TABLE OF CONTENTS a. Natural Persons ...............................................

17
PRELIMINARY TITLE ........................................1 b. Juridical Persons..............................................18
I. EFFECT AND APPLICATION OF LAWS ...... 2 3. Capacity to Act.....................................................19
A. When Laws Take Effect ................................ 2 a. Minority ............................................................19
B. Retroactivity of Laws ..................................... 2 b. Insanity .............................................................20
C. Mandatory or Prohibitory Laws .................... 2 c. Deaf-Mutism ....................................................20
D. Choice-of-Law Rules..................................... 2 d. Prodigality ........................................................21
Nationality Principle ................................................. 2 e. Civil Interdiction .............................................21
Lex Situs...................................................................... 3 f. Family Relations ...............................................21
Lex Loci Celebrationis .............................................. 3 g. Alienage ............................................................21
E. Repeal of Laws .............................................. 3 h. Absence ............................................................21
F. Applicability of Penal Laws ........................... 3 i. Insolvency and Trusteeship ............................21
G. Waiver of Rights ............................................ 3 4. Domicile and Residence of Persons .................22
II. HUMAN RELATIONS.................................... 5 B. Use of Surnames .......................................... 22
A. Abuse of Right ............................................... 5 1. Surname of Children ...........................................22
Kinds of Abuse of Right .......................................... 5 a. Legitimate and Legitimated Children ...........22
1. Acts Contrary to Law ....................................... 5 b. Adopted Child .................................................22
2. Acts Contrary to Morals .................................. 5 c. Illegitimate Child .............................................22
3. Malicious Prosecution ...................................... 6 2. Surname of Wife After and During Marriage..22
4. Public Humiliation............................................ 7 a. During Marriage ..............................................22
5. Oppressive Dismissal ....................................... 7 b. After Marriage .................................................23
B. Unjust Enrichment ........................................ 7 3. Confusion of Names ...........................................23
C. Liability without fault .................................... 8 4. Change of Names ................................................23
D. Ostentatious Display of Wealth .................... 8 C. Entries in the Civil Registry and Clerical Error
Law ................................................................... 23
E. Violation of Human Dignity ......................... 9
D. Absence ....................................................... 25
1. Violation of personal dignity ............................... 9
1. Civil Code Provisions..........................................25
2. Violation of privacy .............................................. 9
a. Provisional Measures in case of Absence ....25
3. Violation of right to peace of mind .................. 10
b. Declaration of Absence..................................25
4. Interference with relations ................................. 10
c. Administration of the Property of the
a. Family Relations .............................................. 10
Absentee ...............................................................25
b. Social Relations ............................................... 11
d. Presumption of Death ..................................25
c. Economic Relations ....................................... 12
2. Presumptive Death of Absent Spouse Under the
d. Political Relations ........................................... 12 Family Code ..............................................................26
5. Civil Action .......................................................... 14 II. MARRIAGE .................................................... 27
PERSONS AND FAMILY RELATIONS............ 17 A. In General .................................................... 27
I. PERSONS ......................................................... 17 B. Requisites of Marriage ................................ 27
A. Civil Personality ............................................ 17 1. Essential Requisites .............................................27
1. In General ............................................................ 17 a. Sex......................................................................27
2. Kinds of Persons ................................................. 17 b. Age ....................................................................28
 c. Consent Freely Given .................................... 28 IV. RIGHTS AND OBLIGATIONS BETWEEN
HUSBAND AND WIFE...................................... 50
d. No Subsisting Marriage ................................. 29
A. Live Together.............................................. 50
2. Formal Requisites ................................................ 29
B. Fix a Family Domicile ................................ 50
a. Marriage Ceremony ........................................ 29
C. Support the Family ..................................... 50
b. Authority of Solemnizing Officer ................ 29
D. Management of Family Life....................... 50
c. Marriage License ............................................. 30
E. Effect of Neglect of Duty ........................... 50
C. Marriages Solemnized Abroad, and Foreign
Divorce .............................................................. 31 F. Exercise of Profession................................. 50
1. Marriages Celebrated Abroad ........................... 31 V. PROPERTY RELATIONS BETWEEN
HUSBAND AND WIFE....................................... 51
2. Foreign Divorce ................................................. 32
A. General Provisions ........................................ 51
D. Void and Voidable Marriages ......................32
B. Donations by Reason of Marriage Donations
1. Void Marriages .................................................... 32
Propter Nuptias ................................................. 51
a. Absence of Requisites .................................... 32
C. Absolute Community of Property ................ 53
b. Bigamous and Polygamous Marriages ......... 32
D. Conjugal Partnership of Gains .................... 53
c. Subsequent Marriage When One Spouse is
Absent................................................................... 33 E. Separation of Property and Administration of
Common Property by One Spouse During the
d. Bad Faith of Both Spouses ........................... 34 Marriage ........................................................... 60
e. Psychological Incapacity ................................ 34 F. Regime of Separation of Property................ 60
f. Incestuous Marriage ........................................ 35 G. Property Regime of Unions Without Marriage
g. Against Public Policy...................................... 35 ........................................................................... 61

h. Non-Compliance with Recording VI. FAMILY HOME ........................................... 62

Requirement after Declaration of Nullity........ 35 A. In General .................................................... 62
2. Voidable Marriages ............................................ 37 B. Who May Constitute the Family Home ...... 62
a. Lack of Parental Consent .............................. 37 C. Beneficiaries of the Family Home............... 62
b. Insanity ............................................................. 37 D. Exemption from Forced Sale, Execution,
c. Fraud................................................................. 38 Attachment ....................................................... 62

d. Force, Intimidation, Undue Influence......... 39 E. Sale of Family Home ................................... 62

e. Impotency ........................................................ 39 F. When Terminated ........................................ 63

f. Sexually-Transmissible Disease Serious and VII. PATERNITY AND FILIATION ................ 64

Incurable............................................................... 40 A. Legitimate Children ..................................... 65
III. LEGAL SEPARATION ................................43 B. Proof of Filiation .......................................... 66
A. Grounds for Legal Separation [Art. 55, Family C. Illegitimate Children ................................... 66
Code] .................................................................43
D. Legitimated Children .................................. 68
B. Defenses [Art. 56, Family Code] ..................44
VIII. ADOPTION ............................................... 69
C. Procedure ......................................................44
A. Domestic Adoption (RA 11642) ................... 69
D. Effects of Filing Petition ..............................45
1. Who May Adopt ..................................................69
E. Effects of Pendency ......................................45
2. Who May be Adopted [Sec. 22, RA 11642] .....69
F. Effects of Decree of Legal Separation ..........45
3. Rights of an Adopted Child ...............................69
G. Reconciliation ...............................................45
a. In General [Sec. 42, RA 11642] ....................69
H. Effect of Death of One of the Parties ..........46
b. Legitimacy [Sec. 41, RA 11642] ....................70
 c. Succession [Sec. 43, RA 11642] .................... 70 C. Subjects of Succession: ................................ 80
d. Name ................................................................ 70 Kinds of Successors/Heirs: ....................................80
e. Nationality ........................................................ 70 II.TESTAMENTARY SUCCESSION ................. 81
4. Instances and Effects of Rescission ................ 70 A. Wills .............................................................. 81
B. Inter-country Adoption (RA 8043, as amended 1. Kinds of Wills: .....................................................81
by RA 11642) ......................................................70 2. Characteristics of Wills: ......................................81
When Allowed ......................................................... 70 B. Testamentary Capacity and Intent .............. 82
IX. SUPPORT ....................................................... 71 Time of Determining Capacity: .............................82
A. Scope ............................................................. 71 Requisites for Capacity to Make a Will: ................82
B. Who are Obliged to Give Support ................ 71 Test of soundness of mind: To be of sound mind,
C. Source of Support ......................................... 71 the testator must know:...........................................82
D. Order of Support .......................................... 71 C. Forms of Wills .............................................. 83
E. Amount of Support .......................................72 Arts. 815-817, Civil Code (summarized in the table
below) provide for the various governing laws in
F. Manner and Time of Payment ......................72
these instances: .........................................................83
G. Renunciation and Termination ....................72
D. Attested or Notarial Wills ............................ 84
H. Support Pendente Lite .................................73
Formal requirements for notarial wills: ................84
I. Procedure in Applications for Support ..........73
Rules on Interested Witness [Art. 823, Civil Code]:
X. PARENTAL AUTHORITY ............................74 86
A. General Provisions ........................................74 E. Holographic Wills........................................ 86
B. Substitute Parental Authority .......................74 Formal Requirements: .............................................86
C. Special Parental Authority ............................74 Witnesses Required for Probate [Art. 811, Civil
D. Effect of Parental Authority over the Child’s Code]..........................................................................86
Person ................................................................75 Additional Dispositions: .........................................86
E. Effect of Parental Authority over the Child’s Insertion, Cancellation, Erasure or Alteration [Art.
Property .............................................................75 814, Civil Code] ........................................................86
F. Suspension or Termination of Parental Effect of Insertion Written by Another Person on
Authority............................................................76 the Validity of a Holographic Will:........................87
XI. EMANCIPATION .........................................77 F. Other Types of Wills .................................... 87
A. Cause of Emancipation ................................77 Joint Wills: .................................................................87
B. Effect of Emancipation ................................77 Mutual Wills: .............................................................87
SUCCESSION ...................................................... 81 Reciprocal Wills: .......................................................87
I. GENERAL PROVISIONS ...............................79 G. Codicil and Incorporation by Reference: .... 87
A. Definition ......................................................79 Codicil: .......................................................................87
Kinds of Succession: ............................................... 79 Incorporation by Reference: ..................................87
Scope of Inheritance: .............................................. 79 H. Revocation of Wills ..................................... 88
B. Rules on Opening of Succession ..................79 I. Republication and Revival: ........................... 89
1. The rights to succession are transmitted from the J. Allowance and Disallowance of Wills ........... 89
moment of the death of the decedent [Art. 777,
Kinds of Probate: .....................................................89
Civil Code] ................................................................ 79
Scope of Probate Proceedings [Art. 839, Civil
2. A person may be “presumed” dead for the
Code]..........................................................................89
purpose of opening his succession after absence of:
80
 Effect of Final Decree of Probate, Res Judicata on Parties: [Balane] ...................................................96
Formal Validity: ....................................................... 90 Requisites for Reserva Troncal [Chua v. CFI,
Grounds for Denying Probate: ............................. 90 G.R. No. L-29901 (1977)]: .................................96
K. Institution of Heirs .......................................90 Three transmissions involved: [Balane] ............97
Extent of Grant [Art. 842, Civil Code]: ............... 90 Extinguishment of the Reserva: ..........................97
Effect of Predecease of Heir [Art. 856, Civil Code]: P. Disinheritance .............................................. 98
90
Effect of Disinheritance: ........................................98
Manner of Distribution: ......................................... 90 Requisites of a Valid Disinheritance: ....................98
Declaration of heirship as decided in Treyes v. Larlar, Causes Common to Disinheritance and
G.R. No. 232579 (2020) ......................................... 91 Unworthiness............................................................98
L. Preterition ..................................................... 91 Modes of Revocation of Disinheritance:..............99
Concept [Art. 854, Civil Code]: ............................. 91 Reconciliation [Art. 922, Civil Code]: ...................99
Omission of Heir from Inheritance:..................... 91 Ineffective Disinheritance [Art. 918, Civil Code]:
No Preterition .......................................................... 91 99
Distinguished from Disinheritance: ...................... 91 Q. Legacies and Devises .................................. 99
M. Substitution of Heirs ...................................92 Persons Charged with the Duty to Give Legacies
and Devises in a Will ...............................................99
Kinds of Substitution: ............................................. 92
Validity and Effect of Legacy or Devise: .............99
1. Brief or Compendious [Art. 860, Civil
Code]..................................................................... 92 Delivery of Legacy/Devise [Art. 951, Civil Code]:
100
2. Reciprocal [Art. 861, Civil Code].............. 92
Effect of Ineffective Legacies or Devises [Art. 956,
3. Simple Substitution [Art. 859, Civil Code]
Civil Code]: ............................................................ 100
92
Revocation of Legacies and Devises [Art. 957, Civil
4. Fideicommissary Substitution ................... 92
Code]:...................................................................... 100
N. Conditional Testamentary Dispositions and
III. LEGAL AND INTESTATE SUCCESSION
Those with a Term ............................................93
............................................................................. 101
3 Kinds of Testamentary Disposition: ................. 93
A. General Provisions; Relationship and
Conditional Dispositions: .................................. 93 Right of Representation .................................. 101
Dispositions with a Term: ................................. 94 Fundamental Principles in Intestate Succession:
Modal Dispositions:............................................ 94 101
O. Legitime .......................................................94 Relationship: .......................................................... 102
Classes of Compulsory Heirs [Art. 887, Civil Code]: Incapacity [Art. 968, Civil Code] ........................ 102
94 Repudiation [Arts. 968-969, Civil Code] ........... 102
Specific Rules on Legitime: .................................... 95 Adoption [Art. 189, Family Code]...................... 102
Steps in Determining the Legitime of Compulsory Right of Representation: ...................................... 102
Heirs [Arts. 908-910, Civil Code]: ......................... 95
B. Order of Intestate Succession ..................... 104
Remedy of a Compulsory Heir in Case of
RULES OF EXCLUSION AND
Impairment of Legitime: ........................................ 95
CONCURRENCE IN INTESTATE SHARES
Method of Reduction [Art. 911, Civil Code]: ...... 95 104
How are Devises and Legacies with usufructs, life Outline of Intestate Shares .................................. 105
annuities and pensions reduced? ........................... 96
IV. PROVISIONS COMMON TO TESTATE
Reserva Troncal: ...................................................... 96 AND INTESTATE SUCCESSION ................... 107
Concept of Reserva Troncal:............................. 96 A. Right of Accretion: ...................................... 107
 B. Capacity to Succeed by Will or by Intestacy 3. Prestation (Object) ........................................ 116
......................................................................... 108 The conduct required to be observed by the
Requisites for Capacity to Succeed by Will or by debtor/obligor (i.e. to give, to do, or not to do)
Intestacy [Art. 1024 – 1025, Civil Code]: ........... 108 [Ang Yu Asuncion v. CA, G.R. No. 109125 (1994)];
116
Persons Incapable of Succeeding [Arts. 1027, 739,
1032, Civil Code]: .................................................. 108 a. Must be possible, physically and juridically. .. 116
Based on Morality or Public Policy [Arts. 739 and b. Must be determinate or at least determinable
1028, Civil Code]: .................................................. 108 according to pre-established elements. .............. 116
Based on Acts of Unworthiness [Art. 1032, Civil c. Must have a possible equivalent in money. ... 116
Code]: ...................................................................... 109 C. Sources of obligations................................. 116
Determination of Capacity [Tolentino] .............. 109 1. Law ...................................................................... 116
C. Acceptance and Repudiation of Inheritance: 2. Contracts ............................................................ 116
......................................................................... 109
3. Quasi-Contracts ................................................ 116
Requisites [Art. 1043, Civil Code] ....................... 109
4. Acts or Omissions Punishable by Law .......... 116
Forms of Acceptance [Arts. 1049 – 1050, Civil
Code]: ...................................................................... 110 5. Quasi-Delicts ..................................................... 116

Forms of Repudiation [Art. 1051, Civil Code] .. 110 II. NATURE AND EFFECT ............................. 117

Heirs in Two Capacities [Art. 1055, Civil Code]: A. Obligation to give ....................................... 117
110 1. Types of Things ............................................. 117
Irrevocability of Acceptance or Repudiation .... 110 2. Rights and Duties of Parties ...................... 117
D. Partition and Distribution of the Estate .....111 B. Obligation to do or not to do ...................... 118
What can be divided? ............................................ 111 1. Rights and Duties of Parties ....................... 118
Effects of Inclusion of Intruder in Partition [Art. C. Transmissibility of obligations ................... 119
1105, Civil Code] ................................................... 112
D. Performance of Obligations ....................... 119
Right of Redemption in Partition ....................... 112
1. Definition ......................................................... 119
Legal Redemption by Co-Heir; ....................... 112
2. General Rule/Requirement ........................ 119
Effects of Partition ................................................ 112
3. Exceptions ....................................................... 119
Warrant of bad debts ............................................ 113
a. Substantial Performance ......................... 119
Rescission and Nullification of Partition ........... 113
b. Incomplete/Irregular performance ..... 119
DIFFERENCE OF NULLITY FROM
d. Partial Liquidation ................................... 119
RESCISSION ........................................................ 114
E. Breaches of Obligations ............................. 119
Important Periods in Partition ............................ 114
1. Failure to Perform .......................................... 119
OBLIGATIONS AND CONTRACTS ............... 121
2. Default, Delay, or Mora ............................... 120
OBLIGATIONS ................................................. 116
Kinds of Delay .................................................. 121
I. GENERAL PROVISIONS ............................. 116
3. Fraud (Dolo) in the Performance of the
A. Definition .................................................... 116
Obligation ............................................................ 122
B. Elements of an obligation .......................... 116
Requisites for Fraud to Vitiate a Contract (Dolo
1. Active Subject (Obligee/Creditor) ............ 116 Causante) ........................................................... 122
The person (natural or juridical) who has the right 4. Negligence (Culpa) in the Performance of
or power to demand the prestation. ................... 116 the Obligation ..................................................... 122
2. Passive Subject (Obligor/Debtor) ............. 116 5. Contravention of the Tenor of the Obligation
The person bound to perform the prestation. .. 116 123
 F. Remedies Available to Creditor in Cases of 2. Solidary Obligations ..................................... 135
Breach.............................................................. 124 Kinds of Solidary Obligations ........................ 135
1. Principal Remedies of Creditors ................ 124 Defenses Available to a Solidary Debtor [Art.
2. Subsidiary Remedies of Creditors ............. 125 1222, Civil Code] .............................................. 136
a. Accion Subrogatoria ..................................... 125 Loss of the thing or impossibility of
performance of the passive/mixed solidary
b. Accion Pauliana ............................................ 125
obligation [Art. 1221, Civil Code] .................. 137
III. KINDS OF OBLIGATIONS ....................... 127
F. Obligations with a Penal Clause ................. 137
A. Pure ............................................................. 127
Rules on Penalty .................................................... 137
B. Conditional ................................................. 127
Enforcement of the Penalty ................................ 138
1. Kinds of Conditions as to Effect ................ 127
Proof of Actual Damage ...................................... 138
A. Suspensive................................................... 127
When Penalty may be Reduced [Art. 1229, Civil
b. Resolutory.................................................... 128 Code]:...................................................................... 138
2. Kinds of Conditions as to Cause/Origin. 128 IV. EXTINGUISHMENT OF OBLIGATIONS
a. Potestative.................................................... 128 ............................................................................. 139

b. Casual ........................................................... 128 Modes of Extinguishing Obligations [Par. 1., Art.

1231, Civil Code] .............................................. 139
c. Mixed ............................................................ 128
Other Modes of Extinguishing Obligations [Par.
3. Impossible Conditions.................................. 130
2, Art. 1231, Civil Code] ................................... 139
4. Positive And Negative Conditions ............ 130
Other Forms of Extinguishment Not Found in
C. Obligation with a Period or a Term ........... 130 Art. 1231 ........................................................... 139
Kinds of Period [Art. 1193, Civil Code] ............ 130 A. Payment or performance ............................ 139
Effect of Advance Payment or Delivery [Art. 1195, 1. Payment ............................................................ 139
Civil Code] .............................................................. 131
a. Definition .................................................... 139
Loss, Deterioration, or Improvement of the Thing
b. Object of Payment .................................... 139
Before Period Expires [Art. 1194, Civil Code].. 131
c. Necessity of Complete Performance [Art.
Benefit of the Period [Art. 1196, Civil Code] .... 131
1248, Civil Code] .............................................. 140
When Courts May Fix Period .............................. 131
d. By whom...................................................... 140
D. Alternative or Facultative ........................... 132
e. To whom...................................................... 141
Alternative and Facultative Conditions
f. Place of Payment........................................ 141
Distinguished ......................................................... 132
g. Time of Payment ...................................... 141
Right of Choice [Art. 1200, Civil Code] ............. 132
h. Form of Payment ...................................... 141
Loss of Specific Things or Impossibility of
Performance of Prestations in an Alternative 2. Application of Payments ............................. 142
Obligation ............................................................... 133 Requisites If there is plurality of debts, the
Facultative Obligations ......................................... 134 debtor, at the time of payment, may declare to
which of the debts the payment must be applied,
Loss or Deterioration of Substitute in Facultative
provided: ............................................................ 142
Obligations [Art. 1206, Civil Code] .................... 134
3. Dation in Payment ........................................ 143
E. Joint and Solidary Obligations ................... 134
4. Payment by cession....................................... 143
1. Joint Obligations............................................. 134
5. Tender of Payment and Consignation .... 144
Presumption of Joint Obligation [Art. 1207,
Civil Code] ......................................................... 134 a. Definitions................................................... 144

Presumption of Divisibility in Joint Obligations b. Requisites of Consignation .................... 144

[Art. 1208, Civil Code] ..................................... 134
 c. When tender and refusal not required/ E. Compensation............................................. 151
Consignation alone is sufficient [Art. 1256, Civil 1. Requisites ......................................................... 151
Code]................................................................... 144
2. Nature and Effects ........................................ 151
d. What constitutes valid consignation.... 145
a. General Rule ............................................... 151
e. How consignation is made ..................... 145
b. By Operation of Law................................ 151
f. Who bears the expenses ........................... 145
c. Compensation Distinguished from Other
g. Effects of Consignation ........................... 145
Modes of Extinguishment............................... 151
h. Withdrawal of Consigned Amount by the 3. Kinds of Compensation ............................... 152
Debtor ................................................................ 145
a. As to extent ................................................. 152
B. Loss of determinate thing due or impossibility
or difficulty of performance............................. 145 b. As to cause .................................................. 152

1. Loss..................................................................... 145 F. Novation ..................................................... 153

a. Loss of Determinate Things................... 145 1. In General......................................................... 153

When the legal excuse of fortuitous event is a. Requisites:................................................... 153

not applicable: ................................................. 146 b. Effects .......................................................... 153
b. Loss of Generic Things ........................... 146 2. Kinds of Novation ......................................... 154
c. Partial Losses .............................................. 146 a. As to Form................................................... 154
d. Presumption of Fault ............................... 146 b. As to extent or effect ................................ 154
e. Loss in Obligations to Give with Resolutory c. As to Essence or Object .......................... 155
Conditions.......................................................... 146
3. Substitution of Debtors ................................ 155
f. Creditors’ Rights......................................... 146
4. Subrogation ..................................................... 156
2. Impossibility of Performance ..................... 147
CONTRACTS ..................................................... 157
a. In General .................................................... 147
I. GENERAL PROVISIONS ............................. 157
b. Types of Impossibility ............................. 147
A. Stages of Contract ....................................... 157
3. Unforeseen Difficulty .................................... 147
B. Classifications ............................................. 157
C. Condonation or remission of debt .............. 148
1. According to subject matter ........................ 157
1. Definition and General Rules ..................... 148
2. According to formation or perfection ....... 157
2. Kinds of Remission........................................ 148
3. According to relation to other contracts .. 157
Rules and Form ................................................. 149
4. According to form .......................................... 157
a. Express Remission .................................... 149
5. According to cause/by equivalence of
b. Implied Remission.................................... 149 prestations ............................................................ 157
c. Partial Remission....................................... 150 6. According to purpose .................................... 157
d. Other Rules on Donation Applicable to 7. According to time of fulfillment ................. 157
Remission ......................................................... 150
8. According to risk ............................................ 158
D. Confusion ................................................... 150
9. According to the nature of the vinculum
1. Definition .......................................................... 150 produced ............................................................... 158
2. Requisites ......................................................... 150 10. According to their designation/name
3. Effects ................................................................ 150 158

a. In general ..................................................... 150 C. Characteristics ............................................ 158

b. Confusion among the Guarantors ........ 150 1. Obligatory force .............................................. 158

c. In case of joint or solidary obligations 151 2. Mutuality .......................................................... 158

 a. General Rule................................................ 158 4. Distinguished from Motive......................... 167
b. Exception..................................................... 158 5. Cause in contracts [Art. 1350, Civil Code] 167
A contract shall be valid even though its fulfillment 6. Effect of Lack of Cause, Unlawful Cause,
or implementation is left to the will of either party False Cause and Lesion [Arts. 1352-1355, Civil
as long as there is a finding of the presence of Code]....................................................................... 167
equality of the parties, which thus prevents the III. FORMALITY ............................................... 169
perpetration of injustice on the weaker party [GF
Equity v. Valenzona, G.R. No. 156841 (2005)]. .. 158 A. General Rule ............................................... 169

3. Relativity ........................................................... 158 B. Exceptions .................................................. 169

a. General Rule................................................ 158 Kinds of Formalities Required by Law .............. 169

b. Exceptions................................................... 158 1. For the Validity of Contracts (Ad Essentia/ Ad

Solemnitatem/ Solemn Contracts) ......................... 169
II. ESSENTIAL REQUISITES ......................... 160
2. For the Purpose of Proving the Existence of
A. Consent ....................................................... 160 the Contract (Ad Probationem/ Statute of Frauds)
1. Definition .......................................................... 160 ............................................................................. 169
2. Requisites for Valid Consent ....................... 160 3. For the Effectivity of the Contract Against
Third Persons.................................................... 170
3. Concurrence of Offer and Acceptance...... 160
a. Offer............................................................... 160 IV. REFORMATION OF INSTRUMENTS .... 172

b. Acceptance .................................................. 161 A. In General ................................................... 172

4. Necessary Legal Capacity ............................ 161 Requisites [Art. 1359, Civil Code] ...................... 172
B. Burden of Proof........................................ 172
Persons incapacitated to give consent [Art. 1327,
Civil Code] ......................................................... 161 C. Effect of Reformation .............................. 172
Persons Disqualified to Contract.................... 162 D. Cases Where Reformation is Proper .......... 173
6. Consent Must be Intelligent, Free, 1. Mistake.............................................................. 173
Spontaneous and Real ....................................... 162 2. Fraud ................................................................. 173
a. Mistake ......................................................... 162 3. Inequitable conduct ...................................... 173
b. Intimidation ................................................ 163
4. Accident............................................................ 173
c. Violence ........................................................ 163
5. Severe Pacto de Retro / Relative Simulation
d. Undue Influence ........................................ 164 173
e. Fraud ............................................................. 164 E. Who May Ask for Reformation ................... 173
7. Simulation of Contracts ................................ 165 F. Cases Where Reformation is Not Proper ... 173
Absolute vs. Relative Simulation [Art. 1345, Civil G. Prescriptive Period for Reformation........ 174
Code]................................................................... 165
V. INTERPRETATION OF CONTRACTS ..... 175
B. Object ......................................................... 166 A. Primacy of Language or Intention ............. 175
1. Requisites ......................................................... 166 1. Cardinal/First Rule of Interpretation –
2. What may be the object of a contract ....... 166 Literal Meaning Governs ................................. 175
a. General Rule................................................ 166 2. Rule if Language Contrary to Intent – Intent
over Literal Interpretation ............................... 175
b. Exceptions [Art. 1347-1349, Civil Code] .. 166
3. Exclusion to Rules – Distinct and Different
c. Exceptions to the Exception .................. 166
Cases ...................................................................... 176
C. Cause .......................................................... 166
4. Stipulation Rendered to be Effectual ....... 176
1. Requisites ......................................................... 166
5. Stipulations Interpreted Together ............. 176
2. Presumption .................................................... 167
3. Cause vs. Object ............................................. 167
 6. Interpretation According to Nature and 2. Divisibility of Contracts ............................... 187
Object of Contract .............................................. 176 3. In Pari Delicto Principle (in pari delicto, non oritur
7. Interpretation against Party Causing actio) [Art. 1411, Civil Code] ................................ 187
Obscurity............................................................... 176 General Rules .................................................... 187
8. Nomenclature NOT Decisive of the Exceptions to the Principle of In Pari Delicto:187
Character ............................................................... 176
NATURAL OBLIGATIONS.............................. 189
9. Separability Clause ......................................... 176
I. IN GENERAL................................................. 189
B. In case of doubt .......................................... 177
A. Concept ....................................................... 189
C. Other rules from the Rules of Court ........... 177
B. Conditions Necessary for Natural Obligations
VI. DEFECTIVE CONTRACTS ....................... 178 ......................................................................... 189
A. Rescissible contracts .................................. 178 C. Types of Obligations in Juridical Science .. 189
1. Rescission ......................................................... 178 II. CONVERSION TO CIVIL OBLIGATIONS
Rescission in Art. 1380 distinguished from ............................................................................. 190
rescission in Art. 1191, Civil Code [Universal Food III. EXAMPLES OF NATURAL OBLIGATIONS
Corp. v. CA, L-29155 (1970)] ........................... 178 ............................................................................. 190
2. Characteristics of Rescissible Contracts . 178 A. Performance after Prescription ................... 190
3. Rescissible Contracts and Their Requisites 1. Voluntary Performance by Obligor........... 190
179
2. When Third Person Pays the Debt ........... 190
Requisites for Rescission under Pars. 1 & 2, Art.
1381, Civil Code ................................................ 179 B. Contracts Made by a Minor ........................ 190

Requisites before a Contract Entered into In 1. Minor Voluntarily Returns Payment ........ 190
Fraud of Creditors May Be Rescinded under Par. 2. Minor Voluntarily Pays ................................ 191
3, Art. 1381, Civil Code.................................... 179
3. Arts. 1426 and 1427, Civil Code,
Requisites Before Payment Made by Insolvent distinguished ....................................................... 191
can be Rescinded............................................... 180
C. Performance by Winning Party .................. 191
4. Effects of Rescission [Art. 1385, Civil Code]
D. Payment beyond Inheritance ..................... 191
180
E. Payment of a Void Legacy.......................... 192
5. Presumption of Fraud ................................... 180
ESTOPPEL ......................................................... 193
6. Resolution and rescission distinguished . 181
I. DEFINITION................................................. 193
B. Voidable contracts ............................................ 181
II. KINDS OF ESTOPPEL ................................ 193
1. Characteristics of Voidable Contracts ...... 182
A. Equitable Estoppel or Estoppel in pais [Art.
2. Who may institute action for annulment. 182
1433, Civil Code] .............................................. 193
3. Effects of Annulment .................................... 183
B. Technical Estoppels ................................... 193
4. Modes of Convalidating a Voidable Contract
C. Estoppel by Judgment ................................ 193
183
D. Estoppel by laches ..................................... 193
a. Prescription ................................................. 183
III. PERSONS BOUND..................................... 193
b. Ratification .................................................. 183
IV. CASES WHERE ESTOPPEL APPLIES ..... 194
C. Unenforceable contracts ............................ 184
A. Sale or alienation of a thing which does not
1. Characteristics ................................................. 184
belong to the seller or grantor and later on acquire
2. Kinds of Unenforceable Contracts [Art. 1403, title thereto [Art. 1434, Civil Code] .................. 194
Civil Code] ............................................................ 184
B. Agent sells or alienates a thing [Art. 1435, Civil
D. Void or inexistent contracts ..................... 186 Code] ............................................................... 194
1. Characteristics ................................................. 186
 C. Title of the lessee or bailee against the lessor B. When Debt not yet Due .............................. 204
or bailor [Art. 1436, Civil Code] ....................... 194 C. Responsibility of Two or More Payees ....... 204
D. Contract between third persons concerning D. When Money or Thing Delivered is Owned by
immovable property where one of them is misled Third Person.................................................... 204
by a person with respect to the ownership or real
right over the real estate [Art. 1437, Civil Code] E. Liability of Payee ........................................ 204
......................................................................... 194 F. Exemption from the Obligation to Restore the
E. One who has allowed another to assume Payment Unduly Made ................................... 204
apparent ownership of personal property for the G. Presumption of Payment by Mistake, Defense
purpose of making any transfer of it, cannot, if he ......................................................................... 205
received the sum for which a pledge has been
IV. OTHER QUASI-CONTRACTS .................. 206
constituted, set up his own title to defeat the
pledge of the property, made by the other to a SALES ................................................................. 262
pledgee who received the same in good faith and I. NATURE AND FORM ................................ 208
for value [Art. 1438, Civil Code] ...................... 194
A. Essential requisites [Art. 1318, Civil Code] 208
IV. LACHES ....................................................... 195
1. Consent of contracting parties ................... 208
TRUSTS .............................................................. 196
2. Object certain which is the subject matter of
I. IN GENERAL ................................................ 196 the contract .......................................................... 208
A. Definition .................................................... 196 a. Must be licit ............................................... 208
B. Characteristics of Trust .............................. 196 b. Existing, Future, Contingent ............. 208
C. Distinguished from Other Concepts .......... 196 c. Determinate or Determinable ................ 209
II. GOVERNING RULES ................................. 198 3. Cause of the obligation which is established
III. PARTIES ...................................................... 198 209
IV. KINDS OF TRUST ...................................... 198 a. Requisites of a valid price....................... 209
A. Express Trust.............................................. 198 b. How price is determined/when certain
............................................................................. 210
B. Implied Trust .............................................. 199
c. Inadequacy of price .................................. 210
Kinds of Implied Trusts ....................................... 199
d. When no price agreed .............................. 210
1. Resulting Trusts ............................................ 199
e. False price vs. simulated price .............. 210
2. Constructive Trusts ...................................... 201
f. Earnest money vs. option money .......... 211
QUASI-CONTRACTS........................................ 202
B. Perfection .................................................... 212
I. IN GENERAL ................................................ 202
1. Meeting of Minds........................................... 212
II. NEGOTIORUM GESTIO
(UNAUTHORIZED MANAGEMENT)........... 202 2. Option contracts ............................................ 212
1. Observe the requisite standard of diligence 3. Right of first refusal ...................................... 212
202 4. Mutual promise to buy and sell ................. 213
2. Liability in the management of the property C. Contract of Sale v. Contract to Sell ............. 213
202
II. CAPACITY TO BUY OR SELL .................... 214
B. Obligations of the Owner of the Property or
Business .......................................................... 203 A. Capacity of Parties ...................................... 214

C. Effect of Ratification .................................. 203 1. Absolute Incapacity .......................................... 214

D. Extinguishment of Management ............... 203 2. Relative incapacity ........................................ 214

III. SOLUTIO INDEBITI (UNDUE PAYMENT) a. Husband and wife [Art. 1490, Civil Code]
............................................................................. 204 ............................................................................. 214

A. Requisites ................................................... 204 b. Alienage [Art. 39, Civil Code]................ 214

 c. Trusteeship [Art. 39, Civil Code] .......... 214 1. Inspection/buyer’s right to examine [Art.
1584, Civil Code] ................................................. 233
B. Effects of incapacity ................................... 215
2. Delivery of goods in installment ............... 233
1. Absolute incapacity ........................................ 215
Where separate price has been fixed for each
2. Relative incapacity ......................................... 215
installment [par. 2, Art. 1583, Civil Code ]
3. Specific incapacity ......................................... 216 ............................................................................. 233
III. EFFECTS OF THE CONTRACT WHEN B. Obligation to pay the price ......................... 234
THE THING SOLD HAS BEEN LOST .......... 217
1. Obligation to pay interest ............................ 234
A. Res Perit domino [Arts. 1263, and 1189 Civil
2. Right of vendee to suspend payment of price
Code] ............................................................... 217
234
B. Prior to Perfection of Contract ................... 217
C. Obligation to bear the expenses for the
C. At Time of Perfection [Arts. 1493 and 1494, execution and registration of the sale and putting
Civil Code]....................................................... 217 the goods in a deliverable state, if so stipulated
D. After Perfection but Before Delivery .......... 218 ......................................................................... 234

E. After Delivery .............................................. 218 VI. BREACH OF CONTRACT ......................... 235

IV. OBLIGATIONS OF VENDOR ................... 220 A. Remedies .................................................... 235

A. Obligations of the Vendor in General ........ 220 1. Remedies of the Seller .................................. 235

1. To Transfer Ownership of the Thing and To a. Sale of Goods .............................................. 235

Deliver the Thing, with its Accessions and b. Special Remedies of the Unpaid Seller
Accessories ........................................................... 220 [Arts. 1525-1535, Civil Code] ....................... 236
a. When Seller is Not the Owner ............... 220 2. Remedies of the Buyer ................................. 239
b. Sale by Person having a Voidable Title a. Sale of Movables ........................................ 240
............................................................................. 220
b. Sale of Immovables [Art 1539 – 1543, Civil
c. Manner of Transfer [Arts. 1477, 1496-1501, Code] ................................................................. 241
Civil Code] ....................................................... 220
B. Recto Law and Maceda Law ...................... 241
d. Concept of Delivery .................................. 221
1. Recto Law: Sale of Movables on Installment
e. When Delivery Does Not Transfer Title – Arts. 1484-1486, Civil Code ........................... 241
............................................................................. 222
a. Specific Performance ............................... 242
f. Kinds of Delivery ........................................ 223
b. Cancellation of sale if vendee fails to pay
g. Double Sales [Art. 1544, Civil Code] .... 224 2 or more installments .................................. 242
h. Property Registration Decree [P.D. 1529] c. Foreclosure of Chattel Mortgage if vendee
............................................................................. 226 fails to pay 2 or more installments ............ 242
2. To Warrant Against Eviction and Against 2. Maceda Law (RA 6552): Sale of Immovables
Hidden Defects ................................................... 226 on Installment ..................................................... 242
a. Express Warranties ................................... 227 Rights of the Buyer ....................................... 242
b. Implied Warranties [Art. 1547, Civil Code] VII. EXTINGUISHMENT ................................ 244
............................................................................. 228
A. In general .................................................... 244
c. Effects of Warranties ................................ 230
B. Conventional Redemption / Pacto de retro
d. Effects of Waiver ....................................... 230 sale ................................................................... 244
e. Buyer’s Options in Case of Breach of 1. Definition [Art.1601, Civil Code] ............... 244
Warranty............................................................ 230
2. Period [Art.1606, Civil Code] ...................... 244
f. Warranty in Sale of Consumer Goods... 232
3. By Whom Exercised ..................................... 244
V. OBLIGATIONS OF VENDEE ..................... 233
4. From Whom to Redeem .............................. 244
A. Inspection and acceptance ......................... 233
 5. How Exercised ............................................... 244 c. Where Return of the Price is
Required [Art. 1653(2), Civil Code] .......... 252
6. Effect of Redemption .................................... 245
d. Presumption of Good Condition [Art.
7. Effect of non-redemption ............................ 245
1666, Civil Code] ............................................ 252
8. Right to redeem v. Option to Purchase ... 245
4. Termination..................................................... 253
C. Equitable mortgage .................................... 245
II. RIGHTS AND OBLIGATIONS OF THE
1. Presumption that a contract is an equitable LESSOR .............................................................. 254
mortgage ............................................................... 246
A. Obligations of a Lessor ............................... 254
2. Requisites for presumption of an equitable
B. Rights of a Lessor ....................................... 254
mortgage ............................................................... 246
1. To engage in a business ............................... 254
3. Rationale behind provision on equitable
mortgage ............................................................... 246 2. To Eject the Lessee (Unlawful Detainer) 254
4. Remedies of apparent vendor ..................... 246 Causes for judicial ejection of the lessee [Art.
1673, Civil Code] .............................................. 254
5. Period of redemption .................................... 247
III. RIGHTS AND OBLIGATIONS OF THE
6. Exercise of the right to redeem [Art. 1616,
LESSEE .............................................................. 255
Civil Code] ............................................................ 247
7. How redemption is exercised ..................... 247 A. Obligations of a Lessee .............................. 255
B. Rights of a Lessee ....................................... 255
VIII. ASSIGNMENT OF CREDITS ................. 248
1. To Sublease ...................................................... 255
A. Definition .................................................... 248
2. To Reduce or Rescind in case of FE ........ 255
B. Nature ......................................................... 248
C. To make use of the period .......................... 256
C. Perfection .................................................... 248
D. Assignment Distinguished from Other Terms PARTNERSHIP AND AGENCY ...................... 270
......................................................................... 248 PARTNERSHIP ................................................. 258
E. Binding Effect ............................................ 248 I. GENERAL PROVISIONS ............................. 258
F. Consent not Necessary ............................... 248 A. Definition .................................................... 258
G. Effect of Payment by Debtor after Assignment B. Elements ..................................................... 258
of Credit ........................................................... 249
1. Two or more persons bind themselves to
1. After notice ....................................................... 249 contribute money, property, or industry to a
common fund ........................................................ 258
2. After notice, or before notice but debtor had
knowledge of assignment................................. 249 2. Intention of dividing the profits among
themselves .............................................................. 258
H. Extent of Assignment of Credit ................. 249
C. Parties & Object ......................................... 258
I. Warranties of the Assignor of Credit ........... 249
1. Parties ................................................................ 258
LEASE ................................................................ 262
2. Object ................................................................ 259
I. GENERAL PROVISIONS ............................ 251
a. In a Universal Partnership...................... 259
A. Definition .................................................... 251
b. In a Particular Partnership ..................... 259
1. Who is Qualified or Disqualified? ............. 251
c. Effect when the object is unlawful ............ 259
2. Transfer of Lease ............................................ 252
D. Form ........................................................... 259
Rights of a Purchaser of Land Under a Lease
[Art. 1676, Civil Code] ................................... 252 E. Characteristics ............................................ 260
3. Warranties ........................................................ 252 1. Generally [De Leon] ....................................... 260
a. Eviction [Art. 1548, Civil Code] .... 252 2. Essential Attributes [Villanueva] .................... 260
b. Warranty against Defects [Art. 1561, 3. Delectus Personae (Selection of Persons)..... 260
Civil Code] ....................................................... 252
 4. Partners Burdened with Unlimited Liability 1. Obligation to Render True and Full
[Arts. 1816, 1817, Civil Code] .............................. 260 Information .......................................................... 267
F. Rules to Determine Existence .................... 260 2. Obligation not to Engage in Another
Business ................................................................ 267
G. Partnership Term ....................................... 261
a. Industrial Partners .................................... 267
H. Partnership by Estoppel ............................ 261
b. Capitalist Partners .................................... 267
1. Definition .......................................................... 261
3. Obligation to Share in the Profits/Losses
2. Partner by Estoppel ....................................... 261
267
3. Liability of a Partner by Estoppel ................... 261
Rules for Distribution of Profits and Losses 267
a. Personal Representation .......................... 261
Exclusion of Partner From Share .................. 268
b. Public Representation.............................. 261
C. Obligations of the Partners to Third
I. Partnership as Distinguished from Joint Persons 268
Venture ............................................................ 262
1. Liability for Partnership Debts .................. 268
J. Professional Partnership .............................. 262
Nature of Individual Subsidiary Liability ...... 268
K. Management ............................................... 263
Pro Rata .................................................................. 268
1. In General ......................................................... 263
Liability of an Industrial Partner .................... 268
2. Scope of Powers of a Managing Partner ....... 263
Stipulation against Individual Liability .......... 268
3. Managing Partner’s Power to Revoke ............ 263
2. Liability of Partners for Partnership
4. In case of Two or More Managing Partners Contracts............................................................... 269
263
a. Acts apparently for the carrying on of
5. Stipulation of Unanimity.............................. 264 usual business................................................. 269
6. When Manner of Management was not b. Acts not apparently for carrying on of
Agreed Upon ........................................................ 264 the usual business ......................................... 269
7. Mutual Agency ................................................ 264 c. Acts of strict dominion ............................ 269
II. OBLIGATIONS OF THE PARTNERS ....... 265 d. Acts in contravention of a restriction .. 269
A. Obligations of the Partners to the Partnership 3. Liability for Admission by a Partner ........ 270
......................................................................... 265
4. Liability for Wrongful Acts of a Partner... 270
1. Obligation to Contribute and to Warrant 265
5. Liability for Misapplication of Money or
Contribution of Money or Property............... 265 Property ................................................................. 270
Amount of Contribution ................................. 265 6. Liability in case of Partnership by Estoppel
Additional Capital Contribution ..................... 265 270

Contribution of Industry ................................. 265 7. Liability of an Incoming Partner............... 271

2. Obligation to Apply Sums Collected Pro 8. Liability with Regard to Personal Creditors
Rata ......................................................................... 266 of Partners ............................................................ 271

Requisites for Applicability of Art. 1792, Civil III. DISSOLUTION AND WINDING UP ....... 272
Code .................................................................... 266 A. Concepts ..................................................... 272
3. Obligation to Compensate for Damages . 266 B. Causes of Dissolution ................................. 272
Set-Off of Liability ............................................ 266 1. Without Violation of the Agreement Between
4. Obligation to Account and Act as Trustee the Partners .......................................................... 272
266 2. In Contravention of the Agreement Between
B. Obligations of the Partners Among the Partners .......................................................... 272
Themselves ...................................................... 267 3. By Operation of Law..................................... 272
4. By Decree of Court ........................................ 273
 5. Other Causes ................................................... 273 C. General and Limited Partners Distinguished
......................................................................... 279
C. Effects of Dissolution ................................. 274
D. General and Limited Partnership
1. On Authority of the Partners ....................... 274
Distinguished .................................................. 280
2. On Liability for Transactions after
E. Formation ................................................... 280
Dissolution ........................................................... 274
1. General Requirements .................................. 280
3. On Liability for Contracts after Dissolution
by Specific Causes [Art. 1833, Civil Code] ..... 275 2. Purpose of Filing ........................................... 280
4. On Existing Liability of Partners [Art. 1835, 3. Firm Name ...................................................... 280
Civil Code] .............................................................. 275 4. False Statement in the Certificate ............. 281
D. Winding Up ................................................ 275 5. General and Limited Partner at the Same
1. Who May Wind Up ........................................ 275 Time ....................................................................... 281
2. Manner of Winding Up ................................ 275 F. Management ............................................... 281
E. Rights of Partners in Case of Dissolution .. 275 G. Obligations of a Limited Partner ............... 282
1. Dissolution Without Violation of the 1. Obligations Related to Contribution........ 282
Agreement............................................................. 275 2. Liability to Partnership Creditors ............. 282
2. Dissolution in Contravention of the
3. Liability to Separate Creditors ................... 282
Agreement............................................................. 276
H. Rights of a Limited Partner ....................... 283
a. Partner who did not cause the
dissolution ........................................................ 276 1. In General......................................................... 283

b. Partner who caused the dissolution ..... 276 2. Right to Transact Business with the
Partnership ........................................................... 283
F. Rights of Partners in Case of Rescission .... 276
3. Right to Share in Profits .............................. 283
G. Settling of Accounts between Partners ...... 276
4. Right to Return of Contribution ................ 283
1. Composition of Partnership Assets ........... 276
5. Preference of Limited Partners .................. 284
2. Amount of Contribution for Liabilities..... 277
6. Right to Assign Interest ............................... 284
3. Enforcement of Contribution ..................... 277
7. Right to Ask for Dissolution ....................... 284
4. Order of Application of Assets ................... 277
I. Dissolution ................................................... 284
5. Doctrine of Marshaling of Assets .............. 277
J. Settlement of Accounts ................................ 285
6. Distribution of Property of Insolvent Partner
277 1. Order of Payment ........................................... 285

H. Rights of the Creditors of the Dissolved 2. Share in the Partnership Assets ................. 285
Partnership ...................................................... 277 K. Amendment or Cancellation of Certificate . 285
1. As Creditors of the New Partnership ........ 277 1. Cancellation of Certificate ........................... 285
2. Liability of A New Partner........................... 278 2. Amendment of Certificate ........................... 285
3. Priority of Creditors of Dissolved Partnership 3. Requirements for Amendment or
278 Cancellation ......................................................... 285
4. Rights of a Retired Partner or a In case of refusal to execute the writing [Art.
Representative of Deceased Partner ............. 278 1865, Civil Code] .............................................. 285
I. Right to an account ..................................... 278 L. Limited Partnerships Formed Prior to the
IV. LIMITED PARTNERSHIP ........................ 279 Effectivity of the Civil Code ............................ 286

A. Definition .................................................... 279 AGENCY ............................................................ 287

B. Characteristics ............................................ 279 I. NATURE, FORM, AND KINDS ................... 287

A. Nature and Elements.................................. 287
 B. Form ........................................................... 288 2. If the Contract Involves Things Belonging to
the Principal......................................................... 296
C. Kinds ........................................................... 288
IV. MODES OF EXTINGUISHMENT ............ 297
1. As to Manner of Creation ............................. 288
A. Summary ..................................................... 297
2. As to Scope of Business ................................ 289
B. Revocation .................................................. 297
3. As to Authority Conferred ............................ 289
1. In General......................................................... 297
4. Other Kinds of Agency ................................. 290
2. When Revocation is Not Binding on Third
a. Agency by estoppel ................................... 290
Persons .................................................................. 297
b. Agency by operation of law .................... 290
a. When Notice is Required ....................... 297
II. OBLIGATIONS OF THE AGENT.............. 291
b. When a Third Person in Good Faith
A. Act within the Scope of Authority .... 291 Has No Knowledge of Revocation ........... 297
B. Carry Out the Agency ................................. 291 3. Appointment of New Agent ....................... 298
C. Prefer the Interest of the Principal Over His 4. Direct Management by the Principal ...... 298
Own ................................................................. 291
5. General authority revoked by special
D. Render an Account, and Deliver ................ 291 authority ................................................................ 298
E. Summary of Liabilities for Damages.......... 292 6. When Agency Cannot be Revoked ........... 298
F. Liability to Pay Interest [Art. 1896, Civil Code] C. Withdrawal by the Agent ............................ 298
......................................................................... 292
D. Death, Civil Interdiction, Insanity or
G. Liability for Acts of Substitutes [Arts. 1892- Insolvency........................................................ 298
1893, Civil Code] .............................................. 292
1. In General......................................................... 298
Liability of the agent for his substitutes ........ 292
2. Exceptions ....................................................... 298
H. Obligations of Commission Agents [Arts.
a. Agency Coupled with an Interest 298
1903-1908, Civil Code] ..................................... 293
b. Contract between Agent Without
Responsibility for goods received [Art. 1903, Civil
Knowledge of Death and Third Person in
Code] ....................................................................... 293
Good Faith ....................................................... 298
Goods belonging to different owners [Art. 1904,
c. Unfinished business ................................. 299
Civil Code] .............................................................. 293
3. In case of the death of an agent ................ 299
Failure to collect credits [Art. 1908, Civil Code]
293 E. Dissolution, Accomplishment, or Expiration
Sale on credit .......................................................... 293 ......................................................................... 299

III. OBLIGATIONS OF THE PRINCIPAL ..... 294

CREDIT TRANSACTIONS .............................. 316
I. LOAN .............................................................. 301
A. Comply with the Obligations
Contracted by the Agent ................................. 294 Commodatum v. Mutuum .............................. 301
B. Advance or Reimburse Sums Necessary A. Commodatum ............................................. 302
294 1. Parties ................................................................. 302
The principal is not liable for the expenses incurred 2. Use by the Bailee .............................................. 302
by the agent in the following cases [Art. 1918, Civil
Code]: ...................................................................... 295 As to Who May Use of the Property Loaned
............................................................................. 302
C. Indemnify the Agent for Injury .................. 295
As to the Use of Fruits of the Thing Loaned302
D. Compensate the Agent ............................... 295
3. Obligations of the Bailee ................................. 303
E. Scope and Nature of the Liability of the
Principal .......................................................... 296 4. Obligations of the Bailor ................................. 303

1. Solidary Liability ............................................. 296 5. Liability for Deterioration ............................... 304

6. Liability for Loss ............................................... 304
 7. Right of Retention............................................. 304 4. When Hotel-Keeper Liable ............................. 312
8. Extinguishment ................................................. 304 5. When Hotel-Keeper not Liable ...................... 312
B. Mutuum ...................................................... 304 Rule in the Occurrence of Theft or Robbery312
1. Obligations of the Borrower ........................... 305 Exemption or Diminution of Liability .......... 312
Rights of the Borrower .................................... 305 6. Hotel-Keeper’s Right to Retention ................ 312
Obligations of the Creditor ............................. 305 C. Judicial Deposit or Sequestration ............... 313
Rights of the Creditor ...................................... 305 1. Nature and Purpose ......................................... 313
2. Interest ................................................................ 305 2. Depositary of Sequestered Property .............. 313
Requisites for Interest to be Chargeable (EWL) 3. Applicable Law.................................................. 313
............................................................................. 305 III. GUARANTY AND SURETYSHIP ............. 314
3. Kinds of Interest ............................................... 305 A. Nature and Extent of Guaranty .................. 314
a. Conventional Interest ................................... 305 1. Obligation Secured by Guaranty .................... 314
b. Interest on Interest ....................................... 305 2. Parties to a Guaranty ........................................ 314
c. Compensatory, Penalty or Indemnity Interest Parties to a Guaranty ....................................... 314
............................................................................. 305
Qualifications of a Guarantor [Art. 2056, Civil
4. Usury ................................................................... 306
Code] .................................................................. 314
5. Finance Charges ................................................ 307
3. Excussion ........................................................... 315
Under the Truth in Lending Act .................... 307
4. Right to Protection ........................................... 315
Requirement for Disclosure ............................ 307 5. Right to Indemnification ................................. 315
Under the Philippine Credit Card Industry 6. Right to Subrogation ........................................ 315
Regulation Law.................................................. 308
7. Rights of Co-Guarantors ................................. 315
In Relation to Credit Limit .............................. 308
Requisites for the Applicability of Art. 2073,
Requirement for Disclosure ............................ 308 Civil Code .......................................................... 316
When Finance Charge is Imposed ................. 308 B. Nature and Extent of Suretyship ................ 316
How Finance Charge is Imposed ................... 308
1. Concept .............................................................. 316
C. Precarium.................................................... 309 Suretyship .......................................................... 316
II. DEPOSIT....................................................... 310 2. Form of Surety .................................................. 316
A. Voluntary Deposit ....................................... 310 3. Obligations Secured ......................................... 317
1. Extinguishment ................................................. 310 4. Surety Distinguished from Standby Letter of
2. Obligations of a Depositary............................. 310 Credit ...................................................................... 317
Depositary NOT Liable for Loss ................... 310 5. Surety Distinguished from Guaranty ............. 317
3. Authority of Depositary ................................... 311 6. Surety Distinguished from Joint and Solidary
Obligations ............................................................. 318
4. Obligations of a Depositor .............................. 311
C. Effect of Guaranty ...................................... 318
5. Authority of Depositor .................................... 311
1. The Guarantor has the Right to Benefit from
6. Right of Retention............................................. 311
Excussion/Exhaustion [Art. 2058, Civil Code] 318
B. Necessary Deposit ...................................... 312
2. The Creditor has the Right to Secure a Judgment
1. Kinds of Necessary Deposit ............................ 312 Against the Guarantor Prior to the Excussion . 318
2. Deposit by Travelers in Hotels and Inns ....... 312 3. The Creditor has the Duty to Make Prior
3. Extent of Liability Under Art. 1998, Civil Code Demand for Payment from the Guarantor [Art.
312 2060, Civil Code]................................................... 318
 4. The Guarantor has the Duty to Set Up the Rationale ............................................................... 323
Benefit of Excussion [Art. 2060, Civil Code] .... 318 When Not Applicable ....................................... 323
5. The Creditor has the Duty to Resort to All Legal When moral culpability can be directly imputed to
Remedies [Arts. 2058 and 2061, Civil Code] ..... 319 the direct tortfeasor, as when there is actual intent
6. The Creditor has the Duty to Notify the to cause harm to others........................................ 323
Guarantor in the Action Against the Debtor [Art. 2. Persons Vicariously Liable [Article 2180, Civil
2062, Civil Code] ................................................... 319 Code]....................................................................... 323
7. A Compromise Shall Not Prejudice a Person 3. What must be established for vicarious
Not Party to It [Art. 2063, Civil Code] .............. 319 liability ................................................................... 323
8. Effects of Guaranty between the Debtor and the D. Res ipsa loquitur ........................................ 323
Guarantor ............................................................... 319
1. Elements ........................................................... 324
D. Extinguishment of Guaranty ..................... 319
2. Basis .................................................................. 324
1. General Rule ...................................................... 319
3. Effect of the Rule ........................................... 324
2. Specific Instances that Extinguish the Guaranty
319 4. Effect of Direct Evidence ............................ 324

a. Creditor Voluntary Accepts the Immoveable 5. Res Ipsa Loquitur vs. Expert Testimony in
for Payment ....................................................... 319 Medical Negligence Cases .............................. 325

b. When an Extension is Granted to the Debtor E. Last clear chance ........................................ 325
without the Consent of Guarantor................. 320 Doctrine of Last Clear Chance ....................... 325
c. When Subrogation is Not Feasible............. 320 F. Damnum absque injuria ............................. 325
E. Legal and Judicial Bonds ........................... 320 II. NEGLIGENCE ............................................. 326
Qualifications of Personal Bondsman [Art. 2082 in A. Negligence .................................................. 326
relation to Art. 2056, Civil Code] ........................ 320
B. Standard of care .......................................... 326
Pledge or Mortgage in Lieu of Bond [Art. 2083,
1. Default Standard of Care: Good Father of a
Civil Code] .............................................................. 320
Family .................................................................... 326
Bondsman Not Entitled to Excussion [Art. 2084,
2. Standard of Care Needed in Specific
Civil Code] .............................................................. 320
Circumstances ..................................................... 326
IV. QUASI-CONTRACTS.................................. 320
Operators of Motor Vehicles in Relation to
TORTS AND DAMAGES .................................. 339 Cyclists ............................................................... 326
I. TORTS ........................................................... 322 Banks .................................................................. 326
A. Elements ..................................................... 322 Experts (In General) ........................................ 326
1. Duty ..................................................................... 322 Doctors .............................................................. 327
2. Breach.................................................................. 322 Possessors of Extremely Dangerous
3. Injury ................................................................... 322 Instrumentalities ............................................... 327

4. Proximate Causation ......................................... 322 Children ............................................................. 327

Quasi-Delict ........................................................... 322 C. Presumptions .............................................. 328

Elements of Quasi-Delict ..................................... 322 1. In Motor Vehicle Mishaps........................... 328

B. Culpa aquilana v. culpa contractual v. culpa a. Liability of the owner ................................... 328
criminal ........................................................... 322 b. Liability of the driver ................................... 329
C. Vicarious liability ........................................ 322 2. Possession of Dangerous Weapons or
1. Doctrine of Vicarious Liability ........................ 322 Substances ............................................................ 329

Doctrine of Vicarious Liability [Art. 2180, Civil 3. Common Carriers .......................................... 330
Code]................................................................... 322 4. Res Ipsa Loquitur .......................................... 330
 D. Persons Liable ............................................ 330 According to Purpose: ......................................... 340
1. The direct tortfeasor, for his own acts ...... 330 1. Actual and Compensatory Damages ........ 341
a. Natural Persons ............................................. 330 a. Components................................................ 342
b. Juridical Persons ........................................... 330 b. Loss Covered .............................................. 342
2. Persons vicariously liable ............................. 330 c. Earning capacity, business standing... 343
3. Persons exercising parental authority ...... 330 d. Death by Crime or Quasi-Delict .......... 344
a. Parents ............................................................ 331 e. Civil/death indemnity ............................. 344
b. Guardians....................................................... 331 1. Death by Crime or Quasi-Delict................ 344
c. Teachers and schools ................................... 331 2. Civil or Death indemnity ............................. 345
d. Owners/managers of establishments or f. Attorney’s fees and expenses of litigation . 345
employers ........................................................... 333 g. Interest ......................................................... 346
e. The State ........................................................ 335 2. Moral Damages .............................................. 348
f. Joint tortfeasors ............................................. 335 a. When awarded ........................................... 348
III. PROXIMATE CAUSE ................................. 337 b. When Recoverable .................................... 349
A. Concept of Proximate Cause ...................... 337 c. Who may Recover Moral Damages ..... 352
1. Two Definitions ................................................ 337 3. Nominal Damages ........................................ 353
Proximate cause immediately resulting in injury: a. When awarded ........................................... 353
............................................................................. 337
a. When Recoverable .................................... 354
Proximate cause not immediately resulting in
injury but sets in motion a chain of events, which b. Factors when Determining Amount ... 355
eventually result in injury: ................................ 337 5. Liquidated Damages .................................... 355
2. Differentiated from other causes .................... 337 6. Exemplary or Corrective Damages .......... 356
Concurrent Cause ............................................. 337 a. When Recoverable .................................... 356
Remote Cause .................................................... 337 b. Requisites.................................................... 357
Intervening Cause ............................................. 337 C. Miscellaneous Rules ................................... 357
Cause in Fact ..................................................... 338 1. Damages that cannot co-exist .................... 357
Efficient Intervening Cause............................. 338 Nominal with other damages.......................... 357
Foreseeable Intervening Cause ....................... 338 Actual and liquidated ....................................... 357
Efficient Intervening Cause............................. 338 2. Damages that must co-exist ....................... 358
Cause as distinguished from condition .......... 338 Exemplary with moral, temperate, liquidated or
B. Tests to Determine Proximate Cause ........ 338 compensatory .................................................... 358

But-for test ............................................................. 338 3. Damages that must stand alone ................ 358

Natural and foreseeable test................................. 338 Nominal damages ............................................. 358

Substantial factor test ............................................ 338 D. Graduation of Damages ............................. 358

Cause and condition.............................................. 339 1. Duty of Injured Party .................................... 358

Sufficient link test .................................................. 339 2. Rules ................................................................... 358

Mixed considerations test ..................................... 339 a. In Crimes ....................................................... 358

IV. DAMAGES .................................................... 340 5. In case of death ........................................... 362

A. General provisions ...................................... 340 a. Death by Crime or Quasi-Delict ............... 362

B. Kinds of damages ....................................... 340 PROPERTY ........................................................ 376

I. CLASSIFICATION OF PROPERTY............. 365
 A. Based on Mobility [Immovable or Movable] c. Specification [Art. 474-475, Civil Code]
......................................................................... 365 ............................................................................. 382
1. Real or Immovable Property [Art. 415, Civil III. CO-OWNERSHIP ....................................... 385
Code] ...................................................................... 365 A. Requisites ................................................... 385
a. Immovables by Nature ............................ 365 B. Sources of Co-Ownership ........................... 385
b. Immovables by Incorporation ............... 365 1. Law ..................................................................... 385
c. Immovables by Destination ................... 365
2. Contract ............................................................ 385
d. By Analogy .................................................. 366 3. Intestate Succession...................................... 385
2. Personal or Movable [Arts. 416 and 417, Civil 4. Testamentary Disposition or Donation Inter
Code] ...................................................................... 366 Vivos....................................................................... 385
3. Importance and Significance of 5. By Fortuitous Event or by Chance ........... 385
Classification under the Civil Code ............... 367
6. By Occupancy................................................. 385
B. Based on Ownership/ Rights-Holder ........ 367
C. Rights of Co-Ownership ............................. 386
1. Public Dominion ............................................ 367
1. Right to Share in the Benefits as Well as the
Classifications .................................................... 368 Charges [Art. 485, CC] ...................................... 386
2. Private Ownership ......................................... 369
a. Proportionality ........................................... 386
Kinds................................................................... 369 b. Presumption of Equal Share.................. 386
3. Based on Consumability .............................. 369 The portions belonging to the co-owners in the
4. Based on Susceptibility to Substitution ... 369 co-ownership shall be presumed equal, unless
the contrary is proved [Art. 485(2), Civil Code]
5. Hidden Treasure ............................................ 369
............................................................................. 386
6. Based on the Constitution ........................... 370
2. Right to Use the Thing Owned in Common
II. OWNERSHIP................................................ 371 [Art. 486, Civil Code] ......................................... 386
A. General Rules .............................................. 371 3. Right to Bring an Action in Ejectment [Art.
1. Rights of an Owner ........................................ 371 487 Civil Code] .................................................... 386

a. Actions to Recover Ownership and 4. Right to Compel Other Co-Owners to

Possession of Real Property and its Contribute to the Expenses of Preservation
Distinctions...................................................... 371 and to the Taxes [Art. 488, Civil Code]........ 386

b. Actions to Recover Movable Property . 372 5. Right to Reimbursement for Necessary

Repairs [Art. 488-489, Civil Code] ................. 386
2. Limitations on Ownership........................... 372
6. Right to Oppose Alterations [Art. 491, Civil
a. General Limitations ...................................... 372
Code] ..................................................................... 387
b. Specific Limitations ...................................... 372
7. Right to Full Ownership of His Part and of
B. Rules on Accession ..................................... 372 the Fruits and Benefits Pertaining thereto [Art.
1. For Immovables .............................................. 372 493, Civil Code] ................................................... 387

a. Accession Discreta .................................... 372 8. Right to Partition [Art. 494, Civil Code] . 387

b. Accession Continua .................................. 373 9. Right to Redemption [Art. 1619, Civil Code]
388
c. Naturally Incorporated [Arts. 457-465,
Civil Code] ....................................................... 379 10. Right to Participate in Administration of
Property Owned in Common [Art. 492, Civil
2. For Movables ................................................... 380 Code] ..................................................................... 388
a. Conjunction/Adjunction [Arts. 466-471, D. Rules ........................................................... 389
Civil Code] ....................................................... 380
1. On Renunciation of Share ........................... 389
b. Commixtion/Confusion [Arts. 472-473,
475, Civil Code] ............................................... 381
 A co-owner may exempt himself from the 1. Ways of Acquiring Possession ................... 394
payment of expenses of preservation by a. By the Material Occupation of a Thing or
renouncing his undivided interest in the co- the Exercise of a Right................................. 394
ownership as may be equivalent to his share in
the necessary expenses and taxes [Art. 488, Civil b. By the Fact that the Thing is Subject to
Code]................................................................... 389 the Action of Our Will .................................. 394

A co-owner who has not waived his share in the Possession is acquired through the following
co-ownership may be compelled to pay his share modes of constructive delivery:...................... 394
in the cost of its maintenance, but he may not be c. By the Proper Acts and Legal Formalities
compelled to renounce..................................... 389 Established for Acquiring Such Right..... 394
Waiver of renunciation is not allowed if it is 2. By Whom May Possession be Acquired
prejudicial to the co-ownership [Art. 488, Civil [Arts. 532-534, Civil Code] ............................... 395
Code]................................................................... 389
3. Preference of Possession [Art. 538, Civil
2. Repairs for Preservation Embellishments or Code] ..................................................................... 395
Improvements...................................................... 389
4. What Does Not Affect Possession ............ 395
3. Rules on Multi-Story House [Art. 490, Civil
a. Acts Merely Tolerated [Art. 537, Civil
Code] ...................................................................... 389
Code] ................................................................. 395
E. Termination or Extinguishment ................ 390
b. Acts Executed Clandestinely and Without
1. Total Destruction of Thing or Loss of the the Knowledge of the Possessor [Art. 537,
Property Co-Owned ........................................... 390 Civil Code] ....................................................... 395
2. Merger of All Interests in One Person ..... 390 c. Acts of Violence as long as the Possessor
3. Acquisitive Prescription ............................... 390 Objects Thereto [Art. 536, Civil Code] .... 395

4. Partition or Division ...................................... 390 C. Effects of Possession .................................. 396

5. Sale of Property Co-Owned [Art. 498, Civil 1. Possession in the Concept of Owner is
Code] ...................................................................... 391 Converted into Ownership After the Required
Lapse of Time Necessary of Prescription ... 396
6. Termination of Period Agreed Upon by the
Co-Owners [Art. 494, Civil Code] .................. 391 2. Entitlement to Fruits/Expenses ............... 396

IV. POSSESSION ............................................... 392 a. Possessor in Good Faith ......................... 396

A. Kinds of Possession .................................... 392 b. Possessor in Bad Faith ............................ 397

1. Possession for Oneself, or Possession V. USUFRUCT ................................................... 398

Exercised in One’s Own Name and Possession A. In General ................................................... 398
in the Name of Another .................................... 392
1. Characteristics ................................................ 398
a. In One’s Own Name ................................ 392
2. Classifications ................................................. 398
b. In the Name of Another .......................... 392
B. Rights and Obligations of the Usufructuary
2. Possession in the Concept of a Holder with ......................................................................... 400
the Ownership Belonging to Another [Art. 525,
1. Rights ................................................................ 400
Civil Code] ............................................................ 392
a. Rights as to the Thing and its Fruits .. 400
3. Possession in the Concept of an Owner .. 392
b. Right to Natural and Industrial Fruits
4. Possession in Good Faith ............................ 392
Pending at the Beginning of Usufruct .... 400
a. Possessor in Good Faith .......................... 392
c. Right to Lease the Thing in Usufruct . 401
b. Rights of a Possessor in Good Faith.... 392
d. To Enjoy Any Increase Which the Thing
c. Other Consequences................................. 393 May Acquire Through Accession ............. 401
5. Possession in Bad Faith ............................... 394 e. To Make Improvements on the Property
B. Acquisition of Possession (including as He May Deem Proper ............................. 401
possession based on tolerance) ....................... 394 f. Right of Retention ..................................... 401
 2. Rights of the Owner ...................................... 402 E. Kinds of Legal Easement ........................... 410
a. At the Beginning of the Usufruct.......... 402 1. Relating to Waters ......................................... 410
b. During the Usufruct ................................. 402 a. Natural Drainage [Art. 637, Civil Code] ... 410
3. Obligations....................................................... 402 b. Riparian Banks [Art. 638, Civil Code] ....... 411
a. Obligations at the Beginning of the c. Abutment of a Dam [Art. 639, Civil Code]
Usufruct or before Exercising the Usufruct ............................................................................. 411
............................................................................. 402
d. Drawing Water and Watering Animals [Arts.
b. Obligations During the Usufruct ......... 403 640 and 641, Civil Code] ................................. 411
c. Obligations at the Time of the e. Aqueduct [Arts. 642-646, Civil Code] ....... 411
Termination of the Usufruct [RIPP] ........ 403 f. Stop Lock or Sluice Gate [Art. 647, Civil Code]
C. Extinguishment .......................................... 403 ............................................................................. 412
1. By the Death of the Usufructuary, unless a 2. Right of Way ................................................... 412
Contrary Intention Clearly Appears .............. 403 3. Light and View [Arts. 667-673, Civil Code]
2. By the Expiration of the Period for which it 413
was Constituted ................................................... 404 VII. NUISANCE................................................. 415
3. By the Fulfillment of any Resolutory A. Classes......................................................... 415
Condition Provided in the Title Creating the
Usufruct ................................................................. 404 1. According to Nature ..................................... 415

4. By Merger of the Usufruct and Ownership in a. Nuisance per se ......................................... 415

the Same Person.................................................. 404 b. Nuisance per accidens ............................ 415
5. By Renunciation of the Usufructuary ...... 404 2. According to Scope of Injurious Effects . 416
6. By the Total Loss of the Thing in Usufruct a. Public Nuisance ........................................ 416
404
b. Private Nuisance ....................................... 416
7. By the Termination of the Right of the
B. Doctrine of Attractive Nuisance ................. 416
Person Constituting the Usufruct .................. 405
C. Liability in Case of Nuisance ..................... 416
8. By Prescription ............................................... 405
D. Regulation of Nuisances ............................ 417
VI. EASEMENTS ............................................... 407
1. Public Nuisance ............................................. 417
A. Modes of Acquiring Easements ................. 407
a. Summary Abatement................................ 417
An easement is either acquired through a
title/juridical act or by prescription [Art. 620 and b. Need for Abatement................................. 418
622, Civil Code]. .................................................... 407 c. Who May Abate Public Nuisances District
1. By Title or by Something Equivalent to a Health Officer ................................................. 418
Title......................................................................... 407 2. Private Nuisance............................................ 418
2. By Law (Legal Easements) ......................... 408 VIII. MODES OF ACQUIRING OWNERSHIP
3. By Prescription ............................................... 408 ............................................................................. 419
B. Rights and Obligations of the Owners of the A. Occupation ................................................. 419
Dominant and Servient Estates ...................... 408 1. Requisites ......................................................... 419
1. Rights of Dominant Estate Owner ............ 408 2. Rules ................................................................... 419
2. Obligations of Dominant Estate Owner . 408 a. On Land ....................................................... 419
3. Rights of the Servient Estate Owner ........ 409 b. On animals.................................................. 419
4. Obligations of Servient Estate Owner...... 409 c. On Other Personal Property .................. 419
C. Modes of Extinguishment .......................... 409 B. Donation ..................................................... 420
D. Legal vs. Voluntary Easements .................. 410 1. Requisites [CADAF] ..................................... 420
 2. Persons Who May Give/Receive a Donation 1. Recovery............................................................. 437
420 2. Disposition ........................................................ 437
3. Effects and Limitations ................................ 420 a. Repossession of Collateral .......................... 438
4. Revocation and Reduction .......................... 421 b. Notification of Disposition ........................ 438
C. Prescription................................................. 421 c. Right of Redemption ................................... 438
1. Definition .......................................................... 421 3. Retention............................................................ 439
2. Who May Acquire Ownership by Prescription G. Transitional Provisions............................... 440
421
1. Prior Interests.................................................... 440
3. Types ................................................................. 421
2. Transitional Period ........................................... 440
a. Acquisitive Prescription........................... 421
II. REAL ESTATE MORTGAGE ...................... 442
b. Extinctive Prescription ............................ 421
A. Objects of Real Mortgage ........................... 442
4. When Inapplicable ......................................... 422
1. Obligations Secured ......................................... 442
5. Prescription of Ownership and Other Real
Rights ..................................................................... 422 B. Characteristics ............................................ 442

6. Prescription of Actions .................................... 423 1. Characteristics of the Collateral ...................... 442

a. To Recover Movables ............................... 423 2. Characteristics of the Mortgage ...................... 443

b. To Recover Immovables ......................... 423 C. Kinds ........................................................... 443

c. Other Actions .............................................. 423 D. Principle of Indivisibility of Pledge/Mortgage

......................................................................... 443
IX. QUIETING OF TITLE ............................... 424
E. Recording Required ................................... 444
A. Requisites ................................................... 424
F. Foreclosure of Mortgage............................. 444
B. Who May File [Sec. 1, Rule 63, Rules of Court]
......................................................................... 424 1. Judicial Foreclosure [Rule 68, Rules of Court]
445
C. Quieting of Title vs. Removing or Preventing
a Cloud ............................................................ 425 2. Extrajudicial Foreclosure ................................. 445

D. Prescription/Non-Prescription of Action .. 426 3. Nature of Power of Foreclosure by Extrajudicial

Sale .......................................................................... 447
CREDIT TRANSACTIONS II .......................... 428
4. Right to Surplus or Deficiency ....................... 447
I. PERSONAL PROPERTY SECURITIES (R.A.
No. 11057) ............................................................ 429 5. Effect of Inadequacy of Price in Foreclosure Sale
447
A. Scope of the Personal Property Security Act
(PPSA) ............................................................. 429 G. Waiver of Security by Creditor.................... 447

B. Definitions .................................................. 429 H. Redemption................................................ 447

C. Security Interest .......................................... 430 1. Kinds .................................................................. 447

1. Asset-Specific Rules - Accounts Receivable.. 430 2. Requisites ........................................................... 448

2. Perfection ........................................................... 431 LAND TITLES AND DEEDS ........................... 466

D. The Registry ............................................... 432 I. THE TORRENS SYSTEM ............................ 450

E. Priority of Security Interest ........................ 433 A. In General ................................................... 450

1. Priority Rules for Intangible Assets ................ 433 1. The Torrens System ......................................... 450

2. Priority Rules for Tangible Assets .................. 434 2. Nature................................................................. 450

3. Priority Rules for Specific Cases ..................... 435 3. Purpose .............................................................. 450

4. Priority of Perfected Security Interest Prior to 4. Background........................................................ 450

Insolvency Proceedings ........................................ 436 B. Concepts ..................................................... 450
F. Enforcement of Security Interest ................ 437
 1. Land Title ........................................................... 450 2. Claims and liens prior to the decree of
registration ............................................................. 458
2. Deed .................................................................... 450
3. Title to the land becomes non-prescriptible . 458
3. Estate .................................................................. 451
4. Torrens certificate is presumed valid and devoid
4. Land Registration .............................................. 451
of flaws. .................................................................. 459
a. Nature of Land Registration ....................... 451
D. Effect of Non-Registration ........................ 459
b. Laws Implementing Land Registration ..... 451
E. Dealings in Land before Issuance of Decree
c. Purpose of Land Registration ..................... 452 ......................................................................... 459
d. Object of Registration.................................. 452 F. Laches, When Applicable ........................... 459
5. Classification of Lands [Sec, 3, Art. XII, 1987 V. SUBSEQUENT REGISTRATION ............... 460
Constitution] .......................................................... 452
A. In General ................................................... 460
C. Administration of the Torrens System ....... 452
B. Voluntary Dealings ..................................... 461
1. Land Registration Authority ............................ 452
1. Innocent purchaser for value and in good faith
2. Register of Deeds .............................................. 452 461
II. THE REGALIAN DOCTRINE ................... 454 2. Mortgagee in good faith................................... 461
A. Concept of the Regalian Doctrine .............. 454 3. Reliance on title................................................. 461
B. Effects of the Regalian Doctrine ................ 454 4. Double Sales ...................................................... 462
C. Native Title and Ancestral Domains .......... 454 5. Forged Deed...................................................... 462
1. Native Title ........................................................ 454 6. Registration of Voluntary Instruments in
2. Ancestral Domains............................................ 454 General ................................................................... 462

III. ORIGINAL REGISTRATION.................... 456 Registration of Dealings Less than Ownership

[Sec. 54, P.D. 1529] .......................................... 463
A. Concept ....................................................... 456
Registration of Deeds of Sale and Transfers 463
B. Voluntary or Involuntary ............................ 456
Registration of Mortgages and Leases [Sec. 60,
C. Who May Apply .......................................... 456
P.D. 1529] .......................................................... 464
1. Under Sec. 14, P.D. 1529, as amended by Sec. 6,
Registration of Powers of Attorneys [Sec. 64,
R.A. No. 11573 ...................................................... 456
P.D. 1529] .......................................................... 464
2. Under Sec. 16, P.D. 1529; Land Applied for
Registration of Trusts ...................................... 464
Registration by a Non-Resident of the Philippines
457 C. Involuntary Dealings ...................................... 464
3. Under Sec. 12, CA 141 ..................................... 457 1. Attachments ...................................................... 464

4. Under R.A. No. 8371:....................................... 457 2. Adverse Claim ................................................... 465

D. Jurisdiction ..................................................... 457 3. Sale on Execution or For Taxes or Assessments

465
IV. CERTIFICATE OF TITLE ......................... 458
4. Lis Pendens........................................................ 466
A. The Torrens Title ....................................... 458
VI. NON-REGISTRABLE PROPERTIES ....... 468
1. Original Certificate of Title (OCT)................. 458
A. Civil Code provisions dealing with non-
2. Transfer Certificate of Title (TCT) ................. 458
registrable properties....................................... 468
3. Patents................................................................. 458
1. Properties of public dominion [Art. 420, Civil
B. Probative Value........................................... 458 Code]....................................................................... 468
C. Effects of Registration under the Torrens 2. Waters under Art. 502, Civil Code ................. 468
System ............................................................. 458
B. Specific kinds of non-registrable properties or
1. Land is placed under the operation of the lands ................................................................ 468
Torrens system....................................................... 458
 1. Forest or timberland, public forest, forest 2. Administrative, which may be availed only in
reserves.................................................................... 468 case of: .................................................................... 482
2. National parks.................................................... 468 PRACTICAL EXERCISES ................................ 483
3. Mangrove swamps ............................................ 468 I. DEMAND AND AUTHORIZATION
LETTERS ........................................................... 483
4. Mineral lands ...................................................... 468
A. Demand Letter ............................................ 483
5. Foreshore land and seashore and reclaimed lands
468 B. Authorization Letter ................................... 483
6. Lakes ................................................................... 469 C. Special Power of Attorney for Sale of Real
Property ........................................................... 484
7. Creeks and Streams ........................................... 469
D. Special Power of Attorney for Purchase of Real
8. Military or Naval Reservations ........................ 469
Property ........................................................... 485
9. Watershed........................................................... 469
E. Special Power of Attorney for Representation
10. Grazing lands ................................................... 469 in Actions......................................................... 485
11. Previously titled land ...................................... 469 II. SIMPLE CONTRACTS ................................ 487
12. Alluvial deposit along river when man-made A. Unilateral Deed of Sale of Registered Land
469 ......................................................................... 487
13. Reservations for public and semi-public B. Unilateral Deed of Sale of Unregistered Land
purposes .................................................................. 469 ......................................................................... 488
C. Patrimonial Property .................................. 469 C. Bilateral Deed of Sale of Registered Land . 489
VII. DEALINGS WITH UNREGISTERED D. Bill of Sale (Personal Property) .................. 490
LANDS ................................................................ 470
E. Deed of Sale of Motor Vehicle .................... 490
VIII. ASSURANCE FUND ................................ 471
F. Contract of Lease ........................................ 491
A. Action of compensation from funds ........... 471
1. Acknowledgment .............................................. 492
B. Limitation of Action ................................... 471
2. Acknowledgment (Affiant Representing a
IX. CADASTRAL SYSTEM OF REGISTRATION Corporation) .......................................................... 493
............................................................................. 472
III. COMPLAINT .............................................. 494
A. In General ....................................................... 472
A. Complaint for Sum of Money ..................... 494
B. Procedure in Cadastral Registration [Secs. 35
and 36, P.D. 1529] ............................................ 473 B. Replevin ...................................................... 495

X. REGISTRATION THROUGH C. Complaint for Ejectment with Damages ... 497

ADMINISTRATIVE PROCEEDINGS............. 474 1. Verification ........................................................ 498
A. Registration Process and Requirements .... 474 2. Certificate of Non-Forum Shopping ............. 499
B. Remedies .................................................... 479 IV. CHECKLIST ................................................ 500
1. Motion for New Trial ....................................... 479
2. Appeal ................................................................. 479
3. Relief from Judgment ....................................... 480
4. Petition for Review of Decree of Registration
480
5. Action for Reconveyance ................................. 481
6. Quieting of Title ................................................ 481
XI. RECONSTITUTION OF TITLES ............. 482
Kinds: .............................................................. 482
1. Judicial................................................................. 482
PRELIMINARY TITLE
CIVIL LAW
PRELIMINARY TITLE CIVIL LAW

I. EFFECT AND Exceptions

1. When the law itself expressly provides;
APPLICATION OF LAWS a. Exceptions to Exception:
• Ex post facto law
A. When Laws Take Effect • Impairment of the obligations in the
contract
2. In case of remedial statutes;
Article 2, Civil Code. Laws shall take effect after
fifteen days following the completion of their 3. In case of curative statutes;
publication either in the Official Gazette, or in a a. Exceptions to the Exception:
newspaper of general circulation in the Philippines, • If it will violate the Constitution
unless it is otherwise provided (As amended by E.O. • If it will destroy the rights of third
200).
persons
• Final judgment
General Rules 4. In case of laws interpreting others;
The clause "unless it is otherwise provided" 5. In case of laws creating new rights [Bona v.
refers to the date of effectivity (i.e., as to when Briones, G.R. No. L-10806 (1918)];
a law shall take effect) and not to the 6. Penal Laws favorable to the accused [Art.
requirement of publication itself, which cannot, 22, RPC].
in any event, be omitted [Tañada v. Tuvera,
G.R. No. L-63915 (1986)]. C. Mandatory or Prohibitory
• Publication is indispensable in every case,
but the legislature may in its discretion
Laws
provide that the usual fifteen-day period
shall be shortened or extended [Tañada v. Article 5, Civil Code. Acts executed against the
Tuvera, supra]. provisions of mandatory or prohibitory laws shall be
void, except when the law itself authorizes their
validity.
When, on the other hand, the administrative
rule goes beyond merely providing for the
means that can facilitate or render least Paragraph 3, Article 17, Civil Code. Prohibitive
cumbersome the implementation of the law but laws concerning persons, their acts or property, and
substantially increases the burden of those those which have for their object public order, public
governed, it behooves the agency to accord at policy and good customs shall not be rendered
least to those directly affected a chance to be ineffective by laws or judgments promulgated, or by
determinations or conventions agreed upon in a
heard, and thereafter to be duly informed, foreign country.
before that new issuance is given the force and
effect of law [Commissioner v. Hypermix, G.R.
No. 179579 (2012)]. D. Choice-of-Law Rules
Exception: Interpretative [implementing] rules Nationality Principle
and regulations and those internal in nature
[Tañada v. Tuvera, supra]. Article 15, Civil Code. Laws relating to family rights
and duties, or to the status, condition and legal
capacity of persons are binding upon citizens of the
B. Retroactivity of Laws Philippines, even though living abroad.

Laws shall have no retroactive effect, unless

the contrary is provided [Art. 4, Civil Code]. Paragraph 2, Article 16, Civil Code. However,
intestate and testamentary successions, both with
respect to the order of succession and to the amount
General Rule: All statutes are to be construed of successional rights and to the intrinsic validity of
as having only prospective operation. testamentary provisions, shall be regulated by the
national law of the person whose succession is
under consideration, whatever may be the nature of
the property and regardless of the country wherein
said property may be found.

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Article 1039, Civil Code. Capacity to succeed is F. Applicability of Penal Laws
governed by the law of the nation of the decedent.
Territoriality Principle
Penal laws and those of public security and
Lex Situs safety shall be obligatory upon all who live or
Paragraph 1, Article 16, Civil Code. Real property sojourn in the Philippine territory, subject to the
as well as personal property is subject to the law of principles of public international law and to
the country where it is situated. treaty stipulations [Art. 14, Civil Code].

Lex Loci Celebrationis Exemptions to the Territoriality Principle

under International Law (Theory of
Paragraphs 1 & 2, Article 17, Civil Code. The Extraterritoriality):
forms and solemnities of contracts, wills and other
public instruments shall be governed by the laws of
1. When the offense is committed by a foreign
the country in which they are executed. sovereign while in Philippine territory;
2. When the offense is committed by
When the acts referred to are executed before the diplomatic representatives; or
diplomatic or consular officials of the Republic of the 3. When the offense is committed in a public
Philippines in a foreign country, the solemnities or armed vessel of a foreign country.
established by Philippine laws shall be observed in
their execution.
G. Waiver of Rights
E. Repeal of Laws Article 6, Civil Code. Rights may be waived, unless
the waiver is contrary to law, public order, public
Article 7, Civil Code. Laws are repealed only by policy, morals, or good customs, or prejudicial to a
subsequent ones, and their violation or non- third person with a right recognized by law.
observance shall not be excused by disuse, or
custom or practice to the contrary.
Waiver
When the courts declare a law to be inconsistent Voluntary and intentional relinquishment or
with the Constitution, the former shall be void and abandonment of a known legal right or
the latter shall govern. privilege. It has been ruled that a waiver to be
valid and effective must be couched in clear
Administrative or executive acts, orders and
regulations shall be valid only when they are not
and unequivocal terms which leave no doubt
contrary to the laws or the Constitution. as to the intention of a party to give up a right
or benefit which legally pertains to him [RB
Michael Press v. Galit, G.R. No. 153510
TWO KINDS OF REPEAL [Tolentino] (2008)].
1. Express or Declared: contained in a
special provision of a subsequent law; The waiver should be made in a positive
names the law repealed. manner [Dona Adela Export International Inc.
2. Implied or Tacit: takes place when the v. Tidcorp, G.R. No. 201931 (2015)].
provisions of the subsequent law are
incompatible or inconsistent with those of an Requisites of a Valid Waiver
earlier law. 1. Existence of a right;
2. Knowledge of the existence thereof; and
The fundamental rule is that the legislature 3. An intention to relinquish the right [Herrera
should be presumed to have known the v. Borromeo, G.R. No. L-41171, (1987)].
existing laws on the subject and not have
enacted conflicting statutes. Hence, all doubts General Rule: Rights may be waived.
must be resolved against any implied repeal,
and all efforts should be exerted in order to Exceptions
harmonize and give effect to all laws on the 1. If the waiver is contrary to law, public order,
subject [Republic v. Marcopper Mining, G.R. public policy, morals or good customs;
No. 137174 (2000)]. 2. If the waiver prejudices a third person;

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3. If the alleged rights do not yet exist;
4. If the right is a natural right.

No compromise upon the following

questions shall be valid [Art. 2035, Civil
Code]:
1. The civil status of persons;
2. The validity of a marriage or a legal
separation;
3. Any ground for legal separation;
4. Future support;
5. The jurisdiction of courts;
6. Future legitime.

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II. HUMAN RELATIONS Kinds of Abuse of Right

1. Acts Contrary to Law
A. Abuse of Right Article 20, Civil Code: Every person who, contrary
to law, wilfully or negligently causes damage to
another, shall indemnify the latter for the same.
Article 19, Civil Code: Every person must, in the
exercise of his rights and in the performance of his
duties, act with justice, give everyone his due, and The provision is intended to provide a remedy
observe honesty and good faith. in cases where the law declares an act illegal
but fails to provide for a relief to the party
injured [Jarencio].
Note: On its own, Article 19 is not actionable.
While Article 19 lays down a rule of conduct for
Art. 20 does not distinguish, and the act may
the government of human relations and for the
be done willfully or negligently.
maintenance of social order, it does not provide
a remedy for its violation. Generally, an action
Requisites
for damages under either Article 20 or Article
a. The act must be willful or negligent;
21 would be proper [Tocoms Philippines v.
b. It must be contrary to law; and
Philips Electronics, G.R. No. 214046 (2020);
c. Damages must be suffered by the injured
Globe MacKay Cable and Radio Corp. v. CA,
party.
G.R. No. 81262 (1989)].
Salvador was misdiagnosed with Hepatitis, as
Elements of Abuse of Right
a result of which she lost her job. During trial, it
1. There is a legal right or duty;
was proven that the clinic was operating under
2. Which is exercised in bad faith; and
substandard conditions, in violation of the
3. For the sole intent of prejudicing or injuring
Clinical Laboratory Law, DOH Administrative
another [California Clothing v. Quiñones,
Order No. 49-B, and the Philippine Medical
G.R. No. 175822 (2013)].
Technology Act of 1969. The Court held that
violation of a statutory duty is negligence, and
Test of abuse of rights
that Article 20 provides the legal basis for
No hard and fast rule; depends on the
award of damages to a party who suffers
circumstances of each case. The exercise of a
damage whenever one commits an act in
right must be in accordance with the purpose
violation of some legal provision [Garcia v.
for which it was established, and must not be
Salvador, G.R. No. 168512 (2007)].
excessive or unduly harsh; there must be no
intention to injure another.
2. Acts Contrary to Morals
There is abuse of right when: Article 21, Civil Code: Any person who wilfully
1. The right is exercised for the only purpose causes loss or injury to another in manner that is
of prejudicing or injuring another; contrary to morals, good customs or public policy
shall compensate the latter for the damage.
2. The objective of the act is illegitimate;
3. There is an absence of good faith.
Elements [Albenson v. CA, G.R. No. 88694
Effects of the application of Art. 19: (1993)]
1. “A right, though by itself legal because a. There is an act which is legal;
recognized or granted by law as such, may b. But which is contrary to morals, good
nevertheless become the source of some customs, and public policy; and
illegality” [Globe Mackay v. CA, G.R. No. c. It is done with intent to injure.
81262 (1989)];
2. It precludes the defense of damnum absque This article is designed “to expand the concept
injuria. Damnum absque injuria does not of torts and quasi-delict in this jurisdiction by
apply when there is an abuse of a person’s granting adequate legal remedy for the untold
right [Amonoy v. Gutierrez, G.R. No. number of moral wrongs which is impossible
140420 (2001)]. for human foresight to specifically enumerate
and punish in statute books” [Baksh v. CA,
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G.R. No. 97336 (1993)]. actionable wrong. But to formally set a wedding
and go through all the above-described
The injury suffered by the plaintiff may refer to preparation and publicity, only to walk out of it
any determinate right or property, whether when the matrimony is about to be solemnized,
material or not. is quite different. This is palpably and
unjustifiably contrary to good customs
The doctrine of proximate cause must apply, [Wassmer v. Velez, G.R. No. L-20089 (1964)].
because the defendant must have caused the
injury through their act or omission. If through Where a man's promise to marry is in fact the
the plaintiff’s own fault or negligence, they proximate cause of the acceptance of his love
sustained injury, they cannot recover. by a woman and his representation to fulfill that
promise thereafter becomes the proximate
Does a “willful” act require malice or cause of the giving of herself unto him in a
deceit? sexual congress, proof that he had, in reality,
Yes. The Code uses the motive-laden word no intention of marrying her and that the
“willfully” rather than the comparatively weaker promise was only a subtle scheme or deceptive
word “intentionally.” device to entice or inveigle her to accept him
and to obtain her consent to the sexual act,
An act which is “willful” connotes an evil or could justify the award of damages pursuant to
malicious motive, while an act which is merely Article 21 not because of such promise to
intentional has ordinarily no such implication marry but because of the fraud and deceit
[Carpio, Antonio T., Intentional Torts in behind it and the willful injury to her honor and
Philippine Law, 47 PHIL L.J. 649 (1972)]. reputation. It is essential, however, that such
injury should have been committed in a manner
a. Acts contrary to morals, in general contrary to morals, good customs or public
Article 21 is the result of adopting moral norms policy [Baksh v. CA, supra].
into actual legal rules, which the Court found as
acceptable, as it notes that the “conscience of Note on Baksh: The test, however, is
man has remained fixed to ancient moorings” problematic, in that it employs the concept of
and that this will impart an “enduring quality” to proximate cause even if Article 21 cases do not
our laws, which is a desirable thing from the require the application of proximate cause.
Court’s perspective [Velayo v. Shell, G.R. No.
L-7817 (1956)]. However, when for one whole year, the
plaintiff, a woman of legal age, maintained
A reading of the provision may provide an sexual relations with the defendant, with
inference of three requisites for a cause of repeated acts of intercourse, there is here
action under Article 21: voluntariness. No case under Article 21 is
1. that one willfully causes injury or loss to made [Tanjanco v. CA, G.R. No. L-18630
another; (1966)].
2. that it was done in a manner that is contrary
to morals, good customs, or public policy; In an action by the woman, the enticement,
and persuasion or deception is the essence of the
3. That the act done to cause injury or loss injury; mere proof of intercourse is insufficient
must be legal. to warrant a recovery. It is not seduction where
the willingness arises out of sexual desire or
The complaint must ask for damages because curiosity of the female, and the defendant
it presupposes losses or injuries material or merely affords her the needed opportunity for
otherwise; if complaint does not ask for the commission of the act [Tanjanco v. CA,
damages, Art. 21 cannot be invoked [Albenson G.R. No. L-18630 (1966)].
v. CA, G.R. No. 88694 (1993)].
3. Malicious Prosecution
b. Breach of Promise to Marry and Moral Malicious prosecution is the institution of any
Seduction action or proceeding, either civil or criminal,
Mere breach of promise to marry is not an maliciously and without probable cause.
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Malicious prosecution is an action for Verily, he has committed an injury to Lolita's
damages brought by one against whom a family in a manner contrary to morals, good
criminal prosecution, civil suit, or other legal customs and public policy as contemplated in
proceeding has been instituted maliciously and Article 21 of the new Civil Code [Pe v. Pe, G.R.
without probable cause, after the termination of No. L-17396 (1962)].
such prosecution, suit, or other proceeding in
favor of the defendant therein [Magbanua v. It is against morals, good customs and public
Junsay, G.R. No. 132659 (2007)]. policy to humiliate, embarrass and degrade the
dignity of a person. Everyone must respect the
Elements [Magbanua v. Junsay, G.R. dignity, personality, privacy and peace of mind
No.132659 (2007)] of his neighbors and other persons [Article 26,
a. The fact of the prosecution or that the Civil Code; Grand Union v. Espino, G.R. No. L-
prosecution did occur and that the 48250 (1979)].
defendant was himself the prosecutor or
that he instigated its commencement; A person may be held liable under Article 21 if
b. That the action finally terminated with an they make an accusation against another and
acquittal; acts to prejudice such person, without proof
c. That in bringing the action, the prosecutor substantiating her accusation.
acted without probable cause; and
d. That the prosecutor was actuated or 5. Oppressive Dismissal
impelled by legal malice, that is, by improper The right of an employer to dismiss an
or sinister motive. employee is not to be confused with the
manner in which this right is to be exercised
The mere dismissal of the criminal complaint and the effects flowing therefrom.
by the fiscal’s office did not create a cause of
action for malicious prosecution, because the If the dismissal was done antisocially or
proceedings therein did not involve an oppressively, then there is a violation of Article
exhaustive examination of the elements of 1701, which prohibits acts of oppression by
malicious prosecution. either capital or labor against the other, and
Article 21, which makes a person liable for
To constitute such, there must be proof that the damages if he willfully causes loss or injury to
prosecution was prompted by a sinister design another in a manner that is contrary to morals,
to vex and humiliate a person and that it was good customs, or public policy.
initiated deliberately by the defendant knowing
that his charges were false and groundless When the manner in which the company
[Que v. IAC, G.R. No. 66865 (1989)]. exercised its right to dismiss was abusive,
oppressive and malicious, it is liable for
Malicious prosecution involves not only damages [Quisaba v. Sta. Ines, G.R. No. L-
criminal but civil and administrative suits as 38088 (1974)].
well [Magbanua v. Junsay, supra].
B. Unjust Enrichment
The presence of probable cause signifies as a
legal consequence the absence of malice [Que
v. IAC, supra]. Article 22, Civil Code. Every person who through
an act of performance by another, or any other
means, acquires or comes into possession of
4. Public Humiliation something at the expense of the latter without just or
The circumstances under which the defendant legal ground, shall return the same to him.
tried to win Lolita’s affection cannot lead to any
other conclusion than that it was he who,
through an ingenious scheme or trickery, Article 23, Civil Code. Even when an act or event
seduced the latter to the extent of making her causing damage to another’s property was not due
to the fault or negligence of the defendant, the latter
fall in love with him. The wrong he has caused
shall be liable for indemnity if through the act or
her and her family is indeed immeasurable event he was benefited.
considering the fact that he is a married man.
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employees may recover from the latter what he
Article 2142, Civil Code. Certain lawful, voluntary has paid or delivered in satisfaction of the claim
and unilateral acts give rise to the juridical relation of [Mendoza v. Sps. Gomez, G.R No. 160110
quasi-contract to the end that no one shall be (2014)].
unjustly enriched or benefited at the expense of
another.
C. Liability without fault
Article 2143, Civil Code. The provisions for quasi Article 23, Civil Code. Even when an act or event
contracts in this Chapter do not exclude other quasi- causing damage to another’s property was not due
contracts which may come within the purview of the to the fault or negligence of the defendant, the latter
preceding article. shall be liable for indemnity if through the act or
event he was benefited.
Elements [Yon Mitori International Industries
v. Union Bank of the Philippines, G.R. No. This provision imposes liability even without
225538 (2020)] fault, as long as the injurious act or event
1. A person is unjustly benefited; and benefited the defendant.
2. Such benefit is derived at the expense of or
with damages to another. This article is based on equity. An involuntary
act, because of its character cannot generally
One person should not be permitted to unjustly create an obligation; but when by such act its
enrich himself at the expense of another, but author has been enriched, it is only just that he
should be required to make restitution of, or for should indemnify for the damages caused, to
property or benefits received, retained, or the extent of his enrichment.
appropriated where it is just and equitable that
such restitution be made, and where such The indemnity does not include unrealized
action involves no violation or frustration of law profits of the injured party, because
or opposition to public policy, either directly or defendant’s enrichment is the limit of his
indirectly. liability. The plaintiff has the burden of proving
the extent of the benefit or enrichment of the
Enrichment at the expense of another is not per defendant.
se forbidden. It is such enrichment without just
or legal cause that is contemplated here. Just D. Ostentatious Display of
and legal cause is always presumed, and the
plaintiff has the burden of proving its absence. Wealth

The restitution must cover the loss suffered by Article 25, Civil Code: Thoughtless extravagance
the plaintiff, but it can never exceed the amount in expenses for pleasure or display during a period
of unjust enrichment of the defendant if it is less of acute public want or emergency may be stopped
by order of the courts at the instance of any
than the loss of the plaintiff. government or private charitable institution.

Requisites
1. That the defendant has been enriched; Note: The law does not provide a cause of
2. That the plaintiff has suffered a loss; action by private citizens. It is only upon the
3. That the enrichment of the defendant is instance of:
without just or legal ground; and 1. The government; or
4. That the plaintiff has no other action based 2. Private charitable institutions.
on contract, crime or quasi-delict.

Under the civil law principle of unjust

enrichment, the registered owner of the motor
vehicle has a right to be indemnified by the
actual employer of the driver; and under Article
2181 of the Civil Code, whoever pays for the
damage caused by his dependents or
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E. Violation of Human Dignity remedy afforded by the law is not only the
recovery of damages. Injunction and other
appropriate reliefs may also be obtained by the
Article 26, Civil Code. Every person shall respect aggrieved party.
the dignity, personality, privacy and peace of mind of
his neighbors and other persons. The following and
similar acts, though they may not constitute a 2. Violation of privacy
criminal offense, shall produce a cause of action for Privacy is the right to be let alone, or to be free
damages, prevention and other relief: from unwarranted publicity, or to live without
1. Prying into the privacy of another’s residence; unwarranted interference by the public in
2. Meddling with or disturbing the private life or
family relations of another;
matters in which the public is not necessarily
3. Intriguing to cause another to be alienated from concerned.
his friends;
4. Vexing or humiliating another on account of his This right is purely personal in nature, such that
religious beliefs, lowly station in life, place of it can be invoked only by the person actually
birth, physical defect, or other personal injured, it is subject to a proper waiver, and it
condition.
ceases upon death. However, the privilege
may be given to heirs of a deceased to protect
Article 26 specifically applies to intentional acts his memory, to protect the feelings of the living
which fall short of being criminal offenses. It heirs.
itself expressly refers to tortious conduct which
“may not constitute criminal offenses.” The Reasonableness of Expectation of Privacy
purpose is precisely to fill a gap or lacuna in the Test: [Ople v. Torres, G.R. No. 127685 (1998)]
law where a person who suffers injury because a. Whether by one’s conduct, the individual
of a wrongful act not constituting a crime is left has exhibited an expectation of privacy
without any redress. b. Whether this expectation is one that society
recognizes and accepts as reasonable
Under Article 26, the person responsible for
such act becomes liable for “damages, Invasion of the right of privacy involves
prevention and other relief.” In short, to four distinct types of tort:
preserve peace and harmony in the family and a. Intrusion upon the plaintiff's physical and
in the community, Article 26 seeks to eliminate mental solitude;
cases of damnum absque injuria in human b. Public disclosure of private facts;
relations [MVRS Publications v. Islamic c. Placing the plaintiff in false light in the public
Da’wah Council, G.R. No. 135306 (2003)]. eye;
d. The commercial appropriation of the
The principal rights protected under this plaintiff’s name or likeness.
provision are the following:
1. The right to personal dignity; Note: The right of privacy does not prohibit the
2. The right to personal security; publication of materials which are of legitimate
3. The right to family relations; public or general interest.
4. The right to social intercourse;
5. The right to privacy; and It has been frequently held that those who
6. The right to peace of mind unwillingly court public attention become
reluctant public figures and “until they have
Note: Coverage of Art. 26 is not limited to those reverted to the lawful and unexciting life led by
enumerated therein, the enumeration being the great bulk of the community, they are
merely examples of acts violative of a person’s subject to the privileges which publishers have
rights to dignity, personality, privacy and peace to satisfy the curiosity of the public as to their
of mind. Other “similar acts” are also covered leaders, heroes, villains and victims” [Carpio,
within the scope of the article. Antonio T., Intentional Torts in Philippine Law,
supra].
1. Violation of personal dignity
In order to be actionable, it is not necessary
that the act constitutes a criminal offense. The
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3. Violation of right to peace of mind sustained by him and not the damage
Violation of the right to peace of mind under Art. sustained by her [Carpio, Antonio T.,
26 is akin to the American tort of intentional Intentional Torts in Philippine Law, supra].
infliction of mental distress (physical illness
suffered by the plaintiff as a result of the Forms of interference
offensive words or act). a. Adultery with the wife: The husband may
maintain an action not only where the
However, the view that physical illness is intercourse is the result of rape, but also
immaterial in infliction of mental distress where the wife consents to it, or where she
appears to be applicable in this jurisdiction herself seduces the defendant.
since Art. 26 itself creates a cause of action for b. Alienation of affection: Interference with
violation of the right to “peace of mind.” the wife’s affection and mental attitude
Violation of the right in itself constitutes a legal toward the husband. In the same manner,
injury sufficient to support the action [Carpio, the wife has a cause of action for the
Antonio T., Intentional Torts in Philippine Law, alienation of her husband’s affection. The
supra]. attempt to alienate must be successful to
be actionable.
4. Interference with relations
An interference with the continuance of Affirmative action on the part of the
unimpaired interests founded upon the relation defendant is required in order that he may
in which the plaintiff stands toward one or more be liable for interference with the marriage
third persons [Prosser and Keeton]. relation. Although the defendant need not
be motivated by spite or ill will toward the
Kinds plaintiff, the tort must nevertheless be an
a. Family relations; intentional one, directed at the relation
b. Social relations; itself.
c. Economic relations;
d. Political relations. 1. Requisites:
a. That the defendant acted for the
a. Family Relations purpose of effecting the relation;
1. Husband and wife and
The law expressly recognizes the right of either b. That he was a substantial factor in
spouse to sue the other without any limitations causing the alienation.
as to the subject matter of litigation. Litigations 2. Elements:
between members of the same family are a. Wrongful conduct of the
expressly allowed by the Code as long as defendant: intentional and
earnest efforts towards a compromise have malicious enticing of a spouse
been made. away from the other spouse;
b. Loss of affection or consortium
Moreover, the Code defines family relations as (Note: Complete absence of
including those between husband and wife. It affection between the spouses is
is therefore our belief that in this jurisdiction, a not a defense); and
personal tort action, like battery, can be c. Causal connection between such
maintained by a wife against her husband, or conduct and loss.
vice versa [Carpio, Antonio T., Intentional Torts 3. Can a meddling mother-in-law be
in Philippine Law, supra]. liable for alienation of affection? No.
Parents enjoy a qualified privilege to
interest themselves in the marital
2. Interferences by third persons
affairs of their child.
The right to family relations includes the right to
consortium and to recover damages in case of
“An action for alienation of affections
breach thereof. A spouse’s interest in his
against the parents of one consort does
relationship with the other spouse is known as
not lie in the absence of proof of malice
consortium. The gist of a husband’s cause of
or unworthy motives on their part”
action for loss of his wife’s consortium is a loss
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[Tenchavez v. Escano, G.R. No. L- tort [Carpio, Antonio T., Intentional Torts in
19671 (1965)]. Philippine Law, supra].
4. Liability of Parents, Guardians or
Kin. The law distinguishes between the 4. Enticement
right of a parent to interest himself in Under Art. 26, a parent may institute a tort
the marital affairs of his child and the action against a person who entices a child
absence of rights in a stranger to away from home. The right to family relations
intermeddle in such affairs. is quite broad and includes within its embrace
a. Such distinction between the the right of parents to the custody of the child.
liability of parents and that of Hence, intruding upon the parents’ right to the
strangers is only with regard to child's custody is an actionable tort under Art.
what will justify interference. 26.
b. A parent is liable for alienation of
affections resulting from his own Can a child sue his mother’s paramour for
malicious conduct, as where he enticing her to leave the conjugal home
wrongfully entices his son or under Art. 26? Yes. The child can sue on the
daughter to leave his or her basis of interference with family relations.
spouse, but he is not liable unless Family relations include those between
he acts maliciously, without ascendants and descendants.
justification and from unworthy
motives. Moreover, a child has a right to an undisturbed
c. He is not liable where he acts family life. He has an interest in the family
and advises his child in good honor and reputation for after all he is part of
faith with respect to his child's the family and he will carry the family honor and
marital relations in the interest reputation as he grows up.
of his child as he sees it.
d. He may in good faith take his When the mother is enticed away from the
child into his home and afford him family home, the child is deprived of the right to
or her protection and support, so be educated by the parent, which includes the
long as he has not maliciously moral and spiritual upbringing of the child, such
enticed his child away, or does not as the guidance of his conscience, the
maliciously entice or cause him or development of family affection and formation
her to stay away from his or her of his character [Carpio, Antonio T., Intentional
spouse. Torts in Philippine Law, supra].

This rule has more frequently been b. Social Relations

applied in the case of advice given Meddling with or disturbing family relations
to a married daughter, but it is
Article 26, Civil Code. Every person shall respect
equally applicable in the case of the dignity, personality, privacy and peace of mind of
advice given to a son [Tenchavez his neighbors and other persons. The following and
v. Escaño, G.R. No. L-19671 similar acts, though they may not constitute a
(1965)]. criminal offense, shall produce a cause of action for
damages, prevention and other relief;
xxx
3. Parent and child 2. Meddling with or disturbing the private life or
Nowhere in the law is there a prohibition family relations of another;
against a child suing the parent. A child can
bring a tort action for injuries inflicted on him by
the parent through excessive punishment. The right to social relations embodied in Art. 26
imposes liability for intriguing to cause another
By parity of reasoning, a parent can also to be alienated from his friends. The word
institute a personal tort action against the child intrigue implies malice or ill will, coupled with
under Art. 26, like an action for assault or some scheme or secret plot to bring about the
battery. There is no law which prohibits a desired purpose, that is, to alienate one from
parent from suing his own child on a personal his friends [Carpio, Antonio T., Intentional Torts

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in Philippine Law, supra]. What constitutes unfair competition:
[Willaware Products Corp. v. Jesichris
c. Economic Relations Manufacturing Corp., G.R. No. 195549 (2014)]
a. it must involve an injury to a competitor or
Article 1314, Civil Code. Any third person who
induces another to violate his contract shall be liable trade rival, and
for damages to the other contracting party. b. it must involve acts which are characterized
as "contrary to good conscience," or
"shocking to judicial sensibilities," or
1. Interference with Contractual Relations otherwise unlawful; in the language of our
Elements of tort interference: [So Ping Bun law, these include force, intimidation, deceit,
v. CA, G.R. No. 120554 (1999)] machination or any other unjust, oppressive
a. Existence of a valid contract; or high-handed method.
b. Knowledge on the part of the third person of
the existence of contract; and Note: The public injury or interest is a minor
c. Interference of the third person is without factor; the essence of the matter appears to be
legal justification or excuse. a private wrong perpetrated by unconscionable
means.
Everyone has a right to enjoy the fruits and
advantages of his own enterprise, industry, skill When a person starts an opposing place of
and credit. He has no right to be protected business, not for the sake of profit to himself,
against competition; but he has a right to be but regardless of loss and for the sole purpose
free from malicious and wanton interference, of driving his competitor out of business so that
disturbance or annoyance. later on he can take advantage of the effects of
his malevolent purpose, he is guilty of wanton
If disturbance or loss comes as a result of wrong.
competition, or the exercise of like rights by
others, it is damnum absque injuria, unless d. Political Relations
some superior right by contract or otherwise is Dereliction of duty
interfered with.
Article 27, Civil Code. Any person suffering
material or moral loss because a public servant or
Thus, a plaintiff loses his cause of action if the
employee refuses or neglects, without just cause, to
defendant provides a sufficient justification for perform his official duty may file an action for
such interference, which must be an equal or damages and other relief against the latter, without
superior right in themselves. The defendant prejudice to any disciplinary administrative action
may not legally excuse himself on the ground that may be taken.
that he acted on a wrong understanding of his
own rights, or without malice, or bona fide, or This applies only to acts of nonfeasance or the
in the best interests of himself [Gilchrist v. nonperformance of some acts which a person
Cuddy, G.R. No. 9356 (1915)]. is obliged or has responsibility to perform. The
duty of the public servant must be ministerial in
Bad faith/malice is required to make the character. If the duty is discretionary, he is not
defendant liable for damages in cases of liable unless he acted in a notoriously arbitrary
tortuous interference [So Ping Bun v. CA, manner.
supra].
The defense of good faith is not available
2. Unfair Competition because an officer is under constant obligation
Article 28, Civil Code: Unfair competition in to discharge the duties of his office, and it is not
agricultural, commercial or industrial enterprises or necessary to show that his failure to act was
in labor through the use of force, intimidation, deceit, due to malice or willfulness.
machination or any other unjust, oppressive or
highhanded method shall give rise to a right of action
by the person who thereby suffers damage.
Requisites: [Amaro v. Sumanguit, G.R. No. L-
14986 (1962)]
1. Defendant is a public officer charged with a
performance of a duty in favor of the

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plaintiff; constitutes a criminal offense, the aggrieved
2. He refused or neglected without just cause party has a right to commence an entirely
to perform the duty; separate and distinct civil action for damages,
3. Plaintiff sustained material or moral loss as and for other relief.
a consequence of such non-performance;
Such civil action shall proceed independently of any
and
criminal prosecution if the latter be instituted), and
4. The amount of such damages, if material. may be proved by a preponderance of evidence.

Violation of Civil and Political Rights The indemnity shall include moral damages.
Exemplary damages may also be adjudicated.
Article 32, Civil Code. Any public officer or
employee, or any private individual, who directly or
The responsibility herein set forth is not demandable
indirectly obstructs, defeats, violates or in any
from a judge unless his act or omission constitutes a
manner impedes or impairs any of the following
violation of the Penal Code or other penal statute.
rights and liberties of another person shall be liable
to the latter for damages:
1. Freedom of religion; Both private individuals and public officers can
2. Freedom of speech;
3. Freedom to write for the press or to maintain a
be held liable under this provision.
periodical publication;
4. Freedom from arbitrary or illegal detention; This article further implements the civil liberties
5. Freedom of suffrage; guaranteed by the Constitution and creates an
6. The right against deprivation of property without absolutely separate and independent civil
due process of law; action for the violation of these civil liberties.
7. The right to a just compensation when private
property is taken for public use;
8. The right to the equal protection of the laws; Malice is not required. To require that a person
9. The right to be secure in one’s person, house, act with malice before he is held liable under
papers, and effects against unreasonable this article would defeat the purpose to protect
searches and seizures; individual rights. The object of the article is to
10. The liberty of abode and of changing the same; put an end to official abuse under the guise of
11. The privacy of communication and
correspondence;
being done in good faith.
12. The right to become a member of associations
or societies for purposes not contrary to law; Liability for violation or obstruction of civil
13. The right to take part in a peaceable assembly liberties
to petition the Government for redress of Any person, whether public officer/employee or
grievances; private individual, who directly or indirectly
14. The right to be free from involuntary servitude in
any form;
obstructs, violates or in any manner impede or
15. The right of the accused against excessive bail; impair the rights of a person as enumerated
16. The right of the accused to be heard by himself (these are actually rights under the Bill of
and counsel, to be informed of the nature and Rights) shall be liable to the latter for damages.
cause of the accusation against him, to have a
speedy and public trial, to meet the witnesses Separate and distinct civil action; quantum
face to face, and to have compulsory process to
secure the attendance of witness in his behalf;
of evidence
17. Freedom from being compelled to be a witness The aggrieved party has the right to commence
against one’s self, or from being forced to a civil action for damages separate, distinct
confess guilt, or from being induced by a and independent of any criminal action that
promise of immunity or reward to make such may arise from the same violation of right. Only
confession, except when the person confessing preponderance of evidence is required.
becomes a State witness;
18. Freedom from excessive fines, or cruel and
unusual punishment, unless the same is Type of damages
imposed or inflicted in accordance with a statute Indemnity shall include moral damages.
which has not been judicially declared Exemplary damages for also be awarded.
unconstitutional; and
19. Freedom of access to the courts. Limited liability for judges
In any of the cases referred to in this article,
Persons are liable under this provision whether
whether or not the defendant’s act or omission or not their act or omission constitutes a

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criminal offense. But Judges can only be held The accused once found by the court not to
liable only when their act or omission in have been the author of an offense and being
violation of civil liberties of others also acquitted of the accusation under no condition
constitutes a criminal offense. can he be made civilly responsible for the harm
caused and for the damages and losses
Article 34, Civil Code. When a member of a city or suffered by reason of the criminal act [Almeida
municipal police force refuses or fails to render aid v. Abaroa, G.R. No. L-2993 (1907)].
or protection to any person in case of danger to life
or property, such peace officer shall be primarily
Article 30, Civil Code. When a separate civil action
liable for damages, and the city or municipality shall
is brought to demand civil liability arising from a
be subsidiarily responsible therefor. The civil action
criminal offense, and no criminal proceedings are
herein recognized shall be independent of any
instituted during the pendency of the civil case, a
criminal proceedings, and a preponderance of
preponderance of evidence shall likewise be
evidence shall suffice to support such action.
sufficient to prove the act complained of.

The primary liability upon a member of a local

police force is already covered by Article 27. Under Art. 100 of the Civil Code, “every person
However, Article 34 creates a separate civil criminally liable for a felony is also civilly liable”.
action to enforce that liability, independent of Civil Liability is dependent upon facts, if true,
any criminal proceedings. would constitute a crime.

Article 34 makes the city or municipality The civil liability is a necessary consequence of
subsidiarily liable for the omission of its police criminal responsibility and is to be declared and
officers to render aid or protection to anyone. enforced in the criminal proceeding. The Final
This liability, therefore, can be enforced against Judgement rendered in the case constitutes a
the city or municipality only when the guilty bar to the subsequent civil action for damages
police officer is insolvent. However, it cannot based upon the same case [Tolentino].
be avoided by proving that the city or Article 31, Civil Code. When the civil action is
municipality has exercised due diligence in the based on an obligation not arising from the act or
selection and supervision of its policemen omission complained of as a felony, such civil action
[Tolentino]. may proceed independently of the criminal
proceedings and regardless of the result of the latter.

5. Civil Action
This article is intended to cover cases where
Article 29, Civil Code. When the accused in a
criminal prosecution is acquitted on the ground that
the civil action can be based on an act or
his guilt has not been proved beyond reasonable omission distinct from that which is complained
doubt, a civil action for damages for the same act or of as a felony [Tolentino].
omission may be instituted. Such action requires
only a preponderance of evidence. Upon motion of
the defendant, the court may require the plaintiff to Article 33, Civil Code. In cases of defamation,
file a bond to answer for damages in case the fraud, and physical injuries a civil action for
complaint should be found to be malicious. damages, entirely separate and distinct from the
criminal action, may be brought by the injured party.
If in a criminal case the judgment of acquittal is Such civil action shall proceed independently of the
based upon reasonable doubt, the court shall so criminal prosecution, and shall require only a
declare. In the absence of any declaration to that preponderance of evidence.
effect, it may be inferred from the text of the decision
whether or not the acquittal is due to that ground.
In these cases, a civil action may be filed
independently of the criminal action, even if
Acquittal predicated on the conclusion “that the there has been no reservation made by the
guilt of the defendant has not been injured party; the law in itself makes such
satisfactorily established” is equivalent to one reservation. The result of the civil action is thus
on reasonable doubt, and a suit to enforce civil independent of the result of the criminal action.
liability for the same act or omission lies [PNB
v. Catipon, G.R. No. L-6662 (1956)]. The underlying purpose for this independent
civil action (also in Articles 32 and 34) is to
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allow the citizen to enforce his rights in a crime to disappear; the prejudicial question
private action brought by him, regardless of the must be determinative of the case before the
action of the State attorney. court, and, that jurisdiction to try said question
must be lodged in another tribunal.
The term “physical injuries” mean bodily
injuries, not the crime of physical injuries
defined in the Revised Penal Code, whether
inflicted with intent to kill or not [Tolentino].

Article 35, Civil Code. When a person, claiming to

be injured by a criminal offense, charges another
with the same, for which no independent civil action
is granted in this Code or any special law, but the
justice of the peace finds no reasonable grounds to
believe that a crime has been committed, or the
prosecuting attorney refuses or fails to institute
criminal proceedings, the complaint may bring a civil
action for damages against the alleged offender.
Such civil action may be supported by a
preponderance of evidence. Upon the defendant's
motion, the court may require the plaintiff to file a
bond to indemnify the defendant in case the
complaint should be found to be malicious.

If during the pendency of the civil action, an

information should be presented by the prosecuting
attorney, the civil action shall be suspended until the
termination of the criminal proceedings.
The right to file a civil action provided in the first
paragraph also exists with respect to offenses
for which the law expressly provides a separate
civil action independent of the criminal
prosecution.

However, the second paragraph only applies to

offenses for which no independent civil action
is provided. The filing of a criminal case
suspends the civil case, inasmuch as the
decision in the civil case would generally
depend upon the judgment in the criminal case.
But if the offense is one for which an
independent civil action is provided by law
(Articles 32-34), the filing of the criminal action
will not suspend the civil action.

Article 36, Civil Code. Pre-judicial questions which

must be decided before any criminal prosecution
may be instituted or may proceed, shall be governed
by rules of court which the Supreme Court shall
promulgate and which shall not be in conflict with the
provisions of this Code.

A pre-judicial question is one raised in a

criminal case by the accused, which is of such
a nature that, if decided favorably to the
accused in a civil case, will cause the supposed
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RELATIONS
CIVIL LAW
PERSONS AND FAMILY RELATIONS CIVIL LAW

I. PERSONS implies that of the former. Full civil capacity is

the existence of both capacity to act and
juridical capacity.
A. Civil Personality
Capacity and incapacity depend on the law.
1. In General Therefore, they cannot be modified by
Persons agreements. It is a matter of public interest
Any being, physical, moral, real, juridical and [Tolentino].
legal susceptible of rights and obligations or
being the subject of legal relations [Tolentino]. 2. Kinds of Persons
Persons could be natural, juridical, or
Personality presumptive or provisional.
The aptitude of a person of becoming the
subject of legal relations, inherent in every a. Natural persons refer to individuals or
natural person and is lost only through death human beings who are created by
[Tolentino]. procreation.
b. Juridical persons are artificial, abstract
Status entities created through laws [Tolentino].
The legal condition or class to which one c. Persons with presumptive or provisional
belongs in society or the legal and juridical personality refer to a conceived child
position of the individual in society, which considered born for all purposes favorable
determines the nature and number of rights of to it, provided it be born later with the
an individual [Tolentino]. conditions under Art. 41 Civil Code [Art. 40,
Civil Code].
Juridical Capacity and Capacity to Act d. Quasi-Personality refers to the estate of
Distinguished the deceased which is considered an
Juridical Capacity Capacity to Act artificial or juridical person for the purposes
of the settlement and distribution of his
Fitness of a person Power to do acts with estate which include the exercise of the
to be the subject of legal effect rights and the fulfillment of obligations which
legal relations survived after his death [Limjoco v. Intestate
Estate of Fragrante, G.R. No. L-770 (1948)].
Passive Active
a. Natural Persons
Aptitude for the Aptitude to exercise Art. 40, Civil Code provides that the conceived
holding and rights child shall be considered born for all purposes
enjoyment of right that are favorable to it, provided it be born later
with the conditions specified in Art. 41, Civil
Inherent in natural Acquired (not Code (i.e. that the fetus be alive at the time it is
persons inherent) and may be completely delivered from the mother’s womb).
lost This proviso, however, is not a condition
precedent to the right of the conceived child; for
Lost upon death and Lost through death if it were, the first part of Art. 40 would become
cannot be limited or and may be entirely useless and ineffective [Quimiguing v.
restricted restricted by other Icao, G.R. No. L-26795 (1970)].
causes
Characteristics of Fetal Personality
Can exist without Must exist with 1. Limited – because it only has rights for
capacity to act juridical capacity purposes favorable to it
2. Provisional/Conditional – because it
Cannot be limited or May be restricted or should be born alive later before the rights
restricted limited can be claimed
3. Can enjoy rights – inherit by will or
Note: Juridical capacity can exist even without intestacy and be given donations even
capacity to act; the existence of the latter before birth.

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A conceived child has a provisional personality called to succeed each other. It does not apply
for all purposes favorable to it. when there is credible eyewitness as to who
1. It is entitled to support [Quimiguing v. Icao, died first [Joaquin v. Navarro, G.R. No. 5426
G.R. No. L-26795 (1970)] (1953)].
2. It may inherit or succeed [Art. 1025, Civil
Code] Art. 43, Civil Code vs. Sec. 3(jj), Rule 131,
3. It may receive donations [Art. 742, Civil Rules of Court
Code]
Art. 43, Civil Code Sec. 3(jj), Rule 131
Period of Conception: The first 120 days of Only use the presumptions when there are
the 300 days preceding the birth of the child no facts to get inferences from
[Art. 166, Family Code].
Only used for Cannot be used for
Birth succession purposes succession purposes
For civil purposes, the fetus is considered born
if it is alive at the time it is completely delivered In any circumstance Only during death in
from the mother’s womb [Art. 41, Civil Code]. calamities, wreck,
Because of the expectancy that it may be born, battle or
the law protects it and reserves its rights, conflagration
making its legal existence, if born alive, retroact
to the moment of its conception [Tolentino].
Rule 131, Section 3(jj) provides that, except
for purposes of succession, when two persons
Intrauterine Life When Considered perish in the same calamity, and it is not shown
Born who died first, and there are no circumstantial
evidence to be inferred from, the survivorship
7 months or more If alive (e.g. can is determined from the probabilities resulting
breathe from the strength and the age of the sexes.
independently, etc.
upon delivery)
Deceased A Deceased B Presumed
Less than 7 months If alive after to have
completion of 24 survived
hours from delivery
Under 15 Under 15 Older
Note, however: Above 60 Above 60 Younger
1. The State shall equally protect the life of the
mother and the life of the unborn from Under 15 Above 60 Under 15
conception [Art. II, Sec. 12, 1987
Constitution]. Above 15 but under 60, Male
2. The life of a new human being commences different sex
upon fertilization [Imbong v. Ochoa, G.R.
No. 204819 (2014)]. Above 15 but under 60, Older
same sex
Death
Civil personality is extinguished by death [Art. Under 15 or Between 15 Between 15
42, Civil Code]. over 60 and 60 and 60

Criminal liability ends with death, but civil

b. Juridical Persons
liability may be charged against the estate
A juridical person is an abstract being, formed
[People v. Tirol, G.R. No. L-30538 (1981)].
for the realization of collective purposes, to
which the law has granted capacity for rights
Presumptions on Survivorship
and obligations. The entity must be recognized
The statutory presumption provided by Art. 43,
as having its own rights and obligations which
Civil Code applies only when there is doubt on
are not that of its component members. Its
the order of death between persons who are
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personality is manifested only in the realm of property relations. Restrictions in capacity to
patrimonial relations–it has no family and act generally affect obligations arising from
personal rights [Tolentino]. contracts only. As a rule, they do not affect
those arising from law, quasi-delicts, etc. Also,
Juridical Persons may: certain rights are not affected by incapacity,
1. Acquire and possess property of all kinds such as the right to inherit or to support [Perez].
2. Incur obligations
3. Bring civil or criminal actions [Tolentino] a. Minority
Art. 234, Family Code is amended, lowering
Juridical persons are not completely at par with the age of emancipation/majority from 21 to 18
natural persons as to capacity because they years. Arts. 235 and 237 of Family Code are
cannot exercise rights which presuppose repealed [RA 6809].
physical existence, such as family rights,
making of wills, etc. But like natural persons, Effects on Contracts
they can have a nationality, a domicile, a name, 1. They cannot give consent to a contract [Art.
and a right to reputation. They can own and 1327 (1), Civil Code)]
possess property, dispose of such property, 2. Minority cannot be asserted by the other
enter into contracts, and inherit by will. They party in an action for annulment [Art. 1397,
can also incur obligations [Tolentino]. Civil Code]
3. Not obliged to make restitution except
The Roman Catholic Church in the Philippines insofar as he has been benefited [Art. 1399,
is considered as a corporation sole which can Civil Code]
acquire properties in the country [Roman 4. Minor has no right to demand the thing/price
Catholic Apostolic Administrator of Davao Inc. voluntarily returned by hum [Art. 1426, Civil
v. Land Registration Com. and Register of Code]
Deeds, G.R. No.L-8451 (1957)]. 5. Minor has no right to recover voluntarily paid
sum or delivered thing, if consumed in good
3. Capacity to Act faith [Art. 1427, Civil Code]
Refers to the power to do acts with legal effect 6. Must pay a reasonable amount for
[Art. 37, Civil Code]. necessaries delivered to him [Art. 1489,
Civil Code]
Presumption of Capacity: Capacity to act 7. A contract where one of the parties is a
must be supposed to attach to a person who minor is voidable [Art. 1390 (1), Civil Code]
has not previously been declared incapable, 8. A contract is unenforceable when both of
and such capacity is presumed to continue for the parties are minors (incapable of giving
so long as the contrary is nor proved [Standard consent) [Art. 1403 (3), Civil Code]
Oil Co. v. Arenas, G.R. No. L-5921 (1911)].
Estoppel works against minors who
Restrictions on Capacity to Act misrepresent their ages in a contract and are
Circumstances which modify, limit, or restrict compelled to comply with its terms [Mercado v.
capacity to act: Espiritu, G.R. No. L-11872 (1917)].
1. Minority
2. Insanity or imbecility However, when a minor made no active
3. Deaf-mutism misrepresentation as to his minority and such
4. Civil Interdiction (Penalty) minority is known to the other party, the
5. Prodigality contract may be annulled by the minor upon
6. Family relations attaining age the age of majority [Bambalan v.
7. Alienage Maramba, G.R. No. L-27710 (1928)].
8. Absence
9. Insolvency and trusteeship Failure of the minors to disclose their age does
not constitute fraud. Because it was merely a
Religious belief and political opinion do not limit passive misrepresentation, they were not
the capacity to act [Art. 39, Civil Code]. estopped and cannot be legally bound by their
signature in the contract. They do not have to
Note: Incapacitated persons are not exempt pay the interest, they may just return their
from certain obligations arising from his acts or portion of the loan. However, the minors are
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obliged to make restitution insofar as they have Effect on Crimes
been benefited from what they have received General Rule: Exempted from criminal liability
[Art. 1399, Civil Code; Braganza v. Villa Abrille, [Art. 12 (1), Revised Penal Code]
G.R. No. L-12471 (1959)].
To be exempt from criminal liability on the
Effects on Marriage ground of insanity, complete deprivation of
1. May not yet contract marriage [Art. 5, Family intelligence in committing the criminal act
Code] needs to be proved. The fact that the accused
2. Marriages, where one of the parties is below threatened the complainant with death should
18, even with the consent of she reveal she had been sexually assaulted by
parents/guardians, are void [Art. 35, Family him indicates that the accused was aware of
Code] the reprehensible moral quality of that assault,
which negated the complete destruction of his
Effect on Crimes [RA 9344 (Juvenile Justice intelligence at the time of commission of the act
and Welfare Act of 2006)] charged [People v. Rafanan, Jr., G.R. No.
General Rule: Exempted from criminal liability 54135 (1991)].

Exception: Acted with discernment, and the In the absence of proof that the defendant had
minor is between 15 and 18 years of age lost his reason or became demented a few
moments prior to or during the perpetration of
b. Insanity the crime, it is presumed that he was in a
Insanity includes many forms of mental normal condition of mind [USA v. Vaquilar,
disease, either inherited or acquired. A person G.R. No. L-9471-72 (1914)].
may not be insane but only mentally deficient
(idiocy, imbecility, feeble-mindedness). Effect on Marriage
Insanity is the complete deprivation of reason May be annulled if either party was of unsound
or intelligence or power to discern [People v. mind unless such party, after coming to reason,
Austria, G.R. Nos. 111517-19 (1996)]. freely cohabited with the other [Art. 45 (2),
Family Code].
On the other hand, imbecility is the weakness
of mind which, without depriving the person Action for annulment of marriage must be filed
entirely of the use of his reason, leaves only the by the sane spouse who had no knowledge of
faculty of conceiving the most common and the other’s insanity, or by any relative/guardian
ordinary ideas and such as relate almost of the insane before the death of either party;
always to physical wants and habits [Black’s or by the insane spouse during a lucid interval
Law Dictionary]. or after regaining sanity [Art. 47 (2), Family
Code].
Prevailing Presumption: Every person is of
sound mind, in the absence of proof to the c. Deaf-Mutism
contrary [Art. 800 (1), Civil Code]. Effect on Contracts
1. Cannot give consent to a contract if he/she
Effect on Contracts also does not know how to write [Art. 1327
1. Incapacity to give consent to a contract [Art. (2), Civil Code]
1327 (2), Civil Code] 2. Can make a valid will, if able to do so;
2. Contracts entered into during lucid intervals otherwise, he shall designate two persons
are valid [Art. 1328, Civil Code] to read it and communicate to him, in some
3. Burden of proof lies with the party asserting practicable manner, the contents thereof
the contract was entered into by the insane [Art. 807, Civil Code]
during a lucid interval 3. Cannot be a witness to the execution of a
4. Resolution of benefits [Art. 1399, Civil Code] will [Art. 820, Civil Code]
5. Voidable if one of the parties is insane [Art. 4. Voidable if one of the parties is a deaf-mute
1390, Civil Code] who does not know how to write [Art. 1390,
6. Unenforceable if both of the parties are Civil Code]
insane [Art. 1403 (3), Civil Code] 5. Unenforceable if both of the parties are
deaf-mutes and do not know how to write
[Art. 1403 (3), Civil Code]
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d. Prodigality 2. Mitigating circumstance if acted in the
The word “incompetent” includes prodigals immediate vindication of a grave
[Sec. 2, Rule 92, Rules of Court] offense/felony committed against his
spouse, ascendants or relatives of the same
Note: It is not the circumstance of prodigality, civil degree [Art. 13 (5), Revised Penal
but the fact of being under guardianship that Code]
restricts capacity to act. 3. Descendants cannot be compelled to testify
in a criminal case, against his parents and
e. Civil Interdiction grandparents.
It is an accessory penalty imposed upon
persons who are sentenced to a principal Unless: the crime was against the
penalty not lower than reclusion temporal [Art. descendants OR by one parent against the
41, Revised Penal Code]. other [Art. 215, Family Code]

Effect on Parental/Marital Authority g. Alienage

Offender is deprived of the rights of parental Dual Citizenship v. Dual Allegiance [Cordora
authority, or guardianship, and of marital v. COMELEC, G.R. No. 176947 (2009)]
authority [Art. 34, Revised Penal Code]. Dual Citizenship Dual Allegiance
Effect on Marriage and Property Arises when, as a Refers to the
1. For the validity of marriage settlements, the result of the situation in which a
participation of the guardian shall be concurrent person
indispensable [Art. 123, Civil Code] application of the simultaneously
2. Sentence of one’s spouse to a penalty different laws of two owes, by some
which carries with it civil interdiction is or more states, a positive act, loyalty to
sufficient cause for judicial separation of person is two or more states
property [Art. 135 (1), Family Code] simultaneously
3. The administration of exclusive property of considered a
either spouse may be transferred by the national by said
court to the other spouse when one of them states
is sentenced to civil interdiction [Art. 142 (3),
Family Code] Involuntary Result of individual’s
4. Does not have the right to manage his volition
property and
5. Does not have the right to dispose of such
by any act inter vivos [Art. 34, Revised Effect of Property
Penal Code]. Aliens cannot own or operate public utilities.
Corporations should be at least 40% Filipino,
f. Family Relations and their managing or executive officials
Family relations include those: should be Filipinos. Furthermore, alien
1. Between husband and wife; Corporations cannot operate for more than 50
2. Between parents and children; years [Sec. 11, Art. XII, 1987 Constitution].
3. Among other ascendants and
descendants; and h. Absence
4. Among brothers and sisters, whether of Absence is a limitation because it is a ground
the full- or half-blood [Art. 150, Family for the judicial appointment of a representative
Code] [Art. 381, Civil Code].

Effect on Crimes Note: Refer to the discussion below on

1. Justifying circumstance if acted in defense Absence.
of person/rights of spouse, ascendants,
descendants, brothers/sisters, and other i. Insolvency and Trusteeship
relatives up to the 4th civil degree [Art. 11 Under the Insolvency Law, debtor who has
(2), Revised Penal Code] been found insolvent cannot dispose of his
property or receive payments [Perez citing Act
No. 1956 (Rules on Corporate Rehabilitation)].
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4. Domicile and Residence of Persons A house is not necessary to establish a
Domicile of Natural Persons domicile [Jalosjos v. COMELEC, G.R. No.
The place of their habitual residence [Art. 50, 193237 (2012)].
Civil Code]
B. Use of Surnames
Domicile of Juridical Persons
The place where their legal representation is 1. Surname of Children
established, or where they exercise their
a. Legitimate and Legitimated Children
primary functions, unless there is a law or other
Reading Art. 364 of the Civil Code together with
provision that fixes the domicile [Art. 51, Civil
the State's declared policy to ensure the
Code].
fundamental equality of women and men
before the law, a legitimate child is entitled to
Domicile v. Residence
use the surname of either parent as a last
While domicile is permanent (there is intent to
name [Alanis III v. CA, G.R. No. 216425
remain), residence is temporary and may be
(2020)].
changed anytime (there is no necessary intent
to remain).
b. Adopted Child
Requisites of Domicile An adopted child shall bear the surname of the
1. Residence or bodily appearance in a new adopter [Art. 365, Civil Code; Art. 189 (1),
locality; Family Code].
2. Intention to permanently remain there
(animus manendi); and Under RA 11642, the adopter has the right to
3. An intention to abandon the old domicile choose the name by which the child is to be
(animus non revertendi). known, consistent with the best interest of the
child. An adopted child shall bear the surname
There must be animus manendi coupled with of the adopter [Sec. 41 (2), RA 11642; Art. 365,
animus non revertendi. One must have actual Civil Code; Art. 189 (1), Family Code].
change of domicile and a bona fide intention to
establish a new residence [Poe Llamanzares v. Note: RA 11642 took effect on January 21,
COMELEC, G.R. No. 221697 (2016)]. 2022, beyond the bar cutoff date of June 30,
2021.
Kinds of Domicile
1. Domicile of Origin: Domicile of parents of c. Illegitimate Child
a person at the time he was born. Illegitimate children shall use the surname of
2. Domicile of Choice: Domicile chosen by a their mother [Art. 176, Family Code].
person, changing his domicile of origin.
Domicile where he intends to remain 2. Surname of Wife After and During
(animus revertendi). Marriage
3. Domicile by Operation of Law (e.g. Art. a. During Marriage
69, Family Code: domicile of married A married woman may use:
persons). 1. Her maiden first name and surname and
add her husband’s surname, or;
A married woman does not lose her domicile to 2. Her maiden first name and her husband’s
that of her husband. Unless there is a clear surname, or;
proof of abandonment, domicile of origin 3. Her husband’s full name, but prefixing a
subsists [Romualdez-Marco v. COMELEC, word indicating that she is his wife, such as
G.R. No. 119976 (1995)]. “Mrs.” [Art. 370, Civil Code].

A foundling found in the Philippines and/or in Note: A married woman has an option, not a
Philippine embassies, consulates and duty, to use the surname of her husband in any
territories abroad is presumed a natural-born of the ways under Art. 370, Civil Code. Hence,
Filipino citizen regardless of the status or she is allowed to use not only any of the three
circumstances of birth [RA 11767 (Foundling provided in Art. 370, Civil Code, but also her
Recognition and Protection Act)]. maiden name upon marriage.

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A woman is not prohibited from continuously Grandsons and other direct male descendants
using her maiden name once she is married shall either:
because when a woman marries, she does not 1. Add a middle name or the mother’s
change her name but only her civil status surname, or
[Remo v. Sec. of DFA, G.R. No. 169202 2. Add the Roman numerals II, III, and so on.
(2010)].
Note: Although Art. 375, Civil Code restricts the
Note: Under the Philippine Passport Act (RA use of “Junior” to sons, social usage allows the
8239), once a married woman opted to adopt use of “Junior” also for daughters but not for
her husband’s surname in her passport, she granddaughters [Paras].
may not revert to the use of her maiden name,
except in the following cases: Usurpation and Unauthorized or Unlawful
1. Death of Husband; Use of Name [Arts. 377-378, Civil Code]
2. Divorce; Usurpation of a name and surname may be the
3. Annulment; or subject of an action for damages and other
4. Nullity of Marriage relief [Art. 377, Civil Code].

b. After Marriage 4. Change of Names

Annulment [Art. 371, Civil Code] General Rule [Art. 376, Civil Code]
In case of annulment of marriage and the wife No person can change his name or surname
is the guilty party, she shall resume her maiden without judicial authority.
name and signature.
Exception [Arts. 379-380, Civil Code]
In case of annulment of marriage and the wife The employment of pen names or stage
is the innocent party, she may choose to names is permitted, provided it is done in good
continue employing her former husband’s faith and there is no injury to third persons. Pen
surname, unless: names and stage names cannot be usurped
1. The court decrees otherwise, or; [Art. 379, Civil Code].
2. She or the former husband is married again
to another person. C. Entries in the Civil Registry
Legal Separation [Art. 372, Civil Code] and Clerical Error Law
When legal separation has been granted, the
wife shall continue using her name and RA 9048 (Correction of Error in Name), as
surname employed before the legal separation. amended by RA 10172 (Correction of Error
in Birthday and Sex)
Note: Before the legal separation, not before The petition for change of first
the marriage. name or nickname may be
allowed in any of the following
Death of Husband [Art. 373, Civil Code] cases [Sec. 4, RA 9048]:
A widow may use the deceased husband’s ● The petitioner finds the
surname as though he were still living, in first name or nickname to
accordance with Art. 370, Civil Code. be ridiculous, tainted with
dishonor or extremely
3. Confusion of Names difficult to write or
General Rule [Art. 374, Civil Code] Grounds pronounce;
In case of identity of names and surnames, the ● The new first name or
younger person shall be obliged to use such nickname has been
additional name or surname as will avoid habitually and
confusion. continuously used by the
petitioner and he has
Special Rules [Art. 375, Civil Code] been publicly known by
In case of identity of names and surnames the first name or
between ascendants and descendants, the nickname in the
word “Junior” can only be used by a son. community, or;

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● The change will avoid 1. Earliest school record or

confusion. earliest school
documents.
Under Sec. 1, RA 10172: No 2. Medical records.
entry in a civil register shall be 3. Other documents issued
changed or corrected without a by religious authorities.
judicial order, except:
● clerical or typographical For Sex:
errors and change of first Certification by an accredited
name or nickname, government physician attesting
● the day and month in the to the fact that petitioner did not
date of birth or sex of a undergo sex change or sex
person where it is transplant.
patently clear that there
was a clerical or Note: RA 9048 (as amended by
typographical error or RA 10172) does not allow a
mistake in the entry. change of first name on the
ground of sex reassignment
[Sec 3, RA 10172] [Silverio v. Republic, G.R. No.
174689 (2007)].
Documentary Attachments:
1. A certified true machine Changes in Procedure: The
copy of the certificate or petition shall be published at
of the page of the registry least once a week for two
book containing the entry consecutive weeks in a
or entries sought to be newspaper of general
corrected or changed; circulation.
2. At least two (2) public or
private documents
showing the correct entry Clerical or Typographical Error
or entries upon which the [Sec. 2 (3), RA 10172]
correction or change Refers to a mistake committed in the
shall be based; and performance of clerical work in writing,
3. Other documents which copying, transcribing or typing an entry in the
the petitioner or the city civil register that is
Requirem or municipal civil 1. harmless and innocuous,
ents registrar or the consul 2. visible to the eyes or obvious to the
general may consider understanding, and
relevant and necessary 3. can be corrected or changed only by
for the approval of the reference to other existing record or
petition records.

Additional Documentary Examples:

Attachments 1. Misspelled name or
Generally: 2. Misspelled place of birth,
1. Certification from 3. Mistake in the entry of day and month in the
appropriate law date of birth or
enforcement agencies 4. The sex of the person or the like
that petitioner has no
pending case or no What Cannot Be Corrected:
criminal record. 1. Nationality
2. Age
For Day and Month in Date of 3. Status
Birth and Sex:

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D. Absence 4. Those who may have, over the property of
the absentee, some right subordinated to
the condition of his death.
1. Civil Code Provisions
a. Provisional Measures in case of Effectivity of the Judicial Declaration of
Absence Absence [Art. 386, Civil Code]
General Rule [Art. 381, Civil Code]: A judge, at The judicial declaration of absence shall not
the instance of an interested party, a relative, take effect until six months after its publication
or a friend, may appoint a person to represent in a newspaper of general circulation.
the absentee in all that may be necessary.
c. Administration of the Property of the
Note: The same shall be observed when under
Absentee
similar circumstances that power conferred by
the absentee has expired.
Appointment of Administrator [Art. 387, Civil
Code]
Requisites
An administrator of the absentee’s property
1. A person disappears from his domicile.
shall be appointed in accordance with Article
2. His whereabouts are unknown.
383.
3. He did not leave an agent to administer his
property.
On Alienation or Encumbrance of the
Property Administered [Art. 388, Civil Code]
Who May Be Appointed [Art. 383, Civil Code]
The wife who is appointed as an administratrix
General Rule: The spouse present shall be
of the husband’s property cannot alienate or
preferred, when there is no legal separation.
encumber the husband’s property; or that of
the conjugal partnership, without judicial
Exception: If there is no spouse, any
authority.
competent person may be appointed by the
court.
Cessation of Administration [Art. 389, Civil
Code]
Safeguarding the Absentee’s Rights and
When Administration Ceases
Properties [Art. 382, Civil Code]
1. When the absentee appears personally or
The judge shall specify the power, obligations,
by means of an agent;
and remuneration of the absentee’s
2. When the death of the absentee is proved
representative, regulating them, according to
and his testate or intestate heir appear;
the circumstances, by the rules concerning
3. When a third person appears, showing by a
guardians.
proper document that he has acquired the
absentee’s property by purchase or other
b. Declaration of Absence title.
When Absence May Be Declared [Art. 384,
Civil Code] Effects of Cessation
A person’s absence may be declared 1. The administrator shall cease in the
1. After two years have elapsed without any performance of his office, and;
news about the absentee or since the 2. The property shall be at the disposal of
receipt of the last news, or those who may have a right thereto.
2. After five years have elapsed, in case the
absentee left a person in charge of the
administration of his property.
d. Presumption of Death
General Rule [Art. 390, Civil Code & Art. 41,
Family Code]
Who May Ask for the Declaration of
1. Seven years, for all purposes, except
Absence [Art. 385, Civil Code]
succession and marriage.
1. The spouse present;
2. Ten years, for the purpose of the opening of
2. The heirs instituted in a will, who may
succession, except marriage.
present an authentic copy of the same;
3. Four consecutive years, for purposes of
3. The relatives who may succeed by the law
remarriage.
of intestacy;

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Exception [Art. 390, Civil Code] Exceptions [Art. 41, Family Code]
If the absentee disappeared after the age of When there is a subsequent marriage due to
seventy-five (75) years: An absence of five (5) ordinary absence, where:
years shall be sufficient to open his a. The prior spouse had been absent for four
succession. (4) consecutive years under ordinary
circumstances, or for two (2) consecutive
Where Disappearance is Attendant with years under the extraordinary
Dangerous Circumstance [Art. 391, Civil circumstances in Art. 391, Civil Code; and
Code] b. The surviving spouse had a well-founded
The absentee shall be presumed dead for all belief that the absent spouse was already
purposes, if he were absent under the following dead.
circumstances:
1. Where the absentee is on board a vessel
lost during a sea voyage, or an airplane
which is missing, who has not been heard of
for four (4) years since the loss of the vessel
or airplane;
2. Where the absentee is in the armed forces
who has taken part in war, and has been
missing for four (4) years.
3. Where the absentee has been in danger of
death under other circumstances and his
existence has not been known for four (4)
years.

In Case of the Absentee’s Reappearance or

Proof of Existence [Art. 392, Civil Code]
If the absentee appears, or without appearing,
his existence is proved, he shall recover his
property in which it may have been alienated or
the property acquired therewith; but he cannot
claim either fruits or rents.

Statutory Presumption on the Order of

Death Between Persons Who Are Called to
Succeed Each Other [Art. 43, Civil Code]

Trigger: If there is doubt, as between two or

more persons who are called to succeed each
other, as to which of them died first

Rules:
1. Whoever alleges the death of one prior to
the other, shall prove the same
2. In the absence of proof: it is presumed that
they died at the same time and there shall
be no transmission of rights from one to
another.

2. Presumptive Death of Absent

Spouse Under the Family Code
General Rule [Art. 41, Family Code]
Marriage contracted by any person during the
subsistence of a previous marriage is void.

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II. MARRIAGE Formal Requisites [Art. 3, Family Code]

1. Authority of solemnizing officer (subject to
Art. 35 (2), Family Code)
A. In General 2. A valid marriage license (subject to
exceptions)
Marriage [Art. 1, Family Code] 3. Marriage ceremony
1. A special contract of permanent union;
2. Between a man and a woman; Effect of Absence or Defect/Irregularity of
3. Entered into in accordance with law; the Requisites on the Marriage [Art. 4, Family
4. For the establishment of conjugal and Code]
family life.
5. It is the foundation of the family and an Absence Defect or
inviolable social institution; Irregularity
6. Its nature, consequences, and incidents
Essential Void Voidable
are governed by law and not subject to
stipulation.
Formal Void No effect, but
makes the
Note: Marriage settlements may fix the
party
property relations during the marriage, within
responsible
the limits provided by this Code [Art. 1, Family
for such
Code].
irregularity
civilly,
Marriage is an institution, the maintenance of
criminally or
which the public is deeply interested in. It is a
administrativ
relation for life and the parties cannot terminate
ely liable
it at any shorter period by virtue of any contract
they may make. The reciprocal rights arising Note: The term “defect” is used for essential
from this relation, so long as it continues, are requisites while “irregularity” is used for formal
such as the law determines from time to time, requisites.
and none other [Goitia v. Campos Rueda, G.R.
No. 11263 (1916)]. 1. Essential Requisites
a. Sex
Breach of Promise to Marry Note: The best source for citing the
Article 21, Civil Code. Any person who willfully requirement of male/female is still statutory, as
causes loss or injury to another in a manner that is provided explicitly Art. 1, Family Code.
contrary to morals, good customs or public policy Marriage is a special contract of permanent
shall compensate the latter for the damages. union between a man and a woman.

Mere breach of a promise to marry is not an A person’s sex is an essential factor in

actionable wrong. marriage and family relations. It is a part of a
person’s legal capacity and civil status. In this
However, damages incurred by an injured connection, sex is defined as “the sum of
party are actionable if proven. This can be said peculiarities of structure and function that
to have been in violation of Art. 21, Civil Code distinguish a male from a female.” The sex of a
[Wassmer v. Velez, G.R. No. L-20089 (1964)]. person is determined at birth, visually done by
the birth attendant (the physician or midwife) by
B. Requisites of Marriage examining the genitals of the infant.

Thus, the words “male” and “female” in

Essential Requisites [Art. 2, Family Code]
everyday understanding do not include
1. Legal capacity of the contracting parties,
persons who have undergone sex
who must be a male and a female; and
reassignment. Furthermore, considering that
2. Consent (of the contracting parties) freely
there is no law legally recognizing sex
given in the presence of a solemnizing
reassignment, the determination of a person’s
officer.
sex made at the time of his or her birth, if not

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attended by error, is immutable [Silverio v. married to the other. i.e., to make the woman
Republic, G.R. No. 174689 (2007)]. his wife [People v. Santiago, G.R. No. 27972
(1927)].
However, the Supreme Court ruled in the case
of Republic v. Cagandahan [G.R. No. 166676 In People v. Santiago [G.R. No. 27972 (1927)],
(2008)] that when the change in sex happens it was held that the marriage entered into by a
naturally, as when the person has Congenital person whose real intent is to avoid
Adrenal Hyperplasia (CAH) or is “biologically or prosecution for rape is void for total lack of
naturally intersex,” the determining factor in consent. Here, it was the intent of the
their sex classification would be what they, accused—not the victim of rape, whom he
having reached the age of majority, with good married under duress—that was considered.
reason thinks is their sex. Sexual development The accused did not intend to make the victim
in cases of intersex persons makes the sex his wife. He merely used such marriage to
classification at birth inconclusive, hence a escape criminal liability.
change in name and sex as registered in the
birth certificate is here allowed. Absence of consent renders the marriage void
while defective consent makes it voidable [Art.
b. Age 4, Family Code].
Article 5, Family Code. Any male or female of the
age of eighteen years or upwards not under any of Situation Consent Status of
the impediments mentioned in Articles 37 and 38, Marriage
may contract marriage.
Either party was of Vitiated/ Voidable
Other Impediments Referenced: unsound mind [Art. Defective
45 (2), Family
Art. 37, Family Code: Incestuous marriages Code]
1. Between ascendants and descendants of
any degree; and Mistake as to the Absent Void
2. Between brothers and sisters, whether of identity of the
the full or half-blood. other party [Art. 35
(5), Family Code]
Art. 38, Family Code: Void for public policy
1. Between collateral blood relatives, whether e.g. if one
legitimate or illegitimate, up to the fourth civil mistakenly marries
degree; his fiancée’s twin
2. Between step-parents and step-children; [Tolentino]
3. Between parents-in-law and children-in-law;
4. Between the adopting parent and the Mistake as to the Absent Void
adopted child; legal
5. Between the surviving spouse of the consequences and
adopting parent and the adopted child; nature of the
6. Between the surviving spouse of the marriage
adopted child and the adopter; ceremony
7. Between an adopted child and a legitimate
child of the adopter; e.g. thinking the
8. Between adopted children of the same ceremony is a
adopter; and joke, pretend, or
9. Between parties where one, with the play-acting
intention to marry the other, killed that other [Tolentino]
person's spouse or his or her own spouse.

c. Consent Freely Given

Consent here refers to the consent of the
contracting parties. The consent must refer to
the contracting parties’ bona fide intention to be
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Situation Consent Status of d. No Subsisting Marriage

Marriage A marriage contracted by any person during
subsistence of a previous valid marriage shall
Consent was Vitiated/ Voidable be null and void, unless there is a declaration
obtained by fraud: Defective of presumptive death of the absentee spouse
[Art. 41, Family Code].
a. Non-
disclosure of The parties are not required to obtain a judicial
previous declaration of absolute nullity of a void ab initio
conviction of first and subsequent marriages in order to raise
crime of it as a defense in a bigamy case [Pulido v.
moral People of the Philippines, G.R. No. 220149
turpitude (2021)].
b. Concealmen
t of Note: This case was promulgated after the
pregnancy cutoff date of June 30, 2021.
by another
man 2. Formal Requisites
c. Concealmen a. Marriage Ceremony
t of STD No prescribed form or religious rite for the
d. Concealmen solemnization of marriage is required [Art. 6,
t of drug Family Code].
addiction,
habitual b. Authority of Solemnizing Officer
alcoholism, Who May Solemnize Marriage:
homosexuali
Normal Circumstances
ty, or
lesbianism Incumbent member of the Judiciary, within
[Art. 46, his jurisdiction [Art. 7, Family Code]
Family
Code] Priest, Rabbi, Imam or Minister of any
Church or Religious Sect who must be:
Consent was Vitiated Voidable a. Duly authorized by his church or
obtained by: /Defective religious sect;
b. Registered with the civil registrar
a. Force general;
b. Intimidation c. Acting within the limits of the written
c. Undue authority granted to him by his
Influence church or religious sect;
[Art. 45 (4), d. At least one of the contracting parties
Family belongs to the solemnizing officer’s
Code] church or religious sect [Art. 7,
Family Code]
Marriage entered Absent Void
into by a person Municipal and City Mayors [Secs. 444-445,
whose real intent Local Government Code]
is to avoid
prosecution for Articulo Mortis (in addition to those
rape [People v. above mentioned)
Santiago, G.R. No.
27972 (1927)] Ship Captain or Airplane Chief may
Note: Defects in consent are discussed further solemnize a marriage in articulo mortis
below in void and voidable marriages. between passengers or crew members [Arts.
7 and 31, Family Code]

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A marriage which preceded the issuance of the
A Military Commander of a unit may
marriage license is void and the subsequent
solemnize marriages in articulo mortis
issuance of such license cannot render valid
between persons within the zone of military
the marriage. Except in cases provided by law,
operation in the absence of a chaplain [Arts.
it is the marriage license that gives the
7 and 32, Family Code]
solemnizing officer the authority to solemnize a
Marriages Abroad marriage [Aranes v. Occiano, MTJ-02-1390
(2002)].
Consul-general, consul or vice-consul may
solemnize marriages between Filipino Foreign National
citizens abroad [Arts. 7 and 10, Family Code] 1. When either or both parties are foreign
nationals: Certificate of legal capacity to
contract marriage issued by a diplomatic
General Rule: Those solemnized by any or consular official, shall be submitted
person not legally authorized to perform before a marriage license can be obtained
marriages are void. [Art. 21, Family Code]
2. Stateless persons or refugees from other
Exception: Unless such marriages were countries: Affidavit stating
contracted with either or both parties believing circumstances showing capacity to
in good faith that the solemnizing officer had contract marriage, instead of certificate of
the legal authority to do so [Art. 35 (2), Family legal capacity [Art. 21, Family Code]
Code].
Note: The Apostille Convention, which took
Good faith refers to questions of fact, not effect in the Philippines on 14 May 2019,
ignorance of the law (e.g. they did not know the simplifies the authentication of foreign
priest’s license expired vs. thinking a Senator documents. Public documents executed in
could solemnize their marriage) [Legarda, Apostille-contracting countries, once
Deriquito-Mawis, and Vargas]. Apostillized, no longer need authentication
from the Philippine embassy or consulate
Note: An irregularity in a formal requisite will general. In the same way, PH documents
not affect the validity of the marriage but those Apostillized by the DFA need not be
responsible may be held criminally, civilly, authenticated by Foreign embassies or
and administratively liable [Arts. 4 & 7, consulate generals if the country is a member
Family Code]. of the convention [DFA Public Advisory].

c. Marriage License A marriage certificate is not an essential or

General Rule: The license required is that formal requisite without which the marriage will
which is issued by the local registrar of the city be void [Madridejo v. de Leon, G.R. No. L-
or municipality where either contracting party 32473 (1930)]. However, it is the best evidence
habitually resides [Art. 9, Family Code]. that a marriage does exist [Tenebro v. CA, G.R.
Publication is required. The civil registrar No. 150758 (2004)].
determines the age of the parties.
Exemption from License Requirement
Where Valid: License valid in any part of the a. Marriage in articulo mortis [Art. 27, Family
Philippines. Code]
Period of Validity: It will be valid for 120 days The marriage may be solemnized without the
from date of issue, automatically canceled at necessity of a marriage license. It remains valid
the expiration of such period. even if the ailing party survives.
1. Between passengers or crew members
Marriages celebrated without a marriage in a ship or airplane [Art. 31, Family
license before the effectivity of the Family Code Code]
are void ab initio as marriage license was an 2. Persons within a military zone [Art. 32,
essential requisite in the Civil Code [Kho v. Family Code]
Republic, G.R. No. 187462 (2016)]. 3. Other situations in articulo mortis

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b. Marriage in remote and inaccessible Exceptions: Void when it involves
places [Art. 28, Family Code] a. Marriage where one or both parties are
below 18 years old [Art. 35 (1), Family
c. Marriages by Muslims and Ethnic cultural Code]
minorities provided they are solemnized in b. Bigamous or polygamous marriage [Art. 35
accordance with their customs, rites or (4), Family Code]
practices [Art. 33, Family Code] c. Mistake in identity [Art. 35 (5), Family Code]
d. Marriages void under Art. 53 [Art. 35 (6),
d. Marriage by parties who have cohabited Family Code]
for at least 5 years without any legal e. Psychological incapacity [Art. 36, Family
impediment to marry each other [Art. 34, Code]
Family Code; Ninal v. Bayadog, G.R. No. f. Incestuous marriages [Art. 37, Family Code]
133778 (2000)] g. Marriage void for reasons of public policy
[Art. 38, Family Code]
Note: A false affidavit of having lived together
for 5 years as husband and wife cannot be Note: This means that the foreign marriage
considered as a mere irregularity in the formal may still be recognized as valid in the
requisites of marriage but a complete absence, Philippines even if it would have fallen under
rendering their marriage void ab initio [De Pars. 2 & 3, Art. 35, Family Code so long as it
Castro v. Assidao-De Castro, G.R. No. 160172 is valid under the law of the country in which it
(2008)]. was solemnized.

Requisites for the 5-year Cohabitation to be

Essential Formal Requisites
Valid for the Exemption from Acquiring a
Requisites
Marriage License
a. The man and woman must have been Inherent in the Requirements
living together as husband and wife for at parties, carried independent of the
least five (5) years before the marriage; everywhere parties
b. The parties must have no legal
impediment to marry each other; Lex Nationalii – Lex loci
c. The fact of absence of legal impediment Laws relating to celebrationis – If
between the parties must be present at family rights and valid where
the time of marriage; duties, or to the celebrated, then
d. The parties must execute an affidavit status, condition, and valid everywhere;
stating that they have lived together for legal capacity of forms of contracting
at least five years [and are without legal persons are binding marriage are to be
impediment to marry each other]; and upon PH citizens regulated by the law
e. The solemnizing officer must execute a even though living where it is celebrated
sworn statement that he had abroad [Art. 15, Civil [Art. 17, Civil Code]
ascertained the qualifications of the Code]
parties and that he had found no legal
impediment to their marriage [Borja- Foreign marriages Foreign marriages
Manzano v. Judge Sanchez, A.M. MTJ- void under PH law may be void under
00-1329 (2001)]. due to lack of an PH law due to
essential requisite, absence of a formal
C. Marriages Solemnized even if valid under requisite under
Abroad, and Foreign Divorce foreign laws, will not foreign laws.
be recognized.
1. Marriages Celebrated Abroad
General Rule: Marriages solemnized abroad Proof of Foreign Marriage in order that it may
in accordance with the laws in force in that be upheld:
country shall be valid in the Philippines [Art. 26 a. Provisions of the foreign law, and
(1), Family Code]. b. Celebration of the marriage in accordance
with said provisions.

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2. Foreign Divorce f. Incestuous Marriages [Art. 37, Family
If the foreign spouse obtains a valid divorce Code]
decree abroad capacitating him/her to remarry, g. Void by reasons of public policy [Art. 38,
the Filipino spouse shall have capacity to Family Code]
remarry under Philippine law [Art. 26 (2),
Family Code]. Article 39, Family Code. The action or defense for
the declaration of absolute nullity shall not prescribe.
The citizenship of the spouses at the time of (as amended by RA 8533)
the divorce determines their capacity to obtain
a valid divorce [Quita v. Dandan, G.R. No. a. Absence of Requisites
124862 (1998)]. Void from the Beginning [Art. 35, Family
Code]
A marriage between two Filipinos cannot be 1. Marriage where any party is below
dissolved even by a divorce obtained abroad, eighteen (18) years of age even with the
because of Arts. 15 & 17, Civil Code [Garcia v.
consent of parents or guardians
Recio, G.R. No. 138322 (2001)]. 2. Marriage solemnized by any person not
legally authorized to perform marriages
Aliens may obtain divorces abroad, which may unless such marriages were contracted with
be recognized in the Philippines, provided they either or both parties believing in good faith
are valid according to their national law; thus, it
that the solemnizing officer had legal
is a matter of evidence. The marriage tie when authority to do so
thus severed as to one party, ceases to bind
either [Van Dorn v. Romillo, G.R. No. L-68470
Note: One’s belief in good faith that the
(1985)]. solemnizing officer has the required
authority is a mistake of fact, and not of law.
Divorces obtained abroad by Filipino citizens
may now be validly recognized in the 3. Marriage solemnized without a valid
Philippines but only in cases of mixed marriage license, except in marriages
marriages involving a Filipino and a foreigner under exceptional circumstances
[Republic of the Philippines v. Manalo, G.R. 4. Bigamous or polygamous marriages not
No. 221029 (2018)].
falling under Art. 41 (Art. 41, Family Code:
Subsequent marriage by present spouse
Note: Following the ruling in Galapon v. who obtained a declaration of presumptive
Republic [G.R. No. 243722 (2020)], paragraph
death for absent spouse prior to the
2, Art. 26, Family Code applies to mixed subsequent marriage)
marriages where the divorce decree is: (1) 5. There is a mistake as to the identity of the
obtained by the foreign spouse; (2) obtained other contracting party
jointly by the Filipino and foreign spouse; or (3) 6. Subsequent marriages that are void
obtained solely by the Filipino spouse.
under Art. 53, Family Code (Non-
compliance with Art. 52, Family Code)
D. Void and Voidable Marriages
To be considered void on the ground of
1. Void Marriages absence of a marriage license, the law requires
Types of Void Marriages that the absence of such marriage license must
a. Absence of any formal/essential be apparent on the marriage contract, or at the
requisites [Art. 35, Family Code] very least, supported by a certification from the
b. Bigamous and polygamous marriages local civil registrar that no such marriage
[Art. 35 (4), Family Code] license was issued to the parties [Alcantara v.
c. Bad faith of both spouses in the Alcantara, G.R. No. 167746 (2007)].
subsequent marriage [Art. 44, Family Code]
d. Psychologically Incapacitated spouse b. Bigamous and Polygamous Marriages
[Art. 36, Family Code] Elements of a Bigamous Marriage
e. Void subsequent marriages [Art. 35 (6), 1. Offender legally married
Family Code] for failure to comply with Art. 2. Marriage not legally dissolved
53, Family Code 3. Offender contracts a subsequent marriage
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4. Subsequent marriage has all the essential c. Onboard vessel lost at sea voyage,
requisites for validity, except legal capacity airplane,
[Capili v. People, G.R. No. 183805 (2013)] d. Armed forces in war, or
e. Danger of death under other
The parties are not required to obtain a circumstances, existence not known
judicial declaration of absolute nullity of a 3. The spouse present had a well-founded
void ab initio first and subsequent belief that the missing person is dead; and
marriages in order to raise it as a defense in 4. Judicial declaration of presumptive
a bigamy case. The same rule now applies to death was secured through a summary
all marriages celebrated under the Civil Code proceeding (no prejudice to the effect of the
and the Family Code. Art. 40, Family Code did reappearance of the absent spouse).
not amend Art. 349, Revised Penal Code, and
thus, did not deny the accused the right to The belief of the present spouse must be the
collaterally attack the validity of a void ab initio result of proper and honest to goodness
marriage in the criminal prosecution for bigamy inquiries and efforts to ascertain the
[Pulido v. People of the Philippines, G.R. No. whereabouts of the absent spouse and
220149 (2021)]. (Note: This case was whether the absent spouse is still alive or is
promulgated after the cutoff date of June 30, already dead. This is drawn from
2021) circumstances before and after the
disappearance and the nature and extent of
Presumptive Death inquiries made [Republic v. Granada, G.R. No.
Failure of the spouse present to obtain a 187512 (2012)].
judicial declaration of presumptive death
before entering a subsequent marriage [Art. Although incapable of exact definition, “well-
41, Family Code]. founded belief” requires a stringent standard.
Jurisprudence demands an active search for
Bad Faith of Both Spouses the absentee spouse, along with attempts to
Both spouses entering a subsequent marriage contact legal authorities to aid in the search
after presumptive death, who acted in bad faith and corroborative evidence to support the
[Art. 44, Family Code]. claim that a diligent search and inquiry was
made [Republic v. Quiñonez, G.R No. 237412
c. Subsequent Marriage When One (2020)].
Spouse is Absent
Requirements for Subsequent Marriage to Effect of Reappearance of Absent Spouse
be Valid When Prior Spouse is Absent [Art. General Rule: The subsequent marriage
41, Family Code] remains valid.
1. Subsequent marriage due to ordinary
absence where: Exception: It is automatically terminated by
a. Absent spouse had been absent for 4 the recording of the affidavit of reappearance
consecutive years; of the absent spouse at the instance of any
b. The spouse present had a well-founded interested person, with due notice to the
belief that the absent spouse is dead; spouses of the subsequent marriage [Art. 42,
and Family Code].
c. Judicial declaration of presumptive
death was secured (no prejudice to the Note: It is the recording of the affidavit of
effect of the reappearance of the absent reappearance that automatically terminates the
spouse) subsequent marriage. Hence, if the absentee
2. Subsequent marriage due to extraordinary spouse reappears without recording an
absence where: affidavit of reappearance, then there is no legal
a. Absent spouse had been missing for 2 effect. Meanwhile, the absentee spouse cannot
consecutive years; remarry [Tolentino].
b. There is danger of death under the
circumstances set forth in Art. 391, Civil Exception to the Exception: If there is a
Code attendant to the disappearance; judgment annulling the previous marriage or
declaring it void ab initio [Art. 42, Family Code].

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Good faith: Period of absence for presumptive
Psychological Vice of Consent
death is mandatory. However, the law
Incapacity
shortens the period for purposes of remarriage.
Has nothing to do The consent itself is
The period of absence is counted from when with consent, but the defective
the party last heard from his/her absentee incapacity to comply
spouse [Jones v. Hortiguela, G.R. No. 43701 with the essential
(1937)]. marital obligations of
marriage
Absence of Spouse under Art. 41 Family
Code [Republic v. Nolasco, G.R. No. 94053
(1993)] Psychological Insanity
[Art. 41, Family Code] Incapacity

1. Well-founded belief Consent might be Vice of consent

that the absent spouse valid, but the party is
is dead; and unable to assume
essential marital
2. Absence of: obligations
Grounds a. 4 years under
normal Ground for nullity Ground for
circumstances; or annulment
b. 2 years under
extraordinary Example of Psychological Incapacity
circumstances The senseless and protracted refusal of one of
the parties to fulfill the marital obligation "to
Summary Required procreate children based on the universal
proceedings principle that procreation of children through
for the sexual cooperation is the basic end of
declaration of marriage," is equivalent to psychological
presumptive incapacity. “A man who can but won’t is
death psychologically incapacitated” [Tsoi v. CA,
G.R. No. 119190 (1997)].
The subsequent marriage
Effect on the is automatically terminated
Annulment under Art. 36, Family Code (as
subsequent by the recording of an
recently articulated in Tan-Andal v. Andal;
marriage affidavit of reappearance
Totality of Evidence Rule)
of the absent spouse
The Court in Tan-Andal v. Andal [G.R. No.
d. Bad Faith of Both Spouses 196359 (2021)] pronounced that psychological
Article 44, Family Code. If both spouses of the
incapacity is not a medical but a legal concept.
subsequent marriage acted in bad faith, said It refers to a personal condition which prevents
marriage shall be void ab initio and all donations by a spouse from complying with fundamental
reason of marriage and testamentary dispositions marital obligations only in relation to a specific
made by one in favor of the other are revoked by partner that may exist at the time of marriage
operation of law. but may have revealed through behavior
subsequent to the ceremonies. In this case, the
e. Psychological Incapacity Court stated that it need not be a permanent
and incurable disorder (effectively overturning
Article 36, Family Code. A marriage contracted by
previous jurisprudence on the matter).
any party who, at the time of the celebration, was
psychologically incapacitated to comply with the Therefore, the testimony of a psychologist or
essential marital obligations of marriage, shall psychiatrist is not mandatory in all cases. The
likewise be void even if such incapacity becomes totality of evidence must show clear and
manifest only after its solemnization. convincing evidence to cause the declaration
of nullity of marriage.
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Things to be Considered in Invoking and 5. Between the surviving spouse of the
Proving Psychological Incapacity: adopting parent and the adopted child;
1. The burden of proof in proving 6. Between the surviving spouse of the
psychological incapacity is on the plaintiff. adopted child and the adopter;
The quantum of proof required in nullity 7. Between an adopted child and a legitimate
cases is clear and convincing evidence child of the adopter;
2. Psychological incapacity is neither a mental 8. Between adopted children of the same
incapacity nor a personality disorder that adopter; and
must be proven through expert testimony. 9. Between parties where one, with the
There must be proof, however, of the intention to marry the other, killed that other
durable or enduring aspects of a person’s person's spouse, or his or her own spouse
personality, called “personality structure,” [Art. 38, Family Code]
which manifests itself through clear acts of
dysfunctionality that undermines the family Note: The following relationships are outside of
3. Incurable, not in the medical, but in the legal Arts. 37-38, Family Code and are therefore not
sense; incurable as to the partner impediments to marriage:
4. As to gravity, it must be shown that the 1. Brother-in-law with sister-in-law;
incapacity is caused by a genuinely serious 2. Stepbrother with stepsister;
psychic cause 3. Guardian with ward; and
5. Juridical antecedence 4. Adopted son of the husband with adopted
6. Marital obligations refer to Arts 68-71, 220, daughter of the wife (i.e. stepchildren).
221 & 225, Family Code
7. The decisions of the National Appellate h. Non-Compliance with Recording
Matrimonial Tribunal of the Catholic Church Requirement after Declaration of
of the Philippines has persuasive effect on Nullity
nullity cases pending before secular courts Subsequent marriage of spouses, where the
[Tan-Andal v. Andal, G.R. No. 196359 requirements of recording under Art. 52, Family
(2021)]. Code have not been complied with, shall be
null and void [Art. 53, Family Code].
f. Incestuous Marriage
Marriages between the following are The judgment of annulment or of absolute
considered incestuous, and are therefore nullity of the marriage, the partition and
void ab initio: distribution of the properties of the spouses
1. Between ascendants and descendants of and the delivery of the children's presumptive
any degree, legitimate or illegitimate legitimes shall be recorded in the appropriate
2. Between brothers and sisters, whether civil registry and registries of property;
full or half blood, legitimate or illegitimate otherwise, the same shall not affect third
[Art. 37, Family Code] persons [Art. 52, Family Code].

g. Against Public Policy Arts. 50, 51, and 52, Family Code, in relation to
Marriages between the following are Arts. 102 and 129, Family Code (i.e., the rules
considered against public policy, and are governing the liquidation of the absolute
therefore void ab initio: community or the conjugal partnership of
1. Between collateral blood relatives, gains, the property regimes for valid and
legitimate or illegitimate, up to the fourth civil voidable marriages) relate only to voidable
degree; marriages and, exceptionally, to void
2. Between step-parents and step-children; marriages under Art. 40, Family Code (i.e.
(Note: Stepbrothers and stepsisters can the declaration of nullity of a subsequent
marry because marriages between them marriage contracted by a spouse of a prior void
are not among those enumerated in Art. 38, marriage before the latter is judicially declared
Family Code) void) [Valdez v. QC-RTC, G.R. No. 122749
3. Between parents-in-law and children-in-law; (1996)].
4. Between adopting parent and adopted
child; Under the Civil Code, no judicial declaration for
nullity of previous marriage was required to

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contract a subsequent marriage [People v. 2. Marriages celebrated during the effectivity
Mendoza, G.R. No. L-5877 (1954)]. of the Civil Code [Carlos v. Sandoval, G.R.
No 179922 (2008)]
Note: This is now the general rule under Pulido
v. People [G.R. No. 220149 (2021)], which was Procedure in Attacking a Void Marriage
promulgated after the cutoff date of June 30, Void Marriages may be attacked collaterally or
2021. directly.

Effects of Termination of Subsequent Safeguard Against Collusion and No

Marriage Under Art. 42 [Art. 43, Family Code] Confession of Judgment
1. Children of subsequent marriage: In the cases referred to in the preceding
conceived prior to its termination considered paragraph, no judgment shall be based upon a
legitimate; custody and support decided by stipulation of facts or confession of judgment
court in a proper proceeding. [Art. 48 (2), Family Code].
2. Property Regime: dissolved and liquidated
(party in bad faith shall forfeit his/her share Stipulation of Facts
in favor of the common children or if there An admission by both parties after agreeing to
are none, children of the guilty spouse by a the existence of any of the grounds or facts that
previous marriage, and in case there are would constitute a void/voidable marriage.
none, to the innocent spouse).
3. Donation propter nuptias: remains valid, Confession of Judgment
(but if the donee contracted marriage in bad The admission by one party admitting his/her
faith, donations are revoked by operation of fault to cause the invalidity of the marriage.
law)
4. Insurance benefits: innocent spouse may Although the admission of guilt of the wife
revoke designation of guilty party as constitutes a confession of judgment, the
beneficiary, even if such designation is husband was also able to present other
stipulated as irrevocable. evidence to support the allegation. Hence,
5. Succession Rights: party in bad faith shall there was no collusion [Ocampo v.
be disqualified to inherit from the innocent Florenciano, G.R. No. L-13553 (1960)].
spouse, whether testate or intestate.
Participation of the OSG
Both Spouses Guilty of Bad Faith The obvious intent of the AM 02-11-10-SC was
If both spouses of the subsequent marriage to require the OSG to appear as counsel for the
acted in bad faith, all donations by reason of State in the capacity of a defensor vinculi (i.e.,
marriage and testamentary dispositions made defender of the marital bond) to oppose
by one party in favor of the other are revoked petitions for, and to appeal judgments in favor
by operation of law [Art. 44, Family Code]. of declarations of nullity of marriage under Art.
36, Family Code, thereby ensuring that only the
Who may File the Petition for Nullity of Void meritorious cases for the declaration of nullity
Marriages? of marriages based on psychological
General Rule: Only the husband or wife may incapacity-those sufficiently evidenced by
file the petition [Sec. 2, AM No. 02-11-10-SC]. gravity, incurability and juridical antecedence-
would succeed [Mendoza v. Republic, G.R. No.
Specifically, A.M. No. 02-11-10-SC extends 157649 (2012)].
only to marriages covered by the Family Code,
which took effect on August 3, 1988, but, being No Motion to Dismiss
a procedural rule that is prospective in Sec. 7, AM 02-11-10-SC prohibits the filing of
application, is confined only to proceedings a motion to dismiss in actions for annulment of
commenced after March 15, 2003 [Ablaza v. marriage [Aurelio v. Aurelio, G.R. No. 175367
Republic, G.R. No 158298 (2010)]. (2011)].

Exceptions: Effect of Pendency of Action for Declaration

1. Nullity of marriage cases commenced of Nullity:
before the effectivity of A.M. No. 02-11-10- 1. The court shall provide for the support of the
SC spouses.
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2. The custody and support of the common a. The party in whose behalf it is sought to
children, giving paramount consideration to have the marriage annulled was eighteen
their moral and material welfare, their (18) years of age or over but below
choice of parent with whom they wish to twenty-one (21), and the marriage was
remain. solemnized without the consent of the
3. The court shall also provide for visitation parents, guardian or person having
rights of the other parent [Art. 49, Family substitute parental authority over the party,
Code]. in that order, unless after attaining the age
of twenty-one (21), such party freely
Effect of Final Judgment Declaring Nullity cohabited with the other and both lived
The effects provided for by Pars. 2, 3, 4 & 5, together as husband and wife;
Art. 43 and by Art. 44, Family Code shall also b. Either party was of unsound mind, unless
apply in the proper cases to marriages which such party after coming to reason, freely
are declared void ab initio or annulled by final cohabited with the other as husband and
judgment under Arts. 40 and 45 [Art. 50 (1), wife;
Family Code]. c. The consent of either party was obtained
by fraud, unless such party afterwards,
Final judgment in such cases shall provide for: with full knowledge of the facts constituting
1. Liquidation, partition, and distribution of the the fraud, freely cohabited with the other as
properties of the spouses husband and wife;
2. Custody and support of the common d. The consent of either party was obtained
children by force, intimidation or undue
3. Delivery of their presumptive legitimes influence, unless the same having
disappeared or ceased, such party
Unless: Such matters had been adjudicated thereafter freely cohabited with the other as
in previous judicial proceedings [Art. 50 (2), husband and wife;
Family Code]. e. Either party was physically incapable of
consummating the marriage with the other,
All creditors of the spouses/property regime and such incapacity continues and appears
shall be notified of the proceedings for to be incurable; or
liquidation [Art. 50 (3), Family Code]. f. Either party was afflicted with a sexually
In the partition, the conjugal dwelling and lot transmissible disease found to be serious
shall be adjudicated to the spouse with whom and appears to be incurable.
majority of the common children remain [Art.
102 and 129, Family Code]. Nature of an Action for Annulment
Action in rem, concerns the status of parties.
Generally, children born or conceived within a. The res is the relation between parties or
void marriages are illegitimate. marriage tie.
b. Jurisdiction depends on nationality or
Exceptions: domicile not the place of celebration.
1. Children conceived or born before the
judgment under Art. 36 has become final a. Lack of Parental Consent
and executory [Art. 54, Family Code] Par. 1, Art. 45, Family Code provides the first
2. Children conceived or born of subsequent ground for a voidable marriage, which is the
marriages under Art. 53 [Art. 54, Family solemnization of a marriage of a party between
Code] 18-21 years of age without the consent of their
parents.
2. Voidable Marriages
Art. 4, Family Code states that a defect in any May be ratified by the party 18 or above but
of the essential requisites shall render the below 21 upon free cohabitation upon reaching
marriage voidable as provided in Art. 45, 21.
Family Code.
Grounds for Annulment that Must Exist at b. Insanity
the Time of the Marriage [Art. 45, Family Par. 2, Art. 45, Family Code provides the
Code] second ground for a voidable marriage, which

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is a marriage entered into by an insane party 3. Conviction must be prior to marriage
or a person of unsound mind.
A crime involves moral turpitude when it
Mental incapacity or insanity is a vice of pertains to an act of “baseness, vileness,
consent. It can be ratified by cohabitation after depravity in the private and social duties which
insanity is cured or during a lucid interval a man owes to his fellow man or to society in
[Tolentino]. general, contrary to the accepted and
customary rules of right and duty between man
Must exist at the time of the celebration of the and man” [Teves v. COMELEC, G.R. No.
marriage. Insanity that occurs after the 180363 (2009)].
celebration of marriage does not constitute a
cause for nullity [Katipunan v. Tenorio, G.R. Concealment of Pregnancy by Another Man
No. 43442 (1937)]. Wife must have:
1. Concealed her pregnancy and
c. Fraud 2. Pregnancy is by another man other than her
Par. 3, Art. 45, Family Code provides the third husband
ground for a voidable marriage, wherein
consent to the marriage was obtained If the husband knew of pregnancy, the
through fraud. The party who was the victim marriage cannot be annulled on the ground of
of the fraud may, however, ratify the detect in concealment.
the marriage by voluntarily cohabiting with the
party after knowledge of the facts constituting The woman was seven (7) months pregnant at
the fraud. the time she met the petitioner. He cannot
claim that the pregnancy was concealed from
Article 46, Family Code. Any of the following
him and that he was defrauded into marrying
circumstances shall constitute fraud referred to in her [Buccat v. Buccat, G.R. No 47101 (1941)].
No. 3 of the preceding Article:
1. Non-disclosure of a previous conviction by But where the wife concealed the fact that she
final judgment of the other party of a crime was 4 months pregnant during the time of the
involving moral turpitude; marriage and was “naturally plump,” Delizo
2. Concealment by the wife of the fact that at
the time of marriage, she was pregnant by
could hardly be expected to know, by mere
a man other than her husband; looking, whether or not she was pregnant at the
3. Concealment of sexually transmissible time of the marriage [Aquino v. Delizo, G.R. No.
disease, regardless of its nature, existing at L-15853 (1960)].
the time of marriage; or
4. Concealment of drug addiction, habitual Note: May be ratified upon free cohabitation
alcoholism or homosexuality or lesbianism
existing at the time of marriage.
after knowledge of fraud.

No other misrepresentation or deceit as to character, Concealment of Sexually Transmissible

health, rank, fortune or chastity shall constitute such Disease
fraud as will give grounds for the action of annulment The STD that was concealed from the other
of marriage. spouse need not be serious and incurable.
When the ground for annulment falls under
Note: The enumeration of the grounds for Par. 3, Art. 46 vis-à-vis Par. 3, Art. 45, Family
annulment under Art. 46, Family Code for Code, the healthy spouse through cohabitation
reasons of fraud or vice of consent is can still ratify the marriage because the defect
exclusive. No other misrepresentation or is in the fact of the concealment and not the
deceit of character, health, rank, fortune or gravity of the disease. Hence, even if the STD
chastity shall constitute fraud. is treatable, the fraud gives the unsuspecting
spouse the right to file for annulment.
Non-Disclosure of Conviction of Crime
Involving Moral Turpitude Concealment of Drug Addiction, Habitual
1. The crime must involve moral turpitude, or Alcoholism, Homosexuality or Lesbianism
“Conduct that is contrary to justice, honesty, The non-disclosure of the drug addiction,
and morality” [Black’s Law Dictionary] habitual alcoholism, homosexuality or
2. Must be convicted by final judgment lesbianism must have been done prior to the
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marriage. Recovery or rehabilitation from STD, Among the circumstances that define improper
drug addiction, and habitual alcoholism will not advantage are the (1) confidential, (2) family,
bar action for annulment; the defect is not the (3) spiritual, (4) professional or other
disease, but the fraud which vitiated consent relationship between the parties, or the fact
[Tolentino]. that the person alleged to have been unduly
influenced was suffering from (5) mental
It is the concealment of homosexuality, and not weakness, (6) ignorance, or (7) was in financial
homosexuality per se, that vitiates the consent or emotional distress [Art. 1337, Civil Code].
of the innocent party. Such concealment
presupposes bad faith and intent to defraud the May be ratified upon voluntary cohabitation
other party in giving consent to the marriage after force, intimidation, or undue influence has
[Almelor v. RTC, G.R. No. 179620 (2008)]. ceased or disappeared.

Any Other Misrepresentation e. Impotency

Art. 46, Family Code categorically states that Impotency refers to the person’s physical
any other misrepresentation as to character, condition where sexual intercourse with a
health, rank, fortune, or chastity shall not be a person of the opposite sex is impossible. It
manifestation of fraud sufficient to be a ground does not refer to mere sterility.
for annulment of marriage.
Refers to the inability to copulate, not
The non-disclosure of a husband’s premarital procreate.
relationship with another woman does not
constitute fraud. It was expressly stated in Art. Impotency being an abnormal condition should
46, Family Code that misrepresentation or not be presumed. The presumption is in favor
deceit as to one’s chastity shall not be a basis of potency. The lone testimony of the husband
for an action to annul a marriage [Anaya v. that his wife is physically incapable of sexual
Palaroan, G.R. No. L-27930 (1970)]. intercourse is insufficient to tear asunder the
ties that have bound them together as husband
d. Force, Intimidation, Undue Influence and wife [Jimenez v. Canizares, G.R. No. L-
Par. 4, Art. 45, Family Code provides the 12790 (1960)].
fourth ground for a voidable marriage, wherein
the consent of one party was obtained by
violence, intimidation, or undue influence.

There is violence when in order to wrest

consent, serious or irresistible force is
employed [Art. 1335, Civil Code].

Intimidation must be one as to compel the

party by a reasonable and well-grounded
fear of an imminent and grave evil upon his
person/properties [Art. 1335, Civil Code]
1. Degree of intimidation: age, sex, condition
of person borne in mind
2. Threat or intimidation as not to act as free
agent

Note: A threat to enforce one’s claim through

competent authority, if one’s claim is just and
legal, does not vitiate consent [Art. 1335, Civil
Code].

There is undue influence when a person

takes improper advantage of his power or
position over the will of another, depriving the
latter of a reasonable freedom of choice.
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f. Sexually-Transmissible Disease 3. Should appear to be incurable [Art. 45 (6),
Serious and Incurable Family Code]
Requisites
1. Should exist at the time of the marriage Not subject to ratification: Cannot be ratified or
2. Should be found serious validated by cohabitation.

Who may File, Prescription, Ratification

Ground [Art. Who can file [Art. 47, Prescription [Art. 47, Ratification [Art. 45,
45, Family Family Code] Family Code] Family Code]
Code]

Lack of Party 18 or above but Within 5 years after Free cohabitation of the
Parental below 21 attaining age of 21 party who entered the
Consent marriage without parental
Parent or guardian who Before party below 21 consent after attaining age
did not give consent reaches 21 of 21

Insanity Sane spouse with no Any time before the death Free cohabitation of insane
knowledge of the other’s of either party party after insane party
insanity comes to reason

Legal guardian of insane Any time before the death

party of either party

Insane party During lucid interval or Free cohabitation after

after regaining sanity, and insane party comes to
before death reason

Fraud Injured (defrauded) party Within 5 years after Free cohabitation of the
discovery of fraud defrauded party after
having full knowledge of
fraud

Force, Injured party Within 5 years after Free cohabitation of the

Intimidation, disappearance of force, injured party after the force
undue undue influence, or or intimidation or undue
influence intimidation influence has ceased or
disappeared

Impotence Potent spouse Within 5 years after Cannot be ratified by

marriage action; prescribes

STD Healthy party Within 5 years after Cannot be ratified by

marriage action; prescribes

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Marriages Not Subject to Ratification
Void Voidable
1. One spouse is incurably impotent
2. One spouse has incurable STD beginning
Rationale: Public policy and health. Susceptible Cannot be Can be
to ratified ratified,
Note: Though these marriages cannot be Ratification subject to 2
ratified, the petition for annulment will prescribe exceptions
within 5 years.
Property Only co- ACP or any
Presence of Prosecutor Relation ownership other
To prevent collusion between the parties, [Art. 147, property
fabrication or suppression of evidence, the Family regime in
prosecuting attorney or fiscal shall appear on Code]; No accordance
behalf of the State [Art. 48, Family Code]. ACP or CPG with the
despite marriage
In a legal separation or annulment case, the having settlement
prosecuting attorney must first rule out entered into
collusion as a condition sine qua non for further a marriage
proceedings. A certification by the prosecutor settlement
that he was present during the hearing and Except the
even cross-examined the plaintiff does not 2nd void
suffice to comply with the mandatory marriage
requirement [Corpus v. Ochotorena, A.M. No. under Art. 40
RTJ- 04-1861 (2004)]. Family
Code.
Effects of Pending Decree of Annulment
The Court shall provide for the support of Status of Illegitimate Children are
spouses and support and custody of common Children under Art. legitimate if
children [Art. 49, Family Code]. In determining 165, Family conceived
which parent should have custody of them, Code (with or born prior
their moral and material welfare shall be given Arts. 36 and to the
paramount consideration [Art. 49, Family 53, Family decree
Code; Luna and Luna v. IAC, G.R. No. L-68374 Code as
(1985)]. exceptions
under Art.
Effects of Decree of Annulment 54, Family
(Same as Decree of Nullity) The effects Code)
provided for by Pars. 2, 3, 4 & 5 of Art. 43 and
by Art. 44, Family Code shall also apply in the How May be Cannot be
proper cases to marriages which are declared Impugned attacked attacked
void ab initio or annulled by final judgment directly or collaterally
under Arts. 40 and 45 [Art. 50 (1), Family collaterally,
Code]. but for the Cannot be
purpose of impugned
Comparative Table on Void and Voidable remarriage, after death
Marriages a judicial of one of the
declaration parties
Void Voidable
of nullity is
Nature No validity Valid until required [Art.
from the time annulled 40, Family
of Code]
performance
; inexistent Can be
from the very impugned

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Void Voidable

even after
death of the
parties

Who May A proper A party to

Challenge interested the
Validity person marriage
(depending
on the dates
of marriage
and of filing
of
proceeding)

Susceptible Does not Prescribes

to prescribe
Prescription

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III. LEGAL SEPARATION 46, Family Code. If drug addiction, habitual

alcoholism, lesbianism or homosexuality
should occur only during the marriage, they
An action for legal separation involves nothing
become mere grounds for legal separation
more than the bed-and-board separation of the
under Art. 55 Family Code [Santos v. Court of
spouses. It is purely personal in nature [Lapuz
Appeals and Bedia-Santos, G.R. No. 112019
Sy v. Eufemio, G.R. No. L-30977 (1972)].
(1995)].

A. Grounds for Legal Separation 7. Contracting by the respondent of a

[Art. 55, Family Code] subsequent bigamous marriage,
whether in the Philippines or abroad
Note: As a ground for legal separation,
1. Repeated physical violence or grossly
however, there is no need for a criminal
abusive conduct directed against the
conviction for bigamy.
petitioner, a common child, or a child of
the petitioner
8. Sexual infidelity or perversion
Note: Acts of Violence according to the Anti-
In Dedel v. Court of Appeals [G.R. No. 151867
Violence Against Women and Their Children
(2004)], the Supreme Court ruled that a
Act of 2004 (RA 9262) are also grounds for
spouse's sexual infidelity or perversion and
legal separation under Art. 55 (1), Family
abandonment, by themselves, do not
Code.
constitute psychological incapacity within the
contemplation of Art. 36, Family Code.
2. Physical violence or moral pressure to
compel the petitioner to change
Irreconcilable differences, sexual infidelity or
religious or political affiliation
perversion, emotional immaturity and
The law does not require the violence or moral
irresponsibility, and the like, do not by
pressure to be repeated. A single act of
themselves warrant a finding of psychological
violence is sufficient to be a ground since
incapacity under Art. 36, as the same may only
religious and political belief are human rights
be due to a person's refusal or unwillingness to
[Tolentino].
assume the essential obligations of marriage
and not due to some psychological illness that
3. Attempt of respondent to corrupt or
is contemplated by this rule [Garlet v. Garlet,
induce the petitioner, a common child,
G.R. No. 193544 (2017)].
or a child of the petitioner, to engage in
prostitution, or connivance in such
9. Attempt by the respondent against the
corruption or inducement
life of the petitioner
Only the respondent spouse must be guilty of
corrupting or inducing the petitioner, a common
10. Abandonment of petitioner by
child or a child of the petitioner to engage in
respondent without justifiable cause
prostitution.
for more than one (1) year.
Abandonment is not mere physical
4. Final judgment sentencing the
estrangement but also financial and moral
respondent to imprisonment of more
desertion. There must be an absolute
than six (6) years, even if pardoned
cessation of marital relations, duties, and rights
with the intention of perpetual separation [Dela
5. Drug addiction or habitual alcoholism
Cruz. v. Dela Cruz, G.R. No. L-19565 (1968)].
of the respondent
To be a ground for legal separation,
6. Lesbianism or homosexuality of the
abandonment must be without just cause [Ong
respondent
Eng Kiam v. Ong, G.R. No. 153206 (2006)].
The other forms of psychoses, if existing at
the inception of marriage, like the state of a
party being of unsound mind or concealment of
drug addiction, habitual alcoholism,
homosexuality or lesbianism, merely renders
the marriage contract voidable pursuant to Art.
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B. Defenses [Art. 56, Family 6. Prescription of action for legal
separation
Code]
Article 57, Family Code. An action for legal
separation shall be filed within five years from the
1. Condonation by the aggrieved party – time of the occurrence of the cause.
after the commission of the offense; may
be expressed or implied.
Condonation may be given expressly or 7. Reconciliation of parties during
impliedly. An example of an implied pendency of action [Art. 66 (1), Family
condonation is when a husband repeatedly has Code]
intercourse with the wife despite the wife’s A joint manifestation, under oath and duly
cruelty. “Although he did not wish it, [he did it] signed by the spouses shall be filed with the
eventually for the sake of peace” [Willan v. court in the same proceeding for legal
Willan, G.R. No. L-13553 (1960)]. separation [Art. 65, Family Code].

2. Consent by the aggrieved party to the 8. Death of either party during pendency
commission of the offense – before the of action
commission of the offense; may be Death of the plaintiff before decree of legal
express [e.g. written agreement, Matubis v. separation abates the action. There is no more
Praxedes, G.R. No. L-11766 (1960)] or need for legal separation because the marriage
implied is already dissolved by the death of one of the
The non-interference of the husband with parties [Lapuz Sy v. Eufemio, G.R. No 30977
regard to the amorous relations between his (1972)].
wife and Ramos constitutes consent [People v.
Sensano and Ramos, G.R. No. L-37720 C. Procedure
(1933)].
Who may File the Action
3. Connivance between parties in the A petition for legal separation may be filed only
commission of the offense by the husband or the wife [Sec. 2, A.M. No.
Connivance is present when the husband 02-11- 11-SC (Rule on Legal Separation)].
throws no protection around his wife nor warns
her against intimacy with the driver. A husband Where to File the Action
who had reliable reports for two months that The petition shall be filed in the Family Court of
gave him reason to suspect that his wife was the province or city where the petitioner or the
having an affair with her driver yet did nothing respondent has been residing for at least six
to keep the latter away is guilty of connivance months prior to the date of filing “or in the case
[Sargent v. Sargent, 114 A. 428 (1920)]. of a non-resident respondent, where he may be
found in the Philippines, at the election of the
4. Mutual guilt or recrimination between petitioner” [Sec. 2, A.M. No. 02-11-11-SC].
spouses in the commission of any
ground for legal separation When to File Action
An action for legal separation shall be filed
5. Collusion between parties to obtain within five years from the time of the
decree of legal separation occurrence of the cause [Art. 57, Family Code;
Collusion in matrimonial cases is the act of A.M. No. 02-11-11-SC].
married persons in procuring a divorce by
mutual consent, whether by preconcerted Cooling-off and Reconciliation Effects
commission by one of a matrimonial offense, or An action for legal separation shall in no case
by failure, in pursuance of agreement, to be tried before six months shall have elapsed
defend divorce proceedings [Brown v. since the filing of the petition [Art. 58, Family
Yambao, G.R. No. L-10699 (1957)]. Code].

Actions cannot be tried unless the court has

attempted to reconcile the spouses, and
determined that despite such efforts,

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reconciliation is highly improbable [Art. 59, spouse shall be forfeited in favor of the
Family Code]. common children, previous children, or
innocent spouse, in that order [Arts. 63 &
Note: Art. 43 (2), Family Code]
1. This is without prejudice to judicial 3. Custody of the minor children shall be
determination of custody of children, awarded to the innocent spouse [Arts. 63 &
alimony, and support pendente lite. 213, Family Code]
2. This Family Code provision dictating a 4. Guilty spouse shall be disqualified from
mandatory 6-month cooling-off period does inheriting from the innocent spouse by
not apply in cases where violence, as used intestate succession. The provisions in
in RA 9262 (Anti-Violence Against Women favor of the guilty party in the will of the
and their Children), is alleged. The case innocent spouse shall also be revoked by
should be heard as soon as possible by the operation of law [Art. 63, Family Code]
court. 5. Donations in favor of the guilty spouse may
be revoked [Art. 64, Family Code] but this
D. Effects of Filing Petition action prescribes after 5 years from the
decree of legal separation
1. The spouses are entitled to live separately, 6. Innocent spouse may also revoke
but the marital bond is not severed [Art. 61 designation of guilty spouse as beneficiary
(1), Family Code] in an insurance policy, even if such
2. Administration of community or conjugal stipulations are irrevocable [Art. 64, Family
property – If there is no written agreement Code; Sec. 11, PD 612]
between the parties, the court shall 7. Obligation for mutual support ceases, but
designate one of them or a third person to the court may order the guilty spouse to
administer the ACP or CPG [Art. 61 (2), support the innocent spouse [Art. 198,
Family Code] Family Code]
8. The wife shall continue to use the surname
Note: No motion to dismiss the petition shall be of the husband even after the decree for
allowed except on the ground of lack of legal separation [Laperal v. Republic, G.R.
jurisdiction over the subject matter or over the No. L-18008 (1992)]
parties; provided, however, that any other
ground that might warrant a dismissal of the G. Reconciliation
case may be raised as an affirmative defense
in an answer [Sec. 4, A.M. No. 02-11-11-SC] Effects of Reconciliation:
1. Proceedings for legal separation shall be
E. Effects of Pendency terminated at whatever stage [Art. 66 (1),
Family Code].
The Court shall provide for: [Arts. 62 & 49, 2. If there is a final decree of legal separation,
Family Code] it shall be set aside [Art. 66 (2), Family
1. Support of spouses Code].
2. Custody of children: The court shall give 3. The separation of property and forfeiture of
custody of children to one of them, if there share of the guilty spouse shall subsist,
is no written agreement between the unless the spouses agree to revive their
spouses. former property regime or to institute
3. Visitation rights of the other spouse another property regime [Arts. 66-67,
Family Code].
4. Joint custody of children is restored.
F. Effects of Decree of Legal 5. The right to intestate succession by the
Separation guilty spouse from the innocent spouse is
restored.
1. The spouses can live separately [Art. 63, 6. The right to testamentary succession
Family Code] but the marriage bonds are depends on the will of the innocent spouse.
not severed
2. The ACP or CPG shall be dissolved and
liquidated, and the share of the guilty

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H. Effect of Death of One of the
Parties
The death of either party to a legal separation
proceeding, before final decree, abates the
action. There is no more need for legal
separation because the marriage is already
dissolved by the death of one of the parties. An
action for legal separation is also purely
personal between the spouses [Lapuz Sy v.
Eufemio, G.R. No. 30977 (1972)].

Void Marriages, Voidable Marriages and Legal Separation

Void Marriages Voidable Marriages Legal Separation

Grounds 1. Absence of essential or Defect in any of the Grounds not relating to

formal requisites essential requisites: any of the essential or
a. One is a minor 1. Lack of parental formal requisites:
b. No authority to marry consent, 1. Repeated physical
c. No valid marriage 2. Insanity, violence
license 3. Fraud, 2. Pressure to compel
d. Bigamous and 4. Force, intimidation, to change
polygamous undue influence, religious/political
marriages 5. Impotence, affiliation
e. Mistake of 6. Serious and 3. Corruption/
identity incurable STD inducement to
2. Psychological engage in
incapacity prostitution
3. Incestuous marriages 4. Final judgment with
4. Marriages against sentence of more
public policy than 6 years
5. Subsequent marriages 5. Drug addiction/
which did not comply habitual alcoholism
with Art. 53, Family 6. Homosexuality/
Code lesbianism
7. Bigamous marriage
8. Sexual infidelity or
perversion
9. Attempts against
the life of petitioner
10. Abandonment
without just cause
for more than 1
year

Defenses None 1. Condonation

2. Consent
3. Connivance
4. Collusion
5. Recrimination
6. Prescription

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Void Marriages Voidable Marriages Legal Separation

Prescription No Prescription 1. Lack of parental Within 5 years from the

consent occurrence of the cause
a. Spouses: 5 years
after turning 21
b. Parents: before
the spouses turn
21
2. Insanity
a. Insane spouse:
during lucid
intervals
b. Sane spouse/
guardian: lifetime
3. Fraud: 5 years after
the discovery of the
fraud
4. Force, intimidation,
undue influence: 5
years after cessation
5. Impotence/STD: 5
years from marriage

Who can file According to A.M. No. 02- Only the spouses Only the spouses
11-10-SC: (cannot survive the (cannot survive the
1. Before March 18, 2003 death of the plaintiff) death of the plaintiff)
(petition for nullity or
celebration of marriage)
- any party
2. On and after March 18,
2003 (petition for nullity
or celebration of
marriage) - only the
Spouses

According to Enrico v. Heirs

of Medinaceli [G.R. No.
173614, (2007):

3. Upon death of the

parents - the heirs

Note: Upon the death of the

parent his heirs have
already a vested right over
whatever property left by
the parent. Hence, upon the
death of anyone of the
guilty party to the void
marriage, his heirs may file
a petition to declare the
marriage void [Enrico v,
Heirs of Medinaceli, supra].

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Void Marriages Voidable Marriages Legal Separation

Effects of In the absence of adequate provisions in a written 1. Live separately

Pendency agreement: 2. Designate either of
1. Support of spouses them or a third
2. Support and custody of children person as
3. Visitation rights administrator of
property
3. Support of spouses
4. Support and custody
of children
5. Visitation rights

Effects of 1. General Rule: 1. Properties [Art. 50, 1. Properties [Art. 63

Decree Properties [Art. 147-148, Family Code] (2), Family Code]
Family Code] a. ACP/CPG a. Dissolution and
a. Art. 147 (equal dissolved, share Liquidation of
shares) governs forfeited to heirs ACP/CPG
property relations of if bad faith
void marriages b. Donations valid, 2. Support and Custody
b. Art. 148 (in except if bad faith [Art. 213, Family
proportion) governs c. Insurance may be Code]
property relations of revoked if bad a. Parental authority
bigamous faith to the parent
adulterous d. No succession for designated by
relationships spouse in bad Court after all
faith relevant
Exception: 2nd void consideration
marriage under Art. 40. 2. Status of Children b. Tender years
[Art. 54, Family presumption for
2. Status of Children [Art. Code] Child under 7 y.o.
54, Family Code] a. Conceived or [Art 213,
born before Family Code]
General Rule: Conceived judgment,
or born before the judgment legitimate. 3. Inheritance,
of absolute nullity, Donations and
illegitimate 3. Continued Use of Designation in
Surname [Art. 371, Insurance Policies
Exceptions: Conceived or Civil Code] [Sec. 22, Rules on
born a. Dependent on Legal Separation]
a. Before the judgment of her being the
annulment; innocent or guilty 4. Continued Use of
b. Before the judgment of party Surname [Art. 372,
absolute nullity under Civil Code]
Art 36, FC
(Psychological
Incapacity)
c. Of the subsequent
marriage under Art. 53,
FC (Failure to Record
the Decree of Nullity of
Annulment);
d. Prior to the termination

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of the subsequent
marriage
under Art. 42, FC (when
the absent spouse files
an affidavit of
reappearance)

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IV. RIGHTS AND Note: Injury contemplated here is physical,

moral, emotional or psychological, not
OBLIGATIONS BETWEEN financial.
HUSBAND AND WIFE
F. Exercise of Profession
These rights and duties are not subject to
stipulation between the spouses; and though Either spouse may exercise any legitimate
they may voluntarily agree to any change in profession, without the need for consent of the
their personal relations, this agreement will be other [Art. 73, Family Code].
void and have no legal effect.

A. Live Together

Article 68, Family Code. The husband and wife are

obliged to live together, observe mutual love,
respect and fidelity, and render mutual help and
support.

Exception: One spouse living abroad or there

are valid and compelling reasons [Art. 69 (2),
Family Code] – at the discretion of the court.

Exception to the Exception: Incompatibility

with the solidarity of the family [Art. 69 (2),
Family Code].

B. Fix a Family Domicile

Paragraph 1, Article 69, Family Code. The

husband and wife shall fix the family domicile. In
case of disagreement, the court shall decide.

C. Support the Family

The spouses are jointly responsible for the
support of the family.

D. Management of Family Life

Article 71, Family Code. The management of the

household shall be the right and duty of both
spouses. The expenses for such management shall
be paid in accordance with the provisions of Art. 70.

E. Effect of Neglect of Duty

Article 72, Family Code. When one of the spouses

neglects his or her duties or commits acts which tend
to bring danger, dishonor or injury to the other or to
the family, the aggrieved party may apply to the court
for relief.

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V. PROPERTY RELATIONS B. Donations by Reason of

BETWEEN HUSBAND Marriage Donations Propter
AND WIFE Nuptias

Donations propter nuptias are made in

A. General Provisions consideration of marriage. There can be a valid
donation even if the marriage never took place,
Requisites for Validity of Marriage but the absence of marriage is a ground for the
Settlements [Art. 75, Family Code] revocation of the donation [Solis v. Barroso,
1. Future spouses agree upon the regime of G.R. No. 27939 (1928)].
absolute community, conjugal partnership
of gains, complete separation of property, or Donations propter nuptias are without onerous
any other regime. consideration, marriage being merely the
2. In the absence of marriage settlement, or occasion or motive for the donation, not its
when the regime agreed upon is void, the cause. Being liberalities, they remain subject to
system of absolute community property as reduction for inofficiousness upon the donor’s
established in this Code shall govern. death, if they should infringe the legitime of a
forced heir [Mateo v. Lagua, G.R. No. L-26270
Requirements for Marriage Settlements and (1969)].
any Modification Thereof [Art. 77, Family
Code] Requisites of Donation Propter Nuptias
1. Must be made in writing 1. Made before the celebration of marriage
2. Signed by the parties 2. Made in consideration of marriage
3. Executed before the marriage celebration 3. Made in favor of one or both of the future
4. If executed by a person below 21 years, spouses
valid only when persons required to give 4. In a public document and not merely
consent to the marriage (father, mother, or privately stipulated [Solis v. Barroso, G.R.
guardian, respectively) are made parties to No. 27939 (1928)]
the agreement [Art. 78, Family Code; Sec.
3, RA 6809 amending Art. 236, Family Who May Donate
Code] 1. Spouses to each other
2. Parents of one or both spouses
Note: Marriage settlements are considered 3. Third persons to either or both spouses
accessory to the marriage, therefore as per Art.
81, Family Code, stipulations in consideration Donations Excluded are:
of future marriage and donations will be void if 1. Ordinary wedding gifts given after the
the marriage does not take place. celebration of marriage
2. Donations in favor of future spouses made
Should the surviving spouse contract a before marriage but not in consideration
subsequent marriage without compliance with thereof
the foregoing requirements, a mandatory 3. Donations made in favor of persons other
regime of complete separation of property shall than the spouses even if founded on the
govern the property relations of the subsequent intended marriage
marriage [Art. 103 (3), Family Code].

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Distinguished from Ordinary Donations
marriage due (knowing donor’s
Donations Propter Ordinary to non- that it was choice;
Nuptias Donations compliance void), within 5
with donations in years from
Does not require Express acceptance registration favor of the date of
express acceptance required requirement second finality of the
in Art. 52, marriage are judicial
May include future Cannot include Family revoked by declaration
property (subject to future property Code) operation of of nullity.
formalities of wills) law.
In case of donation No limit to donation 2. Art 44, If either or
between spouses, if of present property Family Code both
present property is provided legitimes (bad faith in spouses in
donated and the are not impaired securing the
property regime is declaration subsequent
not absolute of marriage
community, limited to presumptive acted in bad
1/5 [Art. 84, Family death) faith
Code] (knowing
that the
Grounds for Grounds for person was
revocation found in revocation found in still alive),
Art. 86, Family Code donation laws Civil donations in
Code provisions favor of the
subsequent
Grounds for Revocation of Donation marriage is
Propter Nuptias [Art. 86, Family Code] revoked by
operation of
Marriage Not Celebrated law.

Donation contained Rendered void [Art. 3. All other Donor’s

in marriage 81, Family Code] void choice,
settlement marriages regardless of
Does not prescribe good/bad
faith of the
donee.
Donation contained Donor’s choice
in a separate
instrument
Prescribes within 5 Other Cause of Annulment
years from supposed
date of marriage Revoked by operation of law if donee is the
guilty spouse who acted in bad faith

Void Marriage
Upon Legal Separation, Donee the Guilty
General Rule: There must be a judicial Spouse [Art. 64, Family Code]
declaration of nullity for the void marriage.
Revocation is by donor’s choice and done
1. Art 40, in If donee- If both within 5 years from finality of decree of legal
relation to spouse parties acted separation
Art 53, contracted in good
Family Code the second faith,
(void marriage in revocation
subsequent bad faith will be by
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donations between the prospective spouses
Resolutory Condition Complied With
made therein, shall be rendered void if the
marriage does not take place. However,
General Rule: Revocation is by donor’s
stipulations that do not depend upon the
choice and done within 5 years from finality
celebration of the marriages shall be valid [Art.
of decree of legal separation
81, Family Code].
Exception: If the other spouse is the donor,
action does not prescribe Provisions on Co-ownership Apply
The provisions on co-ownership shall apply to
the absolute community of property between
Acts of Ingratitude [Art. 765, Civil Code] the spouses in all matters not provided for in
this Chapter [Art. 90, Family Code].
General Rule: Revocation is by donor’s
choice and done within 1 year from N.B. The creditors of the spouse who made
knowledge of fact of ingratitude with donor such waiver may petition the court to rescind
being capable of bringing suit the waiver to the extent of the amount sufficient
to cover the amount of their credits.

C. Absolute Community of D. Conjugal Partnership of Gains

Property
This property regime was formerly the default
Definition regime under the Civil Code.
The community property consists of all the
property owned by the spouses at the time of In this regime, the spouses retain ownership of
the celebration of the marriage, and those their separate property. However, the spouses
either one or both of them acquired during the place in a common fund the proceeds,
marriage. products, fruits and income of their separate
property and those acquired by either or both
Property acquired during the marriage is spouses through their efforts or by chance.
presumed to belong to the community, unless
proved to be excluded therefrom [Art. 93, The presumption applies that all properties
Family Code]. acquired during the marriage belong to the
CPG. There are 3 distinct patrimonies in this
If Marriage Does Not Take Place system, the husband’s capital property, the
Everything stipulated in the settlements or wife’s paraphernal property, and the conjugal
contracts referred to in the preceding articles in property.
consideration of a future marriage, including

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Comparison of ACP and CPG
Absolute Community of Property (ACP) Conjugal Partnership of Gains (CPG)

When it At the precise moment of the celebration For marriages after the Family Code, CPG becomes
commences of the marriage [Art. 88, Family Code] the property regime only if agreed to by the parties
through a marriage settlement

What it All the properties owned by the spouses at Proceeds, products, fruits, and income of their
consists of the time of the celebration of the marriage separate properties
or acquired thereafter [Art. 91, Family Code]
Everything acquired by them during marriage
through their own efforts

Under the ACP, spouses cannot exclude Everything acquired through their efforts or by chance
specific properties from the regime unless
done in settlement

Winnings from gambling shall accrue to Specific properties [Art. 117, Family Code]
the community property but obligations from 1. Acquired by onerous title during the marriage at
gambling shall not [Art. 95, Family Code] the expense of the Common Fund;
2. Acquired through the labor, industry, work, or
Property acquired during marriage is profession of either or both spouses
presumed to have been obtained through 3. Fruits from common property and net fruits of
joint efforts of parties, even though one did the exclusive property of each spouse
not actually participate in the acquisition. 4. Share of either spouse in hidden treasure,
This is true for a party whose efforts whether as finder or owner of property where
consisted in the care and maintenance of treasure was found
the family household. Such is regarded as 5. Acquired through occupation such as fishing or
contributions to the acquisition of common hunting
property by one who has no salary, income, 6. Livestock existing at dissolution of partnership
work or industry [Ocampo v. Ocampo, G.R. in excess of what is brought by either spouse to
No. 198908 (2015)]. the marriage
7. Acquired by chance, such as winnings from
gambling or betting

Moral damages arising from a contract paid from the

CPG [Zulueta v. Pan American World Airways, G.R.
No. L-28589 (1973)]

Loans contracted during the marriage are conjugal,

and so is any property acquired therefrom [Mendoza
v. Reyes, G.R. No. L-31625 (1983)]

Property purchased by installment, paid partly with

conjugal funds and partly with exclusive funds, if full
ownership was vested during the marriage; the CPG
shall reimburse the owner-spouse [Art. 118, Family
Code]

If a winning ticket is bought by conjugal funds, the

prize is conjugal (otherwise, the prize is exclusive
property of the spouse who owns the ticket)

Improvement on exclusive property: if original value is

less than new value (where new value = value of land
+ value of improvements + net change in value), then
land becomes conjugal property, subject to the
reimbursement of the value of the property of the
owner-spouse at the dissolution of the CPG

Property belonging to one spouse converted into

another kind totally different in nature from its original

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Absolute Community of Property (ACP) Conjugal Partnership of Gains (CPG)

form during marriage becomes conjugal in the

absence of proof that the expenses of the conversion
were exclusively for the account of the original owner-
spouse, subject to reimbursement of the value of the
original property from the conjugal partnership

What Properties acquired before the marriage, for Property brought into the marriage by each spouse
remains those with legitimate descendants by a as his/her own
exclusive former marriage (to protect rights of children
property by a former marriage)
[Art. 92, FC]
Properties acquired during the marriage Properties acquired during the marriage by a
by a gratuitous title, i.e., donation, gratuitous title, i.e., donation, inheritance by testate
inheritance by testate and intestate and intestate succession (but the fruits of such
succession, including the fruits of such properties form part of the CPG)
properties
Except: When expressly provided by the donor or
Except: When expressly provided by the testator that the property shall form part of the CPG
donor or testator that the property shall form
part of the ACP

Properties for personal use i.e., wearing Property acquired by right of redemption, by barter, or
apparel, toilet articles, eyeglasses by exchange with property belonging to either spouse

Except: Plata v. Yatco, G.R. No. L-20825 (1964): Plata

1. Luxurious jewelry and those of special purchased property when she was single. When
value that increase in value over time married, she and her husband Bergosa co-signed a
(partakes of the nature of an mortgage on the property. Upon foreclosure, Bergosa
investment) was sued for illegal detainer. A writ of execution on
the property was carried out but Plata refused to leave
the premises. SC ruled that Plata cannot be held in
contempt. Property is not conjugal.

Her husband signing as co-mortgagor does not

convert it to CPG. She could ignore execution
because the decision was for her husband alone.

Property purchased with exclusive money of either

spouse

Property purchased with exclusive money of either

spouse

Property purchased by installment, paid partly with

conjugal funds and partly with exclusive funds, if full
ownership was vested before the marriage [Art. 118,
Family Code]. Even if the installment is completed
after the marriage, the property is exclusive if
ownership was vested in one spouse before the
marriage [Lorenzo v. Nicolas, G.R. No. L-4085
(1952)].

Presumptio All properties acquired during the marriage All property acquired during the marriage, whether
n form part of the ACP, unless it be proven made, contracted, or registered in the name of one
that they are excluded [Art. 93, Family spouse, are presumed conjugal unless the contrary is
Code]. proven [Art. 116, Family Code].

Charges [Arts. 94 & 121-123, Family Code]

and 1. Support of the following:

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Absolute Community of Property (ACP) Conjugal Partnership of Gains (CPG)

Obligations a. Spouses;
b. Common children;
c. Legitimate children of previous marriage;
d. Illegitimate children – follow the provisions on Support; common property liable in case of
absence or insufficiency of the exclusive property of the debtor-spouse, but the payment
shall be considered as an advance on the share of the debtor-spouse.
2. Expenses to enable either spouse to commence/complete a professional/vocational course or
activity for self-improvement;
3. Value donated or promised by both spouses in favor of common legitimate children for the
exclusive purpose of commencing/ completing a professional/ vocational course or activity for
self-improvement;
4. Generally: all expenses incurred with the consent to the spouses or for the benefit of the family.

If community property is insufficient, the If community property is insufficient, the spouses are
spouses are solidarily liable for the unpaid solidarily liable for the unpaid balance from their
balance from their separate properties separate properties except for:
except for: 1. Debts contracted by either spouse before
1. Debts contracted by either spouse marriage which have not redounded to the
before marriage which have not benefit of the family;
redounded to the benefit of the family; 2. Support of illegitimate children; and
2. Support of illegitimate children; and 3. Liabilities incurred by either spouse arising from
3. Liabilities incurred by either spouse crime or quasi-delict.
arising from crime or quasi-delict.
Gambling losses of any kind (i.e., legal or illegal) shall
Gambling losses of any kind (i.e., legal or be borne by the losing spouse’s separate property
illegal) shall be borne by the losing spouse’s [Art. 95, Family Code]
separate property [Art. 95, Family Code]
If conjugal partnership property is insufficient, the
spouses are solidarily liable for the unpaid balance
from their separate properties. Gambling losses of
any kind (i.e., legal or illegal) shall be borne by the
losing spouse’s separate property [Art. 123, Family
Code]

Loan contracts signed by both spouses are conjugal,

and they are jointly liable for payment, even if only one
spouse signs a subsequent promissory note [DBP v.
Adil, G.R. No. L-48889 (1988)].

The Supreme Court ruled that the indirect benefits

that might accrue to a husband in signing as a surety
or guarantee in an agreement not in favor of the family
but in favor of his employer corporation are not
benefits that can be considered as giving a direct
advantage accruing to the family. Hence, the creditors
cannot go against the conjugal partnership property in
satisfying the obligation subject of the surety
agreement. A contrary view would put in peril the
conjugal partnership by allowing it to be given
gratuitously as in cases of donation of conjugal
partnership property, which is prohibited [Ayala
Investment v. Ching, G.R. No. 118305 (1998)].

Ownership, The administration and enjoyment of the community/conjugal property shall belong to both spouses
administrati jointly.
on,
enjoyment, In case of disagreement, the husband’s decision shall prevail, subject to recourse to the court by
and the wife for a proper remedy, within 5 years from the date of contract [Art. 96, 124 Family Code].
disposition
of property Spouses are not co-owners of CPG during the
marriage and cannot alienate the supposed 1/2
interest of each in the said properties. The interest of

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Absolute Community of Property (ACP) Conjugal Partnership of Gains (CPG)

the spouses in the CPG is only inchoate or a mere

expectancy and does not ripen into title until it
appears after the dissolution and liquidation of the
partnership that there are net assets [De Ansaldo v.
Sheriff of Manila, G.R. No. L-43257 (1937)].

Either spouse may, through a will, dispose

of his or her interest in the community
property [Art. 97, Family Code].

However, the will should refer only to his or

her share in the community property.

Disposition or encumbrance of conjugal property requires the following: Authority of the court or
written consent of the other spouse. The absence of such will render such encumbrance void [Art.
96 and 124 (2), Family Code]. It is the same for ACP.

Donation of one spouse without the consent of the other is not allowed [Art. 98, 125 Family Code]

Exception:
Moderate donations to charity or on occasion of family rejoicing or distress

Mere awareness of a transaction is not consent [Jader-Manalo v. Camaisa, G.R. No. 147978
(2002)].

In the absence of (court) authority or written consent of the other spouse, any disposition or
encumbrance of the conjugal property shall be void [Homeowners Savings & Loan Bank v. Dailo,
G.R. No. 153802 (2005)].

If, however, one of the spouses is an alien, the Filipino spouse may encumber or dispose of the
property w/o the consent of the former. The property is presumed to be owned exclusively by the
Filipino spouse [Cheesman v. IAC, G.R. No. 7483 (1991)].

Dissolution Terminates upon [Art. 99, 126 Family Code]:

of the 1. Death of either spouse – follow rules in Art. 103
regime 2. Legal separation – follow rules in Arts. 63 and 64
3. Annulment or judicial declaration of nullity – follow rules in Arts. 50 and 52

Judicial separation of property during marriage – follow rules in Arts. 134 to 138

Rules on de General Rule: De facto separation does not affect the ACP/CPG.
facto
separation Exceptions:
1. Spouse who leaves the conjugal home without just cause shall not be entitled to support;
however, he/she is still required to support the other spouse and the family
2. If consent is necessary for transaction but is withheld or otherwise unobtainable, authorization
may be obtained from the court
3. Support for family will be taken from the ACP/CPG
4. If ACP/CPG is insufficient, spouses shall be solidarily liable

Effect of de If it is necessary to administer or encumber separate property of the spouse who left, the spouse
facto present may ask for judicial authority to do this.
separation
If ACP/CPG is not enough and one spouse has no separate property, the spouse who has property
is liable for support, according to provisions on support.

Rules on Abandonment [Art. 101 & 128, Family Code]

Abandonme Present/aggrieved spouse may petition the court for:
nt 1. Receivership
2. Judicial Separation of Property

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Absolute Community of Property (ACP) Conjugal Partnership of Gains (CPG)

3. Authority to be the sole administrator of the absolute community, subject to precautionary

conditions that the court may impose

A spouse is deemed to have abandoned the other when he or she has left the conjugal dwelling
without any intention of returning.

Spouse is prima facie considered to have abandoned the other spouse and the family if he or she
has:
1. Left for a period of 3 months
2. Failed to inform the other spouse of his or her whereabouts for a period of 3 months

Physical separation of the spouses, coupled with the

husband’s refusal to give support to the wife, sufficed
to constitute abandonment as a ground for an action
for the judicial separation of their conjugal property
[Partosa-Jo v. CA, G.R. No. 82606 (1992)].

Liquidation Procedure [Art. 102, Family Code] Procedure [Art. 129, Family Code]
of assets 1. Prepare an inventory of assets of ACP 1. Prepare an inventory of all properties
and and of spouses with market values 2. Amounts advanced by CPG in payment of
liabilities 2. Debts and obligations are paid with personal debts and obligations shall be credited
community property, and separate to the CPG
debts and obligations not charged to 3. Reimburse each spouse for the use of his/her
ACP paid by respective assets of exclusive funds in the acquisition of property or
spouses for the value of his or her exclusive property, the
a. If obligations exceed the assets of ownership of which has been vested by law in
the ACP, nothing is divided. the conjugal partnership
Creditors can go after the separate 4. Debts and obligations of CPG shall be paid out
properties of the spouses, which are of the conjugal assets, otherwise both spouses
solidarily liable for the deficiency are solidarily liable with their exclusive property
3. Delivery of whatever remains in their 5. Remains of the exclusive properties shall be
exclusive property delivered to respective owner-spouses.
4. The balance, or net remainder, is 6. Indemnification for loss/deterioration of movables
divided equally between the spouses, belonging to either spouse, even due to
or in accordance to the proportion fortuitous event, used for the benefit of the family
agreed upon in the marriage 7. Net remainder of CPG shall constitute the profits
settlement, irrespective of how much which shall be divided equally between husband
each brought into the community and wife except when:
5. If personal obligations of a spouse a. A different proportion or division was agreed
exceed his/her separate property, upon in the marriage settlements
creditor can go after the share of the b. There has been a voluntary waiver or
spouse on the net remainder of the forfeiture of such share as provided in the FC
ACP, without prejudice to the provisions c. Presumptive legitimes are delivered to
of law on forfeitures and delivery of common children
presumptive legitimes d. Conjugal dwelling goes to:
6. After covering all community obligations i. Spouse with whom majority of common
and obligations of spouses, balance of children choose to remain (below 7 y.o. =
separate properties shall be delivered deemed to have chosen the mother based
to respective spouses or their heirs, and on the tender years presumption)
they will also divide into two equal ii. Whoever the court chooses in case of lack
shares whatever is left of the of majority
community assets, without prejudice to
the provisions of law on forfeitures and
delivery of presumptive legitimes
7. Presumptive legitimes are delivered to
common children
8. Conjugal dwelling goes to:
a. Spouse with whom majority of
common children choose to remain
(below 7 y.o., = deemed to have
chosen the mother based on the
tender years presumption)

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Absolute Community of Property (ACP) Conjugal Partnership of Gains (CPG)

b. Whoever the court chooses in case

of lack of majority

Rules in case of termination of marriage by death of one of the spouses [Art. 103, Family Code]:
1. The community property shall be liquidated in the same proceeding for the settlement of the
estate of the deceased spouse.
2. If no such judicial settlement proceeding is instituted, surviving spouse shall liquidate the
community property either judicially or extra-judicially, within one year from the death of the
deceased spouse.
a. If no liquidation is made within the period, any disposition or encumbrance involving
community property of the terminated marriage shall be void.
b. Non-compliance with liquidation procedures would mean that a subsequently contracted
marriage will follow a regime of complete separation of property.

Procedure for liquidation of properties of two marriages [Art. 104, Family Code]:
1. Determine the capital, fruits, and income of each community upon such proof as may be
considered according to the rules of evidence.
2. In case of doubt as to which community the existing properties belong, they shall be divided
between two communities in proportion to the capital and duration of each.

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E. Separation of Property and Liabilities Family expenses: Both
Administration of Common spouses are liable in
proportion to their income;
Property by One Spouse if insufficient, based on the
During the Marriage current value of their
separate properties
If the spouses did not execute a written
agreement regarding their property regime Creditors for family
prior to the marriage, they can no longer expenses: Spouses
change it after the marriage ceremony has solidarily liable
taken place unless they have secured judicial
approval [Art. 134, Family Code]. Ownership, Spouses may own,
administration, dispose, possess, and
Separation of Property enjoyment, and administer separate
disposition estates without the consent
When it Agreed upon in the
of the other
applies marriage settlements by
the spouses Administration of exclusive
properties may be
Mandatory under Arts. 103
transferred between
& 130, Family Code
spouses when:
(subsequent marriages
1. One spouse becomes
contracted by a surviving
the other spouse’s
spouse without judicial
guardian
settlement of previous
2. One spouse is judicially
property regime)
declared an absentee
Judicial separation of 3. One spouse is given the
property (Voluntary or just penalty of civil
cause) interdiction
4. One spouse becomes a
Default property regime fugitive
when there is reconciliation
between spouses after
judicial separation of Conveyance between the
property spouses is allowed under
Art. 1490, Civil Code
What it Present or future property
consists of or both F. Regime of Separation of
Each spouse’s earnings Property
from his or her own
profession, business, or Each spouse has complete control and
industry ownership of his or her own properties which
will include “all earnings from his or her
Natural, industrial or civil profession, business or industry and all fruits,
fruits of spouse’s separate natural, industrial or civil, due or received
properties during the marriage from his or her separate
property.” Expenses of the family shall be
May be total or partial. If shouldered by the spouses in proportion to
partial, property not their income, or, in case of insufficiency or
considered separate is default thereof, to the current market value of
presumed to pertain to the their separate properties.
ACP

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G. Property Regime of Unions contributed jointly, equal sharing.
Without Marriage if the former’s
effort consisted in
the care and
Art. 147, Family Art. 148, Family maintenance of
Code Code family and
household
Applicabil Man and woman Man and woman
ity living together as living together as N.B. Neither party
husband and wife, husband and can encumber or
with capacity to wife, NOT dispose by acts
marry (Art. 5, capacitated to inter vivos his
without any legal marry: share in co-owned
impediment) 1. Under 18 property without
1. at least 18 years old the consent of the
years old 2. Adulterous other party until
2. not violative relationship cohabitation is
of Art. 37 3. Bigamous/ terminated.
(incestuous polygamous
void marriage
marriage) 4. Incestuous Forfeiture Where only one If one party is
3. not violative marriages party to a void validly married to
of Art. 38 under Art. 37 marriage is in another, his/her
(void 5. Void good faith, share share in the co-
marriage by marriages by of party in bad owned
reason of reason of faith is forfeited: properties will
public policy) public policy accrue to the
4. not bigamous under Art. 38 In favor of their ACP/CPG of
common children his/her existing
In case of default valid marriage.
Other void of or waiver by any
marriages due to or all of the If the party who
absence of formal common children acted in bad faith
requisite or their is not validly
descendants, married to
Salaries Owned in equal Separately each vacant share another, his/her
and shares owned by parties shall belong to the share shall be
Wages respective forfeited in the
surviving same manner as
Properties Remains Remains descendants that provided in
acquired exclusive, exclusive Art 147.
through provided there is In the absence of
exclusive proof such The same rules
funds descendants, on forfeiture shall
such share apply if both
Properties Governed by rules Owned in belongs to the parties are in bad
acquired on co-ownership common in innocent party faith.
by both proportion to
through respective
work and contribution
industry

Properties Owned in equal No presumption

acquired shares since it is of joint
while presumed to have acquisition.
living been acquired When there is
together through joint evidence of joint
efforts acquisition but
none as to the
If one party did not extent of actual
participate in contribution,
acquisition, there is a
presumed to have presumption of

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VI. FAMILY HOME 2. Their parents, ascendants, descendants,

brothers, and sisters whether the
relationship be legitimate or illegitimate,
A. In General who are living in the family home and who
depend on the head of the family for support
What Constitutes the Family Home [Art. 154, Family Code].
The family home is the dwelling house where
family resides and the land on which it is Requisites to be a Beneficiary of the Family
sustained [Art. 152, Family Code]. Home
1. The relationship is within those enumerated
When Deemed Constituted in Art. 150, Family Code
The family home is deemed constituted on a 2. They live in the family home
house and lot from the time it is occupied as a 3. They are dependent for legal support on the
family residence [Art. 153, Family Code]. head of the family

Limitations on the Family Home Descendants cannot be considered

The family home must be part of the properties beneficiaries if they are supported by their own
of the absolute community or the conjugal parents and not by the ascendants who
partnership, or of the exclusive properties of constituted the family home [Patricio v. Dario,
either spouse with the other’s consent. It may G.R. No. 170829 (2006)].
also be constituted by an unmarried head of a
family in his or her own property [Art. 156, D. Exemption from Forced Sale,
Family Code].
Execution, Attachment
B. Who May Constitute the Rule: The family home is exempt from the
Family Home following from the time of its constitution and so
long as any of its beneficiaries resides therein:
The family home may be constituted 1. Execution;
1. Jointly by the husband and wife; or 2. Forced sale;
2. An unmarried head of the family [Art. 152, 3. Attachment [Art. 153, Family Code].
Family Code]
The proof that the house is the family home
Note: A person may constitute and be the must be alleged against creditors [Versola v.
beneficiary of only one family home [Art. 161, Mandolaria, G.R. No. 164740 (2006); Art. 160,
Family Code] Family Code].

Under the Family Code, there is no need to Note: The provisions of this Chapter (Arts. 152-
constitute the family home judicially or 162, Family Code) shall also govern existing
extrajudicially. All family homes constructed family residences insofar as said provisions are
after the effectivity of the Family Code (August applicable [Art. 162, Family Code].
3, 1988) are constituted as such by operation
of law. All existing family residences as of E. Sale of Family Home
August 3, 1988 are considered family homes
and are prospectively entitled to the benefits When the Family Home may be Sold
accorded to a family home under the Family The family home may be sold alienated,
Code [Kelley, Jr. v. Planters, G.R. No. 172263 donated, assigned, or encumbered by the
(2008)]. owner or owners thereof with the written
consent of the person constituting the same as
C. Beneficiaries of the Family the latter’s spouse and a majority of the
Home beneficiaries of legal age. In case of conflict,
the court shall decide [Art. 158, Family Code].
Beneficiaries
1. The husband and wife, or an unmarried
person who is the head of a family; and

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Requirements for the Sale, Alienation,
Donation, Assignment, or Encumbrance of
the Family Home
The written consent of the following:
1. the person constituting it;
2. the spouse of the person constituting it;
3. the majority of the beneficiaries who are
of legal age [Art. 158, Family Code].

F. When Terminated
The family home shall continue despite the
death of one or both of the spouses or of the
unmarried head of the family:
1. for a period of ten (10) years; or
2. for as long as there is a minor beneficiary.

And the heirs cannot partition the same unless

the court finds compelling reasons therefore.
The rule shall apply regardless of whoever
owns the property or constituted the family
home [Art. 159, Family Code].

Art. 159, Family Code imposes the

proscription against the immediate
partition of the family home regardless of
its ownership. This signifies that even if the
family home has passed by succession to the
co-ownership of the heirs, or has been willed to
any one of them, this fact alone cannot
transform the family home into an ordinary
property, much less dispel the protection cast
upon it by the law. The rights of the individual
co-owner or owner of the family home cannot
subjugate the rights granted under Article 159
to the beneficiaries of the family home [Arriola
v. Arriola, G.R. No. 177703 (2008)].

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VII. PATERNITY AND Note: In Aquino v. Aquino [G.R. Nos. 208912

and 209018 (2021)], the Court used the terms
FILIATION “marital” and “nonmarital” to replace the terms
“legitimate” and “illegitimate” when referring to
the children, as the latter terms are pejorative
The filiation of children may be (a) by nature
terms when used to describe children based on
or (b) by adoption. Natural filiation may be
their parents’ marital status.
(a) legitimate or (b) illegitimate [Art. 163,
Family Code; See table below].

Status Children Who Have this Rights Effects on

Status Succession

Legitimate a. Conceived or born during a. Bear the surnames Legitimate children are
(Marital) the valid marriage of the of the father and entitled to 1/2 of the
parents [Art. 164, Family the mother estate of the parent
Code] b. Receive support divided amongst
b. Conceived through from parents, themselves [Art. 888,
artificial ascendants, and Civil Code]
insemination [Art. 164, brothers/sisters in
Family Code] proper cases
c. Children of a subsequent c. Entitled to
marriage (after declaration legitimate
of presumptive death) and other
conceived prior to its successional rights
termination [Art. 43, [Art. 174, Family
Family Code] Code]
d. Conceived or born before d. Claim legitimacy
the final judgment of [Art. 173, Family
annulment under Art. 45 or Code]
absolute nullity under Art.
36 [Art. 54, Family Code]
e. Conceived or born of the
subsequent marriage
under Art. 53 [Art. 54,
Family Code]
f. Legitimated children [Art.
177, Family Code]
g. Adopted Children [RA
11642]

Illegitimate Conceived and born outside a a. Bear the surname Each illegitimate child
(Nonmarital) valid marriage [Art. 165, of the mother is entitled to an amount
Family Code] b. Bear the surname 1/2 the share of a
of the father if legitimate child [Art.
filiation has been 176, Family Code]
expressly
recognized by the
father through:
record of birth,
public document,
or private
handwritten
instrument
c. Receive support

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Status Children Who Have this Rights Effects on

Status Succession

d. Entitled to
successional rights
[Art 176, Family
Code]
e. Establish
illegitimate filiation
[Art 175, Family
Code]

Legitimated Conceived and born outside a Same as Legitimate Same as Legitimate

valid marriage provided that: Child [Art. 179, Family Child
a. At the time of conception: Code]
the parents were not
disqualified to marry each
other (unless the
impediment was minority
of either or both of them)
[Art. 177, Family Code]
and
b. The parents subsequently
enter into a valid marriage
[Art. 178, Family Code]

Adopted Those adopted through RA Same as Legitimate Sec. 43, RA 11642

11642 Child [Sec. 42, RA a. In legal and
11642] intestate
succession, the
adopter and the
adoptee shall have
reciprocal rights of
succession without
distinction from
legitimate filiation.
b. If the adoptee
and his/her
biological parents
had left a will, the
law on testamentary
succession shall
govern

A. Legitimate Children subsequent marriages which were

terminated after the reappearance of the
Who are the Legitimate Children? spouse presumed dead.
1. Children conceived or born during the valid 4. Children conceived or born before the
marriage of the parents [Art. 164, Family judgment of annulment under Art. 45 or
Code] absolute nullity under Art. 36 has become
2. Children conceived through artificial final and executory [Art. 54, Family Code]
insemination [Art. 164, Family Code] 5. Children conceived or born of the
3. Children of a subsequent marriage subsequent marriage under Art. 53 [Art. 54,
conceived prior to its termination [Art. 43, Family Code]
Family Code]. This refers to those 6. Legitimated children [Art. 177, Family Code]
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7. Adopted Children [RA 11642] b. Any other means stated by the rules of
court or special laws.
Natural/Biological
A child conceived or born during a valid Note: Only in the absence of primary evidence
marriage is presumed to belong to that can secondary evidence be admitted
marriage, regardless of the existence of
extramarital relationships [Liyao v. Liyao, G.R. Action for Claiming Filiation (Legitimate
No. 138961 (2002)]. Children) [Art. 173, Family Code]:
1. The child can bring the action during his or
Artificial Insemination [Art. 164, Family lifetime.
Code] 2. If the child dies during minority or in a state
Artificial insemination is the impregnation of a of insanity, such action shall be transmitted
female with the semen from male without to his heirs, who shall have a period of five
sexual intercourse. years within which to institute the action.
3. The action commenced by the child shall
The child conceived through artificial survive notwithstanding the death of either
insemination with the consent of both husband or both of the parties.
and wife is legitimate.
Right of Legitimate Children to use their
The Family Code does not require, as a Mother’s Surname
condition for the legitimacy of the child, the Art. 364, Civil Code states that legitimate
impotence of the husband. children shall “principally” use the surname of
the father, but “principally” does not mean
Note: The child must be born to the wife to be “exclusively.” There is no legal obstacle if a
considered legitimate [Art. 164, Family Code]. legitimate or legitimated child should choose to
use the surname of its mother to which it is
B. Proof of Filiation equally entitled [Alanis III v. CA, G.R. No.
216425 (2020)].
Proof of Filiation is Necessary:
1. Where the child is born after 300 days C. Illegitimate Children
following the termination of the marriage
→ Child has no status, and whoever alleges Who are Illegitimate Children?
legitimacy must prove it. General Rule: Those conceived and born
2. If the legitimacy of a child conceived or outside of a valid marriage [Art. 165, Family
born in wedlock is impugned and the Code].
plaintiff has presented evidence to prove
any of the grounds provided in Art. 166 → Exceptions [Art. 54, Family Code]
proof of filiation may be used as a defense 1. Children of marriages void under Art. 36
[Tolentino] (psychological incapacity); and
2. Under Art. 53 (subsequent marriages which
Legitimate Children may Establish Their did not comply with Art. 52)
Filiation by any of the Following [Art. 172,
Family Code]: Action for Claiming Illegitimate Filiation
1. Primary Evidence (for voluntary recognition) Illegitimate children may establish their
a. Their record of birth appearing in the civil illegitimate filiation in the same way and on the
registry or a final judgment. same evidence as legitimate children [Art. 175,
b. An admission of his filiation by his parent Family Code].
in a public document or a private 1. For actions based on primary evidence,
handwritten instrument and signed by the same periods stated in Art. 173 of
said parent Family Code apply - lifetime of the child, will
2. Secondary Evidence (for involuntary not be extinguished by death of either party.
recognition) 2. For actions based on secondary evidence,
a. Proof of open and continuous the action may only be brought during the
possession of status as legitimate child. lifetime of the alleged parent.
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The same kind of evidence provided in Art. 172 evidence of the manifestation of the permanent
for establishing legitimate filiation may be used intention of the supposed father to consider the
to prove the filiation of illegitimate children, and child as his, by continuous and clear
the action for this purpose must be brought manifestations of parental affection and care,
within the same period and by the same parties which cannot be attributed to pure charity
as provided in Article 173 [Art. 175, Family [Perla v. Baring, G.R. No. 172471 (2012)].
Code].
Meanwhile, the lack of participation of the
However, if the evidence to prove the filiation is supposed father in the preparation of a
secondary, the action must be brought within baptismal certificate renders this document
the lifetime of the alleged parent [Art. 175, incompetent to prove paternity. Baptismal
Family Code]. certificates are per se inadmissible in evidence
as proof of filiation and they cannot be admitted
Primary Evidence indirectly as circumstantial evidence to prove
Signature of the father on the birth certificate is the same [Perla v. Baring, supra].
considered as an acknowledgement of
paternity and mere presentation of a duly By "open and continuous possession of the
authenticated copy of such certificate will status of a legitimate child" is meant the
successfully establish filiation [Eceta v. Eceta, enjoyment by the child of the position and
G.R. 157037 (2004)]. privileges usually attached to the status of a
legitimate child, like bearing the paternal
The due recognition of an illegitimate child in a surname, treatment by the parents and family
record of birth, a will, a statement before a court of the child as legitimate, constant attendance
of record, or in any authentic writing, is in itself to the child's support and education, and giving
a consummated act of acknowledgement of the the child the reputation of being a child of his
child, and no further court action is required [De parents [De Jesus v. Syquia, G.R. No. L-39110
Jesus v. Estate of Decedent Juan Gamboa (1933)].
Dizon, G.R. No. 142877 (2001)].
Other Evidence
Secondary Evidence DNA evidence can be used as proof of
Rule 130, Sec. 40 [now Sec. 41] is limited to paternity [Agustin v. CA, G.R. No. 162571
objects commonly known as family (2005)].
possessions reflective of a family's reputation
or tradition regarding pedigree like inscriptions Marriage certificates cannot be used as proof
on tombstones, monuments, or coffin plates of filiation [Lim v. CA, G.R. No. L-39381
[Jison v. CA, G.R. No. 124853 (1998)]. (1975)].

"Su padre [Your father]" ending in a letter is There are four significant procedural aspects of
only proof of paternal solicitude and not of a traditional paternity action that parties have
actual paternity. Signature on a report card to face: a prima facie case, affirmative
under the entry of “Parent/Guardian” is likewise defenses, presumption of legitimacy, and
inconclusive of open admission [Heirs of physical resemblance between the putative
Rodolfo Bañas v. Heirs of Bibiano Bañas, G.R. father and the child. A prima facie case exists
No. L-25715 (1985)]. if a woman declares — supported by
corroborative proof — that she had sexual
Mere possession of status as an illegitimate relations with the putative father; at this point,
child does not make an illegitimate child the burden of evidence shifts to the putative
recognized but is only a ground for bringing an father. Further, the two affirmative defenses
action to compel judicial recognition by the available to the putative father are: (1)
assumed parent [Gono-Javier v. CA, G.R. No. incapability of sexual relations with the mother
111994 (1994)]. due to either physical absence or impotency, or
(2) that the mother had sexual relations with
To prove open and continuous possession of other men at the time of conception [Gotardo v.
the status of an illegitimate child, there must be Buling, G.R. No. 165166 (2012)].

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Rights of Illegitimate Children 2. The parents, at the time of the child's
Illegitimate children shall use the surname and conception, were not disqualified by any
shall be under the parental authority of their impediment to marry each other, or
mother, and shall be entitled to support in disqualified only because either or both of
conformity with this Code. The legitime of each them were below 18 years old [Art. 177,
illegitimate child shall consist of one-half of the Family Code as amended by RA 9858]
legitime of a legitimate child [Art. 176, Family
Code]. Procedure and Effects:
1. Legitimation shall take place by a
It is mandatory that the mother of an illegitimate subsequent valid marriage between the
child signs the birth certificate of her child in all parents. The annulment of a voidable
cases, irrespective of whether the father marriage shall not affect the legitimation.
recognizes the child as his or not. The only [Art. 178, Family Code]
legally known parent of an illegitimate child, by 2. Effects of legitimation shall retroact to the
the fact of illegitimacy, is the mother of the child time of the child’s birth [Art. 180, Family
who conclusively carries the blood of the Code]
mother [Barcelote v. Republic, G.R. No. 3. Legitimation of children who died before
222095 (2017)]. the celebration of the marriage shall benefit
their descendants [Art. 181, Family Code]
Illegitimate children shall be under the parental
authority of their mother. Mothers are entitled Rights of Legitimated Children
to the sole parental authority of their illegitimate Legitimated children have the same rights as
children notwithstanding the father’s those of legitimate children [Art. 179, Family
recognition of the child. In the exercise of that Code].
authority, mothers are consequently entitled to
keep their illegitimate children in their
company, and the Court will not deprive them
of custody, absent any imperative cause
showing the mother’s unfitness to exercise
such authority and care [Masbate v. Relucio,
G.R. No. 235498 (2018)].

The choice of a child over 7 years of age [Art.

213, Family Code] and over 10 years of age
[Rule 99, Rules of Court] shall be considered in
custody disputes only between married parents
as they are accorded joint parental authority
over their common children [Art. 211, Family
Code]. This choice is not available to an
illegitimate child, because parental authority is
given only to the mother [Art. 176, Family
Code], unless she is shown to be unfit or
unsuitable [Masbate v. Relucio, supra]
.
D. Legitimated Children
Rule: Legitimated children are illegitimate
children who because of the subsequent
marriage of their parents are, by legal fiction,
considered legitimate.

Requisites for Legitimation:

1. The child must have been conceived and
born outside of wedlock; and
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VIII. ADOPTION 3. Must come from a country with

diplomatic relations with the Philippines
and that the laws of the adopter’s country
A. Domestic Adoption (RA will:
11642) a. acknowledge the Certificate of
Adoption as valid
Since adoption is wholly and entirely artificial, b. acknowledge the child as a legal child
to establish the relation the statutory of the adopters
requirements must be strictly carried out; c. allow entry of the child into such
otherwise, the adoption is an absolute nullity country as an adoptee
[Republic v. CA and Caranto, G.R. No. 103695
(1996)]. c. Guardians [Sec. 21(b), RA 11642]: With
respect to their wards, after the termination
Note: Republic Act No. 11642 (the Domestic of the guardianship and clearance of his/her
Administrative Adoption and Alternative Child accountabilities
Care Act) repealed RA 8552 and amended RA
8043. It took effect on January 21, 2022, which d. Foster parent [Sec. 21(c), RA 11642]: With
is beyond the bar cutoff date of June 30, 2021. respect to the foster child

Under RA 11642, the Inter-Country Adoption e. Philippine government officials and

Board is reorganized into the National Authority employees [Sec. 21(d), RA 11642]
for Child Care. The duties, functions and 1. Deployed abroad, and
responsibilities of the ICAB, the DSWD and 2. Are able to bring the child with them
other government agencies relating to
alternative child care and adoption are 2. Who May be Adopted [Sec. 22, RA
transferred to the NACC. 11642]
a. Any child who has been issued by a
1. Who May Adopt CDCLAA
a. Filipino Citizens [Sec. 21(a), RA 11642] b. Legitimate child of one spouse by another
1. Of at least 25 years of age c. Illegitimate child by a qualified adopter to
2. With full civil capacity and legal rights improve the child’s status to that of
3. Of good moral character and has not legitimacy
been convicted of any crime involving d. A Filipino of legal age if, prior to the
moral turpitude adoption, said person has been consistently
4. Emotionally and psychologically capable considered and treated, for a period of at
of caring for children least 3 years, by the adopter(s) as his/her
5. At least sixteen (16) years older than child since minority
adoptee, except: e. A child whose previous adoption has been
a. when adopter is the biological parent rescinded
of the adoptee or f. A child whose biological or adoptive
b. the spouse of the adoptee’s parent or parent(s) has died, provided that no
c. the sibling or the adopted proceedings shall be initiated within 6
6. In a position to support and care for months from the time of death of said
his/her children in keeping with the parent(s)
means of the family g. A foster child
7. Has undergone pre-adoption services
3. Rights of an Adopted Child
b. Foreign Nationals a. In General [Sec. 42, RA 11642]
1. Are permanent or habitual residents of Except in cases where the biological parent is
the Philippines for at least 5 years the adopter’s spouse, all legal ties between
2. Must possess the same qualifications as biological parent and adoptee shall be severed,
stated for Filipino nationals prior to the and the same shall then be vested on the
filing of the petition adopters.

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b. Legitimacy [Sec. 41, RA 11642] d. Abandonment or failure to comply with
The adoptee shall be considered the legitimate parental obligations
son/daughter of the adopters for all intents and
purposes, and as such is entitled to all rights Effects of Rescission [Sec. 53, RA 11642]
and obligations provided by law to legitimate a. Restoration of parental authority of the
children born to them without discrimination of adoptee’s biological parent(s) or the legal
any kind. The adoptee is entitled to love, custody of the NACC if the adoptee is still a
guidance, and support in keeping with the child
means of the family. b. Extinguishing of the reciprocal rights and
obligations of the adopters and adoptee.
c. Succession [Sec. 43, RA 11642] c. Cancellation of the new birth certificate of
In legal and intestate succession, the adopter the adoptee as ordered by the court and
and the adoptee shall have reciprocal rights of restoration of the adoptee’s original birth
succession without distinction from legitimate certificate.
filiation. However, if the adoptee and his/her d. Reverting successional rights to its status
biological parents had left a will, the law on prior to adoption but not only as of the date
testamentary succession shall govern. of judgment of judicial rescission.
e. Vested rights acquired prior to judicial
d. Name rescission shall be respected.
Under RA 11642, the adopter has the right to
choose the name by which the child is to be Note: Rescission contemplates a situation
known, consistent with the best interest of the where the adoption decree remains valid until
child. its termination.

e. Nationality B. Inter-country Adoption (RA

Adoption does not confer citizenship of the
adopter to the adopted. Under Sec. 3, Art. IV of
8043, as amended by RA 11642)
the Constitution, Philippine citizenship may be
lost/acquired [only] in the manner provided by Inter-Country Adoption refers to the socio-legal
law. The adoption of an alien is not a means of process of adopting a Filipino child by a
acquiring Philippine citizenship. A Filipino foreigner or a Filipino citizen permanently
adopted by an alien does not lose his Philippine residing abroad where the petition is filed, the
citizenship. supervised trial custody is undertaken, and the
decree of adoption is issued outside the
The right to confer citizenship belongs to the Philippines.
State (political) and cannot be granted by a
citizen through adoption. Adoption creates a Note: Under the new law, the Inter-Country
relationship between the adopter and adoptee, Adoption Board is reorganized into the National
not between the State and the adoptee Authority for Child Care. The duties, functions
[Tolentino]. and responsibilities of the ICAB, the DSWD
and other government agencies relating to
alternative child care and adoption are
4. Instances and Effects of transferred to the NACC.
Rescission
Under RA 11642, the adoption may be
rescinded only upon the petition of the adoptee When Allowed
with the NACC, or with the assistance of the No child shall be matched to a foreign adoptive
SWDO if the adoptee is a minor or if the family unless it can be satisfactorily shown that
adoptee is over 18 but is incapacitated, based the child cannot be adopted locally [Sec. 11,
on the following grounds: [Sec. 47, RA 11642] RA 8043].
a. Repeated physical and verbal maltreatment
by adopters despite having undergone
counseling
b. Attempt on life of adoptee
c. Sexual assault or violence
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IX. SUPPORT C. Source of Support

CPG or ACP shall answer for the support of
A. Scope the:
1. spouse,
Support consists of everything indispensable 2. their common children, and
for sustenance, dwelling, clothing, medical 3. the legitimate children of their spouse [Arts.
attendance, education and transportation, in 94 & 121, Family Code].
keeping with the financial capacity of the family
[Art. 194 (1), Family Code]. The separate property of the obligor shall
1. Education includes a person’s schooling or answer for the support of the:
training for some profession, trade or 1. Legitimate ascendants,
vocation, the right to which shall subsist 2. [All other] descendants, whether legitimate
beyond the age of majority [Art. 194, Family or illegitimate, and
Code]. 3. Brothers and sisters, whether legitimate or
2. Transportation includes expenses in going illegitimately related.
to and from school, or to and from place of
work [Art. 194, Family Code]. If no separate property, the ACP/CPG (if
financially capable) shall advance the support,
to be deducted from the obligor’s share upon
B. Who are Obliged to Give liquidation of such regime [Art. 197, Family
Support Code].

Those obliged to support each other are: D. Order of Support

1. Spouses,
2. Legitimate ascendants and descendants, Article 199, Family Code. Whenever two or more
3. Parents and their children (legitimate and persons are obliged to give support, the liability shall
illegitimate) and the children of the latter devolve upon the following persons in the order
(legitimate and illegitimate), herein provided:
4. Legitimate brothers and sisters, whether of 1. The spouse;
full or half-blood; [Art. 195, Family Code] 2. The descendants in the nearest degree;
3. The ascendants in the nearest degree;
5. Illegitimate brothers and sisters, whether of and
full or half-blood 4. The brothers and sisters.
● Except when the need for support of
one (who is of age) is due to a cause
imputable to his/her fault or negligence The order of liability among ascendants and
[Art. 196, Family Code] descendants would be:
1. Legitimate children and descendants,
Mutual Obligation to Support of Spouses 2. Legitimate parents and ascendants, and
Note: Both legitimate and illegitimate children 3. Illegitimate children and their descendants
are entitled to support. The only difference is [Tolentino].
the source of support which, for illegitimate
children, is the parent’s separate properties. In Case of Multiple Obligors
Where the illegitimate parent is legally married When the obligation to give support falls upon
to another person, their CPG or ACP cannot two or more persons, the payment of the same
answer for support for the illegitimate child of shall be divided between them in proportion to
one of them unless the parent has no adequate their resources [Art. 200 (1), Family Code].
separate property, in which case, support will
be taken from the CPG or ACP subject to Also, in case of urgent need and by special
reimbursement [Arts. 122 & 197, Family Code]. circumstance, the judge may order only one
obligor to furnish support without prejudice to
reimbursement from other obligors of the share
due from them [Art. 200(2), Family Code].

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In Case of Multiple Recipients attachment or execution [Art. 208, Family
If there are multiple recipients and only one Code].
obligor, and the latter has no sufficient means
to satisfy all claims: Reason: The amount of support agreed upon
1. Observe order in Art. 199 as to whose claim in the contract or given in the will can be more
shall be satisfied first; than what the recipient needs [Sempio-Diy].
2. But if the concurrent obligees are the
spouse and a child subject to parental Furthermore, contractual support shall be
authority, the child shall be preferred [Art. subject to adjustment whenever modification is
200 (3), Family Code]. necessary due to changes in circumstances
manifestly beyond the contemplation of the
The above preference given to a child under parties [Art. 208, Family Code].
parental authority over the spouse should
prevail only if the person obliged to support F. Manner and Time of Payment
pays it out his separate property. So if the
support comes from ACP or CPG, the above
rule of preference for the child does not apply Article 203, Family Code. The obligation to give
support shall be demandable from the time the
[Tolentino]. person who has a right to receive the same needs it
for maintenance, but it shall not be paid except from
Support Given by a Stranger the date of judicial or extrajudicial demand.
Article 206, Family Code. When, without the
Support pendente lite may be claimed in accordance
knowledge of the person obliged to give support, it
with the Rules of Court.
is given by a stranger, the latter shall have a right to
claim the same from the former, unless it appears
Payment shall be made within the first five days of
that he gave it without intention of being reimbursed.
each corresponding month or when the recipient
dies, his heirs shall not be obliged to return what he
The stranger contemplated in this provision is has received in advance.
one who does not have any obligation to
support the recipient. Two Options to Fulfill Obligation to Give
Support
Person Obliged Refuses or Fails to Give 1. Payment of the amount; or
Support 2. Receiving and maintaining the recipient in
Article 207, Family Code. When the person obliged the home of the provider
to support another unjustly refuses or fails to give
support when urgently needed by the latter, any third Requisites:
person may furnish support to the needy individual, 1. The obligor has his own home or domicile,
with the right of reimbursement from the person
obliged to give support. This Article shall particularly
and
apply when the father or mother of a child under the 2. There is no moral or legal reason which
age of majority unjustly refuses to support or fails to prevents the recipient from living in the
give support to the child when urgently needed. obligor’s home or domicile [Art. 204, Family
Code].
E. Amount of Support G. Renunciation and Termination
The amount of support is in proportion to the
The obligation of spouses to mutual support
means of the provider and the needs of the
receiver, and can be reduced or increased if lies in the existence of marriage bonds. Once
such circumstances change [Arts. 201 & 202, the marriage has been declared null, this
Family Code]. obligation ceases.

Contractual Support or that Given by Will The Court held that the validity of marriage can
The excess in amount beyond that required for be collaterally attacked in an action for support.
legal support shall be subject to levy on Although the suit is not instituted to directly
address the issue of validity, the Court deems
it essential to the determination of the issue on
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support [De Castro v. Assidao-De Castro, G.R. support without justifiable cause shall render
No. 160172 (2008)]. the respondent or his employer liable for
indirect contempt of court [Sec. 8(g), RA 9262].
Under Art. 194, Family Code, the obligation to
support a recipient’s education may continue In case the filiation of a child claiming for
even after the person entitled has reached the support is disputed, the rules on proving
age of majority. filiation apply. An order for support must be
issued only if paternity or filiation is established
H. Support Pendente Lite by clear and convincing evidence; the reason
being that such order may create an
Pending legal separation or annulment, and for unwholesome situation in the lives of the
declaration of nullity, support pendente lite for parties [Perla v. Baring, G.R. No. 172471
spouses and children will come from the (2012)].
ACP/CPG. After final judgment granting the
petition, mutual support obligation between
spouses ceases. However, in legal separation,
the court may order the guilty spouse to give
support to the innocent spouse [Art. 198,
Family Code].

Note: In Par. 1, Art. 100, Family Code, de facto

separation does not affect the ACP and the
CPG, except that the spouse who leaves the
conjugal home without just cause shall not be
entitled to support.

I. Procedure in Applications for

Support
Petitions for support and/or acknowledgement
may be filed with Family Courts which have
original jurisdiction over such cases [Sec. 5,
RA 8369].

In cases involving violence among immediate

family members living in the same household,
the court may order the temporary custody of
children in all civil actions for their custody. The
court may also order support pendente lite,
including deduction from the salary and use of
conjugal home and other properties in all civil
actions for support [Sec. 7, RA 8369].

A woman or her child experiencing violence

may also be granted a protection order which
may include directing the respondent to
provide support to the woman and/or her child
if entitled to legal support. An appropriate
percentage of the income or salary of the
respondent shall be withheld regularly by the
respondent’s employer for it to be automatically
remitted to the woman. Failure to remit and/or
withhold or any delay in the remittance of

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X. PARENTAL AUTHORITY a. Exception: When several survive, the

one designated by the court, taking into
account all relevant considerations [Art.
A. General Provisions 214, Family Code].

What Comprises Parental Authority [Art. 2. The oldest brother or sister, over 21 years
209, Family Code] of age [Art. 216, Family Code].
1. Caring for and rearing of children for civic 3. The child’s actual custodian, over 21 years
consciousness and efficiency, and; of age [Art. 216, Family Code].
2. Development of the moral, mental, and
physical character and well-being of
children.
C. Special Parental Authority
Who Exercises Special Parental Authority
What Characterizes Parental Authority [Art.
[Art. 218, Family Code]
210, Family Code]
1. The school (its administrators and
teachers), or
General Rule: Parental authority is not
2. The individual, entity, or institution engaged
renounceable and non-transferable.
in child care
Exception: In cases provided by law.
When is Special Parental Authority
Exercised [Art. 218, Family Code]
Who Exercises Parental Authority [Arts.
1. While the child is under their supervision,
211-213, Family Code]
instruction, or custody
2. During all authorized activities, whether
General Rule: Joint exercise by the father and
inside or outside the premises of the school,
the mother of a child [Art. 211 (1), Family
entity, or institution
Code].
Substitute Parental Authority and Special
Exceptions:
Parental Authority, Distinguished
1. In case of disagreement, the father’s
decision prevails [Art. 211, Family Code]. DIFFERENCE SUBSTITUTE SPECIAL
a. Exception to the Exception: If there is
judicial order to the contrary. Who Exercises Grandparents, Schools
2. In case of absence or death of either parent, oldest sibling, (administrat
or court- ors and
the parent present or alive [Art. 212, Family appointed teachers) or
Code]. guardian individuals,
3. In case of separation of the parents, the entities
parent designated by the court [Art. 213, engaged in
Family Code]. child care
4. In case of illegitimate children, the mother
When Exercised Only in case of Concurrent
[Art. 176, Family Code] death, with parental
absence, or authority or
B. Substitute Parental Authority unsuitability of substitute
parents parental
authority
When Substitute Parental Authority is
Exercised [Art. 214, Family Code] How Liable Subsidiarily Principally
In case of death, absence, or unsuitability of liable for and
the parents damages solidarily
caused by the liable for
Who Exercises Substitute Parental minor damages
caused the
Authority (in order) minor’s acts
1. The surviving grandparent [Art. 214, Family or omissions
Code]. while under
their

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custody, In case of disagreement, the father’s decision
supervision, shall prevail, unless there is judicial order to
or the contrary.
instruction
Nature of Administration
The property of the unemancipated child
D. Effect of Parental Authority earned or acquired with his work or industry or
over the Child’s Person by onerous or gratuitous title shall belong the
child in ownership and shall be devoted
Civil Liability [Art. 221, Family Code] exclusively to the latter’s support and
Parents and other persons exercising parental education, unless the title or transfer provides
authority shall be civilly liable for the injuries otherwise.
and damages caused by the acts or omissions
of their unemancipated children living in their The right of the parents over the fruits and
company and under their personal authority incomes of the child’s property shall be limited
subject to the appropriate defenses provided primarily to the child’s support and secondarily
by law. to the collective daily needs of the family [Art.
226, Family Code].
Disciplinary Measures over the Child [Art.
223, Family Code] Bonds
Persons exercising parental authority over a Where the market value of the property or the
child may petition the proper court of the place annual income of the child exceeds P50,000,
where the child resides for an order providing the parent concerned shall be required to
for disciplinary measures over the child. furnish a bond in such amount as the court may
determine, but not less than ten per centum
Note: (10%) of the value of the property or annual
1. The child shall be entitled to the assistance income, to guarantee the performance of the
of counsel, either of his choice or appointed obligations prescribed for general guardians
by the court, and a summary hearing shall [Art. 225 (2), Family Code].
be conducted wherein the petition and the
child shall be heard. The petition shall be considered as a summary
2. However, if in the same proceeding the special proceeding, with the ordinary rules on
court finds the petitioner at fault, irrespective guardianship being merely suppletory.
of the merits of the petition, or when the
circumstances warrant, the court may also Except the Following, in which Case the
order the deprivation or suspension of Ordinary Rules on Guardianship shall
parental authority or adopt such other Apply:
measures as it may deem just and proper. 1. When the child is under substitute parental
authority;
For Persons Exercising Substitute Parental 2. When the guardian is a stranger, or;
Authority [Art. 233 (1), Family Code] 3. A parent has remarried.
The person exercising substitute parental
authority shall have the same authority over the Trusts
person of the child as the parents. If the parents entrust the management or
administration of any of their properties to an
E. Effect of Parental Authority unemancipated child, the net proceeds of such
property shall belong to the owner.
over the Child’s Property
The child shall be given a reasonable monthly
Joint Legal Guardianship [Art. 225 (1), allowance in an amount not less than that
Family Code] which the owner would have paid if the
The father and the mother shall jointly exercise administrator were a stranger, unless the
legal guardianship over the property of their owner grants the entire proceeds to the child.
unemancipated child without the necessity of a
court appointment.
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In any case, the proceeds thus given in whole parent or person exercising parental
or in part shall not be charged to the child’s authority [Art. 231, Family Code]
legitime.
When Reinstated [Arts. 230-231, Family
F. Suspension or Termination of Code]
1. Automatically upon service of penalty (civil
Parental Authority interdiction).
2. Automatically upon pardon or amnesty of
When Permanently Terminated [Art. 228, the offender.
Family Code] 3. By judicial order, if the court finds that the
1. Upon the death of the parents cause therefore has ceased and will not be
2. Upon the death of the child, or repeated [Art. 231, Family Code].
3. Upon the emancipation of the child.
Prohibition for Persons Exercising Special
Unless Subsequently Revived by Final Parental Authority [Art. 233, Family Code]
Judgment, there is Permanent Termination In no case shall the school administrator,
[Art. 229, Family Code] teacher or individual engaged in child care and
1. Upon adoption of the child; exercising special parental authority inflict
2. Upon appointment of a general guardian; corporal punishment upon the child.
3. Upon judicial declaration of
abandonment of the child in a case filed for
the purpose;
4. Upon final judgment of a competent court
divesting the party concerned of parental
authority
a. Note: Also mandatory if the person
exercising parental authority has
subjected the child or allowed him to
be subjected to sexual abuse [Art. 232,
Family Code].
5. Upon judicial declaration of absence or
incapacity of the person exercising
parental authority.

When Suspended [Arts. 230-231, Family

Code]
1. Upon conviction of the parent or the person
exercising the same of a crime which carries
with it the penalty of civil interdiction;
2. Upon final judgment of a competent court
in an action filed for the purpose or in a
related case, if the parent or the person
exercising the same:
a. Treats the child with excessive
harshness or cruelty;
b. Gives the child corrupting orders,
counsel or example;
c. Compels the child to beg, or
d. Subjects the child or allows him to be
subjected to acts of lasciviousness [Art.
231, Family Code].

Note: The grounds enumerated above are

deemed to include cases which have
resulted from culpable negligence of the
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XI. EMANCIPATION XII. RETROACTIVITY OF THE

FAMILY CODE
A. Cause of Emancipation
Article 256 Family Code. This Code shall have
When Emancipation Takes Place [Art. 234, retroactive effect insofar as it does not prejudice or
Family Code, as amended by RA 6089] impair vested or acquired rights in accordance with
By attainment of majority, at the age of 18 the Civil Code or other laws.
years
General Rule: The Family Code has
B. Effect of Emancipation retroactive effect

Effect: Termination of parental authority over Exception: It will not apply if it will prejudice or
the person and property of the child impair vested or acquired rights
emancipated [Art. 228 (3), Family Code]. The
person emancipated becomes qualified and
responsible for all acts of civil life.

Note:
1. Persons possessing parental authority over
the emancipated individual are required to
give their respective parental consent until
the emancipated individual is at the age of
21.
2. Nothing shall be construed to derogate the
duty and responsibility of parents and
guardians for children and wards below 21
years of age mentioned in the Pars. 2 & 3,
Art. 2180, Civil Code.
3. Other exceptions established by existing
laws in special cases.

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SUCCESSION CIVIL LAW

I. GENERAL PROVISIONS only the net estate or remainder goes to the

heirs. If the decedent’s estate is not
sufficient to pay his debts, his heirs cannot
A. Definition be held liable for said debts in their personal
capacity [Rule 88-90, Rules of Court].
Succession is a mode of acquisition by virtue
of which the property, rights and obligations, B. Rules on Opening of
to the extent of the value of the inheritance, of Succession
a person are transmitted through death to
another or others either by will or by operation
of law [Art. 774, Civil Code]. 1. The rights to succession are
transmitted from the moment of
Kinds of Succession: the death of the decedent [Art.
1. Testamentary 777, Civil Code]
2. Legal or Intestate
3. Mixed Implications:
4. Compulsory a. The law in effect at the time of death of the
decedent governs the succession [Art.
Scope of Inheritance: 2263, Civil Code];
General Rule: b. The heir becomes the owner of his share in
1. All the property, rights and obligations (to the inheritance as well as all fruits which
the extent of the inheritance) of a person accrue to such share upon the death of the
which are not extinguished by such person’s decedent;
death [Art. 776, Civil Code]. c. Upon the death of the decedent, heirs may
2. The property and the transmissible rights immediately possess, administer and
and obligations which have accrued to item dispose of their shares in the estate (in the
(1) above since the opening of the absence of existing debts/claims against
succession [Art. 781, Civil Code]. the estate);
d. Since succession takes place by operation
Exceptions: of law at the moment of the death of the
1. Rights and obligations which are not decedent, the heirs can sue upon the rights
transmissible [Art. 1311, Civil Code]; and of the decedent, without having to be
a. Intransmissible by nature appointed executor or administrator
[Emnace v. CA, G.R. No. 126334 (2001)],
• Refers to rights and obligations which
are strictly personal (intuitu personae) and without need of a judicial declaration of
their status as heirs [De Vera v. Galauran,
• Examples:
G.R. No. 45170 (1939)];
1. Those relating to family relations
e. Heirs may also be sued without a previous
2. Those arising from public law
declaration of heirship, provided there is no
3. Those which involve or require the
pending special proceeding for the
personal skills, qualifications,
settlement of estate of the decedent [Gayon
characteristics or circumstances of
v. Gayon, G.R. No. L-28394 (1970)];
a particular individual
f. The possession of hereditary property is
4. Criminal responsibility
deemed transmitted to the heir without
b. Intransmissible by stipulation
interruption and from the moment of death
c. Intransmissible by provision of law
of the decedent, in case the inheritance is
• Examples: accepted [Art. 533, Civil Code];
1. Usufruct [Art. 603, Civil Code] g. Estate taxes accrue upon death of the
2. Agency [Art. 1919, Civil Code]
decedent, even if the heirs come into
3. Commodatum [Art. 1939, Civil
possession only later.
Code]
2. Monetary debts left by the decedent are
intransmissible in the sense that they are
paid from the estate of the decedent and

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2. A person may be “presumed” dead does not affect the institution of legatees and
for the purpose of opening his devisees provided that the legitimes are not
succession after absence of: impaired [Art. 854, Civil Code].

No. of Years Age at Disappearance

Compulsory Heir Legatee / Devisee

10 years 75 years old and below Represents the Does not represent
juridical personal regardless of the
5 years 76 years old and above obligations not legacy or device’s
extinguished by value
death
A person who has gone missing for at least
four years: Succeeds to the Succeeds only to the
a. While on board a lost sea vessel or airplane; remainder of the determinate thing or
or decedent’s quantity which is
b. While taking part in war as a member of the properties after all mentioned in the
armed forces; or the debts and all the legacy or device
c. Has been in danger of death under other legacies and devices
circumstances shall be presumed dead for have been paid
the purpose of division of the estate.
Can exist in either Can exist only in
If the absent person appears, such person may testamentary or testamentary
recover the properties in the condition in which intestate succession succession
they may be found or the price of any alienated
property may be given to said returning person
[Arts. 390-392, Civil Code].

C. Subjects of Succession:

1. Decedent – person whose property is

transmitted through succession, whether or
not he left a will [Art. 775, Civil Code]
2. Testator – a decedent who left a will [Art.
775, Civil Code]
3. Successor/Heir – person who succeeds to
the property of the decedent.

Kinds of Successors/Heirs:
1. Compulsory Heirs;
2. Voluntary or Testamentary Heir;
a. Instituted heir by universal title
b. Devisees are persons to whom gifts of
real property are given by virtue of a will
[Art. 782, Civil Code]
c. Legatees are persons to whom gifts of
personal property are given by virtue of a
will [Art. 782, Civil Code]
3. Legal or Intestate Heirs.

Note: In case of preterition, the distinction

between an instituted heir by universal title and
legatee/devisee is significant. Preterition
annuls the institution of heir by universal title. It
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II.TESTAMENTARY b. Free and intelligent [Art. 839, Civil

Code]
SUCCESSION Execution of a will tainted by any vices affecting
the free will of the testator can cause its
A. Wills disallowance.

Definition of a will: An act whereby a person c. Solemn or formal

is permitted, with the formalities prescribed by If the formalities of a will required by law are not
law to control to a certain degree the complied with, it will be disallowed [Art. 839,
disposition of his estate to take effect after Civil Code].
his death [Art. 783, Civil Code].
d. Revocable and ambulatory
1. Kinds of Wills: A will can be revoked at any time before the
a. Notarial – an ordinary or attested will, which testator’s death [Art. 828, Civil Code].
must comply with the requirements of the
law [Arts. 804-808, Civil Code]. e. Mortis causa
b. Holographic – a will entirely written, dated It takes effect upon the testator’s death [Art.
and signed by the hand of the testator [Art. 783, Civil Code].
810, Civil Code].
f. Individual
2. Characteristics of Wills: Prohibition against joint wills [Art. 818, Civil
a. Purely personal Code].
General Rule: the making of a will is a strictly
personal act. Thus, g. Executed with animus testandi
• It cannot be left in whole or in part to the Intent to dispose of the property.
discretion of a third person, or
• It cannot be accomplished through an agent h. Executed with testamentary capacity
or attorney.
i. Unilateral act
Exception Does not involve an exchange of values or
depend on simultaneous offer and acceptance.
What cannot be What may be
delegated to 3rd entrusted to 3rd
j. Dispositive
persons persons
Disposes of property.
a. designation of a. designation of
heirs, devisees, person/institution Even in the absence of dispositive provisions,
and legatees falling under a a will disinheriting a compulsory heir is still a
b. duration/efficacy class specified by dispositive will because a disinheritance has
of designation testator the effect of disposing the legitime of the
c. determination of b. manner of disinherited compulsory heir in favor of other
portions, when distribution of compulsory heirs [Seangio v. Reyes, G.R. Nos.
referred to by property specified 140371-72 (2006)].
name [Art. 785, by testator [Art.
Civil Code]. 786, Civil Code]. Exception: Non-dispositive wills.
e.g. A will recognizing an illegitimate child
Note: The testator
must first specify the k. Statutory grant
class and the amount Permitted only by law, not a constitutional right.
of property for proper
delegation.

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3. Rules of Construction and Test of soundness of mind: To be of
Interpretation [Arts. 788-795, Civil sound mind, the testator must know:
Code]: 1. The nature of the estate to be disposed of;
Main principle: Testacy is preferred to 2. The proper objects of his bounty;
intestacy. The intent of the testator is 3. The character of the testamentary act [Art.
paramount and must be given effect as far as 799, Civil Code]
legally possible.
General Rule: Soundness of mind is
Governing Laws, In General: presumed [Art. 800, Civil Code].
Aspect of the Governing Law Exceptions:
Will 1. When the testator, one month or less before
the execution of the will, was publicly known
Formal Validity Law in force at the time
to be insane [Art. 800, Civil Code].
the will was executed
2. When the testator executed the will after
[Art. 795, Civil Code].
being placed under guardianship or ordered
committed, in either case, for insanity under
Intrinsic Validity Law of decedent’s
Rules 93 and 101 of the Rules of Court, and
nationality at the time of
before said order has been lifted [Torres v.
his death [Arts. 16 and
Lopez, G.R. No. L-25966 (1926); Balane].
2263, Civil Code].

Aspects of the will governed by the national

law of the decedent:
a. Order of succession;
b. Amount of successional rights;
c. Intrinsic validity of testamentary provisions;
and
d. Capacity to succeed [Art. 16, Civil Code]

B. Testamentary Capacity and

Intent
Time of Determining Capacity:
Capacity to make a will is determined as of the
time of making thereof [Art. 798, Civil Code].

Supervening incapacity does not invalidate an

effective will. Likewise, a supervening capacity
does not validate the will of an incapable [Art.
801, Civil Code].

Requisites for Capacity to Make a Will:

1. The testator must not be expressly
prohibited by law to make a will [Art. 796,
Civil Code];
2. The testator must be at least 18 years old
[Art. 797, Civil Code]; and
3. The testator must be of sound mind at the
time of execution [Art. 798, Civil Code].

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Governing Law as to Place of Execution of C. Forms of Wills
Will:
In General [Art. 804, Civil Code]
Testator Place of Governing Law
1. The will must be in writing;
Execution
2. It must be in a language or dialect known to
of Will
the testator.
Filipino Philippines Philippine Law
[Art. 16, Civil Applicable Laws as to Formal Validity:
Code] Applicable Law

Outside of 1. Philippine Law As to Time Law in force at the time the

the [Art. 815, Civil will was executed [Art. 795,
Philippines Code]; or Civil Code]
2. Law of the
country in which As to Place Law of the country in which
it is executed the will was executed [Art. 17,
[Art. 17, Civil Civil Code]
Code]

Alien Philippines 1. Philippine Law; Arts. 815-817, Civil Code (summarized

or in the table below) provide for the
2. Law of the various governing laws in these
country of which instances:
testator is a 1. A will was made in a foreign country by a
citizen or Filipino [Art. 815];
subject [Art. 2. A will was made in a foreign country by an
817, Civil Code] alien [Art. 816];
3. A will was made in the Philippines by an
Outside of 1. Philippine Law Alien [Art. 817].
the [Art. 816, Civil
Philippines Code]; or
2. Law of the
testator’s
country; or
3. Law of the place
where the
testator resides;
or
4. Law of the
country where
the will is
executed [Art.
17, Civil Code]

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D. Attested or Notarial Wills
Formal requirements for notarial wills:
1. Subscribed to by the testator at the end;
2. Attested and subscribed by 3 or more witnesses in the presence of the testator and of one another;
3. Marginal signatures;
4. Page numbers in letters; and
5. Acknowledged before a notary public.

Note: Unlike in holographic wills, there is no requirement that an attested will should be dated.

Formal Requirements

Subscription Subscribed at the end of the will by:

1. Testator himself; or
2. Testator’s name written by a representative in his presence and under his
express direction.

Attestation Clause Attested and subscribed by 3 or more credible witnesses in the presence of
the testator and of one another [Art. 805, Civil Code]

The attestation clause shall state the following [par. 3, Art. 805, Civil
Code]:
1. Number of pages;
2. The fact that the testator or his representative under his express direction
signed the will and every page in the presence of instrumental witnesses;
and
3. That the witnesses signed the will and all its pages in the presence of the
testator and of one another.

The signatures of the witnesses must be at the bottom of the attestation clause
[Cagro v. Cagro, G.R. No. L-5826 (1953)].

The notary public cannot be counted as an attesting witness [Cruz v. Villasor,

G.R. No. L-32213 (1973)].

Test of presence: Not whether they saw each other sign, but whether they
might have seen each other sign had they chosen to do so considering their
mental and physical condition and position with relation to each other at the
moment of inscription of each signature [Jaboneta v. Gustilo, G.R. No. 1641
(1906)].

Effect of omissions: Omissions which can be supplied by an examination of

the will itself, without the need of resorting to extrinsic evidence, will not be
fatal and will not prevent allowance of the will.

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Formal Requirements

Marginal General Rule: Testator or his representative shall write his name, and the
Signatures witnesses shall sign every page except the last page [Art. 805, Civil Code].

Exceptions:
1. When the will consists of only one page;
2. When the will consists of only two pages, the first of which contains all
dispositions and is signed at the bottom by the testator and the witnesses,
and the second page contains only the attestation clause duly signed at
the bottom by the witnesses [Abangan v. Abangan, G.R. No. L-13431
(1919)];
3. The use of thumbprint was allowed [Matias v. Salud, G.R. No. L-10751
(1958)];
4. The inadvertent failure of one witness to affix his signature to one page of
a testament, due to the simultaneous lifting of two pages in the course of
signing, is not per se sufficient to justify denial of probate [Icasiano v.
Icasiano, G.R. No. L-18979 (1964)].

Page Numbers All the pages of the will shall be numbered correlatively in letters placed on the
upper part of each page (i.e. Page One of Five Pages) [Art. 805, Civil Code].

Acknowledged The certification of acknowledgement need not be signed by the notary in the
before a notary presence of the testator and the witnesses [Javellana v. Ledesma, G.R. L-
public [Art. 806, 7179 (1955)].
Civil Code]

Additional 1. Deaf Mute [Art. 807, Civil Code]

Requirements for a. Testator must personally read the will; or
Handicapped b. Testator shall personally designate two persons to read the contents
Testators and communicate it to him in some practicable manner.
2. Blind [Art. 808, Civil Code]
a. The will shall be read to the testator twice by one of the subscribing
witnesses and by the notary public acknowledging the will.
b. A testator suffering from glaucoma may be considered as legally blind
[Garcia v. Vasquez, G.R. No. L-26615 (1970)].
c. The provision requiring reading of a will twice to a blind testator also
applies to an illiterate testator [In Re: Probate of the Will of Cosico,
G.R. No. 246997 (2021)].

Subscribed by 3 or Qualifications [Art. 820, Civil Code]:

more witnesses in 1. Of sound mind;
the presence of the 2. Aged 18 years or over;
testator and of one 3. Not blind, deaf or dumb; and
another 4. Able to read and write.

Disqualifications [Art. 821, Civil Code]

1. Person not domiciled in the Philippines;
2. Those who have been convicted of falsification, perjury, or false testimony.

Creditors may be witnesses [Art. 824, Civil Code].

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Formal Requirements

Supervening incompetency shall not prevent the allowance of the will [Art. 822,
Civil Code].

Rules on Interested Witness [Art. 823, 3. Entirely written, dated and signed in the
Civil Code]: hand of the testator himself [Art. 810, Civil
Code].
General Rule Exception
Witnesses Required for Probate [Art.
Devises or legacies If there are three 811, Civil Code]
in favor of an other competent 1. At least one witness who knows the
interested witness or witnesses, the devise handwriting and signature of the testator;
his or her spouse, or legacy shall be explicitly declare that it is the testator’s;
parent, or child will valid and the 2. If contested – at least 3 of such witnesses;
be void. interested witness 3. In the absence of a competent witness,
shall be treated as a expert testimony may be resorted to.
mere surplusage
General Rule: The holographic will itself must
be presented for probate [Gan v. Yap, G.R. No.
Note: A survivorship agreement is not a will L-12190 (1958)].
[Vitug v. CA, G.R. No. 82027 (1990)].
● A survivorship agreement is a contract Exception: If there is a photostatic copy or
where two or more parties agree that, upon xerox copy of the holographic will, it may be
the death of one of the co-owners, the title presented for probate [Rodelas v. Aranza, G.R.
to the property shall vest to the survivor. No. L-58509 (1982)].
Said contract imposes a mere obligation
with a term (i.e. the death of one of the co- Additional Dispositions:
owners.) In holographic wills, the dispositions of the
● It is a valid contract but its effect may be testator written below his signature must be
illegal if it is used as a mere cloak to hide an dated and signed by him in order to make
inofficious donation, to transfer property in them valid as testamentary dispositions [Art.
fraud of creditors, or to defeat the legitime of 812, Civil Code].
a compulsory heir.
● A survivorship agreement is NOT a will When a number of dispositions appearing in a
because it does not pertain to a testator but holographic will are signed without being
to a co-ownership. Therefore, it need not dated, and the last disposition has a signature
follow the solemnities of will and it need not and date, such date validates the dispositions
be probated. preceding it, whatever be the time of prior
● A survivorship agreement is neither a dispositions [Art. 813, Civil Code].
donation inter vivos or mortis causa, but
instead is an aleatory contract. Insertion, Cancellation, Erasure or
Alteration [Art. 814, Civil Code]
E. Holographic Wills Testator must authenticate by his full signature.

Formal Requirements: If such change is not authenticated by the

1. In writing [Art. 804, Civil Code]; testator, such change is considered not made.
2. In a language known to the testator [Art. Thus, “the will is not thereby invalidated as a
804, Civil Code]; and whole, but at most only as regards the
particular words erased, corrected, or inserted”
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[Kalaw v. Relova, G.R. No. L-40207 (1984), Mutual Wills:
citing Velasco v. Lopez, G.R. No. 905 (1903)]. 1. Executed pursuant to an agreement
between two or more persons;
Note, however, that in the case of Kalaw v. 2. Jointly executed by them; and
Relova, the alteration involved the designation 3. Either for their reciprocal benefit or for the
of the testator’s sole heir. In this case, the benefit of a third person.
holographic will had only one substantial
provision, which was altered by substituting the This is prohibited under Article 818, Civil Code.
original heir with another, but which alteration
did not carry the requisite of full authentication Reciprocal Wills:
by the full signature of the testator, the effect 1. Testators name each other as beneficiaries
must be that the entire will is voided or revoked in their own wills (there are therefore 2
for the simple reason that nothing remains in separate documents);
the will after that which could remain valid. 2. Under similar testamentary plans – valid.

Effect of Insertion Written by Another G. Codicil and Incorporation by

Person on the Validity of a
Holographic Will:
Reference:
When Made Effect Codicil:
1. It is a supplement or addition to a will;
2. Made after the execution of a will;
After the Insertion considered 3. Annexed to be taken as a part of the will;
execution, without not written. Validity 4. By which any disposition made in the
consent of testator cannot be defeated by original will is explained, added to, or
the malice or caprice altered;
of a third person 5. In order that it may be effective, it shall be
executed as in the case of a will [Arts. 825-
After execution, Will is valid, insertion 826, Civil Code].
with consent is void
Note: A codicil must be in the form of a will –
Contemporaneous Will is void because it
can have a notarial codicil attached to a
to the execution of is not written entirely
holographic will, and a holographic codicil
the will by the testator
attached to a notarial will.

F. Other Types of Wills Incorporation by Reference:

Requisites [Art. 827, Civil Code]
1. The document or paper referred to in the will
Joint Wills: must be in existence at the time of the
1. A single testamentary instrument;
execution of the will;
2. Which contains the wills of two or more
2. The will must clearly describe and identify
persons;
the same, stating among other things the
3. Jointly executed by them;
number of pages thereof;
4. Either for their reciprocal benefit or for the
3. It must be identified by clear and
benefit of a third person.
satisfactory proof as the document or paper
referred to therein; and
Filipinos cannot make Joint Wills
4. It must be signed by the testator and the
Joint wills executed by Filipinos, whether in the
witnesses on each and every page, except
Philippines or abroad, are prohibited.
in case of voluminous books of account or
inventories.
Note: Separate documents, each serving as
one independent will (even if written on the
Note: Not available in holographic wills.
same sheet) are not considered joint wills.

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of Will
H. Revocation of Wills [Balane]
A will may be revoked by the testator at any
time before his death [Art. 828, Civil Code].

Modes of Revocation [Art. 830, Civil Code]:

1. By implication of law;
• EXAMPLE:
a. Preterition [Art. 854, Civil Code] Foreign 1. Law of the
b. Legal separation [Art. 63, Family Country Place of
Code] Execution of
c. Unworthiness to succeed [Art. 1032, Will; or
Civil Code] 2. Law of the
2. By the execution of a will, codicil or other place in
writing executed as provided in the case of which the
wills (may be total or partial); or testator had
3. By burning, tearing, canceling, or his domicile
obliterating the will with the intention of at the time of
revoking it, by the testator himself, or by revocation
some other person in his presence, and by
his express direction.
General Rule: A revocation made in a
The act contemplating revocation must be subsequent will shall take effect, even if the
done at any time before the death of the new will should become inoperative by reason
testator. The right of revocation cannot be of the incapacity of the heirs, devisees or
waived or restricted [Art. 828, Civil Code]. legatees designated therein, or by their
renunciation [Art. 832, CC].
Note: Even if a holographic will was not
intended to be revoked, unless a xerox copy Exception: Doctrine of Dependent Relative
exists, it can no longer be proved. Revocation [Molo v. Molo, G.R. No. L-2538
(1951)].
Law Governing Revocation [Art. 829, Civil
Code]: The rule that where the act of destruction is
Place of Testator’s Governing Law connected with the making of another will so as
Revocation Domicile to fairly raise the inference that the testator
meant the revocation of the old to depend upon
Philippines Philippines, Philippine Law the efficacy of the new disposition intended to
or some be substituted, the revocation will be
other conditional and dependent upon the efficacy of
country the new disposition; and if for any reason, the
new will intended to be made as a substitute is
Outside the Philippines 1. Law of inoperative, the revocation fails and the original
Philippines (This Domicile - will remain in full force.
situation is Philippine
not law; or The failure of the new testamentary disposition
governed 2. Law of Place upon whose validity the revocation depends is
by Art. 829) of equivalent to the non-fulfillment of a
Revocation; suspensive condition and hence prevents the
or revocation.
3. Law of Place
of Execution False Cause/Illegal Cause
A revocation based on a false cause or illegal
cause is null and void [Art. 833, Civil Code].
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It must appear from the will that the testator is J. Allowance and Disallowance
revoking because of the cause which he did not
know was false. of Wills

Recognition of Illegitimate Child Probate Requirement: No will shall pass

The recognition of an illegitimate child does not either real or personal property unless it is
lose its legal effect even though the will wherein proved and allowed in accordance with the
it was made should be revoked [Art. 834, Civil Rules of Court [Art. 838, Civil Code].
Code].
Definition of a Probate: A proceeding in rem
Principle of Instanter required to establish the validity of a will and in
Revoking clause in the 2nd will is not order to pass real or personal property. The
testamentary in character but operates to testator himself may, during his lifetime,
revoke the prior will instanter (immediately) petition the court having jurisdiction for the
upon the execution of the will containing it. The allowance of his will [Art. 838, Civil Code].
revocation of the 2nd will does not revive the 1st
will which has already become a nullity. Kinds of Probate:
1. Post-mortem: after death
2. Ante-mortem: during the testator’s lifetime
I. Republication and Revival:
Note: Probate of a will is mandatory.
Republication vs. Revival:
Republication Revival Matters to be proved in probate:
1. Identity
● Takes place by ● Takes place by 2. Due Execution
an act of the operation of law 3. Capacity of the Testator
testator ● Restores a
● Corrects extrinsic revoked will Scope of Probate Proceedings [Art.
and intrinsic 839, Civil Code]
defects General Rule: The probate court cannot
inquire into the intrinsic validity of testamentary
provisions. Only the extrinsic validity of such
2 Provisions on Republication:
wills may be examined.
Art. 835 Art. 836
Exceptions:
1. When practical considerations demand that
Void as to form [Art. Void as to: the intrinsic validity of the will be resolved:
805, Civil Code] 1. Non-formal When the will is intrinsically void on its face
defect (e.g., when there is clearly a preterition)
2. Previously such that to rule on its formal validity would
revoked be a futile exercise [Acain v. IAC, G.R. No.
L-72706 (1987)].
How to Republish: How to Republish: 2. Claimants are all heirs and they consent,
1. Execute new will 1. Execute new will either expressly or impliedly, to the
2. Copy out the or codicil submission of the question of intrinsic
provisions from 2. Simply make validity to the court [Valera v. Inserto, G.R.
the original void references to old No. L-56504 (1987)].
will will 3. Probate court may pass upon the title to a
property, but such determination is
Reference to original Reference to original provisional and not conclusive, and is
insufficient sufficient subject to the final decision in a separate
action to resolve title [Pastor v.CA, G.R. No.
L-56340 (1983)].

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4. Probate court may decide on the ownership 6. If it was executed through force or under
of a property when the estate contains only duress, or the influence of fear, or threats
one property to be adjudicated upon [Art. 839, Civil Code].
[Portugal v. Portugal-Beltran, G.R. No.
155555 (2005)]. K. Institution of Heirs
Revocation vs. Disallowance: A will shall be valid even though it —
Revocation Disallowance 1. should not contain an institution of an heir;
or
2. such institution should not comprise the
Voluntary act of the Given by judicial entire estate; or
testator decree 3. the person so instituted should not accept
the inheritance or be incapacitated to
With or without Must always be for a succeed.
cause legal cause
In such cases, the testamentary dispositions
May be partial or Always total, except made in accordance with law shall be complied
total when the ground is with and the remainder of the estate shall pass
fraud or influence to the legal heirs [Art. 841, Civil Code].
which affects only
certain portions of the Extent of Grant [Art. 842, Civil Code]:
will Freedom of disposition depends upon the
existence, kind and number of compulsory
heirs.
Effect of Final Decree of Probate, Res 1. No compulsory heirs – Testator has full
Judicata on Formal Validity: power of disposition
The probate of a will by the probate court 2. With compulsory heirs – Testator cannot
having jurisdiction thereof is usually considered disregard the rights of the compulsory heirs.
as conclusive as to its due execution and Testator may dispose of the free portion of
validity and is also conclusive that the testator his estate only.
was of sound and disposing mind at the time
when he executed the will, and was not acting Effect of Predecease of Heir [Art. 856,
under duress, menace, fraud, or undue Civil Code]:
influence, and that the will is genuine and not a Any heir who dies before the testator or is
forgery [Mercado v. Santos, G.R. No. 45629 incapacitated to succeed or renounces the
(1938)]. inheritance transmits no rights of the testator to
his own heirs. This is without prejudice to the
Grounds for Denying Probate: rights of representation [Tolentino].
1. If the signature of the testator was procured
by fraud; Manner of Distribution:
2. If it was procured by undue and improper 1. Heirs instituted without designation of
pressure and influence, on the part of the shares shall inherit in equal parts [Art. 846,
beneficiary or some other person; Civil Code]
3. If the testator acted by mistake or did not 2. If the institution pertains to some heirs
intend that the instrument he signed should individually and others collectively, the
be his will at the time affixing his signature presumption is that all are individually
thereto; instituted [Art. 847, Civil Code]
4. If the testator was insane or otherwise 3. If siblings are instituted (whether full or half-
mentally incapable of making a will at the blood), the presumption is that the
time of its execution; inheritance is to be distributed equally [Art.
5. If the formalities required by law have not 848, Civil Code]. This is different from the
been complied with; or rules of distribution in intestate succession.

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4. If parents and children are instituted, they least have been conceived before the
are presumed to have been instituted testator’s death.
simultaneously and not successively [Art.
849, Civil Code] Omission of Heir from Inheritance:
Note: By “unknown,” the Code actually means NOT ALTHOUGH NAMED
persons who could not be ascertained; a NAMED
disposition in favor of a stranger is valid
He is not He is:
[Tolentino].
named in the 1. Expressly disinherited
will. without valid cause
Declaration of heirship as decided in 2. Not instituted as an heir
Treyes v. Larlar, G.R. No. 232579 3. Not assigned any part of
(2020) the estate
The rule which requires a prior determination of
heirship in a separate special proceeding as a Thus: the heir is deprived of his right to
prerequisite before one can file an ordinary civil legitime.
action to enforce ownership rights acquired by
virtue of succession, is abandoned.
No Preterition
Henceforth, the rule is: unless there is a If the heir in question is instituted in the will but
pending special proceeding for the settlement the portion given to him by the will is less than
of the decedent's estate or for the his legitime – there is no preterition [Reyes v.
determination of heirship, the compulsory or Barretto-Datu, G.R. No. L-17818 (1967)].
intestate heirs may commence an ordinary civil If the heir is given a legacy or devise – there is
action to declare the nullity of a deed or no preterition [Aznar v. Duncan, G.R. No. L-
instrument, and for recovery of property, or any 24365 (1966)].
other action in the enforcement of their
ownership rights acquired by virtue of If the heir had received a donation inter vivos
succession, without the necessity of a prior from the testator – the better view is that there
and separate judicial declaration of their is no preterition. The donation inter vivos is
status as such. treated as an advance on the legitime under
Articles 906, 909, 910 and 1062.
The ruling of the trial court shall only be in
relation to the cause of action of the ordinary The remedy, if the value of inheritance, legacy
civil action, i.e., the nullification of a deed or or devise, or donation inter vivos is only for
instrument, and recovery or reconveyance of completion of his legitime under Articles 906
property, which ruling is binding only between and 907.
and among the parties.
Distinguished from Disinheritance:
L. Preterition Preterition Disinheritance

Concept [Art. 854, Civil Code]: ● Tacit deprivation ● Express

1. There must be a total omission of one, some of a compulsory deprivation of a
or all of the heir/s from the inheritance heir of his compulsory heir
[Seangio v. Reyes, G.R. Nos. 140371-72 legitime of his legitime
(2006)]. ● May be ● Always voluntary
2. The omission must be that of a compulsory voluntary but the ● For some legal
heir. presumption of cause
3. The compulsory heir omitted must be of the law is that it is ● If the
direct line. involuntary disinheritance is
4. The omitted compulsory heir must be living ● Law presumes valid, the
at the time of the testator’s death or must at there has been compulsory heir
merely oversight disinherited is

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or mistake on totally excluded 2. Reciprocal [Art. 861, Civil Code]

the part of the from the If the heirs instituted in unequal shares should
testator inheritance be reciprocally substituted, the substitute shall
● Since preterition ● In case of invalid acquire the share of the heir who dies,
annuls the disinheritance, renounces, or is incapacitated, unless it clearly
institution of the compulsory appears that the intention of the testator was
heirs, the heir is merely otherwise. If there is more than one substitute,
omitted heir gets restored to his they shall have the same share in the
not only his legitime substitution as the institution.
legitime but also
his share in the Example (only 1 substitute): If two heirs are
free portion not reciprocally substituted, then if one of them
disposed of by dies before the testator dies, renounces, or
way of legacies turns out to be incapacitated, the other will get
and devises his share, regardless of whether or not their
shares are equal.

Effects of Preterition [Art. 854, Civil Code]: Example (more than 1 substitute): A is
1. The institution of the heir is annulled. instituted to 1/3, B to 1/6, and C to ½. If C dies
2. Devises and legacies shall remain valid as before the testator, renounces or turns out to
long as they are not inofficious. be incapacitated, then the other two will get his
3. If the omitted compulsory heir should die shares in the same proportion as in the
before the testator, the institution shall be institution. A will get twice as much as B
effective, without prejudice to the right of (because his share of 1/3 in the institution is
representation. twice the size of B’s share of 1/6).

When there are no devises and legacies, 3. Simple Substitution [Art. 859, Civil
preterition will result in the annulment of the will Code]
and give rise to intestate succession [Neri v. The testator may designate one or more
Akutin, G.R. No. L-47799 (1941)]. persons to substitute the heir/s instituted in
case the heirs should:
M. Substitution of Heirs a. die before him;
b. should not wish to accept the inheritance
Substitution - the appointment of another heir, (repudiation); or
so that he may enter into the inheritance in c. should be incapacitated to accept the
default of the heir originally instituted [Art. 857, inheritance.
Civil Code].
4. Fideicommissary Substitution
The substitute shall be subject to the same The testator institutes an heir with an obligation
charges and conditions imposed upon the to preserve and to deliver to another the
instituted heir, unless the testator has property so inherited. The heir instituted to
expressly provided the contrary, or the charges such condition is called the First Heir or the
or conditions are personally applicable only to Fiduciary Heir; the one to receive the property
the heir instituted [Art. 862, Civil Code]. is the Second Heir or the Fideicommissary [Art.
863, Civil Code].
Kinds of Substitution:
Requisites [Arts. 863-865, Civil Code]:
1. Brief or Compendious [Art. 860, Civil
a. A Fiduciary or first heir instituted is
Code] entrusted with the obligation to preserve
Brief – Two or more persons were designated and to transmit to a Fideicommissary
by the testator to substitute for only one heir. Substitute or second heir the whole or part
of the inheritance.
Compendious – One person is designated to b. The substitution must not go beyond one
take the place of two or more heirs. degree from the heir originally instituted.
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c. The Fiduciary Heir and the POTESTATIVE, CASUAL, AND MIXED
Fideicommissary are living at the time of CONDITIONS
the death of the testator. Potestative Conditions
d. The fideicommissary substitution must be Depends solely on the will of the heir.
expressly made.
e. The fideicommissary substitution is General Rule: Must be fulfilled as soon as the
imposed on the free portion of the estate heir learns of the testator’s death.
and never on the legitime
Exception: If the condition was already
In the absence of an obligation on the part of complied with at the time the heir learns of the
the first heir to preserve the property for the testator’s death; or if the condition is of such a
second heir, there is no fideicommissary nature that it cannot be fulfilled again.
substitution [PCIB v. Escolin, G.R. Nos. L-
27860 and L-27896 (1974)]. If there is constructive compliance, it is
deemed fulfilled.
Effects of predecease of the first
heir/fiduciary or the second Casual and Mixed Conditions:
heir/fideicommissary:
Casual Mixed
Situation 1: If the heir dies followed by the
second heir, then the testator dies, who will Fulfillment depends Fulfillment depends
inherit? The legal heirs. There is no on chance or the will partly on the will of
fideicommissary substitution because first and of a third person. the heir and partly on
second heirs are not living at the time of the chance or the will of
testator’s death [Art. 863, Civil Code]. a third person.

Situation 2: The testator dies first followed by General Rule: May be fulfilled at any time
the second heir. The first heir survived them but (before or after testator’s death), unless
subsequently dies, who will inherit? The testator provides otherwise.
second heir and his heirs under Art. 866, Civil
Code. This is because the second heir passes Exception: If already fulfilled at the time of
his rights to his own heirs when he dies before execution of will:
first heir. 1. If testator unaware of the fact of fulfillment –
deemed fulfilled
Situation 3: If the first heir dies, followed by the 2. If testator aware:
testator, then the second heir, who will inherit? ● can no longer be fulfilled again: deemed
No specific provision in law, but second heir fulfilled
inherits because the testator intended him to ● can be fulfilled again: must be fulfilled
inherit. again.

N. Conditional Testamentary Constructive Compliance:

1. If casual – not applicable
Dispositions and Those with a 2. If mixed – applicable only if dependent
Term partly on the will of a third party not
interested.
3 Kinds of Testamentary Disposition:
1. Conditional [Art. 871, Civil Code] Prohibited conditions: (considered as not
2. Dispositions with a term [Art. 885, Civil imposed)
Code] 1. Any charge, condition or substitution
3. Dispositions with a mode/modal whatsoever upon the legitimes [Art. 872,
dispositions [Art. 882, Civil Code] Civil Code];
2. Impossible and illegal conditions [Art. 873,
Conditional Dispositions: Civil Code];
Effect: Entire disposition is void.
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3. Absolute condition not to contract a first Caución Muciana
marriage [Art. 874, Civil Code]; A security to guarantee the return of the value
4. Absolute condition not to contract a of property, fruits, and interests, in case of
subsequent marriage unless imposed on contravention of condition, term or mode.
the widow or widower by the deceased
spouse, or by the latter’s ascendants or Instances when it is needed:
descendants [Art. 874, Civil Code]; 1. Suspensive term [Art. 885, Civil Code]
5. Scriptura captatoria or legacy-hunting 2. Negative potestative condition - when the
dispositions - dispositions made upon the condition imposed upon the heir is negative,
condition that the heir shall make some or consists in not doing or not giving
provision in his will in favour of the testator something [Art. 879, Civil Code]
or of any other person [Art. 875, Civil 3. Mode [Art. 882, par. 2, Civil Code]
Code].
O. Legitime
Dispositions with a Term:
A term may either be suspensive or resolutory. It is that part of the testator’s property which he
Suspensive Resolutory cannot dispose of because the law has
reserved it for his compulsory heirs [Art. 886,
Civil Code].
Before the arrival of Before the arrival of Every renunciation or compromise as regards
the term, the property the term, the a future legitime between the person owing it
should be delivered property should be and his compulsory heirs is void, and the latter
to the legal or delivered to the may claim the same upon the death of the
intestate heirs. Upon instituted heir. former; but they must bring to collation
the arrival of the term, whatever they may have received by virtue of
the inheritance the renunciation or compromise [Art. 905, Civil
should be delivered Code].
to the heir.
Classes of Compulsory Heirs [Art.
A caución muciana, No caución muciana 887, Civil Code]:
or bond, has to be required. 1. Primary: Legitimate Children and
posted by the legal or Legitimate Descendants with respect to
intestate heirs. their Legitimate Parents and Ascendants
2. Secondary: Those who succeed only in the
absence of the primary compulsory heirs:
Modal Dispositions: a. Legitimate Parents and Legitimate
Dispositions with an obligation imposed upon Ascendants, with respect to their
the heir, without suspending the effectivity of Legitimate Children and Descendants.
the institution, as a condition does. (They will inherit only in default of
legitimate children and their
A mode functions similarly to a resolutory descendants)
condition. b. Illegitimate Parents with respect to their
Illegitimate Children. (They will inherit
In modal institutions, the testator states: only in default of the illegitimate and
● the object of the institution; legitimate children and their respective
● the purpose or application of the property descendants)
left by the testator; or Note that other illegitimate ascendants
● the charge imposed by the testator upon are not included.
the heir [Rabadilla v. CA, G.R. No. 113725 3. Concurring: Those who succeed together
(2000)]. with the primary or the secondary
compulsory heirs:
● Surviving Spouse
● Illegitimate Children and Illegitimate
Descendants
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Specific Rules on Legitime: Steps in Determining the Legitime of
1. Direct Descending Line Compulsory Heirs [Arts. 908-910, Civil
a. Rule of Preference between lines [Arts. Code]:
978 and 985, Civil Code]
● Those in the direct descending line Value of the Estate
shall exclude those in the direct - Taxes
ascending and collateral lines; and - Less Liabilities
● Those in the direct ascending line NET ESTATE
shall, in turn, exclude those in the + collationable donations
collateral line. THEORETICAL* HEREDITARY ESTATE
● Rule of Proximity [Art. 962, Civil
Code]: The relative nearest in *Because this amount is what the legitime will
degree excludes the farther one. be based on, but the actual amount available
b. Right of representation ad infinitum in for physical distribution is the net estate
case of predecease, incapacity, or
disinheritance [Arts. 972 and 992, Civil Remedy of a Compulsory Heir in Case
Code]
● For decedents who are Legitimate
of Impairment of Legitime:
Children, only the Legitimate Extent and Nature Remedy
Descendants are entitled to right of of Impairment
representation.
● For decedents who are Illegitimate Total omission of a Annulment of
Children, both the Legitimate and compulsory heir institution and
the Illegitimate Descendants can who is a direct reduction of legacies
represent, only with respect to the descendant or and devises [Art. 854,
decedent’s illegitimate parents. ascendant Civil Code]
c. If all the Legitimate Children repudiate (preterition)
their legitime, the next generation of
Legitimate Descendants may succeed Testamentary Reduction of the
in their own right. dispositions disposition insofar as
impairing or they may be
2. Direct Ascending Line diminishing the inofficious or
a. Rule of division between lines legitime excessive [Art. 907,
● The father and the mother shall Civil Code]
inherit equally if both living. One
parent succeeds to the entire Partial impairment Completion of the
estate of the child if the other legitime [Art. 906, Civil
parent is dead [Art. 986, Civil Code]
Code].
● In default of the mother and the Impairment by Collation – reduction
father, the ascendants nearest in inofficious of donations [Arts. 771
degree will inherit [Art. 987, Civil donations and 911, Civil Code]
Code].
● If there is more than one relative of
Method of Reduction [Art. 911, Civil
the same degree but of different
lines, one half will go to the paternal Code]:
ascendants and the other half to Order of priorities to be observed in the
the maternal ascendants [Art. 987, reduction [Balane]:
Civil Code]. 1. Reduce pro rata the non-preferred legacies
b. Rule of equal division and devises, and the testamentary
● The relatives who are in the same dispositions to heirs
degree shall inherit in equal shares 2. Reduce pro rata the preferred legacies and
[Art. 987, Civil Code]. devises

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3. Reduce the donations inter vivos according Reserva Troncal:
to the inverse order of their dates (oldest is The ascendant who inherits from his
the most preferred) descendant any property which the latter may
have acquired by gratuitous title from another
How are Devises and Legacies with ascendant, or a brother or sister, is obliged to
usufructs, life annuities and pensions reserve such property as he may have
reduced? acquired by operation of law for the benefit of
If the value of these grants exceeds the free relatives who are within the third degree and
portion, it impairs the legitimes and should be who belong to the line from which said property
reduced. came [Art. 891, Civil Code].

The compulsory heir has 2 options: Concept of Reserva Troncal:

1. Delivering to the devisee or legatee the free 1. A descendant (prepositus) inherits or
portion acquires property from an ascendant or
2. Complying with the testamentary provision from a brother or sister (origin or mediate
source) by gratuitous title.
Note: If the devise subject to reduction should 2. The same property is inherited by another
consist of real property, which cannot be ascendant (reservista) or is otherwise
conveniently divided, it shall go to the devisee acquired by him by operation of law from the
if the reduction does not absorb ½ of its value; said descendant (prepositus).
and in a contrary case, to the compulsory heirs; 3. The said ascendant (reservista) must
but the former and the latter shall reimburse reserve the property for the benefit of the
each other in cash for what respectively relatives of the deceased descendant within
belongs to them. the third civil degree and who belong to the
line from which the said property came
The devisee who is entitled to a legitime may (reservatarios).
retain the entire property, provided its value
does not exceed that of the disposable portion Parties: [Balane]
and of the share pertaining to him as a legitime 1. Origin or Mediate Source – either an
[Art. 912, Civil Code]. ascendant of any degree of ascent or a
brother or sister of the Prepositus;
If the heirs or devisees do not choose to avail responsible for the 1st transfer
themselves of the right granted by the 2. Prepositus – the first transferee of the
foregoing, any heir or devisee who did not have reserved property
such right may exercise it; should the latter not 3. Reservista – an ascendant of the
make use of it, the property shall be sold at Prepositus other than the Origin or Mediate
public auction at the instance of any one of the Source; the one obligated to reserve the
interested parties [Art. 913, Civil Code]. property
4. Reservatarios – within the 3rd degree of
Note: Rule on Reduction of Legitimes consanguinity from the Prepositus
(Shares) [Cabardo v. Villanueva, G.R. No. L-19003
(1922)] belonging to the line from which the
Legitimate Never reduced, they are property came
children primary and preferred

Surviving Never reduced Requisites for Reserva Troncal [Chua v.

spouse CFI, G.R. No. L-29901 (1977)]:
1. That the property was acquired by a
Illegitimate Subject to reduction, pro rata, descendant (Prepositus) from an
children without preference (you get ascendant or from a brother or sister
the remaining portion, divide it (Origin or Mediate Source) by gratuitous
by the number of illegitimate title;
children) 2. That the Prepositus died without
(legitimate*) issue;

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3. That the property is inherited by another 3. The right of ownership is alienable, but
ascendant (Reservista) by operation of subject to the same resolutory condition;
law; and 4. The reservista’s right of ownership is
4. That there are relatives within the 3 rd registrable.
degree (Reservatarios) belonging to the
line from which said property came. Nature of reservatarios’ right: [Sienes v.
Esparcia, G.R. No. L-12957 (1961)]
Note: Only legitimate descendants will prevent 1. The reservatarios have a right of
the property from being inherited by the expectancy over the property;
legitimate ascending line by operation of law 2. The right is subject to a suspensive
[Balane]. condition, i.e., the expectancy ripens into
ownership if the reservatarios survive the
Three transmissions involved: [Balane] reservistas;
1. 1st transfer – by gratuitous title, from a 3. The right is alienable but subject to the
person to his descendant, brother or sister same suspensive condition;
2. 2nd transfer – by operation of law, from the 4. The right is registrable.
transferee in the 1st transfer to another
ascendant. This creates the reserva. Reserva Minima vs. Reserva Maxima:
3. 3rd transfer – from the transferee in the 1. The prepositus acquired property
second transfer to the relatives gratuitously from an ascendant, a brother or
sister
The 1st transfer from the origin does not 2. In his will, he institutes as his heir his
make the property reservable. ascendant (who is also a compulsory heir)
The 1st transferee owns the property he such that the ascendant receives half of the
receives in full and in fee simple. If he sells the estate by operation of law as legitime and
property, then there is no reserva that can be the other half by testamentary disposition
created. It is at this point, however, that a
reserva may ignite, because if the 1 st Two Views
transferee has no legitimate descendants, the 1. Reserva Maxima: As much of the
property, by operation of law, will go back up to potentially reservable property as possible
his ascendant. must be deemed included in the part that
passes by operation of law (maximizing the
The 2nd transferee is the reservor. scope of the reserva)
The reservor can enjoy the property, but his 2. Reserva Minima: every single property in
title is subject to a double resolutory condition. the prepositus’s estate must be deemed to
pass, partly by will and partly by operation
So, if he dies, you need to ask 2 questions: of law, in the same proportion that the part
1. Does the prepositus have relatives? given by will bears to the part not so given
2. Are these relatives qualified to inherit from [Balane]
the prepositus?
If the answers are YES: then a reserva Either view is defensible, but Reserva Minima
occurs. finds wider acceptance in the Philippines
[Balane].
Note: The reservatarios actually inherit, by
delayed intestacy, from the prepositus. Extinguishment of the Reserva:
1. Loss of the reservable property
Nature of the reservista’s right: [Edroso v. 2. Death of the reservista
Sablan, G.R. No. 6878 (1913)] 3. Death of all the relatives within the third
1. The reservista’s right over the reserved degree belonging to the line from which the
property is one of ownership; property came
2. The right of ownership is subject to a 4. Renunciation by the reservatarios, but a
resolutory condition, i.e., the existence of future reservatario is not bound by such
reservatarios at the time of the reservista's renunciation → a conditional
death; extinguishment.
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5. Prescription, when the reservista holds the How do you reconcile unworthiness and
property adversely against the disinheritance as regards Restoration to
reservatarios, as free from reservation Capacity?
Under the rules on Under the rules
P. Disinheritance Disinheritance on Unworthiness

A compulsory heir may, in consequence of Note: This is Note: This is by

disinheritance, be deprived of his legitime, for expressly made by operation of law
causes expressly stated by law [Art. 915, testator
Civil Code].
A subsequent Either:
Effect of Disinheritance: reconciliation is 1. written pardon,
A disinherited heir is totally excluded from the enough or
inheritance. This means that he forfeits not only 2. subsequent
his legitime, but also his intestate portion (if will
any), and any testamentary disposition made in reconciliation
a prior will of the disinheriting testator [Balane]. is not enough

Requisites of a Valid Disinheritance: Overlap of Rules: If he did not know

1. Heir disinherited must be designated by Remedy the cause
name or in such a manner as to leave no 1. If the offended ● Unworthiness
room for doubt as to who is intended to be party does not stays
disinherited; make a will
2. It must be for a cause designated by law; subsequent to the
3. It must be made in a valid will; occurrence of the
4. It must be made expressly, stating the cause
cause in the will itself; ● Unworthiness
5. The cause must be certain and true and sets in
must be proved by the interested heir if the ● Written
person should deny it; condonation is
6. It must be unconditional; and necessary to
7. It must be total. restore
2. If the offended
Note: The burden of proving the truth of the party makes a will
cause for disinheritance shall rest upon the subsequent to the
other heirs of the testator, if the disinherited occurrence of the
heir should deny it [Art. 917, Civil Code]. cause
● If he knew the
Causes Common to Disinheritance cause
and Unworthiness ● If he disinherits
Article 1032 enumerates five acts of - Art. 922
unworthiness which likewise constitute ● If he institutes
grounds to disinherit a compulsory heir. or pardons the
offender
The effect of the concurring causes of ● Restored to
unworthiness and grounds for disinheritance is capacity
as follows: If the testator failed to disinherit the ● If will silent –
offender, the law nonetheless intervenes by unworthiness
excluding the offender from the inheritance of stays
the testator or the decedent by reason of
unworthiness.

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Modes of Revocation of Only annuls the Annuls the entire
Disinheritance: institution in so far institution of heirs
1. Reconciliation [Art. 922, Civil Code] as it prejudices the
2. Subsequent institution of the disinherited person disinherited
heir
3. Nullity of the will which contains the
disinheritance. Q. Legacies and Devises
Note: The moment that testator uses one of the
Legacy Devise
acts of unworthiness as a cause for
disinheritance; he thereby submits it to the
rules on disinheritance. Thus, reconciliation A gift of personal A gift of real property
renders the disinheritance ineffective. property given in a given in a will
will
Reconciliation [Art. 922, Civil Code]:
Effect of Reconciliation between Offender It is bequeathed It is devised
and Offended Person:
● If no disinheritance has been made yet, the Persons Charged with the Duty to
offended person will be deprived of his right
Give Legacies and Devises in a Will
to disinherit.
1. Compulsory heir, provided, their legitimes
● If disinheritance has been effected, it will
are not impaired [Art. 925, Civil Code]
be rendered ineffectual.
2. Voluntary heir
3. Legatee or devisee can be charged with
Rights of Descendants of Person
the duty of giving a sub-legacy or sub-
Disinherited [Art. 923, Civil Code]:
devise but only to the extent of the value of
Disinheritance gives rise to the right of
the legacy or devise given him [Art. 925,
representation in favor of the children and
Civil Code]
descendants of the disinherited person with
4. The estate represented by the executor
respect to his legitime.
or administrator, if no one is charged with
this duty to pay or deliver the legacy or
Ineffective Disinheritance [Art. 918, devise in the will
Civil Code]:
Instances of Ineffective disinheritance: If there is an administration proceeding, it
1. There is no specification of the cause. constitutes a charge upon the estate. If there
2. The cause is not proved. is no administration proceeding, it is a charge
3. The cause is not among those specified in upon the heirs.
the provisions.
Validity and Effect of Legacy or
Effect of Ineffective Disinheritance: if the
Devise:
disinheritance lacks one or other of the
requisites mentioned in this article, the heir in Legacy or Devise of a thing owned in
question gets his legitime [Balane]. part by the testator [Art. 929, Civil Code]
Ineffective Preterition
Disinheritance The legacy or devise shall be understood to
be limited to such part or interest
Person disinherited Person omitted
may be any must be a Exception If testator expressly declares
compulsory heir compulsory heir in that he gives the thing in its
the direct line entirety.

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Legacy or Devise of a thing belonging to Delivery of Legacy/Devise [Art. 951,

another [Art. 930, Civil Code] Civil Code]:
The very thing bequeathed shall be delivered
Testator erroneously Void and not its value
believed that the 1. With all its accessions and accessories
property belonged to 2. In the condition in which it may be upon the
him death of the testator
3. Legacies of money must be paid in cash
The thing Effective
bequeathed Effect of Ineffective Legacies or
afterwards becomes Devises [Art. 956, Civil Code]:
his by whatever title In case of repudiation, revocation or incapacity
of the legatee or devisee, the legacy or devise
Testator knew Valid – estate must shall be merged with the mass of the hereditary
property did not try to acquire estate, except in cases of substitution or
belong to him property or else give accretion.
heir monetary value.
Revocation of Legacies and Devises
[Art. 957, Civil Code]:
Legacy or Devise of a thing belonging to
1. Testator transforms the thing such that it
the legatee or devisee
does not retain its original form or
The thing already Ineffective denomination.
belongs to the legatee or 2. Testator alienates the thing by any title or
devisee at the time of the for any cause. Reacquisition of the thing by
execution of the will [Art. the testator does not make the legacy or
932, Civil Code] devise valid, unless it is effected by right of
repurchase.
The thing is subject to an Valid only as to 3. Thing is totally lost during the lifetime or
encumbrance or interest the interest or after the death of the testator.
of another person [Art. encumbrance 4. Other causes: nullity of will, non-
932, Civil Code] compliance with suspensive condition, sale
of the thing to pay the debts of the
Legatee or devisee Ineffective deceased during the settlement of his
subsequently alienates estate.
the thing [Art. 933, Civil
Code]

After alienating the thing, Ineffective

the legatee or devisee
subsequently reacquires
it gratuitously [Art. 933,
Civil Code]

After alienating the thing, Legatee or

the legatee or devisee devisee can
acquires it by onerous demand
title [Art. 933, Civil Code] reimbursement
from the heir or
estate

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III. LEGAL AND INTESTATE vacancy is caused by predecease,

incapacity, or disinheritance.
SUCCESSION 3. The right of Accretion applies to the free
portion when the requisites in Art. 1016 are
A. General Provisions; present.
4. If there is no substitute, and the right of
Relationship and Right of representation or accretion is not proper,
Representation the rules on Intestate succession shall
apply.
Intestacy – that which takes place by
operation of law in default of compulsory and Fundamental Principles in Intestate
testamentary succession. Not defined in the Succession:
Civil Code. Rule of Preference Between Lines:
● Those in the direct descending line shall
Legal succession is a mode of transmission exclude those in the direct ascending and
mortis causa which takes place in the absence collateral lines;
of the expressed will of the decedent embodied ● Those in the direct ascending line shall,
in a testament [Tolentino]. in turn, exclude those in the collateral line.

Instances When Legal or Intestate Rule of Proximity: The relative nearest in

Succession Operates [Art. 960, Civil Code]: degree excludes the farther one [Art. 962(1),
1. If a person dies without a will, or with a void Civil Code], saving the right of representation
will, or will has subsequently lost its validity; when it properly takes place.
2. When the will does not institute an heir;
3. Upon the expiration of term, or period of Rule of Equal Division:
institution of heir [Balane]; General Rule: The relatives who are in the
4. Upon fulfillment of a resolutory condition same degree shall inherit in equal shares [Arts.
attached to the institution of heir, rendering 962(2), 987 and 1006, Civil Code].
the will ineffective [Balane];
5. When the will does not dispose of all the Exceptions [Balane]:
property belonging to the testator. Legal 1. Rule of preference between lines;
succession shall take place only with 2. Distinction between legitimate and
respect to the property which the testator illegitimate filiation. The ratio under the
has not disposed (mixed succession); present law is 2:1 [Art. 983, in relation to
6. If the suspensive condition attached to the Art. 895, Civil Code as amended by Art.
institution of the heir does not happen or is 176, Family Code];
not fulfilled; 3. Rule of division by line in the ascending line
7. If the heir dies before the testator; [Art. 987 (2), Civil Code];
8. If the heir repudiates the inheritance, there 4. Distinction between full-blood and half-
being no substitution, and no right of blood relationship among brothers and
accretion takes place; sisters, as well as nephews and nieces [Art.
9. When the heir instituted is incapable of 1006 and 1008, Civil Code];
succeeding, except in cases provided in 5. Right of representation.
the Civil Code;
10. Preterition – Intestacy may be total or Rule of Barrier between the legitimate
partial depending on whether or not there family and the illegitimate family (the iron-
are legacies or devises [Balane]. curtain rule): The illegitimate family cannot
inherit by intestate succession from the
Note: In all cases where there has been an legitimate family and vice-versa [Art. 992, Civil
institution of heirs, follow the ISRAI order: Code].
1. If the Institution fails, Substitution occurs.
2. If there is no substitute, the right of Note: In Aquino v. Aquino [G.R. No. 208912
Representation applies in the direct (2021)], the Supreme Court ruled that children,
descending line to the legitime if the regardless of their parents’ marital status, can
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now inherit from their grandparents and other portion shall accrue to the others of the same
direct ascendants by right of representation. degree.
This decision, however, was promulgated
beyond the cut off period of June 30, 2021. Exception: When the right of representation
should take place.
Rule of Double Share for full blood
collaterals: When full and half-blood brothers Note: This accretion in intestacy takes place in
or sisters, nephews or nieces, survive, the full case of predecease, incapacity, or renunciation
blood shall take a portion in the inheritance among heirs of the same degree. The relatives
double that of the half-blood [Arts. 895 and 983, must be in the same relationship because of
Civil Code]. the Rule of Preference of Lines.

Note: Repudiation [Arts. 968-969, Civil

1. If one of the legitimate ascendants, Code]
illegitimate parents, legitimate children or There is no right of representation in
illegitimate children survives, the brother, repudiation. If the nearest relative/s
sisters, nephews, and nieces (BSNN) are repudiates the inheritance, those of the
excluded. following degree shall inherit in their own right.
2. If one of the legitimate ascendants,
illegitimate parents, legitimate children, In case of repudiation by all in the same
illegitimate children or surviving spouse degree, the right of succession passes on the
survives, the other collateral relatives and heirs in succeeding degrees: descending line
the state are excluded. first, ascending line next, and collateral line
3. If any of the heirs concur in legitimes, then next [Balane].
they also concur in intestacy.
Adoption [Art. 189, Family Code]
Relationship: In adoption, the legal filiation is personal and
Proximity of Relationship: determined by the exists only between the adopter and the
number of generations. Each generation forms adopted. The adopted is deemed a legitimate
one degree [Art. 963, Civil Code]. child of the adopter, but still remains as an
intestate heir of his natural parents and other
Note: It is important to distinguish between blood relatives.
direct and collateral, as the direct has
preference over the collateral. Note: Section 16 of the Domestic Adoption Act
(RA 8552) provides that all legal ties between
In a line, as many degrees are counted as there the biological parent(s) and the adoptee shall
are generations [Art. 966, Civil Code]. be severed and the same shall then be vested
on the adopter(s).”
Note: Descending line is preferred over
ascending. Right of Representation:
Representation – Right created by fiction of
Blood relationship is either full or half-blood law, by virtue of which the representative is
[Art. 967, Civil Code]. raised to the place and the degree of the
person represented, and acquires the rights
Note: As among brothers and sisters and which the latter would have if he were living or
nephews and nieces, there is a 2:1 ratio for full- if he could have inherited [Art. 970, Civil Code].
blood and half-blood relatives. Direct relatives
are preferred. But this distinction does not Effect of Representation
apply with respect to other collateral relatives. The representative heir acquires the rights
which the person represented would have if he
Incapacity [Art. 968, Civil Code] were living or if he could have inherited.
General Rule: If there are several relatives of
the same degree, and one or some of them are
unwilling or incapacitated to succeed, his
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When it occurs
Representation is allowed with respect to
inheritance conferred by law (legitime and
intestate based on Art. 923).

It occurs only in the following instances:

(DIP)
1. Predecease of an heir;
2. Incapacity or unworthiness;
3. Disinheritance [Art. 923, Civil Code].

Note: There is no right of representation in a

devise or a legacy.

An heir who renounces can represent, but

cannot be represented. Rationale is found in
Art. 971 which states that “The representative
does not succeed the person represented but
the one whom the person represented would
have succeeded.”

Representation in the Direct Descending

Line:
Representation takes place ad infinitum in the
direct descending line but never in the direct
ascending line [Art. 972, Civil Code].

General Rule: Grandchildren inherit from the

grandparents by right of representation, if
proper.

Exception: Whenever all the children

repudiate, the grandchildren inherit in their own
right because representation is not proper [Art.
969, Civil Code].

Representation in Collateral Line:

In the collateral line, representation takes place
only in favor of the children of the brothers or
sisters (i.e., nephews and nieces) whether of
the full or half-blood [Art. 972, Civil Code] and
only if they concur with at least one.

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B. Order of Intestate Succession
Decedent is a Legitimate Decedent is an Illegitimate Decedent is an Adopted Child
Child Child

Legitimate children or Legitimate children or Legitimate children or

descendants (LCD) descendants (LCD) descendants (LCD)

Legitimate parents or Illegitimate children or Illegitimate children or

ascendants (LPA) descendants (LPA) descendants (ICD)

Illegitimate children or Illegitimate parents (IP) Legitimate or illegitimate parents,

descendants (ICD) or legitimate ascendants,
adoptive parents

Surviving spouse (SS) Surviving spouse (SS) Surviving spouse (SS)

Brothers and sisters, Illegitimate brothers and sisters, Brothers and sisters, nephews,
nephews, nieces (BS/NN) nephews, nieces (IBS/NN) nieces (BS/NN)

Legitimate collateral
relatives within the 5th State State
degree (C5)

State

RULES OF EXCLUSION AND CONCURRENCE IN INTESTATE SHARES

Intestate Heirs Excludes Excluded By Concurs With

LC + LD Ascendants, No one SS + ILC

Collaterals and State

ILC + D ILP, Collaterals and No one SS, LC, LP

State

LP + LA Collaterals and State LC ILC + SS

ILP Collaterals and State LC and ILC SS

SS Collaterals other than No one LC, ILC, LP, ILP,

siblings, nephews and Siblings, Nephews,
nieces, State Nieces

Siblings, Nephews, All other collaterals and LC, ILC, LP, ILP SS
Nieces State

Other collaterals Collateral more remote LC, ILC, LP, ILP and Collaterals in the same
within 5th degree in degree and State SS degree

State No one Everyone No one

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Note: In partial intestacy, the testamentary dispositions can reduce the shares of intestate heirs,
provided that their legitimes, if they are also compulsory heirs, are not impaired. More specifically:
1. The law of legitimes must be brought into operation in partial intestacy.
2. If among the concurring intestate heirs there are compulsory heirs whose legal or intestate portions
exceed their respective legitimes, the amount of the testamentary disposition must be deducted
from the disposable portion, to be borne by all the intestate heirs in the proportions that they are
entitled to receive from such disposable portion as intestate heir.
3. If the legal or intestate share of a compulsory heir is equal to his legitime, then the amount of the
testamentary disposition must be deducted only from the legal or intestate shares of the others.
4. If the testamentary dispositions consume the entire disposable portion, then the intestate heirs
who are compulsory heirs will get only their legitimes, and those who are not compulsory heirs will
get nothing [Tolentino].

Outline of Intestate Shares

Legitimate children only ● Divide entire estate equally among all legitimate children [Art.
979, Civil Code]
● Legitimate children include an adopted child.

Legitimate children and ● Divide entire estate such that each illegitimate child gets ½ of
Illegitimate children what a legitimate child gets [Art. 983, Civil Code and Art. 176,
Family Code]
● Ensure that the legitime of the legitimate children are first
satisfied.

Legitimate children and Divide entire estate equally between the legitimate children and the
surviving spouse surviving spouse, the latter deemed as one child. The same rule
holds where there is only one child.

Legitimate children, ● Divide the entire estate such that the surviving spouse is
Surviving spouse, and deemed one legitimate child and each illegitimate child getting
Illegitimate children ½ of what the legitimate child gets [Art. 996, Civil Code and Art.
176, Family Code]
● Ensure that the legitime of the legitimate children and the spouse
are first satisfied.

Legitimate parents only Divide the entire estate equally [Art. 985, Civil Code].

Legitimate ascendants Divide the entire estate equally but with the observance of the rule
only (excluding parents) of division by line [Art. 987, Civil Code].

Legitimate parents and Legitimate parents get ½ of the estate, illegitimate children get the
illegitimate children other ½ [Art. 991, Civil Code].

Legitimate parents and Legitimate parents get ½ of the estate; The surviving spouse gets
surviving spouse the other ½ [Art. 997, Civil Code].

Legitimate parents, Legitimate parents get ½ of the estate; surviving spouse and the
surviving spouse and illegitimate child each get ¼ each, the latter to share among
illegitimate children themselves if more than one [Art. 1000, Civil Code].

Illegitimate children only Divide the entire estate equally [Art. 988, Civil Code].

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Illegitimate children and Illegitimate children get ½ of the estate; the surviving spouse gets
surviving spouse the other ½ [Art. 998, Civil Code].

Surviving spouse only Entire estate goes to the surviving spouse [Art. 995, Civil Code].

Surviving spouse and Illegitimate parents get ½ and the spouse gets the other ½ [by
illegitimate parents analogy with Art. 997, Civil Code].

Surviving spouse and Surviving spouse gets ½ of the estate, while the rest gets the other
legitimate brothers and ½ with the nephews and nieces inheriting by representation if proper
sisters, nephews and [Art. 1001, Civil Code].
nieces

Surviving spouse and Surviving spouse gets ½ of the estate while the rest gets the other
illegitimate brothers and ½ with the nephews and nieces inheriting by representation, if
sisters, nephews and proper; Note that all the other relatives should be “illegitimate”
nieces because of the iron-curtain rule [Art. 994, Civil Code].

Illegitimate parents only Entire estate goes to the illegitimate parents [Art. 993, Civil Code].

Illegitimate parents and Illegitimate parents are excluded and do not inherit.
children of any kind
(whether legitimate or
illegitimate child)

Legitimate brothers and Divide the entire estate such that full-blood brothers/sisters get a
sisters only share double the amount of a half-blood brother or sister [Art. 1004
and 1006, Civil Code].

Legitimate brothers and Divide the entire estate observing the 2 is to 1 ratio for full and half-
sisters, nephews and blood relationships with respect to the brothers and sisters, with the
nieces nephews and nieces inheriting by representation, if proper [Art. 1005
& 1008, Civil Code].

Nephews and nieces only Divide the entire estate per capita, observing the 2 is to 1 ratio [Art.
975 and 1008, Civil Code].

Other collaterals [Arts. ● Divide entire estate per capita. Collateral relatives must be with
1009 and 1010] the 5th degree of consanguinity.
● Note: the nearer relative excludes the more remote relatives.

State ● If there are no other intestate heirs, the State inherits the entire
estate through escheat proceedings [Art. 1011, Civil Code].

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IV. PROVISIONS COMMON There can only be accretion if there is an

institution of heirs with respect to specific
TO TESTATE AND properties [Art. 1016, Civil Code]. In other
words, both heirs were called to inherit the
INTESTATE SUCCESSION same whole.

A. Right of Accretion: If there was “earmarking” – there can be no

accretion.
Definition of Accretion [Art. 1015, Civil ● What is “earmarking?” – when the whole
Code] has been subdivided into specific portions
It is a right by virtue of which, when two or more
persons are called to the same inheritance, Example: Heir #1 was called to inherit the
devise or legacy, the part assigned to one who southern part of Plot A, and Heir #2 was called
renounces or cannot receive his share or who to inherit the northern part of Plot A.
died before the testator is added or
incorporated to that of his co-heirs, co- Among compulsory heirs, there can only be
devisees, or co-legatees. accretion with respect to the free portion. There
can be no accretion with respect to the
Basis legitimes [Arts. 1021 and 1018, Civil Code].
The right of accretion is based upon the
presumed will of the decedent. Thus, the The heirs to whom the portion goes by the right
testator can expressly provide that there shall of accretion take it in the same proportion that
be no accretion among persons who would they inherit [Art. 1019, Civil Code].
otherwise be entitled thereto. Conversely, the
testator may validly provide for accretion in a Exceptions [Balane]
case where no accretion would take place 1. In testamentary succession, if the testator
under the provisions of the law [Tolentino]. provides otherwise;
2. If the obligation is purely personal, and
Requisites [Tolentino] hence intransmissible.
1. Unity of object and plurality of subjects (two
or more persons are called to the same The heirs to whom the inheritance accrues
inheritance or same portion thereof); and shall succeed to all the rights and obligations
2. Vacancy of share (one of the heirs dies which the heir who renounced or could not
before the testator, or renounces the receive it would have had [Art. 1020, Civil
inheritance, or is incapacitated) Code].

When does Accretion Occur? In testamentary succession, when the right of

Accretion happens when there is repudiation, accretion does not take place, the vacant
incapacity, or predecease of an heir. portion of the instituted heirs, if no substitute
has been designated, shall pass to the legal
It is the mechanism where the share of an heir heirs of the testator, who shall receive it with
is increased by vacant shares vacated by heirs the same charges and obligations [Art. 1022,
who cannot inherit for various reasons. Civil Code].

Rationale: The decedent intended to give the Accretion shall also take place among
property to nobody but the co-heirs. devisees, legatees and usufructuaries under
the same conditions established for heirs [Art.
1023, Civil Code].

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Effect of Predecease, Incapacity, Disinheritance or Repudiation:
Cause of Testamentary Succession Intestate Succession
Vacancy
Legitime Free Portion

Predecease Representation Accretion Intestate Representation

Intestate Succession Succession Intestate Succession

Incapacity Representation Accretion Representation

Intestate Succession Intestate Intestate Succession
Succession

Disinheritance Representation - -
Intestate Succession

Repudiation Intestate Succession Accretion Accretion

B. Capacity to Succeed by Will or thereof; except if the guardian is his

ascendant, descendant, brother, sister, or
by Intestacy spouse;
4. Relatives of the priest or minister of the
Requisites for Capacity to Succeed by gospel within the fourth degree, the church,
Will or by Intestacy [Art. 1024 – 1025, order, chapter, community, organization, or
Civil Code]: institution to which such priest or minister
1. The heir, legatee or devisee must be living may belong;
or in existence at the moment the 5. Attesting witness to the execution of a will,
succession opens [Art. 1025, Civil Code]; the spouse, parents, or children, or anyone
and claiming under such witness, spouse,
2. He must not be incapacitated or disqualified parents, or children;
by law to succeed [Art. 1024, par.1, Civil 6. Physician, surgeon, nurse, health officer or
Code]. druggist who took care of the testator during
his last illness.
Persons Incapable of Succeeding
[Arts. 1027, 739, 1032, Civil Code]: Based on Morality or Public Policy
Based on undue influence or interest [Art. [Arts. 739 and 1028, Civil Code]:
1027, Civil Code] 1. Those made in favor of a person with whom
1. Priest who heard the last confession of the the testator was guilty of adultery or
testator during his last illness, or the concubinage at the time of the making of the
minister of the gospel who extended will;
spiritual aid to him during the same period; 2. Those made in consideration of a crime of
2. Individuals, associations and corporations which both the testator and the beneficiary
not permitted by law to inherit; have been found guilty;
3. Guardian with respect to testamentary 3. Those made in favor of a public officer or
dispositions given by a ward in his favor his spouse, descendants and ascendants,
before the final accounts of the by reason of his public office.
guardianship have been approved, even if
the testator should die after the approval

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Based on Acts of Unworthiness [Art. Effect of Pardon:
1032, Civil Code]: Once the act of unworthiness has been
The following are incapable of succeeding by pardoned, whether expressly or tacitly, the heir
reason of unworthiness: is restored to full capacity to succeed the
1. Parents who have abandoned their children decedent, as if the cause of unworthiness had
or induced their daughters to lead a corrupt never existed.
or immoral life, or attempted against their
virtue; Unworthiness vs. Disinheritance:
2. Any person who has been convicted of an Unworthiness Disinheritance
attempt against the life of the testator, his or
her spouse, descendants, or ascendants;
3. Any person who has accused the testator of Unworthiness Disinheritance is the
a crime for which the law prescribes renders a person act by which a
imprisonment for six years or more, if the incapable of testator, for just
accusation has been found groundless; succeeding to the cause, deprives a
4. Any heir of full age who, having knowledge succession, whether compulsory heir of his
of the violent death of the testator, should testate or intestate. right to the legitime
fail to report it to an officer of the law within [Art. 915, Civil Code].
a month, unless the authorities have already
taken action; this prohibition shall not apply
to cases wherein, according to law, there is
no obligation to make an accusation;
5. Any person convicted of adultery or
concubinage with the spouse of the testator; Determination of Capacity [Tolentino]
6. Any person who by fraud, violence, General Rule: At the death of the decedent
intimidation, or undue influence should [Art. 1034, Civil Code].
cause the testator to make a will or to
change one already made; Exceptions:
7. Any person who by the same means 1. Those falling under 2, 3, and 5 of Art. 1032
prevents another from making a will, or from – when the final judgment is rendered;
revoking one already made, or who 2. Those falling under 4 of Art. 1032 – when
supplants, conceals, or alters the latter's the month allowed for the report expired;
will; 3. If the institution is conditional – when the
8. Any person who falsifies or forges a condition is complied with.
supposed will of the decedent.
C. Acceptance and Repudiation
Pardon of Acts of Unworthiness: of Inheritance:
Express Implied
Definition of Acceptance
The act by which the person called to succeed
Made by the Effected when the by universal title either by the testator or by law
execution of a testator makes a will manifests his will of making his own the
document or any instituting the universality of the rights and obligations which
writing in which the unworthy heir with are transmitted to him [Tolentino].
decedent condones knowledge of the
the cause of cause of incapacity. Definition of Repudiation
incapacity. The manifestation by an heir of his desire not
to succeed to the rights and obligations
Cannot be revoked. Revoked when the transmitted to him [Tolentino].
testator revokes the
will or the institution. Requisites [Art. 1043, Civil Code]
1. Certainty of death of the decedent; and
2. Certainty of the right to the inheritance.

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Forms of Acceptance [Arts. 1049 – Heirs in Two Capacities [Art. 1055,
1050, Civil Code]: Civil Code]:
1. Express Acceptance – one made in a 1. If a person is called to the same inheritance
public or private document [Art. 1049, par. as an heir by will and by law and he
2, Civil Code]. repudiates the inheritance in his capacity as
2. Tacit Acceptance – one resulting from acts a testamentary heir, he will be considered to
by which the intention to accept is have also repudiated the inheritance as a
necessarily implied or from acts which one legal heir.
would have no right to do except in the 2. If he repudiates it as a legal heir, without
capacity of an heir. knowledge of his being a testamentary heir,
3. Implied Acceptance - Within thirty days he may still accept it in the latter capacity.
after the court has issued an order for the
distribution of the estate in accordance with Irrevocability of Acceptance or
the Rules of Court, the heirs, devisees and Repudiation
legatees shall signify to the court having General Rule: The acceptance or repudiation
jurisdiction whether they accept or of an inheritance, once made, is irrevocable
repudiate the inheritance; if they do not do and cannot be impugned.
so within that time, they are deemed to have
accepted the inheritance [Art. 1057, Civil Exceptions
Code]. 1. When the acceptance or repudiation suffers
from any of the vices which annul consent;
An inheritance is deemed accepted: and
1. If the heir sells, donates, or assigns his right 2. When an unknown will appears [Art. 1056,
to a stranger, or to his co-heirs, or to any of Civil Code].
them – the heir must first accept the
inheritance before he can dispose of it.
2. If the heir renounces the same, even though
gratuitously, for the benefit of one or more
of his co-heirs – this is actually a donation.
The heir must first accept the inheritance
before he can donate it.
3. If the heir renounces it for a price in favor of
all his co-heirs indiscriminately – this is
actually an onerous disposition. The heir
must first accept the inheritance before he
can dispose of it.

Note: But if the renunciation should be

gratuitous, and in favor of all the co-heirs (to
whom the portion renounced should devolve by
accretion), the inheritance shall not be deemed
as accepted [Art. 1050, Civil Code]. This is a
true case of renunciation.

Forms of Repudiation [Art. 1051, Civil

Code]
1. In a public instrument acknowledged before
a notary public; or
2. In an authentic document – equivalent of an
indubitable writing or a writing whose
authenticity is admitted or proved; or
3. By petition presented to the court having
jurisdiction over the testamentary or
intestate proceeding
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D. Partition and Distribution of What acts are deemed partition?
Every act which is intended to put an end to
the Estate indivision among heirs and legatees or
devisees is deemed a partition, although it
Definition of Partition: Separation, division should purport to be a sale, an exchange, a
and assignment of a thing held in common compromise, or any other transaction [Art.
among those to whom it may belong. 1082, Civil Code].

What can be divided? A void partition may be valid if:

The thing itself or its value may be divided 1. The will was in fact a partition
[Art. 1079, Civil Code]. 2. The beneficiaries of the void will were legal
heirs
Before Partition: Whole estate of the
decedent is owned in common by the heirs [Art. The titles of acquisition or ownership of each
1078, Civil Code]. property shall be delivered to the co-heir to
whom said property has been adjudicated [Art.
1089, Civil Code].

JUDICIAL vs. EXTRAJUDICIAL PARTITION

Judicial Extra-judicial

Partition done by Partition made by the decedent himself by an act inter vivos or by will or by
Court pursuant to an a third person entrusted by the decedent or by the heirs themselves [Paras].
Order of Distribution
which may or may Partition Inter Vivos: It is one that merely allocates specific items or pieces
not be based on a of property on the basis of the pro-indiviso shares fixed by law or given under
project of partition. the will to heirs or successors [Art. 1080, Civil Code].

Who may effect 1. The Decedent, during his lifetime by an act inter vivos or by will [Art.1080,
Partition? Civil Code];
2. The decedent’s heirs [Art.1083, Civil Code];
3. A competent court [Art. 1083, Civil Code]; or
4. A third person not an heir designated by the decedent [Art.1081, Civil
Code].

Who may demand 1. Compulsory heir;

partition? 2. Voluntary heir upon fulfillment of condition, if any [Art. 1084, Civil Code];
3. Legatee or devisee;
4. Any person who has acquired interest in the estate.

When Partition 1. When expressly prohibited by the testator for a period not exceeding 20
cannot be years [Art. 1083, Civil Code];
demanded? 2. When the co-heirs agreed that the estate shall not be divided for a period
not exceeding 10 years, renewable for another 10 years [Art. 494, Civil
Code];
3. When prohibited by law;
4. When to partition the estate would render it unserviceable for the use for
which it is intended.

Prohibition to 1. The prohibition to partition for a period not exceeding 20 years can be
Partition imposed even on the legitime.

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2. If the prohibition to the partition is for more than 20 years, the excess is
void.
3. Even if a prohibition is imposed, the heirs by mutual agreement can still
make the partition.

Effects of Inclusion of Intruder in Effects of Partition

Partition [Art. 1105, Civil Code] Effect: A partition legally made confers upon
1. Between a true heir and several mistaken each heir the exclusive ownership of the
heirs – partition is VOID property adjudicated to him [Art. 1091, Civil
2. Between several true heirs and a mistaken Code].
heir – transmission to mistaken heir is void
3. Through error or mistake, share of true heir No partition shall be construed so as to
is allotted to mistaken heir – partition shall prejudice, defeat, or destroy the right or title of
not be rescinded unless there is bad faith or any person claiming the real estate involved in
fraud on the part of the other persons the action for partition by title under any other
interested, but the latter shall be person, or by title paramount to the title of the
proportionately obliged to pay the true heir parties among whom the partition may have
of his share. The partition with respect to the been made [Rule 69, Sec. 12, Rules of Court].
mistaken heir is void [Sempio-Dy].
Warranty: After the partition has been made,
Right of Redemption in Partition the co-heirs shall be reciprocally bound to
Should any of the heirs sell his hereditary rights warrant the title to, and the quality of, each
to a stranger before the partition, any or all of property adjudicated [Art. 1092, Civil Code].
the co-heirs may be subrogated to the rights of
the purchaser by reimbursing him for the price Reciprocal obligation of warranty: shall be
of the sale, provided they do so within the proportionate to the respective hereditary
period of one month from the time they were shares of the co-heirs.
notified in writing of the sale by the vendor [Art.
1088, Civil Code]. In case of insolvency of any of the co-heirs:
Other co-heirs shall be liable for his part in the
Strangers – those who are not heirs on the same proportion, deducting the part
succession. corresponding to the one who should be
indemnified.
Legal Redemption by Co-Heir;
Requisites Right of Action for Reimbursement: Those
1. That there are several heirs of the common who pay for the insolvent heir shall have a right
inheritance; of action against him for reimbursement,
2. That one of them sells his hereditary rights; should his financial condition improve [Art.
3. That the sale is made to a stranger, and 1093, Civil Code].
before the partition has been made;
4. That one or more of the co-heirs demand Prescription period for action to enforce
the repurchase within a period of one warranty among the co-heirs: Ten (10) years
month, counted from the time he or they from the date the right of action accrues [Art.
were notified in writing of the sale; and 1094, Civil Code].
5. That the buyer is reimbursed the price of the
sale [Garcia v. Calaliman, G.R. No. L-26855 If a credit should be assigned as collectible:
(1989)]. Co-heirs shall not be liable for the subsequent
insolvency of the debtor of the estate, but only
Note: The redemption can be exercised only by for his insolvency at the time the partition is
a co-heir. made [Art. 1095, Civil Code].

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Prescription period of the warranty of the except when the legitime of the compulsory
solvency of the debtor: Can only be enforced heirs is thereby prejudiced, or when it
during the five (5) years following the partition. appears or may be reasonably presumed
that the intention of the testator was
Warrant of bad debts otherwise [Art. 1099, Civil Code].
General Rule: Co-heirs do not warrant bad 4. Preterition of a compulsory heir in the
debts, if so known to, and accepted by the partition [Art. 1104, Civil Code]:
distributee. ● Partition shall not be rescinded unless
bad faith or fraud on the part of other
Exception: But if such debts are not assigned heirs is proved.
to a co-heir, and should be collected, in whole ● The culpable heirs shall share in the
or in part, the amount collected shall be damages of the prejudiced compulsory
distributed proportionately among the heirs heir proportionately.
[Art. 1095, Civil Code]. 5. A partition which includes a person
believed to be an heir, but who is not, shall
Cessation of Obligation of Warranty Among be void only with respect to such person
Co-heirs: The obligation of warranty among [Art. 1105, Civil Code].
co-heirs shall cease in the following cases:
1. The testator himself has made the partition. Rescission on Account of Lesion
Unless it appears, or it may be reasonably Prescription: After four (4) years from the time
presumed, that his intention was otherwise, the partition was made [Art. 1100, Civil Code].
but the legitime shall always remain
unimpaired; Option of Heir Sued:
2. When it has been so expressly stipulated in 1. Indemnifying the plaintiff for the loss; or
the agreement of partition. Unless there has 2. Consenting to a new partition
been bad faith;
3. When the eviction is due to a cause Indemnity may be made:
subsequent to the partition, or has been 1. By payment in cash; or
caused by the fault of the distributee of the 2. By the delivery of a thing of the same kind
property [Art. 1096, Civil Code]. and quality as that awarded to the plaintiff.

Rescission and Nullification of If option of consenting to a new partition

Partition was chosen: Shall affect neither those who
Causes for Rescission or Annulment have not been prejudiced nor those who have
1. A partition may be rescinded or annulled for not received more than their just share [Art.
the same causes as contracts [Art. 1097, 1101, Civil Code].
Civil Code].
2. A partition, judicial or extrajudicial, may also Who cannot maintain an action for
be rescinded on account of lesion, when rescission on the ground of lesion?
any one of the co-heirs received things An heir who has alienated the whole or a
whose value is less by at least one-fourth considerable part of the real property
(¼) than the share to which he is entitled, adjudicated to him, but he shall have a right to
considering the value of the things at the be indemnified in cash [Art. 1102, Civil Code].
time they were adjudicated [Art. 1098, Civil
Code]. When is rescission of the partition on the
● This article applies only to cases of ground of lesion not allowed?
partition among-coheirs When there is omission of one or more objects
● Lesion is the injury suffered in or securities of the inheritance, but the partition
consequence of inequality of situation shall be completed by the distribution of the
by one party who does not receive the objects or securities which have been omitted
full equivalent for what she gives in a [Art. 1103, Civil Code].
sale or any commutative contract
3. The partition made by the testator cannot
be impugned on the ground of lesion,
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DIFFERENCE OF NULLITY FROM
RESCISSION
● Nullity – the act is supposed to never have
existed
● Rescission – the act is valid at the origin
though it afterwards became ineffective.

Important Periods in Partition

1 month or less Testator, if publicly known to be insane, burden of proof is on the one
before making a will claiming validity of the will
20 years Maximum period testator can prohibit alienation of dispositions
5 years from delivery To claim property escheated to the State
to the State
1 month To report knowledge of violent death of decedent lest he be considered
unworthy
5 years from the time Action for declaration of incapacity and for recovery of the inheritance,
disqualified person devise or legacy
took possession

30 days from Must signify acceptance/repudiation; otherwise, deemed accepted

issuance of order of
distribution
1 month form written Right to repurchase hereditary rights sold to a stranger by a co-heir
notice of sale
10 years To enforce warranty of title/quality of property adjudicated to co-heir from
the time the right of action accrues
5 years from partition To enforce warranty of solvency of debtor of the estate at the time
partition is made

4 years from partition Action for rescission of partition on account of lesion

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CONTRACTS
CIVIL LAW
OBLIGATIONS CIVIL LAW

OBLIGATIONS C. Sources of obligations

I. GENERAL PROVISIONS
Article 1157, Civil Code. Obligations arise from:
1. Law;
A. Definition 2. Contracts;
3. Quasi-contracts;
4. Acts or omissions punished by law; and
Article 1156, Civil Code. An obligation is a juridical 5. Quasi-delicts.
necessity to give, to do or not to do.

1. Law
An obligation is a juridical relation, whereby a Obligations arise when imposed by the law
person (called the creditor) may demand from itself and cannot be presumed [Art. 1158, Civil
another (called the debtor) the observance of a Code].
determinative conduct, and in case of breach,
may obtain satisfaction from the assets of the
2. Contracts
latter [Makati Stock Exchange v. Campos, G.R.
Obligations arise from the stipulation of the
No. 138814 (2009)].
parties; it has the force of law and should be
complied with in good faith [Art. 1159, Civil
B. Elements of an obligation Code].

1. Active Subject (Obligee/Creditor) 3. Quasi-Contracts

The person (natural or juridical) who has the Certain lawful, voluntary and unilateral acts
right or power to demand the prestation. give rise to the juridical relation of quasi-
contract to the end that no one shall be
2. Passive Subject (Obligor/Debtor) unjustly enriched or benefited at the expense
The person bound to perform the prestation. of another [Art. 2142, Civil Code].

3. Prestation (Object) 4. Acts or Omissions Punishable by

The conduct required to be observed by the Law
debtor/obligor (i.e. to give, to do, or not to do) Responsibility for fault or negligence under a
[Ang Yu Asuncion v. CA, G.R. No. 109125 quasi-delict [Art. 2176, Civil Code] is entirely
(1994)]; separate and distinct from the civil liability
a. Must be possible, physically and juridically. arising from negligence under the penal code.
b. Must be determinate or at least But the plaintiff cannot recover damages twice
determinable according to pre-established for the same act or omission of the defendant
elements. [Art. 2177, Civil Code].
c. Must have a possible equivalent in money.
5. Quasi-Delicts
4. Vinculum Juris (Juridical or Legal Obligations arise from damages caused to
Tie) another through an act or omission, there being
The efficient cause established by the sources fault or negligence but no contractual
of obligation [Ang Yu Asuncion v. CA, G.R. No. relations exist between the parties [Art. 2176,
109125 (1994)]. Civil Code].

That which binds or connects the parties to the

obligation [De Leon].

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II. NATURE AND EFFECT

A. Obligation to give
1. Types of Things
Specific/ Generic Thing Limited Generic Thing
Determinate Thing

Particularly designated or Object is designated only by its When the generic objects are
physically segregated from all class, genus, or species. condoned to a particular class.
others of the same class [Art.
1460, Civil Code];
Identified by individuality.

Cannot be substituted against Can be substituted by any of the Can be substituted by any of the
the obligee’s will, although the same class and same kind. same particular class.
thing may be of the same value
as, or more valuable than that
which is due [Art. 1244, Civil
Code]

2. Rights and Duties of Parties

Duties of the Debtor Rights of the Creditor

To Give a Specific Thing

a. To preserve or take care of the a. To compel delivery [Art. 1165, Civil Code]
thing due with the proper b. To the fruits from the time the obligation to
diligence of a good father of a deliver arises [Art. 1164, Civil Code]
family, unless other standard of c. To the accessions and accessories, even if
case is required by the law or not mentioned [Art. 1166, Civil Code]
stipulation of the parties [Art. d. No to be compelled to receive a different
1163, Civil Code] one, although of the same value as, or more
b. To deliver the thing itself [Art. valuable than that which is due [Art. 1244,
1165, Civil Code] Civil Code]
c. To deliver the fruits of the thing e. To recover damages in case of breach,
[Art. 1166, Civil Code] exclusive or in addition to specific
d. To deliver its accessions and performance [Art. 1165, 1170, Civil Code]
accessories, even though not
mentioned [Art. 1166, Civil Code]
1. Accessions - everything which is
produced by a thing, or which is
incorporated or attached thereto,
excluding fruits
2. Accessories - things designed for the
embellishment, use or preservation of
another thing of more importance
e. To pay damages in case of breach [Art. 1170,
Civil Code]

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To Give a Generic Thing

a. To take care of the thing [Art. 1163, Civil a. To ask that the obligation be complied with
Code] at the expense of the debtor [Art. 1165, Civil
b. To deliver a thing of the quality intended by Code]
the parties taking into consideration the b. To recover damages in case of breach [Art.
purpose of the obligations and other 1165, Civil Code]
circumstances [Art. 1246, Civil Code] c. Not to be compelled to receive a different
c. Creditor cannot demand a thing of superior one, although of the same value as, or more
quality; neither can the debtor deliver a thing valuable than that which is due [Art. 1244,
of inferior quality [Art. 1246, Civil Code] Civil Code]
d. To pay damages in case of breach [Art. 1170, d. To ask that the obligation be complied with by
Civil Code] a third person at the expense of the debtor

B. Obligation to do or not to do
1. Rights and Duties of Parties
Duties of the Debtor Rights of the Creditor

Obligation To Do

a. To do it [Art. 1167, Civil Code] a. To have the obligation executed at the cost
b. To shoulder the cost of execution should he of the debtor [Art. 1167, Civil Code]
fail to do it [Art. 1167, Civil Code] b. To recover damages in case of breach [Art.
c. To undo what has been poorly done [Art. 1170, Civil Code]
1167, Civil Code]
d. To pay damages in case of breach [Art. 1170, Note: The debtor cannot be compelled to perform
Civil Code] his obligation. The ultimate sanction of civil
obligations is indemnification of damages. This
would be tantamount to involuntary servitude.

Obligation Not To Do

a. Not to do what should not be done a. To ask to undo what should not be done, at
b. To shoulder the cost of undoing what should the debtor’s expense [Art. 1168, Civil Code]
not have been one [Art. 1168, Civil Code] b. To recover damages, where it would be
c. To pay damages in case of breach [Art. 1170, physically or legally impossible to undo what
Civil Code] should not have been done, because of:
1. The very nature of the act itself;
2. Rights acquired by third persons who
acted in good faith
3. When the effects of the acts prohibited
are definite in character and will not
cease even if the thing prohibited be
undone.

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C. Transmissibility of obligations Effect: The obligation is deemed fully complied
with.
Article 1178, Civil Code. Subject to the laws, all
rights acquired in virtue of an obligation are
c. Partial prestation
transmissible, if there has been no stipulation to the General Rule:
contrary. 1. The creditor CANNOT be compelled to
receive partial payments.
2. The debtor CANNOT be required to make
General Rule: All rights acquired by virtue of partial payments.
an obligation are transmissible [Art. 1178, Civil
Code]. Contracts take effect only between the Exception: When expressly stipulated [Art.
parties, their assigned and heirs [Art. 1311, 1248 (1), Civil Code]
Civil Code].
d. Partial Liquidation
Exception: Nature of obligation, law or
Trigger: The debt is partly liquidated and partly
stipulation to the contrary provides otherwise
unliquidated.
[Art. 1178, Art. 1311, Civil Code].
Effect: The creditor may demand and the
Only personal obligations, or those identified
debtor may affect the payment of the liquidated
with the persons themselves are extinguished
debt without waiting for the liquidation of the
by death [Stronghold Insurance Co. v.
unliquidated debt [Art. 1248 (2), Civil Code].
Republic-Asahi Glass Corp., G.R. No. 147561
(2006)].
E. Breaches of Obligations
D. Performance of Obligations Those who in the performance of their
obligations are guilty of the following are liable
1. Definition for damages [Art. 1170, Civil Code]:
Payment means not only (1) the delivery of 1. Fraud (dolo): The fraud contemplated by
money, but also (2) the performance, in any the foregoing provision is the deliberate
other manner, of an obligation [Art. 1232, Civil and intentional evasion of the normal
Code]. fulfillment of obligations.
2. Negligence (culpa): Fault or negligence of
2. General Rule/Requirement the debtor as an incident in the fulfillment
The thing or service in which the obligation of an existing obligation.
consists [must be] completely delivered or 3. Delay (mora): Delay in the fulfillment of the
rendered, as the case may be [Art. 1233, Civil obligation. The delay however must be
Code]. imputable to the debtor/obligor.
4. Those who in any manner contravene
3. Exceptions the tenor thereof: Covers any illicit act
a. Substantial Performance which impairs the strict and faithful
Trigger: The obligation has been substantially fulfillment of the obligation.
performed in good faith.
1. Failure to Perform
Effect: The obligor may recover though there Rule
had been a strict and complete fulfillment, less Rescission of a contract will not be permitted
damages suffered by the obligee [Art. 1234, for a slight or casual breach, but only for such
Civil Code]. substantial and fundamental breach as would
defeat the agreement [Vermen Realty Corp v.
b. Incomplete/Irregular performance CA, G.R. No. 101762 (1993)].
Trigger: Obligee accepts performance despite
knowledge of its incompleteness or irregularity,
and without expression any protest or
objection.

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Effect of Failure to Perform Rules on Default, Delay, or Mora
Substantial Breach Slight or Casual Unilateral Obligations Reciprocal
Breach Obligations

a. Total Breach a. Partial breach General Rule: “No Neither party

b. Amounts to non- b. There is partial/ demand, no delay.” incurs in delay if
performance, substantial the other does not
basis for performance in The mere expiration of comply or is not
rescission under good faith the period fixed by the ready to comply in
Art. 1191 and c. Gives rise to parties is not enough in a proper manner
payment of liability for order that the debtor with what is
damages damages only may incur in delay. incumbent upon
[Art. 1234, Civil him. From the
Code] Those obliged to deliver moment one of the
or to do something parties fulfills his
incur in delay from obligation, delay
Substantial breach the time the obligee by the other
The question of whether a breach of contract is judicially or begins [Art. 1169
substantial depends upon the attending extrajudicially (3), Civil Code].
circumstances and not merely on the demands from them
percentage of the amount not paid [Sps. Cannu the fulfillment of their No delay if
v. Sps. Galang, G.R. No. 139523 (2005)]. obligation [Art. 1169 neither performs.
(1), Civil Code].
Substantial performance in good faith
● An attempt in good faith to perform, without
any willful or intentional departure therefrom When demand is not necessary in order
● The deviation from the obligation must be that delay may exist [Art. 1169 (2), Civil Code]
slight, and the omission or defect must be a. When demand would be useless, as
technical and unimportant, and must not when the obligor has rendered it beyond
pervade the whole or be so material that the his power to perform; such as:
object which the parties intended to 1. When the impossibility is caused by
accomplish in a particular manner is not some act or fault of the debtor (e.g.
attained [International Hotel Corp. v. debtor absconded or has destroyed the
Joaquin, G.R. No. 158361 (2013)]. thing to be delivered);
2. When the impossibility is caused by a
2. Default, Delay, or Mora fortuitous event, but the debtor has
Definition: Delay is the nonfulfillment of an bound himself to be liable in case of
obligation with respect to time [Gilat Satellite such event [Tolentino].
Networks Ltd. v. UCPB General Insurance Co. b. When from the nature and the
Inc., G.R. No. 189563 (2014)] circumstances of the obligation it appears
that the designation of the time when the
thing is to be delivered or the service is
to be rendered was a controlling motive
for the establishment of the contract (time
is of the essence);
c. When the law so provides; or
d. When the obligation expressly declares.

Note: It is insufficient that the law or obligation

fixes a date for performance. It must further
state expressly that after the period lapses,
default will commence.

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Kinds of Delay 3. The debtor may relieve himself of the
a. Moral Solvendi obligation by consigning the thing
b. Mora Accipiendi [Tolentino].
c. Compensatio Morae
Compensatio Morae
Mora Solvendi Delay of both parties in reciprocal
Delay on the part of the debtor to fulfill his obligations [Megaworld Properties and
obligation either to give (ex re) or to do (ex Holdings Inc. v. Majestic Finance and
persona). Investment Co., G.R. No. 169694 (2015)].

Requisites Effects
a. Obligation must be liquidated, due and a. Delay of the obligor cancels delay of obligee
demandable (and vice versa) hence it is as if there is no
b. Non-performance by the debtor within the default.
period agreed upon b. The liability of the first infractor shall be
c. Demand, judicial or extra-judicial, by the equitably tempered by the courts. If it cannot
creditor, unless demand is not necessary be determined which of the parties first
under the circumstances enumerated in Art. violated the contract, the same shall be
1169 (2), Civil Code. deemed extinguished, and each shall bear
his own damages [Art. 1192, Civil Code].
Effects
a. The debtor is liable for damages [Art. 1170, Equitable Tempering under Art. 1192 vs.
Civil Code]. under Art. 2215 [Ong v. Bognalbal, G.R. No.
b. For determinate objects, the debtor shall 149140 (2006)]
bear the risk of loss, even if the loss is due Art. 1192 Art. 2215
to fortuitous events [Art. 1165 (3), Civil
Code]. In case both parties In contracts, quasi-
have committed a contracts, and quasi-
Mora Accipiendi breach of the delicts, the court may
Delay on the part of the creditor to accept the obligation, the equitably mitigate the
performance of the obligation [Pantaleon v. liability of the first damages under
American Express International Inc. (AMEX), infractor shall be circumstances other
G.R. No. 174269 (2010)]. equitably tempered than the case referred
by the courts. to in the preceding
Requisites [Pantaleon v. AMEX, supra] article, as in the ff.
a. Debtor offers performance. instances:
b. Offer must be in compliance with the
prestation as it should be performed. (1) That the plaintiff
c. Creditor refuses performance without just himself has
cause. contravened the terms
of the contract -xxx-
Effects
a. The responsibility of the debtor is reduced The second Does not appear to
to fraud and gross negligence. infractor is not liable consider which
b. The debtor is exempted from the risk of loss for damages at all; infractor first
of the thing, which is borne by the creditor. only the first committed the breach.
c. The expenses incurred by the debtor for the infractor is liable,
preservation of the thing after the mora shall but with his liability
be chargeable to the creditor. mitigated.
1. If the obligation bears interest, the debtor
does not have to pay from the time of
delay.
2. The creditor is liable for damages.

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3. Fraud (Dolo) in the Performance of Effect
the Obligation
Art. 1171, Civil Code. Responsibility arising from Voidable and Damages Damages
fraud is demandable in all obligations. Any waiver of
an action for future fraud is void.

Requisites for Fraud to Vitiate a

Definition Contract (Dolo Causante)
Fraud (dolo) is the deliberate or intentional a. It must have been employed by one
evasion of the normal fulfillment of an contracting party upon the other;
obligation [Legaspi Oil Co. Inc. v. CA, G.R. No. b. It must have induced the other party to
96505 (1993)]. It is an inducement through enter into the contract;
false representation and insidious machination c. It must have been serious; and
[Cathay Pacific Airways Ltd. v. Sps. Vazquez, d. It must have resulted in damage or injury to
G.R. No. 150843 (2003]. the party seeking annulment [Tolentino].

Two Types of Fraud 4. Negligence (Culpa) in the

Dolo Causante Dolo Incidente Performance of the Obligation
[Art. 1338 (1), Art. [Art. 1344 (2), Article 1172, Civil Code. Responsibility arising from
1344, Civil Code] Civil Code] negligence in the performance of every kind of
obligation is also demandable, but such liability may
Definition be regulated by the courts, according to the
circumstances.
Those deceptions or Those which are
misrepresentations of a not serious in Article 1173, Civil Code. The fault or negligence of
serious character character and the obligor consists in the omission of that diligence
employed by one party without which the which is required by the nature of the obligation and
and without which the other party would corresponds with the circumstances of the persons,
other party would not still have entered of the time and of the place. x x x x
have entered into the into the contract
If the law or contract does not state the diligence
contract [Tankeh v. [Tankeh v. DBP, which is to be observed in the performance, that
DBP, G.R. No. 171428 G.R. No. 171428 which is expected of a good father of a family shall
(2013)]. (2013)]. be required.

When Present
General Rule: Standard of care required is
diligence of a good father of the family.
Deception is used by Deception used by
one party prior to or one party at the Exceptions (Other standards of care)
simultaneous with the time of birth or a. Common Carriers
contract, in order to perfection, or They are bound to observe extraordinary
secure the consent of performance of diligence in the vigilance over the goods and
the other [Tankeh v. the obligation for the safety of the passengers transported by
DBP, G.R. No. 171428 them [Art. 1733, Civil Code].
(2013)].

Object b. Hotel and inn-keepers

The keepers of hotels or inns shall be
Essential cause of the Some particular or responsible for the deposit of effects, made by
obligation without which accident of the travelers, as depositaries, provided that notice
the other party would obligation was given to them, or their employees of such
not have entered into effects and that they take precautions relative
the contract to the care and vigilance of their effects [Art.
1998, Civil Code].

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This responsibility shall include the loss of, or prima facie to warrant
injury to, the personal property of the guests recovery.
caused by the servants or employees of the
keepers of hotels or inns as well as strangers;
but not that which may proceed from any force Extent of Damages to be Awarded [Art.
majeure [Art. 2000, Civil Code]. 2201, Civil Code]

c. Banks Good Faith Bad Faith

Banks have the obligation to treat the accounts
of its clients ‘meticulously and with the highest Obligor is liable for Obligor shall be
degree of care’ [Poole-Blunden v. UnionBank, those that are the responsible for all
G.R. No. 205838 (2017)]. natural and probable damages which may
consequences of be reasonably
d. Pharmacists the breach of the attributed to the non-
As active players in the field of dispensing obligation, and performance of the
medicines to the public, the highest degree of which the parties obligation.
care and diligence is expected [Mercury Drug have foreseen or
Corporation v. De Leon, G.R. No. 165622 could have Any waiver or
(2008)]. reasonably foreseen renunciation made in
at the time the the anticipation of
Test of Negligence obligation was such liability is null
Whether or not the defendant, in doing the constituted. and void.
alleged negligent act, observed the reasonable
care and caution, which an ordinary and 5. Contravention of the Tenor of the
prudent person would have used in the same
situation. If not, then he is guilty of negligence
Obligation
[Mandarin Villa Inc. v. CA, G.R. No. 119850 The contravention of the tenor includes any
(1996)]. illicit act which impairs the strict and faithful
fulfillment of the obligation. It constitutes every
Kinds of Civil Negligence kind of defective performance [Arrieta v.
National Rice and Corn Corp., G.R. No. L-
Culpa Contractual Culpa Aquiliana 15645 (1964)].

Negligence is merely Negligence is For example, there is a contravention of the

incidental in the direct, substantive, tenor of the obligation when a person tasked to
performance of an and independent. repair a typewriter fails to repair it and, instead,
obligation. returns it in shambles. Under Art. 1167 of the
Civil Code, said person should pay the cost of
There is always a pre- There may or may the labor or service expended in the repair of
existing contractual not be a pre- the typewriter by another person. Under Art.
relation. existing contractual 1170, Civil Code, said person shall also be
obligation. liable for the cost of missing parts because he
failed to return the typewriter in the same
The source of the The source of
condition as it was when he received it [Chaves
obligation of the obligation is the
v. Gonzales, G.R. No. L-27454 (1970)].
defendant to pay defendant’s
damages is the breach negligence itself.
or non-fulfillment of the
contract.

Proof of the existence The negligence of

of the contract and of the defendant must
its breach or non- be proven.
fulfillment is sufficient

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F. Remedies Available to Rescission (Resolution in Reciprocal
Obligations)
Creditor in Cases of Breach
Article 1191, Civil Code. The power to rescind
obligations is implied in reciprocal ones, in case one
1. Principal Remedies of Creditors of the obligors should not comply with what is
incumbent upon him.
Obligation to Obligation to Give a
Give a Specific Generic Thing and The injured party may choose between the
Thing Obligation to Do fulfillment and the rescission of the obligation, with
the payment of damages in either case. He may also
Alternative Remedies seek rescission, even after he has chosen fulfilment,
if the latter should become impossible.
Compel the Ask the obligation to be The court shall decree the rescission claimed,
debtor to make complied with at the unless there be just cause authorizing the fixing of a
delivery (specific expense of the debtor period.
performance) [Art. 1165 (2), Civil
[Art. 1165 (1), Code]. This is understood to be without prejudice to the
Civil Code] rights of third persons who have acquired the thing,
in accordance with Arts. 1385 and 1388 and the
Mortgage Law.
Rescission [Art. If a person obliged to do
1191, Civil Code] something fails to do it,
the same shall be Rescission
executed at his cost [Art. The unmaking of a contract, or its undoing from
1167, Civil Code] the beginning, and not merely its termination
[Pryce Corp v. PAGCOR, G.R. No. 157480
What has been poorly (2005)].
done [may] be undone
[Art. 1167, Civil Code]. Right to Rescind
The rescission on account of breach of
Rescission [Art. 1191, stipulations is not predicated on injury to the
Civil Code] economic interests of the party plaintiff but
on the breach of faith by the defendant, that
Damages in any event
violates the reciprocity between the parties
Those who in the performance of their [Universal Food Corporation v. CA, G.R. No. L-
obligations are guilty of fraud, negligence, or 29155 (1970)].
delay, and those who in any manner
contravene the tenor thereof, are liable for Effect of Rescission Under Art. 1191
damages [Art. 1170, Civil Code]. Extinguishes the obligatory relation as if it had
never been created, the extinction having a
retroactive effect. Both parties must surrender
what they have respectively received and
return each other as far as practicable to their
original situation [Tolentino].

Rescission may take place extrajudicially, by

the declaration of the injured party. The party
who deems the contract violated may
consider it resolved or rescinded, and act
accordingly, without previous court action,
but it proceeds at its own risk. For it is only
the final judgment of the corresponding court
that will conclusively and finally settle whether
the action taken was or was not correct in law.
But the law definitely does not require that
the contracting party who believes itself
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injured must first file suit and wait for a 2. Subsidiary Remedies of Creditors
judgment before taking extrajudicial steps to a. Accion Subrogatoria
protect its interest [UP v. Delos Angeles, G.R.
Article 1177, Civil Code. The creditors, after having
No. L-28602 (1970)]. pursued the property in possession of the debtor to
satisfy their claims, may exercise all the rights and
Under Art. 1191, the right to rescind an bring all actions of the latter for the same purpose,
obligation is predicated on the violation of the save those which are inherent in his person; they
reciprocity between parties, brought about by a may also impugn the acts which the debtor may
breach of faith by one of them. Rescission, have done to defraud them.
however, is allowed only where the breach is
substantial and fundamental to the The right of the creditor to exercise all of the
fulfillment of the obligation [Del Castillo Vda. rights and bring all the actions which his debtor
de Mistica v. Naguiat, G.R. No. 137909 (2003); may have against third persons.
Sps. Cannu v. Sps. Galang, G.R. No. 139523
(2005)]. In order to satisfy their claims against the
debtor, creditors have the ff. successive
It will not be permitted in casual or slight breach rights:
[Song Fo v. Hawaiian Philippines, G.R. No. 1. To levy by attachment and execution upon
23769 (1925)]. all the property of the debtor, except those
exempt from execution;
Distinguished from Rescission under Art. 2. To exercise all the rights and actions of the
1380 debtor, except such as are inherently
Rescission / Rescission [Art. personal to him; and
Resolution [Art. 1380, Civil Code] 3. To ask for rescission of the contracts made
1191, Civil Code] by the debtor in fraud of their rights.

Based on non- Based on lesion or Requisites

performance or fraud upon creditors. 1. The person to whom the right of action
non-fulfillment of pertains must be indebted to the creditor
obligation. 2. The debt is due and demandable
3. The creditor must be prejudiced by the
Action is instituted Action is instituted by failure of the debtor to collect his debts due
only by the injured either party or by a to him from third persons, either through
party. third person. malice or negligence
4. The debtor's assets are insufficient (debtor
Principal action, Subsidiary action, in is insolvent)
retaliatory in the absence of any 5. The right of action is not purely personal to
character. other legal means to the debtor
obtain reparation.
Note: Previous approval of the court is not
Applies only to Applies to either necessary to exercise the accion subrogatoria.
reciprocal unilateral or reciprocal
obligations where obligations even when b. Accion Pauliana
one party is guilty the contract has been Creditors may also impugn the acts which the
of non-fulfillment fully fulfilled.
debtor may have done to defraud them [Art.
In some cases, Court cannot grant a 1177, Civil Code].
court may grant a period or term within
term for which one must Paragraph 3, Article 1381, Civil Code. The
performance. comply. following contracts are rescissible:

Non-performance Non-performance by (3) Those undertaken in fraud of creditors when the

latter cannot in any other manner collect the claims
by the other party is the other party is due them.
important. immaterial.

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Requisites [Cheng v. CA, G.R. No. 144169
(2001)]
1. There is a credit in favor of the plaintiff
prior to the alienation by the debtor
2. The debtor has performed a subsequent
contract conveying patrimonial benefit to
third person/s.
3. The debtor’s acts are fraudulent to the
prejudice of the creditor.
4. The creditor has no other legal remedy to
satisfy his claim
5. The third person who received the
property is an accomplice to the fraud.

An accion pauliana thus presupposes the

following:
1. A judgment;
2. the issuance by the trial court of a writ of
execution for the satisfaction of the
judgment, and;
3. the failure of the sheriff to enforce and
satisfy the judgment of the court.

It requires that the creditor has exhausted the

property of the debtor. The date of the
decision of the trial court is immaterial.
What is important is that the credit of the
plaintiff antedates that of the fraudulent
alienation by the debtor of his property.
After all, the decision of the trial court against
the debtor will retroact to the time when the
debtor became indebted to the creditor [Cheng
v. CA, G.R. No. 144169 (2001)].

Accion Accion Pauliana

Subrogatoria

Not necessary Credit must exist before the

that creditor’s fraudulent act [Tolentino]
claim is prior to
the acquisition Note: Commentators have
of the right by conflicting views on
the debtor whether new debts
contracted by the debtor fall
under the scope of accion
pauliana.

No need for Fraudulent intent is

fraudulent required if the contract
intent rescinded is onerous

No period for Prescribes in 4 years from

prescription the discovery of the fraud

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III. KINDS OF OBLIGATIONS his right [Art. 1188,

Civil Code].
A. Pure
Doctrine of Constructive Fulfillment of
Article 1179, Civil Code. Every obligation whose Suspensive Conditions
performance does not depend upon a future or Article 1186, Civil Code. The condition shall be
uncertain event, or upon a past event unknown to deemed fulfilled when the obligor voluntarily
the parties, is demandable at once. prevents its fulfillment.
Every obligation which contains a resolutory
condition shall also be demandable, without A suspensive condition is deemed fulfilled
prejudice to the effects of the happening of the when:
event.
1. Obligor intends to prevent obligee from
complying with the condition
A pure obligation is immediately demandable, 2. Obligor actually prevents obligee from
regardless of the presence of a condition or a complying with the condition
term/period.
The two requisites must concur. Mere
B. Conditional intention of the debtor to prevent the happening
of the condition, or to place ineffective
obstacles to its compliance, without actually
Article 1181, Civil Code. In conditional obligations, preventing the fulfillment, is insufficient
the acquisition of rights, as well as the
extinguishment or loss of those already acquired,
[International Hotel Corporation v. Joaquin,
shall depend upon the happening of the event which G.R. No. 158361 (2013)].
constitutes the condition.
Doctrine does not apply to:
1. Resolutory conditions
Definition 2. External contingency that is lawfully within
A condition is a future AND uncertain event. the control of the obligor [Taylor v. Uy Tieng,
This includes the acquisition of proof or G.R. No. L-16109 (1922)]
knowledge of a past event unknown to the 3. Obligor, in preventing the fulfilment of the
parties. condition, acts pursuant to a right
1. Kinds of Conditions as to Effect Principle of Retroactivity in Suspensive
A. Suspensive Conditions
Obligation shall only be effective upon the
Paragraph 1, Article 1187, Civil Code. The effects
fulfillment of the condition [Art. 1181, Civil of a conditional obligation to give, once the condition
Code]. The obligee acquires a mere hope or has been fulfilled, shall retroact to the day of the
expectancy, protected by law, upon the constitution of the obligation. Nevertheless, when
constitution of the obligation. the obligation imposes reciprocal prestations upon
the parties, the fruits and interests during the
pendency of the condition shall be deemed to have
Before Fulfillment After Fulfillment been mutually compensated.

The demandability The obligation

Rationale: Obligation is constituted when its
and acquisition/ arises or becomes
essential elements concur. The condition
effectivity of the rights effective.
imposed is only an accidental element.
arising from the
obligation is The obligor can be
Applicability: This applies to consensual
suspended, but the compelled to
contracts only.
creditor may bring the comply with what is
appropriate actions incumbent upon
Exception: This does not apply to real
for the preservation of him.
contracts which can only be perfected by
delivery.
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Effects of the Happening of Suspensive 2. Kinds of Conditions as to
Conditions Cause/Origin
To Give To Do/Not To Do a. Potestative
The fulfillment of the condition depends on the
If reciprocal, the In obligations to do or sole act or decision of a party.
fruits and interests not to do, the court
shall be deemed to shall determine the b. Casual
have been mutually retroactive effect of The fulfillment of the condition depends upon
compensated as a the condition that has chance or upon the will of a third person [Art.
matter of justice and been complied with 1182, Civil Code].
convenience [Art. [Art. 1187 (2), Civil
1187 (1), Civil Code] c. Mixed
Code] The fulfillment of the condition depends partly
upon the will of a party to the contract and
If unilateral, the The power of the court partly upon chance and/or will of a third person.
debtor shall includes the
appropriate the determination of
fruits and interests whether or not there Exclusively Condition and obligation
received, unless will be any retroactive upon the are valid.
from the nature and effect. This rule shall Creditor’s Will
circumstance it likewise apply in
should be inferred obligations with a Exclusively Condition and obligation
that the intention of resolutory condition upon the are void because to allow
the persons [Art. 1190 (3), Civil Debtor’s Will such condition would be
constituting the Code] in case of a equivalent to sanctioning
same was different Suspensive obligations which are
[Art. 1187 (1), Civil Condition illusory. It also constitutes
Code] [Art. 1182, a direct contravention of
CC] the principle of mutuality of
contracts.
b. Resolutory
The obligation is demandable at once, without Exclusively Condition and obligation
prejudice to the effects of the happening of the upon the are valid because in such
event [Art. 1179 (2), Civil Code]. Debtor’s Will situation, the position of the
in case of a debtor is exactly the same
Resolutory as the position of the
Before After Fulfillment
Condition creditor when the condition
Fulfillment
[par. 2, Art. is suspensive. It does not
Preservation of Whatever may have 1179, CC] render the obligation
creditor’s rights been paid or delivered by illusory.
[Art. 1188 (1), one or both of the parties
Civil Code] also upon the constitution of The condition that payment should be made by
applies to the obligation shall have Hermosa as soon as he receives funds from
obligations with to be returned upon the the sale of his property in Spain is a mixed
a resolutory fulfillment of the condition condition. The condition implies that the
condition. [Art. 1190 (1), Civil obligor already decided to sell the house
Code]. There is no return and all that was needed to make the
to the status quo. obligation demandable is that the sale be
However, when the consummated and the price thereof
condition is not fulfilled, remitted to the islands.
rights are consolidated
and they become There were still other conditions that had to
absolute in character. concur to effect the sale, mainly that of the
presence of a buyer, ready, able and willing to
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purchase the property under the conditions set
Without With Debtor’s
by the intestate [Hermosa v. Longara, G.R. No.
Debtor’s Fault/Act
L-5267 (1953)].
Fault/Act
Loss, Deterioration, or Improvement of a Loss
Specific Thing before Fulfillment of
Suspensive Condition in Obligations to Obligation is Obligation is converted
Give [Art. 1189, Civil Code] or of Resolutory extinguished. into one of indemnity for
Condition in Obligations to Do or Not to Do damages.
[Art. 1190 (2), Civil Code]
Deterioration
Loss of a A thing is deemed lost:
Impairment to be Creditor may choose
Thing a. When it perishes;
borne by the between bringing an
b. When it goes out of
creditor. action for rescission of
commerce of man; or
the obligation OR
c. When it disappears in such
bringing an action for
a manner that its existence is
specific performance,
unknown or it cannot be
with damages in either
recovered
case.
Deteriorati Any reduction or impairment Improvement
on of a in the substance or value of
Thing a thing which does not Improvement at Improvement by the
amount to a loss the debtor’s thing’s nature or by time
expense, the shall inure to the benefit
Improveme Anything added to, debtor shall of the creditor.
nt of a incorporated in, or attached to ONLY have
Thing the thing that is due. usufructuary
rights.
Re: Obligation to Deliver a Determinate
Thing Re: Obligations To Do and Not To Do
When the conditions have been imposed with
Paragraph 3, Article 1190, Civil Code. As for the
the intention of suspending the efficacy of an obligations to do and not to do, the provisions of the
obligation to give, the following rules shall be second paragraph of article 1187 shall be observed
observed in case of the improvement, loss or as regards the effect of the extinguishment of the
deterioration of the thing during the pendency obligation.
of the condition [Art. 1189, Civil Code]:
Paragraph 2, Article 1187, Civil Code. In
obligations to do and not to do, the courts shall
determine, in each case, the retroactive effect of the
condition that has been complied with.

Re: Obligations With a Resolutory

Condition
Upon the happening of the resolutory
condition, the rules of Art. 1189, Civil Code
shall be applied to the party who is bound to
return (i.e. the creditor in the original
obligation).

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3. Impossible Conditions 3. When the debtor binds himself to pay when
General Rule his means permit him to do so, the
Impossible conditions, those contrary to good obligation shall be deemed to be one with a
customs or public policy and those prohibited period [Art. 1180, Civil Code].
by law shall annul the obligation which
depends upon them [Art. 1183, Civil Code]. Period or Term
Interval of time, which either suspends
Exceptions [Art. 1183, Civil Code] demandability or produces extinguishment.
a. If the obligation is divisible: The part
thereof which is not affected by the A fortuitous event does not interrupt the
impossible or unlawful condition shall be running of the period. It only relieves the
valid. contracting parties from the fulfillment of their
b. If the condition is not to do an respective obligations during the period
impossible thing: Said condition shall be [Victoria’s Planters v. Victoria Milling Co., G.R.
considered as not having been agreed No. L-6648 (1955)].
upon.
Term/Period and Condition Distinguished
4. Positive And Negative Conditions Term/Period Condition
Positive [Art. 1184, Negative [Art.
Interval of time which Fact or event which
Civil Code] 1185, Civil Code]
is future and certain is future and
The condition that The condition that uncertain
some event happen at some event will not
Must necessarily May or may not
a determinate time happen at a
come, although it may happen
shall extinguish the determinate time
not be known when
obligation shall render the
1. as soon as the obligation effective
time expires or from the moment No effect on Gives rise to an
2. if it has become 1. the time existence of the obligation or
indubitable that the indicated has obligation, only its extinguishes one
event will not take elapsed, or demandability or already existing
place. 2. if it has performance
become evident
that the event No retroactive effect Has retroactive
cannot occur. unless there is an effect
agreement to the
Where no date of fulfillment is stipulated, the contrary
condition must be fulfilled within a reasonable
When it is left When it is left
time or the time probably contemplated
exclusively to the will exclusively to the
according to the nature of the obligation [Art.
of the debtor, the will of the debtor, the
1185 (2), Civil Code].
existence of the very existence of the
obligation is not obligation is affected
C. Obligation with a Period or a affected
Term
Kinds of Period [Art. 1193, Civil Code]
1. Obligations for whose fulfillment a day
1. Ex die/ Suspensive Period – Obligation
certain has been fixed ⎯ shall be
becomes demandable after the lapse of the
demandable only when that day comes [Art.
period.
1193, Civil Code].
2. In die/ Resolutory period – Obligation
2. Obligations with a resolutory period ⎯ take
becomes demandable at once but is
effect at once, but terminate upon arrival of extinguished after the lapse of the period.
the day certain [Art. 1193, Civil Code].

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Effect of Advance Payment or Delivery If the period is for the benefit of the debtor
[Art. 1195, Civil Code] alone, he shall lose every right to make use
Trigger: of it:
1. Something has been paid or delivered 1. When after the obligation has been
before the arrival of the period, and contracted, he becomes insolvent, unless
2. The obligor being unaware of the period or he gives a guaranty or security for the debt;
believing that the obligation has become 2. When he does not furnish to the creditor the
due and demandable guaranties or securities which he has
promised;
Effect: That thing paid or delivered may be 3. When by his own acts he has impaired said
recovered with fruits and interests guaranties or securities after their
establishment, and when through a
Loss, Deterioration, or Improvement fortuitous event they disappear, unless he
immediately gives new ones equally
of the Thing Before Period Expires satisfactory;
[Art. 1194, Civil Code] 4. When the debtor violates any undertaking,
Trigger: In case of loss, deterioration or in consideration of which the creditor agreed
improvement of the thing before the arrival of to the period;
the day certain 5. When the debtor attempts to abscond [Art.
1198, Civil Code]
Effect: The rules in Art. 1189 shall apply 6. When required by law or stipulation;
7. If parties stipulated an acceleration clause
Benefit of the Period [Art. 1196, Civil [Tolentino]
Code]
Trigger: Whenever in an obligation a period is When Courts May Fix Period
designated Triggers:
1. If the obligation does not fix a period but it
Effect: It is presumed to have been established can be inferred from its nature and the
for the benefit of both the creditor and the circumstances that a period was intended
debtor [Art. 1197, Civil Code];
2. If the period depends upon the will of the
Exception: From the tenor of the same or debtor [Art. 1197, Civil Code]; or
other circumstances it should appear that the 3. If the debtor binds himself to pay when his
period has been established in favor of one or means permit him to do so and thus the
of the other. obligation is deemed to be one with a period
[Art. 1180, Civil Code].
Period for the benefit of either creditor or
debtor General Rule: The courts may fix the duration
Creditor Debtor of the period. Once fixed by the courts, the
period cannot be changed by the parties. The
Creditor may Debtor may oppose any courts shall determine such period as may,
demand the premature demand on under the circumstances, have been probably
fulfillment or the part of the obligee for contemplated by the parties [Art. 1197, Civil
performance of the performance of the Code].
the obligation at obligation, or if he so
any time but the desires, he may Exception: The court shall not fix a period
obligor cannot renounce the benefit of anymore if the fixing is rendered futile by the
compel him to the period by performing circumstances of the case. For example, if it
accept his obligation in advance. can be deduced that the parties intended that
payment before the obligation be complied with within a
the expiration of reasonable time, and it has been fifty (50) years
the period. since the execution, the reasonable time
contemplated by the parties has already
lapsed. Hence, there is no need to fix a period
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which will only be a mere formality with no other creditor [Art. 1200,
purpose than to delay or lead to an Civil Code].
unnecessary multiplication of suits [Clemente
v. Republic, G.R. No. 220008 (2019)].

“Period probably contemplated by the Loss/impossibility of Loss/impossibility of

parties” all prestations due the prestation due
The seller was given a reasonable time to to a fortuitous event to a fortuitous event
comply with its obligation to construct streets in shall extinguish the is sufficient to
the perimeter of the land. In fixing a period, the obligation. extinguish the
SC ruled that the parties intended that the obligation.
period be indefinite and shall last until the
informal settlers are evicted from the land Loss/impossibility of Loss/impossibility of
where the streets ought to be constructed one of the the substitute/s
[Araneta v. Phil. Sugar Estates, G.R. No. L- prestations does does not extinguish
22558 (1967)]. not extinguish the the obligation,
obligation. provided the
The parents, out of parental love, allowed their obligation which is
children to occupy their land. The SC ruled that due subsists
no period was intended from such agreement.
Hence, the Court has no authority to set a Culpable loss of any Culpable loss of the
period. Rather, the parties implied a resolutory of the objects object which the
condition that the agreement would end upon alternatively due debtor may deliver in
the dissipation of parental love [Macasaet v. before the choice is substitution before
Macasaet, G.R. No. 154391-92 (2004)]. made may give rise the substitution is
to liability on the effected does not
D. Alternative or Facultative part of the debtor. give rise to any
liability on the part of
the debtor.
Alternative and Facultative
Conditions Distinguished
Right of Choice [Art. 1200, Civil Code]
Alternative Facultative
General Rule: Belongs to the debtor
Obligations Obligations

Of the two or more Of the two or more Exceptions

prestations, several prestations, only 1. it is expressly granted to the creditor
are due. one is due, while the 2. it is expressly granted to a third person
other/s may be
performed in Form of notice
substitution of the Notice of selection or choice may be in any
one due. form provided it is sufficient to make the other
party know that the selection has been made.
May be complied May be complied It can be:
with by performance with by performance 1. Oral
of one of the of another prestation 2. In writing
prestations which in substitution of 3. Tacit
are alternatively that which is due. 4. Any other equivocal means [Tolentino]
due.
Consent of other party
The right of choice Choice of prestation The law does not require the other party to
belongs to the pertains only to the consent to the choice made by the party
debtor, unless it debtor. entitled to choose. The only possible exception
has been expressly is when the debtor has chosen a prestation
granted to the which could not have been the object of the

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obligation; the creditor’s consent would bring value may also be
about a novation of the obligation awarded
Debtor cannot make a choice, or delays
selection
If through the creditor's acts the debtor cannot
make a choice according to the terms of the
obligation, the latter may rescind the Some prestations lost/impossible
contract with damages [Art. 1203, Civil
Code].
Debtor to Debtor to perform that
If the debtor does not select at the time perform that which the debtor shall
when performance should be effected, the which he shall choose from among the
choice can be made for him by the creditor choose from remainder, without
by applying Art. 1167 among the liability for damages.
In obligations to do (debtor considered to have remainder.
waived his right, subject to equity
One prestation remains
considerations) [Tolentino].
Effect of notice of choice Debtor to Debtor to perform that
The effect of the notice is to limit the obligation perform that which remains.
to the object or prestation selected. The which remains.
obligation is converted into a simple obligation
to perform the prestation chosen. Once a
selection has been communicated, it is If Creditor’s Choice [Art. 1205, Civil Code]
irrevocable [Ibid]. Fortuitous Debtor’s Fault
Event
Instances when obligation is converted into
a simple obligation All prestations lost/impossible
1. The person with the right of choice has
communicated his choice [Art. 1201 & Debtor is Creditor may claim the
Art.1205 (1), Civil Code] released from price/value of any of
2. Only one prestation is practicable [Art. the obligation. them, with indemnity for
1202, Civil Code] damages.

Loss of Specific Things or Some prestations lost/impossible

Impossibility of Performance of
Prestations in an Alternative Debtor to deliver Creditor may claim any of
that which he those subsisting without
Obligation shall choose a right to damages OR
If Debtor’s Choice [Art. 1204, Civil Code]
from among the price/value of the thing
Fortuitous Debtor’s Fault remainder. lost, with right to
Event damages.

All prestations lost/impossible One prestation remains

Debtor is Creditor shall have a right Debtor to Creditor may claim the
released from to indemnity for damages perform that remaining thing without a
the obligation. based on the value of the which remains. right to damages OR the
last thing which price/value of the thing
disappeared or service lost with right to
which become damages.
impossible, plus
damages other than the

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Facultative Obligations under Arts. 19-22, Civil Code, if committed
Only one prestation is agreed upon, but the by two or more persons acting jointly
obligor may render another in substitution [Art. c. When the nature of the obligation requires
1206, Civil Code]. solidarity
d. When a charge or condition imposed upon
Loss or Deterioration of Substitute in heirs or legatees, and the testament
Facultative Obligations [Art. 1206, expressly makes the charge or condition in
solidum
Civil Code] e. When the solidary responsibility is imputed
Before After Substitution is by a final judgment upon several defendants
Substitution is Made
Made Presumption of Divisibility in Joint
Obligations [Art. 1208, Civil Code]
If due to bad faith The loss or deterioration Credit or debt shall be presumed to be divided
or fraud of of the substitute on into as many equal shares as there are
obligor: obligor is account of the obligor’s creditors or debtors, the credits or debts being
liable. delay, negligence, or considered distinct from one another.
fraud, renders the obligor
If due to the liable because once the
Joint Divisible Obligation
negligence of the substitution is made, the
One where a concurrence of several creditors,
obligor: obligor is obligation is converted
or of several debtors, or of several creditors
not liable. into a simple one with the and debtors, by virtue of which, each of the
substituted thing as the creditors has a right to demand, and each of
object of the obligation. the debtors is bound to render compliance with
his proportionate part of the prestation which
E. Joint and Solidary Obligations constitute the object of the obligation.

Joint Indivisible Obligation

1. Joint Obligations
The whole obligation, whether capable of Article 1209, Civil Code. If the division is
impossible, the right of the creditors may be
division into equal parts or not, is to be paid or
prejudiced only by their collective acts, and the debt
performed by several debtors (joint debtors) can be enforced only by proceeding against all the
and/or demanded by several creditors (joint debtors. If one of the latter should be insolvent, the
creditors). others shall not be liable for his share.

Each debtor is liable only for a proportionate

When there are several debtors or creditors,
part of the debt, and each creditor is entitled
but the prestation is indivisible, the obligation is
only to a proportionate part of the credit
joint, unless solidarity has been stipulated
[Tolentino].
[Tolentino].
Presumption of Joint Obligation [Art. When Indivisible [Art. 1225, Civil Code]
1207, Civil Code] a. Obligations to give definite things
General Rule: An obligation is presumed joint b. Obligations not susceptible of partial
if there is a concurrence of several creditors, or performance
of several debtors, or of several creditors and c. Indivisibility is provided by law or intended
debtors in one and the same obligation by the parties, even though the object or
service may be physically divisible
Exceptions c. In obligations not to do, when character of
a. When the obligation expressly states that prestation requires indivisibility
there is solidarity
b. When the law requires solidarity, i.e. quasi-
delicts [Art. 2194, Civil Code], joint payees
by mistake [Art. 2157, Civil Code], acts

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Summary: in case of Breach debtor is bound to debtor is not bound
Joint Divisible Joint Indivisible pay the entire to pay more than his
Obligations Obligations prestation share

In case of In case of breach where Effect of breach: Effect of breach:

breach of one of the joint debtors Solidarity remains Obligation is
obligation by fails to comply with his converted to
one of the undertaking, the indemnity for
debtors, obligation can no longer damages
damages due be fulfilled or performed.
must be borne Thus, the action must be All debtors are liable Only the debtors
by him alone. converted into one for for breach committed guilty of breach of
indemnity for damages, by a co-debtor obligation is liable for
with each debtor liable damages
only for his part in the
price or value of the All debtors are Other debtors are not
prestation. proportionately liable liable if one debtor is
for insolvency of one insolvent
debtor
2. Solidary Obligations
An obligation where there is concurrence of
several creditors, or of several debtors, or of Kinds of Solidary Obligations
several creditors and several debtors, by virtue As to Source
of which, each of the creditors has the right to a. Legal – imposed by law
demand, and each of the debtors is bound to b. Conventional – agreed upon by parties
render, entire compliance with the prestation c. Real – imposed by the nature of the
which constitutes the object of the obligation. obligation

The indivisibility of an obligation does not As to Parties Bound

necessarily give rise to solidarity. Nor does a. Active (solidarity among creditors) – Each
solidarity of itself imply indivisibility [Art. 1210, creditor has the authority to claim and
Civil Code]. enforce the rights of all, with the resulting
obligation of paying everyone what belongs
Solidarity may exist although the creditors and to him.
the debtors may not be bound in the same b. Passive (solidarity among debtors) – Each
manner and by the same periods and condition debtor can be made to answer for the
[Art. 1211, Civil Code]. others, with the right on the part of the
debtor-payor to recover from the others their
respective shares.
Solidarity Indivisibility c. Mixed (solidarity among creditors and
debtors) – The creditor can commence an
Refers to the legal tie Refers to the
action against anyone of the debtors for the
(vinculum juris), and prestation that is not
compliance with the entire obligation minus
consequently to the capable of partial
the portion or share which corresponds to
subjects or parties of performance
the debtor affected by the condition or
the obligation
period [Art. 1211, Civil Code].
More than one Exists even if there is
creditor or more than only one creditor Active Solidary Obligation (among
one debtor (plurality and/or one debtor creditors)
of subjects) Article 1214, Civil Code. The debtor may pay any
one of the solidary creditors; but if any demand,
Each creditor may Each creditor cannot judicial or extrajudicial, has been made by one of
demand the entire demand more than them, payment should be made to him.
prestation and each his share and each

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Effects of Active Solidarity [Tolentino] Effects of Passive Solidarity [Tolentino]
a. Death of solidary creditor does not a. Each debtor can be required to pay the
transmit solidarity to his heirs but rather to entire obligation, but after payment he can
all of them taken together (joint) recover from the co-debtors their respective
b. Each represents the other in receiving shares
payment and all other advantageous acts b. Each debtor may set up his own claims
(i.e. interrupt prescription and render the against the creditor as payment of the
debtor in default for the benefit of all obligation
creditors) c. Remission of the entire debt affects all
c. Each one of the solidary creditors may do debtors, but when remission is limited to the
whatever may be useful to the others, but share of one debtor, the other debtors are
not anything which may be prejudicial to the still liable for the balance of the obligation
latter [Art. 1212, Civil Code] 1. The remission of the whole obligation,
d. One creditor does NOT represent all obtained by one of the solidary debtors,
others in acts such as novation (even if does not entitle him to reimbursement
advantageous), compensation and from his co-debtors [Art. 1220, Civil
remission. In this case, even if the debtor is Code].
released, the other creditors can still 2. The remission made by the creditor of
enforce their rights against the creditor who the share which affects one of the
made the novation, compensation or solidary debtors does not release the
remission [Art. 1215 (2), Civil Code] latter from his responsibility towards the
e. The creditor who collects the debt, shall co-debtors, in case the debt had been
be liable to the others for the share in the totally paid by any one of them before the
obligation corresponding to them [Art. 1215 remission was effected [Art. 1219, Civil
(2), Civil Code] Code].
f. The credit and its benefits are divided d. All debtors are liable for the loss of the thing
equally among them, unless agreement to due, even if only one of them is at fault, or
the contrary. after incurring delay it is lost by fortuitous
g. Debtor may pay any one of the solidary event
creditors; but if any demand, judicial or e. Interruption of prescription as to one debtor
extrajudicial, has been made by one of affects all others, but renunciation of
them, payment should be made to him who prescription already had does not prejudice
demanded [Art. 1214, Civil Code] the others. (Reason: prescription
extinguishes the mutual representation
Passive Solidary Obligation among solidary debtors)
General Rules f. Interests due by delay of one is borne by all
a. The creditor may proceed against any one of them
of the solidary debtors or some or all of them
simultaneously, so long as the debt has not Defenses Available to a Solidary Debtor
been fully collected [Art. 1216, Civil Code]. [Art. 1222, Civil Code]
b. Payment made by one of the solidary a. Those derived from the nature of the
debtors extinguishes the obligation. If two or obligation
more solidary debtors offer to pay, the Defenses inherent in an obligation include non-
creditor may choose which offer to accept existence of the obligation because of absolute
[Art. 1217, Civil Code]. simulation or illicit object, nullity due to defect
c. A solidary debtor may, in actions filed by the in capacity or consent of all debtors,
creditor, avail himself of all defenses which unenforceability, non-performance of
are derived from the nature of the obligation suspension condition or non-arrival of period,
and of those which are personal to him, or extinguishment of the obligation, res judicata,
pertain to his own share. For defenses and prescription.
which personally belong to the others, such
debtor may avail himself thereof only as b. Those personal to him
regards that part of the debt for which the Personal defenses such as minority, insanity,
latter are responsible [Art. 1222, Civil Code]. fraud, violence, or intimidation will serve as a
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complete exemption of the defendant debtor Loss of the thing or impossibility of
from liability to the creditor performance of the passive/mixed
solidary obligation [Art. 1221, Civil
c. Those pertaining to his own share Code]
d. Those personally belonging to other co- Without The obligation shall be
debtors but only as regards that part of the fault of the extinguished.
debt for which the latter are responsible. debtors

Comparing Demand Upon Solidary Debtor With fault All debtors shall be responsible
and Payment by a Solidary Debtor of any of to the creditor, for the price and
the the payment of damages and
Demand Upon a Payment by a debtors interest, without prejudice to
Solidary Debtor Solidary Debtor their action against the guilty or
negligent debtor.
The demand made Full payment
against one of them made by one of Through a All debtors shall be responsible
shall not be an obstacle the solidary fortuitous to the creditor, for the price and
to those which may debtors event after the payment of damages and
subsequently be extinguishes the one interest, without prejudice to
directed against the obligation [Art. incurred their action against the guilty or
others so long as the 1217, Civil Code]. in delay negligent debtor.
debt has not been fully
collected [Art. 1216,
Civil Code]. F. Obligations with a Penal Clause
The creditor may If two or more Penal Clause
proceed against any solidary debtors An accessory undertaking to assume greater
one of the solidary offer to pay, the liability in case of breach. It is generally a sum
debtors or all creditor may of money, but it can be any other thing like an
simultaneously [Art. choose which act or abstention [Tolentino].
1216, Civil Code]. offer to accept
[Art. 1217, Civil If the principal obligation is void, the penal
Code]. clause shall also be void. However, the nullity
of the penal clause does not carry with it the
A creditor’s right to The solidary nullity of the principal obligation [Art.1230, Civil
proceed against the debtor who made Code].
surety exists the payment shall
independently of his have the right to
Rules on Penalty
right to proceed against claim from his co-
1. The penalty shall substitute the indemnity
the principal. debtors the share
for damages and payment of interest in
which
case of non-compliance [Art. 1226, Civil
corresponds to
Code], unless:
them with interest,
a. There is an express provision to that
UNLESS barred
effect
by prescription or
b. The obligor refuses to pay the penalty
illegality [Art.
c. The obligor is guilty of fraud in non-
1218, Civil Code].
fulfillment
2. Debtor cannot exempt himself from the
performance of the principal obligation by
paying the stipulated penalty unless this
right has been expressly reserved for him
[Art. 1227, Civil Code].
3. Creditor cannot demand the fulfillment of
the principal obligation and demanding the
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satisfaction of the penalty at the same time is addressed to the sound discretion of the
unless the right has been clearly granted to court [Ligutan v CA, G.R. No. 138677 (2002)].
him [Art. 1227, Civil Code]. A tacit or implied
grant is admissible.
a. If the creditor chooses to demand the
satisfaction of the penalty, he cannot
afterwards demand the fulfillment of the
obligation.
b. If there was fault on the part of the
debtor, creditor may demand not only
the satisfaction of the penalty but also
the payment of damages.
c. If the creditor has chosen to demand
the fulfillment of the principal
obligation and the performance
thereof becomes impossible without
his fault, he may still demand the
satisfaction of the penalty.

Enforcement of the Penalty

The enforcement of the penalty can be
demanded by the creditor only when the non-
performance is due to the fault or fraud of the
debtor. However, the creditor does not have to
prove fault or fraud, since the non-performance
gives rise to the presumption of fault
[Tolentino].

Proof of Actual Damage

Proof of actual damage suffered by the creditor
is not necessary in order that the penalty may
be enforced [Art. 1228, Civil Code].

When Penalty may be Reduced [Art.

1229, Civil Code]:
1. If the principal obligation has been partly
complied with.
2. If the principal obligation has been
irregularly complied with.
3. If the penalty is iniquitous or
unconscionable, even if there has been no
performance.

The question of whether a penalty is

reasonable or iniquitous can be partly
subjective and partly objective. Its resolution
would depend on such factors as, but not
necessarily confined to, the type, extent and
purpose of the penalty, the nature of the
obligation, the mode of breach and its
consequences, the supervening realities, the
standing and relationship of the parties, and
the like, the application of which, by and large,

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IV. EXTINGUISHMENT OF b. Object of Payment

Integrity of Prestation
OBLIGATIONS General Rule: A debt shall be understood to
have been paid when the thing or service in
Modes of Extinguishing which the obligation consists has been
completely delivered or rendered [Art. 1233,
Obligations [Par. 1., Art. 1231, Civil Code]
Civil Code]
1. By payment or performance Exceptions:
2. By the loss of the thing due; 1. When the obligation has been substantially
3. By the condonation or remission of the debt; performed in good faith [Art. 1234, Civil
4. By the confusion or merger of the rights of Code]
creditor and debtor; 2. When the obligee accepts performance
5. By compensation; despite its incompleteness or irregularity
6. By novation and without expressing any protest or
correction [Art. 1235, Civil Code]
Other Modes of Extinguishing
Identity of Prestation
Obligations [Par. 2, Art. 1231, General Rules
Civil Code] For obligations to give: The same thing or the
1. By annulment same prestation, in the manner agreed upon,
2. By rescission must be delivered or performed. The debtor of
3. By fulfillment of a resolutory condition a thing cannot compel the creditor to receive a
4. Prescription different one, although the latter may be of the
same value as, or more valuable than that
Other Forms of Extinguishment which is due [Art. 1244, Civil Code].
Not Found in Art. 1231 For obligations to do or not to do: an act or
1. Death of one of the contracting parties in
forbearance cannot be substituted by another
personal obligations [Art. 1311 (1), Civil
act or forbearance against the obligee's will
Code]
[Art. 1244, Civil Code].
2. Will of one of the contracting parties
3. Renunciation or Waiver by the creditor
Exceptions to Art. 1244, Civil Code:
4. Mutual Desistance or withdrawal [Saua
1. If the obligation is facultative [Art. 1206,
Import & Export Co. v. DBP, G.R. No. L-
Civil Code]
24968 (1972)]
2. When creditor agrees to a dation in
5. Happening of a fortuitous event [Art. 1165,
payment [Art. 1245, Civil Code]
Civil Code]
3. When obligee accepts incomplete or
6. Compromise [Art. 2028, Civil Code]
irregular performance without any
7. Impossibility of fulfillment [Art. 1184 & 1266,
protest → obligation deemed fully complied
Civil Code]
with [Art. 1235, Civil Code].
8. Expiration of resolutory term or period [Art.
4. If there is substantial performance by
1193 (2), Civil Code]
debtor → The obligor may recover as
though there had been a strict and complete
A. Payment or performance fulfillment, less damages suffered by the
obligee [Art. 1234, Civil Code]
1. Payment
a. Definition Requisites of substantial performance:
The delivery of money OR the performance of 1. Attempt in good faith to perform without
obligation [Art. 1232, Civil Code] willful or intentional departure
2. Deviation is slight
3. Omission or defect is unimportant
4. Must be not so material that intention of the
parties is not attained [International Hotel
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Corporation v. Joaquin, G.R. No. 158361 Effects of payment by interested third
(2013)] person
a. Obligation is extinguished;
c. Necessity of Complete Performance b. Debtor should fully reimburse the
[Art. 1248, Civil Code] interested third person;
General Rules: c. The interested third person is
1. Creditor cannot be compelled partially to subrogated to the rights of the creditor
receive the prestations in which the [Paras].
obligation consists. 4. A third person not interested in the
2. Debtor may not be required to make partial obligation. However, the creditor is not
payments bound to accept payment by him, unless
there is a stipulation to the contrary [Art.
Exceptions: 1236, Civil Code].
1. There is an express stipulation that permits
partial performance Payment by a third person not interested
2. When the debt is in part liquidated and in in the fulfillment of the obligation
part unliquidated, the creditor may demand General Rule: The creditor is not bound to
and the debtor may effect the payment of accept payment or performance by a third
the former without waiting for the liquidation person who has no interest in the fulfillment of
of the latter the obligation [Art. 1236, Civil Code]
3. When the nature of the obligation is
susceptible to partial fulfillment (e.g. there Exception: Stipulation to the contrary [Art.
are different prestations with different terms 1236, Civil Code]
and conditions, or the obligation cannot be
performed at one time) Reimbursement for Payment Made by a
Third Person
d. By whom
Payor must have: The third party The third party
1. free disposal of the thing due, and pays with the pays without the
2. capacity to alienate it [Art. 1239, Civil consent of the knowledge or
Code]. debtor consent of the
debtor
Free disposal of the thing due means that the
thing to be delivered must not be subject to The third party may The third party may
any claim or lien or encumbrance of a third claim reimbursement only claim insofar as
person. Capacity to alienate means that the for the full amount the payment has
person is not incapacitated to enter into [Art. 1236, Civil been beneficial to the
contracts [Arts. 1327, 1329, Civil Code] and Code]. debtor [Art. 1236,
for that matter, to make a disposition of the Civil Code].
thing due [De Leon].
The third party is The third party
Payor may either be: presumed to be cannot compel the
1. The debtor or his duly authorized agent legally subrogated creditor to subrogate
2. The debtor’s heir or successor in interest [Art. 1302, Civil him on his rights [Art.
3. A third person interested in the Code]. 1237, Civil Code].
fulfillment of the obligation (i.e. co-
debtor, guarantor, surety, owner of
mortgaged property or pledge) whether the
debtor consents to it or not, and even
without debtor’s knowledge [Art. 1302, Civil
Code]. This includes payment by a joint
debtor [Monte de Piedad y Caja de Ahorros
de Manila v. Rodrigo, G.R. No. L-42928
(1936)] but not a solidary co-debtor.
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Reimbursement and Subrogation the person of the creditor or through error
Distinguished induced by fraud of a third person [Allied
Banking Corp. v. Lim Sio Wan, G.R. No.
Reimbursement Subrogation
133179 (2008)].

Personal action to Includes Exceptions:

recover amount paid reimbursement, but 1. Subrogation: if after the payment, the third
also the exercise of person acquires the creditor’s rights;
other rights attached 2. Ratification: if the creditor ratifies the
to the original payment to the third person;
obligation (e.g. 3. Estoppel: if by the creditor’s conduct, the
guaranties, debtor has been led to believe that the third
securities) person has authority to receive the payment
[Art. 1241, Civil Code];
4. Payment made in good faith to any person
Payment made by a third person who does in possession of the credit shall release the
not intend to be reimbursed by the debtor is debtor [Art. 1242, Civil Code];
deemed to be a donation, which requires the 5. Payment made to the creditor by the debtor
debtor's consent. But the payment is in any after the latter has been judicially ordered
case valid as to the creditor who has accepted to retain the debt shall not be valid [Art.
it [Art. 1238, Civil Code]. 1243, Civil Code].

e. To whom f. Place of Payment

1. Payment shall be made to: 1. In the place designated in the obligation.
a. the person in whose favor the obligation 2. In the absence of stipulation and if the
has been constituted; or obligation is to deliver a determinate thing
b. his successor in interest; or → wherever the thing might be at the
c. any person authorized to receive it [Art. moment the obligation was constituted.
1240, Civil Code] 3. In any other case: domicile of debtor [Art.
● Person authorized to receive 1251, Civil Code]
payment refers not only to a person
authorized by the creditor, but also to g. Time of Payment
a person authorized by law to do so General Rule: Upon demand
[Jurado].
Exceptions:
2. Payment to a person who is 1. When time is of the essence
incapacitated to administer his 2. When the debtor loses the benefit of the
property shall be valid if: period
a. he has kept the thing delivered, OR 3. When the obligation is reciprocal
b. insofar as the payment has been
beneficial to him [Art. 1241 (1), Civil h. Form of Payment
Code]. General Rule: Payment must be made in the
currency stipulated
3. Payment made to a third person may
also be valid Exception: if payment is not possible in such
a. Insofar as it has redounded to the benefit currency → pay in legal tender [Art. 1249, Civil
of the creditor Code].
b. Proof that such payment has redounded
to the benefit of the creditor is required. Legal Tender
c. When payment is made to the wrong Such currency which in a given jurisdiction can
party, the obligation is not extinguished be used in the payment of debts, and which
as to the creditor who is without fault or cannot be refused by the creditor.
negligence even if the debtor acted in
utmost good faith and by mistake as to
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When payment is not in legal tender considered as resulting to "extraordinary
General Rule: The creditor may refuse to inflation" as to justify the application of Art.
accept payment (e.g. checks) not made in legal 1250, Civil Code [Telengtan & Sons, Inc. v.
tender [Philippine Airlines v. Court of Appeals, United States Lines, G.R. No. 132284 (2006)].
G.R. No. L-49188 (1990)].
● Checks representing demand deposits do Extraordinary Inflation or Deflation
not have legal tender power and their Requires Judicial Determination
acceptance in the payment of public and The supervening of extraordinary inflation is
private debts is at the creditor’s option [Sec. never assumed. The party alleging it must lay
60, R.A. No. 7653]. down the factual basis for the application of Art.
● If the creditor accepts the check or no 1250, Civil Code. The effects of extraordinary
prompt objection to the form of payment is inflation are not to be applied without an official
made, there is a valid tender of payment declaration by competent authorities and the
and credit can no longer claim later that only competent authority so far recognized by
payment is not in legal tender [Pabugais v. this Court to make such an official
Sahijwani, G.R. No. 156846 (2004)] proclamation is the BSP [Citibank v.
● When payment in check is accepted, it Sabeniano, G.R. No. 156132 (2007)].
produces the effect of payment only when
the check is cleared and the funds are 2. Application of Payments
transferred to the account of the creditor Requisites If there is plurality of debts, the
[Evangelista v. Screenex, Inc., G.R. No. debtor, at the time of payment, may declare to
211564 (2017)]. which of the debts the payment must be
applied, provided:
The delivery of promissory notes payable to a. Debts are of the same kind
order, or bills of exchange or other mercantile b. Debts are owed to the same creditor and by
documents shall produce the effect of payment the same debtor
only when: c. All debts are due, UNLESS parties so
1. they have been cashed, or stipulate, or when application is made by the
2. through the fault of the creditor they party for whose benefit the term has been
have been impaired [Art. 1249 (2), Civil constituted
Code]. d. Payment made is not sufficient to cover all
debts [Art. 1252, Civil Code]
Extraordinary Inflation or Deflation
In case an extraordinary inflation or deflation of Rules on Application of Payments
the currency stipulated should supervene → a. Preferential right of debtor - debtor has
the value of the currency at the time of the the right to select which of his debts he is
establishment of the obligation shall be the paying [Art. 1252, Civil Code].
basis of payment b. The debtor makes the designation at the
Exception: There is an agreement to the time he makes the payment.
contrary [Art. 1250, Civil Code]. c. If not, the creditor makes the application,
by so stating in the receipt that he issues,
Requisites for application of Art. 1250, Civil unless there is cause for invalidating the
Code contract.
1. Official declaration of extraordinary inflation d. If neither the creditor nor debtor exercises
of deflation from the BSP the right to apply, or if the application is not
2. Obligation is contractual in nature valid, the application is made by operation
3. Parties expressly agreed to consider the of law.
effects of extraordinary inflation or deflation
[Equitable PCI Bank v. Sheung Ngor, G.R. Note: The court will apply the payment
No. 171545 (2007)] according to the justice and equity of the case,
taking into consideration all its circumstances
Even if the price index of goods and services [Premiere Development Bank v. Central
may have risen during the intervening period, Surety, G.R. No. 176246 (2009)].
this increase, without more, cannot be
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e. If debt produces interest, the payment of b. Alienation to the creditor of a property by
principal is not deemed to have been made the debtor with the creditor’s consent
unless the interests are covered [Art. 1253, c. Satisfaction of the money obligation
Civil Code].
f. When no application can be inferred from 4. Payment by cession
the circumstances of payment, it is applied: Special form of payment where the debtor
a. to the most onerous debt of the debtor; assigns/abandons ALL his property for the
or benefit of his creditors in order that from the
b. if debts due are of the same nature and proceeds thereof, the latter may obtain
burden, to all the debts in proportion payment of their credits.
[Art. 1254, Civil Code].
g. Rules on application of payment may not Requisites
be invoked by a surety or solidary a. There is a plurality of debts
guarantor. b. There is a plurality of creditors
c. Partial or relative insolvency of debtor
Exceptions: d. Acceptance of the cession by the
a. Rules on application of payment cannot be creditors
made applicable to a person whose e. Debtor is released only for the net proceeds
obligation as a mere surety is both unless there is a stipulation to the contrary
contingent and singular. There must be full [Art. 1255, Civil Code].
and faithful compliance with the terms of the
contract [Reparations Commission v. Remedy if Creditors Refuse Cession
Universal Deep-Sea Fishing Corp., G.R. There will be a proceeding in accordance with
Nos. L-21901 and L-21996 (1978)]. the FRIA such that all of the assets of an
b. The debtor’s right to apply payment can be insolvent debtor are pooled then sold for the
waived and even granted to the creditor if benefit of the creditors [R.A. No. 10142].
the debtor so agrees [Premiere
Development v. Central Surety, G.R. No. Cession and Dation Distinguished
176246 (2009)].
Cession Dacion en Pago
Limitations
Plurality of creditors One creditor
a. Creditor may refuse partial payment [Art.
1248, Civil Code]
b. Payment of principal not yet made if Debtor must be Debtor not
interest has not been covered [Art. 1253, partially or relatively necessarily in state
Civil Code] insolvent of financial difficulty
c. Debtor cannot apply payment to a debt
which is not yet liquidated Universality of Thing delivered is
d. He cannot choose a debt with a period property is ceded equivalent of
(established for the creditor’s benefit) performance
before the period has arrived.
Merely releases Extinguishes
e. Stipulation as to preference of payment
debtor for the net obligation to the
[Tolentino].
proceeds of things extent of the value of
ceded or assigned, the thing delivered,
3. Dation in Payment unless there is as agreed upon,
Definition contrary intention proved or implied
Delivery and transmission of ownership of a from the conduct of
thing by the debtor to the creditor as an the creditor
accepted equivalent of the performance of the
obligation (dacion en pago). Involves all Does not involve all
properties of debtor properties of debtor
Requisites
a. Existence of a money obligation

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Tender of Payment and Consignation
Creditor does not Creditor becomes
Distinguished
become owner of the owner
ceded property Tender of Payment Consignation

5. Tender of Payment and Manifestation made Deposit of the object

Consignation by the debtor to the of obligation in a
a. Definitions creditor of his desire competent court in
1. Tender of payment to comply with his accordance with the
Manifestation made by the debtor to the obligation, with offer rules prescribed by
creditor of his desire to comply with his of immediate law whenever the
obligation, with offer of immediate performance. creditor unjustly
performance [Del Carmen v. Sps. Sabordo, refuses payment or
G.R. No. 181723 (2014)]. because of some
circumstances which
Tender of payment must be made in the lawful render direct
currency. The tender of a check to pay for an payment to the
obligation is not a valid tender of payment creditor impossible
thereof [Soco v. Militante, G.R. No. L-58961 or inadvisable.
(1983)].
Antecedent or Principal act
2. Consignation preparatory act
Deposit of the object of obligation in a
Extrajudicial Judicial
competent court in accordance with the rules
prescribed by law whenever the creditor
unjustly refuses payment or because of some Both Tender and Consignation Needed To
circumstances which render direct payment to Produce Effect of Payment
the creditor impossible or inadvisable. To have the effect of payment and the
consequent extinguishment of the obligation to
b. Requisites of Consignation pay, the law requires the companion acts of
1. There is a debt due; tender of payment and consignation. Tender of
2. Consignation is made because of some payment without consignation only frees the
legal cause: debtor from the obligation to pay interest on the
a. There was tender of payment and amount due from the time the unjustified
creditor refuses without just cause to refusal takes place [Go Cinco v. CA, G.R. No.
accept it 151903 (2009)].
b. Instances when consignation alone
would suffice as provided under Art. c. When tender and refusal not required/
1256, Civil Code Consignation alone is sufficient [Art.
3. Previous notice of consignation was given 1256, Civil Code]
to those persons interested. Previous 1. Creditor is absent or unknown, or does not
notice is essential to the validity of the appear at the place of payment;
consignation and its lack invalidates the 2. Creditor is incapacitated to receive the
same [Soco v. Militante, G.R. No. L- 58961 payment at the time it is due;
(1983)] (1st notice) 3. When without just cause, creditor refuses
4. Actual deposit/consignation with proper to give receipt;
judicial authority 4. Two or more persons claim the same right
5. Subsequent notice of consignation (2nd to collect (i.e. Interpleader);
notice) 5. Title of the obligation has been lost.

Unless there is an unjust refusal by a creditor

to accept payment from a debtor, Art. 1256,

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Civil Code cannot apply [Llobrera v. h. Withdrawal of Consigned Amount by
Fernandez, G.R. No. 142882 (2006)]. the Debtor
1. Amount deposited may be withdrawn by
d. What constitutes valid consignation debtor if made before approval of the
In order that the consignation of the thing due court or acceptance of the creditor. In
may release the obligor, it must first be such a case, obligation remains in force [Art.
announced to the persons interested in the 1260 (2), Civil Code].
fulfilment of the obligation. The consignation 2. After approval of the court or acceptance by
shall be ineffectual if it is not made strictly in the creditor, with the consent of the latter →
consonance with the provisions which regulate Obligation remains in force, but guarantors
payment [Art. 1257, Civil Code]. and co-debtors are released. Preference of
the creditor over the thing is lost [Art. 1261,
e. How consignation is made Civil Code].
Consignation shall be made by depositing the 3. After approval of the court or acceptance by
things due at the disposal of judicial the creditor, and without creditor’s consent
authority, before whom the tender of payment → debtor can no longer withdraw the
shall be proved, in a proper case, and the consigned amount since the obligation has
announcement of the consignation in other already been extinguished [Pabugais v.
cases. The consignation having been made, Sahijwani, G.R. No. 156846 (2004)].
the interested parties shall also be notified 4. If the creditor authorizes the debtor to
thereof [Art. 1258, Civil Code]. withdraw, third persons who were benefited
by the consignation are not prejudiced by
f. Who bears the expenses the revival of the obligation.
The expenses of consignation, when properly
made, shall be charged against the creditor B. Loss of determinate thing due
[Art. 1259, Civil Code].
or impossibility or difficulty
The expenses are chargeable to the debtor if of performance
consignation is not properly made [De Leon].
1. Loss
g. Effects of Consignation a. Loss of Determinate Things
If accepted by the creditor or judicial General Rule: Obligor shall not be liable for
declaration by the Court that consignation is delivery of a determinate thing when:
properly made: 1. Thing is lost or destroyed without debtor’s
1. Debtor is released in same manner as if he fault; and
had performed the obligation at the time of 2. Debtor has not incurred in delay [Art. 1262
consignation (1), Civil Code].
2. Accrual of interest is suspended from the
moment of consignation Exception: the obligor is still liable for the loss
3. Deterioration or loss of the thing or when:
amount consigned, occurring without the 1. Law or a stipulation provides that obligor
fault of debtor, must be borne by creditor is still liable for fortuitous events; or
from the moment of deposit 2. The nature of the obligation requires an
assumption of risk.
When Consignation is Completed • In such a case, obligor is also liable for
Consignation is completed at the time the damages [Art. 1262 (2), Civil Code].
creditor accepts the same without objections, 3. When the obligation to deliver a determinate
or, if he objects, at the time the court declares object arises from a criminal act → debtor
that it has been validly made in accordance shall be liable for the payment of its price
with law [Dalton v. FGR Realty and [Art. 1268, Civil Code]
Development Corporation, G.R. No. 172577 4. Acceptance of payments in bad faith [Art.
(2011)]. 2159, Civil Code]

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When the legal excuse of fortuitous event is d. Presumption of Fault
not applicable: General Rule: It is presumed that the loss was
1. Obligor delays delivery of determinate thing due to debtor’s fault when the thing is lost while
[Art. 1165 (3), Civil Code]; in his possession [Art. 1265, Civil Code].
2. Obligor promises to deliver the same
thing to two or more persons who do not Exceptions:
have the same interest [Art. 1165 (3), Civil 1. There is proof to the contrary; or
Code]; 2. In case of earthquake, flood, storm or
3. Nature of the obligation requires other natural calamity [Art. 1265, Civil
assumption of risk [Art. 1174, Civil Code] Code].
4. Provided by law or stipulation; [Art. 1174,
Civil Code] e. Loss in Obligations to Give with
5. Liability of a bailee in fortuitous events; Resolutory Conditions
[Art. 1942, Civil Code] When the conditions have been imposed with
6. Liability of a depositary in fortuitous the intention of suspending the efficacy of an
events [Art. 1979, Civil Code] obligation to give, the following rules shall be
7. Liability of the officious manager in observed in case of the improvement, loss or
fortuitous events [Art. 2147, Civil Code]. deterioration of the thing during the pendency
of the condition:
b. Loss of Generic Things 1. If the thing is lost without the fault of the
General Rule: Obligation is NOT extinguished. debtor, the obligation shall be extinguished;
Article 1263, Civil Code. In an obligation to deliver 2. If the thing is lost through the fault of the
a generic thing, the loss or destruction of anything of debtor, he shall be obliged to pay damages;
the same kind does not extinguish the obligation. it is understood that the thing is lost
when it perishes, or goes out of
Exceptions: commerce, or disappears in such a way
1. Delimited Generic Thing - When there is a that its existence is unknown or it cannot
limitation of the generic object to a particular be recovered [Art. 1189, Civil Code].
existing mass or a particular group of things,
the obligation is extinguished by the loss of Effects of Loss [Arts. 1262-1263, Civil Code]
the particular mass or group or limited Obligation to Obligation to
quantity from which the prestation has to be Deliver a Deliver a
taken [Tolentino] Specific Thing Generic Thing
2. Genus goes out of commerce - The
obligation to deliver is extinguished Obligation is Loss of a generic
extinguished if the thing does not
c. Partial Losses thing was destroyed extinguish an
When there is partial loss of the object, the without fault of the obligation, EXCEPT
courts shall determine whether, under the debtor and before he in case of delimited
circumstances, the partial loss is so important has incurred delay. generic things,
as to extinguish the obligation [Art. 1264, Civil where the kind or
Code]. In other words, the court will decide class is limited itself,
whether the partial loss is such as to be and the whole class
equivalent to a complete or total loss [De Leon]. perishes.
Effects of Partial Losses
1. Loss is significant - possible extinguishment f. Creditors’ Rights
of obligation The obligation having been extinguished by the
2. Loss is insignificant - obligation is NOT loss of the thing, the creditor shall have all the
extinguished rights of action which the debtor may have
against third persons by reason of the loss
[Art. 1269, Civil Code].

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Requisites: accomplished by others. Failure of
1. Obligation is extinguished; and performance is imputable to the debtor. Thus,
2. Extinguishment is due to the loss of the the debtor must indemnify the creditor for the
thing damages suffered by the latter [Tolentino].

Effect: Creditor shall have all rights of action 3. Partial Impossibility

which the debtor may have against third The rule in Art. 1264, Civil Code, (partial loss)
persons by reason of the loss. may be applied. Thus, the Courts shall
determine whether it is so important as to
2. Impossibility of Performance extinguish the obligation. If the debtor has
a. In General performed part of the obligation when
impossibility occurred, the creditor must pay
Article 1266, Civil Code. The debtor in obligations
to do shall also be released when the prestation
the part done as long as he benefits from it
becomes legally or physically impossible without the [Tolentino].
fault of the obligor.
3. Unforeseen Difficulty
Impossibility at Constitution and When the service has become so difficult as to
Subsequent Impossibility Distinguished be manifestly beyond the contemplation of
all the parties, the obligor may also be
Impossibility at the Impossibility which released therefrom, in whole or in part [Art.
Time the Supervenes at the 1267, Civil Code].
Obligation was Time of
Constituted [Art. Performance [Art. Requisites:
1348, Civil Code] 1266, Civil Code] a. The event or change in circumstances
could not have been foreseen at the time
Brings about the Brings about a of the execution of the contract;
nullity of the contract modification or b. It makes the performance of the contract
extinguishment of extremely difficult but not impossible;
the obligation, c. The event must not be due to the act of
depending on any of the parties; and
whether or not it is d. The contract is for a future prestation
imputable to the [Tagaytay Realty Co, Inc. v. Gacutan, G.R.
debtor No. 160033 (2015)].

Doctrine of Unforeseen Events

b. Types of Impossibility The parties to the contract must be presumed
1. Physical and Legal to have assumed the risks of unfavorable
Physical Impossibility: There is physical developments. It is therefore only in
impossibility when the act, by reason of its absolutely exceptional changes of
nature, cannot be accomplished [Tolentino]. circumstances that equity demands
assistance for the debtor [PNCC v. CA, G.R.
Legal Impossibility: There is legal No. 116896 (1997)].
impossibility when, the act, by subsequent law,
is prohibited [Tolentino].

2. Subjective and Objective

Objective Impossibility: There is objective
impossibility when the act or service in itself,
without considering the person of the obligor,
becomes impossible [Tolentino].

Subjective Impossibility: There is subjective

impossibility when the act or service cannot be
done by the debtor himself, but it can be
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Fortuitous Events, Loss/Impossibility, and d. One and the other kinds shall be subject to
Unforeseen Difficulty Distinguished the rules which govern inofficious
donations. Express condonation shall,
Fortui- Loss/ Unfore-
furthermore, comply with the forms of
tous Impos- seen
donation [Art. 1270, Civil Code].
Events sibility Difficulty
Requisites [Tolentino]
Elem- Could not Perishes, Could not
a. The debt must be existing and demandable;
ents have been goes out have
b. The renunciation must be gratuitous;
foreseen of been
c. Parties must be capacitated and must
or commerce foreseen.
consent;
foreseen or
d. The debtor must accept the remission -
but disappear Service
implied in mortis causa and express in inter
inevitable. s has
vivos condonation;
become
e. Formalities of a donation are required in the
Causes so
case of an express remission or
loss of the difficult
condonation.
thing or but
obligation not
Effect: The obligation is extinguished
could not impossibl
[Tolentino].
be e.
complied
Definition
with in the
Remission is an act of liberality, by virtue of
normal
which, without receiving any equivalent, the
manner
creditor renounces the enforcement of the
obligation. The obligation is extinguished either
Fault Without May be Without in whole or in such part of the same to which
fault with or Fault remission refers [Tolentino].
without
fault If 2nd Requisite is Not Met
If the renunciation is not gratuitous, the nature
of the act changes and it may become:
a. Dation in payment – when the creditor
Effect Non- If without Release receives a thing different from that
liability for fault, from the stipulated;
delay/ extinguish obligation b. Novation – when the object or principal
damages es the in whole conditions of the obligation have changed;
obligation; or in part or
If with c. Compromise – when the matter renounced
fault, is in litigation or dispute and in exchange of
liability for some concession which the creditor
damages receives [Tolentino].

2. Kinds of Remission
C. Condonation or remission of
As To Form
debt
1. Express Express remission must
1. Definition and General Rules Remission comply with forms of
General Rules: ordinary donations. An
a. Condonation or remission is essentially express remission must
gratuitous, and be accepted in order to be
b. requires the acceptance by the obligor. effective [Art. 1270, Civil
c. It may be made expressly or impliedly. Code].

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Otherwise, the donation shall be void [Art. 748,
Civil Code].
When the debt refers to
movable or personal
Express Remission of Immovable or Real
property, Art. 748 will
Property
govern; if it refers to
In order that the donation of an immovable may
immovable or real
be valid, it must be made in a public
property, Art. 749 applies.
document, specifying therein the property
2. Implied It is inferred from the acts donated and the value of the charges which the
Remission of the parties. donee must satisfy.

As To Extent The acceptance may be made in the same

deed of donation or in a separate public
1. Total Extinguishes the entire document, but it shall not take effect unless it
obligation is done during the lifetime of the donor.

2. Partial Refers to only a particular If the acceptance is made in a separate

aspect of the obligation, instrument, the donor shall be notified thereof
i.e. amount of in an authentic form, and this step shall be
indebtedness or an noted in both instruments [Art. 749, Civil Code].
accessory obligation
[Tolentino]. b. Implied Remission
Presumption of Renunciation
As to Manner The delivery of a private document evidencing
a credit, made voluntarily by the creditor to the
1. Inter Vivos Effective during the debtor, implies the renunciation of the action
lifetime of the creditor which the former had against the latter [Art.
1271, Civil Code].
2. Mortis Effective upon the death
Causa of the creditor. Trigger:
1. Delivery of a private document evidencing a
Rules and Form credit; and
a. Express Remission 2. Delivery was made voluntarily by the
One and the other kind shall be subject to the creditor to the debtor
rules which govern inofficious donations.
Express condonation shall, furthermore, Effect: There will be implied renunciation.
comply with the forms of donation [Art. 1270
(2), Civil Code]. Exception: The contrary is proved.

The law subjects express remission to the Note: If in order to nullify this waiver it should
same formalities as donations. be claimed to be inofficious, the debtor and his
heirs may uphold it by proving that the delivery
Express Remission of Movable or Personal of the document was made in virtue of payment
Property of the debt [Art. 1271, Civil Code].
The donation of a movable may be made orally
or in writing. Presumption of Renunciation of
Accessory Obligation
An oral donation requires the simultaneous Accessory obligation of pledge has been
delivery of the thing or of the document remitted when the thing after its delivery is
representing the right donated. found in the possession of the debtor or third
person [Art. 1274, Civil Code].
If the value of the personal property donated
exceeds five thousand pesos, the donation and Trigger:
the acceptance shall be made in writing. 1. A thing is pledged;
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2. There has been a delivery of such thing to On Amount
the creditor; and 1. The donation may comprehend all the
3. The thing pledged is found in the present property of the donor, or part
possession of the debtor, or of a third thereof, provided he reserves, in full
person who owns the thing. ownership or in usufruct, sufficient means
for the support of himself, and of all relatives
Effect: It is presumed that the accessory who, at the time of the acceptance of the
obligation of pledge has been remitted. donation, are by law entitled to be supported
by the donor. Without such reservation, the
Presumption of Delivery donation shall be reduced on petition of any
Whenever the private document in which the person affected [Art. 750, Civil Code].
debt appears is found in the possession of the 2. The provisions of Art. 750 notwithstanding,
debtor, it shall be presumed that the creditor no person may give or receive, by way of
delivered it voluntarily, unless the contrary is donation, more than he may give or receive
proved [Art. 1272, Civil Code]. by will. The donation shall be inofficious in
all that it may exceed this limitation [Art.
Trigger: The private document in which the 752, Civil Code].
debt appears is found in the possession of the
debtor. D. Confusion
Effect: There is a presumption that it has been 1. Definition
voluntarily delivered by the creditor. The meeting in one person of the qualities of
creditor and debtor of the same obligation
Exception: The contrary is proved. [Tolentino].
c. Partial Remission When the characters of creditor and debtor are
Article 1273, Civil Code. The renunciation of the merged in the same person [Art. 1275, Civil
principal debt shall extinguish the accessory Code].
obligations; but the waiver of the latter leaves the
former in force.
2. Requisites
a. It should take place between principal
d. Other Rules on Donation Applicable to debtor and creditor;
Remission b. The very same obligation must be involved;
Condonation or remission is essentially a and
donation. It is a bilateral act which requires c. The confusion must be total, i.e. as regards
acceptance by the debtor. It is therefore the whole obligation [Valmonte v. CA, G.R.
subject to the rule on donations with respect to No. L-41621 (1999)].
acceptance, amount and revocation; where
donor refers to the creditor, and donee to the 3. Effects
debtor, and donation to the remission a. In general
[Tolentino]. The obligation is extinguished from the time the
characters of the debtor and creditor are
On Acceptance merged in the same person [Art. 1275, Civil
1. The donee must accept the donation Code].
personally, or through an authorized
person with a special power for the b. Confusion among the Guarantors
purpose, or with a general and sufficient A merger which takes place in the person of the
power; otherwise, the donation shall be void principal debtor or creditor benefits the
[Art. 745, Civil Code]. guarantors. Confusion which takes place in the
2. Acceptance must be made during the person of any of the latter does not extinguish
lifetime of the donor and of the donee the obligation [Art. 1276, Civil Code].
[Art. 746, Civil Code].

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c. In case of joint or solidary obligations To warrant the application of set off under Art.
1278, Civil Code, the debtor’s admission of
Confusion in Confusion in
his obligation must be clear and categorical
Joint Obligation Solidary
and not one which merely arise by inference or
Obligation
implication from the customary execution of
official documents in assuming the
Confusion DOES Extinguishes the
responsibilities of a predecessor [Bangko
NOT extinguish a entire obligation, but
Sentral v. COA, G.R. No. 168964 (2006)].
joint obligation the other debtors
EXCEPT as regards may be liable for
the share of the reimbursement if 2. Nature and Effects
person in whom the payment was made a. General Rule
two characters prior to remission. When all requisites mentioned in Art. 1279 are
concur [Art. 1277, present, compensation takes effect by
Civil Code] operation of law, and extinguishes both debts
to the concurrent amount, even though the
creditors and debtors are not aware of the
Obligation is not extinguished when confusion compensation [Art. 1290, Civil Code].
takes place in the person of subsidiary debtor
(i.e. guarantor), but merger in the person of the b. By Operation of Law
principal debtor shall benefit the former. Compensation takes place by operation of law,
even though the debts may be payable at
Note: Where, however, the mortgagee different places, but there shall be an indemnity
acquires ownership of the entire mortgaged for expenses of exchange or transportation to
property, the mortgage is extinguished; but this the place of payment [Art. 1286 Civil Code].
does not necessarily mean the extinguishment
of the obligation secured thereby, which may Compensation takes effect by operation of law
become an unsecured obligation. even without the consent or knowledge of
the parties concerned when all the
E. Compensation requisites mentioned in Art. 1279, Civil
Code are present [Trinidad v. Acapulco, G.R.
Mode of extinguishing the obligations of two No. 147477 (2006)].
persons, who in their own right, are reciprocal
creditors and debtors of each other [Art. 1278, c. Compensation Distinguished from
Civil Code]. Other Modes of Extinguishment
1. Requisites Compensation Confusion
a. Each obligor is bound principally, and at the
There must always Involves only one
same time a principal creditor of the other;
be two obligations. obligation.
b. Both debts must consist in a sum of money,
or if the things due are consumable, they be
There are two There is only one
of the same kind and quality;
persons who are person whom the
mutually debtors and characters of the
Note: The term ‘consumable’ is erroneously
creditors of each creditor and debtor
used in Art 1279. The appropriate term is
other in two separate meet.
‘fungible’ [Tolentino].
obligations, each
arising from the
c. Both debts are due;
same cause.
d. Debts are liquidated and demandable; and
e. There must be no retention or controversy There is indirect There is impossibility
over either of the debts, commenced by payment. of payment.
third persons and communicated in due
time to the debtor [Art. 1279, Civil Code].

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b. Bank deposits, against the accounts of a
Compensation Payment
depositor whose checks were dishonored
Capacity to dispose Requires capacity to [BPI v. CA, G.R. No. 116792 (1996)]
and receive the thing dispose of the thing
is unnecessary since paid and capacity to 2. Voluntary Compensation
compensation receive Takes place when parties who are mutually
operates by law creditors and debtors of each other agree to
compensate their respective obligations even
May be partial Must be total though one of the requisites of compensation
performance may be lacking.

The parties may agree upon the compensation

Compensation Counterclaim of debts which are not yet due [Art. 1282, Civil
Code].
Takes place by Must be pleaded to
operation of law be effectual Requisites of conventional compensation
a. That each of the parties can dispose of the
credit he seeks to compensate, and
3. Kinds of Compensation b. That they agree to the mutual
a. As to extent extinguishment of their credits [United
1. Total Planters v. CA, G.R. No. 126890 (2009)].
When two debts are of the same amount. If
they are of different amounts, compensation is 3. Judicial Compensation
total as regards the smaller debt, and partial Takes place by judicial decree, needs pleading
only with respect to the larger debt [Art. 1281, and proof. All requirements must concur except
Civil Code]. liquidation.

2. Partial If one of the parties to a suit over an obligation

When the two obligations are of different has a claim for damages against the other, the
amounts and a balance remains [Art. 1281, former may set it off by proving his right to said
Civil Code] damages and the amount thereof [Art. 1283,
Civil Code].
b. As to cause
1. Legal Compensation “Judicial Compensation” is NOT contemplated
Takes place by operation of law from the by the Civil Code. In reality, what is set off
moment all requisites are present. against the other party is a counterclaim. A
counterclaim must be pleaded to be effectual;
Since it takes place ipso jure, when used as a whereas, a compensation takes place by mere
defense, it retroacts to the date when all its operation of law. Hence, the counterclaim
requisites are fulfilled. defined by the Rules of Court is not the legal
compensation contemplated by the Code
When all the requisites mentioned in Art. 1279, [Jurado].
Civil Code are present, compensation takes
effect by operation of law, and extinguishes 4. Facultative Compensation
both debts to the concurrent amount, even When it can be claimed by one of the parties
though the creditors and debtors are not aware who, however, has the right to object to it.
of the compensation [Art. 1290, Civil Code].
This kind of compensation can only be set up
Legal compensation may apply to: at the option of a creditor, when legal
a. Awards of attorney’s fees, against the compensation cannot take place because
litigant and not his lawyer [Gan Tion v. CA, some legal requisites in favor of the creditor are
G.R. No. L-22490 (1969)] lacking.

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Obligations which cannot be compensated b. Substituting the person of the debtor; or
a. Contracts of depositum c. Subrogating a third person in the rights of
b. Contracts of commodatum the creditor [Art. 1291, Civil Code].
c. Future support due by gratuitous title
d. Civil liability arising from a penal offense Unlike other modes of extinguishment, it is a
e. Obligations due to the government juridical act of dual function—it extinguishes an
f. Damage caused to the partnership by a obligation, and at the same time, it creates a
partner [Arts. 1287-1288, Civil Code] new one in lieu of the old. It operates as a
relative, not an absolute, extinction.
Right of a Guarantor
A guarantor may set up compensation as This is not to say however, that in every case
regards what the creditor may owe the principal of novation the old obligation is necessarily
debtor [Art. 1280, Civil Code]. extinguished. Our Civil Code now admits of the
so-called imperfect or modificatory novation
Effect of Assignment of Rights by the where the original obligation is not
Creditor to a Third Person [Art. 1285, Civil extinguished but modified or changed in
Code] some of the principal conditions of the
obligation. Thus, Art. 1291, Civil Code
With debtor’s Debtor cannot set up
provides that obligations may be modified
consent against assignee
[Modomo v. Sps. Layug, G.R. No. 197722
compensation pertaining to
(2019)].
him against assignor
UNLESS he reserved such
right at the time he gave his a. Requisites:
consent 1. A previous valid obligation
2. Agreement of all the parties to the new
With debtor’s Debtor may set up obligation
knowledge compensation of debts 3. Animus novandi or intent to novate
but without previous to the assignment 4. Substantial difference between old and new
consent but not of subsequent ones obligations and, consequently,
extinguishment of the old obligation
5. Validity of the new obligation [Tomimbang v.
Without Debtor may set up Tomimbang, G.R. No. 165116 (2009)]
debtor’s compensation of all credits
knowledge prior and also later to the b. Effects
assignment until he had In General If Original If New
knowledge of the Obligation Obligation
assignment is Void is Void

Order of Compensation Old Novation is New

If a person should have against him several obligation void if the obligation is
debts which are susceptible of compensation, is original void, the old
the rules on application of payments shall apply extinguish obligation was obligation
to the order of the compensation [Art. 1289, ed and void, EXCEPT subsists,
Civil Code]. replaced when UNLESS the
by the new annulment parties
one may be intended that
F. Novation stipulated. claimed only the former
by the debtor, relations shall
1. In General or when be
It is the substitution or change of an obligation ratification extinguished
by another resulting in its extinguishment or validates acts in any event
modification by: that are [Art. 1297,
a. Changing their object or principal voidable [Art. Civil Code]
conditions;
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In General If Original If New obligation: old the condition

Obligation Obligation obligation is affecting it.
is Void is Void revived; new
obligation loses
1298, Civil force.
Code] a. New 3. Fulfillment of
Obligation condition
a. Original void: concerning the
obligation is No novation. new obligation:
void: no novation;
No novation. b. New requisite of a
obligation previous valid
b. Original voidable: and effective
obligation Novation is obligation
voidable: effective. lacking.
Effective if
contract is
ratified before 2. Kinds of Novation
novation. a. As to Form
1. Express
Declared in unequivocal terms
Accessory Obligations
Accessory obligations are also extinguished,
2. Implied
but may subsist only insofar as they may
The old and new obligations are on every point
benefit third persons who did not give their
incompatible with each other [Jurado].
consent to the novation [Art. 1296, Civil Code].
Novation is not presumed
Accidental Modifications
In the absence of an unequivocal declaration of
The extension or shortening of the period for
extinguishment of the pre-existing obligation,
the performance of the obligation is generally
only proof of incompatibility between the old
considered as merely accidental and does not
and new obligation would warrant a novation
bring about a novation [Tolentino].
by implication [California Bus Line v. State
Investment, G.R. No. 147950 (2003)].
Original or new obligation with suspensive
or resolutory condition
Test of Incompatibility
If the original obligation was subject to a
The test of incompatibility is whether or not the
suspensive or resolutory condition, the new
two obligations can stand together, each one
obligation shall be under the same condition,
having its independent existence. If they
unless it is otherwise stipulated [Art. 1299, Civil
cannot, they are incompatible and the latter
Code].
obligation novates the first.

Compatible Incompatible The incompatibility must take place in any of

Conditions Conditions the essential elements of the obligation, such
as its object, cause or principal conditions
1. Fulfillment of both 1. Original obligation thereof; otherwise, the change would be
conditions: new is extinguished, merely modificatory in nature and insufficient to
obligation while new extinguish the original obligation [Quinto v.
becomes obligation exists. People, G.R. No. 126712 (1999)].
demandable. 2. Demandability
2. Fulfillment of shall be subject to b. As to extent or effect
condition fulfillment/ 1. Total
concerning the nonfulfillment of 2. Partial [Jurado]
original

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c. As to Essence or Object a. Consent of the Consent of
1. Objective/Real creditor and the a. old debtor
When the object (or cause) or principal new debtor; (delegante);
conditions of the obligation are changed [Art.
1291, Civil Code] Note: Implied b. new debtor
consent by the (delegatario); and
2. Subjective/Personal creditor is allowed
Substitution of debtor or by subrogation [Art. [Asia Banking Corp. c. Creditor
1291, Civil Code] v. Elser, G.R. No. (delegado).
30266 (1929)]
3. Mixed
Change in the object or principal condition and b. Knowledge or
change in the persons of either creditor and consent of the old
debtor of an existing obligation [Art. 2191, Civil debtor is not
Code]. required.

Objective/Real Subjective/
Personal Expromision Delegacion

a. Change of the a. Substitution of Effects

subject matter; debtors
a. Expromision a. Old debtor is a. Insolvency of the
b. Change of cause b. Delegacion released new debtor
or consideration; revives the
or b. Subrogation of a b. Insolvency of the obligation of the
third person to the new debtor does old debtor if it was
c. Change of the rights of the not revive the old anterior and
principal creditor obligation in case public, and known
conditions or a. Conventional the old debtor did to the old debtor.
terms b. Legal not agree to
expromision. b. New debtor can
demand
3. Substitution of Debtors c. If with the reimbursement of
knowledge and the entire amount
Expromision Delegacion
consent of the old he has paid from
Initiative for change Debtor (delegante) debtor, the new the original
does not emanate offers or initiates the debtor can debtor. He may
from the debtor, and change, and the demand compel the
may even be made creditor (delegatorio) reimbursement of creditor to
without his accepts a third the entire amount subrogate him to
knowledge. person (delegado) as paid and with all of his rights.
consenting to the subrogation of
substitution. creditor’s rights.

d. If without
Requisites knowledge of the
old debtor, the
new debtor can
demand
reimbursement
only up to the
extent that the
latter has been

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Difference between Conventional
benefited without
Subrogation and Assignment of Credit
subrogation of
[Licaros v. Gatmaitan, G.R. No. 142838 (2001)]
creditor’s rights.
Conventional Assignment of
subrogation credit
For subjective novation, it is insufficient
that the juridical relation between the
parties to the original contract is extended Debtor’s consent is Debtor’s consent is
to a third person. If the old debtor is not necessary. not required.
released, no novation occurs and the third
person who has assumed the debtor’s Extinguishes an Refers to the same
obligation becomes merely a co-debtor or obligation and gives right which passes
surety or co-surety [Cochingyan, Jr. v. R&B rise to a new one. from one person to
Surety and Insurance Company, G.R. No. L- another, without
47369 (1987)]. modifying or
extinguishing the
An accessory surety may not be released if obligation.
he expressly waives his discharge from the
obligation in case of change or novation in the Defects/vices in the Defects/vices in the
original agreement [Molino v. Security Diners old obligation are old obligation are not
International Corp, G.R. No. 136780 (2001)]. cured. cured.

4. Subrogation Legal Subrogation

Transfers to the person subrogated the credit Takes place by operation of law.
with all the rights thereto appertaining, either
against the debtor or against third persons, be Legal subrogation is not presumed, except
they guarantors or possessors of mortgages, in the following circumstances:
subject to stipulation in a conventional a. When creditor pays another creditor who is
subrogation [Art. 1303, Civil Code]. preferred, even without the debtor’s
knowledge
Effects b. When a third person, not interested in the
Total Partial obligation, pays with the express or tacit
approval of the debtor
Transfers to the A creditor, to whom c. When, even without the knowledge of the
person subrogated, partial payment has debtor, a person interested in the fulfillment
the credit with all the been made, may of the obligation pays, without prejudice to
rights thereto exercise his right for the effects of confusion as to the latter’s
appertaining, either the remainder, and share [Art. 1302, Civil Code]
against the debtor or shall be preferred to
third persons. the person Art. 1303, Civil Code particularly provides that
subrogated in his the effect of legal subrogation is to transfer to
place in virtue of the the new creditor the credit and all the rights and
partial payment. actions that could have been exercised by the
former creditor either against the debtor or
against third persons [BDO Unibank v. Pua,
Conventional Subrogation – takes place by G.R. No. 230923 (2019)].
agreement of parties

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CONTRACTS b. Real – delivery, actual or constructive, is

required in addition to consent [Art. 1316,
I. GENERAL PROVISIONS Civil Code]
c. Solemn or formal – where special
A. Stages of Contract formalities are required for perfection [Art.
1356, Civil Code]
1. Preparation (conception or “generation” or
negotiation) – begins from time the parties 3. According to relation to other
manifest their interest and ends prior to the contracts
moment of agreement a. Principal – may exist alone (e.g. lease)
2. Perfection (or birth) – when the parties b. Accessory – depends on another contract
agreed upon essential elements of contract for its existence (e.g. guaranty)
3. Consummation (or death) - when parties c. Preparatory – a preliminary step towards
fulfill or perform the agreement the celebration of a subsequent contract
(e.g. agency)
Preparation Perfection Consumma-
tion
4. According to form
a. Common or informal – may be entered
Exchanges Parties come Parties into in whatever form as long as there is
of offers and to an perform their consent, object and cause
counter- agreement. obligations b. Special or formal – required by law to be in
offers. under the a certain specified form
All the contract
No contract essential 5. According to cause/by equivalence
yet, thus no requisites of prestations
binding concur a. Onerous – there is an exchange of
effect correlative values (e. g. sale)
b. Remuneratory – where the outstanding
The stage to The stage to prestation is premised upon services or
look at to look at to benefits already received
determine the determine c. Gratuitous – where no correlative
status of the whether prestation is received by one party (e.g.
contract (i.e., there has donation, commodatum)
valid, been a
voidable, breach of the 6. According to purpose
void, contract a. Transfer of ownership (e.g. sale)
unenforceabl b. Conveyance of use (e.g. commodatum)
e) c. Rendition of service (e.g. agency)

7. According to time of fulfillment

B. Classifications a. Executed – where the obligations are
fulfilled at the time the contract is entered
1. According to subject matter into
a. Things - to give (e.g. sale, deposit, pledge) b. Executory – where fulfillment of obligations
b. Services - to do (e.g. agency, lease of does not take place at the time the contract
services) is made

2. According to formation or
perfection
a. Consensual – consent is sufficient to
perfect the contract [Art. 1315, Civil Code]

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8. According to risk b. Exception
a. Commutative – fair exchange of values; A contract shall be valid even though its
fulfillment is predetermined in advance (e.g. fulfillment or implementation is left to the will of
sale, lease) either party as long as there is a finding of the
b. Aleatory – fulfillment is dependent upon presence of equality of the parties, which thus
chance (e.g. insurance) prevents the perpetration of injustice on the
weaker party [GF Equity v. Valenzona, G.R.
9. According to the nature of the No. 156841 (2005)].
vinculum produced
a. Unilateral – only one party is bound by the Example: Escalation clause
prestation (e.g. commodatum) A bank’s unilateral determination and
b. Bilateral – both parties are bound by imposition of the monthly adjustment of interest
reciprocal prestations (e.g. sale) rates without the other party’s assent, in the
event of changes in the rates prescribed by law
Note: All contracts are bilateral in the consent, or the Bangko Sentral ng Pilipinas, violates the
but not all are bilateral in terms of effects. principles of mutuality. Such escalation clause
shall be void [Floirendo Jr. v. Metropolitan
Bank & Trust Co., G.R. No. 148325 (2007)].
10. According to their
designation/name However, the escalation clause may still be
a. Nominate – where the law gives the valid if the creditor has anyway notified the
contract a special designation or particular debtor in order to give the latter the option to
name; e.g. deposit reject the repricing, or if the repricing of the
b. Innominate – where the contract has no interest rates resulted in a decrease and not an
special name or designation in law increase of rates [Villa Crista Monte Realty &
• Do ut des (I give so that you may give) Dev’t Corp. v. Equitable PCI Bank, G.R. No.
• Do ut facias (I give so that you may do) 208336 (2018)].
• Facio ut facias (I do so that you may do)
• Facio ut des (I do so that you may give) 3. Relativity
a. General Rule
Article 1307, Civil Code. Innominate contracts shall
Paragraph 1, Article 1311, Civil Code. Contracts
be regulated by the stipulations of the parties, by the
take effect only between the parties, their assigns
provisions of Titles I and II of this Book, by the rules
and heirs, except in case where the rights and
governing the most analogous nominate contracts,
obligations arising from the contract are not
and by the customs of the place.
transmissible by their nature, or by stipulation or by
provision of law. The heir is not liable beyond the
value of the property he received from the decedent.
C. Characteristics
1. Obligatory force b. Exceptions
1. Contracts creating real rights
Article 1159, Civil Code. Obligations arising from
contracts have the force of law between the Article 1312, Civil Code. In contracts creating real
contracting parties and should be complied with in rights, third persons who come into possession of
good faith. the object of the contract are bound thereby, subject
to the provisions of the Mortgage Law and the Land
Registration Laws.
2. Mutuality
a. General Rule 2. Contracts in fraud of creditors
Article 1308, Civil Code. The contracts must bind
Article 1313, Civil Code. Creditors are protected in
both contracting parties; its validity or compliance
cases of contracts intended to defraud them.
cannot be left to the will of one of them.

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3. Stipulations in favor of a third person
(stipulation pour autrui)

Requisites [Art. 1311 (2), Civil Code]

a. If a contract should contain some stipulation
in favor of a third person
b. The third person communicated his
acceptance to the obligor before its
revocation
c. The stipulation is not a mere or incidental
benefit or interest; and
d. The contracting parties clearly and
deliberately conferred a favor upon a third
person.

Rule: The third person may demand its

fulfillment [Art. 1311 (2), Civil Code]

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II. ESSENTIAL REQUISITES Requisites for a Valid Offer [Tolentino]

1. Certain or definite - liability of the parties
must be fixed
Article 1318, Civil Code. There is no contract 2. Seriously intended - offer made in jest,
unless the following requisites concur: anger, or while emotionally upset, or in other
a. Consent of the contracting parties;
ways indicating that the same was not
b. Object certain which is the subject matter of the seriously intended is not a valid offer.
contract;
c. Cause of the obligation which is established. Invitation to Make Offers (Advertisements)
1. Business Advertisements of things for
sale are NOT definite offers, but just
A. Consent invitations to make an offer, UNLESS the
contrary appears [Art. 1325, Civil Code].
1. Definition 2. Advertisement for bidders are invitations
The meeting of the minds of the parties on to make proposals, the advertiser is NOT
the subject matter and cause of the contract. bound to accept the lowest or highest
The fact that the signatures of the witnesses bid; UNLESS the contrary appears. The
and the notary public were forged does not bidder is the offeror [Art. 1326, Civil Code].
negate the existence of the contract for as
long as the parties consented to it. The The Terms and Conditions of the bidding
signatures of the witnesses and the notary disseminated constitutes the advertisement to
public are necessary simply to make the bid on the project. The bid proposals or
contract binding on the third person [Soriano v. quotations submitted by the prospective
Soriano, G.R. No. 130348 (2007)]. suppliers are the offers. The reply constitutes
the acceptance or rejection of the respective
2. Requisites for Valid Consent offers [Jardine Davies Inc. v. CA, G.R. No.
a. It must be manifested by the concurrence 128066 (2000)].
of the offer and acceptance [Arts. 1319-
1326, Civil Code]. 3. Statements of intention: no contract
b. The contracting parties must possess the results even if accepted.
necessary legal capacity [Arts. 1327-
1329, Civil Code]. In a letter informing another that the sender
c. It must be intelligent, free, spontaneous, was “in a position and is willing to entertain” the
and real (not vitiated) [Arts. 1330-1346, purchase of a yacht under some terms, the
Civil Code]. word “entertain” applied to an act does not
mean the resolution to perform said act, but
3. Concurrence of Offer and simply a position to deliberate for deciding to
Acceptance perform or not to perform said act. It was
A contract is perfected by mere consent. From merely a position to deliberate whether or not
the moment of a meeting of the offer and the he would purchase the yacht and invitation to a
acceptance upon the object and the cause proposal being made to him, which might be
that would constitute the contract, consent accepted by him or not [Rosenstock v. Burke,
arises. However, “the offer must be certain” G.R. No. 20732 (1924)].
and “the acceptance seasonable and
absolute; if qualified, the acceptance would Temporary Suspension of Offer
merely constitute a counteroffer [Insular Life v. When a contract is suspended temporarily, it
Asset Builders Corp., G.R. No. 147410 (2004)]. provisionally ceases to be operative until the
occurrence of a condition or situation that
a. Offer warrants the lifting of the suspension of the
A unilateral proposition which one party makes contract. It is different from a cancellation of
to the other for the celebration of the contract a contract which terminates the contract such
[Tolentino]. that it does not become operative again [Metro
Rail Transit Development Corporation v.

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Gammon Philippines, Inc., G.R. No. 200401 to decide whether or not to enter into a principal
(2018)]. contract [Art. 1324, Civil Code].

Termination of Offer
With consideration Without
1. Rejection by the offeree
consideration
2. Incapacity (death, civil interdiction,
insanity, or insolvency) of the offeror or Offeror cannot Offeror may
offeree before acceptance is conveyed [Art. unilaterally withdraw withdraw by
1323, Civil Code] his offer. communicating
3. Submission of a counter-offer withdrawal to the
4. Lapse of the time stated in the offer without offeree before
acceptance being conveyed acceptance.
5. Revocation of the offer before learning of
acceptance
6. Supervening illegality before acceptance General Rule: When the offerer gives to the
[Reyes and Puno]. offeree a certain period to accept, "the offer
may be withdrawn at any time before
b. Acceptance acceptance," except when the option is
Acceptance must be absolute, unconditional, founded upon consideration [Art. 1324, Civil
and without variance of any sort from the offer. Code]
It must also be made known to the offeror.
An acceptance not made in the manner Exception: Applies to "a promise to buy and
prescribed is not effective but constitutes a sell" specifically [Art. 1479, Civil Code]. This
counter-offer [Malbarosa v. CA, G.R. No. rule requires that a promise to sell to be valid
125761 (2003)]. and binding must be supported by a
consideration distinct from the price. Otherwise,
Requisites of Acceptance the option can still be withdrawn, even if
1. Unqualified and unconditional, i.e. it must accepted [Tuazon v. Del Rosario-Suarez, G.R.
conform with all the terms of the offer, No. 168325 (2010)].
otherwise it is a counter-offer [Art. 1319,
Civil Code]. 4. Necessary Legal Capacity
2. Directed and communicated to the offeror Two types of void contracts:
and learned by him [Art. 1319, Civil Code]. a. Those where one of the essential
If made through an agent, the offer is requisites of a valid contract as provided for
accepted from the time the acceptance is by Art. 1318, Civil Code is totally wanting;
communicated to such agent [Art. 1322, and
Civil Code]. b. Those declared to be so under Art. 1409,
3. Made within the proper time Civil Code. By contrast, a voidable or
4. May be express/implied, but is not annullable contract is one in which the
presumed [Art 1320, Civil Code]. Time, essential requisites for validity under Art.
place and manner of acceptance may be 1318 are present, but vitiated by mistake,
fixed by offeror [Art 1321, Civil Code]. violence, intimidation, undue influence, or
fraud [Art. 1330, Civil Code].
Cognition Theory
Acceptance made by letter or telegram does Persons incapacitated to give consent
not bind the offeror except from the time it [Art. 1327, Civil Code]
came to his knowledge. The contract, in such a a. Minors, EXCEPT:
case, is presumed to have been entered into in 1. Where necessaries are sold or delivered
the place where the offer was made [Art. 1319 [Art 1489, Civil Code]
(2), Civil Code]. 2. Where the minor actively misrepresents
his age (estoppel) [Mercado v. Espiritu,
Option Contract G.R. No. L-11872 (1917)]
A preparatory contract in which one party
grants to the other, for a fixed period, the option
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Note: There is no estoppel if the minority Based upon subjective Based upon public
was known by the other party, and circumstances of policy and morality
there was no active misrepresentation on certain persons
the part of the minors [Bambalan v.
Maramba, G.R. No. L-27710 (1928)]. Voidable Void
3. When it involves a natural obligation and
such obligation is fulfilled voluntarily by 6. Consent Must be Intelligent, Free,
the minor [Arts. 1425-1427, Civil Code] Spontaneous and Real
4. Contracts entered into by guardians or Vices of Consent (makes contract voidable)
legal representatives [Art. 1330, Civil Code]
5. When upon reaching the age of majority a. Mistake
they ratify the same b. Intimidation
6. When a minor opens a savings account c. Violence
without the assistance of his parents, d. Undue influence
provided that the minor is at least 7 years e. Fraud
old and can read and write [PD 734].
b. Insane or demented persons, UNLESS a. Mistake
they contract during a lucid interval [Art. A misunderstanding of the meaning or
1328, Civil Code] implication of something” or a “wrong action or
c. Deaf-mutes who do not know how to read statement proceeding from a faulty judgment
AND write. [Domingo Realty v. CA, G.R. No. 126236
(2007)].
Persons Disqualified to Contract
a. Those under civil interdiction for transactions Inadvertent and excusable disregard of a
inter vivos [Art. 34, RPC] circumstance material to the contract [Reyes
b. Undischarged insolvents [Sec. 24, and Puno].
Insolvency Law]
c. Husband and wife cannot donate to each In order that mistake may invalidate consent, it
other [Art. 87, Family Code], nor sell to each should refer to the substance of the thing
other if the marriage is under the regime of which is the object of the contract, or to those
Absolute Community of Property [Art. 1490, conditions which have principally moved one or
Civil Code] both parties to enter into the contract [Art.1331,
d. The ff. cannot purchase, whether in public or Civil Code].
private sale [Art. 1491, Civil Code]:
1. Guardian - Property of the ward There is no mistake if the party alleging it
2. Agent - Property of the Principal knew the doubt, contingency or risk affecting
3. Executors and Administrators - the object of the contract [Art. 1333, Civil
Property under administration Code].
4. Public Officers - Property under their
administration Requisites
5. Justices, judges, prosecutors, clerks 1. The error must be substantial regarding:
of court, lawyers - property attached in a. The object of the contract (error in re)
litigation which may be:
• Mistake as to the identity of the
Incapacity to Give Consent vs. thing (error in corpore)
Disqualification to Contract • Mistake as to the substance of the
Incapacity to Give Disqualification to thing (error in substantia)
Consent Contract • Mistake as to the conditions of the
thing provided, or
Restrains the exercise Restrains the very • Mistake as to the quantity of the
of the right to contract right itself thing (error in quantitate)

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b. The condition which primarily moved or spouse, descendants or ascendants, to give
induced one or both parties to enter the his consent [Art. 1335, Civil Code].
contract.
c. Identity or qualifications of one of the To determine the degree of intimidation, the
parties (error in persona), but only if such age, sex and condition of the person shall be
was the principal cause of the contract. borne in mind [Art. 1335, Civil Code].
2. The error must be excusable
3. The error must be a mistake of fact and not Requisites
of law. 1. One party is compelled to give his consent
by a reasonable and well-grounded fear of
Mistake which vitiates consent is an error of an evil;
fact, and not an error of law. Ignorance of the 2. The evil must be imminent and grave;
law excuses no one from compliance therewith 3. The evil must be upon his person, property,
[Art. 3, Civil Code]; but the modern tendency is spouse, descendants or ascendants;
to allow an excusable mistake of law to be 4. The evil must be unjust.
invoked as vitiating consent [Tolentino].
c. Violence
On Possession: Mistake upon a doubtful or Serious or irresistible force used to wrest
difficult question of law may be the basis of consent [Art. 1335, Civil Code]
good faith [Art. 526, Civil Code].

Ignorantia Facti Excusat vs. Ignorantia Violence Intimidation

Legis Neminem Excusat Serious or irresistible Reasonable and
Mistake of Fact Mistake of Law force well-grounded fear
of an imminent and
grave evil upon his
One or both One or both parties person or property,
contracting parties arrive at an or person or property
believe that a fact erroneous conclusion of his spouse,
exists when in reality on the interpretation descendants, or
it does not, or vice of a question of law or ascendants
versa its legal effects
Physical compulsion Moral compulsion
Vitiates consent Does not vitiate
consent except when External or prevents Internal or induces
it involves mutual the will to manifest the performance of
error as to the effect itself an act
of an agreement
when the real
purpose is frustrated. Determined by: 1. Age
1. Intention 2. Sex
2. Means employed 3. Condition
Note: The obligation to show that the terms of
the contract had been fully explained to the
party who is unable to read or understand the Violence Intimidation
language of the contract, when fraud or
mistake is alleged, devolves on the party 1. Physical force 1. Intimidation must
seeking to enforce it [Art. 1332, Civil Code]. employed must be be the determining
irresistible, or of cause of the contract
b. Intimidation such degree that OR must have
One of the contracting parties is compelled by victim has no other caused the consent
a reasonable and well-grounded fear of an recourse under the to be given
imminent and grave evil upon his person or circumstances but to
property, or upon the person or property of his submit 2. Threatened act
must be unjust or
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2. Such force is the unlawful
Intimidation Undue Influence
determining cause in
giving of consent 3. The threat must be
real and serious Must be an unlawful There need not be
act or unjust act which an unjust or
4. Produces a is threatened and unlawful act.
reasonable and well- which causes the
grounded fear from consent to be given
the fact the person
has the necessary e. Fraud
means or ability to When, through insidious words or
inflict threatened machinations of one of the contracting
injury parties, the other is induced to enter into a
contract which, without them, he would not
Note: Violence or intimidation shall annul the have agreed to [Art. 1338, Civil Code].
obligation, although it may have been
employed by a third person who did not take In order that fraud may make a contract
part in the contract [Art. 1336, Civil Code]. voidable, it should be serious and should not
have been employed by both contracting
d. Undue Influence parties [Art. 1344, Civil Code].
When a person takes improper advantage of
his power over the will of another, depriving the Requisites:
latter of a reasonable freedom of choice [Art. 1. It must be made in bad faith
1337, Civil Code]. 2. One party must have employed fraud or
insidious words or machinations
Requisites 3. Damage or injury resulted to the other
1. Improper advantage party
2. Power over the will of another 4. It must have been serious
3. Deprivation of the latter’s will of a 5. It induced the other party to enter into a
reasonable freedom of choice contract
6. It must have been employed by one
Circumstances to consider contracting party upon the other and not
1. Relationship of the parties (family, spiritual, employed by both contracting parties nor by
confidential etc.) third persons.
2. That the person unduly influenced was
suffering from mental weakness, ignorance Determining the existence of Fraud
or in financial distress [Art.1337, Civil Code] Not Fraudulent
1. Usual exaggerations in trade, when the
Note: By analogy, undue influence employed other party had an opportunity to know the
by a third person may annul the contract. facts [Art. 1340, Civil Code]
2. A mere expression of an opinion UNLESS
Test of Undue Influence: Whether or not the made by an expert and the other party has
influence exerted has so overpowered or relied on the former’s special knowledge
subjugates the mind of a contracting party [Art. 1341, Civil Code]
as to destroy his free agency, making him 3. Misrepresentation made in good faith [Art.
express the will of another rather than his own 1343, Civil Code]
[Coso-Fernandez v. Deza, G.R. No. L-16763
(1921)]. Note: Not fraudulent, but this may constitute
error

Fraudulent
Failure to disclose facts, when there is a duty
to reveal them, as when the parties are bound
by confidential relations [Art. 1339, Civil Code]
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Dolo Causante vs. Dolo Incidente 7. Simulation of Contracts
Dolo Causante Dolo Incidente Simulation is the declaration of a fictitious
(Causal Fraud) (Incidental Fraud) will, deliberately made by agreement of the
parties, in order to produce, for the purposes
Refers to those Refers to those of deception, the appearances of a judicial act
deceptions or deceptions or which does not exist or is different with that
misrepresentations of misrepresentations which was really executed [Nautica Canning
a serious character which are not Corporation v. Yumul, G.R. No. 164588
employed by one serious in character (2005)]. There exists an instrument, but there
party and without and without which is no contract.
which the other party the other party
would not have would have still Requisites of Simulation
entered into the entered into the a. An outward declaration of will different from
contract contract [Art. 1344, the will of the parties
Civil Code] b. The false appearance must have been
Determines or is the intended by mutual agreement
essential cause of the Refers only to some c. The purpose is to deceive third persons
consent [Tankeh v. particular or [Penalosa v. Santos, G.R. No. 133749
DBP, G.R. No. accident of the (2001)]
171428 (2013)] obligation [Tankeh
v. DBP, G.R. No. The primary consideration in determining the
171428 (2013)] true nature of a contract is the intention of the
parties. Such intention is determined not only
Renders the contract Renders the party from the express terms of their agreement, but
voidable liable for damages also from the contemporaneous and
subsequent acts of the parties [Spouses
Lopez v. Sps. Lopez, G.R. No. 161925 (2009)].
Fraud to vitiate consent must fulfill two
conditions
Absolute vs. Relative Simulation [Art.
1. The fraud must be dolo causante or it
must be fraud in obtaining the consent of 1345, Civil Code]
the party. The deceit must be serious. Absolute Relative Simulation
Simulation (Disimulados)
The fraud is serious when it is sufficient to (Simulados)
impress, or to lead an ordinarily prudent person
into error; that which cannot deceive a prudent
The parties have no The parties conceal
person cannot be a ground for nullity. The
intention to be their true
circumstances of each case should be
bound at all agreement.
considered, considering the personal
conditions of the victim.
Fictitious contract Disguised contract
2. The fraud must be proven by clear and
convincing evidence and not merely by a Void. (Because Bound to their real
preponderance thereof [ECE Realty v. there is an absolute agreement, so long
Mandap, G.R. No. 196182 (2014)]. lack of cause) [Art. as it does not
1346, Civil Code] prejudice a third
Note: However, fraud in its general sense person and is not
(false representation of a fact) coming about in contrary to law,
the consummation stage of the sale, as morals, good
opposed to the negotiation and perfection customs, public order
stages, entitles the aggrieved party to the or public policy [Art.
rescission of the sales contract [Sps. Tongson 1346, Civil Code].
v. Emergency Pawnshop, G.R. No. 167874
(2010)].

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If the parties merely state a false cause in the 1. Conditional contract, where its efficacy
contract to conceal their real agreement, the should depend upon the future existence of
contract is relatively simulated and the parties the thing.
are still bound by their real agreement. 2. Aleatory contract, where one of the
contracting parties assumes the risk that
Hence, where the essential requisites of a the thing will never come into existence,
contract are present and the simulation refers e.g. insurance [Tolentino].
only to the content or terms of the contract, the
agreement is absolutely binding and b. Exceptions [Art. 1347-1349, Civil
enforceable between the parties and their Code]
successors in interest [Valerio v. Refresca, 1. Things which are outside the commerce of
G.R. No. 163687 (2006)]. men
2. Intransmissible rights
B. Object 3. Future inheritance except in cases
authorized by law
The subject matter; the thing, right or service
which is the subject matter of the obligation Requisites
arising from the contract [Tolentino]. a. The succession has not yet been
opened;
1. Requisites b. The object of the contract forms part of
a. Within the commerce of men [Art. 1347, the inheritance; and
Civil Code] c. The promisor has an expectancy of a
b. Not legally or physically impossible [Art. right which is purely hereditary in
1348, Civil Code] nature
c. In existence or capable of coming into 4. Services that are contrary to law, morals,
existence [Arts. 1461, 1493, 1495, Civil good customs, public order, or public policy
Code] 5. Impossible things or services
d. Determinate or determinable, without the 6. Objects which are indeterminable as to their
need of a new contract between the parties kind, the genus should be expressed
[Arts. 1349 and 1460 (2), Civil Code]
c. Exceptions to the Exception
2. What may be the object of a 1. In case of marriage settlements under Art.
130, Civil Code
contract
2. In case of partition of properties inter vivos
a. General Rule by the deceased under Art. 1080, Civil Code
All things or services may be the object of [JLT Agro v. Balansag, G.R. No. 141882
contracts, which includes future things [Art. (2005)]
1347, Civil Code]

In order that a thing, right, or service may be C. Cause

the object of a contract, it should be in
existence at the moment of the celebration The essential and impelling reason why a
of the contract, or at least, it can exist party assumes an obligation.
subsequently or in the future [Tolentino].
Motive, on the other hand, is the particular
A showing of mere inconvenience, unexpected reason for a contracting party which does not
impediments, or increased expenses is not affect the other [Manresa].
enough to relieve a party of the obligation [De
Castro v. Longa, G.R. No L-2152-53 (1951)]. 1. Requisites
a. Exists at the time the contract is entered into
A future thing may be the object of a contract. [Art. 1409 (3), Civil Code]
Such contract may be interpreted as: b. Lawful [Art. 1352, Civil Code]
c. True or real [Art. 1353, Civil Code]

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2. Presumption Illegality affects Illegality does not
The law presumes that even if the contract existence or validity affect existence or
does not state a cause, one exists and is of the contract validity of contract
lawful; and it is incumbent on the party
impugning the contract to prove the contrary.
If the cause is stated in the contract and it is 5. Cause in contracts [Art. 1350, Civil
shown to be false, then it is incumbent upon Code]
the party enforcing the contract to prove the
legality of the cause [Sepe v. Heirs of Kilang, Onerous Remunerato- Pure
G.R. No. 199766 (2019)]. Contracts ry Contracts Beneficence

3. Cause vs. Object The The service or Mere

Cause Object undertaking benefit which liberality of
or the is the
As to Remuneration promise of remunerated benefactor
the thing or
The service or The thing which is service by
benefit which is given in remuneration the other
remunerated party

As to Donation
6. Effect of Lack of Cause, Unlawful
The liberality of the The thing which is Cause, False Cause and Lesion [Arts.
donor or benefactor given or donated 1352-1355, Civil Code]
Cause Effect
As to the Thing
Lack of Cause VOID.
– absence or
Prestation or The thing or service total lack of Note: Cause must exist at
promise of a thing or itself cause the time of the perfection of
service by the other the contract; it need not
exist later.
As to Contracting Parties

Different with May be the same for

respect to each part both parties Contrary to VOID.
law, morals,
good If parts of a contract are
4. Distinguished from Motive customs, illegal but the rest are
public policy supported by lawful
Cause Motive
and public cause, claimant of such
Proximate reason Remote reason for order has the burden of showing
for contract the contract (unlawful proof; otherwise, the whole
cause) contract is VOID.
Objective or juridical Psychological and
reason purely personal Contracts with illegal cause
reason may still produce effect in
certain cases where parties
Always the same for Differs for each are not of equal guilt:
each contracting contracting party (1) innocent party cannot
party be compelled to perform
his obligation and he may
recover what has already
been given;
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(2) if both parties are guilty,

neither can sue the other,
the law leaving them as
they are (in pari delicto)
[Art. 1411, Civil Code]

Falsity of REVOCABLE/VOIDABLE
cause – cause Parties are given a chance
is stated but to show that a cause really
is untrue exists, and that said cause
is true and lawful.

Lesion or General Rule: NO

inadequacy of EFFECT.
cause – cause
is not Exception: Inadequacy of
proportionate cause shall invalidate the
to object contract when:
(1) there is fraud,
mistake, undue influence
(2) when parties
intended a donation

Note: Inadequacy of cause may be a badge of

fraud.

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III. FORMALITY Contract of The amount of the

antichresis principal and the
A. General Rule interest, if any, must
be specified in writing;
No form necessary for contracts provided that otherwise, the contract
all the essential requisites for their validity are of antichresis shall be
present [Art. 1356, Civil Code] void [Art. 2134, Civil
Code]
B. Exceptions Agency to sell land Authority of the agent
or any interest must be in writing;
1. When the law requires that a contract be in therein otherwise, the sale
some form in order that it may be valid [Art. shall void [Art. 1874,
1356, Civil Code] Civil Code]
2. When the law requires that a contract be
proved in a certain way to be enforceable Stipulation to pay Must be expressly
(Statute of Frauds) [Art. 1356, Civil Code] interest on loans, made in writing [Art.
3. When the law requires a contract to be in interest for the use 1956, Civil Code]
some form for convenience, or to be of money
effective against third parties [Arts. 1357
and 1358, Civil Code] Stipulation limiting Must be (1) in writing,
common carrier’s signed by the shipper
Kinds of Formalities Required by Law duty of or owner; (2)
1. For the Validity of Contracts (Ad extraordinary supported by a
diligence to valuable
Essentia/ Ad Solemnitatem/ Solemn
ordinary diligence consideration; and (3)
Contracts) reasonable, just, and
Formal or Solemn Special Form not contrary to public
Contract Required by Law policy [Art. 1744, Civil
Code]
Donation of Must be in a public
Immovables instrument, specifying Transfer of large Requires transfer of
therein the property cattle the certificate of
donated and the value registration [Sec. 523,
of the charges which Administrative Code]
the donee must satisfy
[Art. 749, Civil Code] 2. For the Purpose of Proving the
Donation of Must be in writing; Existence of the Contract (Ad
movables when the otherwise, the Probationem/ Statute of Frauds)
value of the donation is void [Art. The following contracts are
personal property 748, Civil Code]. UNENFORCEABLE, UNLESS they are
donated exceeds ratified:
P5,000 a. Those entered into in the name of another
person by one who has been:
Partnerships where An inventory of said 1. given no authority, or
immovable property property must be 2. legal representation, or
is contributed made, signed by the 3. who has acted beyond his powers;
parties and attached b. Those that do not comply with the Statute of
to the public Frauds
instrument. Otherwise, c. Those where both parties are incapable of
the contract of giving consent to a contract [Art. 1403, Civil
partnership is void Code].
[Art. 1773, Civil Code].

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Statute of Frauds 3. For the Effectivity of the Contract
An agreement as to the following shall be Against Third Persons
unenforceable UNLESS: If the law requires a document or other special
a. The agreement, or some note or form [Art. 1357, Civil Code]
memorandum, thereof, be in writing, and a. The contracting parties may compel each
b. Subscribed by the party charged, or by his other to observe that form, once the contract
agent; evidence, therefore, of the has been perfected.
agreement cannot be received without the b. This right may be exercised simultaneously
writing, or a secondary evidence of its with the action upon the contract.
contents [Art. 1403, Civil Code]
Art. 1358, Civil Code which requires the
Agreements under the Statute of Frauds embodiment of certain contacts in a public
[Art. 1403, Civil Code]: instrument, is only for convenience, and
a. An agreement that by its terms is not to be registration of the instrument only adversely
performed within a year from the making affects third parties.
thereof;
b. A special promise to answer for the debt, Formal requirements are, therefore, for the
default, or miscarriage of another; benefit of third parties. Non-compliance
c. An agreement made in consideration of therewith does not adversely affect the validity
marriage, other than a mutual promise to of the contract nor the contractual rights and
marry; obligations of the parties thereunder [Fule v.
d. An agreement for the sale of goods, CA, G.R. No. 112212 (1998)].
chattels or things in action, at a price not
less than five hundred pesos, unless the
Article 1358, Civil Code. The following must appear
buyer accept and receive part of such goods in a public document:
and chattels, or the evidences, or some of 1. Acts and contracts which have for their
them, of such things in action or pay at the object the creation, transmission,
time some part of the purchase money; but modification or extinguishment of real
when a sale is made by auction and entry is rights over immovable property; sales of
made by the auctioneer in his sales book, at real property or of an interest therein as
governed by Arts. 1403, No. 2, and 1405;
the time of the sale, of the amount and kind 2. The cession, repudiation or renunciation of
of property sold, terms of sale, price, names hereditary rights or of those of the conjugal
of the purchasers and person on whose partnership of gains;
account the sale is made, it is a sufficient 3. The power to administer property, or any
memorandum; other power which has for its object an act
e. An agreement of the leasing for a longer appearing or which should appear in a
public document, or should prejudice a
period than one year, or for the sale of third person;
real property or of an interest therein; 4. The cession of actions or rights proceeding
f. A representation as to the credit of a from an act appearing in a public
third person document.

An unenforceable contract under the Statute of All other contracts where the amount involved
exceeds five hundred pesos must appear in writing,
Frauds is not necessarily void since it can be even a private one. But sales of goods, chattels or
ratified by failure to object to the presentation things in action are governed by Arts. 1403, No. 2
of oral evidence to prove the contract itself, or and 1405.
by the acceptance of benefits [Estate of Bueno
v. Estate of Peralta, G.R. No. 205810 (2020)].
Enumerated contracts in Art. 1358, Civil Code
This article applies to executory contracts are valid even when not reduced into writing,
only [Almirol v. Monserrat, G.R. No. 23717 although parties may have recourse under Art.
(1925)]. 1357, Civil Code to compel execution of the
writing, except in the following cases:
a. Solemn Contracts (action under Art. 1357,
Civil Code is not available at all)

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b. Real Contracts (action under Art. 1357,
Civil Code is available if there is consent,
subject matter, cause, and delivery)
c. Contracts under the Statutes of Fraud
(remedy under Art. 1357, Civil Code is
applicable only if the defense of the Statute
is waived expressly or impliedly by the party
charged)

Actions under Art. 1357, Civil Code may be

exercised simultaneously with (i.e. need not be
separate nor need it precede) the action to
enforce the contract, although questions of
form must be decided first.

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IV. REFORMATION OF Reformation v. Annulment [Veluz v. Veluz,

supra]
INSTRUMENTS Reformation of Annulment
Instrument
A. In General
Presupposes a valid, Presupposes a
Reformation is a remedy in equity by means of existing contract, in defective contract
which a written instrument is made or which there had been in which the minds
construed so as to express or conform to the a meeting of the minds of the parties did
real intention of the parties when some error or of the parties but the not meet, or the
mistake has been committed [Reyes and instrument drawn up consent of one was
Puno]. and signed by them vitiated.
does not correctly
Requisites [Art. 1359, Civil Code] express the terms of
1. There must be a meeting of the minds of their agreement.
the contracting parties
2. Their true intention is not expressed in Equity of reformation is Intended to declare
the instrument; ordinarily limited to the inefficiency
3. Such failure to express their true intention written agreements, which the contract
is due to mistake, fraud, inequitable and its purpose is to already carries in
conduct, or accident; and establish and itself and to render
4. There is clear and convincing proof of perpetuate the true the contract
mistake, fraud, inequitable conduct, or agreement. inefficacious.
accident.

The appellant’s complaint states no cause of

B. Burden of Proof
action, for it fails to allege that the instrument to
The presumption is that an instrument sets out
be reformed does not express the real
the true agreement of the parties and that it
agreement or intention of the parties. Such
was executed for valuable consideration. Thus,
allegation is essential since the object sought
when there is some error or mistake in the
in an action for reformation is to make an
contract, the onus probandi is upon the party
instrument conform to the real agreement
who insists that the contract should be
or intention of the parties. Moreover, courts
reformed.
do not reform instruments merely for the sake
of reforming them, but only to enable some
While intentions involve a state of mind,
party to assert right under them as reformed
subsequent and contemporaneous acts of
[Garcia v. Bisaya, G.R. No. L-8060 (1955)].
the parties as well as the evidentiary facts as
proved and admitted can be reflective of one’s
Note: If mistake, fraud, inequitable conduct, or
intention [Multi-Ventures Capital Management
accident has prevented a meeting of the minds
Corporation v. Stalwart Management, G.R. No.
of the parties, the proper remedy is not
157439 (2007)].
reformation of the instrument but annulment of
the contract [Art. 1359 (2), Civil Code].
C. Effect of Reformation
The action for reformation of instrument should
not be confused with the action for annulment In granting reformation, the remedy in equity is
of contract [Veluz v. Veluz, G.R. No. L-23261 not making a new contract for the parties, but
(1968)]. establishing and perpetuating the real
contract between the parties which, under the
technical rules of law, could not be enforced but
for such reformation [Quiros v. Arjona, G.R.
No. 158901 (2004)].

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D. Cases Where Reformation is No fraud exists in the sense that neither of the
parties took part therein.
Proper
5. Severe Pacto de Retro / Relative
1. Mistake Simulation
The mistake should be of fact generally, and
not of law [BPI v. Fidelity and Surety Co., G.R. Article 1365, Civil Code. If two parties agree upon
No. L-26743 (1927)]. the mortgage or pledge of real or personal property,
but the instrument states that the property is sold
absolutely or with a right of repurchase, reformation
Mutual of the instrument is proper.
Mutual mistake of parties that causes failure to
disclose real agreement [Art. 1361, Civil Code]
E. Who May Ask for Reformation
Unilateral
a. One party was mistaken, while the other
acted fraudulently [Art. 1362, Civil Code] Trigger Rule
b. One party was mistaken, while the other
knew or believed that the instrument did not If the mistake was Reformation may be
state their real agreement, but concealed it mutual ordered at the
from the former [Art. 1363, Civil Code] instance of either
party or his
2. Fraud successors in
Active interest [Art. 1368,
If one party was mistaken and the other acted Civil Code]
fraudulently in such a way that the instrument
If the mistake was Reformation may be
does not show their true intention [Art. 1362,
not mutual ordered upon
Civil Code]
petition of the injured
party, or his heirs
Passive
and assigns [Art.
When one party was mistaken and the other
1368, Civil Code]
knew or believed that the instrument did not
state their real agreement [Art. 1363, Civil When through the The courts may
Code] ignorance, lack of order that the
skill, negligence or instrument be
3. Inequitable conduct bad faith on the part reformed [Art. 1364,
If one party was mistaken and the other acted of the person Civil Code]
fraudulently or inequitably in such a way that drafting the
the instrument does not show their true instrument or of the
intention [Art. 1362, Civil Code] clerk or typist, the
instrument does not
4. Accident express the true
When, through the ignorance, lack of skill, intention of the
negligence or bad faith on the part of the parties
person drafting the instrument or of the clerk or
typist, the instrument does not express the true
intention of the parties [Art. 1364, Civil Code] F. Cases Where Reformation is
Not Proper
4. Wills. There can be no reformation before 5. When the real agreement is void, there is
the testator dies because the making of a nothing to reform. The power of the court to
will is strictly personal [Art. 784, Civil Code], reform is not for accomplishing a vain thing
a free act [Art. 839, Civil Code], and [Tolentino].
essentially revocable [Art. 828, Civil Code]. 6. Implied Ratification/Estoppel: The party
who has brought an action to enforce the
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instrument cannot subsequently ask for its
reformation [Art. 1367, Civil Code]
7. Simple donations inter vivos—wherein
no condition is imposed. Donation is an act
of liberality [Art. 725, Civil Code] and cannot
be compelled.

G. Prescriptive Period for

Reformation
The prescriptive period for actions based upon
a written contract and for reformation of an
instrument is ten (10) years under Art. 1144,
Civil Code [Rosello-Bentir v. Leanda, G.R. No.
128991 (2000)].

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V. INTERPRETATION OF CONTRACTS

A. Primacy of Language or rewrite contracts because they operate harshly

or inequitably as to one of the parties, or alter
Intention them for the benefit of one party and to the
detriment of the other, or by construction,
1. Cardinal/First Rule of Interpretation relieve one of the parties from the terms which
– Literal Meaning Governs he voluntarily consented to, or impose on him
If the terms of a contract are clear and leave no those which he did not [Bautista v. CA, G.R.
doubt upon the intention of the contracting No. 123655 (2000)].
parties, the literal meaning of its stipulations
shall control [Art. 1370 (1), Civil Code]. 2. Rule if Language Contrary to Intent
– Intent over Literal Interpretation
In contract interpretation, courts must first If the words appear to be contrary to the
determine whether a stipulation is ambiguous evident intention of the parties, the latter
or susceptible of multiple interpretations. If no shall prevail over the former [Art. 1370 (2), Civil
ambiguity is found and the terms of the contract Code].
clearly reflect the intentions of the contracting
parties, the stipulation will be interpreted as it The cardinal test is the intention of the parties,
is written [Cezar Yatco Real Estate Services, to be derived from the terms/language of the
Inc. v. Bel-Air Village Association, Inc., G.R. contract.
No. 211780 (2018)].
In order to judge the intention of the contracting
Application parties, their contemporaneous and
Where the language of a contract is plain and subsequent acts shall be principally
unambiguous, its meaning should be considered [Art. 1371, Civil Code].
determined without reference to extrinsic facts
or aids. The intention of the parties must be Absent any showing that its provisions are
gathered from that language, and from that contrary to law, morals, good customs, public
language alone. order, or public policy, it should be enforced to
the letter. Contracts cannot be altered for the
Courts cannot make for the parties better or benefit of one party and to the detriment of
more equitable agreements than they another. Neither can the Court, by
themselves have been satisfied to make, or
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construction, relieve a party from the terms to Trigger: Words which may have different
which he voluntarily consented to, or impose significations.
on him those which he did not [National Power
Corporation v. Southern Philippines Power Effect: They shall be understood in what is
Corp., G.R. No. 219627 (2016)]. most keeping with the contract’s nature and
object.
3. Exclusion to Rules – Distinct and
Different Cases 7. Interpretation against Party
However general the terms of a contract may Causing Obscurity
be, they shall not be understood to The interpretation of obscure words or
comprehend things that are distinct and cases stipulations in a contract shall not favor the
that are different from those upon which the party who caused the obscurity [Art. 1377, Civil
parties intended to agree [Art. 1372, Civil Code].
Code].
Interpretation of Contracts of Adhesion
4. Stipulation Rendered to be A contract of adhesion is just as binding as
Effectual ordinary contracts. Contracts of adhesion are
If some stipulation of any contract should admit not invalid per se; they are not entirely
of several meanings, it shall be understood as prohibited. The one who adheres to the
bearing that import which is most adequate to contract is in reality free to reject it entirely; if
render it effectual [Art. 1373, Civil Code]. he adheres, he gives his consent.

5. Stipulations Interpreted Together While ambiguities in a contract of adhesion

The various stipulations of a contract shall be are to be construed against the party that
interpreted together, attributing to the doubtful prepared the same, this rule applies only if
ones that sense which may result from all of the stipulations in such contract are
them taken jointly [Art. 1374, Civil Code]. obscure or ambiguous. If the terms thereof
are clear and leave no doubt upon the intention
Difference between Art. 1373 and Art. 1374, of the contracting parties, the literal meaning of
Civil Code its stipulations shall control. In the latter case,
there would be no need for construction [RCBC
Art. 1373 Provides that which of the v. CA, G.R. No. 133107 (1999)].
several meanings of a
stipulation would most 8. Nomenclature NOT Decisive of the
adequately render the contract Character
effectual would be adopted. A contract is what the law defines it to be, and
not what it is called by the contracting parties.
The Title of the contract does not necessarily
Art. 1374 Provides that the various determine its nature [Tolentino].
stipulations of a contract would
be interpreted together,
9. Separability Clause
attributing to doubtful
Another fundamental rule in the interpretation
stipulations the sense resulting
of contracts is that the terms, clauses and
from the joint interpretation.
conditions contrary to law, morals and public
order should be separated from the valid and
6. Interpretation According to Nature legal contract and when such separation can
and Object of Contract be made because they are independent of the
Words which may have different significations valid contract [Kasilag v. Rodriguez, G.R. No.
shall be understood in that which is most in 46623 (1939)].
keeping with the nature and object of the
contract [Art. 1375, Civil Code]. Exceptions:
a. Where the statute expressly or by
necessary implication declares the entire
contract void; or
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b. Where the terms, clauses, and conditions, C. Other rules from the Rules of
by an established connection or by manifest
intention of the parties, is inseparable from Court
the principal obligation, and is a condition,
juridically speaking, of that the nullity of Article 1379, Civil Code. The principles of
which it would also occasion [Manresa]. interpretation stated in Rule 123 of the Rules of
Court shall likewise be observed in the construction
of contracts.
B. In case of doubt
When it is absolutely impossible to settle Note: This is now found in Secs. 10-19, Rule
doubts by the rules established in the 130, Rules of Court.
preceding articles [Art. 1378, Civil Code]:
1. Writing is to be interpreted according to its
When doubts are cast The contract shall legal meaning unless parties intended
upon the principal be null and void. otherwise [Sec. 10].
object/s of any 2. Instrument must be construed to give effect
contract and it cannot to all provisions [Sec. 11].
be known what may 3. Particular provisions are paramount to
have been the general ones when they are inconsistent
intention or will of the [Sec. 12].
parties 4. The circumstances under which the
instrument was made must be considered
When doubts refer to The least [Sec. 13].
the incidental transmission of 5. The terms of a writing are presumed to
circumstances of rights and have been used in their primary and
gratuitous contracts interests shall general acceptation unless contrary
and it is absolutely prevail. evidence is presented [Sec. 14].
impossible to settle 6. Written words prevail over printed ones
doubts by the rules [Sec. 15].
7. Experts and interpreters may be used in
When doubts refer to The doubt shall
explaining language not understood by the
the incidental be settled in favor
court [Sec. 16].
circumstances of of the greatest
8. When conflicting constructions of
onerous contracts and reciprocity of
provisions are equally proper that which is
it is absolutely interests.
the most favorable to the party in whose
impossible to settle
favor the provision was made shall be
doubts by the rules
accepted [Sec. 17].
9. When an instrument is equally susceptible
In interpreting a contract to sell, the partial of two interpretations, one in favor of
payments on a failed contract to sell may be natural right and the other against it, the
retained by the seller as reasonable former is to be adopted [Sec. 18].
compensation for use of the property. The 10. An instrument may be construed according
conversion of partial payments into rentals is to usage, in order to determine its true
also consistent with Art. 1378, Civil Code which character [Sec. 19].
teaches that doubts in the interpretation of
onerous contracts "should be settled in favor of
the greatest reciprocity of interests" [Godinez
v. Norman, G.R. No. 225449 (2020)].

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VI. DEFECTIVE CONTRACTS preferential right [Aquino v. Tañedo, G.R. No.

L-12457 (1919)].

Rescissible A contract that has caused Rescission in Art. 1380 distinguished

a particular damage to from rescission in Art. 1191, Civil
one of the parties or to a Code [Universal Food Corp. v. CA, L-
third person and which for 29155 (1970)]
equitable reasons may
be set aside even if valid. Rescission Art. Rescission Art.
1191 1380
Annulable or A contract in which
Voidable consent of one of the Premised on breach Based on economic
(contrato nulo) parties is defective, either damage or prejudice
because of want of A primary remedy
capacity or because it is Rescission is
vitiated, but which subsidiary
contract is valid until
judicially set aside. Lesion
Unenforceable A contract that for some The injury which one of the parties suffers by
reason cannot be virtue of a contract which is disadvantageous
enforced, unless ratified for him. To give rise to rescission, the lesion
in the manner provided must be known or could have been known at
by law. the time of making of the contract [Tolentino].

Void or A contract which is an Lesion does not invalidate a contract except

Inexistent absolute nullity and only in special cases provided by law [Art.
produces no effect, as if it 1355, Civil Code]
had never been executed
or entered into. Subsidiary Remedy
Rescission is not a principal remedy, but a
[Tolentino] subsidiary one. It can only be availed of only if
the injured party proves that he has no other
A. Rescissible contracts legal means to obtain redress for the damage
caused [Art. 1177, Civil Code]
Contracts which are valid until rescinded. All
essential requisites of a contract exist but there Necessary Extent
is injury or damage to one of the parties or to The rescission shall only be to the extent
third persons – external or extrinsic defect necessary to cover the damages caused, i.e.
consisting of an economic damage or lesion partial rescission [Art. 1384, Civil Code].
[Paras].
2. Characteristics of Rescissible
1. Rescission Contracts
Rescission is a remedy granted to contracting a. The defect consists in injury or damage
parties and to third persons, to secure either to one of the contracting parties or to
reparation for damages caused to them by a third persons;
contract, by means of the restoration of things b. Before rescission, they are valid, and
to their condition at the moment prior to the therefore, legally effective;
celebration of said contract [Ada v. Baylon, c. They can only be attacked directly only and
G.R. No. 182435 (2012)]. not collaterally;
d. They can be attacked only by a contracting
party or a third person who is injured or
Relief to protect one of the parties or a third defrauded;
person from all injury and damages which the e. They are susceptible of convalidation only
contract may cause, to protect some by prescription and not ratification; and
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f. They must be rescinded within four years, who did not act in bad faith [Art. 1385 (2),
the prescription for actions to claim Civil Code].
rescission [Art.1389, Civil Code].
Note: Art. 1381 (4), Civil Code: Any disposition
3. Rescissible Contracts and Their of the thing subject of litigation or any act which
Requisites tends to render inutile the court’s impending
disposition in such case without the knowledge
Article 1381, Civil Code. The following contracts
and approval of the litigants or of the court, is
are rescissible:
1. Those which are entered into by guardians unmistakably and irrefutably indicative of bad
whenever the wards whom they represent suffer faith.
lesion by more than one-fourth of the value of
the things which are the object thereof; However, even without knowledge or approval
2. Those agreed upon in representation of from the court, the conveyance of a property
absentees, if the latter suffer the lesion stated in subject of litigation may still be valid but is
the preceding number;
3. Those undertaken in fraud of creditors when the susceptible for rescission under Art. 1381 (4),
latter cannot in any other manner collect the Civil Code.
claims due them;
4. Those which refer to things under litigation if A definitive judicial determination with respect
they have been entered into by the defendant to the thing subject of litigation is not a
without the knowledge and approval of the
condition sine qua non before the rescissory
litigants or of competent judicial authority;
5. All other contracts specially declared by law to action contemplated under Par. 4, Art. 1381,
be subject to rescission Civil Code may be instituted. The primordial
purpose of Par. 4, Art. 1381, Civil Code is to
secure the possible effectivity of the impending
judgment by a court with respect to the thing
Requisites for Rescission under Pars. 1 which is the subject of litigation [Ada v. Baylon,
& 2, Art. 1381, Civil Code G.R. No. 182435 (2012)].
a. Contract was entered into by a guardian in
behalf of his ward or by a legal Requisites before a Contract Entered
representative in behalf of an absentee [Art.
1381, Civil Code].
into In Fraud of Creditors May Be
Rescinded under Par. 3, Art. 1381, Civil
Note: A guardian is authorized only to Code
manage the estate of the ward; should he a. There is a credit existing prior to the
dispose a portion thereof without authority celebration of the contract, although not yet
from the court by way of a contract, the due or demandable;
same is unenforceable under Art. 1403 b. There is fraud, or at least, the intent to
(1), Civil Code, irrespective of whether commit fraud to the prejudice of the creditor
there is lesion or not. seeking rescission, which may be presumed
or proved [Art 1387, Civil Code];
b. It was entered into without judicial approval c. Creditor cannot in any legal manner collect
[Art. 1386, Civil Code]. his credit; insolvency of the debtor is not
c. Ward or absentee suffered lesion of more required; and
than one-fourth of the value of the property d. The object of the contract must not be
which is the object of the contract [Art. 1381 legally in the possession of a third person
(1) & (2), Civil Code]. who did not act in bad faith.
d. There is no other legal means of obtaining
reparation for the lesion [Art. 1383, Civil General Rule: Rescission requires the
Code]. existence of creditors at the time of the alleged
e. The person bringing the action must be able fraudulent alienation, and this must be proved
to return whatever he may be obliged to as one of the bases of the judicial
restore [Art. 1385 (1), Civil Code]. pronouncement setting aside the contract.
f. The object of the contract must not be Without any prior existing debt, there can
legally in the possession of a third person neither be injury nor fraud.

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While it is necessary that the credit of the absentees, the period of four years shall not
plaintiff in the accion pauliana must exist prior begin until the termination of the former's
to the fraudulent alienation, the date of the incapacity, or until the domicile of the latter is
judgment enforcing it is immaterial. Even if the known [Art. 1389, Civil Code].
judgment is subsequent to the alienation, it is
merely declaratory, with retroactive effect to Do all creditors benefit from the rescission?
the date when the credit was constituted The rescission should benefit only the creditor
[Siguan v. Lim, G.R. No. 134685 (1999)]. who obtained the rescission, because the
rescission is to repair the injury caused to him
Accion Pauliana by the fraudulent alienation. If a balance is left
The action to rescind contracts in fraud of after satisfying the claim of the creditor who
creditors. Consequently, accion pauliana brought the action, other creditors who are
presupposes a judgment and unsatisfied qualified to bring an accion pauliana should be
execution which cannot exist when the debt is given the benefit of rescission, instead of
not yet demandable at the time the rescissory requiring them to bring other rescissory
action is brought [Tolentino]. actions. However, creditors who only became
such after the fraudulent alienation, cannot
Note: Even secured creditors are entitled to benefit from the rescission.
accion pauliana.
5. Presumption of Fraud
Payments made in a state of insolvency for When alienation of property presumed in fraud
obligations to whose fulfillment the debtor of creditors:
could not be compelled at the time they were a. Alienation by gratuitous title if the debtor has
effected, are also rescissible [Art. 1382, Civil not reserved sufficient property to pay all of
Code]. his debts contracted before alienation [Art.
1387, Civil Code]
Requisites Before Payment Made by b. Alienation by onerous title if made by a
Insolvent can be Rescinded debtor against whom some judgment has
a. It was made in a state of insolvency; been rendered in any instance or some writ
b. Obligation must have been one which of attachment has been issued [Art. 1387,
debtor could not be compelled to pay at the Civil Code].
time such payment was effected.
Badges of Fraud
Note: A debtor can be compelled to pay by the A conveyance leaving no property for other
creditor even before the expiration of the period creditors to attach is an evidence of fraud
since by his insolvency he has already lost his [China Banking v. CA, G.R. No. 129644
right to the benefit of such period [Art. 1198 (1), (2000)]:
Civil Code]. a. Consideration is fictitious or inadequate;
b. Transfer was made while suit had begun or
4. Effects of Rescission [Art. 1385, Civil pending;
Code] c. Sale was upon credit by insolvent debtor;
It creates an obligation of mutual restitution d. There was large indebtedness or complete
or the obligation to return the things which were insolvency;
the object of the contract, together with their e. Transfer consisted of all or nearly all
fruits, and the price with its interests. property especially when insolvent or
greatly;
However, if the object of the contract is in the f. The transfer was made between father and
possession of third persons in good faith, son when other above circumstances
rescission cannot take place and indemnity for present; and
damages may be demanded from the person g. There was failure of vendee to take
causing the loss [Art. 1385, Civil Code]. exclusive possession of all property
embarrassed financially.
Rescission prescribes in a period of four
years. For persons under guardianship and for
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6. Resolution and rescission Note: Not all
distinguished forms of
Tolentino notes that Art. 1191, Civil Code is economic
taken from Art. 1124 of the Old Civil Code, but prejudice are
the present Code uses the term “rescission” recognized by
instead of the original “resolution” in the old law as a
Code. Nevertheless, the Code uses the terms ground to
synonymously. rescind

Definition As to The cause of The reparation

effect action is of damages for
Rescission Resolution
subordinated the breach is
A subsidiary action As referred to in Art. to the purely
based on injury to 1191, Civil Code the existence of secondary.
the plaintiff’s action is based on the an economic
economic interests defendant’s breach of prejudice.
as described in Arts. faith, a violation of the Hence, where
1380 & 1381, Civil reciprocity between the defendant
Code. the parties. makes good
the damages
caused, the
action cannot
be maintained
[Heirs of Sofia Quirong v. Development Bank
or continued.
of the Philippines, G.R. No. 173441 (2009)]
As to Prejudiced Only party to
Similarities According to Tolentino: parties- third party the contract
a. Both presuppose contracts validly entered in- may also seek may seek
into and existing (this distinguishes interest remedy remedy
rescission from annulment, in which there is
a defect which vitiates the contract) As to Equity Non-
b. Both require mutual restitution when grounds compliance or
declared proper. non-
performance
Differences
As to Right to seek May be denied
Rescission Resolution
action by remedy is not if court finds
[Arts. 1380 & [Art. 1191, Civil courts affected by that there is
1381, Civil Code] extension of sufficient
Code] time reason to
As to Subsidiary Principal justify
Nature of Action Action, extension
Action involving retaliatory in As to Four years Ten years
partial nature prescript [Art. 1389,
resolution ive Civil Code]
As to Economic Breach of faith period
Basis prejudice [Congregation of the Religious Virgin Mary v.
rendering the Orola, G.R. No. 169790 (2008)]
contract
legally B. Voidable contracts
rescissible
Voidable or annullable contracts are existent,
valid and binding, although they can be
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annulled because of want of capacity or vitiated A remedy A sanction
consent of one of the parties [Tolentino].

Article 1390, Civil Code. The following contracts Equity The law
are voidable or annullable, even though there may predominates predominates
have been no damage to the contracting parties:
1. Those where one of the parties is incapable of May be demanded Can be demanded
giving consent to a contract; by third parties only by parties to the
2. Those where the consent is vitiated by mistake, affected by the contract
violence, intimidation, undue influence or fraud.
contract
These contracts are binding, unless they are
annulled by a proper action in court. They are
susceptible of ratification. 2. Who may institute action for
annulment
General Rule: Action for annulment may be
Note: Art. 1390 refers to a “proper action in instituted by all who are thereby obliged
court”. The validity of a voidable contract may principally or subsidiarily.
only be attacked either by way of a direct action
or by way of defense via a counterclaim, and Exceptions:
not a special or affirmative defense [Jurado]. a. Persons capable of giving consent and
b. Guilty parties who have caused the vitiation
1. Characteristics of Voidable of consent cannot allege the incapacity or
Contracts want of consent of those they contracted
a. Its defect consists of the vitiation of with [Art. 1397, Civil Code].
consent of one of the contracting parties;
b. It is binding until it is annulled; Requisites:
c. It is susceptible of convalidation by a. Plaintiff must have an interest in the
ratification or prescription; once ratified, contract;
they become absolutely valid and can no b. The victim and not the party responsible
longer be annulled [Art. 1392, Civil Code]; for the vice or defect must assert the same
and
d. Its defect or voidable character cannot be Exception: If a third person is prejudiced in his
invoked by third persons. rights with respect to one of the contracting
parties and can show detriment which would
Rescission Annulment positively result to him from the contract in
which he has no intervention [Teves v.
People’s Homesite and Housing Corp., G.R.
Merely produces the Declares the No. L-21498 (1968)].
inefficacy of the inefficacy which the
contract, which did contract already
not essentially exist carries in itself
in the contract

Needs ratification to Requires an act of

be effective ratification to be cured

Private interest Direct influence of the

alone governs public interest is
involved

May be compatible Based on a vice of the

with the perfect contract which
validity of the invalidates it
contract

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3. Effects of Annulment a. Prescription
Prescription of the Action for Annulment
Contract has been Contract has not
Consummated been Grounds for being Reckoning Point
Consummated voidable

The parties shall be Mutual Restitution - Intimidation, Four years from the
released from the the contracting violence, or undue time the defect of the
obligations arising parties shall restore influence consent ceases
therefrom. to each other the
things which have Fraud or Mistake Four years from
been the subject discovery thereof
matter of the
contract, with their Minors and Four years from the
fruits, and the price Incapacitated time the guardianship
with its interest, Persons ceases.
except in cases
provided by law [Art. Constructive Notice
1398-1402, Civil
Discovery or fraud must be reckoned from the
Code]. time the document was registered in the office
of the Register of Deeds. Registration
Mutual Restitution constitutes constructive notice to the whole
world [Carantes v. CA, G.R. No. L-33360
Vitiation of Parties shall restore to each
(1977)].
Consent other the subject matter of
the contract with its fruits and
b. Ratification
the price thereof with legal
The act or means by virtue of which efficacy is
interest.
given to a contract which suffers from a vice of
curable nullity [Arts. 1392-1396, Civil Code].
In obligations to render
Ratification is either express or tacit.
service, the value thereof
1. EXPRESS or
shall be the basis for
2. TACIT
damages [Art. 1398, Civil
Code].
When the person who has the right to invoke it,
Incapacity Incapacitated person is not with the knowledge of the reason which
obliged to make any renders the contract voidable and such reason
restitution except insofar as having ceased, executes an act implying an
he has been benefited by the intention to waive his right [Art. 1393, Civil
thing or price received by him Code].
[Art. 1399, Civil Code].
Requisites of Ratification
1. Contract is tainted with a vice susceptible
4. Modes of Convalidating a Voidable of being cured;
Contract 2. Confirmation is effected by the person who
a. By prescription of the action for annulment is entitled to do so under the law;
[Art.1391, Civil Code] 3. It is effected with knowledge of the vice or
b. By ratification or confirmation [Art. 1392- defect of the contract;
1396, Civil Code] 4. Cause of the nullity or defect has already
c. By loss of the thing which is the object of the disappeared.
contract through the fraud or fault of the
person who is entitled to institute the action The right to ratify may be transmitted to the
for the annulment [Art.1401, Civil Code] heirs of the party entitled to such right. It may
likewise be exercised by the guardian of the

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incapacitated person having such right [Art. 1. Characteristics
1394, Civil Code]. a. Cannot be enforced by a proper action in
court;
Ratification does not require the conformity of b. Susceptible of ratification;
the contracting party who has no right to bring c. Cannot be assailed by third persons [Art.
an action for annulment [Art. 1395, Civil Code]. 1408, Civil Code].

Effect of Ratification 2. Kinds of Unenforceable Contracts

It extinguishes the action for annulment of a [Art. 1403, Civil Code]
voidable contract [Art. 1392, Civil Code]. a. Unauthorized contracts – those entered into
by one who has no authority or legal
It cleanses the contract from all its defects from representation, or who has acted beyond
the moment it was constituted [Art. 1396, Civil his powers [Art. 1403 (1), Civil Code]
Code]. b. Those which did not comply with the Statute
of Frauds [Art. 1403 (2), Civil Code]
c. Loss of the Thing
Loss of thing by Loss of thing by The Statute of Frauds embodied in Par. 2,
Plaintiff Defendant Art. 1403, Civil Code requires certain
contracts enumerated therein to be
If the loss of the If it is lost through the evidenced by some note or memorandum in
object in his defendant’s fault, he order to be enforceable. The Statute does
possession is due to is liable for fruits not deprive the parties of the right to
his fault or fraud, the received, value of the contract with respect to the matters therein
action for annulment thing at the time it was involved, but merely regulates the
of contracts shall be lost, with interest from formalities of the contract necessary to
extinguished. He the same date [Art. render it enforceable. Evidence of the
cannot ask for 1400, Civil Code]. agreement cannot be received without the
annulment [Art. writing or a secondary evidence of its
1401, Civil Code]. content [Swedish Match v. CA, G.R. No.
128120 (2004)].
C. Unenforceable contracts c. Those where both parties are incapable of
giving consent to a contract [Art. 1403 (3),
Contracts that by reason of statutory defects do Civil Code]
not confer any action to enforce the same until
and unless they are ratified in the manner
prescribed by law [Reyes].

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SUMMARY OF UNENFORCEABLE CONTRACTS
Contract entered Contracts covered by Contract where both
into without Statute of Frauds parties are incapable of
authority giving consent

Effect on the No effect unless ratified. Cannot be enforced by a proper action in court
Contract

How to assail Not by direct action. Not by direct action. Not by direct action.

As a defense, by As a defense, by motion to As a defense, by motion to

motion to dismiss dismiss on the ground that dismiss the complaint on
the complaint on the the contract is the ground that the contract
ground that the unenforceable is unenforceable
contract is
unenforceable Objection to the
presentation of oral
evidence to prove an oral
contract [Art. 1405, Civil
Code]

Who can assail By the person whose By the party against whom By the party against whom
- cannot be name the contract the contract is being the contract is being
assailed by was entered into / by enforced; or his privies enforced; or his privies; or
third persons owner of property parents or guardians, as it
[Art. 1408, Civil is a personal defense
Code]

When When a party asks the court to enforce the contract

How to Cure Ratification by Ratification by party against Ratification of party against

Defect person whose name whom the contract is being whom the contract is being
the contract was enforced enforced; or his privies; or
entered into parents or guardians
Failure to object to the
presentation of oral The ratification by one
evidence to prove the party converts the contract
contract amounts to waiver into a voidable contract
[Art. 1405, Civil Code]; [Art. 1407, Civil Code]
makes it as binding as if
written

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D. Void or inexistent contracts conditions set forth in Art. 1177, Civil Code,
exercise the rights and actions of the latter,
Those which, because of certain defects, except only those which are inherent in his
generally produce no effect at all. They are person, including therefore, his right to the
considered as inexistent from its inception or annulment of said contract, even though
from the very beginning [De Leon]. such creditors are not affected by the same,
except indirectly, in the manner indicated in
Includes not only those contracts in which one said legal provision [Pascual v. Secretary of
of the essential requisites is totally wanting, but Public Works, G.R. No. L-10405 (1960)].
also those which are declared void by positive
provision of law or statute. Note: A contract which is a direct result of a
previous illegal contract is also void and
inexistent [Art 1422, Civil Code]. The novation
Article 1409, Civil Code. The following contracts is void if the original obligation was void, except
are inexistent and void from the beginning:
1. Those whose cause, object or purpose is
when annulment may be claimed only by the
contrary to law, morals, good customs, debtor or when ratification validates acts which
public order or public policy; are voidable [Art. 1298, Civil Code].
2. Those which are absolutely simulated or
fictitious; Void vs. Inexistent Contracts
3. Those whose cause or object did not exist at
the time of the transaction; Void Inexistent
4. Those whose object is outside the commerce
of men;
5. Those which contemplate an impossible Those where all the Those where one or
service; requisites of a some or all of the
6. Those where the intention of the parties relative contract are present requisites essential for
to the principal object of the contract cannot be but the cause, the validity of a
ascertained; object or purpose is contract are
7. Those expressly prohibited or declared void
by law
contrary to law, absolutely lacking
morals, good
These contracts cannot be ratified. Neither can the customs, public
right to set up the defense of illegality be waived. order or public
policy, or the
contract itself is
1. Characteristics prohibited or
a. It does not produce any legal effect;
declared void by
b. It is not susceptible of ratification;
law
c. The right to set up the defense of
inexistence or absolute nullity cannot be Principle of pari Principle of pari
waived or renounced; delicto is applicable delicto is inapplicable
d. The action or defense for the declaration of
their inexistence or nullity is May produce legal Cannot produce any
imprescriptible [Art. 1410, Civil Code]; effects effect

Note: This provision does not apply to wills Covers Pars. 1, 2, 4, Covers Pars. 2 & 3,
[Gallanosa v. Arcangel, G.R. No. L-29300 6 & 7, Art. 1409, Art. 1409, Civil Code
(1978)]. Civil Code

e. The inexistence or absolute nullity of a

contract cannot be invoked by a person
whose interests are not directly affected
[Art. 1421, Civil Code].

Note: Art. 1421, Civil Code is subject to

exceptions. For instance, the creditors of a
party to an illegal contract may, under the
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Void vs. Voidable Contracts act constitutes a criminal offense [Art.
Void Voidable 1411, Civil Code]
a. Parties shall have no cause of action
against each other
Those where one of Those where all the b. Both parties shall be prosecuted.
the essential essential requisites c. Things or price of the contract which are
requisites is are present, but considered as effects or instruments of a
wanting, either in consent is vitiated by crime are forfeited in favor of the
fact or in law, or is want of capacity, or by government.
declared void by error, violence,
statute. intimidation, or deceit The act in which the unlawful or forbidden
cause consists does not constitute a
Void; no contract at Valid until annulled criminal offense [Art. 1412, Civil Code]
all
When both When only one of the
May be assailed Must be assailed parties are contracting parties is at
indirectly through an action for at fault fault
that purpose by a
party to the contract, Neither may Guilty Party Innocent
and never by a third recover what Party
person (direct attack) he has given
by virtue of 1. He cannot 1. He may
Nullity may be set- Nullity may only be the contract, recover what demand the
up against anyone set-up against a party or demand he has given return of
who asserts a right thereto. the by reason of what he has
arising from it. performance the contract, given
of the other's
Not susceptible to May be validly ratified undertaking 2. He cannot 2. He is
ratification ask for the without any
fulfillment of obligation to
Action to declare Action for annulment what has comply with
nullity does not prescribes been his promise.
prescribe [Art. 1410, promised
Civil Code] him.

2. Divisibility of Contracts Exceptions to the Principle of In Pari

Trigger: A contract has separate provisions of Delicto:
which only one or more provisions is invalid a. Payment of usurious interest paid in
excess of the interest may be recovered by
Rule: If the illegal terms can be separated from the debtor [Art. 1413, Civil Code].
the legal ones, the latter may be enforced [Art. b. Payment of money or delivery of property
1420, Civil Code] for an illegal purpose, where the party who
paid or delivered repudiates the contract
3. In Pari Delicto Principle (in pari before the purpose has been accomplished,
delicto, non oritur actio) [Art. 1411, or before any damage has been caused to
Civil Code] a third person. May allow the repudiating
Parties to a void agreement cannot expect the party to recover money or property [Art.
aid of the law; the courts leave them as they 1414, Civil Code; Hulst v. PR Builders Inc.,
are, because they are deemed in pari delicto or G.R. No. 156364 (2007)].
"in equal fault" [Menchavez v. Teves, G.R. No. c. Payment of money or delivery of property
153201 (2005)]. made by an incapacitated person. It is not
necessary that the illegal purpose has not
General Rules
been accomplished, or no damage has yet
Nullity proceeds from the illegality of the
been caused [Art. 1415, Civil Code].
cause or object of the contract, and the
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d. Agreement or contract not illegal per se but
merely prohibited by law, and the
prohibition is designed for the plaintiff’s
protection. Plaintiff may recover as
allowing recovery enhances public policy
[Art. 1416, Civil Code].

Note: When the assailed contracts are void

ab initio, Art. 1416 cannot be applied, as in
the case of aliens purchasing property
despite knowing fully well the constitutional
prohibition against foreigners owning land in
the Philippines at the time of purchase
[Frenzel v. Catito, G.R. No. 143958 (2003)].

e. Payment of any amount in excess of the

maximum price of any article or commodity
fixed by law [Art. 1417, Civil Code]
f. Contract whereby a laborer undertakes to
work longer than the maximum number of
hours fixed by law [Art. 1418, Civil Code]
g. Contract whereby a laborer accepts a wage
lower than the minimum wage fixed by law.
He may recover the deficiency with legal
interest, and the employer shall be
criminally liable [Art. 1419, Civil Code].
h. In case of divisible contracts, the legal
portions/terms may be enforced separately
from the illegal portions/terms [Art. 1420,
Civil Code]; and
i. One who lost in gambling because of
fraudulent schemes practiced on him. He is
allowed to recover his losses [Art. 315(3)(b),
RPC] even if gambling is prohibited

The principle of in pari delicto admits of an

exception under Art. 1416, Civil Code.
Recovery for what has been paid or delivered
pursuant to an inexistent contract is allowed
only when the following requisites are met:
a. the contract is not illegal per se but merely
prohibited;
b. the prohibition is for the protection of the
plaintiffs; and
c. if public policy is enhanced thereby
[Acabal v. Acabal, G.R. No. 148376
(2005)].

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NATURAL OBLIGATIONS Natural Civil

Obligations Obligations
I. IN GENERAL
As to Not by court Court action
A. Concept enforceabil- actions, but or the
Natural obligations, not being based on ity by good coercive
positive law but on equity and natural law, do conscience of power of
not grant a right of action to enforce their debtor public
performance, but after voluntary fulfillment by authority
the obligor, they authorize the retention of what
has been delivered or rendered by reason
thereof [Art. 1423, Civil Code]. As to basis Equity and Positive law
natural [Art. 1157,
General Rule: Do not grant a right of action to justice Civil Code]
enforce their performance.

Exception: After voluntary fulfillment, they Natural Obligations Imperfect

authorize the retention of what has been Obligations
delivered/rendered by reason thereof.
Only the Existence of the
In order that there may be a natural obligation performance of the obligation depends
there must exist a juridical tie which is not obligation is left to exclusively upon the
prohibited by law and which in itself could give the will of the debtor judgment of debtor
a cause of action but because of some special
circumstances is actually without legal sanction
or means of enforcing compliance by Natural Obligations Moral Obligations
intervention of courts [Tolentino].

B. Conditions Necessary for There is a juridical tie No juridical tie

between the parties whatsoever
Natural Obligations which is not
enforceable by court
1. That there be a juridical tie between two action.
persons; (this distinguishes it from moral
obligations) and Voluntary fulfillment Voluntary fulfillment
2. That this tie is not given effect by law (this of such produces of such does not
distinguishes it from civil obligations). legal effects which produce any legal
the court will effect which the court
C. Types of Obligations in recognize and will recognize and
protect. protect.
Juridical Science
Within the domain of Within the domain of
1. Moral Obligations – duties of conscience law morals
completely outside the field of law
2. Natural Obligations – duties not
sanctioned by any action but have a
relative judicial effect
3. Civil Obligations – juridical obligations
that are in conformity with positive law but
are contrary to juridical principles and
susceptible of being annulled; enforceable
by action
4. Mixed Obligations – full juridical effect;
falls under civil obligations

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II. CONVERSION TO CIVIL III. EXAMPLES OF NATURAL

OBLIGATIONS OBLIGATIONS
Rule A. Performance after Prescription
Partial payment of a natural obligation does not
make it civil; the part paid cannot be recovered
1. Voluntary Performance by Obligor
but the payment of the balance cannot be
enforced. Article 1424, Civil Code. When a right to sue upon
a civil obligation has lapsed by extinctive
prescription, the obligor who voluntarily performs the
This is applicable only to natural obligations contract cannot recover what he has delivered or the
because of prescription or lack of formalities value of the service he has rendered.
(nullity due to form e.g. Art. 1430) and not to
natural obligations subject to ratification or
confirmation. Requisites
a. There is a civil obligation
Note: Payment by mistake is not voluntary and b. The right to sue upon it has already lapsed
may be recovered. Payment is voluntary when by extinctive prescription
the debtor knew that the obligation is a natural c. Obligor performs contract voluntarily
one. The debtor, however, has the burden of
proving the mistake. Consequence: Obligor cannot recover what
he has delivered or value of the service he
Natural obligations may be converted to rendered. Obligee gains the right to retain what
civil obligations by way of: has been paid.
1. Novation
2. Ratification or confirmation 2. When Third Person Pays the Debt
Article 1425, Civil Code. When without the
Rules on Natural Obligation: knowledge or against the will of the debtor, a third
1. The promise to perform a natural obligation person pays a debt which the obligor is not legally
is as effective as performance itself and bound to pay because the action thereon has
prescribed, but the debtor later voluntarily
converts the natural obligation to a civil reimburses the third person, the obligor cannot
obligation. recover what he has paid.
2. Partial payment of a natural obligation does
not make it civil; the part paid cannot be
recovered, but payment of the balance Requisites (Prescribed Civil Obligation –
cannot be enforced. The exception would Payment to 3rd Person)
be if the natural obligation is susceptible of a. There is a debt
ratification. b. Action upon the debt has prescribed
3. Guaranties for the performance of a natural c. A third person, without the knowledge or
obligation are valid [Art. 2052, Civil Code]. against the will of the debtor, pays the debt
4. In principle, however, natural obligations d. Debtor voluntarily reimburses the third
cannot be guaranteed. The guaranty person
changes the character of obligation. The
debtor impliedly accepts coercive remedies Consequence: Obligor cannot recover what
to enforce the guaranty, and the he has paid.
transformation into civil [Tolentino].
5. Payment of a natural obligation is not B. Contracts Made by a Minor
subject to reduction by reason of
inofficiousness, appearance of children or 1. Minor Voluntarily Returns Payment
ingratitude.
Article 1426, Civil Code. When a minor between
eighteen and twenty-one years of age who has
entered into a contract without the consent of the
parent or guardian, after the annulment of the
contract voluntarily returns the whole thing or price

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received, notwithstanding the fact that he has not 3. Arts. 1426 and 1427, Civil Code,
been benefited thereby, there is no right to demand distinguished
the thing or price thus returned.
Art. 1426 Art. 1427
Note: Majority commences at the age of 18 Presupposes a prior No prior annulment is
years [Art. 234, Family Code, as amended by annulment involved
RA 6809]. This article may no longer have any
application [Tolentino]. Refers to any object Refers to money or
fungible things
Requisites
a. There is a civil obligation Consumption in good Requires
b. Minor between 18 and 21 entered into the faith is not required consumption in good
contract without consent of parent or faith
guardian
c. Obligation is annulled after minor has
received the price or whole thing C. Performance by Winning
d. Minor returns whole thing or price received Party
voluntarily

Consequence: There is no right to demand Article 1428, Civil Code. When, after an action to
enforce a civil obligation has failed the defendant
the thing or price returned. voluntarily performs the obligation, he cannot
demand the return of what he has delivered or the
2. Minor Voluntarily Pays payment of the value of the service he has rendered.
Article 1427, Civil Code. When a minor between
eighteen and twenty-one years of age, who has Requisites
entered into a contract without the consent of the 1. There is a civil obligation
parent or guardian, voluntarily pays a sum of money
or delivers a fungible thing in fulfillment of the 2. An action to enforce such has failed
obligation, there shall be no right to recover the 3. Defendant voluntarily performs the
same from the obligee who has spent or consumed obligation
it in good faith.
Consequence: Defendant cannot demand
Requisites return of what he has delivered or the payment
a. There is a civil obligation of the value of the service.
b. Minor between 18 and 21 entered into the
contract without consent of parent or D. Payment beyond Inheritance
guardian
c. Minor pays a sum of money or delivers a Article 1429, Civil Code. When a testate or
fungible thing voluntarily intestate heir voluntarily pays a debt of the decedent
d. Obligee spends the money or consumes the exceeding the value of the property which he
thing in good faith received by will or by the law of intestacy from the
estate of the deceased, the payment is valid and
cannot be rescinded by the payer.
Consequence: There is no right to recover the
money paid or thing delivered.
Requisites under Art. 1429 (Payment made
Note: It is not the voluntary payment that by Heir)
prevents recovery, but the consumption or 1. Decedent incurred in debt during his lifetime
spending of the thing or money in good faith. 2. Heir voluntarily pays debt
3. Value of debt exceeds value of heir’s
inheritance

Consequence: Payment is valid and heir

cannot rescind it.

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E. Payment of a Void Legacy

Article 1430, Civil Code. When a will is declared

void because it has not been executed in
accordance with the formalities required by law, but
one of the intestate heirs, after the settlement of the
debts of the deceased, pays a legacy in compliance
with a clause in the defective will, the payment is
effective and irrevocable.

Requisites
1. There is a will providing for a legacy
2. The will is declared void because it was not
executed in accordance with the formalities
required by law
3. Heir pays legacy in compliance with a
clause in the defective will

Consequence: Payment is effective and

irrevocable.

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ESTOPPEL D. Estoppel by laches

I. DEFINITION
III. PERSONS BOUND
A condition or state by virtue of which an
admission or representation is rendered Estoppel is effective only as between the
conclusive upon the person making it, and parties thereto or their successors-in-
cannot be denied or disproved as against the interest [Art. 1439, Civil Code].
person relying thereon [Art. 1431, Civil Code].
The government is not estopped by mistake
Estoppel is a bar which precludes a person or error on the part of its officials or agents.
from asserting anything contrary to that
which has been established as the truth, either In Manila Lodge No. 761 Benevolent and
by the acts of judicial or legislative officers or Protective Order of the Elks v. CA [G.R. No. L-
by his own deed or representation, either 41001 (1976)], the sale executed by the City of
express or implied [De Leon]. Manila to Manila Lodge was certainly a
contract prohibited by law, and that estoppel
II. KINDS OF ESTOPPEL cannot be urged even if the City of Manila
accepted the benefits of such contract of sale
and the Manila Lodge No. 761 had performed
A. Equitable Estoppel or Estoppel in
its part of the agreement, for to apply the
pais [Art. 1433, Civil Code] doctrine of estoppel against the City of Manila
in this case would be tantamount to enabling it
1. Estoppel by silence [Art. 1437, Civil Code] to do indirectly what it could not do directly.
2. Estoppel by acceptance of benefits

B. Technical Estoppels

1. Estoppel by Deed – a party to a deed is

precluded from asserting as against the
other party, a material fact asserted therein;
[Art. 1433, Civil Code]
2. Estoppel by Record – a party is precluded
from denying the truth of the matters set
forth in a record whether judicial or
legislative and also to deny the facts
adjudicated by a court of competent
jurisdiction.

C. Estoppel by Judgment

A party to a case is precluded from denying the

facts adjudicated by a court of competent
jurisdiction.

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IV. CASES WHERE D. Contract between third

ESTOPPEL APPLIES persons concerning immovable
property where one of them is
A. Sale or alienation of a thing misled by a person with respect
which does not belong to the to the ownership or real right
seller or grantor and later on over the real estate [Art. 1437,
acquire title thereto [Art. 1434, Civil Code]
Civil Code]
Requisites:
Requisites: 1. There must be fraudulent representation or
1. The seller or grantor is not the owner of a wrongful concealment of facts known to the
thing party estopped;
2. The person sells or alienates and delivers it 2. The party precluded must intend that the
to another other should act upon the facts as
3. The person later on acquires title to the misrepresented;
thing 3. The party misled must have been unaware
of the true facts; and
Effect: Title passes by operation of law to the 4. The party defrauded must have acted in
buyer or grantee. accordance with the misrepresentation

Effect: The guilty party is precluded from

B. Agent sells or alienates a asserting his legal title or interest therein,
thing [Art. 1435, Civil Code] provided all these requisites are present.

Requisite: Person in representation of another E. One who has allowed another

sells or alienates a thing
to assume apparent ownership
Effect: The person cannot set up his own title of personal property for the
as against the buyer or grantee. purpose of making any transfer
of it, cannot, if he received the
C. Title of the lessee or bailee
sum for which a pledge has been
against the lessor or bailor [Art.
constituted, set up his own title
1436, Civil Code]
to defeat the pledge of the
Requisite: There exists a lessor-lessee property, made by the other to a
relationship pledgee who received the same
Effect: The lessee or bailee is estopped from
in good faith and for value [Art.
asserting title to the thing leased or received. 1438, Civil Code]

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IV. LACHES
Laches is the failure or neglect for an
unreasonable and unexplained length of
time to do that which, by exercising due
diligence, could or should have been done
earlier; it is negligence or omission to assert a
right within a reasonable time, warranting a
presumption that the party entitled to assert
it either has abandoned it or declined to
assert it [Pangasinan v. Disonglo-Almazora,
G.R. No. 200558 (2015)].

Elements [Pangasinan v. Disonglo-Almazora,

supra]
1. Conduct on the part of the defendant, or of
one under whom he claims, giving rise to
the situation of which complaint is made for
which the complaint seeks a remedy;
2. Delay in asserting the complainant’s
rights, the complainant having had
knowledge or notice, of the defendant’s
conduct and having been afforded an
opportunity to institute a suit;
3. Lack of knowledge or notice on the part
of the defendant that the complainant
would assert the right on which he bases his
suit; and
4. Injury or prejudice to the defendant in the
event relief is accorded to the complainant,
or the suit is not held to be barred.

Prescription Laches

Concerned with the fact of delay Concerned with the effect of delay

Question or matter of time Question of inequity of permitting the claim to be

enforced

Statutory Not statutory

Applies in law Applies in equity

Cannot be availed of unless it is specifically Being a defense in equity, it need not be

pleaded as an affirmative allegation specifically pleaded

Based on a fixed time Not based on a fixed time

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TRUSTS CIVIL LAW

TRUSTS
I. IN GENERAL
A. Definition
A trust is the legal relationship between one person having an equitable ownership of property and
another person owning the legal title to such property, the equitable ownership of the former entitling
him to the performance of certain duties and the exercise of certain powers by the latter [Estate of
Cabacungan v. Laigo, G.R. No. 175073 (2011)].

B. Characteristics of Trust
1. It is a relationship
2. The relationship is of fiduciary character
3. The relationship is with respect to property, not one involving merely personal duties
4. It involves the existence of equitable duties imposed upon the holder of the title to the property to
deal with it for the benefit of another
5. It arises as a result of a manifestation of intention to create the relationship

C. Distinguished from Other Concepts

Trust Stipulation pour autrui

Refers to a specific property Involves any stipulation in favor of a third person

Trust Condition

Performance of trust is enforceable Performance or accomplishment is not

enforceable

Trust Guardianship or Executorship

Trustees has legal title to the property Guardians or Executors do not have legal title but
mere actual possession and limited powers over
the property

Trust Contract

Always involves ownership, embracing a set of A legal obligation based on an undertaking

rights and duties fiduciary in character, which may supported by a consideration, which obligation
be created by a declaration without consideration may or may not be fiduciary in character.

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Trust Debt

The beneficiary of a trust has a beneficial interest A creditor has merely a personal claim against the
in the trust property. debtor.

There is a fiduciary relationship between a trustee There is no fiduciary relationship between a

and a beneficiary. debtor and a creditor.

Trust Sale

An express trust is not perfected by mere Seller obliges himself to transfer ownership and
consent, but requires the actual delivery of the deliver possession to the buyer
naked or legal title to the trustee for the
relationship of legality to arise.

Trustee in an express trust only takes naked or Buyer takes full ownership of the subject matter
legal title and for the benefit of another person, for his sole benefit.
the beneficiary.

Constituted merely as a preparation, Entered into for its own end, the acquiring of title
arrangement, medium, by which the trustee is of the subject matter by the buyer.
expected to pursue other juridical acts for the
benefit of the beneficiary.

Trust Lease

Naked title is transferred to the trustee; full Lessor retains naked title.
beneficial ownership is for the account of the
beneficiary.

Essence of the contract is for the trustee to Essence of the contract is the enjoyment of the
manage the rust property as the legal title holder possession and use of the leased property.
for benefit or interest of the beneficiary.

Benefits enjoyed by the beneficiary are usually Benefits enjoyed by the lessee are only for a
of a permanent nature. limited contracted period.

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Trust Donation

An existing legal relationship which involves the There is a transfer of property as well as the
separation of legal and equitable title disposition of both legal and equitable ownership
except in cases of gifts in the trust.

The beneficiary of a trust may demand The donee must comply with the legal
performance of the obligation without having requirements in accepting donations.
formally accepted the benefit of the trust in public
document, upon mere acquiescence in the
formation of the trust and acceptance under the
second paragraph of Art. 1311.

II. GOVERNING RULES Trust is created:

1. By declaration of the trustor or settlor that
he holds property in trust,
The principles of the general law of trusts
2. By conveyance to the trustee,
insofar as they are not in conflict with this Code,
3. Inter vivos, or
the Code of Commerce, the Rules of Court and
4. By testament.
special laws are hereby adopted [Art. 1442,
Civil Code].
Proof Required:
1. No express trusts concerning an immovable
III. PARTIES or any interest therein may be proved by
parol evidence [Art. 1443, Civil Code].
1. Trustor – the person who establishes the Trusts over real property are unenforceable
trust unless in writing, although writing is not
2. Trustee – one in whom the confidence is required for validity, only for proof
reposed as regards property for the benefit 2. Where the trust is over personal property,
of another person an oral trust is sufficient between the
3. Beneficiary or cestui que trust – person parties.
for whose benefit the trust has been 3. But to bind third persons the trust must be
created [Art. 1440, Civil Code] in a public instrument [Art. 1358 (1) & (3),
Civil Code]
IV. KINDS OF TRUST Form of Express Trusts
No particular words are required for the
A. Express Trust creation of an express trust, it being sufficient
that trust is clearly intended [Art. 1444, Civil
Created by the intention of the trustor or of the Code].
parties [Art. 1441, Civil Code]
Want of Trustee
Elements: No trust shall fail because the trustee
1. Competent trustor or settlor appointed declines the designation, unless the
2. Trustee contrary should appear in the instrument
3. Ascertainable trust res / Trust property constituting the trust [Art. 1445, Civil Code].
4. Sufficiently certain beneficiaries

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Acceptance by beneficiary declarations. Trustworthy evidence is required
Acceptance by beneficiary is necessary [Art. because oral evidence can easily be fabricated
1446, Civil Code]. It may be: [Morales v. Court of Appeals, G.R. No. 117228
1. Express (1997)].
2. Implied – acceptance by the beneficiary is
not subject to the formal rules of Kinds of Implied Trusts
donations [Cristobal v. Gomez, G.R. No. L- 1. Resulting Trusts
27014 (1927)] A trust raised by implication of law and
3. Presumed – if the trust imposes no onerous presumed to have been contemplated by the
condition upon the beneficiary parties, the intention as to which is to be found
in the nature of their transaction, but not
Termination of Express Trusts expressed in the deed or instrument of
1. Revocation or modification by the trustor conveyance [Salao v. Salao, G.R. No. L- 26699
under a reserved power (1976)].
2. Rescission
3. Expiration of the period or happening of the Rules on Resulting Trusts
resolutory condition a. There is an implied trust when property is
4. Accomplishment of the purpose or its sold, and the legal estate is granted to one
becoming impossible or illegal party but the price is paid by another for the
5. Dissolution by the Court if continuation will purpose of having the beneficial interest of
defeat the purpose of the trust the property. The former is the trustee, while
6. Dissolution by the consent of all the the latter is the beneficiary. However, if the
beneficiaries and/or the settlor person to whom the title is conveyed is a
7. Merger child, legitimate or illegitimate, of the one
paying the price of the sale, no trust is
B. Implied Trust implied by law, it being disputably presumed
that there is a gift in favor of the child [Art.
Implied trusts come into being by operation of 1448, Civil Code].
law [Art. 1441, Civil Code]. b. There is also an implied trust when a
donation is made to a person but it appears
The essential idea involves a certain that although the legal estate is transmitted
antagonism between the cestui que trust and to the donee, he nevertheless is either to
the trustee even where the trust has not arisen have no beneficial interest or only a part
out of fraud or an immoral transaction [Reyes] thereof [Art. 1449, Civil Code].
c. When land passes by succession to any
Proof required person and he causes the legal title to be
An implied trust may be proved by oral put in the name of another, a trust is
evidence [Art. 1457, Civil Code]. established by implication of law for the
benefit of the true owner [Art. 1451, Civil
A trust must be proven by clear, satisfactory Code].
and convincing evidence. It cannot rest on d. If two or more persons agree to purchase
vague and uncertain evidence or on loose, property and by common consent the legal
equivocal or indefinite declarations [De Leon v. title is taken in the name of one of them for
Molo-Peckson, G.R. No. L-17809 (1962)]. the benefit of all, a trust is created by force
of law in favor of the others in proportion to
As a rule, the burden of proving the existence the interest of each [Art. 1452, Civil Code].
of a trust is on the party asserting its existence, e. When property is conveyed to a person in
and such proof must be clear and satisfactorily reliance upon his declared intention to hold
show the existence of the trust and its it for, or transfer it to another or the grantor,
elements. While implied trusts may be proved there is an implied trust in favor of the
by oral evidence, the evidence must be person whose benefit is contemplated [Art.
trustworthy and received by the courts with 1453, Civil Code].
extreme caution, and should not be made to
rest on loose, equivocal or indefinite
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Express and Implied Trust Distinguished
Express Trust Implied Trust

As to Creation Created by the intention of the trustor Comes into being by operation of law.
or the parties.
Those, without being expressed, are
Created by the direct and positive acts deductible from the nature of the
of the parties by some writing or deed transaction by operation of law as
or will or by words evidencing an matters of equity, independent y of the
intention to create a trust. particular intention of the parties.

As to Proof An express trust over an immovable An implied trust may be proved by oral
property or any interest therein cannot evidence
be proved by parol evidence

As to Action must be made within 10 years In resulting trust: Action must be

Prescription from knowledge of the repudiation, made within 10 years from knowledge
otherwise prescribed. of repudiation, otherwise prescribed.

In constructive trust: It must be

made within 10 years from date of
registration.

As to Laches An express repudiation made known In constructive trusts, even if

to the beneficiary is necessary in there is no repudiation, laches may
order that laches or acquisitive bar an action to enforce an implied
prescription may bar an action to trust
enforce an express trust.
Exception: If there is concealment.

As to Suability Trustee can sue and be sued alone Trustee cannot sue and be sued
[PAL, Inc. v. Heald Lumber Co., G.R. alone.
No. L-11497 (1957)]

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2. Constructive Trusts
A trust not created by any words, either
expressly or impliedly evincing a direct
intention to create a trust, but by the
construction of equity in order to satisfy the
demands of justice [Salao v. Salao, G.R. No.
26699 (1976)].

Rules on Constructive Trusts

a. If the price of a sale of property is loaned or
paid by one person for the benefit of another
and the conveyance is made to the lender
or payor to secure the payment of the debt,
a trust arises by operation of law in favor of
the person to whom the money is loaned or
for whom it is paid. The latter may redeem
the property and compel a conveyance
thereof to him [Art. 1450, Civil Code].
b. If an absolute conveyance of property is
made in order to secure the performance of
an obligation of the grantor toward the
grantee, a trust by virtue of law is
established. If the fulfillment of the
obligation is offered by the grantor when it
becomes due, he may demand the
reconveyance of the property to him [Art.
1454, Civil Code].
c. When any trustee, guardian or other person
holding a fiduciary relationship uses trust
funds for the purchase of property and
causes the conveyance to be made to him
or to a third person, a trust is established by
operation of law in favor of the person to
whom the funds belong [Art. 1455, Civil
Code].
d. If property is acquired through mistake or
fraud, the person obtaining it is, by force of
law, considered a trustee of an implied trust
by prescription, the title thereto may be
attacked, either directly or collaterally, by
the State which is not bound by any
prescriptive period provided by the Statute
of Limitation [Martinez v. CA, G.R. No. L-
31271 (1974)].

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QUASI-CONTRACTS A. Obligations of a Gestor

I. IN GENERAL 1. Observe the requisite standard of
diligence
A quasi-contract is that juridical relation
resulting from a lawful, voluntary and unilateral Article 2145, Civil Code. The officious manager
must perform his duties with all the diligence of a
act, and which has for its purpose the payment good father of a family, and pay the damages which
of indemnity to the end that no one shall be through his fault or negligence may be suffered by
unjustly enriched or benefited at the expense the owner of the property or business under
of another [Art. 2142, Civil Code]. management.

Based on presumed will or intent of the obligor The courts may, however, increase or moderate the
indemnity according to the circumstances of each
dictated by equity and by the principles of case.
absolute justice [Padcom v. Ortigas Center,
G.R. No. 146807 (2002)].
2. Liability in the management of the
Consent is absent in quasi-contracts. They are property
voluntary and unilateral [Casis]. Solidary liability
The officious manager is liable for the acts of
II. NEGOTIORUM GESTIO the persons to whom he delegated all or some
of his duties. The responsibility of two or more
(UNAUTHORIZED gestors shall be solidary, unless the
MANAGEMENT) management was assumed to save the thing
or business from imminent danger [Art. 2146,
Negotiorum gestio takes place when a person Civil Code].
voluntarily takes charge of another’s
abandoned business or property without the Note: This is without prejudice to the direct
owner’s authority [Art. 2144, Civil Code]. As a obligation of the delegate to the owner of the
rule, reimbursement must be made to the business.
gestor (i.e., one who carried out the business)
for necessary and useful expenses. Liability for fortuitous events
The officious manager is liable for any
Requisites: fortuitous event under the following conditions:
1. Person voluntary takes charge; a. If he undertakes risky operations which the
2. Takes charge of the agency or management owner was not accustomed to embark upon
of a business or property belonging to b. If he has preferred his own interest to that of
another; the owner
3. Property or business is neglected or c. If he fails to return the property or business
abandoned; and after demand of the owner
4. Manager has not been tacitly authorized by d. If he assumed management in bad faith [Art.
the owner. 2147, Civil Code]
e. If he is manifestly unfit to carry on the
The obligation does not arise: management
1. When the property or business is not f. If by his intervention he prevented a more
neglected or abandoned; competent person from taking up the
2. If in fact the manager has been tacitly management [Art. 2148, Civil Code].
authorized by the owner.
Note: The gestor shall not be liable for (e) and
In the first case, the provisions of Arts. 1317, (f) if the management was assumed to save the
Par. 1, 1403, and 1404, Civil Code regarding property or business from imminent danger.
unauthorized contracts shall govern. In the
second case, the rules on agency shall be Personal liability
applicable [Art. 2144, Civil Code]. Be personally liable for contracts which he
entered into with third persons, even though he
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acted in the name of the owner, and there shall 3. By the death, civil interdiction, insanity or
be no right of action between the owner and insolvency of the owner or the gestor [Art.
third persons. 2153, Civil Code].

The gestor shall NOT be personally liable for

such contracts, provided:
a. The owner has expressly or tacitly ratified
the management, or
b. When the contract refers to things
pertaining to the owner of the business [Art.
2152, Civil Code].

B. Obligations of the Owner of

the Property or Business
Although the management was not expressly
ratified, the owner who enjoys the advantages
of the same shall:
1. Be liable for the obligations incurred in his
interest
2. Reimburse the gestor for the necessary and
useful expenses and for the damages the
latter may have suffered in the performance
of his duties

The above obligations shall be incumbent upon

the owner if the management had for its
purpose the prevention of an imminent and
manifest loss, although no benefit may have
been derived [Art. 2150, Civil Code].

The owner would still be liable, even if the

owner did not derive any benefit and there was
no imminent and manifest danger to the
property or business, provided:
1. The gestor has acted in good faith; and
2. The property or business is intact, ready to
be returned to the owner [Art. 2151, Civil
Code].

C. Effect of Ratification

Article 2149, Civil Code. The ratification of the

management by the owner of the business produces
the effects of an express agency, even if the
business may not have been successful.

D. Extinguishment of Management
1. When the owner repudiates or puts an end
thereto
2. When the gestor withdraws from the
management, subject to Art. 2144
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III. SOLUTIO INDEBITI If the owner, in spite of such information, does

not claim it within the period of one month, the
(UNDUE PAYMENT) payee shall be relieved of all responsibility by
returning the thing deposited to the payor.
Solutio indebiti takes place when something is
received when there is no right to demand it, If the payee has reasonable grounds to believe
and it was unduly delivered through mistake. that the thing has not been lawfully acquired by
The recipient has the duty to return it [Art. 2154, the payor, the former may return the same
Civil Code]. [Arts. 2158 & 1984, Civil Code].

A. Requisites E. Liability of Payee

1. Something has been unduly delivered If in bad faith, he shall be liable:
through mistake; and 1. For legal interest if a sum of money is
2. Something was received when there was no involved, or
right to demand it [Metrobank v. Absolute 2. For the fruits received or which should have
Management Corp., G.R. No. 170498 been received if the thing produces fruits,
(2013)] and
3. For any loss or impairment of the thing for
This situation may cover payment by reason of any cause, and
a mistake in the construction or application of a 4. For damages to the person who delivered
doubtful or difficult question of law [Art. 2155, the thing, until it is recovered [Art. 2159,
Civil Code]. Civil Code].

The Government also comes within the scope If in good faith, he shall be liable:
of solutio indebiti. Tax refunds are based on 1. For the impairment or loss of the thing
such [CIR v. Acesite, G.R. No. 147295 (2007)]. certain and determinate or its accessories
and accessions insofar as he has thereby
B. When Debt not yet Due been benefited.
2. For the return of the price or assign the
If the payer was in doubt whether the debt was action to collect the sum if he has alienated
due, he may recover if he proves that it was not the same [Art. 2160, Civil Code].
due [Art. 2156, Civil Code].
F. Exemption from the
C. Responsibility of Two or More Obligation to Restore the
Payees Payment Unduly Made
When there has been payment of what is not A person who, believing in good faith that the
due, their responsibility is solidary [Art. 2157, payment was being made of a legitimate and
Civil Code]. subsisting claim,
1. destroyed the document, or
D. When Money or Thing 2. allowed the action to prescribe, or
3. gave up the pledges, or
Delivered is Owned by Third 4. cancelled the guaranties for his right shall be
Person exempt from the obligation to restore.

The payee cannot demand that the payor The person who paid unduly may proceed only
prove his ownership of the thing delivered. against the true debtor or the guarantors with
Nevertheless, should he discover that the thing regard to whom the action is still effective [Art.
has been stolen and who its true owner is, he 2162, Civil Code].
must advise the latter.

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G. Presumption of Payment by
Mistake, Defense
The presumption of payment by mistake arises
if something which had never been due or had
already been paid was delivered; but he from
whom the return is claimed may prove that the
delivery was made out of liberality or for any
other just cause [Art. 2163, Civil Code].

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IV. OTHER QUASI- undertakes to do the necessary work,

even over his objection, he shall be liable to
CONTRACTS pay the expenses [Art. 2169, Civil Code].

1. When, without the knowledge of the person 7. When by accident or other fortuitous
obliged to give support, it is given by a event, movables separately pertaining to
stranger, the latter shall have a right to two or more persons are commingled or
claim the same from the former, unless it confused, the rules on co-ownership shall
appears that he gave it out of piety and be applicable [Art. 2170, Civil Code].
without intention of being repaid [Art. 2164,
Civil Code]. 8. The rights and obligations of the finder of
lost personal property shall be governed
2. When the person obliged to support an by Arts. 719-720, Civil Code [Art. 2171, Civil
orphan, or an insane or other indigent Code].
person unjustly refuses to give support to
the latter, any third person may furnish 9. The right of every possessor in good faith
support to the needy individual, with the to reimbursement for necessary and
right of reimbursement from the person useful expenses is governed by Art. 546,
obliged to give support. The provisions of Civil Code [Art. 2172, Civil Code].
this article apply when the father or mother
of a child under eighteen years of age Note: Possessor in good faith may retain the
unjustly refuses to support him [Art. 2166, thing until he has been reimbursed [Casis].
Civil Code].
10. When a third person, without the
3. When funeral expenses are borne by a knowledge of the debtor, pays the debt,
third person, without the knowledge of the rights of the former are governed by
those relatives who were obliged to give Arts. 1236 and 1237, Civil Code [Art. 2173,
support to the deceased, said relatives shall Civil Code].
reimburse the third person, should the latter
claim reimbursement [Art. 2165, Civil Code]. Note: Cannot compel the creditor to
subrogate him in his rights.
Note: Only necessary expenses. The third
person must claim [Casis]. 11. When in a small community, a majority of
the inhabitants of age decide upon a
4. When through an accident or other cause a measure for protection against
person is injured or becomes seriously ill, lawlessness, fire, flood, storm or other
and he is treated or helped while he is not calamity, anyone who objects to the plan
in a condition to give consent to a contract, and refuses to contribute to the expenses
he shall be liable to pay for the services of but is benefited by the project as executed
the physician or other person aiding him, shall be liable to pay his share of said
unless the service has been rendered out of expenses [Art. 2174, Civil Code].
pure generosity [Art. 2167, Civil Code].
12. Any person who is constrained to pay the
5. When during a fire, flood, storm, or other taxes of another shall be entitled to
calamity, property is saved from reimbursement from the latter [Art. 2175,
destruction by another person without the Civil Code].
knowledge of the owner, the latter is bound
to pay the former just compensation [Art. Note: The list of quasi-contracts in the Civil
2168, Civil Code]. Code is not exhaustive. A quasi-
contractual relation may be forced upon
6. When the government, upon the failure of the parties to prevent unjust enrichment
any person to comply with health or safety [PNB v. Court of Appeals, G.R. No. 97995
regulations concerning property, (1993)].

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CIVIL LAW
SALES CIVIL LAW

I. NATURE AND FORM a. Must be licit

● Within the commerce of man
Contract of Sale – one of the contracting ● When right is not intransmissible [Art. 1347,
parties obligates himself to transfer the Civil Code]
ownership and to deliver a determinate thing, ● It does not contemplate a future inheritance,
and the other to pay therefor a price certain in unless expressly authorized by law
money or its equivalent [Art. 1458, Civil Code]. ● Example of illicit things per se (of its nature)
and per accidens (due to provisions of law)
○ Sale of animals if the use or service for
A. Essential requisites [Art. which they are acquired has been stated
1318, Civil Code] in the contract, and they are found to be
unfit therefor [Art. 1575, Civil Code]
1. Consent of contracting parties ○ Sale of animals suffering from
2. Object certain which is the subject matter contagious diseases [Art. 1575, Civil
of the contract Code]
3. Cause of the obligation which is ○ Sale of future inheritance is void [Art.
established 1347, Civil Code]
○ Sale of land in violation of Constitutional
1. Consent of contracting parties prohibition against the transfer of lands
Consent refers to seller’s consent to transfer to aliens [Art. XII of Constitution]
ownership of, and deliver, a determinate thing,
and to buyer’s consent to pay the price certain. b. Existing, Future, Contingent
● Existing goods owned or possessed by the
Being a consensual contract, the contract of seller;
sale is perfected at the moment there is a ● Goods to be manufactured, raised, OR
“meeting of the minds” upon the thing which is acquired by the seller – “Future Goods;”
the object of the contract and upon the price [Art. 1462, Civil Code]
[Art. 1475, Civil Code]. ● Things having potential existence may be
the object of a contract of sale [Art. 1461,
Can there be sales without consent? Civil Code].
a. Expropriation [Art. 1488, Civil Code]
b. Ordinary Execution Sale [Rule 39, Sec. A sale may be made of a thing which, though
15, Rules of Court] not yet actually in existence is reasonably
c. Judicial Foreclosure Sale [Rule 68, Rules certain to come into existence as the natural
of Court], and increment or usual incident of something in
d. Extra-Judicial Foreclosure Sale [Act. existence already belonging to the seller, and
3135, as amended] the title will vest in the buyer the moment the
thing comes into existence [Sibal v. Valdez,
Special Case G.R. No. L-26278 (1927)].
If the sale involves the conjugal property of
spouses, consent must be given by both.

2. Object certain which is the subject

matter of the contract
The things must be licit and the vendor must
have a right to transfer the ownership thereof
at the time it is delivered [Art. 1459, Civil Code].

Requisites of a Valid Subject Matter

[Arts. 1459-1465, Civil Code]
a. Licit
b. Existing, Future, Contingent
c. Determinate or determinable

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Sale of Things Having Potential c. Determinate or Determinable

Existence Determinate
When it is particularly designated or physically
Emptio Rei Emptio Rei Spei segregated from all others of the same class
Speratei [Art. 1460, Civil Code].

Mere Hope Vain Hope Determinable

When it is capable of being made determinate
at the time the contract was entered into
Sale of a Sale of a Sale of a without the necessity of a new or further
thing MERE HOPE VAIN HOPE agreement between the parties [Art. 1460, Civil
expected or or expectancy or Code].
future thing expectancy
3. Cause of the obligation which is
Valid General Rule: Exception: established
Valid Void This refers to the “price certain in money or its
equivalent” [Art. 1458, Civil Code]. It does not
include goods or merchandise although they
Example: Example: Example: have their own value in money.
Sale of the Sale of a valid Sale of a
grain a field lottery ticket fake lottery However, the words “its equivalent” have been
may grow in ticket interpreted to mean that payment need not be
a given time in money, so that there can be a sale where the
thing given as token of payment has “been
Deals with a Deals with a thing that assessed and evaluated and [its] price
future thing currently exists – the hope or equivalent in terms of money [has] been
that is expectancy determined” [De Leon].
currently not
in existence a. Requisites of a valid price
1. Certain or ascertainable at the time of
Subject to Not subject to any condition; perfection
the condition The contract comes into 2. In money or its equivalent
that the thing existence immediately ● If price is partly in money and partly
will exist in another thing: determine manifest
intention of the parties to see whether
it was barter or sale [Art. 1468, Civil
Future thing Code]
is certain as ● If intention does not clearly appear:
to itself, but it shall be considered a barter if the
uncertain as value of the thing exceed the amount of
to quantity money or its equivalent [Art. 1468, Civil
and quality Code]
3. Real
● When buyer has an intention to pay
In case of doubt, the presumption is in favor and the seller has an expectation to
of emptio rei speratae since it is more in receive the price
keeping with the commutative character of ● If simulated: Sale is VOID; BUT act
the contract. may be shown to have been a donation
or some other act or contract [Art.
1471, Civil Code]
● If price is false: when the real
consideration is not the price stated in
the contract:
○ Sale is void
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■ UNLESS proved to be founded it may indicate a defect in consent [Bagnas v.
on another true and lawful price CA, G.R. No. L-38498 (1989)].
[Art. 1353, Civil Code]
General Rule: Does not affect a contract of
b. How price is determined/when certain sale’s validity [Art. 1470, Civil Code].
1. Fixed by agreement of the parties and
cannot be left to the discretion of one of the Exceptions:
parties – BUT if such is accepted by the 1. In Voluntary sales
other, sale is perfected [Art. 1473, Civil ● Where low price indicates a vice of
Code]. consent, sale may be annulled.
2. Determination is left to the judgment of a ● Where price is so low to be shocking to
specified person. the conscience (fraud, mistake, undue
influence), then sale may be set aside.
General Rule: Price fixed by 3rd persons ● Where price is simulated such as when
designated by the parties is binding upon them. the real intention was a donation or
some other contract.
Exceptions: ● Where the parties did not intend to be
● If 3rd person is unable or unwilling: Sale is bound at all, sale is void.
inefficacious unless parties subsequently 2. In Involuntary sales
agree about the price. ● A judicial or execution sale is one made
● If 3rd person fixed the price in bad faith/by by a court with respect to the property
mistake: Courts may fix price (but mere of a debtor for the satisfaction of his
error in judgment cannot serve as basis for indebtedness.
impugning price fixed). ● Rescissible contracts of sale -
● If 3rd person is prevented from fixing price Inadequacy of price is a ground for
by fault of seller or buyer: Innocent party rescission of conventional sale under
may avail of remedies (rescission or Art. 1381 (a) and (b), Civil Code.
fulfillment of obligation, with damages).
● If 3rd person disregards specific d. When no price agreed
instructions/data/procedure, thereby fixing 1. Sale is inefficacious [Art. 1474, Civil Code]
an arbitrary price. 2. But if the thing or part thereof has been
● The price is made in reference to another delivered and appropriated by the buyer,
thing, or when the price fixed is the price of he must pay a reasonable price therefore
the commodity on a definite day, or in a ● What is a reasonable price is a
particular exchange or market, or when the question of fact dependent on the
amount fixed is above or below the price on circumstances of each particular case
such day, exchange or market [Art. 1472, [Art. 1474, Civil Code]
Civil Code]. ● The reasonableness of a price may be
determined on the basis of a
General Rule: When the price is not certain, company’s balance sheet showing the
the contract is without effect and no obligation book value or fair market value of its
arises from it. shares [Philippine Free Press v. CA,
G.R. No. 132864 (2005)]
Exception: When the thing is already 3. Generally, the reasonable price is the
delivered, the buyer must pay a reasonable market price at the time and place fixed by
price therefor. This exception only arises when the contract or by law for delivery of goods
the means contemplated by the parties for
fixing the price have become ineffectual. e. False price vs. simulated price
c. Inadequacy of price False Price Simulated Price
The stipulation in a contract of sale which
states that the consideration is “PhP1 and
other valuable considerations” does not make Price stated in the Price stated in the
the contract void. Gross inadequacy of price contract is not the contract is not
does not affect the contract of sale except that intended to be paid.
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true price. Parties Parties never Status of Contract with regard to Price
intended to be bound. intended to be
bound.
Void 1. Parties did not agree on
Effect: Effect: price
Binds the parties to Void for lack of 2. Fixing of price left to one
their real agreement cause/consideration contracting party and
when it does not , but can be shown other party does not
prejudice 3rd persons as a donation or accept
and is not intended some other contract. 3. Lack of cause or
for any purpose Parties may recover consideration
contrary to law, from each other 4. Involuntary judicial sale
morals, public policy, what they may have where price is so low and
etc. given under the shocking
contract. • EXC: right to
repurchase
available
f. Earnest money vs. option money 5. Voluntary sale where
Earnest Money – paid in advance of the price is so low it is
purchase price agreed upon by the parties in a shocking
contract of sale, given by the buyer to the • But may be
seller, to bind the latter to the bargain. declared equitable
mortgage
Option Money Earnest Money 6. Simulated price
• But may be
declared donation
Separate and distinct Part of purchase 7. Unlawful Price
consideration from the price [Art. 1482,
purchase price Civil Code] Inefficacious 1. Price cannot be
determined
2. Third party is unable
Given when sale is Given only when to fix price and the
not yet perfected there is already a parties do not agree on
sale the price

Voidable 1. Low price indicates a

When given, the When given, the defect in the consent
would-be-buyer is not buyer is bound to
required to buy, but pay the balance Rescissible 1. Guardian lesion
may even forfeit it contracts
depending on the
terms of the option Valid 1. Fixing of price left to
one contracting party
Grantee of option is Buyer manifests his and other party accepts
still undecided earnest desire to 2. Third party is unable
whether or not to buy buy the property to fix price and the
or sell the property parties agree on the
[Baviera] price
3. Third party acted in
bad faith or by mistake in
[Limson v. CA, G.R. No. 135929 (2001)] fixing the price (but the
court may fix the price)

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4. False (relatively 2. Option contracts

simulated contract) or Option
mistake price An accepted unilateral promise to buy or to sell
a determinate thing for a price certain is binding
upon the promisor if the promise is supported
B. Perfection by a consideration distinct from the price [Art.
1479(2), Civil Code; De Leon].
1. Meeting of Minds
Separate Consideration
Article 1475, Civil Code. The contract of sale is A consideration for an optional contract is just
perfected at the moment there is a meeting of minds
upon the thing which is the object of the contract and
as important as the consideration for any other
upon the price. kind of contract. If there was no consideration
for the contract of option, then it cannot be
From that moment, the parties may reciprocally enforced any more than any other contract
demand performance, subject to the provisions of where no consideration exists [Enriquez dela
the law governing the form of contracts. Cavada v. Diaz, G.R. No. 11668 (1918)].

Essential elements of a perfected contract The option is not the contract of sale itself. The
of sale. There must be a meeting of minds optionee has the right, but not the obligation, to
a. Upon the thing which is the object of the buy. Once the option is exercised timely, i.e.,
contract [Art. 1475, Civil Code] the offer is accepted before a breach of the
b. Upon the price [Art. 1475, Civil Code], and option, a bilateral promise to sell and to buy
c. Upon the manner of payment [Toyota ensues and both parties are then reciprocally
Shaw Inc. v. CA, G.R. No. L-116650 bound to comply with their respective
(1995)]. undertakings [Ang Yu v. CA, G.R. No. 109125
(1994)].
Offer and Acceptance
● The offer must be certain and the The offeror is still free and has the right to
acceptance absolute [Art. 1319, Civil withdraw the offer:
Code]. ● If the period is not itself founded upon or
● The person making the offer may fix the supported by a consideration and
time, place, and manner of acceptance, all withdrawn before its acceptance.
of which must be complied with [Art. 1321, ● If an acceptance has been made, before
Civil Code]. the offeror's coming to know of such fact,
● An offer becomes ineffective upon the by communicating that withdrawal to the
death, civil interdiction, insanity, or offeree.
insolvency of either party before
acceptance is conveyed [Art. 1323, Civil Breach of contract
Code]. It will be a breach of contract when the offer
● When the offerer has allowed the offeree was withdrawn during the agreed period if the
a certain period to accept, the offer may be period has separate consideration since the
withdrawn at any time before acceptance contract of “option is deemed perfected.”
by communicating such withdrawal,
except when the option is founded upon a 3. Right of first refusal
consideration, as something paid or While the object might be made determinate,
promised [Art. 1324, Civil Code]. the exercise of the right, however, would be
● Unless it appears otherwise, business dependent not only on the grantor's eventual
advertisements of things for sale are not intention to enter into a binding juridical relation
definite offers, but mere invitations to with another but also on terms, including the
make an offer [Art. 1325, Civil Code]. price, that obviously are yet to be later firmed
up.

Even on the premise that such right of first

refusal has been decreed under a final

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judgment, like here, its breach cannot justify
Contract of Sale Contract to sell
correspondingly an issuance of a writ of
execution under a judgment that merely
recognizes its existence, nor would it sanction Ownership is Ownership is only
an action for specific performance without transferred upon transferred upon full
thereby negating the indispensable element of delivery payment of price
consensuality in the perfection of contracts
[Ang Yu v. CA, G.R. No. 109125 (1994)].
Non-payment is a Full payment is a
4. Mutual promise to buy and sell resolutory condition positive suspensive
The obligation is not to enter into a sale, but condition; hence
rather to negotiate in good faith for the non-payment would
possibility of entering into a sale. When the not give rise to the
promisor has in fact negotiated in good faith, obligation to transfer
but the parties’ minds could not meet on the ownership
price and the terms of payment, then promisor
has complied with his obligation [Villanueva].
Conditional Contract to sell
C. Contract of Sale v. Contract to Contract of Sale
Sell
Sale is already No perfected sale yet
Contract to Sell perfected
Article 1478, Civil Code: The parties may stipulate
that ownership in the thing shall not pass to the
purchaser until he has fully paid the price. A subsequent buyer A subsequent buyer
is presumed to be a is presumed to be a
buyer in bad faith buyer in good faith
Conditional Contract of Sale
Article 1461, Civil Code: Things having a potential
existence may be the object of the contract of sale.

The efficacy of the sale of a mere hope or

expectancy is deemed subject to the condition that
the thing will come into existence.

The sale of a vain hope or expectancy is void.

Article 1462, Civil Code: The goods which form the

subject of a contract of sale may be either existing
goods, owned or possessed by the seller, or goods
to be manufactured, raised, or acquired by the seller
after the perfection of the contract of sale, in this Title
called “future goods.”

There may be a contact of sale of goods, whose

acquisition by the seller depends upon a
contingency which may or may not happen.

Article 1465, Civil Code: Things subject to a

resolutory condition may be the object of the
contract of sale.

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II. CAPACITY TO BUY OR b. Alienage [Art. 39, Civil Code]

c. Trusteeship [Art. 39, Civil Code]
SELL 1. Agents
2. Guardian
A. Capacity of Parties 3. Executors and administrators
4. Public officers and employees
General Rule: Any person who has capacity to 5. Lawyers
act may enter into a contract of sale 6. Justices, Judges, prosecuting
[Villanueva]. attorneys, clerks and other officers and
employees connected with the
As a general rule, all persons, whether natural administration of justice
or juridical, who can bind themselves have also 7. Others specially disqualified by law
legal capacity to buy and sell [De Leon].
a. Husband and wife [Art. 1490, Civil
Kinds of incapacity Code]
1. Absolute [Art. 1327, 1397, 1399, Civil General Rule: Spouses cannot sell property to
Code] - In the case of persons who cannot each other
bind themselves
2. Relative - Married person Exceptions:
3. Special disqualifications [Arts. 1491- 1. Separation of property in marriage
1492, Civil Code] settlement, OR
2. Judicial separation of property.
1. Absolute Incapacity
Sale by husband in favor of a concubine after
a. Minors [Art. 1327, Civil Code]
he had abandoned his family and left conjugal
b. Insane or Demented [Art. 1327, Civil Code]
home where his wife and children lived and
c. Deaf-mutes who do not know how to write
from whence they derived their support, is void
[Art. 1327, Civil Code]
[Ching v. Goyanko, Jr., G.R. No. 165879
d. Civil Interdiction [Art. 38, Civil Code]
(2006)].
e. Judicially-declared Incompetents [Art. 39,
Civil Code]
Reason for this rule: Such prohibition is for
1. Prodigal
the protection of third persons who, relying
2. Imbeciles
upon supposed property of either spouse,
3. Absence & presumption of death
enters into a contract with either of them only
4. Persons not of unsound mind but by
to find out that the property relied upon was
reason of age, disease, weak mind,
transferred to the other spouse [De Leon].
and other similar causes, cannot take
care of themselves and manage their
property without outside aid (Easy prey b. Alienage [Art. 39, Civil Code]
for deceit and exploitation) General Rule: Aliens are disqualified from
purchasing or acquiring real property.
General Rule: Contracts entered into by a
minor and other incapacitated persons are Exception: If acquisition is through hereditary
voidable. succession.

Exception: Where necessaries are sold and c. Trusteeship [Art. 39, Civil Code]
delivered to him (without parent or guardian), Such is grounded on public policy
he must pay a reasonable price therefor. considerations which disallow the transactions
a. Such contract is VALID entered into by them (directly or indirectly) in
b. But the minor has the right to recover any view of the fiduciary relationship involved or
excess above a reasonable value paid by the peculiar control exercised by these
him. individuals over the properties or rights
covered [Mananquil v. Villegas, A.M. No. 2430
2. Relative incapacity (1990)].
a. Husband and wife [Art. 1490, Civil Code]
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1. Agents – Cannot purchase or acquire 6. Justices, Judges, prosecuting
property whose administration or sale was attorneys, clerks and other officers and
entrusted to them, except if principal gives employees connected with the
consent. administration of justice - Cannot
acquire or purchase property or rights in
2. Guardian – Cannot purchase property of litigation or levied upon on execution
person under his guardianship. before the court within whose jurisdiction or
territory they exercise their respective
functions.
3. Executors and administrators –Cannot
acquire or purchase property of estate 7. Others specially disqualified by law
under their administration. a. Unpaid sellers with goods in transit
from buying the goods
The prohibition on executors and b. Officer conducting the execution sale
administrators does not apply if the of deputies
principal consents to the sale [Distajo v. c. Aliens who are disqualified to purchase
CA, G.R. No. 112954 (2000)]. private agricultural lands

4. Public officers and employees - Cannot B. Effects of incapacity

acquire or purchase property of State/any
of its subdivisions, GOCC or
1. Absolute incapacity
administration, the administration of which
If both parties are incapacitated:
was entrusted to them. Prohibition includes
unenforceable [Art. 1403 (3), Civil Code].
judges and government experts who, in
any manner, take part in the sale.
If only 1 party is incapacitated: voidable.
5. Lawyers - Cannot acquire or purchase
Exception: Where necessaries are sold and
property or rights in litigation in which they
delivered to a minor or to a person without
take part by virtue of their profession.
capacity to act, he must pay a reasonable price
therefor [Art. 1489, par. 2, Civil Code]. The
For the prohibition to operate, the sale or
resulting sale therefore described in the
assignment must take place during the
foregoing article is valid and binding.
pendency of the litigation involving the
property [Laig v. Court of Appeals, G.R. No.
L-26882 (1978)]. 2. Relative incapacity
Sale between spouses is void.
Exceptions: An assignment to a lawyer by
his client of an interest in the property does Rationale:
not violate Art 1491, where: a. To protect 3rd persons who may have
a. A judgment has been rendered and contracted with the spouse
has become final; and b. To avoid undue advantage of the dominant
b. In case of contingency fee spouse over the weaker spouse.
arrangements: the interest of the c. To avoid circumvention of the prohibition
lawyer may be annotated as an against donations between spouses
adverse claim on the property awarded [Medina v. CIR, G.R. No. L-15113 (1961)].
to his client [Director of Lands v.
Ababa, G.R. No. L-26096 (1979)] Such prohibition shall likewise apply to
common law spouses [Calimlim-Canullas v.
Fortun, G.R. No. L-57499 (1984)].

But if already sold to a third person who relied

on the title of his immediate seller,
reconveyance to the seller spouse is no longer
available [Cruz v. CA, G.R. No. 120122
(1997)].
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Sale contracted by aliens is void [Art. XII of the
Constitution].

3. Specific incapacity
General Rule: Contracts expressly prohibited
by law are VOID and CANNOT BE RATIFIED.
Neither can the right to set-up the defense of
illegality be waived [Art. 1409 (7), Civil Code].

Those entered into by public

officers/employees, justices and judges, and
lawyers in violation of Art. 1491 are inexistent
and VOID from the beginning [Rubias v.
Batiller, G.R. No. L-35702 (1973)]. It is NOT
subject to RATIFICATION.

Exception: Sales entered into by guardians,

administrators, and agents (specific
incapacities) in violation of Art. 1491 may be
RATIFIED by means of and in the form of a
new contract when the cause of nullity has
ceased to exist. Ratification is valid only from
date of execution of the new contract and does
not retroact.

Status of Contract with regard to

Capacity of Parties

Void 1. Sale between

spouses
2. Sale from
conjugal property
without the authority
of court or consent of
other spouse
3. Public Officers &
Employees
4. Judicial Officers &
Employees and
lawyers
5. Others
disqualified by law

Voidable 1. Guardians
2. Agents
3. Executors and
Administrators
4. One of the parties
is a minor or
incapacitated persons

Unenforceable 1. Both parties are minors

or incapacitated persons

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III. EFFECTS OF THE cannot be said that the contracting parties have
given their mutual consent as to the subject
CONTRACT WHEN and consideration of the contract. The
disappearance or loss of property which the
THE THING SOLD HAS owner intended or attempted to sell can only
BEEN LOST interest the owner, who should suffer the loss,
and not a third party who has acquired no rights
The Code Commission followed the common nor incurred any liability with respect thereto
law rule that the OWNER bears the risk of [Roman v. Grimalt, G.R. No. L-2412 (1906)].
loss in absence of stipulation to the contrary,
while retaining the rule in Roman Law which C. At Time of Perfection [Arts.
requires delivery by the seller, whether actual
or constructive, to transfer OWNERSHIP to the
1493 and 1494, Civil Code]
buyer.
Seller bears risk of loss and deterioration.
Basis: Res perit domino.
Article 1263, Civil Code: In an obligation to deliver
a generic thing, the loss or destruction of anything of
the same kind does not extinguish the obligation. Article 1493, Civil Code: If at the time the contract
of sale is perfected, the thing which is the object of
the contract has been entirely lost, the contract shall
General Rule: Risk of loss shall be borne by be without any effect.
the owner (Note: Owner is not always the
But if the thing should have been lost in part only,
seller) the vendee may choose between withdrawing from
the contract and demanding the remaining part,
Exceptions paying its price in proportion to the total sum agreed
1. When ownership of the goods has been upon.
transferred to him, the buyer bears the risk
Article 1494, Civil Code: Where the parties purport
of loss.
a sale of specific goods, and the goods without the
2. When there is a stipulation to the contrary. knowledge of the seller have perished in part or have
3. When the seller retains the title for security, wholly or in a material part so deteriorated in quality
the buyer bears the risk of loss. as to be substantially changed in character, the
4. When there is delay in the delivery, the buyer may at his option treat the sale:
party in fault bears the risk of loss. (1) As avoided; or
(2) As valid in all of the existing goods or in so much
5. When sale is for “approval or trial”, the
thereof as have not deteriorated, and as binding the
seller bears the risk of loss until the buyer buyer to pay the agreed price for the goods in which
approves or the trial period lapses. the ownership will pass, if the sale was divisible.
6. When sale is on “return”, the buyer bears
the risk of loss until he returns it.

A. Res Perit domino [Arts. 1263, Total Loss Partial Loss (Or loss
which results in
and 1189 Civil Code] substantial change
in character)
Owner bears risk of loss and deterioration. The
ownership is transferred only upon delivery. Contract is void Buyer may withdraw
because the object from the contract
B. Prior to Perfection of Contract did not exist at the or
time of the Buy the remainder at a
Seller bears risk of loss and deterioration. transaction. proportionate price
Basis: Res perit domino

When there is no proof that the parties have

agreed as to the thing which should be the Article 1496 of the Civil Code which provides
subject of the contract and that one has that “in the absence of an express assumption
accepted the terms proposed by the other, it of risk by the buyer, the things sold remain at
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seller’s risk until the ownership thereof is Deterioration [Art. 1189, Civil Code]
transferred to the buyer,” is applicable to this Impairment is borne by the CREDITOR if the
case, for there was neither an actual nor thing deteriorates without the fault of the
constructive delivery of the thing sold, hence, debtor.
the risk of loss should be borne by the seller,
Norkis, which was still the owner and If it deteriorates through the fault of the debtor,
possessor of the motorcycle when it was the creditor may choose between rescission of
wrecked. This is in accordance with the well- obligation and fulfillment, either case with
known doctrine of res perit domino [Norkis v. indemnity for damages.
CA, G.R. No. 91029 (1991)].
E. After Delivery
D. After Perfection but Before
Delivery Article 1504, Civil Code: Unless otherwise agreed,
the goods remain at the seller's risk until the
Loss ownership therein is transferred to the buyer, but
General Rule: Stipulations in the contract will when the ownership therein is transferred to the
govern. buyer the goods are at the buyer's risk whether
actual delivery has been made or not, except that:
Exception: In the absence of stipulation, there (1) Where delivery of the goods has been made to
are two conflicting views: the buyer or to a bailee for the buyer, in pursuance
1. Res perit creditori or the buyer bears the of the contract and the ownership in the goods has
risk of loss. been retained by the seller merely to secure
performance by the buyer of his obligations under
This is an exception to the rule of res perit the contract, the goods are at the buyer's risk from
the time of such delivery;
domino.
(2) Where actual delivery has been delayed through
Basis: Art. 1504, Civil Code only covers the fault of either the buyer or seller the goods are at
goods. the risk of the party in fault.

Pursuant to Art. 1262, Civil Code if the

thing is destroyed without the fault of the General Rule: Buyer bears risk of loss and
debtor/seller, the obligation to pay shall deterioration.
subsist.
Exceptions: [Art. 1504 (1) and (2), Civil Code]
2. Res perit domino or the seller bears the risk 1. Where delivery has been made either to
of loss. the buyer or to the bailee for the buyer, but
ownership in the goods has been retained
Basis: The rule on loss is different from the by the seller → Seller will bear the risks
rule on deterioration for the loss would be • Exception to the Exception: Seller
for the account of the seller, while the retained ownership merely to secure
deterioration would be for the account of performance by the buyer of his
the buyer. obligations under the contract; →
Buyer will bear the risks
In reciprocal obligations, the 2. Where actual delivery has been delayed
extinguishment of the obligation due to loss through the fault of either the buyer or seller
of the thing extinguishes the entire juridical → The party at fault will bear the risks
relation.

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SUMMARY OF RULES ON THE RISK OF

LOSS AND DETERIORATION

Before Seller bears risk of loss and

Perfection deterioration

Seller also benefits from the

fruits and improvements
therein

At Entire Loss will be ineffective

Perfection
Substantial Loss or
Deterioration shall allow the
buyer to withdraw or buy the
remainder at a proportionate
price.

After Seller bears risk of loss

Perfection
Buyer bears risk of
deterioration

Buyer also benefits from the

fruits and improvements
therein

Before Buyer bears risk of loss or

Delivery deterioration

Buyer also benefits from the

fruits and improvements
therein

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IV. OBLIGATIONS OF One who sells something he does not own

yet is bound by the sale when he acquires
VENDOR the thing later [Bucton v. Gabar, G.R. No.
L-36359 (1974)].
Note: Further discussion can also be found in
Section J of this Sales Reviewer, on the 2. Estoppel: Owner is, by his conduct,
Performance of the Contract. precluded from denying the seller’s
authority to sell [Art. 1434, Civil Code].
A. Obligations of the Vendor in
3. Registered land bought in good faith.
General
General Rule: Buyer need not go beyond
1. To transfer ownership of the thing [Art. the Torrens Title.
1495, Civil Code]
2. To deliver the thing, with its accessions Exception: When he has actual
and accessories, if any [Arts. 1164, 1166, knowledge of facts and circumstances that
Civil Code] would impel a reasonably cautious man to
3. To warrant against eviction and against make further inquiry.
hidden defects [Arts. 1545-1581, Civil
Code] 4. Order of courts; Statutory Sale - In
4. To take care of the thing, pending delivery, execution sale, the buyer merely steps into
with proper diligence [Art. 1163, Civil Code] the shoes of the judgment debtor [Sec. 33,
5. To pay for the expenses of the deed of Rule 39, ROC].
sale [Art. 1487, Civil Code]
5. When goods are purchased in Merchant’s
1. To Transfer Ownership of the Thing store, Fair, or Market [Art. 1505, Civil
and To Deliver the Thing, with its Code].
Accessions and Accessories
The ownership of the thing sold shall be b. Sale by Person having a Voidable Title
transferred to the vendee upon the actual or 1. True owner may recover the thing when the
constructive delivery thereof, or in any manner ff. requisites concur:
signifying an agreement that possession is a. Subject matter is movable
transferred from the vendor to the vendee b. Owner has either lost the thing or has
[Baviera]. been unlawfully deprived [Art. 559, Civil
Code].
Note: The contract of sale constitutes only a
right to the transfer or acquisition of ownership, 2. Reimbursement is necessary before owner
while delivery is the method of accomplishing can recover when:
the same. a. Buyer acted in good faith
b. Acquired at a public auction [Art. 559,
a. When Seller is Not the Owner Civil Code]
General Rule: Ownership is not acquired by
the buyer. One cannot give what one does not 3. Recovery no longer possible when:
have [Art. 1505, Civil Code]. a. Buyer in good faith
b. Acquired it at a merchant’s store, fair or
Exceptions: market [Art. 1506, Civil Code].
1. Seller has a right to transfer ownership.
c. Manner of Transfer [Arts. 1477, 1496-
Seller need not be the owner of the thing at 1501, Civil Code]
the time of perfection of the contract. It is General Rule: Ownership of the thing sold
sufficient that the seller has a right to shall be transferred to the vendee upon actual
transfer ownership thereof at the time it is or constructive delivery thereof [Art. 1477, Civil
delivered [Art. 1459, Civil Code]. Code].

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Exceptions: Exception: When the thing is sold on credit.
1. Contrary stipulation
2. Contract to sell The Agreement of the parties determines
3. Contract of insurance whether it is for the buyer to take possession of
4. Sale on acceptance/Trial the goods or for the seller to send them to the
5. When seller is not the owner or has buyer.
voidable title
Requisites
Obligation to transfer ownership and to deliver 1. Identity – between what must be delivered
is implied in every contract of sale [Arts. 1458- and what is actually delivered
1459, Civil Code] 2. Integrity – in a condition suitable for
enjoyment
Transfer of ownership requires delivery [Art. 3. Intentional
1495, Civil Code]
Thing, Place, Time and Manner of
General Concepts Delivery
Under Article 1495, the seller has twin
obligations to (a) transfer the ownership and (b) What to Deliver
deliver the thing, which is the object of sale to 1. Thing sold [Art. 1495, Civil Code]
the buyer. In Article 1164, this includes the 2. Fruits [Art. 1164 & 1537, Civil Code] –
obligation to deliver the fruits and accessories belong to the vendee from day of
from the time the obligation to deliver it arises; perfection.
however, he shall acquire no real right over 3. Accessions and accessories [Art. 1166 &
them until the same has been delivered to him. 1537, Civil Code] – in the same condition
they were in on day of perfection:
Transfer of ownership is effected even if the a. Improvements by seller at his expense
purchase has been made on credit. Payment grants him a usufructuary right [Art.
of the purchase price is not essential to transfer 1138, 1189, Civil Code]
of ownership as long as the property sold was b. No indemnification
delivered. c. But he may remove it to the extent that
there is no damage [Art. 1538, Civil
Intention to transfer ownership Code]
● All forms of delivery shall be coupled with
intention of delivering the thing sold. Where to Deliver
● Seller must be the owner or authorized by 1. A hierarchy is followed:
owner of the thing sold a. Stipulation
b. Usage of trade
When right to transfer ownership must c. Seller’s place of business (office)
exist: At the time of delivery and not at the time d. Seller’s residence
of perfection of contract of sale. 2. In case of specific goods, which the
parties knew to be at some other place
d. Concept of Delivery when the contract was perfected, that
Payment and delivery of the thing sold are place is the place of delivery
concurrent acts, in consonance with the rule in 3. If goods at the time of sale are
reciprocal obligations [Baviera]. possessed by a third person, then there
is no delivery until he acknowledges to the
The rule is that neither party incurs in delay if buyer that he holds the goods for the buyer
the other does not comply or is not ready to
comply in a proper manner with what is When to Deliver
incumbent upon him. Where, by agreement, the seller is bound to
send the goods to the buyer, he is bound to
General Rule: The vendor is not bound to send them within the time agreed upon.
deliver the thing sold if the vendee has not paid ● If no time fixed: within a reasonable time.
the price.

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● The expenses of placing the goods in a Depends on the Depends on the will
deliverable state shall be borne by the character or quality of of the buyer
seller (unless otherwise stipulated) goods
Note: Demand or tender of delivery shall be Subject to a Subject to a
made at a reasonable hour. suspensive condition resolutory condition

Manner of Delivery Risk of loss remains Risk of loss remains

Where the goods at the time of the sale are in with the seller with the buyer
the possession of a third person: NO
DELIVERY unless such third person
acknowledges to the buyer that he holds Express Reservation
the goods on the latter’s behalf. If it was stipulated that ownership in the thing
shall not pass to the purchaser until he has fully
paid the price, then ownership remains with
e. When Delivery Does Not Transfer seller even when delivery is made [Art. 1478,
Title Civil Code].
Sale on Approval or Trial
Title remains with the seller notwithstanding Implied Reservation
delivery of the goods. The following are instances when there is an
implied reservation of ownership:
Buyer becomes the owner when he: 1. Goods are shipped, but by the bill of lading
1. Signifies his approval or acceptance to the goods are deliverable to the seller or his
seller agent, or to the order of the seller or his
2. Does any other act adopting the agent
transaction (i.e. sale to a third person) 2. Bill of lading is retained by the seller or his
3. Retains the goods without giving notice of agent [Art. 1503, Civil Code].
rejection after the time fixed has expired; if
no time has been fixed, after the expiration When the seller of the goods draws on the
of a reasonable time [Art. 1502, Civil Code] buyer for the price and transmits the bill of
exchange and bill of lading to the buyer, and
Sale or Return the latter does not honor the bill of exchange
● Buyer becomes owner of the property on by returning the bill of lading to the seller.
delivery, BUT has the option to revest
ownership in the seller instead of paying When Sale Not Valid
the price by returning the goods within the When the thing sold is a public property.
time fixed in the contract, or, if no time is
fixed, within a reasonable time. Otherwise, Sale by Person Having a Voidable Title
the sale becomes absolute. 1. True owner may recover the thing when the
● Loss or destruction of the property prior to ff. requisites concur:
return falls upon the buyer and makes him a. Subject matter is movable
responsible for the purchase price. b. Owner has either lost the thing or has
been unlawfully deprived [Art. 559,
Sale on Approval v. Sale or Return Civil Code]
Sale on Approval Sale or Return 2. Reimbursement is necessary before owner
can recover when:
a. Buyer acted in good faith
Ownership does not Ownership passes b. Acquired at a public auction [Art. 559,
pass upon delivery to buyer on delivery Civil Code]
remaining with the and subsequent 3. Recovery no longer possible when:
seller until buyer return revests a. Buyer in good faith
signifies his approval. ownership in the b. Acquired it at a merchant’s store, fair or
seller. market [Art. 1506, Civil Code]

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f. Kinds of Delivery Execution of a public instrument gives rise only
Actual Delivery to a prima facie presumption of delivery,
Deemed made when the thing sold is placed in negated by failure of the buyer to take actual
the control and possession of the vendee [Art. possession of land sold. A person who does
1497, Civil Code] not have actual possession cannot transfer
constructive possession by execution and
Not always essential to passing of title [Art. delivery of public instrument [Spouses
1477, Civil Code] Santiago v. Villamor, G.R. No. 168499 (2012)].

Parties may agree when and on what 2. Symbolic Delivery

conditions the ownership shall pass to the Delivery of keys of the place or depositary
buyer [e.g.: Art 1478 where ownership will only where the movable is stored or kept [Art. 1498,
pass after full payment of the price] Civil Code].

Constructive Delivery Unless otherwise agreed, when symbolic

1. Execution of public instrument delivery has been made, the seller is not
2. Symbolic delivery obliged to remove tenants to place the buyer in
3. Traditio longa manu (long hand) actual possession of the property as he has
4. Traditio brevi manu (short hand) already complied with his obligation to transfer
5. Traditio constitutum possessorium ownership of and deliver the thing sold [Power
6. Quasi-traditio Commercial and Industrial Corp. v. CA, G.R.
7. Delivery to a Common Carrier No. 119745 (1997); Sabio v. The International
Corporate Bank, Inc., G.R. No. 132709 (2001)].
1. Execution of public instrument [par. 1,
Art. 1498, Civil Code] 3. Traditio Longa Manu (Long Hand)
General Rule: produces the same legal effects Delivery of movable property by mere consent
of actual delivery. or agreement, if the thing sold cannot be
transferred to the possession of the buyer at
Exceptions: the time of sale [Art. 1499, Civil Code].
a. The parties intended otherwise.
b. At the time of execution, the subject matter Example: Seller points to the property without
was not subject to the control of the seller, actually transferring physical possession
which control must subsist for a reasonable thereof.
length of time after execution [Pasagui v.
Villablanca, G.R. No. L-21998 (1975)]. Delivery by mere agreement; seller points out
to the buyer the property without need of
“Control” over thing sold must be such that actually delivering (as when the thing sold
the seller is capable of physically cannot be transferred to the possession of the
transferring it to buyer. vendee at the time of sale). Delivery takes
place when the thing is placed in the sight of
Although parties may stipulate that the the purchaser so that he can take possession
execution of a public instrument is equivalent of it at pleasure. With regard to movable
to delivery, this legal fiction holds true only property, its delivery may also be made by the
when there is no impediment that may prevent delivery of the keys of the place or depository
the passing of the property from the vendor to where it is stored or kept.
the vendee [Vda. de Sarmiento v. Lesaca, G.R.
No. L-15385 (1960)]. When an employer assigned all its rights and
title to all surplus property salvaged by the
If, notwithstanding execution of the instrument, contractor, traditio longa manu takes place.
the buyer cannot enjoy material tenancy and Delivery is upon the moment a thing is
make use of the object himself or through salvaged [Board of Liquidators v. Floro, G.R.
another in his name, there is no delivery No. L-15155 (1960)].
[Power Commercial v. CA, G.R. No. 119745
(1997)].

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4. Traditio Brevi Manu (Short Hand) Exceptions:
Delivery of movable property by mere consent a. Seller reserved title through the form of the
or agreement, if the buyer already had it in his bill of lading, with intent to remain the
possession for any other reason [Art. 1499, owner, not merely for the purpose of
Civil Code]. securing payment, OR
b. Contrary intention appears in the contract
Happens when the buyer already has (i.e. seller is required to deliver goods to
possession of the thing sold before the sale by buyer at the point of destination)
virtue of another title (as lessee, borrower, c. Delivery by the seller is in breach of the
depositary, etc.) contract
d. F.O.B. (Free on Board or Freight on Board)
5. Traditio Constitutum Possessorium - When seller bears the expenses of
Seller continues to be in possession of the transportation up to the F.O.B. point
property sold not as owner but in some other e. C.I.F. (Cost, Insurance, Freight) - Price
capacity, like as tenant or lessee. quoted includes the costs of the goods,
insurance, and freight charges on the
At the time of perfection, the seller held goods up to the point of destination
possession of the subject matter in the concept f. F.A.S. (Free Alongside) – Seller bears the
of owner, and pursuant to the contract, the expenses of transportation until he delivers
seller continues to hold physical possession the goods alongside a vessel at a named
thereof as lessee or other form of possession port
other than the concept of owner.
g. Double Sales [Art. 1544, Civil Code]
For example, a seller remains in possession of Article 1544 (1), Civil Code: If the same thing
the property sold, by virtue of a lease should have been sold to different vendees, the
agreement with the vendee, at the time of the ownership shall be transferred to the person who
perfection of the contract of sale. may have first taken possession thereof in good
faith, if it should be movable property.
Vendee became, as lessor, the legal
possessor while the vendor is in material
Article 526, Civil Code: He is deemed a possessor
possession of the property in the name and in good faith who is not aware that there exists in his
representation of the vendee. title or mode of acquisition any flaw which invalidates
it.
Seller continues to be in possession of the
property sold. He is deemed a possessor in bad faith who
possesses in any case contrary to the foregoing.
6. Quasi-traditio Mistake upon a doubtful or difficult question of law
Mode of delivery of incorporeal things or rights. may be the basis of good faith.

Delivery is effected:
a. By execution of public instrument Article 527, Civil Code: Good faith is always
b. When such is not applicable, by placing the presumed, and upon him who alleges bad faith on
titles of ownership in the possession of the the part of a possessor rests the burden of proof.
buyer
c. By allowing the buyer to use his rights as General Rule: Prior tempore, prior jure (“First
new owner with the consent of the seller in time, priority in right”) applies.

7. Delivery to a Common Carrier Requisites:

General Rule: Delivery to the courier or carrier 1. 2 or more valid sales;
is tantamount to delivery to buyer, whether 2. Same subject matter;
carrier is named by buyer or not. The buyer 3. 2 or more buyers with conflicting interests
assumes the risk of loss. over the rightful ownership of the thing
sold;

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4. Same seller [Cheng v. Genato, G.R. No. Possession refers to any of the modes of
129760 (1998)]. possession in Arts. 1497-1501, Civil Code

Rules on Double Sale Oldest Title as to any public document

There is no double sale when: showing acquisition of the land in good
1. Not all the elements of a sale are present. faith. To constitute “title,” the transmission
2. The principle of prior tempore, prior jure (he of ownership must appear in a public
who is first in time is preferred in right) document [Art. 1358 (1), Civil Code]
should apply.
3. The two different contracts of sale are Registration includes any entry made in
made by two different persons, one of them the Primary Entry Book of the registry,
not being the owner of the property sold. including both registration in its ordinary
4. The land sold is not yet registered under and strict sense and cancellation,
the Torrens system. annotation, and even marginal notes
5. The first sale occurred when land was not [Cheng v. Genato, G.R. No. 129760
yet registered, and the second sale was (1998)].
done when the land was already registered
– prior tempore, prior jure should apply. Penciled entries on the title are not
considered registration [AFPMBAI v. Court
Rules on Preference of Appeals, G.R. No. 126745 (1999)].
Personal property
1. First possessor in good faith 3. Second Sale Made by Virtue of
Execution and Attachment –
Real property Art. 1544 does NOT apply in cases where
1. First registrant in good faith: second buyer the first sale of an unregistered immovable
must register the document in good faith, occurred prior to an execution sale and the
otherwise, he does not have a better right second sale occurred by virtue of an
2. First possessor in good faith execution sale. This is because a buyer of
3. Person with oldest title in good faith unregistered land at an execution sale only
steps into the shoes of the judgment debtor
Caveat emptor: One who purchases real (the person who sold the property prior to
property which is in actual possession of others the execution sale). The second buyer
should make some inquiry concerning the merely acquires the latter’s interest in the
rights of those in possession property sold as of the time the property
was levied upon [Carumba v. CA, G.R. No.
Rules Governing Sale of Movables, L-27587 (1970)].
Immovables and Unregistered Lands
1. Sale of Movable: Ownership shall be 4. Sale of Immovables: Unregistered Land
transferred to the person who may have Instrument or deeds establishing,
first taken possession in good faith. transmitting, acknowledging, modifying or
extinguishing rights with respect to lands
2. Sale of Immovables: Registered Land – not registered under the Land Registration
Ownership belongs to the person who: Act or the Spanish Mortgage Law, are
a. In good faith first recorded the sale in required to be registered in the Registry of
the Registry of Property; or Property to prejudice 3rd persons, although
b. If there is no inscription of sale on the such registration is understood to be
title, ownership passes to the person “without prejudice to a third party with a
who in good faith was first in better right” [PD 1529, Sec 113].
possession; or
c. In the absence thereof, to the person Art. 1544 applies to unregistered land
who presents the oldest title, subject to a conventional sale (because of
provided there is good faith. Art. 1358) but NOT to unregistered land
subject to judicial sale.

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Unregistered by both buyers, the first buyer
Lis Pendens Annotation of
is preferred.
Adverse Claim
If first buyer did not register but second May be cancelled May be cancelled
buyer registered property, second buyer is even before the action only in one
preferred. is finally terminated for instance, i.e., after
causes which may not the claim is
h. Property Registration Decree [P.D. be attributable to the adjudged invalid or
1529] claimant unmeritorious by
the Court
REQUISITES FOR REGISTRATION OF
DEED OF SALE IN GOOD FAITH
The two are not contradictory or repugnant to
a. Purchaser in Good Faith
one another; nor does the existence of one
b. Accompanied by vendors duplicate
automatically nullify the other, and if any of the
certificate of title, payment of capital gains
registrations should be considered
tax, and documentary tax registration fees
unnecessary or superfluous, it would be the
notice of lis pendens [A. Doronila Resources
a. Purchaser in Good Faith - One who
Development Inc v. CA, G.R. Nos. L-42956-
buys the property of another, without
571988 (1988)].
notice that some other person has a
right to or interest in such property, and
b. Accompanied by vendors
who pays a full and fair price for the
duplicate certificate of title,
sale, at the time of the purchase or
before he has notice of the payment of capital gains tax, and
claim/interest of some other person in documentary tax registration fees
the property [Agricultural and Home Must be accompanied by:
Extension Development Group v. CA, 1. Vendor’s duplicate certificate of title
G.R. No. 92310 (1992)]. 2. Payment of capital gains tax – 6% of the
selling price or zonal value, whichever is
General Rule: As a rule, he who asserts the higher
status of a purchaser in good faith and for value 3. Documentary tax registration fees – 1.5%
has the burden of proving such assertion of the selling price or zonal value,
[Mathay v. CA, G.R. No. 115788 (1998)]. whichever is higher
a. Risk of Loss
When buyer is presumed to be in bad faith
● Annotation of adverse claim: Places any (Note: This is discussed under Part III of this
subsequent buyer of the registered land in Sales Reviewer, on Effects of the contract
bad faith [Balatbat v. CA, G.R. No. 109410 when the thing sold has been lost.)
(1996)].
● Annotation of Lis Pendens: Buyer cannot 2. To Warrant Against Eviction and
be considered an innocent purchaser for Against Hidden Defects
value where it ignored the lis pendens on Warranties - A statement or representation
the title. made by the seller contemporaneously and as
● A purchaser of a parcel of land cannot part of the contract of sale, having reference to
close his eyes to facts which should put a the character, quality, or title of the goods, and
reasonable man upon his guard, such as by which he promises or undertakes to ensure
when the property subject of the purchase that certain facts are or shall be as he then
is in the possession of persons other than represents.
the seller. A buyer who could not have
failed to know or discover that the land sold Not every false representation voids the
to him was in the adverse possession of contract, only those matters substantially
another is a buyer in bad faith [Heirs of affecting the buyer’s interest, not matters of
Ramon Durano v. Uy, G.R. No. 136456 opinion, judgment, probability, or expectation.
(2000)]. When the buyer undertakes his own

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investigation, and the seller does nothing to the nonperformance of the condition as a
prevent it from being as full as the buyer breach of warranty [Art. 1545, Civil Code].
chooses, the buyer cannot afterwards allege
misrepresentations [Songco v. Sellner, G.R.
Express Implied
No. L-11513 (1917)].

Economic Loss Doctrine: Where the defect Nature is Contractual; Constituted by Law
makes the goods less valuable Freely Represented

Condition v. Warranty Stipulated by parties, Only seller is bound,

Article 1545, Civil Code: Where the obligation of thereby binding both whether or not
either party to a contract of sale is subject to any the seller and buyer intended or known
condition which is not performed, such party may by the parties.
refuse to proceed with the contract or he may waive
performance of the condition. If the other party has
promised that the condition should happen or be a. Express Warranties
performed, such first mentioned party may also treat
the nonperformance of the condition as a breach of
For there to be express warranty, the following
warranty. requisites must concur:
1. An affirmation of fact or any promise
Where the ownership in the thing has not passed, relating to the thing sold
the buyer may treat the fulfillment by the seller of his 2. The natural tendency of such affirmation or
obligation to deliver the same as described and as promise is to induce the buyer to buy
warranted expressly or by implication in the contract
of sale as a condition of the obligation of the buyer
3. The buyer buys the thing relying thereon
to perform his promise to accept and pay for the [Art. 1546, Civil Code]
thing. 4. Made before the sale, not upon delivery or
any other point

Condition Warranty An express warranty can be made by and also

be binding on the seller even in the sale of a
secondhand article [Moles v. IAC, G.R. No.
Pertains to and Goes into the 73913 (1989)].
affects the existence performance of an
of the obligation obligation and may, Express Warranty v. Dealer’s/Trader’s Talk
in itself, be an
Article 1546, Civil Code: Any affirmation of fact or
obligation
any promise by the seller relating to the thing is an
express warranty if the natural tendency of such
Non-happening does Non-fulfillment affirmation or promise is to induce the buyer to
not amount to breach constitutes breach of purchase the same, and if the buyer purchase the
of contract contract thing relying thereon. No affirmation of the value of
the thing, nor any statement purporting to be a
statement of the seller's opinion only, shall be
construed as a warranty, unless the seller made
Must be stipulated Stipulation or
such affirmation or statement as an expert and it was
operation of law relied upon by the buyer.

May attach either to Always relates to the Article 1340, Civil Code: The usual exaggerations
the seller’s duty to subject matter or the in trade, when the other party had an opportunity to
deliver thing or some seller’s obligations know the facts, are not in themselves fraudulent.
other circumstance as to the subject
Article 1341, Civil Code: A mere expression of an
matter
opinion does not signify fraud, unless made by an
expert and the other party has relied on the former's
special knowledge.
If seller has promised that the condition should
happen or be performed, the buyer may treat

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Express Dealer’s or Trader’s b. Implied Warranties [Art. 1547, Civil

Warranty Talk Code]
An implied warranty is derived by law, by
implication, or inference from the nature of the
What is specifically Affirmation of the value transaction or relativation, or circumstances of
represented as of the thing or the parties, irrespective of any intention of the
true in said statement of only the seller to create it [De Leon].
document cannot seller’s opinion is not a
be considered as warranty unless: Implied Warranty of Title
mere dealer's talk a. The seller 1. Implied Warranty against
[Moles v. IAC, made it as an Encumbrance/Non-Apparent Servitudes
supra]. expert; 2. Implied Warranty against Hidden Defects
b. It was relied [Art. 1547, Civil Code]
upon by the buyer a. Implied Warranty as to Merchantable
[Art.1546, Civil Quality and Fitness of Goods
Code]; b. Implied Warranty against Redhibitory
c. Ordinarily, Defect in the Sale of Animals [Art.
what does not 1572, Civil Code]
appear on the face c. Quality and Fitness of Goods in Sale by
of the written Sample or Description
instrument [Moles 3. Other Warranties
v. IAC, supra]
IMPLIED WARRANTY OF TITLE
Implied warranty arises by operation of law and
Express Warranty v. False Representation
need not be stipulated in the contract of sale.
Article 1342, Civil Code: Misrepresentation by a
third person does not vitiate consent, unless such Warranty of Seller’s Right to Sell: Seller
misrepresentation has created substantial mistake
and the same is mutual. warrants his right to sell at the time the
ownership is to pass.

Express False Representation Inapplicable to a sheriff, auctioneer,

Warranty mortgagee, pledgee, or other person
professing to sell by virtue of authority in fact or
Concealment of When concealment of law [Art. 1547, Civil Code].
facts does not facts comes with an active
necessarily misstatement of fact or a Warranty against Eviction: Seller warrants
amount to false partial statement of fact, that buyer, from the time ownership passes,
representation such that withholding of shall have and enjoy legal and peaceful
that unsaid portion makes possession of the thing. Its requisites are:
that which is stated 1. Buyer is deprived of the whole or a part of
absolutely false. the thing sold;
2. Eviction is by final judgment;
However, a buyer who 3. Final judgment based on a right prior to the
fails to inspect the sale or an act imputable to the vendor;
condition of property 4. Seller is summoned and made co-
despite ample opportunity defendant in the suit for eviction at the
to do so when there is no instance of the buyer [Power Commercial
opposition on the part of and Industrial Corp. v. CA, G.R. No.
seller to inspect cannot 119745 (1997)].
later on allege false
representation [Philippine
Manufacturing Co. v. Go
Jocco, G.R. No. L-24256
(1926)].
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IMPLIED WARRANTY AGAINST apparent on reasonable examination of the
ENCUMBRANCE/NON-APPARENT sample [Art. 1566, Civil Code]
SERVITUDES
Requisites for breach: Warranty of merchantability is warranty that
1. Thing sold is an immovable goods are reasonably fit for the general
2. Burden or servitude encumbering the thing purpose for which the same are sold.
sold is:
a. Non-apparent to the naked eye Warranty of fitness is warranty that goods are
b. Not mentioned in the agreement suitable for the special purpose of the buyer
c. Of such nature that it must be which will not be satisfied by mere fitness for
presumed that the buyer would not general purposes.
have bought it had he been aware of it
d. Not recorded in the Registry of In a sale by sample, there is implied warranty
Property unless there is an express that goods are free from defects not apparent
warranty that the thing is free from all on reasonable examination of sample and
burdens and encumbrances [Art. 1560, which render goods unmerchantable [Mendoza
Civil Code] v. David, G.R. No. 147575 (2004)].

IMPLIED WARRANTY AGAINST HIDDEN “Fitness for a particular purpose”: Where

DEFECTS the buyer expressly or impliedly makes known
Requisites for breach: to the seller the particular purpose for which the
1. The defect renders the thing sold unfit for goods are acquired AND it appears that the
the use for which it was intended OR buyer relied on the seller’s skill or judgment
diminishes its fitness for such use to such [Art.1562(1), Civil Code]
an extent that had the buyer been aware
thereof, he would not have bought it or IMPLIED WARRANTY AGAINST
would have paid a lower price; REDHIBITORY DEFECT IN THE SALE OF
2. The defect is not patent or visible; ANIMALS [Art. 1572, Civil Code]
3. The buyer is not an expert who, by reason Redhibitory defect – a hidden defect of
of his trade or profession, should have animals of such nature that expert knowledge
known the defect; is not sufficient to discover it, even in a case
4. The seller is aware of the hidden fault or where a professional inspection has been
defect, OR even if he is not aware thereof, made
if there is no stipulation to the contrary
[Art.1566, Civil Code]. No warranty in case of [Art. 1574, Civil Code]
1. Animals sold at fairs or public auctions
The buyer must also give notice of such 2. Livestock sold as condemned
redhibitory defect within a reasonable time.
The following sales are void [Art. 1575, Civil
The use contemplated must be that which is Code]
stipulated, and in the absence of stipulation, 1. Sale of animals suffering from contagious
that which is adopted to the nature of the thing, diseases
and to the business of the buyer. 2. Sale of animals unfit for the purpose for
which they are acquired as stated in the
IMPLIED WARRANTY AS TO contract
MERCHANTABLE QUALITY AND
FITNESS OF GOODS Veterinarians are liable if they fail to discover
Merchantable Quality or disclose the hidden defect through
1. Where the goods are brought by ignorance or bad faith [Art. 1576, Civil Code].
description from a seller who deals in
goods of that description [Art. 1562, Civil Seller liable if the animal dies within 3 days
Code] after its purchase due to a disease that existed
2. In a sale by sample, if the seller is a dealer at the time of sale [Art. 1578, Civil Code].
in goods of that kind and the defect is not
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c. Effects of Warranties 4. Rescind (Refuse to accept or return or offer
1. Natural tendency is to induce buyer to to return) + recover price paid [Art. 1599,
purchase the subject matter Civil Code]
2. Buyer purchases subject matter relying
thereon EXPRESS WARRANTY
3. Seller liable for damages in case of breach Prescriptive period: Period specified in
express warranty OR 4 years, if no period is
d. Effects of Waiver specified (following the general rule on
Only applicable to waiver of warranty against rescission of contracts)
eviction; parties may increase or decrease
warranty against eviction but the effect Remedies
depends on good/bad faith of the seller: Rescission not available when buyer:
1. Seller in bad faith and there is warranty 1. Knew of breach of warranty when he
against eviction – null and void accepted the goods without protest
2. Buyer without knowledge of a particular 2. Fails to notify the seller about election to
risk and made general renunciation of rescind within a reasonable period of time
warranty – not waiver but merely limits 3. Fails to return or offer to return the goods
liability of seller in case of eviction (pay to the seller in substantially a good
value of subject matter at the time of condition as they were when delivered,
eviction) unless deterioration was due to breach of
3. Buyer with knowledge of risk of eviction warranty
assumed its consequences and made a
waiver – vendor not liable Measure of damages: Difference between
4. Waiver to a specific case of eviction – value of goods at the time of delivery and the
wipes out warranty as to that specific risk value they would have had if they had
but not as to eviction caused by other answered to the warranty
reasons
Effects of rescission
One who purchases real estate with knowledge 1. Buyer no longer liable for price: Entitled to
of defect or lack of title cannot claim he the return of any part of price paid,
acquired title thereto in good faith, as against concurrently with or immediately after an
true owner of land or of interest therein [J.M. offer to return the goods
Tuason v. CA, G.R. No. L-41233 (1979)]. 2. If seller refuses to accept offer to return
goods: buyer deemed as bailee for seller
The same rule must be applied to one who has and has right of lien to secure payment of
knowledge of facts which should have put him part of price paid
upon such inquiry and investigation as might
be necessary to acquaint him with the defects
in the title of his vendor. A purchaser cannot
close his eyes to facts which should put a
reasonable man upon his guard and then claim
that he acted in good faith under the belief that
there was no defect in the title of the vendor.

e. Buyer’s Options in Case of Breach of

Warranty
Remedies of buyer for breach of warranty,
both implied and express:
1. Accept goods + demand
diminution/extinction of price
2. Accept goods + damages
3. Refuse to accept goods + damages

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IMPLIED WARRANTY AGAINST 3. Buyer made waiver with knowledge of
EVICTION [Arts. 1555, 1556, Civil Code] risks: Seller not liable; buyer assumed the
consequences
Total Eviction Partial Eviction
IMPLIED WARRANTY AGAINST
Enforce liability for Enforce liability ENCUMBRANCES [Art. 1560, Civil Code]
eviction (demand VICED) Rescission: Within 1 year from execution of
deed of sale OR
Demand from seller: OR
(VICED) Damages: Within 1 year from execution of
a. Value of thing sold Rescind within 6 deed of sale or discovery of the burden or
at time of eviction months from servitude
b. Income or fruits, if delivery
he has been a. If he would not IMPLIED WARRANTY AGAINST HIDDEN
ordered to deliver have bought DEFECTS [Arts. 1567-1571, Civil Code]
them to the party the thing sold If thing is not lost:
who won the without the part 1. Withdraw from contract (accion
eviction suit lost; redhibitoria) + damages
c. Costs of eviction b. BUT he must 2. Demand a proportionate reduction of the
suit and in a return the thing price (accion quanti minoris) + damages
proper case, suit without other
against seller for encumbrances If thing is lost:
warranty than those Due to hidden fault Due to fortuitous
d. Expenses of the which it had event or fault of
contract, if buyer when he buyer
has paid them acquired it
e. Damages and
interests, and If seller aware of Demand:
ornamental defect, buyer may 1. Price paid minus
expenses, IF sale demand: value of thing
was made in bad 1. Return of price when it was lost
faith 2. Refund of 2. Damages, if
expenses seller acted in
3. Damages bad faith
Rules
1. Buyer need not appeal from decision to
hold seller liable for eviction
2. When adverse possession commenced If seller not aware of
before sale, but prescription period defect:
completed after transfer: seller is not liable Buyer may demand
3. If property sold for nonpayment of taxes price and expenses
due and not made known to the buyer BUT NOT damages
before the sale: seller liable
4. Judgment debtor also responsible for
eviction in judicial sales, unless it is Prescriptive period: 6 months from delivery
otherwise decreed in the judgment
IMPLIED WARRANTY AGAINST
If there is waiver of warranty: REDHIBITORY DEFECTS OF ANIMALS
1. Seller acted in bad faith: Waiver is void, Remedies
seller liable for eviction ● Withdraw from contract + damages
2. Buyer made waiver without knowledge of ● Demand a proportionate reduction of the
risks of eviction: Seller liable only for the price + damages
value of the thing sold at time of eviction

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If sale is rescinded:
a. Buyer must return animal in the condition in
which it was sold and delivered
b. Buyer shall be liable for injury due to his
negligence

Prescriptive period: 40 days from delivery

f. Warranty in Sale of Consumer Goods

If implied warranty accompanies express
warranty, both will be of equal duration [Sec.
68, RA 7394].

Express Warranty Implied Warranty

a. Demand repair a. Retain the

within 30 days; goods and
extendible for recover
causes beyond damages
the control of the
warrantor OR
b. Demand refund of
price minus b. Reject the
amount directly goods, cancel
attributable to the contract and
use of the recover from
consumer prior to seller so much
the discovery of of the purchase
the non- price as has
conformity been paid +
damages

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V. OBLIGATIONS OF Note: He is not a depositary thereof UNLESS

he voluntarily agrees to be one.
VENDEE
1. Inspection/buyer’s right to examine
A. Inspection and acceptance [Art. 1584, Civil Code]
1. Inspection/buyer’s right to examine General Rule: The buyer is not deemed to
2. Delivery of goods in installment have accepted the goods delivered which he
B. Pay price has not previously examined unless and until
1. Pay interest he has had a reasonable opportunity to
2. Suspend payment of price examine them for the purpose of ascertaining
C. Bear the expenses for the execution and whether they are in conformity with the
registration of the sale and putting the contract.
goods in a deliverable state, if so stipulated
Exception: If there is a stipulation to the
A. Inspection and acceptance contrary [par. 1, Art. 1584, Civil Code]

Buyer is deemed to have accepted the General Rule: The seller is bound, when he
goods tenders delivery to the buyer, on request, to
afford the buyer a reasonable opportunity to
Expressly
examine the goods for the purpose of
ascertaining whether they are in conformity
When he intimates to the seller that he has with the contract.
accepted them
Exception: Unless otherwise agreed upon
Impliedly [par. 2, Art. 1584, Civil Code]

When the goods have been delivered to him Exception to the right to examine: C.O.D.
and he does any act in relation to them which Sales
is inconsistent with the ownership of the Where goods are delivered to a carrier by the
seller seller, in accordance with an order from or
When, after the lapse of a reasonable time, agreement with the buyer, upon the terms that
he retains the goods without intimating to the the goods shall not be delivered by the carrier
seller that he has rejected them [Art. 1585, to the buyer until he has paid the price, whether
Civil Code]. such terms are indicated by marking the goods
with the words "collect on delivery," or
otherwise, the buyer is not entitled to examine
General Rule: Exercise of acts of ownership the goods before the payment of the price, in
over the goods is a manifestation of the absence of:
acceptance, such as making use of them as 1. agreement; or
owner, making alterations in the goods, or 2. usage of trade
subjecting it to the process of manufacture. 3. permitting such examination [par. 3, Art.
1584, Civil Code]
Exception: Buyer’s right to make a test of
goods, but only if necessary, to enable him to 2. Delivery of goods in installment
determine whether to accept or reject the General Rule: The vendee is not bound to
goods. accept delivery of goods in installment.

Vendee’s refusal Exception: Unless otherwise agreed upon

If vendee has the right to refuse and rightfully [par. 1, Art. 1583, Civil Code]
refused upon delivery, he has no obligation to
return them UNLESS otherwise agreed BUT Where separate price has been fixed for
he has to take reasonable care of the goods. each installment [par. 2, Art. 1583, Civil
Code ]
Where there is a contract of sale of goods
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a. To be delivered by stated installments, 2. Right of vendee to suspend
b. To be separately paid for, and payment of price
c. The seller makes defective deliveries in The vendee has the right to suspend payment
respect of one or more installments, or the in two instances:
buyer neglects or refuses without just a. If he is disturbed in the possession or
cause to take delivery of or pay for one or ownership of the thing bought; or
more installments. b. If he has reasonable grounds to fear such
disturbance, by a vindicatory action or a
It depends in each case on the terms of the foreclosure of mortgage [Art. 1590, Civil
contract and the circumstances of the case: Code]
a. Whether the breach of contract is so
material as to justify the injured party in Except
refusing to proceed further and suing for a. If the vendor gives security for the return of
damages for breach of the entire contract, the price in a proper case
or b. If it has been stipulated
b. Whether the breach is severable, giving c. If the vendor caused disturbance or danger
rise to a claim for compensation but not to to cease
a right to treat the whole contract as d. If the disturbance is a mere act of trespass
broken. e. If the vendee has already fully paid the
price [De Leon]
B. Obligation to pay the price
Note: It is absolutely necessary that the cause
Article 1582, Civil Code: The vendee is bound to
of disturbance or danger be based on a fact
accept delivery and to pay the price of the thing sold arising before the sale or if it arose after the
at the time and place stipulated in the contract. sale, the cause is imputable to the vendor or
his successor-in-interest [Baviera].
If the time and place should not have been
stipulated, the payment must be made at the time In cases of delay of payment, one should also
and place of the delivery of the thing sold.
be liable for interest and penalties for such
delay in payment. It would be grossly unfair for
respondent to be deprived of the amount it
1. Obligation to pay interest would have received from the sale of their
If there is a stipulation requiring interests: The
properties, while petitioners benefited from the
vendee shall owe interest on the price from the
use and continued possession of the properties
time the thing is delivered up to the time of
[Sps. Mahusay v. B.E. San Diego, G.R. No.
payment.
179675 (2011)].
If there is no stipulation: from the time of
judicial or extrajudicial demand for C. Obligation to bear the
payment. expenses for the execution and
● This applies if the thing delivered produces
fruits or income, or if the buyer incurs in registration of the sale and
default putting the goods in a
deliverable state, if so stipulated
The three instances when the vendee shall pay
interest for the period between delivery and
payment of the price: Article 1521, par. 5, Civil Code: Unless otherwise
a. If there was a stipulation; agreed, the expenses of and incidental to putting the
goods into a deliverable state must be borne by the
b. If the thing sold and delivered produces seller.
fruits or income;
c. If the vendee is in default, from the time of
judicial or extrajudicial demand for
payment [Art. 1589, Civil Code].

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VI. BREACH OF CONTRACT REMEDY

A. Remedies Movables Damages, Rescission,

Price through Specific
The following remedies arise from the Performance.
bilateral nature of the contract of sale:
1. Specific performance Special Remedies:
2. Rescission Possessory lien, Stoppage
3. Damages in transitu, Resale,
Rescission
General Rule: Rescission of a contract will not
be permitted for a slight or casual breach, but Movables on Exact fulfillment,
only for such substantial and fundamental Installment Cancellation of the Sale,
breach as would defeat the very object of the Foreclosure of Chattel
parties in making the agreement [Song Fo & Mortgage
Co. v. Hawaiian-Philippine Co., G.R. No.
23769 (1925)].
Immovables Price through Specific
Prescriptive periods [Arts. 1144-1145, Civil Performance, Rescission
Code] (for anticipatory breach and
● 10 years if based on a written contract for non-payment)
● 6 years upon an oral contract
Immovables Contract of Sale:
1. Remedies of the Seller on Rescission through Article
QUICK SUMMARY: REMEDIES OF SELLER Installment 1592, Civil Code
Movables
Contract to Sell:
Damages, Rescission, Price through
Rescission through
Specific Performance
Maceda Law (RA 6552)
Special Remedies:
Possessory lien, Stoppage in transitu, a. Sale of Goods
Resale, Rescission ACTION FOR PRICE [Art. 1595, Civil
Movables on Installment Code]
1. When the ownership of the goods has
Exact fulfillment, Cancellation of the Sale, passed to the buyer and he wrongfully
Foreclosure of Chattel Mortgage neglects or refuses to pay for the price
2. When the price is payable on a certain day
Immovables and the buyer wrongfully neglects to pay
such price, whether or not ownership has
Price through Specific Performance, passed
Rescission (for anticipatory breach and for 3. When the goods cannot readily be resold
non-payment) for a reasonable price, and the buyer
wrongfully refuses to accept the goods,
Immovables on Installment whether or not ownership has passed

Contract of Sale: Rescission through Art. In an action by the seller under (b), buyer can
1592, Civil Code set up the defense that the seller, at any time
before judgment in such action, could not or did
Contract to Sell: Rescission through Maceda not intend to deliver the goods.
Law (RA 6552)
Unless the contrary appears, payment and
delivery are presumed to be concurrent acts,
and the obligation of each party to perform the
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contract is dependent upon the simultaneous contract of sale, or manifested his inability to
performance by the other party [De Leon]. perform his obligations, or has committed a
breach of the contract of sale.
If ownership has not yet passed to the buyer,
the seller cannot maintain an action for the Under this rule, rescission would bar an action
price, unless it involves (a) or (c). on the contract because it means cancellation
of the contractual obligations between the
Title to goods passes from the moment the parties [Baviera].
goods are placed at the buyer’s disposal when
refusal to accept is without just cause [De Leon The unpaid seller’s right to rescind for non-
citing Art. 1588, Civil Code]. performance is not absolute. Not allowed to
rescind when:
ACTION FOR DAMAGES [Art. 1596, Civil 1. There are 3rd persons possessing the
Code] objects of the contract to whom no bad faith
When ownership has not yet passed and the is imputable [De Leon; Ocejo Perez & Co.
buyer, without lawful cause, neglects or v. International Bank, G.R. No. L-10658
refuses to ACCEPT and PAY for the goods (1918)]
2. Breach is slight or casual [De Leon; Song
General Rule: Measure of damages is the Fo & Co. v. Hawaiian-Phil. Co., supra]
ESTIMATED LOSS directly and naturally
resulting in the ordinary course of events from The seller cannot unilaterally and
the buyer’s breach. extrajudicially rescind a contract absent
express stipulation to do so, except as
Exceptions: provided in Art. 1597 [De Leon].
1. Where there is available market for goods:
Difference between the contract price and b. Special Remedies of the Unpaid
the market price. The market price is fixed Seller [Arts. 1525-1535, Civil Code]
at the time the goods ought to have been 1. Possessory lien;
accepted, or if no time was fixed, at the 2. Stoppage in transitu;
time of refusal to accept. 3. Special right of resale; and
4. Special right to rescind
Note: When there are special
circumstances showing proximate Note: These special remedies have a
damages of a greater amount than the hierarchical application. The special rights to
difference between the contract price and resell and to rescind can be availed of by the
market price, seller is entitled to such unpaid seller only when either of the two prior
higher amount of damages when such rights of possessory lien or stoppage in transitu
damages may be reasonably attributed to have been exercised by the unpaid seller
the non-performance of the obligation [De [Villanueva].
Leon; par. 3, Art. 1596 read with par. 2, Art.
2201, Civil Code]. Definition of an Unpaid Seller
Seller is deemed to be unpaid seller:
2. Where labor or expense of material amount 1. When the whole of the price has not been
is necessary on the part of the seller to paid or tendered;
perform the contract: Cost of labor 2. When a bill of exchange or other negotiable
performed or expenses made before instrument has been received as
receiving notice of buyer’s repudiation, and conditional payment, and the condition on
unrealized profit. which it was received has been broken by
reason of the dishonor of the instrument,
RESCISSION BY GIVING THE BUYER the insolvency of the buyer, or otherwise
NOTICE OF THE ELECTION TO RESCIND [Art. 1525, Civil Code].
[Art. 1597, Civil Code]
When the goods have not yet been delivered to
the buyer, and the buyer repudiated the

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Unpaid Seller also includes: ● It is not lost by the mere fact that seller
1. The agent of the seller to whom the bill of obtained a judgment for the price
lading was endorsed,
2. The consignor or agent who had paid the When Lien May Be Revived After Delivery
price or is responsible for the price, 1. If the buyer refuses to receive the goods
3. Any other person who is in the position of a after the same are delivered to the carrier
seller (i.e. buyer who paid the price and had or other bailee on his behalf, though the
a right to return the goods) [Art. 1525, Civil seller has parted with both ownership and
Code]. possession. Here, the seller may reclaim
the goods and revest the lien [par. 1 (2). Art
A seller is considered to be an unpaid seller if 1531, Civil Code].
the whole price has not been paid or tendered, 2. If the buyer returns the goods in wrongful
or when check received as a conditional repudiation of the sale, and the seller, in
payment was dishonored by non-payment or accepting the goods from the buyer, says
insolvency of the buyer [Baviera]. he does not assent to the rescission.

POSSESSORY LIEN OVER THE GOODS Possessory lien is lost after the seller loses
Right to retain possession of goods until possession but his lien as an unpaid seller
payment or tender of the whole price, or unless remains. His preference can only be defeated
he agrees to sell on credit [Arts. 1526-1529, by the government’s claim to the specific tax on
1503, 1535, Civil Code]. the goods [Arts. 2241, 2247, Civil Code].

When lien available RIGHT OF STOPPAGE IN TRANSITU

1. The seller is unpaid An extension of the lien for the price; entitles
2. The unpaid seller has possession over the unpaid seller to resume possession of the
thing goods while they are in transit before the goods
3. Ownership of the thing has passed to the come in possession of the vendee [Arts. 1530-
buyer 1532, 1535, 1636(2) Civil Code].
4. Any of the following: [Art 1527, Civil Code]
● Goods are sold without stipulation as to Requisites for the exercise of stoppage in
credit transitu
● Goods are sold on credit, but term of 1. The seller is unpaid
credit has expired 2. The buyer is insolvent
● Buyer becomes insolvent 3. The goods are in transit
4. The seller either takes actual possession,
The seller may exercise his right of lien or gives notice of claim to the carrier or
notwithstanding that he is in possession of the other person possessing the goods
goods as agent or bailee for the buyer [par. 2, 5. The seller must surrender the negotiable
Art. 1527, Civil Code]. instrument or title, if any, issued by the
carrier/bailee
When unpaid seller loses his lien [Art. 1529, 6. The seller must bear the expenses of the
Civil Code] delivery of the goods after exercise of such
1. Seller delivers goods to carrier or other right.
bailee for transmission to the buyer without
reserving ownership or right of possession When Goods Are In Transit [par. 1, Art 1531,
(i.e. under a straight or non-negotiable bill Civil Code]
of lading) 1. From the time of delivery to the carrier or
2. Buyer or his agent lawfully obtains other bailee by the seller, for the purpose
possession of goods of transmission to the buyer, until the buyer
3. Seller waives the lien or his agent takes such delivery from the
● But it is not lost with respect to the carrier.
remainder of the goods when only 2. Even when goods have reached their
partial delivery is made (unless such is ultimate destination, if buyer rejects them
symbolic delivery of the whole) and carrier retains possession

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To terminate transit by delivery to a SPECIAL RIGHT OF RESALE
middleman, delivery must be to keep, not to Available to unpaid seller who has a right of lien
transport. or who has stopped the goods in transitu [Art.
1533, Civil Code].
In case of misdelivery, the goods are still
considered in transit, hence, the seller may still When available
exercise his right pursuant to Article 1523. When the unpaid seller has either a right of lien
or has stopped the goods in transitu and under
When Goods are No Longer in Transit [par. any of the following conditions:
2, Art. 1531, Civil Code] 1. The goods are perishable in nature
1. Buyer obtained delivery of the goods 2. The right to resell is expressly reserved in
before they have reached their appointed case the buyer should default
destination 3. The buyer delays in paying the price for an
2. Goods have arrived at the appointed unreasonable time
destination, and the carrier/bailee
acknowledges to hold the goods on behalf Note: The right to resell the goods is not
of the buyer mandatory, but permissive.
3. Goods have arrived at the appointed
destination, but carrier wrongfully refuses How exercised
to deliver to buyer/his agent 1. He must do so within a reasonable time
and in such manner as to obtain the best
Note: If the goods are delivered to a ship, price possible.
freight train, truck, or airplane chartered by the 2. The place of sale shall be at the place of
buyer, it is a question depending on the delivery, except if the seller cannot sell the
circumstances of the particular case, whether thing at a fair price at the place of delivery.
they are in the possession of the carrier as 3. Resale is deemed to be a fair sale if it is
such or as agent of the buyer. undertaken in accordance with established
business practices, with no attempt to take
How Right is Exercised [Art. 1532, Civil advantage of the original buyer.
Code] 4. Resale may be in a private or public sale,
1. By obtaining actual possession of the but seller cannot buy directly or indirectly.
goods 5. For resale to be valid, buyer need not be
2. By giving notice of his claim to the notified of an intention to resell or the time
carrier/other bailee who has possession of and place of the resale.
the goods
● Carrier must redeliver goods to seller, Exception: if the ground for resale is failure to
or according to his instructions pay for an unreasonable amount of time
● Carrier not obliged to redeliver until the ● The seller must exercise reasonable
negotiable document of title, if any, has judgment in making the sale.
been surrendered for cancellation
Effects of Resale:
Effect When Buyer Has Sold the Goods [Art. 1. Seller is no longer liable to the original
1535, Civil Code] buyer upon the contract of sale or for any
General Rule: Seller’s right to stoppage in profit made by the resale
transitu is not affected even if buyer has sold or 2. Buyer at resale acquires good title as
disposed of the goods unless the seller has against the original owner
given his assent thereto. 3. In case resale is at a loss, seller is entitled
to recover the difference from the original
Exceptions: buyer
1. When seller has given consent thereto 4. Seller may recover damages from original
2. When a negotiable document of title has buyer for breach of contract
been issued for the goods to a purchaser
for value in good faith

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SPECIAL RIGHT TO RESCIND If seller chose specific performance, and such
Return of the title over the undelivered goods becomes impossible, he may still avail of
to the seller, and right to recover damages for rescission. If absolute sale, seller must make a
breach of contract [Art. 1534, Civil Code] demand for rescission.
1. Judicially, OR
When available 2. By a notarial act
When the unpaid seller has either a right of lien
or has stopped the goods in transitu and under Demand necessary even if automatic
any of the following conditions: rescission is stipulated
1. Seller expressly reserved his right to 1. Effect of lack of demand: Buyer can still
rescind in case buyer defaults pay
2. Buyer has been in default in payment for an 2. Effect of demand: Court may not grant
unreasonable time buyer a new term

Transfer of title shall not be held to have been SECS. 23 AND 24, PD 957
rescinded by the unpaid seller until he Non-forfeiture of payments
manifests by notice to the buyer or some other No installment payment made by the buyer
overt act an intention to rescind. shall be forfeited in favor of the owner or
developer of the condominium or subdivision
Communication of rescission to buyer is not project, after due notice, when the buyer
always necessary (it can be an overt act). But desists from paying due to the failure of the
giving/failure to give notice is relevant in developer or owner to develop the project
determining reasonableness of time given to according to the approved plans or within the
the buyer to make good his obligation under time limit stated.
contract [De Leon].
Buyer’s Remedy: At his option, he may
c. Sale of Immovables reimburse the total amount paid including
RESCISSION FOR ANTICIPATORY amortization interest with interest thereon at
BREACH [ART. 1591, Civil Code] the legal rate.
Note: This is applicable to both cash sales and
sales in installments. If the buyer fails to pay the installments for
reasons other than the failure of the owner or
Requisites developer to develop the project, his rights
1. There is delivery of immovable property shall be governed by RA 6552.
2. Vendee has not yet paid the price; and
3. Vendor has reasonable grounds to fear the 2. Remedies of the Buyer
loss of property and the loss of price General Rule: Courts will refuse to decree
specific performance with respect to chattels
If there is no such reasonable ground, Art. 1191 because damages are a sufficient remedy.
applies (specific performance or rescission
with damages). Exception: Buyer is entitled to the specific
thing which to him has special value and which
Court has no discretion to compel the seller to he cannot readily obtain in the market OR
wait for the expiration of the period to pay, or to where damages would not furnish a complete
grant the buyer more time to pay. and adequate remedy [Baviera].

SPECIFIC PERFORMANCE + DAMAGES

OR RESCISSION + DAMAGES [Art. 1191,
Civil Code]
Seller may choose between specific
performance and rescission, with damages in
either case. Court has discretion, for a just
cause, to give the buyer more time to pay even
if the seller chooses rescission.
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QUICK SUMMARY: REMEDIES OF BUYER Contract to Sell: Maceda
Movables Law (RA 6552)
Damages, Rescission, Price through
Specific Performance
Breach of Warranty
a. Sale of Movables
REMEDY FOR BREACH OF OBLIGATION
Return or Offer to Return (with recovery of TO PRESERVE
price or may become the seller’s bailee)
Acceptance, for recoupment or with If thing is lost:
damages Without fault of Through fault of seller
Refuse to Accept with Damages seller /
Through Fortuitous
Immovables Event (if seller is
liable)
Rescission, Suspension of Payment, PD 957
(Reimbursement of the total amount paid/ NO BREACH Damages
compel the developer to complete facilities) Obligation is
extinguished.
Immovables on Installment

Contract of Sale: Rescission through Art. A thing is lost when it:

1592, Civil Code 1. Perishes;
2. Goes out of commerce of man; or
Contract to Sell: Rescission through Maceda 3. Disappears in such a way that its existence
Law (RA 6552) is unknown or it cannot be recovered

If thing deteriorates:
REMEDY Without fault of Through fault of seller
seller
Movables Damages, Rescission,
NO BREACH. Rescission + damages
Price through Specific
Impairment shall
Performance.
be borne by OR
Breach of Return or Offer to Return buyer
Warranty (with recovery of price or Specific performance +
may become the seller’s damages
bailee)
Acceptance, for
recoupment or with
damages
Refuse to Accept with
Damages

Immovables Rescission, Suspension of

Payment, PD 957
(Reimbursement of the total
amount paid/ compel the
developer to complete
facilities)

Immovables Contract of Sale: Article

on 1592, Civil Code
Installment

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REMEDY FOR BREACH OF OBLIGATION exceeds 1/10
TO DELIVER of price
b. Buyer would
Delivery of wrong quantity [Art. 1522, Civil not have
Code] bought the
LESS THAN what was MORE THAN property has
contracted what was he been
contracted aware of the
inferior quality
Reject the goods Reject the or smaller
excess area
OR
OR
Note: This rule also applies to judicial sales
Accept and pay:
[Art. 1541, Civil Code].
a. At contract rate if Reject the whole,
buyer accepts if indivisible
IF FOR A LUMP SUM
knowing that
seller won’t OR Everything is within Not everything is
perform in full boundaries, even if within the
b. At fair value if Accept the whole less or more than boundaries
goods were used and pay at stated area
before knowing contract rate
that seller won’t No remedy Proportional
be able to reduction in price
perform in full Where both the area
and the boundaries of OR
Buyer becomes the the immovable are
owner of the whole mass declared, the area Rescission
and the seller is bound to covered within the
make good the boundaries of the
deficiency [Art. 1464, immovable prevails
Civil Code] over the stated area
[Rudolf Lietz, Inc. v.
CA, G.R. No. 122463
b. Sale of Immovables [Art 1539 – 1543, (2005)]
Civil Code]
IF AT THE RATE OF A CERTAIN PRICE PER
Prescriptive period: 6 months counted from
UNIT OF MEASURE OR NUMBER
date of delivery.
Less (in area or More (in area or
quality) than what quality) than what B. Recto Law and Maceda Law
was agreed upon: was agreed upon:
1. Recto Law: Sale of Movables on
Proportional reduction Reject the excess Installment – Arts. 1484-1486, Civil
of price Code
OR
OR WHEN APPLICABLE
Accept the whole
Rescission, if: and pay at contract Sale of movables in installment
a. Lack in area is rate The rule is intended to apply to sales of
at least 1/10 movables, the price of which is payable in 2 or
of what is more installments, but not to straight-term
stated, or sales where the price is payable in full, after
inferior value making a down payment because the law aims
of thing sold to protect improvident buyers who may be
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tempted to buy beyond their means [Levy Otherwise, the mortgagor will find himself
Hermanos v. Gervacio, G.R. No. L-46306 minus the property and still owing practically
(1939)]. the full amount of his original indebtedness
[Bachrach Motor Co., Inc. v. Millan, G.R. No. L-
Lease of personal property with option to 42256 (1935)].
buy
● When lessor has deprived the lessee of the 2. Maceda Law (RA 6552): Sale of
possession or enjoyment of the thing (i.e. Immovables on Installment
lessor files a complaint for replevin against RA 6552 does NOT apply to:
lessee). a. Industrial lots
● Also applies when seller assigns his credit b. Commercial buildings
to someone else. c. Sale to tenants under Agricultural Reform
Code [RA 3844]
ALTERNATIVE AND EXCLUSIVE d. Sale of lands payable in straight terms
REMEDIES [Sec. 3, RA 6552]
Note: The exercise of one remedy bars the
exercise of the others. Rights of the Buyer
The law imposes additional requirements on
a. Specific Performance the part of the seller for a valid rescission.
General Rule: When the seller has chosen a. If buyer has paid at least 2 years of
specific performance, he can no longer seek installments then defaults:
for rescission or foreclosure of the chattel ● Buyer has right to a grace period of 1
mortgage month per year of installment payment
made BUT the buyer may only avail of
Exception: If specific performance has the grace period once every 5 years
become impossible, the seller may still choose ● Buyer has right to the refund of Cash
rescission [Art. 1191, Civil Code] Surrender Value (CSV): 50% of total
amount paid + 5% for every year after
b. Cancellation of sale if vendee fails to the first 5 years of installments BUT
pay 2 or more installments total CSV should not be greater than
When the seller cancels the sale by 90% of total amount paid
repossessing the property sold, he is barred ● After the lapse of the grace period,
from exacting payment for its price. buyer is given a notice of cancellation
or demand for rescission by notarial
Note: It can only be carried out when he who act, effective 30 days from the buyer’s
demands rescission can return whatever he receipt thereof AND only upon full
may be obliged to restore [Art. 1385, Civil payment of CSV
Code].
b. If buyer has paid less than 2 years of
c. Foreclosure of Chattel Mortgage if installments:
vendee fails to pay 2 or more ● Grace period of at least 60 days
installments ● After the lapse of the grace period,
If seller chooses this remedy, he shall have no buyer is given a notice of cancellation
further action to recover any unpaid balance, or demand for rescission by notarial
and any stipulation to the contrary shall be void. act, effective 30 days upon receipt
thereof
Purpose of the law
1. To remedy the abuses committed in c. During the grace period, the buyer shall
foreclosure of chattel mortgages. also have the right:
2. To prevent mortgagees from seizing the ● To sell or assign his rights, evidenced
mortgaged property, buying it at in a notarial instrument
foreclosure sale for a low price and then ● To update his account
bringing the suit against the mortgagor for ● To pay in advance any installment, or
a deficiency judgment. the full unpaid balance of the price,
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without any interest, and to have such
full payment of the purchase price
annotated in the certificate of title
covering the property.

Down payments, deposits, or options on the

contract shall be included in the total number of
installments made.

The seller may go to court for judicial rescission

in lieu of a notarial act of rescission.

Cancellation pertains to extrajudicial

cancellation. Absence of notice does not bar
the filing of an action to cancel the contract.

A decision in an ejectment case can operate as

notice of cancellation as required by RA 6552.

However, mere filing of an unlawful detainer

suit by the seller does not operate as such
notice [De Leon].

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VII. EXTINGUISHMENT Exceptions:

a. In the absence of a stipulation, the right
must be exercised within 4 years from the
A. In general date of contract.
b. If no period stipulated but the parties
Generally, a sale is extinguished by the same intended a period, then it shall be 10 years
causes as all other obligations [Arts.1600, from the date of the contract.
1231, Civil Code] c. But vendor may still exercise the right to
1. Payment/performance repurchase within thirty days from the time
2. Prescription final judgment was rendered in a civil
3. Loss of thing due action on the basis that the contract was a
4. Annulment true sale with right to repurchase.
5. Novation
6. Condonation/remission 3. By Whom Exercised
7. Confusion/merger a. Vendor, after returning to vendee price of
8. Compensation sale plus expenses of the contract, other
9. Rescission legitimate payments made by reason of
10. Resolutory condition fulfilled sale, and necessary and useful expenses
11. Redemption (Conventional or Legal) made on the thing sold [Art. 1616, Civil
Code]
B. Conventional Redemption / b. His heirs, assigns or agents
c. Creditor, after he has exhausted the
Pacto de retro sale property of the vendor [Art. 1610, Civil
Code]
1. Definition [Art.1601, Civil Code] d. Co-owners of an immovable, if they sold
Conventional Redemption exists when the their interests to the same person, may
vendor reserves the right to repurchase the only redeem their respective shares [Art.
thing sold, with the obligation to: 1612, Civil Code]
a. Return price of the sale
b. Expenses of the contract Note: Vendee cannot be compelled to agree to
c. Any other legitimate payments by reason of a partial redemption and can compel all sellers
the sale to redeem the entire property or for only one of
d. Necessary and useful expenses [Art.1601, them to redeem it [Art. 1613, Civil Code]
Civil Code]
4. From Whom to Redeem
Note: Redemption feature does not prevent the a. Vendee a retro
full consummation of the contract of sale b. His heirs, assigns or agents
c. Subsequent purchaser of property, even if
Available when the seller reserves the right to the right to redeem was not mentioned in
repurchase the thing sold in the same the subsequent contract; except if
instrument of sale as one of the stipulations of registered land, where the right to redeem
the contract [Villarica v. CA, G.R. No. L-19196 must be annotated on the title
(1968)] d. If several heirs, then the right of redemption
can be exercised against each heir for his
2. Period [Art.1606, Civil Code] share of the property [Art. 1615, Civil Code]
General Rule: Follow period stipulated in
contract, but should not exceed 10 years. 5. How Exercised
Otherwise, automatically reduced. a. By returning the ff. to the buyer:
● Price of the sale; except if the parties
agreed on a redemption price
● Expenses of the contract and other
legitimate payments made by reason of
the sale;

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● Necessary and useful expenses made 8. Right to redeem v. Option to
on the thing sold Purchase
b. Complying with any other stipulation
agreed upon, if any. Right to Redeem Option to Purchase

General Rule: It is not sufficient that a person Not a separate Generally a principal
offering to redeem manifests his desire to do contract but part of a contract and may be
so. The statement of intention must be main contract of sale, created independent
accompanied by an actual and simultaneous and cannot exist of another contract
tender of payment for the full amount of the unless reserved at
repurchase price [BPI Family Savings Bank, the time of the
Inc. v. Sps. Veloso, G.R. No. 141974 (2004)]. perfection of the
main contract of sale
6. Effect of Redemption Does not need a Must have a
a. The sale is extinguished
separate consideration
b. The seller shall receive the thing free from
consideration to be separate and distinct
all charges or mortgages constituted by the
valid and effective from the purchase
buyer BUT he shall respect leases
price to be valid and
executed by the buyer in good faith and in
effective [Arts. 1324
accordance with local custom
and 1479, Civil
c. As to fruits:
Code]
1. If parties agreed on a distribution, the
fruits shall be distributed according to The maximum period The period of the
the agreement for the exercise of option contract may
2. If parties did not agree on a distribution, the right to be beyond the 10-
a. If there are growing fruits at the repurchase cannot year period
time of sale and at the time of exceed 10 years
redemption:
1. Buyer receives reimbursement
if the buyer paid indemnity at Requires in addition
the time of the sale a tender of payment May be exercised by
2. Buyer receives no of the amount notice of its exercise
reimbursement or prorating if required by law, to the offeror
the buyer did not pay indemnity including
at the time of sale consignment thereof
b. If there were no growing fruits at if tender of payment
the time of sale, but some exist at cannot be made
the time of redemption: fruits effectively on the
prorated (buyer entitled to part buyer
corresponding to time he
possessed the land in the last year,
counted from the anniversary of the C. Equitable mortgage
date of sale)
An equitable mortgage is defined as one
which, although lacking in some formality, or
7. Effect of non-redemption form or words, or other requisites demanded by
Ownership is consolidated in the buyer BUT a statute, nevertheless reveals the intention of
the consolidation shall not be recorded in the the parties to charge real property as security
Registry of property without a judicial order, for a debt, and contains nothing impossible or
after the vendor has been duly heard contrary to law [Molina v. CA, G.R. No. 125755
[Art.1607, Civil Code]. (2003)].

A pactum commissorium is a stipulation

enabling the mortgagee to acquire ownership
of the mortgaged properties without need of
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foreclosure proceedings which is a nullity being benefit received as “rents,” shall be
contrary to the provisions of Article 2088 of the considered as “interest” (and subject to
Civil Code. The inclusion of such stipulation in usury laws)
the deed shows the intention to mortgage b. The court may decree that the vendor-
rather than to sell [Legaspi v. Sps. Ong, G.R. debtor to pay the outstanding loan to the
No. 141311 (2005)]. vendee-creditor
c. Where the agreement is upheld as a pacto
A pactum commissorium is contrary to the de retro sale, the vendor may still exercise
nature of a true pacto de retro sale since the right within 30 days from the time the
ownership of the property sold is immediately judgment becomes final.
transferred to the vendee a retro upon
execution of the sale, subject only to the The right of repurchase is not a right granted to
repurchase of a vendor a retro within the the seller by the buyer in a subsequent
stipulated period. instrument, but one reserved by the seller in the
same instrument as the sale contract. Any right
1. Presumption that a contract is an granted after the execution of the sale
equitable mortgage instrument is not a right to repurchase, but
The contract shall be presumed to be an some other right like an option to buy [Roberts
equitable mortgage, in any of the following v. Papio, G.R. No. 166714 (2007)].
cases:
a. Price unusually inadequate; 2. Requisites for presumption of an
b. Possession retained by the seller as lessee equitable mortgage
or otherwise; a. That the parties entered into a contract
c. Period of redemption extended (or granted denominated as a contract of sale, and
anew) upon or after the expiration of the b. That their intention was to secure an
right to repurchase; existing debt by way of a mortgage [Molina
d. Part of the purchase price retained by the v. CA, supra].
seller;
e. Payment of taxes on the thing sold borne In case of doubt, a contract purporting to be a
by the seller; sale with right to repurchase shall be construed
f. Any other case where it may be fairly as an equitable mortgage [Art. 1603, Civil
inferred that the real intention of the parties Code].
is for the transaction to secure a debt or
other obligation [Art. 1602, Civil Code]. 3. Rationale behind provision on
equitable mortgage
Note: A contract shall be construed as an a. Circumvention of usury law
equitable mortgage when any of the
circumstances in Art. 1602 is present. When in
b. Circumvention of prohibition against
pactum commissorium – creditor cannot
doubt whether equitable mortgage or sale,
appropriate the things given by way of
settle in favor of equitable mortgage because it
pledge or mortgage since remedy is
involves a lesser transmission of rights.
foreclosure.
By itself, no equitable mortgage under the ff.
Instances: 4. Remedies of apparent vendor
a. Mere tolerated possession a. If the instrument does not reflect the true
b. Mere delay in transferring title to the buyer agreement: remedy is reformation
The provisions on equitable mortgage of b. If decreed to be an equitable mortgage:
Art.1602, Civil Code also applies to a contract any money, fruits or other benefit to be
purporting to be a deed of absolute sale. received by the buyer as rent or otherwise
considered as interest.
Remedy: Reformation of the instrument [must c. If decreed as a true sale with right to
be brought within 10 years] purchase: seller may redeem within 30
a. If the agreement is construed to be an days from finality of judgment, even if the
equitable mortgage, any money or other period for redemption has expired.

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5. Period of redemption c. the necessary and useful expenses made
No stipulation: 4 years from the date of on the thing sold [Art.1616, Civil Code].
contract [Art. 1606, Civil Code]
7. How redemption is exercised
When there is agreement: Period not to a. The vendor de retro must complete the
exceed 10 years [Art. 1606, Civil Code] repurchase before the expiration of the
redemption period [Panganiban v. Cuevas,
General Rule: Period starts to run from the G.R. No. 2001 (1907)]
date of the execution of the contract b. A sincere or genuine tender of payment is
enough. The deposit of the amount of the
Exception: When the efficacy of the sale is repurchase money with the Clerk of Court
subject to a suspensive condition, period was simply an additional security [Legaspi
should be counted not from the date appearing v. CA, G.R. No. L-45510 (1986)]
on the instrument, but from the date when the c. When tender of payment cannot be validly
condition is fulfilled, marking the made because the buyer cannot be
consummation of the sale [Tolentino citing located, it becomes imperative for the
Manresa]. seller a retro to file a suit for consignation
with the courts of the redemption price
Additional 30 days for Repurchase [Catangcatang v. Legayada, G.R. L-26295
The last paragraph of Art. 1606 giving the (1978)]
vendor the right to repurchase within 30 days d. If the offer or tender of payment for
from the time of the rendition of final judgment repurchase is refused, it is not necessary
applies only where the nature and the for the vendor a retro to consign in court or
character of the transaction, whether as a make judicial deposit of the repurchase
pacto de retro or an equitable mortgage, was price [Rosales v. Reyes, G.R. No. 8162
put in issue before the court [Gonzales v. de (1913)]
Leon, G.R. No. L-14532 (1965)]
The seller a retro is given no option to require
When an unrecorded pacto de retro sale was the buyer a retro to remove the useful
construed as an equitable mortgage, the improvements on the land subject of the sale a
plaintiff had the right to enforce his lien in a retro, unlike that granted the owner of a land
separate proceeding notwithstanding the fact under Arts. 546 and 547. Under Art. 1616, the
that he had failed to obtain judgment declaring seller a retro must pay for useful improvements
him the sole and absolute owner of the land introduced by the buyer a retro; otherwise, the
[Heirs of Arches v. Diaz, G.R. No. L-27136 latter may retain possession of the land until
(1973)]. reimbursement is made [Gargollo v. Duero,
G.R. No. L-15973 (1961)].
Where the petition of the buyer in a pacto de
retro sale is for a judicial orders pursuant Art.
1607, so that there may be consolidation of
ownership since there was failure to redeem
during the redemption period, the right of action
to foreclose or to collect the indebtedness
arises from the court judgment declaring the
contract an equitable mortgage.

6. Exercise of the right to redeem [Art.

1616, Civil Code]
The seller can avail himself of the right of
repurchase by returning to the buyer:
a. the price of the sale;
b. the expenses of the contract and any other
legitimate payments made by reason of the
sale;
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VIII. ASSIGNMENT OF D. Assignment Distinguished

CREDITS from Other Terms

An assignment of credits and other incorporeal ● Renunciation is the abandonment of a

rights shall be perfected in accordance with the right without a transfer to another.
provisions of article 1475 [Art. 1624, Civil ● Agency involves representation, not
Code]. transmission wherein the agent acts for the
principal.
A. Definition ● Substitution is the change of the previous
debtor by a new debtor with the credit
An assignment of credit is a contract by which remaining in the same creditor.
the owner (assignor/creditor) of a credit and ● Subrogation is the change in the person
other incorporeal rights transfers, either of the creditor with his credit being
onerously or gratuitously, to another (assignee) transferred to the new creditor.
his rights and actions against a third person ● Dation in payment is the alienation of
(debtor) [De Leon]. property to the creditor in satisfaction of a
debt of in money. It is also governed by the
law on sales. It may be legal or
B. Nature conventional.
It is a consensual, bilateral, generally onerous,
and commutative or aleatory contract [De E. Binding Effect
Leon].
General Rule: An assignment of a credit, right
Where the assignment is on account of pure or action shall produce no effect as against
liberality on the part of the assignor, the rules third persons.
on donation would be pertinent; where valuable
consideration is involved, the assignment Exceptions:
partakes of the nature of a contract of sale or 1. If it appears in a public instrument
purchase [Nyco Sales Corporation v. BA 2. If it is recorded in the Registry of Property
Finance Corporation, G.R. No. 71694 (1991)]. in case the assignment involves real
property.
It merely effects the transfer of rights which the
assignor has at the time [of the assignment] to The assignee cannot acquire greater rights
the assignee [Casabuena v. CA, G.R. No. than those pertaining to the assignor [Koa v.
115410 (1998)]. Court of Appeals, G.R. No. 84847 (1993)].

The act of assignment cannot operate to erase The debtor who, before having knowledge of
liens or restrictions burdening the right the assignment, pays his creditor shall be
assigned [Gonzales v. Land Bank of the released from the obligation [Art. 1626, Civil
Philippines, G.R. No. 76759 (1990)]. Code].

C. Perfection F. Consent not Necessary

It is perfected from the moment the parties Consent of debtor is not necessary; merely
agree upon the credit or right assigned and notice to him is necessary. Hence, the duty to
upon the price but the assignee will acquire pay does not depend on the consent of the
ownership only upon delivery [De Leon]. debtor; otherwise, all creditors would be
prevented from assigning their credits because
of the possibility of the debtors’ refusal to give
consent [Sison v. Yap Tico, G.R. No. L-11583
(1918)].

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The purpose of the notice by the assignee is to released from his obligation. He acted in bad
inform the debtor that from the date of the faith. He can be made to pay again [De Leon].
assignment he should make payment to the
assignee and not to the original creditor. H. Extent of Assignment of
Credit
G. Effect of Payment by Debtor
after Assignment of Credit General Rule: All the accessory rights (such
as guaranty, mortgage, pledge or preference)
1. After notice are included [Art. 1627, Civil Code].
Payment to original creditor is valid. The
assignee has a right of action against the Exception: The parties may stipulate
assignor, the original creditor. Burden of otherwise [De Leon].
proving that the debtor had knowledge of the
assignment is on the assignee [De Leon citing I. Warranties of the Assignor of
Manresa].
Credit
1. Existence and legality of credit at the
2. After notice, or before notice but perfection of the contract unless the credit
debtor had knowledge of had been sold as doubtful
assignment 2. No warranty as to the solvency of the
Payment by the debtor to the original creditor debtor unless:
after the former had received notice of the a. expressly stipulated
assignment, whether or not he consented, is b. insolvency was already existing prior to
not valid as against the assignee. the sale and of public knowledge at the
time of the assignment
If he had knowledge even before the notice and
still paid to the original creditor, he will not be

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I. GENERAL PROVISIONS Those disqualified under Art. 1490

The husband and wife cannot sell property,
except for
A. Definition a. When a separation of property was agreed
upon in the marriage settlements; or
Scope: The contract of lease may be of b. When there has been a judicial separation
things, or of work and service [Art. 1642, Civil of property under Art. 191.
Code].
Those disqualified under Article 1941
Lease of Things: In the lease of things, one of The following persons cannot acquire by
the parties binds himself to give to another the purchase, even at a public or judicial auction,
enjoyment or use of a thing for a price certain, either in person or through the mediation of
and for a period, which may be definite or another:
indefinite. However, no lease for more than a. The guardian – The property of the person
ninety-nine years shall be valid [Art. 1643, Civil or persons who may be under his
Code]. guardianship;
b. Agents – The property whose
Lease of Work and Service: In the lease of administration or sale may have been
work or service, one of the parties binds himself entrusted to them, unless the consent of
to execute a piece of work or to render to the the principal have been given;
other some service for a price certain, but the c. Executors and administrators – The
relation of principal and agent does not exist property of the estate under their
between them [Art. 1644, Civil Code]. administration;
d. Public officers and employees – The
Limitation: Consumable goods cannot be the property of the State or of any subdivision
subject matter of a contract of lease, except thereof, or of any government owned or
when they are merely to be exhibited or when controlled corporation, or institution, the
they are accessory to an industrial administration of which has been entrusted
establishment [Art. 1645, Civil Code]. to them; this provision shall apply to judges
and government experts who, in any
Record in the Registry of the Property manner whatsoever take part in the sale;
If a lease is to be recorded in the Registry of e. Justices, judges, prosecuting
property, the following persons cannot attorneys, clerks of superior and
constitute the same without proper authority: inferior courts, and other officers and
1. The husband with respect to the wife’s employees connected with the
paraphernal real estate; administration of justice – The property
2. The father or guardian as to the property of and rights in litigation or levied upon an
a minor or ward; and execution before the court within whose
3. The manager without special power [Art. jurisdiction or territory they exercise their
1647, Civil Code]. respective functions; this prohibition
includes the act of acquiring by assignment
Every lease of real estate may be recorded in and shall apply to lawyers, with respect to
the Registry of Property. Unless a lease is the property and rights which may be the
recorded, it shall not be binding upon third object of any litigation in which they may
persons [Art. 1648, Civil Code]. take part by virtue of their profession;
f. Others specially disqualified by law
1. Who is Qualified or Disqualified?
The persons disqualified to buy referred to in
Articles 1490 and 1491, are also disqualified to
become lessees of the things mentioned
therein [Art. 1646, Civil Code].

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2. Transfer of Lease Note: Art. 1547 shall not be held to render liable
General Rule: The lessee cannot assign the a sheriff, auctioneer, mortgagee, pledgee, or
lease without the consent of the lessor. other person professing to sell by virtue of
authority in fact or law, for the sale of a thing in
Exception: There is a stipulation to the which a third person has a legal or equitable
contrary [Art. 1649, Civil Code]. interest.

Rights of a Purchaser of Land Under a a. Eviction [Art. 1548, Civil Code]

Lease [Art. 1676, Civil Code] Eviction shall take place whenever by a final
General Rule: The purchaser of a piece of land judgment based on a right prior to the sale or
which is under a lease that is not recorded in an act imputable to the vendor, the vendee is
the Registry of Property may terminate the deprived of the whole or of a part of the thing
lease. purchased.
● The vendor shall answer for the eviction
Exceptions: even though nothing has been said in the
a. There is a stipulation to the contrary in the contract on the subject.
contract of sale; or ● Contracting parties may increase, diminish,
b. When the purchaser knows of the existence or suppress this legal obligation of the
of the lease. vendor.

If the buyer makes use of this right, the b. Warranty against Defects [Art. 1561,
lessee may demand: Civil Code]
a. That he be allowed to gather the fruits of the General Rule: The vendor shall be responsible
harvest which corresponds to the current for warranty against the hidden defects which
agricultural year; and the thing sold may have:
b. That the vendor indemnifies him for 1. Should they render it unfit for the use for
damages suffered. which it is intended; or
2. Should they diminish its fitness for such
If the sale is fictitious, for the purpose of use to such an extent that, had the vendee
extinguishing the lease, the supposed vendee been aware thereof, he would not have
cannot make use of the right to terminate the acquired it or would have given a lower
lease. price for it.
● The sale is presumed to be fictitious if at the
time the supposed vendee demands the Exception: Said vendor shall not be
termination of the lease, the sale is not answerable for:
recorded in the Registry of Property. 1. Patent defects;
2. Those which may be visible; or
3. Warranties 3. For those which are not visible if the
General Rule: In a contract of sale, there is an vendee is an expert who, by reason of his
implied warranty on the part of the seller that: trade or profession, should have known
a. He has a right to sell the thing at the time them.
when the ownership is to pass, and that the
buyer shall from that time have and enjoy c. Where Return of the Price is
the legal and peaceful possession of the Required [Art. 1653(2), Civil Code]
thing; and Reduction shall be made in proportion to the
b. The thing shall be free from any hidden time during which the lessee enjoyed the thing.
faults or defects, or any charge or
encumbrance not declared or known to the d. Presumption of Good Condition [Art.
buyer. 1666, Civil Code]
General Rule: In the absence of a statement
Exception: Unless a contrary intention concerning the condition of the thing at the time
appears [Art. 1547, Civil Code] the lease was constituted, the law presumes
that the lessee received it in good condition.

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Exception: There is proof to the contrary.

4. Termination
The lease may terminate:
a. By the expiration of the period [Art. 1669];
b. By the total loss of the thing;
c. By the resolution of the right of the lessor,
such as when the lessor is usufructuary
and the usufruct is terminated;
d. By the will of the purchaser or transferee of
the things;
e. By rescission due to nonperformance of
the obligations of one of the parties [Art.
1659, Civil Code];
● The aggrieved party may either ask for
the rescission of the contract and
indemnification for damages, OR only
ask for indemnification for damages
(the contract remains in force).
f. If a dwelling place or any other building
intended for human habitation is in such a
condition that its use brings imminent and
serious danger to life or health [Art. 1660,
Civil Code].

To terminate the lease, the lessee must notify

the lessor, even if at the time the contract was
perfected the former knew of the dangerous
condition or waived the right to rescind the
lease on account of this condition.

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II. RIGHTS AND objection, he is subject to the responsibilities of

a possessor in bad faith [Art. 1671, Civil Code].
OBLIGATIONS OF THE
In ejectment cases where an appeal is taken, a
LESSOR preliminary mandatory injunction may be
granted to restore the lessor in possession if
A. Obligations of a Lessor the higher court is satisfied that:
● The lessee's appeal is frivolous or dilatory,
1. To deliver the thing which is the object of or
the contract in such a condition as to render ● The lessor's appeal is prima facie
it fit for the use intended; meritorious, by motion filed within 10 days
2. To make on the same during the lease all from the time the appeal is perfected [Art.
the necessary repairs, unless there is a 1674, Civil Code]
stipulation to the contrary;
3. To maintain the lessee in the peaceful Causes for judicial ejection of the
and adequate enjoyment of the lease [Art. lessee [Art. 1673, Civil Code]
1654, Civil Code]; a. When the period agreed upon, or that
4. If the lessee makes useful improvements in which is fixed for the duration of leases
good faith, without altering form or under Articles 1682 and 1687, has expired
substance, lessor, upon the termination of b. When the duration of the lease of rural
the lease, shall pay the lessee one-half of land has not been fixed
the value of the improvements at that 1. The duration is for all the time
time. necessary to gather the fruits of the
estate which it may yield in one year, or
If payment is refused, the lessee may which it may yield once, although two
remove the improvements, even though or more years have to elapse for the
the principal thing may suffer damage purpose [Art. 1682, Civil Code].
thereby [Art. 1678, Civil Code]. c. If the period for the lease has not been
fixed
B. Rights of a Lessor 1. The duration is from year to year, if the
rent is annual; from month to month, if
it is monthly; from week to week, if it is
1. To engage in a business
weekly; and from day to day, if it is to
In cases of business or industrial
be paid daily.
establishment, the lessor may continue
2. In case of monthly rent, and there is no
engaging in the same business or industry to
period for the lease, the courts may fix
which the lessee devotes the thing leased,
a longer term if the lessee was in
unless there is a stipulation to the contrary [Art.
possession for over one year.
1656, Civil Code].
3. In case of weekly rent, the courts may
fix a longer term if the lessee was in
Lessor is not obliged to answer for a mere act
possession for over six months.
of trespass which a third person may cause;
4. In case of daily rent, the courts may fix
however, he or she shall have a direct action
a longer period if the lessee was in
against the intruder [Art. 1664, Civil Code].
possession for over one month [Art.
1687, Civil Code].
Prohibited Acts by the Lessor: Lessor
d. Lack of payment
cannot alter the form of the thing leased in
e. Violation of any of the conditions in the
such a way as to impair the use to which the
contract
thing is devoted [Art. 1661, Civil Code].
f. When the lessee devotes the thing leased
to any use or service not stipulated which
2. To Eject the Lessee (Unlawful causes its deterioration, or if he does not
Detainer) observe his obligations in Art. 1657
If the lessee continues enjoying the thing after Note: The ejectment of tenants of agricultural
the expiration of the contract, over the lessor's lands is governed by special laws.
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III. RIGHTS AND Note: This does not apply to cases when
destruction is caused by natural calamity
OBLIGATIONS OF THE
9. To be liable for any deterioration caused
LESSEE by members of his household, guests or
visitors [Art. 1668, Civil Code]
A. Obligations of a Lessee
B. Rights of a Lessee
1. To pay the price of the lease according to
the terms stipulated
2. To use the thing leased as a diligent 1. To Sublease
father of a family, devoting it to the use General Rule: When in the contract of lease of
stipulated things there is no express prohibition, the
lessee may sublet the thing leased, in whole or
Note: In the absence of stipulation, the in part, without prejudice to his responsibility for
diligence required is to that which may be the performance of the contract toward the
inferred from the nature of the thing leased, lessor [Art. 1650, Civil Code].
according to the custom of the place
Liability of sublessee: Without prejudice to
3. To pay expenses for the deed of lease his obligation toward the sublessor, the
[Art. 1657, Civil Code] sublessee is bound to the lessor for all acts
4. To notify the lessor of usurpation or which refer to the use and preservation of the
untoward act which any third person may thing leased in the manner stipulated between
or will commit [Art. 1663, Civil Code] the lessor and the lessee [Art. 1651, Civil
5. To advise the lessor of need for repairs, Code].
to return the property leased upon
The sublessee is subsidiarily liable to the
Note: If the lessor fails to make any urgent lessor for any rent due from the lessee.
repairs, lessee may order the repairs at the
lessor’s cost. Lessee shall be liable for any However, the sublessee shall not be
damages caused by his own negligence responsible beyond the amount of rent due
from him, in accordance with the terms of the
6. Lessee is obliged to tolerate the need for sublease, at the time of the extrajudicial
urgent repairs made during his lease demand by the lessor.

Note: If repairs last more than 40 days, rent Payments of rent in advance by the sublessee
may be reduced. If the work is of such nature shall be deemed not to have been made, so far
to render the dwelling uninhabitable, lessee as the lessor's claim is concerned, unless said
may rescind the contract [Art. 1662, Civil Code] payments were effected in virtue of the custom
of the place [Art. 1652, Civil Code].
7. To return the thing leased upon
termination of lease just as he received it, 2. To Reduce or Rescind in case of FE
except for impairment due to lapse of time, If the thing leased is totally destroyed by a
ordinary wear and tear or inevitable causes fortuitous event, the lease is extinguished.
[Art. 1665, Civil Code]
If the destruction is partial, the lessee may
Note: In the absence of stipulation, the law choose between
presumes that the lessee had received it in a. Proportional reduction of the rent and,
good condition [Art. 1666, Civil Code] b. A rescission of the lease [Art. 1655, Civil
Code]
8. To be responsible for the loss or
deterioration of the thing leased, unless
he proves it is without his fault [Art. 1667,
Civil Code]

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C. To make use of the period
General Rule: The lessee has the right to
make use of the periods established in Articles
1682 and 1687.

Exceptions: Judicial Ejectment [Art. 1673,

Civil Code]

Right to repurchase: The purchaser in a sale

with the right of redemption cannot make use
of the power to eject the lessee until the end of
the period for the redemption [Art. 1677, Civil
Code].

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AGENCY
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PARTNERSHIP CIVIL LAW
PARTNERSHIP Philippine Fishing Gear, G.R. No. 136448
(1999)].
I. GENERAL PROVISIONS
2. Intention of dividing the profits
A. Definition among themselves
Intention to Divide Profits
By the contract of partnership: If the common fund’s work is “indispensable,
1. Two or more persons bind themselves to beneficial and economically useful to the
contribute to a common fund: business” of the partners and the profit motive
a. money, is the primordial reason to establish the
b. property, or partnership, even if there are no actual profits,
c. industry. then there is partnership [AFISCO v. CA, G.R.
2. With the intention of dividing the profits No. 112675 (1999)].
among themselves.
Note: There must be a valid contract.
Two or more persons may also form a Additionally, a partnership contract must
partnership for the exercise of a profession comply with the necessary elements of a
[Art. 1767, Civil Code]. contract under the Civil Code (cause, object,
and consideration).
B. Elements
C. Parties & Object
1. Two or more persons bind
themselves to contribute money, 1. Parties
property, or industry to a common General Rule: Any person capacitated to
contract may enter into a contract of
fund
partnership.
Money
Must be in legal tender. Checks, drafts,
Exceptions: The capacity of the following
promissory notes, and other mercantile
persons to enter into a contract of partnership,
documents are not money. There is no
though capacitated to contract generally, are
contribution of money until they have been
limited.
cashed [Art. 1249, Civil Code].
The following persons cannot enter into a
Property
contract of partnership:
May be real, personal, corporeal, or
a. Those suffering from civil interdiction;
incorporeal property.
b. Minors;
c. Insane or demented persons;
Industry
d. Deaf-mutes who do not know how to write;
Means the active cooperation, the work of the
e. Incompetents who are under guardianship.
party associated, which may be either personal
f. Those who are prohibited from giving each
manual efforts or intellectual, and for which he
other any donation or advantage cannot
receives a share in the profits (not salary) of the
enter into a universal partnership [Art. 1782,
business.
Civil Code].
Common Fund
Void donations:
The Civil Code requires the parties “bind
a. Those made between persons who were
themselves to contribute” to a common fund.
guilty of adultery or concubinage at the time
The partnership may therefore exist even
of the donation [Art. 739, Civil Code]
before the common fund is created. The
b. Those made between persons found guilty
common fund may not even come from the
of the same criminal offense, in
partners themselves but may be borrowed from
consideration thereof [Art. 739, Civil Code]
third persons. The form of the common fund
c. Those made to a public officer or his wife,
may not even be cash or property; it can be in
descendants and ascendants, by reason of
the form of credit or industry [Lim Tong Lim v.
his office [Article 739, Civil Code]
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d. Every donation or grant of gratuitous When the articles of universal partnership do
advantage, direct or indirect, between the not specify its nature (all present property or all
spouses during the marriage shall be void, the profits), the partnership will be considered
except moderate gifts, which the spouses as one only of all the profits [Art. 1781, Civil
may give to each other on the occasion of Code].
any family rejoicing. The prohibition shall
also apply to persons living together as Rule on After-Acquired Properties
husband and wife without a valid marriage Aside from the contributed properties, only the
[Article 87, Family Code]. profits of the contributed common property (no
e. A corporation cannot enter into a other profits) are included. Thus, should a
partnership in the absence of express partner subsequently acquire a property as
authorization by statute or charter [Mendiola remuneration for his work, such property and
v. CA, G.R. No. 159333 (2006)]. its fruits are not to be enjoyed by the universal
partnership of all present property [Paras].
Under Sec. 35 of the Revised Corporation
Code (RCC), every corporation incorporated Properties subsequently acquired by
under the RCC has the power and capacity to inheritance, legacy, or donation, cannot be
enter into a partnership, joint venture, merger, included in the stipulation but the fruits thereof
consolidation, or any other commercial can be included in the stipulation.
agreement with natural and juridical persons.
b. In a Particular Partnership
There is no prohibition against a partnership A particular partnership has for its object:
being a partner in another partnership [De 1. Determinate things,
Leon]. 2. Their use or fruits, or
3. A specific undertaking, or
2. Object 4. The exercise of a profession or vocation
a. In a Universal Partnership [Art. 1783, Civil Code].
A universal partnership may refer to:
1. All present property c. Effect when the object is unlawful
a. The partners contribute all the property If the partnership has an unlawful object or
which belongs to them to a common purpose:
fund, with the intention of dividing the 1. The contract is void ab initio [Art. 1409 (1),
same among themselves, as well as the Civil Code];
profits they may acquire therewith [Art. 2. Once dissolved by judicial decree:
1778, Civil Code]. a. The profits shall be confiscated by favor
b. The property contributed includes all of the State;
those belonging to the partners at the b. The instruments or tools and proceeds of
time of the constitution of the the crime shall also be forfeited in favor
partnership. of the State [Art. 1770, Civil Code];
c. A stipulation for the common enjoyment 3. The contributions of partners shall not be
of any other profits may also be made. confiscated unless they are instruments or
However, the property which the tools of the crime [De Leon].
partners may acquire subsequently by
inheritance, legacy or donation cannot D. Form
be included in such stipulation, except
the fruits thereof [Art. 1779, Civil Code]. General Rule
2. All the profits No required form is necessary.
a. It comprises all that the partners may
acquire by their industry or work during Exceptions: The contract is subject to the
the existence of the partnership. provisions of Arts. 1771, 1772 and 1773, Civil
b. Only the usufruct over the property of the Code and to the Statute of Frauds.
partners passes to the partnership [Art. 1. Where immovable property or real rights are
1780, Civil Code]. contributed to the partnership, a public

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instrument shall be necessary [Art. 1771, 3. Delectus Personae (Selection of
Civil Code]. Persons)
a. An inventory of said property, signed by One selects his partners on the basis of their
the parties, must be attached to the personal qualifications and qualities. It is for
public instrument; this reason that there is mutual representation
b. Otherwise, the contract of partnership is among the partners so that the act of one is
void [Art. 1773, Civil Code]. considered the act and responsibility of the
2. Every contract of partnership having a others as well [Bautista].
capital of Php 3,000 or more, in money or
property, shall appear in a public instrument
a. The instrument must be recorded in the
4. Partners Burdened with Unlimited
Office of the Securities and Exchange Liability [Arts. 1816, 1817, Civil
Commission. Code]
b. Failure to comply with these
requirements shall not affect the liability F. Rules to Determine Existence
of the partnership and the members
thereof to third persons [Art. 1772, Civil When the intent of the parties is clear, such
Code]. intent shall govern.

E. Characteristics When the intent of parties does not clearly

appear, the following rules apply:
1. Generally [De Leon] 1. Persons who are not partners to each other
a. Principal – does not depend on other are not partners as to third persons, subject
contracts to the provisions on partnership by estoppel.
b. Preparatory – entered as a means to an 2. Co-ownership or co-possession does not of
end itself establish a partnership, even when
c. Commutative – undertaking of each one is there is sharing of profits in the use of the
considered equal with others property.
d. Consensual – perfected by mere consent
e. Bilateral – entered by two or more persons Exception: The co-ownership of inherited
f. Onerous – contributions have to be made properties is automatically converted into an
g. Nominate – has a special designation in unregistered partnership the moment said
law. common properties and/or the income
derived therefrom are used as a common
fund with intent to produce profits for the
2. Essential Attributes [Villanueva] heirs in proportion to their respective shares
1. Informal/Consensual and Weak Juridical in the inheritance as determined in a project
Personality [Arts. 1771, 1785, 1830, Civil partition [Ona v. CIR, G.R. L-19342 (1972)].
Code]
a. Generally, a partnership may be 3. Sharing of gross returns does not of itself
constituted in any form; establish a partnership, even when the
b. The juridical personality of a partnership parties have joint or common interest in any
is deemed weak since a partnership may property from which the returns are derived.
be dissolved without need of going 4. The receipt by a person of a share in the
through a formal dissolution process. profits of a business is prima facie evidence
that he is a partner.
2. Mutual Agency [Arts. 1803, 1818, Civil
Code] Exception: No such inference is drawn if
a. All partners shall be considered agents and the profits are received in payment:
whatever any one of them may do alone a. As a debt by installments or otherwise;
shall bind the partnership; b. As wages of an employee or rent to a
b. Every partner is an agent of the partnership landlord;
for the purpose of its business, and the act c. As an annuity to a widow or
of every partner binds the partnership. representative of a deceased partner;
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d. As interest on a loan, though the amount 2. Partner by Estoppel
of payment vary with the profits of the A partner by estoppel is a person who, by
business; words spoken or written or by conduct: (1)
e. As the consideration for the sale of a represents himself as a partner or (2) consents
goodwill of a business or other property to another representing him to anyone as a
by installments or otherwise [Art. 1769, partner
Civil Code]. a. In an existing partnership; or
b. With one or more persons not actual
G. Partnership Term partners [Art. 1825, Civil Code].

Article 1784, Civil Code. A partnership begins from

3. Liability of a Partner by Estoppel
the moment of the execution of the contract, unless a. Personal Representation
it is otherwise stipulated. A partner by estoppel is liable to any such
persons:
As to period, a partnership may either be: 1. To whom such representation has been
made; and
1. For a fixed term or particular
undertaking; or 2. Who has, on the faith of such
2. At will, the formation and dissolution of representation, given credit to the actual or
which depend on the mutual desire and apparent partnership [Par. 1, Art. 1825, Civil
consent of the parties. Any one of the Code].
partners may, at his sole pleasure, dictate
the dissolution of the partnership, even in b. Public Representation
bad faith, subject to liability for damages If he has made such representation or
[Ortega v. CA, G.R. No. 109248 (1995)]. consented to its being made in a public
manner, whether the representation has or has
A partnership term may be extended by: not been (personally) made or communicated
1. Express renewal; or to such persons so giving credit by or with his
2. Implied renewal, when these requisites knowledge:
concur: 1. When partnership liability results, he is
a. The partnership is for a fixed term or liable as though he were an actual member
particular undertaking; of the partnership.
b. It is continued after the termination of the 2. When no partnership liability results, he is
fixed term or particular undertaking liable pro rata with the other persons, if any,
without any express agreement [Art. so consenting to the contract or
1785, Civil Code]. representation.
3. When there are no such other persons, he
Note: A continuation of the business by the is separately liable [Par. 1, Art. 1825, Civil
partners or such of them as habitually acted Code].
therein during the term, without any settlement
or liquidation of the partnership affairs, is prima
facie evidence of a continuation of the
partnership [Art. 1785 (2), Civil Code].

H. Partnership by Estoppel
1. Definition
Estoppel is a bar which precludes a person
from denying or asserting anything contrary to
that which has been established as the truth by
his own deed or representation, either express
or implied [De Leon].

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Effect on Existing Partnership or Other b. There is no existing partnership and all
Persons not Actual Partners [Par. 2, Art. those represented as partners
1825, Civil Code] consented to the representation.
3. He is liable separately when:
Representation Effect
a. There is an existing partnership but none
When a person has He is an agent of the of the partners consented; or
been represented to persons consenting b. There is no existing partnership and not
be a partner (1) in an to such all of those represented as partners
existing partnership, representation: consented to the representation.
or (2) with one or 1. To bind them to
more persons not the same extent Note: Art. 1825, Civil Code does not create a
actual partners and in the same partnership as between the alleged partners.
manner as The law only considers them as partners and
though he were a the association as a partnership insofar as it is
partner in fact favorable to third persons. However,
2. With respect to partnership liability is created only in favor of
persons who rely persons who on the faith of such
upon the representation given credit to the partnership
representation. [De Leon].

I. Partnership as Distinguished
Representation Effect from Joint Venture

When all the A partnership act or Partnership Joint venture

members of the obligation results.
existing partnership Operates with firm Operates without
consent to the name and legal firm name and legal
representation personality personality

In all other cases The representation Generally relates to a Usually limited to a

is the joint obligation continuing business of single transaction
of the person acting various transactions of
and the persons a certain kind
consenting to the
representation A joint venture is an agreement between two
parties to enter into a commercial undertaking.
Nature of Liability It may fall under a partnership with a limited
A partner by estoppel is liable in the following purpose.
manner [Art. 1825, Civil Code]
1. He is liable as though he were a partner Under Philippine law, a joint venture is a form
when of partnership and should thus be governed by
a. There is an existing partnership; the laws of partnership [Aurbach v. Sanitary
b. All the partners consented to the Wares Manufacturing Corp., G.R. No. 75875
representation; and (1989)].
c. A partnership liability results.
2. He is liable jointly and pro rata (as though J. Professional Partnership
he were a partner in fact) with those who
consented to the representation when: Definition
a. There is an existing partnership but not Those formed by persons for the sole purpose
all the partners consented; or of exercising their common profession, no part
of the income of which is derived from

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engaging in any trade or business [Sec. 22 (B), The powers of the managing partner may be
National Internal Revenue Code]. revoked:
If appointed in the articles of partnership, when
Distinguished from an Ordinary Partnership a. There is just or lawful cause for revocation;
The distinction between a Partnership and a and
General Professional Partnership (GPP) is b. The partners representing the controlling
material in taxation. interest revoke such power.
1. A GPP is not taxable as an entity.
2. The income tax is imposed not on the If appointed after the constitution of the
professional partnership, which is tax partnership, at any time and for any cause [Art.
exempt, but on the partners themselves in 1800, Civil Code].
their individual capacity computed on their
distributive shares of partnership profits” Rationale: Such appointment is a mere
[Tan v. Del Rosario, G.R. No. 109289 delegation of power, not founded on a change
(1994)]. of will on the part of the partners, the
appointment not being a condition of the
K. Management contract.

It is merely a simple contract of agency, which

1. In General
may be revoked at any time. Removal,
The property rights of a partner are:
however, should also be done by the partners
a. His rights in specific partnership property;
having the controlling interest [De Leon].
b. His interest in the partnership; and
c. His right to participate in the management
[Art. 1810, Civil Code] 4. In case of Two or More Managing
Partners
Management of the partnership is primarily When there are two or more managing
governed by the agreement of the partners in partners appointed:
the articles of partnership. a. Each one may separately execute all acts of
administration.
It may be stipulated that the partnership will b. If any of them opposes the acts of the
be managed by: others, the decision of the majority prevails.
a. All the partners; or c. In case of a tie, the partners owning the
b. A number of partners appointed as controlling interest will decide [Art. 1801,
managers which may be appointed Civil Code].
1. In the articles of partnership; or
2. After the constitution of the partnership. Requisites for Applicability of Art. 1801:
a. Two or more partners have been appointed
2. Scope of Powers of a Managing as managers;
b. There is no specification of their respective
Partner
duties or no stipulation on how each one will
General Rule: The partner designated as
act; and
manager in the articles may execute all acts of
c. There is no stipulation that one of them shall
administration, despite opposition by the other
not act without the consent of all the others.
partners.
The right to oppose is not given to non-
managers because in appointing their other
Exception: He cannot do so when he acts in
partners as managers, they have stripped
bad faith [Art. 1800, Civil Code].
themselves of all participation in the
administration [Paras].
3. Managing Partner’s Power to
Revoke The other managers, however, should make
General Rule: Power is irrevocable without the opposition before the acts produce legal
just or lawful cause. effects insofar as third persons are concerned.

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Note: Those who vote against the contract c. Notice to any partner of any matter relating
shall prevail, the same having been entered to partnership affairs is notice to the
into without authority [De Leon]. partnership [Art. 1821, Civil Code].
d. Wrongful act or omission of any partner
5. Stipulation of Unanimity acting for partnership affairs makes the
General Rule: In case there is a stipulation that partnership liable [Art. 1822, Civil Code].
none of the managing partners shall act without e. Partnership is bound to make good losses
the consent of others for wrongful acts or misapplications of
a. The concurrence of all is necessary for the partners [Art. 1823, Civil Code].
validity of the acts, and
b. The absence or disability of one cannot be
alleged.

Exception: Unless there is imminent danger of

grave or irreparable injury to the partnership
[Art. 1802, Civil Code].

6. When Manner of Management was

not Agreed Upon
When there is no agreement as to the manner
of management, the following rules apply:
a. All the partners are considered agents
(mutual agency). Whatever any one does
alone binds the partnership, unless there is
a timely opposition to the act, under Art.
1801, Civil Code.
b. Any important alteration in the immovable
property of the partnership, even if useful to
the partnership, requires unanimity. If the
alteration is necessary for the preservation
of the property, however, consent of the
others is not required [Art. 1803, Civil Code;
De Leon].

If the refusal is manifestly prejudicial to the

partnership, court intervention may be sought
[Art. 1803, Civil Code].

The consent need not be express. It may be

presumed from the fact of knowledge of the
alteration without interposing any objection [De
Leon].

7. Mutual Agency
In addition to the Art. 1801, Civil Code there is
effectively a mutual agency in the following
cases:
a. Partners can dispose of partnership
property even when in partnership name
[Art. 1819, Civil Code].
b. An admission or representation made by
any partner concerning partnership affairs is
evidence against the partnership [Art. 1820,
Civil Code].
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II. OBLIGATIONS OF THE partnership coffers: To indemnify the
partnership for
PARTNERS 1. Interest; and
2. Damages from the time he should have
A. Obligations of the Partners to complied with his obligation, or from the
time he converted the amount to his own
the Partnership use, respectively [Art. 1788, Civil Code].
d. To preserve the property with diligence of a
1. Obligation to Contribute and to good father of a family pending delivery to
Warrant the partnership [Art. 1163, Civil Code].
Art. 1786, Civil Code. Every partner is a debtor of e. To indemnify for any interest and damages
the partnership for whatever he may have promised caused by the retention of the property or by
to contribute. delay in its obligation to contribute a sum of
money [Arts. 1788 & 1170, Civil Code].
He shall also be bound for warranty in case of
eviction with regard to specific and determinate
things which he may have contributed to the
Amount of Contribution
partnership, in the same cases and in the same General Rule: Partners are to contribute equal
manner as the vendor is bound with respect to the shares to the capital of the partnership.
vendee. He shall also be liable for the fruits thereof
from the time they should have been delivered, Exceptions
without the need of any demand. a. When there is an agreement to the contrary,
the contribution shall follow such agreement
Contribution of Money or Property [Art. 1790, Civil Code].
With respect to contribution of money or b. Industrial partners, unless he has
property, a partner is obliged: contributed capital pursuant to an
a. To contribute, at the beginning of the agreement to that effect.
partnership or at the stipulated time, the
money, property or industry which he Additional Capital Contribution
undertook to contribute; Requisites:
a. There is an imminent loss of the business of
Effect of failure to contribute: Makes the the partnership;
partner ipso jure a debtor of the partnership b. The majority of the capitalist partners are of
even in the absence of demand. The the opinion that an additional contribution to
remedy is not rescission but an action for the common fund would save the business;
specific performance with damages and c. The capitalist partner refuses deliberately
interest [Sancho v. Lizarraga, G.R. L-33580 (not because of financial inability) to
(1931)]. contribute an additional share to the capital;
and
Note: When contribution is in goods, the d. There is no agreement that even in case of
amount thereof must be determined by imminent loss of the business, the partners
proper appraisal of the value thereof at the are not obliged to contribute.
time of contribution [Art. 1787, Civil Code].
Any partner who refuses to contribute an
b. In case a specific and determinate thing is additional share to the capital, except an
to be contributed: industrial partner, to save the venture shall be
1. To warrant against eviction in the same obliged to sell his interest to the other partners,
manner as a vendor; and unless there is an agreement to the contrary
2. To deliver to the partnership the fruits of [Art. 1791, Civil Code].
the property promised to be contributed,
from the time they should have been Contribution of Industry
delivered, without need of demand [Art. An industrial partner is obliged to contribute his
1786, Civil Code]; industry at the stipulated time.
c. In case a sum of money is to be contributed,
or in case he took any amount from the
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2. Obligation to Apply Sums Collected the partner be both a creditor and a debtor of
Pro Rata the partnership at the same time, is not
General Rule: A partner (a) authorized to complied with [Art. 1278, Civil Code; De Leon].
manage, (b) who collects a demandable sum
owed to him in his own name from a person Exception: The court may equitably lessen the
who also owes the partnership a demandable liability if, through his extraordinary efforts in
sum, is obliged to apply the sum collected to other activities of the partnership, unusual
both credits pro rata, even if he issued a receipt profits were realized [Art. 1794, Civil Code].
for his own credit only [Art. 1792, Civil Code]. Note, however, that there is still no
compensation in this case.
Exceptions
a. In case the receipt was issued for the 4. Obligation to Account and Act as
account of the partnership credit only, Trustee
however, the sum shall be applied to the Every partner must
partnership credit alone. a. Account to the partnership for any benefit;
b. When the debtor declares, pursuant to Art. and
1252, Civil Code at the time of making the b. Hold as trustee for it any profits derived by
payment, to which debt the sum must be him without the consent of the other
applied, and if the personal credit of the partners:
partner is more onerous to him, it shall be 1. From any transaction connected with the
so applied [Art. 1792, Civil Code]. formation, conduct, or liquidation of the
partnership; or
Requisites for Applicability of Art. 1792, 2. From any use by him of its property [Art.
Civil Code 1807, Civil Code].
a. There exist at least two debts, one where
the collecting partner is creditor, and the General Rule: The partner cannot use or apply
other, where the partnership is the creditor; exclusively to his own benefit partnership
b. Both debts are demandable; and assets or results of the knowledge or
c. The partner who collects is authorized to information gained by him as a partner to the
manage and actually manages the detriment of the partnership [De Leon].
partnership.
Exception: If the taking by the partner is with
3. Obligation to Compensate for the consent of all other partners [Lim Tanhu v.
Ramolete, G.R. L-40098 (1975)].
Damages
Every partner is responsible to the partnership
The duty to account continues until the
for damages suffered by it through his fault.
partnership relation is terminated [De Leon].
a. He cannot compensate the damages with
the profits and benefits which he may have
This obligation exists even when he issued a
earned for the partnership by his industry.
receipt for his share only [Art. 1793, Civil
b. However, the courts may equitably lessen
Code].
this responsibility if through the partner's
extraordinary efforts in other activities of the
Rationale: In this case, the debt becomes a
partnership, unusual profits have been
bad debt. It would be unfair for the partner who
realized [Art. 1794, Civil Code].
already collected not to share in the loss of the
other partners.
Set-Off of Liability
General Rule: The liability for damages cannot Credit collected after dissolution: The
be set-off or compensated by profits or benefits collecting partner need not bring the same to
which the partner may have earned for the the partnership capital. Art. 1793 presupposes
partnership by his industry. that there exists partnership capital. Upon
dissolution of the partnership and the return to
Rationale: The partner has the obligation to each principal of what he contributed, the
secure the benefits for the partnership. As
such, the requirement for compensation that
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community of interest between them Rationale
disappears altogether [De Leon]. 1. To prevent the industrial partner from
exploiting his services for his own personal
B. Obligations of the Partners benefit without the permission of the firm.
2. To prevent conflict of interest and to ensure
Among Themselves compliance by said partner with his
prestation.
1. Obligation to Render True and Full
Information b. Capitalist Partners
Partners shall render on demand true and full General Rule: For a capitalist partner, the
information of all things affecting the prohibition on engaging in another business
partnership to: extends only to any operation which is of the
a. Any partner; same or similar kind of business in which the
b. The legal representative of any deceased partnership is engaged
partner; or
c. The legal representative of any partner Exception: Unless there is a stipulation to the
under legal disability [Art. 1806, Civil Code]. contrary.

Even without demand, honesty demands the If the capitalist partner violates this prohibition,
giving of vital information, the refraining from all he shall:
kinds of concealment [Paras]. 1. Bring to the common funds any profits
accruing to him from his transactions; and
By “information”, it is meant that which can be 2. Personally bear all the losses [Art. 1808,
used for partnership purposes, it is in the sense Civil Code].
of a property which the partnership has a
valuable right [De Leon]. The test is the possibility of unfair
competition.
2. Obligation not to Engage in A partner occupies a fiduciary position with
Another Business respect to his co-partners imposing duties of
a. Industrial Partners utmost good faith and he may not carry on any
General Rule: An industrial partner cannot other business in rivalry with the business of
engage in business for himself. Should he do the partnership, whether in his own name or for
so, the capitalist partners, as well as industrial the account of another at the expense of the
partners may either: partnership [De Leon].
1. Exclude him from the firm; or
2. Avail themselves of the benefit which he 3. Obligation to Share in the
may have obtained with a right to damages Profits/Losses
[De Leon]. Rules for Distribution of Profits and
Losses
Exception: He may engage in business for a. They shall be distributed in conformity with
himself when the partnership expressly permits the agreement.
him to do so [Art. 1789, Civil Code]. b. If only the share in profits has been
stipulated, the share in the losses shall be
Remedy of the other partners in the same proportion.
The other partners have the remedy of either c. In the absence of any stipulation:
excluding the erring partner from the firm or of 1. The share in the profits of the capitalist
availing themselves of the benefits which he partners shall be in proportion to their
may have obtained. contributions.
2. The losses shall be borne by the
An action for specific performance to compel capitalist partners, also in proportion to
the partner to perform the promised work is not the contributions.
available as a remedy because this will amount 3. The share of the industrial partners in the
to involuntary servitude. profits is that share as may be just and
equitable. If he also contributed capital,
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he will receive a share of the profits in misapplication of money or property by a
proportion to his contribution; and partner in the ordinary course of business.
4. The industrial partner, who did not b. A person admitted as a partner into an
contribute capital, is not liable for losses existing partnership is liable for all the
[Art. 1797, Civil Code]. obligations of the partnership arising before
his admission, except that his liability shall
Exclusion of Partner From Share be satisfied only out of partnership property,
General Rule: A stipulation excluding one or unless there is a stipulation to the contrary
more partners from any share in the profits or [Art. 1826, Civil Code]. In other words, he is
losses is void [Art. 1799, Civil Code]. not personally liable.

Exception: A stipulation exempting an Pro Rata

industrial partner from losses is valid, since, if The partners are liable pro rata. This liability is
the partnership fails to realize profits, he can no not increased even when a partner:
longer withdraw his work or labor [De Leon]. a. Has left the country and the payment of his
share of the liability cannot be enforced [Co-
Note: But this does not exempt the industrial Pitco v. Yulo, G.R. No. L-3146 (1907)]; or
partner from liability insofar as third persons b. His liability is condoned by the creditor
are concerned. He may however, recover what [Island Sales v. United Pioneers, G.R. No.
he has given to third persons from the other L-22493 (1975)].
partners, for he is exempted by law from
losses. Basis for Pro-rating
Pro rata must be understood to mean equally
C.Obligations of the Partners to or jointly and not its literal meaning. After all
partnership assets have been exhausted, pro-
Third Persons rating is based on the number of partners and
not on the amount of their contributions to the
1. Liability for Partnership Debts common fund, subject to adjustment among
The partnership is primarily liable for contracts the partners [De Leon].
entered into:
a. In its name and for its account; Liability of an Industrial Partner
b. Under its signature; and An industrial partner, who is not liable for
c. By a person authorized to act for it. losses, is not exempt from this liability (for
partnership debts). However, he can recover
Upon exhaustion of its assets, all partners are the amount he has paid from the capitalist
liable pro rata with all their property. Any partners, unless there is a stipulation to the
partner may enter into a separate obligation to contrary [La Compania Maritima v. Muñoz,
perform a partnership contract [Art. 1816, Civil G.R. No. L-3704 (1907)].
Code].
Stipulation against Individual Liability
Nature of Individual Subsidiary Liability Any stipulation against pro rata liability is void
General Rule: The partners are liable against third persons but valid among the
subsidiarily. It only arises upon exhaustion of partners [Art.1817, Civil Code].
partnership assets [La Compania Maritima v.
Muñoz, G.R. No. L-3704 (1907)]. A stipulation which excludes one or more
partners from any share in the profits or losses
Exceptions: is void [Art. 1799, Civil Code].
a. A third person who transacted with the
partnership can hold the partners solidarily Note: The exemption of the industrial partner to
(rather than subsidiarily) liable for the whole pay losses relates exclusively to the settlement
obligation if the case falls under Art. 1822 or of the partnership affairs among the partners
1823, Civil Code [Muñasque v. CA, G.R. L- themselves, and has nothing to do with the
39780 (1985)]. The provisions refer to liabilities of the parties to third persons.
wrongful acts or omission and

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a. Art. 1816 refers to “liabilities” while Art. 1797 1. Authorized by all the partners; or
speaks of “losses”. 2. The other partners have abandoned the
b. There is therefore no conflict between the business [Par. 3, Art. 1818, Civil Code].
two articles [Nachura].
d. Acts in contravention of a restriction
2. Liability of Partners for Partnership Any act of a partner in contravention of a
Contracts restriction on authority does not bind the
a. Acts apparently for the carrying on of partnership to persons having knowledge of
usual business the restriction [Par. 4, Art. 1818, Civil Code].
General Rule: The partnership is liable for any
act of a partner which is apparently for the The partnership is not liable to third persons
carrying on of the usual business of the having actual or presumptive knowledge of the
partnership binds the latter, including the restrictions, whether or not the acts are for
execution of any instrument in the partnership apparently carrying on in the usual business of
name. the partnership [De Leon].

Exception: The partnership is not bound when Conveyance of Partnership Real Property
the following concur: 1. Title in Partnership Name
1. The partner has in fact no authority to act; Any partner may convey the real property in the
and name of the partnership. The partnership can
2. The person with whom he deals has recover it, except when:
knowledge of such fact [Par. 1, Art. 1818, a. The act of the partner binds the partnership,
Civil Code]. when he has authority to carry out the usual
business of the partnership, under Par. 1,
b. Acts not apparently for carrying on of Art. 1818, Civil Code; or
b. If not so authorized, the property has been
the usual business
conveyed by the grantee, or a person
General Rule: Acts of a partner which is not
claiming under him, to a holder for value and
apparently for carrying on of the usual business
without knowledge that the partner
does not bind the partnership.
exceeded his authority [Par. 1, Art. 1819,
Civil Code].
Exception: The partnership is bound if the
other partners authorized him to do the act
A partner authorized to carry out the usual
[Par. 2, Art. 1818, Civil Code].
business may convey, in his own name, the
equitable interest of the partnership [Par. 2, Art.
c. Acts of strict dominion 1819, Civil Code].
General Rule: One or some of the partners
have no authority to do the following acts of
2. Title in the Name of Other Persons
strict dominion:
Where the title is in the name of one or more
1. Assign the partnership property in trust for
but not all the partners, and the record does not
creditors or on the assignee’s promise to
disclose the right of the partnership:
pay the debts of the partnership;
a. The partners having title may convey title.
2. Dispose of the goodwill of the business;
b. The partnership may recover it when the
3. Do any other act which makes it impossible
partners conveying title have no authority to
to carry on the ordinary business of the
carry on the usual business of the
partnership;
partnership, unless the purchaser or his
4. Confess a judgment;
assignee is:
5. Enter into a compromise concerning a
1. A holder for value; and
partnership claim or liability;
2. Without knowledge that the act
6. Submit a partnership claim or liability to
exceeded authority [Par. 4, Art. 1819,
arbitration;
Civil Code].
7. Renounce a claim of the partnership.
Where the title is in the name of one or more or
Exceptions:
all the partners, or in a third person in trust for
They may do so if:
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the partnership, a partner authorized to carry 2. Misapplied by any partner while it is in
on the usual business may convey equitable the custody of the partnership [Art. 1823,
title in the partnership name or in his own name Civil Code].
[Par. 4, Art. 1819, Civil Code].
Solidary liability
Where the title is in the names of all the All partners are solidarily liable with the
partners, a conveyance executed by all of them partnership for its liabilities under Arts. 1822
passes all the rights to the property [Par. 5, Art. and 1823 [Art. 1824, Civil Code].
1819, Civil Code].
This is without prejudice to the guilty partner
3. Liability for Admission by a Partner being liable to the other partners. However, as
An admission or representation by any partner far as third persons are concerned, the
may be used as evidence against the partnership is answerable [De Leon].
partnership when:
a. It concerns partnership affairs; and Applicability of the Rule of Respondeat
b. Such affairs are within the scope of his Superior
authority [Art. 1820, Civil Code]. The rule of respondeat superior (also called the
rule of vicarious liability) applies to the law of
Instances Where Knowledge of a Partner is partnership in the same manner as other rules
Considered Knowledge of the Partnership governing the agency relationship [De Leon].
a. Knowledge of the partner acting in the
particular matter It is not only the partners who are liable in
1. Acquired while a partner, or solidum; it is also the partnership [Art 1824,
2. Then present to his mind; Civil Code].
b. Knowledge of any other partner who
reasonably could and should have The injured party may proceed against the
communicated it to the acting partner [Art. partnership or any partner [Paras].
1821, Civil Code].
The reason for the law’s imposition of wider
4. Liability for Wrongful Acts of a liability on the partnership with respect to torts
Partner and breach of trust is based on public policy
The partnership is solidarily liable with the [De Leon].
partner who causes loss or injury to any person
not a partner, or incurs any penalty through any Criminal Liability for Criminal Acts
wrongful act or omission: A non-acting partner in a partnership engaged
a. In the ordinary course of the business of the in a lawful business is not criminally liable for
partnership, or the criminal acts of another partner but he is
b. Not in such ordinary course of business, but criminally liable if the partnership is involved in
with the authority of his co-partners [Art. an unlawful enterprise with his knowledge or
1822, Civil Code]. consent.

Partnership Liability
5. Liability for Misapplication of a. Does Not Extend to criminal liability
Money or Property where the wrongdoing is regarded as
The partnership is liable for losses suffered individual in character (e.g. embezzlement)
by a third person whose money or property b. Extends to criminal liability where the
was: crime is statutory, especially where it
a. Received by a partner involves fine or imprisonment [De Leon].
1. Acting within the scope of his apparent
authority, and 6. Liability in case of Partnership by
2. Misapplied it
b. Received by the partnership
Estoppel
1. In the course of its business, and Note: Refer to the discussion above on
Partnership by Estoppel.

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7. Liability of an Incoming Partner Remedy in Case of Insufficiency of Assets:
A person admitted as a partner is liable for a. Partnership Creditor – After exhaustion of
obligations incurred subsequent to his partnership assets, the creditor may come
admission as the other partners are liable. This after the private property of the partners.
is because he is already part of the partnership. b. Partner’s Individual Creditor – Ask for
attachment and public sale of the share of
The partner is liable for obligations incurred the partner in the partnership assets [De
before his admission, but will be satisfied only Leon].
out of the partnership property, unless
otherwise stipulated that he fully assumes such 8. Liability with Regard to Personal
obligations [Art. 1826, Civil Code]. Creditors of Partners
Interest by Personal Creditors
Rationale General Rule: Partnership creditors are
a. The new partner partakes of the benefits of preferred over the personal creditors of the
the partnership property and an already partners as regards partnership property.
established business.
b. He has every means of obtaining full Exception: On due application by any
knowledge of the debts of the partnership judgment creditor of a partner, a competent
and remedies that amply protect his interest court may:
[De Leon]. a. Charge the interest of the partner for the
satisfaction of the judgment debt;
Notice to or Knowledge of the Partnership b. Appoint a receiver of the share of the
The following operate as notice to or profits and of any other money due or to fall
knowledge of the partnership: due to the partner; and
a. Notice to any partner of any matter relating c. Make all other orders, directions, accounts
to partnership affairs; and inquiries, which the debtor partner
b. Knowledge of the partner acting in the might have made, or which the
particular matter acquired while a partner; circumstances may require [Par. 1, Art.
c. Knowledge of the partner acting in the 1814, Civil Code].
particular matter then present to his mind; or
d. Knowledge of any other partner who The interest charged may be redeemed before
reasonably could and should have foreclosure or, in case of sale directed by the
communicated it to the acting partner. court, may be purchased without causing
dissolution:
These do not apply in case of fraud on the a. With separate property, by one or more of
partnership committed by or with the consent the partners; or
of the partner [Art. 1821, Civil Code]. b. With partnership property, by one or more of
the partners, with consent of all, except the
Preference of Partnership Creditors in debtor partner [Par. 2, Art. 1814, Civil
Partnership Property Code].
With respect to partnership assets the
partnership creditors are entitled to priority of
payment. However, the private creditors of
each partner may ask for the attachment and
public sale of the share of the latter in the
partnership assets as provided in Art. 1814,
Civil Code [Art. 1827, Civil Code].

Property Preference:
a. Partnership Property – Partnership
creditors are preferred
b. Partner’s Individual Property – Partner’s
individual creditors are preferred [De Leon].

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III. DISSOLUTION AND c. By the express will of all the partners who
have not assigned their interests or suffered
WINDING UP them to be charged for their separate debts,
either before or after the termination of any
A. Concepts specified term or particular undertaking;
d. By the expulsion of any partner from the
Dissolution is the change in the relation of the business bona fide in accordance with such
partners caused by any partner ceasing to be a power conferred by the agreement
associated in the carrying on of the business. between the partners [Par. 1, Art. 1830, Civil
1. It is different from the winding-up of the Code].
business [Art. 1828, Civil Code]. e. If, after the expiration of the definite term or
2. It does not terminate the partnership, which particular undertaking, the partners
continues until the winding up of partnership continue the partnership without making a
affairs is completed [Art. 1829, Civil Code]. new agreement, the firm becomes a
partnership at will [Art. 1785, Civil Code].
Note: f. Any one of the partners may, at his sole
1. The dissolution of a partnership must not be pleasure, dictate the dissolution of the
understood in the absolute and strict sense partnership at will. He must, however, act in
so that at the termination of the object for good faith, not that the attendance of bad
which it was created, the partnership is faith can prevent the dissolution of the
extinguished [Testate Estate of Mota v. partnership, but that it can result in a liability
Serra, G.R. No. L-22825 (1925)]. for damages [Ortega v. CA, G.R. No.
2. The partnership, although dissolved, 109248 (1995)].
continues to exist until its termination, at
which time the winding up of its affairs 2. In Contravention of the Agreement
should have been completed and the net Between the Partners
partnership assets are partitioned and Where circumstances do not permit dissolution
distributed to the partners [Emnace v. CA, under any other provision of Art. 1830, Civil
G.R. No. 126334 (2001)]. Code, it may also be dissolved by the express
will of any partner at any time.
Winding up is the actual process of settling the
partnership business or affairs after Thus, even if there is a specified term, one
dissolution. It involves collection and partner can cause its dissolution by expressly
distribution of partnership assets, payment of withdrawing even before the expiration of the
debts, and determination of the value of the period, with or without justifiable cause. If the
interest of the partners in the partnership. cause is not justified or no cause was given,
the withdrawing partner is liable for damages
Termination is the point in time when all but in no case can he be compelled to remain
partnership affairs are completely wound up in the firm [Rojas v. Maglana, G.R. No. 30616
and finally settled. It signifies the end of the (1990)].
partnership life [De Leon].
3. By Operation of Law
B. Causes of Dissolution a. By any event which makes it unlawful for the
business of the partnership to be carried on
1. Without Violation of the Agreement or for the members to carry it on in
partnership;
Between the Partners
a. By the termination of the definite term or Note: If the business or object had been
particular undertaking specified in the unlawful from the very beginning, the firm
agreement; never had juridical personality [Paras].
b. By the express will of any partner, who must
act in good faith, when no definite term or b. When a specific thing which a partner had
particular is specified; promised to contribute, perishes before
delivery, or by the loss of the thing, only the
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use or enjoyment of which has been d. A partner willfully or persistently commits a
contributed; the loss of a specific thing, breach of the partnership agreement, or
however, does not dissolve the corporation otherwise so conducts himself in matters
after its ownership has already been relating to the partnership business that it is
transferred to the partnership; not reasonably practicable to carry on the
business in partnership with him;
c. By the death of any partner;
Rationale: They defeat and materially
d. By the insolvency of any partner or of the affect and obstruct the purpose of the
partnership; partnership [De Leon].

Note: The insolvency of the partner or of the e. The business of the partnership can only be
partnership must be adjudged by the court carried on at a loss;
[De Leon].
Note: A court is authorized to decree
e. By the civil interdiction of any partner; dissolution notwithstanding the partnership
has been making profits where it appears at
Civil interdiction deprives the offender the time of the application that the business
during the time of his sentence of the right can only be carried on at a loss [De Leon].
to manage his property and dispose of such
property by any act or any conveyance inter f. Other circumstances render a dissolution
vivos [Art. 34, Revised Penal Code]. equitable.

Rationale: One who is without capacity to Reason for necessity of court decree: In the
manage his own property should not be instances mentioned in Art. 1831, the facts
allowed to manage partnership property [De may be so far open to dispute as to make
Leon]. necessary judicial determination as to
dissolution, rather than allow them to be the
4. By Decree of Court occasion for automatic dissolution by
A partner may apply for dissolution in court operation of law [De Leon].
when:
a. A partner has been declared insane in any A person who acquires the interest of a
judicial proceeding or is shown to be of partner may likewise apply:
unsound mind; a. After the termination of the specified term or
particular undertaking;
Note: The partner may have been b. At any time if the partnership was a
previously declared insane in a judicial partnership at will when the interest was
proceeding; otherwise, his insanity must be assigned or when the charging order was
duly proved. It must materially affect the issued.
capacity of the partner to perform his
contractual duties as such [De Leon]. 5. Other Causes
a. When a new partner is admitted into an
b. A partner becomes in any other way existing partnership;
incapable of performing his part of the b. When any partner retires;
partnership contract; c. When the other partners assign their rights
to the sole remaining partner;
Note: The incapacity must be lasting, from d. When all the partners assign their rights in
which the prospect of recovery is remote the partnership property to third persons
[De Leon]. [Art. 1840, Civil Code]

c. A partner has been guilty of such conduct

as tends to affect prejudicially the carrying
on of the business;

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C. Effects of Dissolution Note the character of the notice required:
a. As to persons who extended credit to the
partnership prior to dissolution, notice must
1. On Authority of the Partners
be actual.
In general
b. As to persons who merely knew of the
Upon dissolution, the authority of the partners
existence of the partnership, publication in a
to represent the partnership is confined only to
newspaper of general circulation in the
acts necessary to:
place of business of the partnership is
a. Wind up partnership affairs; or
sufficient.
b. Complete transactions began but not then
finished [Par. 1, Art. 1832, Civil Code].
2. On Liability for Transactions after
With respect to partners Dissolution
The authority of partners to act for the The liability of a partner, in general, is the same
partnership is terminated, with respect to as in ordinary contracts (pro rata and
partners: subsidiary).
a. When the dissolution is not by the act,
insolvency or death of a partner, or In the following cases, however, the liability
b. When the dissolution is by such act, shall be satisfied out of the partnership
insolvency or death, when the partner acting assets alone (i.e., there is no subsidiary
for the partnership has knowledge or notice liability):
of the cause [Arts. 1832, Civil Code]. a. When the partner had been, prior to the
dissolution, unknown as a partner to the
In other cases, each partner is still liable for his person with whom the contract is made;
share in the liability created by the partner b. When the partner had been, prior to the
acting for the partnership [Art. 1833, Civil dissolution, so far unknown or inactive in
Code]. partnership affairs that the business
reputation of the partnership could not be
With respect to third persons who are not said to have been in any degree due to his
partners connection with it [Art. 1834, Civil Code].
a. After dissolution, a partner can bind the
partnership by any act appropriate for Any act of a partner after dissolution in no
1. Winding up partnership affairs; or case binds the partnership in the following
2. Completing transactions unfinished at cases:
dissolution. a. Where the partnership is dissolved because
b. He can also bind it by any transaction which it is unlawful to carry on the business,
would bind the partnership as if dissolution unless the act is appropriate for winding up
had not taken place, provided the other partnership affairs;
party to the transaction b. Where the partner has become insolvent; or
1. Had extended credit to the partnership c. Where the partner has no authority to wind
prior to dissolution and had no up partnership affairs, except by a
knowledge or notice thereof; or transaction with one who
2. Had not so extended credit but had 1. Had extended credit to the partnership
known of the partnership prior to prior to dissolution and had no
dissolution, and having no knowledge or knowledge or notice of his want of
notice of dissolution, the fact had not authority; or
been advertised in a newspaper of 2. Had not extended credit to the
general circulation in the place (or in partnership prior to dissolution and,
each place if more than one) at which the having no knowledge or notice of his
partnership business was regularly want of authority, the fact of his want of
carried on [Art. 1834, Civil Code]. authority has not been advertised [Art.
1834, Civil Code].

Art. 1834, Civil Code does not affect the liability

under Art. 1825, Civil Code of any person who,
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after dissolution, represents himself or D. Winding Up
consents to another representing him as a
partner in a partnership engaged in carrying on
1. Who May Wind Up
business [Art. 1834, Civil Code].
The following partners have the right to wind
up the partnership affairs:
3. On Liability for Contracts after a. Those designated in an agreement;
Dissolution by Specific Causes b. Those who have not wrongfully dissolved
[Art. 1833, Civil Code] the partnership; or
Trigger: A contract c. The legal representative of the last surviving
a. Entered into by a partner acting for the partner, who was not insolvent.
partnership
b. After dissolution by a partner’s: Any partner or his legal representative or
1. act, assignee may obtain winding up by the court,
2. death, or upon cause shown [Art. 1836, Civil Code].
3. insolvency
2. Manner of Winding Up
General Rule: Binds the other partners. a. Extrajudicial, by the partners themselves; or
b. Judicial, under the control and direction of
Exceptions: the proper court.
a. The dissolution being by act of any partner,
the partner acting for the partnership had The action for liquidation of the partnership is
knowledge of the dissolution; or personal. The fact that sale of assets, including
b. The dissolution being by death or real property, is involved does not change its
insolvency of a partner, the partner acting character, such sale being merely a necessary
for the partnership had knowledge or notice incident of the liquidation of the partnership,
of the death or insolvency. which should precede and/or is part of its
process of dissolution [Claridades v. Mercader,
4. On Existing Liability of Partners G.R. No. L-20341 (1966)].
[Art. 1835, Civil Code]
General Rule: Dissolution does not of itself E. Rights of Partners in Case of
discharge the existing liability of any partner.
Dissolution
Exception: A partner may be relieved when
there is an agreement to that effect between: 1. Dissolution Without Violation of the
a. Himself; Agreement
b. The partnership creditor; and Each partner may have:
c. The person or partnership continuing the a. The partnership property applied to
business. discharge the partnership liabilities; and
b. The surplus applied in cash to the net
Such agreement may be inferred from the amount owing to the respective partners.
course of dealing between:
a. The creditor having knowledge of the This is a right as against his co-partners and all
dissolution; and partners claiming through them in respect of
b. The person or partnership continuing the their interests in the partnership. It cannot be
business. availed if there is an agreement to the contrary
[Art. 1837, Civil Code].
In case of dissolution by death, the individual
property of a deceased partner is liable for Note: When dissolution is caused by expulsion,
obligations of the partnership incurred while he the expelled partner may be discharged from
was a partner, after payment of his separate all partnership liability in the same manner as
debts. above but he shall receive in cash only the net
amount due him from the partnership [De
Leon].

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2. Dissolution in Contravention of the includes the firm name) is part of the
Agreement partnership assets and may be subject of a
a. Partner who did not cause the sale [De Leon].
dissolution
The partners who did not cause the dissolution F. Rights of Partners in Case of
wrongfully has the following rights: Rescission
1. To demand the right under Par. 1, Art. 1837,
Civil Code Rights
2. To be indemnified for damages for breach A partner, who is induced by fraud or
of the agreement against the partner who misrepresentation to become such partner,
caused the dissolution wrongfully [Par. 1, may rescind the contract. Without prejudice to
Art. 1837, Civil Code]; any other right, he is entitled:
3. To continue the business: 1. To a lien on, or right of retention of, the
a. In the same name surplus of the partnership property after
b. By themselves or jointly with others satisfying the partnership liabilities to third
c. During the agreed term for the persons for any sum of money paid by him
partnership. for the purchase of an interest in the
partnership and for any capital or advances
For the purpose of continuing the business, the contributed by him;
said partners may possess the partnership 2. To stand, after all liabilities to third persons
property provided: have been satisfied, in the place of the
1. They secure the payment by bond approved creditors of the partnership for any
by the court; or payments made by him in respect of the
2. They pay any partner, who has caused the partnership liabilities; and
dissolution wrongfully, the value of his 3. To be indemnified by the person guilty of the
interest in the partnership, less any fraud or making the representation against
damages recoverable, and indemnity all debts and liabilities of the partnership
against all present or future partnership [Art. 1838, Civil Code].
liabilities [Art. 1837, Civil Code].
Nature of Fraud or Deceit
b. Partner who caused the dissolution The fraud or deceit must be material or
The partner who caused the dissolution substantial. Mere exaggerations of one partner
wrongfully has the following rights: of the prospects of enterprises or of value of
1. If the business is not continued: All the the property which he has put into the firm as
rights in Par. 1, Art. 1837, Civil Code, capital is not ground for dissolution [Pineda].
subject to liability for damages;
2. If the business is continued: The right, as G. Settling of Accounts between
against his co-partners and all claiming
through them, to: Partners
a. Ascertainment, without considering the
value of the goodwill of the business, and Subject to any agreement to the contrary, the
payment to him in cash the value of his following rules shall be observed in settling
partnership interest, less any damage, or accounts between partners after dissolution:
have the payment secured by a bond
approved by the court; and 1. Composition of Partnership Assets
b. Be released from all existing liabilities of a. The partnership property; and
the partnership [Par. 3, Art. 1837, Civil b. The contributions of the partners necessary
Code]. for the payment of all the liabilities [Art. 1839
(1), Civil Code].
The goodwill of a business may be defined to
be the advantage which it has from its In accordance with the subsidiary liability of the
establishment or from the patronage of its partners, the partnership property shall be
customers, over and above the mere value of applied first to satisfy any liability of the
its property and capital. The goodwill (which partnership [Art. 1839 (3), Civil Code].
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2. Amount of Contribution for 6. Distribution of Property of Insolvent
Liabilities Partner
The rules for distribution of losses shall Trigger: Where -
determine the contributions of the partners [Art. a. A partner has become insolvent; or
1839 (4), Civil Code]. As such: b. His estate is insolvent,
a. The contribution shall be in conformity with
the agreement. Rule: The claims against his separate property
b. If only the share in profits has been shall rank in the following order:
stipulated, the contribution shall be in the a. Those owing to separate creditors;
same proportion. b. Those owing to partnership creditors;
c. In the absence of any stipulation, the c. Those owing to partners by way of
contribution shall be in proportion to the contribution [Art. 1839 (9), Civil Code].
capital contribution [Art. 1797, Civil Code].
H. Rights of the Creditors of the
3. Enforcement of Contribution Dissolved Partnership
The following persons have the right to enforce
the contributions:
a. An assignee for the benefit of creditors; 1. As Creditors of the New Partnership
b. Any person appointed by the court; or In the following cases, creditors of the
c. To the extent of the amount which he has dissolved partnership are also creditors of the
paid in excess of his share of the person or partnership continuing the business:
partnership liability, any partner or his legal a. When the business is continued without
representative [Art. 1839 (5) & (6), Civil liquidation, and the cause of dissolution is:
Code]. 1. Admission of a new partner into the
existing partnership;
The individual property of a deceased partner 2. Retirement or death of any partner, and
shall be liable for the contributions [Art. 1839 his rights to partnership property are
(7), Civil Code]. assigned to [1] two or more of the
partners, or [2] one or more of the
partners and one or more third persons;
4. Order of Application of Assets
3. Retirement of all but one partner, and
The partnership liabilities shall rank, in order of
their rights to partnership property are
payment, as follows:
assigned to the remaining partner, who
a. Those owing to creditors other than
continues the business, either alone or
partners;
with others;
b. Those owing to partners other than for
4. Wrongful dissolution by any partner, and
capital and profits;
the remaining partners continue the
c. Those owing to partners in respect of
business, either alone or with others; or
capital;
5. Expulsion of a partner, and the
d. Those owing to partners in respect of profits
remaining partners continue the
[Art. 1839 (2), Civil Code].
business, either alone or with others.
5. Doctrine of Marshaling of Assets b. When the cause of dissolution is the
When partnership property and the individual retirement or death of any partner, and
properties of the partners are in possession of business is continued with the consent of
a court for distribution: the retired partner or the representative of
a. Partnership creditors have priority on the deceased partner, without assignment
partnership property; of their rights to partnership property.
b. Separate creditors have priority on
individual property, saving the rights of lien c. When the cause of dissolution is the
of secured creditors; assignment by all the partners or their
c. Anything left from either shall be applied to representatives of their rights in
satisfy the other [Art. 1839 (8), Civil Code]. partnership property to one or more third
persons who promise to pay the debts and

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who continue the business of the profits attributable to the use of his right
partnership [Par. 1, Art. 1840, Civil Code]. in the property of the dissolved
partnership [Art. 1841, Civil Code].
2. Liability of A New Partner
The liability to the creditors of the dissolved Exception: Unless otherwise agreed upon
partnership of a new partner in the partnership
continuing the business shall be satisfied out of I. Right to an account
the partnership property alone. However, he
may, through agreement, assume individual In the absence of any agreement to the
liability [Par. 2, Art. 1840, Civil Code]. contrary, the right to an account of his interest
shall accrue to any partner, or his legal
3. Priority of Creditors of Dissolved representative at the date of dissolution, as
Partnership against:
Creditors of the dissolved partnership have 1. The winding up partners;
prior right to any claim of the retired partner or 2. The surviving partners; or
the representative of the deceased partner 3. The person or partnership continuing the
against the person or partnership continuing business [Art. 1842, Civil Code].
the business [Par. 3, Art. 1840, Civil Code].

This is without prejudice to the right of creditors

to set aside any assignment on the ground of
fraud [Par. 4, Art. 1840, Civil Code].

Ratio: Business will be hampered if outside

creditors are not given superior rights. It will be
risky for them to deal with partnerships.
Moreover, if partners enjoy priority right, in the
natural order of things, they will prefer their own
interests to that of the outside creditors. Such
a state will make it easy to defraud non-partner
creditors [Pineda].

4. Rights of a Retired Partner or a

Representative of Deceased
Partner
Trigger:
a. When any partner retires or dies, and
b. The business is continued without any
settlement of accounts as between him or
his estate and the person or partnership
continuing the business

General Rule: He or his legal representative,

as against such person or partnership, subject
to the prior rights of creditors of the dissolved
partnership:
a. May have the value of his interest at the
date of dissolution ascertained; and
b. Shall receive as an ordinary creditor
1. An amount equal to the value of his
interest in the dissolved partnership with
interest; or
2. At his option or at the option of his legal
representative, in lieu of interest, the
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IV. LIMITED PARTNERSHIP C. General and Limited Partners
Distinguished
A. Definition General partner Limited partner
1. A partnership; Extent of liability
2. Formed by two or more persons;
3. Having as members: Personally, but Liable only to the
a. One or more general partners; and subsidiarily liable extent of his capital
b. One or more limited partners [Art. 1843, for obligations of contributions (subject
Civil Code]. the partnership to exceptions)
The limited partners as such shall not be bound
by the obligations of the partnership [Art. 1843, Right to participate in management
Civil Code], except to the extent of their capital
contributions. Unless otherwise No right to participate
agreed upon, all in management
general partners
B. Characteristics have an equal right
to manage the
1. A limited partnership is formed by partnership
compliance with the statutory
requirements [Art. 1844, Civil Code]. Nature of contribution
2. The business is controlled or managed by Cash, property or Cash or property only,
one or more general partners, who are industry not industry
personally liable to creditors [Arts. 1848 &
1850, Civil Code].
Proper party in proceedings by or
against partnership
3. One or more limited partners contribute to
the capital and share in the profits but do not
Proper party Not a proper party,
manage the business and are not
unless (1) he is also a
personally liable for partnership obligations
general partner; or (2)
beyond their capital contributions [Arts.
where the object of the
1845, 1848 & 1856, Civil Code].
proceedings is to
enforce his right
4. Obligations or debts are paid out of the
against or liability to the
partnership assets and the individual
partnership.
property of the general partners [Art. 1843,
Note: The limited
Civil Code].
partner is a necessary
but not an
5. The limited partners may have their
indispensable party.
contributions back subject to conditions
prescribed by law [Arts. 1844 and 1857, Firm name
Civil Code].
Name may appear Name must not appear
6. A limited partnership has the following in the firm name in the firm name
advantages: (subject to exceptions)
a. For general partners, to secure capital
from others while retaining control and Prohibition to engage in other business
supervision for the business;
b. For limited partners, to have a share in Prohibited (subject Not prohibited
the profits without risk of personal to qualifications)
liability.

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General partner Limited partner May or may not partners, unless: [1]
include the name of it is also the surname
one or more of the of a general partner,
Effect of retirement, death, insanity or partners. or [2] prior to the time
insolvency when the limited
partner became
Dissolves Does not dissolve such, the business
partnership partnership; rights has been carried on
transferred to executor under a name in
or administrator for which his surname
selling his estate appeared
Assignability of interest Rules governing dissolution
Not assignable Assignable Arts. 1828-1842, Arts. 1860-1863,
Civil Code Civil Code
D. General and Limited
Partnership Distinguished E. Formation

General Limited 1. General Requirements

partnership partnership Two or more persons desiring to form a limited
partnership shall:
a. Sign and swear to a certificate stating the
Creation items in Art. 1844, Civil Code; and
b. File, for record, the certificate in the SEC
May be constituted in Partners must: [1] [Art. 1844, Civil Code].
any form, subject to sign and swear to a
exceptions certificate in A limited partnership is formed if there is
compliance with Art.
substantial compliance in good faith with the
1844, Civil Code;
requirements [Art. 1844, Civil Code].
and [2] file the When there is failure to substantially comply
certificate for record
with the requirements:
in the SEC
a. In relation to third persons, the partnership
is general, unless they recognized that the
Composition
firm is a limited partnership; and
Only general One or more general, b. As between the partners, the partnership
partners and one or more remains limited, since they are bound by
limited partners their agreement [De Leon].

2. Purpose of Filing
a. To give actual or constructive notice to
General Limited
potential creditors or persons dealing with
partnership partnership
the partnership; and
b. To acquaint them with its essential features,
Firm name including the limited liability of limited
partners [De Leon].
Must contain the Must include the
word “Company” word “Limited” [SEC
3. Firm Name
[SEC Memo. Circ. Memo. Circ. No. 14-
General Rule: The surname of a limited
No. 14-00], except 00]
partner shall not appear in the partnership
for professional
name.
partnerships. Must not include
name of limited

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Exceptions: b. Be subject to all the restrictions of a general
a. It is also the surname of a general partner; partner.
or
b. Prior to the time when the limited partner Except that, in respect to his contribution
became such, the business had been as a limited partner, he shall have the rights
carried on under a name in which his against the other members which he would
surname appeared. have had if he were not also a general partner
[Art. 1853, Civil Code].
A limited partner whose surname appears in a
partnership name contrary to this prohibition F. Management
is liable as a general partner to partnership
creditors who extend credit without actual General Rule: Only general partners have the
knowledge that he is not a general partner [Art. right to manage the partnership.
1846, Civil Code].
A general partner shall have the rights and
4. False Statement in the Certificate powers and be subject to all restrictions and
If the certificate contains a false statement, one liabilities of a partner in a partnership without
who suffers loss by reliance thereon may hold limited partners. Thus, he has general authority
liable any party to the certificate who knew the over the business.
statement to be false:
a. At the time he signed the certificate; or Thus, if a limited partner takes part in the
b. Subsequently, but within a sufficient time control of the business, he becomes liable as a
before the statement was relied upon to general partner [Art. 1848, Civil Code].
enable him to cancel or amend the
certificate, or to file a petition for its However, written consent or ratification by
cancellation or amendment [Art. 1847, Civil all limited partners is necessary to
Code]. authorize the general partners to:
1. Do any act in contravention of the
Requisites: certificate;
a. The partner knew the statement to be false: 2. Do any act which would make it impossible
1. At the time he signed the certificate; or to carry on the ordinary business of the
2. Subsequently, but having sufficient time partnership;
to cancel or amend it, or file a petition for 3. Confess a judgment against the
its cancellation or amendment, and he partnership;
failed to do so; 4. Possess partnership property, or assign
b. The person seeking to enforce liability has their rights in specific property, for other
relied upon the false statement in than a partnership purpose;
transacting business with the partnership; 5. Admit a person as a general partner;
and 6. Admit a person as a limited partner, unless
c. The person suffered loss as a result of the right to do so is given in the certificate;
reliance upon such false statement. 7. Continue the business with partnership
property on the:
5. General and Limited Partner at the a. Death;
Same Time b. Retirement;
A person may be a (1) general; and (2) limited c. Insanity;
partner in the same partnership at the same d. Civil interdiction; or
time. e. Insolvency of a general partner,

This fact must be stated in the certificate. unless the right to do so is given in the
certificate [Art. 1850, Civil Code].
Such person shall have:
a. All the rights and powers of a general
partner; and

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G. Obligations of a Limited A person designated as general partner
Partner but who exercised the rights of a limited
partner
Trigger: A person:
1. Obligations Related to Contribution
a. Who has contributed capital to a
The contributions of a limited partner may be
partnership;
cash or other property, but not services [Art.
b. Who erroneously believed that he has
1845, Civil Code].
become a limited partner; and
c. Whose name appears in the certificate as a
A limited partner is liable for partnership
general partner, or who is not designated as
obligations when he contributes services
a limited partner,
instead of only money or property to the
partnership [De Leon].
Rule: Is not personally liable as a general
partner by reason of his exercise of the rights
A limited partner is liable to the of a limited partner, provided:
partnership: a. On ascertaining the mistake, he promptly
a. For the difference between his actual renounces his interest in the profits of the
contribution and that stated in the certificate business or other compensation by way of
as having been made; and income [Art. 1852, Civil Code];
b. For any unpaid contribution which he b. He does not participate in the management
agreed in the certificate to make in the of the business [Art. 1848, Civil Code]; and
future, at the time and on the conditions c. His surname does not appear in the
stated in the certificate [Par. 1, Art. 1858, partnership name [Art. 1846, Civil Code].
Civil Code].
2. Liability to Partnership Creditors
He holds as trustee for the partnership: General Rule: A limited partner is not liable as
a. Specific property stated in the certificate as a general partner. His liability is limited to the
contributed by him, but which was not extent of his contributions [Art. 1843, Civil
contributed or which has been wrongfully Code].
returned; and
b. Money or other property wrongfully paid or Exceptions: The limited partner is liable as a
conveyed to him on account of his general partner when:
contribution [Par. 2, Art. 1858, Civil Code]. a. His surname appears in the partnership
name, with certain exceptions [Par. 2, Art.
These liabilities can be waived or 1846, Civil Code].
compromised only by the consent of all b. He takes part in the control of the business
members. Such waiver or compromise, [Art. 1848, Civil Code].
however, shall not affect the right to enforce c. The certificate contains a false statement of
said liabilities of a creditor: which he knows and which was relied upon,
a. Who extended credit; or resulting in loss [Art. 1847, Civil Code].
b. Whose claim arose, after the filing or before
a cancellation or amendment of the In cases (1) and (2), the limited partner is
certificate, to enforce such liabilities [Par. 3, entitled to reimbursement by the general
Art. 1858, Civil Code]. partner/s.
Even after a limited partner has Rationale: The general partner/s may not have
rightfully received the return in whole or been aware of such false statement.
in part of his capital contribution, he is
still liable to the partnership for any sum, not in 3. Liability to Separate Creditors
excess of such return with interest, necessary On due application to a court of competent
to discharge its liabilities to all creditors: jurisdiction by any separate creditor of a limited
a. Who extended credit; or partner, the court may:
b. Whose claims arose before such return a. Charge his interest with payment of the
[Par. 4, Art. 1858, Civil Code]. unsatisfied amount of such claim;
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b. Appoint a receiver; and b. Receive any payment, conveyance, or
c. Make all other orders, directions and release from liability if it will prejudice the
inquiries which the circumstances of the right of third persons [Art. 1854, Civil Code].
case may require.
Violation of the prohibition is considered a
The interest so charged may be redeemed with fraud on the creditors of the partnership [Par.
the separate property of any general partner, 2, Art. 1854, Civil Code].
but may not be redeemed with partnership
property [Art. 1862, Civil Code]. 3. Right to Share in Profits
A limited partner may receive from the
Note: In a general partnership, the interest may partnership the share of the profits or the
be redeemed with partnership property with the compensation by way of income stipulated for
consent of all the partners whose interests are in the certificate.
not charged [Art. 1814, Civil Code].
This right is subject to the condition that
H. Rights of a Limited Partner partnership assets will still be in excess of
partnership liabilities after such payment [Art.
1. In General 1856, Civil Code]. The partnership liabilities
A limited partner shall have the same rights being referred to exclude the liabilities to the
as a general partner to: limited and general partners.
a. Require that the partnership books be kept
at the principal place of business of the Rationale: Otherwise, he will receive a share
partnership; to the prejudice of third-party creditors.
b. To inspect and copy any of them at a
reasonable hour; 4. Right to Return of Contribution
c. To demand true and full information of all A limited partner may have his
things affecting the partnership; contributions withdrawn or reduced when:
d. To demand a formal account of partnership a. All the liabilities of the partnership, except
affairs whenever circumstances render it liabilities to general partners and to limited
just and reasonable; partners on account of their contributions,
e. To ask for dissolution and winding up by have been paid or there remains property of
decree of court; the partnership sufficient to pay them;
f. To receive a share of the profits or other b. The consent of all members is had, unless
compensation by way of income; and the return may be demanded as a matter of
g. To receive the return of his contribution right; and
provided the partnership assets are in c. The certificate is cancelled or so amended
excess of all its liabilities [Art. 1851, Civil as to set forth the withdrawal or reduction
Code]. [Par. 1, Art. 1857, Civil Code].

2. Right to Transact Business with the Note: Once withdrawal has been approved by
the SEC and registered, the partnership may
Partnership
no longer recover the limited partner’s
A limited partner may:
contributions.
a. Loan money to the partnership;
b. Transact other business with the
The return of his contributions may be
partnership; and
demanded, as a matter of right (i.e., even
c. Receive a pro rata share of the partnership
when not all the other partners consent):
assets with general creditors if he is not also
a. On the dissolution of the partnership;
a general partner [Par. 1, Art. 1854, Civil
b. Upon the arrival of the date specified in the
Code].
certificate for the return; or
c. After the expiration of a 6-month notice in
Limitations: A limited partner, with respect to
writing given by him to the other partners, if
his transactions with the partnership, cannot:
no time is fixed in the certificate for:
a. Receive or hold as collateral security any
1. The return of the contribution; or
partnership property; or
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2. The dissolution of the partnership [Par. 2, by way of income, or the return of
Art. 1857, Civil Code]. contribution, to which the assignor would
otherwise be entitled. He has no right:
Return of Contribution in the Form of 1. To require any information or account of
Cash the partnership transactions;
General Rule: A limited partner, irrespective of 2. To inspect the partnership books [Par. 3,
the nature of his contribution, has only the right Art. 1859, Civil Code].
to demand and receive cash in return for his b. An assignee has the right to become a
contribution. substituted limited partner if:
1. All the partners consent thereto; or
Exceptions: He may receive his contribution in 2. The assignor, being empowered to do so
a form other than cash when: by the certificate, gives him that right
a. There is a statement in the certificate to the [Par. 4, Art. 1859, Civil Code].
contrary; or c. An assignee becomes a substituted limited
b. All the members of the partnership consent partner when the certificate is appropriately
[Par. 3, Art. 1857, Civil Code]. amended [Par. 5, Art. 1859, Civil Code].

5. Preference of Limited Partners 7. Right to Ask for Dissolution

General Rule: The limited partners stand on A limited partner may have the partnership
equal footing. dissolved and its affairs wound up when:
a. He rightfully but unsuccessfully demands
Exception: By an agreement of all the partners the return of his contribution; or
(general and limited) stated in the certificate, b. He has a right to contribution but his
priority or preference may be given to some contribution is not paid because the
limited partners over others with respect to: partnership property is insufficient to pay its
a. The return of contributions; liabilities [Art. 1857, Civil Code].
b. Their compensation by way of income; or
c. Any other matter [Art. 1855, Civil Code]. I. Dissolution
Note: Such an agreement shall be stated in the A limited partnership is dissolved in much the
certificate. same way and causes as an ordinary
partnership [De Leon].
6. Right to Assign Interest
The interest of a limited partner is assignable. General Rule: The retirement, death,
insolvency, insanity or civil interdiction of a
The assignee may become: general partner dissolves the partnership.
a. A substituted limited partner; or
b. A mere assignee. Exception: It is not so dissolved when the
business is continued by the remaining general
Substituted limited partner partners:
a. He is a person admitted to all the rights of a 1. Under a right to do so stated in the
limited partner who has died or has certificate; or
assigned his interest in a partnership. 2. With the consent of all members [Art. 1860,
b. He has all the rights and powers, and is Civil Code].
subject to all the restrictions and liabilities of
his assignor, except those liabilities which: Upon the death of a limited partner, his
1. The assignee was ignorant of; and executor or administrator shall have:
2. Cannot be ascertained from the 1. All the rights of a limited partner for the
certificate [Pars. 2 & 6, Art. 1859, Civil purpose of settling his estate; and
Code]. 2. The power to constitute an assignee as a
substituted limited partner, if the deceased
Assignee was so empowered in the certificate.
a. An assignee is only entitled to receive the
share of the profits or other compensation
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The estate of a deceased limited partner shall 2. Amendment of Certificate
be liable for all his liabilities as a limited partner A certificate shall be amended when:
[Art. 1861, Civil Code]. a. There is a change in the name of the
partnership or in the amount or character
J. Settlement of Accounts of the contribution of any limited partner;
b. A person is substituted as a limited
1. Order of Payment partner;
In settling accounts after dissolution, the c. An additional limited partner is admitted;
liabilities of the partnership shall be entitled to d. A person is admitted as a general partner;
payment in the following order: e. A general partner retires, dies, becomes
a. Those to creditors, including limited insolvent or insane, or is sentenced to
partners except those on account of their civil interdiction and the business is
contributions, in the order of priority as continued;
provided by law; f. There is a change in the character of the
b. Those to limited partners in respect to their business of the partnership;
share of the profits and other compensation g. There is a false or erroneous statement in
by way of income in their contributions; the certificate;
c. Those to limited partners in respect to the h. There is a change in the time as stated in
capital of their contributions; the certificate for the dissolution of the
d. Those to general partners other than for partnership or for the return of a
capital and profits; contribution;
e. Those to general partners in respect to i. A time is fixed for the dissolution of the
profits; partnership, or the return of a contribution,
f. Those to general partners in respect to no time having been specified in the
capital [Par. 1, Art. 1863, Civil Code]. certificate; or
j. The members desire to make a change in
Note: In settling accounts of a general any other statement in the certificate in
partnership, those owing to partners in respect order that it shall accurately represent the
to capital enjoy preference over those in agreement among them [Art. 1864, Civil
respect to profits. Code].

2. Share in the Partnership Assets 3. Requirements for Amendment or

General Rule: The share of limited partners in Cancellation
respect to their claims for capital, profits, or for To amend or cancel a certificate:
compensation by way of income, is in a. The amendment or cancellation must be in
proportion of their contribution [Art. 1863, Civil writing;
Code]. b. It must be signed and sworn to by all the
members including the new members, and
Exceptions: Unless the assigning limited partner in case of
a. There is a statement in the certificate as to substitution or addition of a limited or
their share in the profits; or general partner; and
b. There is a subsequent agreement fixing c. The writing to amend (with the certificate, as
their share [Art. 1863, Civil Code]. amended) or to cancel must be filed, for
record, in the SEC [Art. 1865, Civil Code].
K. Amendment or Cancellation
In case of refusal to execute the writing
of Certificate [Art. 1865, Civil Code]
Trigger: If any person, who is designated in
1. Cancellation of Certificate Art. 1865, Civil Code as a person who must
The certificate shall be canceled when: execute the writing, refuses to do so
a. The partnership is dissolved; or
b. All limited partners cease to be such limited Rule: A person desiring the cancellation or
partners. amendment of a certificate may petition the

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court to order a cancellation or amendment
thereof.

Action of the court: The court shall order the

SEC to record the cancellation or amendment
if it finds that the petitioner has a right to have
the writing executed. From the moment the
amended certificate/writing or a certified copy
of a court order granting the petition for
amendment has been filed, such amended
certificate shall thereafter be the certificate of
partnership.

L. Limited Partnerships Formed

Prior to the Effectivity of the
Civil Code
Limited partnerships formed under the law
prior to the Civil Code may:
1. Continue to be governed by the provisions
of the old law
2. Become a limited partnership under the CC
by compliance with Art. 1844, Civil Code
provided that the certificate states:
a. The amount of the original contribution of
each limited partner and the time it was
made; and
b. That the partnership assets exceed its
liabilities to third persons by an amount
greater than the sum of all limited
partners’ contributions [Art. 1867, Civil
Code].

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AGENCY Distinguishing Agency from Lease of
Service
I. NATURE, FORM, AND [De Leon]
KINDS
Agency Lease of Service
A. Nature and Elements Based on Based on
By the contract of agency, a person binds representation employment
himself to render some service or to do
something in representation or on behalf of Agents generally Lessor (employee)
another, with the consent or authority of the exercises discretion only exercises
latter [Art. 1868, Civil Code]. ministerial acts
Based on the definition above, there are two Parties involved Parties involved are
parties in a contract of agency. include agent, lessee (employer)
1. The agent is the one who binds himself to principal, and third and lessor
represent another; while person (employee)
2. The principal is the one who is represented
by the agent.
Distinguishing Agency from Independent
A contract of agency has at least four Contract
essential elements: [De Leon]
1. There is consent, express or implied of the
parties to establish the relationship; Agency Loan
2. The object is the execution of a juridical act
in relation to a third person; Agent may be Independent
3. The agents acts as a representative and controlled and contractor is
not for himself, and directed by the independent from the
4. The agent acts within the scope of his principal principal’s control
authority [Rallos v. Felix Go Chan, G.R. No. and direction
L-24332 (1978)].
Generally, principal Generally, employer
Note: Agency is not always contractual. As is liable for the is not liable for the
will be discussed, even if some of these agent’s acts independent
elements are missing, agency may still be contractor’s acts
created by operation of law, such as in Arts.
1930 and 1931, Civil Code.
Distinguishing Agency from Partnership
Agency distinguished from other contracts [De Leon; Art. 1767, Civil Code]
Distinguishing Agency from Loan
[De Leon] Agency Partnership

Agency Loan Agent acts in Each partner is an

representation of the agent of the
Principal gives funds Lender gives funds principal, not vice partnership and his
to agent to advance to borrower for versa co-partners (i.e.
principal’s own borrower’s own contract of mutual
business purposes agency)

Does not carry with it Carries with it the Unless acting Acting in
the obligation to corresponding outside the scope of representation of the
return the money obligation to return authority, agent does partnership, a
the money not incur personal partner binds
liability himself, the

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partnership, and his Distinguishing Agency from Trust

co-partners [Art. [De Leon; Art. 1440, Civil Code]
1822, Civil Code]
Agency Lease of Service
Agent is subject to Partners do not have
the control of the the right to control Agent acts in Title passes to the
principal co-partners representation of the trustee acting in his
principal own name

Distinguishing Agency from Brokerage May be revoked any Terminated upon

[Hahn v. CA, G.R. No. 113074 (1997)] time [see fulfillment of purpose
Extinguishment of of trust
Agency Brokerage Agency]

“An agent receives a “[B]roker earns his

commission upon the pay merely by B. Form
successful bringing the buyer
conclusion of a sale.” and the seller General Rule: Agency may be written or oral,
together, even if no unless the law requires a specific form [Art.
sale is eventually 1869, Civil Code].
made.”
Exceptions
1. In an agency to sell a piece of land or any
Distinguishing Agency from Sale interest therein, the authority of the agent
[Art. 1458, Civil Code; Quiroga v. shall be in writing. Otherwise, the sale shall
Parsons, G.R. No. L-11491 (1918)] be void [Art. 1874, Civil Code].
2. A corporation may act only through its board
Agency to sell Sale of directors or, when authorized either by
its bylaws or by its board resolution,
Principal does not Seller transfers through its officers or agents in the normal
transfer ownership of ownership of the course of business [San Juan Structural
the goods to the goods Steel v. CA, G.R. No. 129549 (1998)].
agent.
C. Kinds
Agent does not pay Buyer pays the price
the price of the of a thing. A contract of agency may be classified:
goods to principal, 1. As to manner of creation: express and
but delivers the price implied [Arts. 1869-1873, Civil Code]
he obtains from 2. As to scope of business: general and
selling them to third special [Art. 1876, Civil Code]
persons 3. As to authority conferred: couched in
general terms and couched in specific terms
Agent must return No obligation to [Art. 1877-1880, Civil Code]
the goods if the return the goods if 4. As to consideration: gratuitous or onerous
goods remain unsold the buyer is unable to [Art. 1875, Civil Code]
sell it to third persons
1. As to Manner of Creation
An agency may be express or implied [Art.
1869, Civil Code].
a. Express: oral or written
b. Implied from
1. The acts of the principal,
2. His silence or lack of action, or

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3. His failure to repudiate the agency,
necessary, since necessary to invoke
knowing that another person is acting on
there is an actual agency by estoppel.
his behalf without authority [Art. 1869,
agency.
Civil Code].

Acceptance by the agent may also be 2. As to Scope of Business

express or implied. An agency is either general or special [Art.
a. Express: oral or written 1876, Civil Code]:
b. Implied from a. General: comprises of all the business of
1. His acts which carry out the agency, or the principal
2. His silence or inaction according to the b. Special: Comprises one or more specific
circumstances [Art. 1870, Civil Code] transactions

Between persons who are present, the A general agent is “one authorized to do all
acceptance of the agency may also be acts pertaining to a business of a certain kind
implied if the principal delivers his power of or at a particular place, or all acts pertaining to
attorney to the agent and the latter receives it a business of a particular class or series, while
without any objection [Art. 1871, Civil Code] a special agent is “one authorized to do some
particular act or to act upon some particular
Between persons who are absent, the occasion. He acts usually in accordance with
acceptance of the agency cannot be implied specific instructions or under limitations
from the silence of the agent, except: necessarily implied from the nature of the act
a. When the principal transmits his power of to be done” [Siasat v. IAC, G.R. No. L-67889
attorney to the agent, who receives it (1985)].
without any objection;
b. When the principal entrusts to him by letter 3. As to Authority Conferred
or telegram a power of attorney with An agency may also be couched in general
respect to the business in which he is terms or specific terms [Art. 1877, Civil
habitually engaged as an agent, and he did Code]:
not reply to the letter or telegram [Art. 1872, a. Couched in general terms: comprises
Civil Code]. only acts of administration, even if:
1. The principal should state that he
Implied agency v. Agency by estoppel withholds no power or that the agent may
Distinguishing implied agency from execute such acts as he may consider
agency by estoppel appropriate, or
[De Leon] 2. Or even though the agency should
authorize a general and unlimited
Implied agency Agency by management [Art. 1877, Civil Code].
[Arts. 1881-1882] estoppel [Art. 1911]
The term acts of administration refer to
Actual or real No actual agency, those acts which do not imply the authority
agency.. only the presence of to alienate for the exercise of which an
an apparent authority express power is necessary [De Leon].

Only the principal is Liability depends b. Couched in specific terms: A special

liable to third whether estoppel is power of attorney is necessary in acts of
persons. caused by the strict dominion [De Leon]. The
principal or the circumstances enumerated in Art. 1878,
agent. Civil Code pertain to this, namely:
1. To make such payments as are not
usually considered as acts of
A third party’s A third party’s administration;
reliance in the reliance in the
representation is not representation is

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2. To effect novations which put an end to his detriment [Litonjua v. Eternit
obligations already in existence at the Corporation, G.R. No. 144805 (2006)].
time the agency was constituted;
3. To compromise, to submit questions to b. Agency by operation of law
arbitration, to renounce the right to While agency is generally contractual, the Civil
appeal from a judgment, to waive Code admits several exceptions.
objections to the venue of an action or to 1. The agent must finish the business
abandon a prescription already acquired; already begun on the death of the principal,
4. To waive any obligation gratuitously; should delay entail any danger [Par. 2, Art.
5. To enter into any contract by which the 1884, Civil Code].
ownership of an immovable is 2. The agent, even if he should withdraw
transmitted or acquired either from the agency for a valid reason, must
gratuitously or for a valuable continue to act until the principal has had
consideration; reasonable opportunity to take the
6. To make gifts, except customary ones for necessary steps to meet the situation [Art.
charity or those made to employees in 1929, Civil Code].
the business managed by the agent; 3. The agency shall remain in full force and
7. To loan or borrow money, unless the effect even after the death of the principal,
latter act be urgent and indispensable for if it has been constituted in the common
the preservation of the things which are interest of the latter and of the agent, or in
under administration; the interest of a third person who has
8. To lease any real property to another accepted the stipulation in his favor [Art.
person for more than one year; 1930, Civil Code].
9. To bind the principal to render some 4. Anything done by the agent, without
service without compensation; knowledge of the death of the principal or
10. To bind the principal in a contract of of any other cause which extinguishes the
partnership; agency, is valid and shall be fully effective
11. To obligate the principal as a guarantor with respect to third persons who may have
or surety; contracted with him in good faith [Art. 1931,
12. To create or convey real rights over Civil Code].
immovable property;
13. To accept or repudiate an inheritance;
14. To ratify or recognize obligations
contracted before the agency;
15. Any other act of strict dominion.

4. Other Kinds of Agency

a. Agency by estoppel
In an agency by estoppel, there is no agency
at all, but the one assuming to act as agent has
apparent authority, to represent another,
although not real [Yun Kwan Byung v.
PAGCOR, G.R. No. 163553 (2009)].

To establish agency by estoppel, the following

elements must be shown:
1. The principal manifested a representation
of the agent’s authority or knowingly allowed
the agent to assume such authority;
2. The third person, in good faith, relied upon
such representation; and
3. Relying upon such representation, such
third person has changed his position to

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II. OBLIGATIONS OF THE 3. Even if the agent withdraws, continue to
act as an agent until the principal has had
AGENT reasonable opportunity to take the
necessary steps to meet the situation [Art.
1929, Civil Code].
A. Act within the Scope of
Authority The obligation to carry out the agency also
includes the obligation to not carry out the
One of the primary obligations of an agent is to agency if its execution would manifestly result
act within the scope of his authority [Art. in loss or damage to the principal [Art. 1888,
1881, Civil Code]. This includes acting Civil Code].
according to the instructions of the principal;
and in default thereof, according to the C. Prefer the Interest of the
diligence of a good father of a family as Principal Over His Own
required by the nature of the business [Art.
1887, Civil Code].
This obligation is manifested in two ways:
1. An agent shall be liable for damages if,
In the following cases, the acts performed by
there being a conflict between his interests
the agent shall be deemed within the scope
and those of the principal, he should prefer
of his authority:
his own [Art. 1889, Civil Code].
1. Acts that may be conducive to the
2. An agent, who has been authorized to lend
accomplishment of the purpose of the
money, may not borrow it without the
agency [Art. 1881, Civil Code]
consent of the principal [Art. 1890, Civil
2. Acts performed in a manner more
Code].
advantageous to the principal than that
3. An agent cannot acquire by purchase the
specified by him [Art. 1882, Civil Code]
property whose administration or sale may
3. So far as third persons are concerned, acts
have been entrusted to them, even by public
within the terms of the written power of
or judicial auction, either in person or
attorney, even if the agent has in fact
through the mediation of another, unless the
exceeded the limits of his authority
consent of the principal has been given [Art.
according to an understanding between the
1491 (1), Civil Code].
principal and the agent [Art. 1900, Civil
Code]
D. Render an Account, and
Note: Deliver
1. The special power to sell excludes the
power to mortgage; and a special power to
An agent must render an account of his
mortgage does not include the power to sell
transactions and deliver to the principal
[Art. 1879, Civil Code].
whatever he may have received by virtue of the
2. The power to compromise does not
agency, even though it may not be owing to the
authorize submission to arbitration [Art.
principal [Art. 1891, Civil Code].
1880, Civil Code].
A stipulation exempting the agent from the
B. Carry Out the Agency obligation to render an account shall be void
[Art. 1891, Civil Code].
Another primary obligation of an agent is to
carry out the agency [Art. 1884, Civil Code].
Such obligation entails that the agent shall
1. Be liable for the damages caused to the
principal through his non-performance [Art.
1884, Civil Code];
2. Finish the business already begun on the
death of the principal, should delay entail
danger [Art. 1884, Civil Code];
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E. Summary of Liabilities for F. Liability to Pay Interest [Art.
Damages 1896, Civil Code]

Trigger Rule Trigger Rule Reckoning

Period
If the principal may The agent is liable
suffer damages for damages [Art. When the The agent Interest paid
through the agent’s 1884, Civil Code] agent has owes the from the day
non-performance applied to his principal on which the
own use the the interest sums were
Fraud or negligence The agent is sums on the said applied to
responsible not only belonging to sums of the agent’s
for fraud or the principal money. use
negligence, which
shall be judged with When the Interest paid
more or less rigor by agent still from the day
the courts, according owes a sum of of the expiry
to whether the money to the of the
agency was or was principal after agency
not for the expiration
compensation [Art. of the agency
1909, Civil Code]

If there is a conflict The agent shall be G. Liability for Acts of

between the liable for damages Substitutes [Arts. 1892-
interests of principal [Art. 1889, Civil
and agent, and the Code]
1893, Civil Code]
agent prefers his
own Appointment of a substitute
General Rule: An agent may appoint a
If the principal The agent must substitute.
should suffer any indemnify the
damage by reason principal, except Exception: When the principal prohibits the
of the withdrawal of when the withdrawal agent from doing so, all of the substitute’s acts
the agent is based upon the shall be void [Art. 1892, Civil Code].
impossibility of
continuing the Liability of the agent for his
agency without substitutes
grave detriment to General rule: The agent shall not be
the agent [Art. 1928, responsible for the acts of the substitute.
Civil Code]
Exemptions: An agent is responsible for the
acts of the substitute in the following cases:
1. When the agent was not given the power to
appoint one;
2. When the agent was given such power, but
without designating the person, and the
person appointed was notoriously
incompetent or insolvent [Art. 1892, Civil
Code].

Note: In both exceptions above, the principal

may bring an action against the substitute with
respect to the obligations the substitute has
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contracted under the said substitution [Art. Sale on credit
1893, Civil Code]. General Rule: The commission agent cannot
sell on credit [Art. 1905, Civil Code]
H. Obligations of Commission
Exception: When there is an express or
Agents [Arts. 1903-1908, Civil implied consent of the principal [Art. 1905, Civil
Code] Code]
1. The agent may sell on credit
Commission agent is one whose business is to 2. The agent shall inform the principal, with the
receive and sell goods for a commission, and statement of the names of the buyers [Art.
who is entrusted by the principal with the 1906, Civil Code]
possession of goods to be sold, and is usually
selling in his own name [De Leon]. Special cases of sale on credit
1. If the sale on credit is without the
Responsibility for goods received consent of the principal: The latter may
[Art. 1903, Civil Code] demand from the agent the payment in
General Rule: The commission agent shall be cash, but the commission agent shall be
responsible for the goods received by him in entitled to any interest resulting from the
the terms and conditions, and as described in sale [Art. 1905, Civil Code]
the consignment 2. If the agent fails to inform the principal
with the statement of the names of the
Exception: Unless, upon receiving them, he buyers: The sale shall be deemed to have
should make a written statement of the been made for cash insofar as principal is
damage and deterioration suffered by the concerned [Art. 1906, Civil Code]
same.

Goods belonging to different owners

[Art. 1904, Civil Code]
Trigger: When the commission agent:
1. Handles goods of the same kind and mark,
2. Which belong to different owners

Rule: He shall:
1. Distinguish them by counter-marks, and
2. Designate the merchandise respectively
belonging to each principal.

Failure to collect credits [Art. 1908,

Civil Code]
Trigger: The commission agent who
1. Does not collect the credits of his principal
2. At the time when they become due and
demandable

Liability: Shall be liable for damages, unless

he proves that he exercised due diligence for
that purpose.
Note: This does not apply in case of guarantee
commission wherein the agent guarantees the
payment of all debts arising from the agency

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III. OBLIGATIONS OF THE However, in some cases, the mere acceptance
of benefits is not tantamount to ratification by
PRINCIPAL the principal.

A. Comply with the Obligations Acts which are absolutely void cannot be
ratified [De Leon].
Contracted by the Agent
When Estoppel Applies
The principal must comply with all the Even when the agent has exceeded his
obligations which the agent may have authority, the principal is solidarily liable with
contracted within the scope of his authority the agent if the former allowed the latter to act
[Par. 1, Art. 1910, Civil Code]. as though he had full powers [Art. 1911, Civil
Code].
Doctrine of Representation
All contracts and transactions entered into by This is termed as agency by estoppel
the agent on behalf of the principal within the [Villanueva]. Even if there was no express
scope of his authority are binding on the authority, the principal is still solidarily liable
principal as though he himself had entered into because he allowed the agent to act as if he
them directly [Eurotech v. Cuizon, G.R. No. had authority.
167552 (2007].
Acts by the Agent in His Own Name but
If the agent acts within the scope of his Involving Things of the Principal [Par. 2, Art.
authority, then the principal must comply. 1883, Civil Code]
Otherwise, the principal is bound to comply When the properties of the principal are
only if he ratifies the agent’s act that was done involved, the principal is bound even when the
beyond the scope of his authority. contract was entered into in the name of the
agent. The purpose of this rule is to protect
Acts Within the Scope of Authority third persons against possible collusion
1. Those expressly specified in the power of between the agent and the principal [Gold Star
attorney Mining Co. v. Lim-Jimena, G.R. No. L-25301
2. Conducive acts (1968); PNB v. Agudelo, G.R. No. 39037
3. Advantageous acts (1933)].
4. Collateral acts

Ratified Acts
B. Advance or Reimburse Sums
As for any obligation wherein the agent has Necessary
exceeded his power, the principal is not bound
except when he ratifies it expressly or tacitly The principal must advance to the agent,
[Par. 2, Art. 1910, Civil Code]. should the latter so request, the sums
necessary for the execution of the agency.
The principal must have full knowledge at the
time of ratification of all the material facts and Should the agent have advanced them, the
circumstances relating to the unauthorized act principal must reimburse him therefor, even if
of the person who assumed to act as agent. If the business or undertaking was not
the material facts were suppressed or successful, provided the agent is free from all
unknown, there can be no ratification [Manila fault.
Memorial v. Linsangan, G.R. No. 151319
(2004)]. The reimbursement shall include interest on
the sums advanced, from the day on which the
By benefitting from the unauthorized act of an advance was made [Art. 1912, Civil Code].
agent, the principal is said to have ratified the
acts of the agent and is estopped from denying
said authority [Filipinas Life v. Pedroso, G.R.
No. 159489 (2008)].

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The principal is not liable for the C. Indemnify the Agent for Injury
expenses incurred by the agent in the
following cases [Art. 1918, Civil The principal must also indemnify the agent for
Code]: all the damages which the execution of the
1. If the agent acted in contravention of the agency may have caused the latter, without
principal's instructions, unless the latter fault or negligence on his part [Art. 1913, Civil
should wish to avail himself of the benefits Code].
derived from the contract;
2. When the expenses were due to the fault of General Rule: The principal must indemnify
the agent; the agent for damages in the execution of the
3. When the agent incurred them with agency.
knowledge that an unfavorable result would
ensue, if the principal was not aware Exception: When damage was caused due to
thereof; the fault or negligence of the agent.
4. When it was stipulated that the expenses
would be borne by the agent, or that the D. Compensate the Agent
latter would be allowed only a certain sum.
Agency is presumed to be for compensation,
General Rule: The principal must advance or unless there is proof to the contrary [Art. 1875,
reimburse (with interest) the sums necessary Civil Code].
to execute the agency.
Note:
Exceptions: 1. Compensation is not an element of an
1. Expenses incurred through acts which agency contract [Casis]. The principal must
contravene the principal’s instructions, and prove that the agency is not for a fee if he
the principal does not want to derive benefit contests it. But in itself, compensation is not
therefrom an element of an agency contract.
2. Expenses due to the fault of the agent 2. The fact that the agency was for
3. Expenses incurred by the agent with the compensation or not, shall be considered by
knowledge that an unfavorable result would the court in determining the extent of liability
ensue, and the principal was unaware of an agent for fraud or negligence [Art.
4. If there is a stipulation that expenses would 1909, Civil Code].
be borne by the agent or that he would be
allowed only a certain sum Procuring Cause
5. Expenses incurred from acts outside the A procuring cause starts a series of events,
authority of the agent. which, without break in their continuity, result in
the accomplishment of the prime objective of
Sums to be reimbursed include those from the employment of the broker – a sale
unsuccessful undertakings as well as those [Philippine Health Care Providers v. Estrada,
initially in contravention of the principal’s G.R. 171052 (2008)].
instructions but later becomes a source of
benefits. The agent must be the efficient procuring
cause of a sale in order to be entitled to
Note: Compare the obligation of the principal commission [Danon v. Brimo & Co., G.R. No.
with the obligation of the agent, who is bound 15823 (1921)].
to advance the sums necessary to carry out the
agency only when he so consents or it is The broker becomes entitled to the usual
stipulated in the agreement and if the principal commissions whenever he brings to his
is not insolvent [Art. 1912 vis-à-vis Art. 1886, principal a party who is able and willing to take
Civil Code]. the property and enter into a valid contract
upon the terms then named by the principal,
although the particulars may be arranged and
the matter negotiated and completed between
the principal and the purchaser directly
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[Macondray v. Sellner, G.R. No. L-9184 If two or more persons have appointed an
(1916)]. agent for a common transaction or
undertaking, they shall be solidarily liable to the
The agent is entitled to commission even if the agent for all the consequences of the agency
(transaction) is consummated after the [Art. 1915, Civil Code].
revocation of his authority, if the revocation
was done in bad faith by the principal to avoid Requisites:
payment of commission [Infante v. Cunanan, a. There are two or more principals;
G.R. No. L-5180 (1953)]. b. The principals have all concurred in the
appointment of the same agent; and
Test c. The agent is appointed for a common
Even if the agent is not the procuring cause of transaction or undertaking
the transaction, he may still be awarded a sum
of money if he is “somehow instrumental in 2. If the Contract Involves Things
bringing the parties together again and finally Belonging to the Principal
consummating the transaction” [Prats v. CA, If an agent acts in his own name, the principal
G.R. No. L-39822 (1978)]. has no right of action against the persons with
whom the agent has contracted; neither have
When there is a close, proximate and causal such persons against the principal.
connection between the agent’s efforts and
labor and the principal’s sale of his property, In such case the agent is the one directly bound
the agent is entitled to commission [Manotok in favor of the person with whom he has
Brothers v. CA, G.R. No. 94753 (1993)]. contracted, as if the transaction were his own,
except when the contract involves things
Forfeiture of Right to Commission belonging to the principal [Art. 1883, Civil
An agent who takes a secret profit without Code].
revealing the same to his principal is guilty of a
breach of his loyalty to the principal and forfeits General Rule: If the agent acts in his own
his right to collect the commission from his name, then the contract is between the agent
principal, even if the principal does not suffer and the third person. Neither the third person
any injury, or he obtained better results, or the nor the principal has a right of action against
agency is gratuitous, or that usage or custom the other.
allows it. The rule is to prevent the possibility of
any wrong, not to remedy an actual damage Exception: If the contract involves things
[Domingo v. Domingo, G.R. No. L-30573 belonging to the principal, then the principal is
(1971)]. also liable to the third party (agency with an
undisclosed principal). However, it is not the
E. Scope and Nature of the case that the agent escapes liability by simply
Liability of the Principal contracting things belonging to the principal.

The exception has two (2) effects, according

1. Solidary Liability to jurisprudence:
The principal is bound and liable for the acts of
a. Principal and third persons now have a right
the agent done within the scope of his authority
of action against each other [Syjuco v.
(express, conducive, advantageous, and
Syjuco, G.R. No. 13471 (1920)].
collateral acts), for unauthorized acts which the
b. The principal is not bound by the contract if
principal has ratified and for acts which is
the act is beyond the scope of the agent’s
estopped from denying [Art. 1911, Civil Code].
authority [PNB v. Agudelo, G.R. No. L-
39037 (1933)]. This operates as an
Requisites:
exception to the exception.
a. Agency relationship exists;
b. The agent acts in excess of his authority;
and
c. The principal allowed the agent to act as
though he had full powers
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IV. MODES OF and his removal from the management is
unjustifiable.
EXTINGUISHMENT
The principal can revoke the agency even if the
A. Summary period fixed in the contract has not yet expired
[CMS Logging v. CA, G.R. No. L-41420
Agency is extinguished [Art. 1919, Civil (1992)].
Code]:
1. By its revocation; When two or more principals have granted a
2. By the withdrawal of the agent; power of attorney for a common transaction,
3. By the death, civil interdiction, insanity or any one of them may revoke the same without
insolvency of the principal or of the agent; the consent of the others [Art. 1925, Civil
4. By the dissolution of the firm or corporation Code].
which entrusted or accepted the agency;
5. By the accomplishment of the object or Note: The rule enunciated by Art. 1925, Civil
purpose of the agency; Code is consistent with Art. 1915, Civil Code
6. By the expiration of the period for which the which provides that, if two or more persons
agency was constituted. have appointed an agent for a common
transaction or undertaking, they shall be
The provision enumerates only those which are solidarily liable to the agent for all the
peculiar to agency and is, therefore, not consequences of the agency.
exclusive. Agency may also be extinguished by
the modes of extinguishment of obligations in Qualifications: The right of the principal to
general [De Leon]. terminate the authority of his agent is absolute
and unrestricted, except that he is liable for
The modes of extinguishment may be damages in case:
classified into three: a. He revokes the agency in bad faith [Danon
1. By agreement [(e) and (f)]; v. Brimo, G.R. No. 15823 (1921)]; or
2. By subsequent acts of the parties: b. He revokes the agency before the expiration
a. By the act of both parties or by mutual of the period stipulated in the agency
consent; or contract.
b. By the unilateral act of one of them [(a)
and (b)] 2. When Revocation is Not Binding on
3. By operation of law [(c) and (d)] Third Persons
a. When Notice is Required
B. Revocation If the agency has been entrusted for the
purpose of contracting with specified persons,
its revocation shall not prejudice the latter if
1. In General
they were not given notice thereof [Art. 1921,
Article 1920, Civil Code. The principal may revoke Civil Code].
the agency at will, and compel the agent to return
the document evidencing the agency. Such
revocation may be express or implied. b. When a Third Person in Good Faith
Has No Knowledge of Revocation
If the agent had general powers, revocation of
General Rule: The principal may revoke the the agency does not prejudice third persons
agency at will. who acted in good faith and without knowledge
of the revocation. Notice of the revocation in a
Exception: Agency cannot be revoked if it is newspaper of general circulation is a sufficient
coupled with an interest, such that: warning to third persons [Art. 1922, Civil Code].
a. A bilateral contract depends upon it;
b. It is the means of fulfilling an obligation An agent with general powers is most likely, an
already contracted; or agent authorized to transact with the general
c. A partner is appointed manager of a public in contradistinction to the agent who
partnership in the contract of partnership
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contracts with specified persons under Art. be revoked if there is just cause to terminate
1921, Civil Code. such agency relationship.

3. Appointment of New Agent C. Withdrawal by the Agent

Article 1923, Civil Code. The appointment of a new
agent for the same business or transaction revokes General Rule: The agent may withdraw from
the previous agency from the day on which notice the agency by giving due notice to the principal.
thereof was given to the former agent, without If the latter should suffer any damage by
prejudice to the provisions of the two preceding
articles.
reason of the withdrawal, the agent must
indemnify him therefor [Art. 1928, Civil Code].

Revocation takes effect when notice is given to Exception: Unless the agent should base his
the former agent, not when the new agent is withdrawal upon the impossibility of continuing
appointed. the performance of the agency without grave
detriment to himself [Art. 1928, Civil Code].
4. Direct Management by the Principal
Article 1924, Civil Code. The agency is revoked if If the Agent files a complaint against his
the principal directly manages the business principal, then he is understood to have
entrusted to the agent, dealing directly with third renounced the agency because his act was
persons. more expressive than words and could not
have caused any doubt [Valera v. Velasco,
If the principal believes that the agent is in G.R. No. L-28050 (1928)].
breach of the contract and thereby decides to
deal with the business directly, then the agency D. Death, Civil Interdiction,
is said to be revoked [CMS Logging v. CA, G.R. Insanity or Insolvency
No. L-41420 (1992)]. The mere act of direct
management by the principal is not enough to 1. In General
revoke the agency without such intention.
Due to the very nature of the relationship
between the principal and agent, agency is
5. General authority revoked by extinguished by the death of the principal or the
special authority agent. Any act of an agent after the death of his
Article 1926, Civil Code. A general power of principal is void ab initio unless the same falls
attorney is revoked by a special one granted to under the exceptions provided for in Arts.
another agent, as regards the special matter 1930-1931, Civil Code.
involved in the latter.
2. Exceptions
6. When Agency Cannot be Revoked a. Agency Coupled with an Interest
Article 1927, Civil Code. An agency cannot be Article 1930, Civil Code. The agency shall remain
revoked if a bilateral contract depends upon it, or if in full force and effect even after the death of the
it is the means of fulfilling an obligation already principal, if it has been constituted in the common
contracted, or if a partner is appointed manager of a interest of the latter and of the agent, or in the
partnership in the contract of partnership and his interest of a third person who has accepted the
removal from the management is unjustifiable. stipulation in his favor.

Article 1930, Civil Code. The agency shall remain b. Contract between Agent Without
in full force and effect even after the death of the Knowledge of Death and Third
principal, if it has been constituted in the common Person in Good Faith
interest of the latter and of the agent, or in the
interest of a third person who has accepted the Article 1931, Civil Code. Anything done by the
stipulation in his favor. agent, without knowledge of the death of the
principal or of any other cause which extinguishes
the agency, is valid and shall be fully effective with
Even if the agency is coupled with an interest respect to third persons who may have contracted
(which means that it is irrevocable), it may still with him in good faith.

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c. Unfinished business Expiration
Paragraph 2, Article 1884, Civil Code. He must
If created for a fixed period: expiration of the
also finish the business already begun on the death period extinguishes agency [Par. 6, Art. 1919,
of the principal, should delay entail any danger. Civil Code] even if the purpose was not
accomplished.
3. In case of the death of an agent If no time is specified: the courts may fix the
If the agent dies, his heirs must: period as under the circumstances have been
a. Notify the principal thereof; and probably contemplated by the parties [Art.
b. In the meantime adopt such measures as 1197, Civil Code]. Otherwise, the agency
the circumstances may demand in the terminates at the end of a reasonable period of
interest of the latter [Art. 1932, Civil Code]. time. Either party can terminate the relationship
at will by giving notice to the other [De Leon].
E. Dissolution, Accomplishment,
or Expiration Note: The period contemplated may be implied
from terms of agreement, purpose of agency,
Dissolution: The dissolution of the firm or and the circumstances of the parties.
corporation which entrusted (principal) or
accepted (agent) the agency extinguishes the
agency by operation of law [Par. 4, Art. 1919,
Civil Code], except for the purpose of winding
up its affairs. It is equivalent to the death of a
natural person [De Leon].

Accomplishment: The fulfillment of the

purpose for which agency was created ipso
facto terminates agency [Par. 5, Art. 1919, Civil
Code] even though it was expressly made
irrevocable. If the purpose has not been
accomplished, the agency continues
indefinitely for as long as the intent to continue
is manifested through words or actions of the
parties [De Leon].

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CIVIL LAW
CREDIT TRANSACTIONS CIVIL LAW
I. LOAN Commodatum v. Mutuum

Article 1933, Civil Code. By the contract of loan, 1. Nature

one of the parties delivers to another, either Commodatum Mutuum
something not consumable so the latter may use the
same for a certain time and return it, in which case
Purely personal in Not purely personal
the contract is called a commodatum, or money or
other consumable thing, upon the condition that the character [Art. 1939, in character
same amount of the same kind and quality shall be Civil Code]
paid, in which case the contract is simply called a
loan or mutuum. Both are reciprocal obligations

Commodatum is essentially gratuitous.

Note: As a purely personal obligation,
Simple loan may be gratuitous or with a stipulation consequently:
to pay interest. a. The death of either the bailor or the bailee
extinguishes the contract
In commodatum the bailor retains the ownership of
the thing loaned while in simple loan, ownership
b. The bailee can neither lend nor lease the
passes to the borrower. object of the contract to a third person.
However, the members of the bailee’s
household may make use of the thing
Contract of Loan vs. Contract to Loan loaned unless there is a stipulation to the
Contract of Loan Contract to Loan contrary, or unless the nature of the thing
forbids such use [Art. 1939, Civil Code]

Real Contract: Consensual Contract: 2. Purpose

perfected, not by perfected by mere Commodatum Mutuum
mere consent, but consent.
by delivery of the Loan for permissive Loan for
object of the An accepted promise to or temporary use consumption
contract. deliver something by [Art.1935, Civil Code]
way of commodatum or
simple loan is binding
upon the parties [Art. 3. As to Object
1934, Civil Code]. Commodatum Mutuum

Two Types of Contracts of Loan General Rule: General Rule:

1. Commodatum – a contract where one Involves non- Involves money or
party delivers to another something not consumable movable other consumable
consumable so that the latter may use the or immovable movable property
same for a certain time and return it [Art. property
1933, Civil Code]. Consumable -
2. Mutuum (Simple Loan) – a contract where Exception: cannot be used in a
one party delivers to another, money or Consumable goods manner appropriate
other consumable thing, upon the condition may be the subject of to their nature
that the same amount of the same kind and commodatum if the without their being
quality shall be paid [Art. 1933, Civil Code]. purpose of the consumed [Art.
contract is NOT 418, Civil Code]
consumption of the
object, as when it is
merely for exhibition
[Art. 1936, Civil Code]
(e.g., stamps for an
exhibition)

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4. As to Ownership of the Thing Loaned 7. As to Liability for Loss
Commodatum Mutuum Commodatum Mutuum

Retained by the bailor Transferred to the Bailor suffers the Borrower suffers the
[Art.1933, Civil Code] borrower loss of the subject loss even if caused
matter since he is the exclusively by a
owner [Arts. 1942 fortuitous event and
5. As to Consideration
and 1174, Civil he is not, therefore,
Commodatum Mutuum Code] discharged from his
duty to pay the same
Essentially gratuitous May be gratuitous amount, kind and
[Art.1933, Civil Code] or onerous, i.e. with quality
stipulated interest

6. As to Obligations of the Borrower

A. Commodatum
Commodatum Mutuum 1. Parties
a. Bailee - debtor
Borrower must return Borrower need only b. Bailor - creditor
the same thing loaned pay an equal
[Art. 1933, Civil Code] amount of the same Who May Be a Bailor in Commodatum?
kind and quality [Art. Anyone. The bailor in commodatum need not
General Rule: Bailor 1953, Civil Code] be the owner of the thing loaned [Art. 1938,
CANNOT demand the Civil Code], but as against the bailee, the bailor
return of the thing until General Rule: retains ownership of the thing loaned.
after the expiration of Lender may NOT
the period stipulated demand the return
2. Use by the Bailee
or the of the thing loaned
accomplishment of nor payment before As to Who May Use of the Property
the use for which the the lapse of the term Loaned
contract was agreed upon General Rule: The bailee acquires permissive
constituted [Art.1946, use of the thing loaned only for himself. He may
Civil Code] not lend nor lease the thing loaned to him to a
third person [Art. 1935, Civil Code].
Exception: Bailor
may demand the Exception: The members of the bailee’s
return of the thing household may make use of the thing loaned.
loaned before the
expiration of the term: Exceptions to the Exception:
1. In case of urgent a. If there is a stipulation to the contrary, or
need [Art. 1946, b. The nature of the thing forbids such use [Art.
Civil Code] 1939(2), Civil Code].
2. If the
commodatum is a As to the Use of Fruits of the Thing
precarium [Art. Loaned
1947, Civil Code] General Rule: The bailee acquires the
3. If the bailee permissive use of the thing loaned but NOT its
commits any of fruits [Art. 1935, Civil Code].
the acts of
ingratitude in Art. Exception: Parties stipulate otherwise; such
765 [Art. 1948, stipulation is considered valid [Art. 1940, Civil
Civil Code] Code].

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3. Obligations of the Bailee Note: If, for the purpose of making use of the
(TUNR-PBS) thing loaned, the bailee incurs ordinary or
a. Take care of the thing loaned with the extraordinary expenses which are neither
proper diligence of a good father of a family for the use nor the preservation of the thing,
[Art. 1163, Civil Code]. he is not entitled to reimbursement [Art.
1950, Civil Code].
b. Use the thing loaned only for the purpose for
which it was loaned and not for any other 4. Obligations of the Bailor
purpose [Art. 1935, 1939(2), 1942 (1), Civil (DR-BP)
Code]. a. Demand the return of the thing only upon
the expiration of the term or after the
c. Not to lend the thing to a third person who is accomplishment of the use [Art. 1946, Civil
not a member of his household [Art. 1942 Code].
(4), Civil Code].
Exceptions:
Exception: The members of the bailee’s 1. When bailor has urgent need of the
household may make use of the thing thing, he may demand its return
loaned. (extinguish commodatum) or its
temporary use (suspend
Exceptions to the Exception: commodatum) [Art. 1946, Civil Code].
1. If there is a stipulation to the contrary,
or 2. Precarium [Art. 1947, Civil Code] or a
2. The nature of the thing forbids such contractual relation where the bailor
use [Art. 1939(2), Civil Code]. may demand the property loaned at
will.
d. Return the thing upon the expiration of the
period stipulated or after the 3. If bailee commits any acts of ingratitude
accomplishment of the use for which it has in Art. 765 [Art. 1948, Civil Code]:
been constituted [Art. 1944, 1946, Civil • Bailee committed some offense
Code]. against the person, honor or
property of the bailor, or of his wife
Exception: Bailee has right of retention for or children under his parental
damages when the bailor who, knowing the authority;
flaws of the thing loaned, does not advise • Bailee imputes to bailor any criminal
the bailee of the same [Arts. 1951, 1944, offense, or any act involving moral
Civil Code]. turpitude, even though he should
prove it, unless the crime or act has
e. Pay for the ordinary expenses for the use been committed against the bailee
and preservation of the thing loaned [Art. himself, his wife or children under
1941, Civil Code]. his authority; or
• Bailee unduly refuses bailor support
f. Bear equally (with the bailor) the when bailee is legally or morally
extraordinary expenses arising on the bound to give support the bailor.
occasion of the actual use of the thing by the
bailee even though bailee acted without b. Refund the extraordinary expenses during
fault [Art. 1949, Civil Code]. the contract for the preservation of the thing
loaned [Art. 1949, Civil Code].
Exception: Contrary stipulation.
Provided that: Bailee brings the same to
g. Solidarily liable when there are two or more the knowledge of the bailor before incurring
bailees to whom a thing is loaned in the them, except when they are so urgent that
same contract [Art. 1945, Civil Code]. the reply cannot be awaited without danger.

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c. Bear equally (with the bailee) the the use for which the commodatum has
extraordinary expenses arising on the been constituted;
occasion of actual use of the thing by the
bailee [Art. 1949, Civil Code]. e. Lent or leased the thing to a third person,
who is not a member of his household;
Exception: Contrary stipulation.
Exception: The members of the bailee’s
d. Pay damages to the bailee for hidden flaws household may make use of the thing
known to the bailor [Art. 1951, Civil Code]. loaned.

Note: Bailor has no right of abandonment; Exceptions to the exception:

he cannot exempt himself from payment of 1. If there is a stipulation to the contrary, or
expenses or damages to the bailee by 2. The nature of the thing forbids such use
abandoning the thing to the latter [Art. 1952, [Art. 1939(2), Civil Code].
Civil Code].
7. Right of Retention
5. Liability for Deterioration General Rule: The bailee has no right of
General Rule: The bailee is NOT liable for the retention of the thing loaned on the ground that
deterioration of the thing loaned when the the bailor owes him something, even though it
deterioration of the thing is due only to the use may be by reason of expenses [Art. 1944, Civil
thereof and without his fault [Art. 1943, Civil Code].
Code].
Exception: The bailee has the right of
Exception: The bailee is liable only when the retention for damages arising from hidden
deterioration of the thing is due to his fault [Art. flaws when bailor, knowing the flaws of the
1943, Civil Code]. thing loaned, does not advise the bailee of the
same [Art. 1944, 1951, Civil Code].
6. Liability for Loss
General Rule: The bailee is NOT liable for loss Note that the thing is retained by way of legal
of the thing due to a fortuitous event [Art. 1174, pledge.
Civil Code].
8. Extinguishment
Since the bailor retains ownership of the (DEA-PU)
property loaned, generally, it is the bailor who a. Death of either the bailor or the bailee [Art.
bears the liability for loss of the property loaned 1939, Civil Code]
due to fortuitous events. b. Expiration of term or accomplishment of
purpose [Art. 1946, Civil Code]
Exceptions: The bailee is liable for loss of the c. Act/s of ingratitude has/have been
thing, even if it is through a fortuitous event, if committed by the bailee, and the bailor
the bailee: (DDS-KL) demands the return
a. Devoted the thing to any purpose different d. Upon demand in case of Precarium
from that for which it has been loaned; e. Bailor has Urgent need of the thing loaned,
b. Loaned thing has been Delivered with and he demands the return (and not just
appraisal of its value; temporary use)

Exception: Unless there is a stipulation B. Mutuum

exempting the bailee from responsibility in
case of a fortuitous event. Mutuum – a contract where one of the parties
(creditor) delivers to another (debtor/borrower)
c. Saved his own thing, being able to save money or other consumable thing upon the
either the thing borrowed or his own thing; condition that the same amount of the same
d. Kept the thing longer than the period kind and quality shall be paid [Art. 1953, Civil
stipulated, or after the accomplishment of Code].

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1. Obligations of the Borrower [Art. 2212, Civil Code] or where there is
(EVI) an express stipulation [Art.1959, Civil
a. Pay the creditor an Equal amount of the Code]
same kind and quality [Art. 1953, Civil
Code]. b. Agreement must be in Writing [Art.1956,
b. Pay Value at the time of perfection of loan, Civil Code]
if impossible to deliver the same kind [Art. c. Must be Lawful
1955, Civil Code].
c. Pay Interest, if stipulated in writing [Art. Note: If the above-mentioned requisites are not
1956, Civil Code]. met, and the borrower:
a. Paid interest by mistake, the creditor is
Rights of the Borrower obliged to return what was delivered [Arts.
a. Right of ownership; upon delivery/receipt of 1960 and 2154, Civil Code]
the loan of money or any fungible thing, the b. Voluntarily paid interest (i.e., with
person acquires ownership of the knowledge that the requisites have not been
money/fungible thing [Art. 1953, Civil Code] met), the creditor is authorized to retain
b. Right to not pay interest, unless stipulated what was paid [Art. 1423, Civil Code]
[Art. 1956, Civil Code]
1. If the debtor however pays interest when 3. Kinds of Interest
there is no stipulation, the rules on a. Conventional Interest
solutio indebiti, or natural obligations, Simple interest – Paid for the principal at a
shall be applied [Art. 1960, Civil Code] certain rate fixed or stipulated by the parties.

Obligations of the Creditor b. Interest on Interest

Barred from placing stipulations under any Compound Interest – Interest which is imposed
cloak or device that circumvent laws on usury when interest due and unpaid is capitalized or
[Art. 1957, Civil Code]. added to the principal [Art. 1959, Civil Code].

Rights of the Creditor The accrued interest is added to the principal

a. Right to receive an equal amount of the sum and the whole (principal and accrued
same kind and quality [Art. 1953, Civil Code] interest) is treated as a new principal upon
b. Right to impose interest, once stipulated which the interest is calculated for the next
[Art. 1959, Civil Code] period [De Leon].

2. Interest General Rule: Compound interest is not

Interest – The compensation allowed by law or allowed [Art.1959, Civil Code].
fixed by the parties for the loan or forbearance
of money, goods or credits (conventional Exceptions: Compound interest is allowed:
interest), or the amount imposed by law or by 1. When there is an express written stipulation
courts as penalty or indemnity for damages to that effect [Art. 1956, Civil Code] or
(compensatory interest). 2. Upon judicial demand [Art. 2212, Civil
Code].
Requisites for Interest to be Chargeable
(EWL) c. Compensatory, Penalty or Indemnity
a. Must be Expressly stipulated [Art. 1956, Interest
Civil Code]. Also known as Legal Interest – That which the
law directs to be charged in the absence of any
Exceptions: agreement as to the rate between the parties,
1. The debtor in delay is liable to pay legal or when there are actual and compensatory
interest (6% per annum) as indemnity for damages imposed by the Court.
damages [Art. 2209, Civil Code]
2. Interest accruing from unpaid interest –
Interest demanded shall earn interest
from the time it is judicially demanded
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Rules for the Award of Interest in the the prevailing rate prescribed by the
Concept of Actual and Compensatory Bangko Sentral ng Pilipinas, from the
Damages time of judicial demand UNTIL FULL
Note: Jurisprudential basis is Lara's Gifts & PAYMENT.
Decors, Inc. v. Midtown Industrial Sales, Inc.,
G.R. No. 225433 (2019) 3. When the obligation, not constituting a loan
or forbearance of money, goods, credits or
1. When the obligation is breached, and it judgments, is breached
consists in the payment of a sum of money, a. An interest on the amount of damages
i.e, a loan or forbearance of money, goods, awarded may be imposed in the
credits or judgments, discretion of the court at the prevailing
a. the interest due shall be that which is legal interest prescribed by the Bangko
stipulated by the parties in writing, Sentral ng Pilipinas, pursuant to
provided it is not excessive and Articles 2210 and 2011 of the Civil
unconscionable. Code.
b. No interest shall be adjudged on
b. In the absence of a stipulated unliquidated claims or damages until
reckoning date, interest shall be the demand can be established with
computed from default, i.e., from reasonable certainty.
extrajudicial or judicial demand in c. Where the amount of the claim or
accordance with Article 1169 of the damages is established with
Civil Code, UNTIL FULL PAYMENT, reasonable certainty, the prevailing
without compounding any interest legal interest shall begin to run from the
time the claim is made extrajudicially or
Exception: when compounded judicially (Art. 1169, Civil Code) UNTIL
interest is expressly stipulated by the FULL PAYMENT.
parties, by law or regulation. d. When such certainty cannot be so
reasonably established at the time the
c. Interest due on the principal amount demand is made, the interest shall
accruing as of judicial demand shall begin to run only from the date of the
SEPARATELY earn legal interest at judgment of the trial court (at which
the prevailing rate prescribed by the time the quantification of damages may
Bangko Sentral ng Pilipinas, from the be deemed to have been reasonably
time of judicial demand until full ascertained) UNTIL FULL PAYMENT.
payment. e. The actual base for the computation of
the interest shall, in any case, be on the
2. In the absence of stipulated interest, in a principal amount finally adjudged,
loan or forbearance of money, goods, without compounding any interest
credits or judgments unless compounded interest is
a. The rate of interest on the principal expressly stipulated by law or
amount shall be the prevailing legal regulation.
interest prescribed by the Bangko
Sentral ng Pilipinas, which shall be 4. Usury
computed from default, i.e., from Unlawful or Usurious Interest – Paid or
extrajudicial or judicial demand in stipulated to be paid beyond the maximum
accordance with Article 1169 of the fixed by law.
Civil Code, UNTIL FULL PAYMENT,
without compounding any interest The Usury Law [Act No. 2566] – an act fixing
unless compounded interest is rates of interests upon loans and declaring the
expressly stipulated by law or effect of receiving or taking usurious rates and
regulation. for other purposes [Arevalo v. Dimayuga, G.R.
b. Interest due on the principal amount No. 26218 (1927)].
accruing as of judicial demand shall
SEPARATELY earn legal interest at

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(MR-IT) subsequent to the making of such sale or
a. A loan or forbearance of Money contract; any rental-purchase contract; any
b. An understanding between parties that the contract or arrangement for the hire, bailment,
loan shall and may be Returned or leasing of property; any option, demand,
c. An unlawful Intent to take more than the lien, pledge, or other claim against, or for the
legal rate for the use of money or its delivery of, property or money; any purchase,
equivalent or other acquisition of, or any credit upon the
d. The Taking or agreeing to take for the use security of, any obligation of claim arising out
of the loan of something in excess of what of any of the foregoing; and any transaction or
is allowed by law. series of transactions having a similar purpose
or effect [Sec. 3(2), Truth in Lending Act].
Note: A usurious loan transaction is not a
complete nullity but defective only with respect Requirement for Disclosure
to the agreed interest, i.e., as if no interest was
Section 4, Truth in Lending Act. Any creditor shall
stipulated [Carpo v. Chua, G.R. Nos. 150773 furnish to each person to whom credit is extended,
and 153599 (2005)]. Hence, if the principal prior to the consummation of the transaction, a clear
obligation is the payment of a sum of money, statement in writing setting forth, to the extent
the debtor will be liable for the principal plus applicable and in accordance with rules and
legal interest, following Article 2209. regulations prescribed by the Board, the following
information:
1. the cash price or delivered price of the property
The Monetary Board of the Central Bank of the or service to be acquired;
Philippines (now the Bangko Sentral ng 2. the amounts, if any, to be credited as down
Pilipinas) issued Circular No. 905, Series of payment and/or trade-in;
1982 which lifted the ceilings on interest rates 3. the difference between the amounts set forth
pursuant to the powers granted to it by the under clauses (1) and (2);
4. the charges, individually itemized, which are
Usury Law. Thus, usury is legally non-existent.
paid or to be paid by such person in connection
Interest can be charged based on agreement with the transaction but which are not incident
of the parties pursuant to Art. 1306. to the extension of credit;
5. the total amount to be financed;
BUT although usury is legally inexistent, courts 6. the finance charge expressed in terms of
will not hesitate to declare void “excessive, pesos and centavos; and
7. the percentage that the finance bears to the
iniquitous, unconscionable, exorbitant” interest
total amount to be financed expressed as a
[Gomez-Somera citing Carpo v. Chua, G.R. simple annual rate on the outstanding unpaid
Nos. 150773 and 153599 (2005 ]. balance of the obligation.

5. Finance Charges
Under Section 4(6), "finance charge"
Under the Truth in Lending Act represents the amount to be paid by the debtor
Section 3(3), Truth in Lending Act. "Finance incident to the extension of credit such as
charge" includes interest, fees, service charges, interest or discounts, collection fees, credit
discounts, and such other charges incident to the investigation fees, attorney’s fees, and other
extension of credit as the Board may be regulation
prescribe.
service charges. The total finance charge
represents the difference between (1) the
aggregate consideration (down payment plus
Note: This law applies to all persons who installments) on the part of the debtor, and (2)
extend credit, who require as an incident to the sum of the cash price and non-finance
extending credit, the payment of a finance charges [Sps. Silos v. Philippine National
charge [Sec. 3(4), Truth in Lending Act]. Bank, G.R. No. 181045 (2014)].

“Credit” is defined in the TILA as “any loan,

mortgage, deed of trust, advance, or discount;
any conditional sales contract; any contract to
sell, or sale or contract of sale of property or
services, either for present or future delivery,
under which part or all of the price is payable
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Should the requirement under the TILA be not In Relation to Credit Limit
complied with, the penalties under Sec. 6 will Section 5(i), Philippine Credit Card Industry
apply: Regulation Law. Credit card limit refers to the
Section 6, Truth in Lending Act. maximum total amount for purchases, cash
a. Any creditor who in connection with any credit advances, balance transfers, and finance charges,
transaction fails to disclose to any person any service fees, penalties, and other charges which can
information in violation of this Act or any be charged to the credit card;
regulation issued thereunder shall be liable to
such person in the amount of P100 or in an
amount equal to twice the finance charged Thus, in computing for the credit limit, the
required by such creditor in connection with finance charge is included.
such transaction, whichever is the greater,
except that such liability shall not exceed Requirement for Disclosure
P2,000 on any credit transaction. Action to
recover such penalty may be brought by such Section 11, Philippine Credit Card Industry
person within one year from the date of the Regulation Law. Information to be Disclosed. - A
occurrence of the violation, in any court of credit card issuer shall disclose to all credit
competent jurisdiction. In any action under cardholders and potential credit cardholders the
this subsection in which any person is entitled following information:
to a recovery, the creditor shall be liable for a. Finance charges for unpaid amounts after
reasonable attorney's fees and court costs as payment due date
determined by the court.
b. Except as specified in subsection (a) of this
section, nothing contained in this Act or any When Finance Charge is Imposed
regulation contained in this Act or any Section 10, Philippine Credit Card Industry
regulation thereunder shall affect the validity Regulation Law. Imposition of Finance Charges. -
or enforceability of any contract or Finance charges and other fees arising from
transactions. nonpayment in full or on time of the outstanding
c. Any person who willfully violates any provision balance shall be based on the unpaid amount of the
of this Act or any regulation issued thereunder outstanding balance.
shall be fined by not less than P1,00 or more
than P5,000 or imprisonment for not less than
6 months, nor more than one year or both. How Finance Charge is Imposed
d. No punishment or penalty provided by this Act
Credit card issuers shall only charge interest or
shall apply to the Philippine Government or
any agency or any political subdivision finance charges arising from the non-payment
thereof. in full or on time of the outstanding balance
e. A final judgment hereafter rendered in any based on the unpaid amount of the outstanding
criminal proceeding under this Act to the effect balance as of statement cut-off date, but
that a defendant has willfully violated this Act excluding:
shall be prima facie evidence against such
a. the current billing cycle's purchase
defendant in an action or proceeding brought
by any other party against such defendant transactions reckoned from the previous
under this Act as to all matters respecting cycle's statement cut-off date; and
which said judgment would be an estoppel as b. deferred payments under zero-interest
between the parties thereto. installment arrangements which are not yet
due
Under the Philippine Credit Card Industry
Regulation Law Interest or finance charges shall be imposed on
the unpaid outstanding balance as of cut-off
Section 5(k), Philippine Credit Card Industry date each time a cardholder pays less than, or
Regulation Law. Finance charges refer to the does not pay on time, the outstanding balance
interest charged to the cardholder on all credit card
transactions in accordance with the terms and
stated in his/her statement of account. Such
conditions specified in the agreement on the use of interest or finance charge shall continue to be
the credit card; imposed until the outstanding balance and
applicable interest are fully paid.
Note: This law governs all credit card issuers, For credit card cash advances, a cardholder
acquirers and all credit card transactions. may be charged cash advance fees and
finance charges on the date that the cash is
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obtained, subject to terms and conditions
under the credit card agreement or contract.

For a loan where the principal is payable in

installments, interest per installment period
shall be calculated based on the outstanding
balance of the loan at the beginning of each
installment period.

All credit card-related documents shall show

repayment schedules in a manner consistent
with this provision. Marketing and advertising
materials shall likewise be consistent with this
provision.

Note: Basis is BSP Circular No. 1003, Series of

2018, “Guidelines on the Establishment and
Operations of Credit Card lssuers to Implement
Republic Act No. 10870 or the Philippine Credit
Card Industry Regulations Law.”

C. Precarium

Article 1947, Civil Code. The bailor may demand

the thing at will, and the contractual relation is called
a precarium, in the following cases:
1. If neither the duration of the contract nor
the use to which the thing loaned should be
devoted, has been stipulated; or
2. If the use of the thing is merely tolerated by
the owner.

Precarium is a kind of commodatum where the

bailor may demand the thing at will. It has been
defined as a “contract by which the owner of a
thing, at the request of another person, gives
the latter the thing for use as long as the owner
shall please” [De Leon].

In either of the two cases mentioned in Article

1947, it is presumed that use of the thing has
been granted subject to revocation by the
bailor at any time, whether or not the use for
which the thing has been loaned has been
accomplished. Hence, the name precarium [De
Leon].

Note: The use of the term “owner” in Art. 1947

(2) is inaccurate. The bailor need not be the
owner of the thing loaned [De Leon].

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II. DEPOSIT A deposit may be made by two or more
persons (who believe that they are entitled to
the thing deposited with a third person). The
A deposit is constituted from the moment a
third person is to deliver the thing to the one to
person receives a thing belonging to another,
whom it belongs [Art. 1968, Civil Code].
with the obligation of safely keeping it and of
returning the same [Art. 1962, Civil Code].
How Entered Into: Orally or in writing [Art.
1969, Civil Code].
Object of Deposit
Art. 1966 provides that only movable things How Perfected: The deposit is perfected upon
may be the object of a deposit. However, Art. delivery, which is made by the will of the
2006 provides that movable as well as depositor [Arts. 1963 and 1968, Civil Code].
immovable property may be the object of
sequestration or judicial deposit.
1. Extinguishment
Loss or destruction of thing deposited, or
Principal Purpose
a. In case of a gratuitous deposit, upon the
Safekeeping of the thing; if safekeeping is NOT
death of either the depositor or depositary
the principal purpose, or is only an accessory
[Art. 1995, Civil Code]. The depositary is not
obligation, there is NO DEPOSIT but some
obliged to continue with the contract of
other contract [Art. 1962, Civil Code].
deposit.
b. By other modes provided in the Civil Code,
Consideration
e.g. novation, merger, etc. [Art.1231, Civil
A deposit is generally gratuitous, except:
Code].
1. If there is an agreement to the contrary
2. When the depositary is engaged in the
business of storing goods [Art. 1965, Civil 2. Obligations of a Depositary
Code] (KRB)
a. Keep the thing safely
Parties b. Return the thing to the depositor, heirs,
1. Depositor: the person who delivers, or successors or person designated in the
formally transfers, gives, or yields contract, when required [Art. 1972, Civil
possession or control of the movable Code], together with all its products,
property for purposes of safekeeping accessories and accessions [Art. 1983, Civil
2. Depositary: the person who receives it Code] at the place designated when deposit
was made. Otherwise, where the thing may
be [Art. 1987, Civil Code].
Kinds of Deposit
1. Extrajudicial
Exception to return on demand: there is no
a. Voluntary – obligation arises as a
obligation to return on demand when (a) the
consequence of contract;
thing is judicially attached while in the
b. Necessary – obligation arises as a
depositary’s possession, or (b) when
consequence of law or quasi-contract
depositary is notified of the opposition of a
2. Judicial – obligation arises as a
third person [Art. 1988, Civil Code]
consequence of a law allowing the issuance
of a judicial order constituting a deposit
Note: The depositary must return the thing
closed and sealed if it is delivered in that
A. Voluntary Deposit condition [Art. 1981, Civil Code]

Voluntary deposit – The deposit itself is a real c. Bear the expenses for preservation of the
contract, as it is not perfected until the delivery thing deposited if the deposit is onerous
of the thing [Art. 1968, Civil Code]. A contract [Art. 1992, Civil Code]
to deposit, or an agreement to constitute a
deposit, is consensual and binding. Depositary NOT Liable for Loss
General Rule: The depositary is not liable in
the event of loss. The required degree of care
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however, is greater if the deposit is for instruments when it becomes due [Art 1975,
compensation. Civil Code].
c. Depositary cannot make Use of the thing
Exceptions: (NPC-FUTR) deposited unless with depositor’s consent
a. Loss is through his fault or Negligence [Art. or its preservation requires its use [Art 1977,
1170, Civil Code] or the negligence of his Civil Code].
employee [Art. 1973, Civil Code], even if the d. Depositary may Return the thing to the
thing was insured [Art. 2207, Civil Code]; depositor even before the time designated,
b. Loss while in his Possession, ordinarily if there is justifiable reason not to keep it.
raises presumption of fault on his part [Art.
1265, Civil Code] Exception: when the deposit is for valuable
c. Loss arose from the Character of the thing consideration [Art. 1989, Civil Code]
deposited, and the depositary was notified
of, or was aware of such character at the 4. Obligations of a Depositor
time of the constitution of the deposit [Art. a. Depositor is obliged to reimburse the
1993, Civil Code] depositary for expenses incurred for
d. Loss is through a Fortuitous event, and if preservation in a gratuitous deposit
1. It is stipulated that depositary will be [Art.1992, Civil Code].
liable; b. Depositor is obliged to pay losses incurred
2. Depositary uses the thing without due to the character of thing deposited [Art.
Depositor’s permission; 1993, Civil Code].
3. Depositary delays its return; or
4. Depositary allows others to use it [Art. Exceptions:
1979, Civil Code] 1. Depositor was not aware nor expected to
know of the dangerous character of the
e. Loss when depositary Uses the thing thing;
2. Depositor notified the depositary of such
Exception: Use with permission or for dangerous character;
preservation 3. Depositary was aware of the danger without
advice from the depositor.
f. Loss when depositary deposits the thing
with a Third person 5. Authority of Depositor
a. When there are two or more depositors and
Exception: if deposit with a third person is they are not solidary and the thing admits of
allowed division, one cannot demand more than his
share [Art. 1985, Civil Code].
Exception to the Exception: if such third b. If he should lose his capacity to contract
person is manifestly careless or unfit [Art. after having made the deposit, the thing
1973, Civil Code]; cannot be returned except to persons who
may have administration of his property and
g. Loss occurs and the depositary Receives rights [Art. 1986, Civil Code].
money/replacement, he must deliver such
to the depositor [Art. 1990, Civil Code] 6. Right of Retention
The depositary may retain the thing until the full
3. Authority of Depositary payment of what may be due him by reason of
(CC-UR) the deposit [Art. 1994, Civil Code].
a. Depositary may Change way of deposit if he
may reasonably presume that the depositor Note that the thing is retained by way of legal
would consent if he knew the situation. He pledge [Gomez-Somera citing Ortiz v.
is to notify the depositor thereof and wait for Kayanan, G.R. No. 32974 (1979)].
the latter’s decision, unless delay would
cause danger [Art. 1974, Civil Code].
b. Depositary is required to Collect on interest
earned by certificates, bonds, securities and
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B. Necessary Deposit a. The loss or injury to personal property is
caused by his servants or employees as
Made in compliance with a legal obligation, or well as by strangers [Art. 2000, Civil Code].
on the occasion of any calamity, or by travelers b. The loss is caused by the act of a thief or
with common carriers [Arts.1734-1735, Civil robber without the use of arms and without
Code], or by travelers in hotels and inns the use of irresistible force [Art. 2001, Civil
[Arts.1996-2004, Civil Code]. Code].

1. Kinds of Necessary Deposit 5. When Hotel-Keeper not Liable

(LCCH) a. The loss or injury is caused by force
a. Deposit made in compliance with a Legal majeure, like flood, fire, [Art. 2000, Civil
obligation, in which case it is governed by Code], and theft or robbery by a stranger—
the law establishing it, and in case of not the hotel-keeper’s servant or
deficiency, the rules on voluntary deposit, employee—with the use of arms or
e.g., Arts. 538, 586 and 2104 irresistible force [Art. 2001, Civil Code]
b. Deposit taking place on the occasion of any
Calamity [Art. 2168, Civil Code] Exception: Hotel-keeper is guilty of fault or
negligence in failing to provide against the
Note: There must be a causal relation loss or injury from his cause [Arts.1170 and
between the calamity and the constitution of 1174, Civil Code]
the deposit. In this case the deposit is
governed by the rules on voluntary deposit. b. The loss is due to the acts of the guests, his
family, servants, visitors [Art. 2002, Civil
c. Deposit made by passengers with Common Code]
carriers [Art.1754, Civil Code]. c. The loss arises from the character of the
d. Deposit made by travelers in Hotels or inns things brought into the hotel [Art. 2002, Civil
[Art. 1998, Civil Code]. Code]

2. Deposit by Travelers in Hotels and Rule in the Occurrence of Theft or

Inns Robbery
Before keepers of hotels or inns may be held The act of a thief or robber, who has entered
responsible as depositaries with regard to the the hotel is not deemed force majeure, unless
effects of their guests, the following must it is done with the use of arms or through
concur: irresistible force [Art. 2001, Civil Code].
a. Keepers or their employees have previously
been informed about the effects brought by Exemption or Diminution of Liability
the guests; and The hotel-keeper cannot free himself from
b. The latter have taken the precautions responsibility by posting notices to the effect
prescribed regarding their safekeeping [Art. that he is not liable for the articles brought by
1998, Civil Code]. the guest [Art. 2003, Civil Code]. This is due to
public policy. The hotel business is imbued with
public interest [YHT Realty Corp. v. CA, G.R.
3. Extent of Liability Under Art. 1998, No. 126780 (2005)].
Civil Code
a. Those in hotel rooms which come under the Any stipulation between the hotel-keeper and
term “baggage” or articles such as clothing the guest whereby the responsibility of the
as are ordinarily used by travelers former as set forth in articles 1998 to 2001 is
b. Those lost or damaged in hotel annexes suppressed or diminished shall be void [Art.
such as vehicles in the hotel’s garage. 2003, Civil Code].

4. When Hotel-Keeper Liable 6. Hotel-Keeper’s Right to Retention

Regardless of the amount of care exercised, The hotel-keeper has a right to retain the things
the hotel-keeper is liable when: brought into the hotel by the guest, as a
security for credits on account of:
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a. lodging,
b. supplies usually furnished to hotel guests
[Art. 2004, Civil Code].

The right of retention recognized in this article

is in the nature of a pledge created by operation
of law [Gomez-Somera citing Ortiz v. Kayanan,
G.R. No. 32974 (1979)].

C. Judicial Deposit or
Sequestration
Takes place when an attachment or seizure of
property in litigation is ordered [Arts. 2005-
2009, Civil Code]. It is the only type of deposit
that may involve immovable property.

Examples of Judicial Deposit [De Leon]

1. When properties are attached by the sheriff
upon the filing of a complaint (Rule 57,
Rules of Court)
2. When a receiver (a disinterested party) is
appointed by the court to administer and
preserve the property in litigation (Rule 59,
Rules of Court)
3. When personal property is seized by the
sheriff in suits of replevin or manual delivery
of personal property (Rule 60, Rules of
Court).

1. Nature and Purpose

It is auxiliary to a case pending in court. The
purpose is to maintain the status quo during
pendency of the litigation or to insure the right
of the parties to the property in case of a
favorable judgment.

2. Depositary of Sequestered Property

A person is appointed by the court [Art. 2007,
Civil Code] with the obligations—
a. To take care of the property with the
diligence of a good father of the family [Art.
2008, Civil Code].
b. To continue in his responsibility until the
controversy which give rise thereto is ended
unless the court so orders [Art. 2007, Civil
Code].

3. Applicable Law
Judicial deposit law is remedial or procedural.
The Rules of Court shall govern matters not
provided for in the Civil Code [Art. 2009, Civil
Code].

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III. GUARANTY AND 3. Natural obligation – the creditor may
proceed against the guarantor although
SURETYSHIP he has no right of action against the
principal debtor for the reason that the
Guaranty – A contract whereby a person latter’s obligation is not civilly
(guarantor) binds himself to the creditor to fulfill enforceable. When the debtor himself
the obligation of the principal debtor in case the offers a guaranty for his natural
latter should fail to do so [Art. 2047, Civil Code]. obligation, he impliedly recognizes his
liability, thereby transforming the
Suretyship – A relation which exists where obligation from a natural into a civil one.
one person (surety) binds himself solidarily c. A guaranty may secure a future debt [Art.
with the principal debtor, such that the former 2053, Civil Code]; Continuing Guaranty
undertakes a direct and primary obligation or 1. Not limited to a single transaction but
other duty to a third person (creditor), who is which contemplates a future course of
entitled to but one performance, and as dealings, covering a series of
between the two who are bound, the latter transactions generally for an
rather than the former should perform. indefinite time or until revoked.
2. It is prospective in its operation and is
While a surety undertakes to pay if the principal generally intended to provide security
does not pay, the guarantor only binds himself with respect to future transactions.
to pay if the principal is unable to pay [See 3. Future debts, even if the amount is
benefit of excussion, Art. 2058, Civil Code]. not yet known, may be guaranteed
but there can be no claim against the
A. Nature and Extent of Guaranty guarantor until the amount of the debt
is ascertained or fixed and
demandable.
Article 2047, Civil Code. By a guaranty a person,
called the guarantor, binds himself to the creditor to
fulfill the obligation of the principal debtor in case the 2. Parties to a Guaranty
latter should fail to do so. Parties to a Guaranty
a. Creditor
If a person binds himself solidarily with the principal b. Debtor of the Principal Obligation
debtor, the provisions of Section 4, Chapter 3, Title
1 of this Book shall be observed. In such case the
c. Guarantor [Somera]
contract is called a suretyship.
Qualifications of a Guarantor [Art. 2056,
Civil Code]
General Rule: Guaranty is gratuitous a. He possesses integrity;
b. He has capacity to bind himself;
Exception: When there is a stipulation to the c. He has sufficient property to answer for the
contrary [Art. 2048, Civil Code] obligation which he guarantees.
1. Obligation Secured by Guaranty General Rule: Creditor has the right to
a. The guaranty must be founded on a valid demand another guarantor with the
principal obligation [Art. 2052 (1), Civil qualifications in Art. 2056 if the previous
Code] guarantor has been convicted in first instance
b. A guaranty may secure the performance of of a crime involving dishonesty or has become
a voidable, unenforceable, and natural insolvent [Art. 2057, Civil Code].
obligation [Art. 2052(2), Civil Code]. This
implies that a guaranty may secure the Exception: Creditor has no right to demand a
performance of a: replacement guarantor if he himself required
1. Voidable contract – such contract is and stipulated that the specified person should
binding, unless it is annulled by a proper be the guarantor.
court action.
2. Unenforceable contract – because
such contract is not void.

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3. Excussion b. In case of insolvency of the principal debtor
The guarantor cannot be compelled to pay the or if he is in imminent danger of becoming
creditor unless the latter has [Art. 2058, Civil insolvent;
Code]: c. When the debtor has bound himself to
a. Exhausted all of the property of the debtor; relieve him from the guaranty within a
and specified period, and this period has
b. Resorted to all the legal remedies against expired;
the debtor. d. When the period for payment has expired;
e. After the lapse of ten years, when the
To avail of the benefit of excussion, the principal obligation has no fixed period for
guarantor must [Art. 2060, Civil Code]: its maturity, unless it be of such nature that
a. Set it up against the creditor upon demand it cannot be extinguished except within a
for payment; and period longer than 10 years;
b. Point out to the creditor available property of f. If there are reasonable grounds to fear that
the debtor within PH territory sufficient to the principal debtor intends to abscond.
cover the amount of the debt.
To protect his interest, a guarantor can
General Rule: The guarantor has the right to proceed against the principal debtor by:
benefit from excussion/exhaustion. a. Obtaining release from the guaranty; or
b. Demanding a security that shall protect him
Exception: The excussion shall not take place: from any proceedings by the creditor and
(ESIAP) from the danger of insolvency of the debtor
a. If the guarantor has Expressly renounced it; [Art. 2071, Civil Code]
b. If he has bound himself Solidarily with the
debtor; 5. Right to Indemnification
c. In case of Insolvency of the debtor; The guarantor who pays for a debtor must be
d. When he has Absconded, or cannot be indemnified by the latter.
sued within the Philippines unless he has
left a manager or a representative. The indemnity comprises:
e. If it may be Presumed that an execution on a. The total amount of the debt
the property of the principal debtor would b. The legal interests thereon from the time the
not result in the satisfaction of the obligation payment was made known to the debtor,
[Art. 2059, Civil Code]. even though it did not earn interest for the
creditor
Other Exceptions c. The expenses incurred by the guarantor
a. If he does not comply with Art. 2060; after having notified the debtor that payment
b. If he is a judicial bondsman and sub- surety had been demanded of him
[Art. 2084, Civil Code]; d. Damages if they are due [Art. 2066, Civil
c. Where a pledge or mortgage has been Code]
given by him as a special security;
[Southern Motors, Inc. v. Barbosa, G.R. No. 6. Right to Subrogation
L-9306 (1956)] The guarantor who pays is subrogated by
d. If he fails to interpose it as a defense before virtue thereof to all the rights which the creditor
judgment is rendered against him. had against the debtor.

4. Right to Protection If the guarantor has compromised with the

Art. 2071 provides a protective remedy in favor creditor, he cannot demand of the debtor more
of the guarantor, which is available BEFORE than what he has really paid [Art. 2067, Civil
he has paid, but after he is made liable for the Code].
debt, and when any of the ff. grounds is
applicable: 7. Rights of Co-Guarantors
a. When he is sued for the payment; a. Right of excussion against the principal
guarantor and the principal debtor [Art.
2064, Civil Code]
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b. Benefit of division [Art. 2065, Civil Code]. B. Nature and Extent of
However, the benefit of division will cease if
1. Solidary liability has been stipulated [Art. Suretyship
2065, Civil Code]; or
2. If any of the exceptions to the benefit of 1. Concept
excussion are present [Somera, Art. Article 2047, Civil Code. By a guaranty a person,
2059, Civil Code] called the guarantor, binds himself to the creditor to
fulfill the obligation of the principal debtor in case the
c. Right to reimbursement, i.e. to demand latter should fail to do so.
payment from the other co-guarantors their If a person binds himself solidarily with the principal
proportional share owed to him/her. This is debtor, the provisions of Section 4, Chapter 3, Title
available to the co-guarantor who paid the 1 of this Book shall be observed. In such case the
debt [Art. 2073, par. 1, Civil Code] contract is called a suretyship.
d. Right of an insolvent guarantor to have his
share bore by the others, including the Suretyship
payor, in the same proportion [Art. 2073, A relation which exists where one person
par. 2, Civil Code] (surety) binds himself solidarily with the
e. Right to set-up defenses against the paying principal debtor, such that the former
co-guarantor those available to the principal undertakes a direct and primary obligation or
debtor against the creditor other duty to a third person (creditor), who is
1. Exception: Defenses personal to the entitled to but one performance, and as
debtor are not available to the guarantor, between the two who are bound, the latter
hence not available as well to the co– rather than the former should perform.
guarantor [Art. 2081, Civil Code]
A suretyship is also an agreement whereby a
f. Right to Benefit from the release of one surety guarantees the performance or
guarantor [Art. 2078, Civil Code] undertakes to answer, under specified terms
and conditions, for the debt, default or
Requisites for the Applicability of Art. miscarriage of the principal or obligor, such as
2073, Civil Code failure to perform, or breach of trust,
a. There are two or more guarantors of the negligence and the like, in favor of a third party.
same debtor for the same debt;
b. Payment has been made by one guarantor; It shall be deemed as insurance contract if the
c. The payment was made: surety’s main business is that of suretyship,
1. Because of the insolvency of the debtor, and not where the contract is merely incidental
or to any other legitimate business or activity of
2. By judicial demand the surety.
d. The paying guarantor seeks to be
indemnified only to the extent of his 2. Form of Surety
proportionate share in the total
The contract of a surety is evidenced by a
obligation.
document called surety bond which is
essentially a promise to guarantee the
For purposes of proportionate reimbursement,
obligation of the obligor. In turn, the obligor
the other guarantors may interpose such
executes an indemnity agreement in favor of
defenses against the paying guarantor as are
the insurer [De Leon].
available to the debtor against the creditor,
except those that are personal to the debtor
It is an accessory contract unlike a contract of
[Art. 2074, Civil Code].
insurance which is the principal contract itself.

A suretyship is covered by the Statute of

Frauds since it constitutes a special promise to
answer for the debt, default, or miscarriage of
another [Art. 1403, Civil Code].

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Therefore, a suretyship is unenforceable Comprehensive or Continuing Surety
unless: Art. 2053 applies to suretyships as well, such
a. The suretyship or some note or that a surety may also be given as security for
memorandum thereof, is in writing; and future debts.
b. The suretyship is subscribed by the party or
by his agent [Art. 1403, Civil Code]. It contemplates a prospective or future course
of dealing, covering a series of transactions
3. Obligations Secured within the stipulations of the contract, until the
A suretyship is valid despite the absence of any expiration or termination of the suretyship.
direct consideration received by the surety,
either from the principal debtor or from the 4. Surety Distinguished from Standby
creditor. Letter of Credit
The consideration necessary to support a Surety Standby L/C
surety’s obligation need not pass directly to the
Upon debtor’s Upon default, the
surety. A consideration moving the principal
default, the creditor creditor-beneficiary
debtor alone is sufficient [Garcia v. CA, G.R.
expects that the expects that it will
No. 80201 (1990)].
surety will perform promptly receive
cash before any
Strictissimi Juris Rule
litigation
The obligation of the surety cannot be
extended by implication beyond the terms of There is no duty to There is a duty to
the contract [La Insular v. Go-Tauco, G.R. No. indemnify the pay the creditor-
L-13307 (1919)]. creditor until the beneficiary upon
creditor establishes presentation of the
The rule will apply only after it has been the fact of the required documents
definitely ascertained that the contract is one of debtor’s non-
suretyship or guaranty. It cannot be used as an performance No need to prove
aid in determining whether a party’s non-performance in
undertaking is that of a surety or guarantor [De litigation.
Leon citing Palmares v. CA, G.R. No. 126490
(1998)].
5. Surety Distinguished from
This rule is applicable only to an Guaranty
accommodation surety. An accommodation
Surety Guaranty
surety acts without motive of pecuniary gain.
Therefore, the accommodation surety should An accessory A collateral
be protected against unjust pecuniary promise by which a undertaking to pay
impoverishment by imposing on the principal, person binds himself the debt of another in
duties akin to those of a fiduciary [De Leon for another already case the latter is
citing Pacific Tobacco Corp. v. Lorenzana, bound, and agrees unable to pay the
G.R. No. 8086 (1957)]. with the creditor to debt
satisfy the obligation
This rule is not applicable to compensated if the debtor does not
sureties. The rule of strictissimi juris was meant
to secure gratuitous obligations, which is not
present in compensated sureties. Thus, in
compensated sureties, if there is any ambiguity
in the surety bond, it should be interpreted
against the surety company that prepared it
[De Leon citing Pao Chuan Wei v. Reposito,
G.R. No. 10292 (1958)].

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A surety is usually The contract of Joint and Solidary
bound with his guaranty is the Surety
Obligations
principal by the same guarantor's own
instrument, executed separate Surety has the right Joint and solidary
at the same time, undertaking, in which to indemnification debtor has only a
and on the same the principal does not and subrogation as right to
consideration. He is join. It is usually against the principal reimbursement as
an original promisor entered into before debtor [Art. 2066- against his co-
and debtor from the or after that of the 2067, Civil Code] debtors [Art. 1217,
beginning, and is principal, and is often Civil Code]
held, ordinarily, to supported on a
know every default of separate Accessory, ancillary, Not dependent on,
his principal. consideration from and collateral or not an incident to
that supporting the obligation a principal obligation
contract of the
principal. The original
contract of his C. Effect of Guaranty
principal is not his
contract, and he is 1. The Guarantor has the Right to
not bound to take Benefit from Excussion/Exhaustion
notice of its non- [Art. 2058, Civil Code]
performance
A surety will not be A guarantor is often
2. The Creditor has the Right to
discharged, either by discharged by the Secure a Judgment Against the
the mere indulgence mere indulgence of Guarantor Prior to the Excussion
of the creditor to the the creditor to the
principal, or by want principal, and is General Rule: An ordinary personal guarantor
of notice of the usually not liable (NOT a pledgor/mortgagor), may demand
default of the unless notified of the exhaustion of all the property of the debtor
principal, no matter default of the before he can be compelled to pay.
how much he may principal
be injured thereby Exception: The creditor may, prior thereto,
secure a judgment against the guarantor, who
A surety is the A guarantor is the shall be entitled, however, to a deferment of the
insurer of the debt, insurer of the execution of said judgment against him, until
and he obligates solvency of the after the properties of the principal debtor shall
himself to pay if the debtor and thus have been exhausted, to satisfy the latter’s
principal does not binds himself to pay obligation [Tupaz v. CA, G.R. No. 145578
pay if the principal is (2005)].
unable to pay
[Zobel, Inc. v. CA, G.R. No. 113931 (1998)] 3. The Creditor has the Duty to Make
Prior Demand for Payment from the
6. Surety Distinguished from Joint and Guarantor [Art. 2060, Civil Code]
Solidary Obligations
The demand is to be made only after judgment
Nature of Liability on the debt.
Although contractual (limited by the terms of
the contract) and accessory (arises only if 4. The Guarantor has the Duty to Set
principal debtor is held liable), a surety’s Up the Benefit of Excussion [Art.
liability is direct, primary, and absolute. 2060, Civil Code]

As soon as he is required to pay, the guarantor

must also point out to the creditor available
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property (not in litigation or encumbered) of the Should payment be made without
debtor within the Philippines. notification or against the debtor’s will, and
supposing the debtor has already made a
5. The Creditor has the Duty to Resort prior payment, the debtor would be justified
to All Legal Remedies [Arts. 2058 in setting up the defense that the obligation
and 2061, Civil Code] has already been extinguished by the time
the guarantor made the payment. The
After the guarantor has fulfilled the conditions guarantor will then lose the right of
required for making use of the benefit of reimbursement and consequently the right
excussion, it becomes the duty of the creditor of subrogation.
to:
a. Exhaust all the property of the debtor b. The guarantor cannot demand
pointed out by the guarantor; reimbursement for payment made by him
b. If he fails to do so, he shall suffer the loss before the obligation has become due [Art.
for the insolvency of the debtor, but only to 2069, Civil Code]
the extent of the value of the said property
General Rule: Since a contract of guaranty is
only subsidiary, the guarantor cannot be liable
6. The Creditor has the Duty to Notify for the obligation before the period on which the
the Guarantor in the Action Against debtor’s liability will accrue. Any payment
the Debtor [Art. 2062, Civil Code] made by the guarantor before the obligation is
due cannot be indemnified by the debtor. The
Notice to the guarantor is mandatory in the guarantor can only demand reimbursement
action against the principal debtor. The upon expiration of the period.
guarantor, however, is not duty bound to
appear in the case, and his non-appearance Exception: Prior consent or subsequent
shall not constitute default, with its ratification by the debtor.
consequential effects.
The guarantor may proceed against the debtor
Rationale: To give the guarantor the even before payment has been made [Art.
opportunity to allege and substantiate 2071, Civil Code].
whatever defenses he may have against the
principal obligation, and chances to set up such D. Extinguishment of Guaranty
defenses as are afforded him by law.
1. General Rule
7. A Compromise Shall Not Prejudice
The obligation of the guarantor is extinguished
a Person Not Party to It [Art. 2063, at the same time as that of the debtor and for
Civil Code] the same causes as all other obligations [Art.
2076, Civil Code].
A compromise between creditor and principal
debtor benefits the guarantor but does not 2. Specific Instances that Extinguish
prejudice him.
the Guaranty
A compromise between guarantor and the
a. Creditor Voluntary Accepts the
creditor benefits but does not prejudice the Immoveable for Payment
principal debtor. The guarantor is released if the creditor
voluntarily accepts immoveable or other
property in payment of the debt, even if he
8. Effects of Guaranty between the
should afterwards lose the same through
Debtor and the Guarantor eviction [Art. 2077, Civil Code].
a. The guarantor has the duty to notify the
debtor before paying the creditor [Art. 2068;
see also Arts. 1236 and 1237, Civil Code]

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b. When an Extension is Granted to the pledge or mortgage sufficient to cover the
Debtor without the Consent of obligation shall be admitted in lieu thereof.
Guarantor
An extension granted to the debtor by the Bondsman Not Entitled to Excussion [Art.
creditor without the consent of the guarantor 2084, Civil Code]
extinguishes the guaranty [Art. 2079, Civil A judicial bondsman and the sub-surety are not
Code]. entitled to the benefit of excussion.

However, the mere failure on the part of the Reason: They are not mere guarantors, but
creditor to demand payment after the debt has sureties whose liability is primary and solidary.
become due does not, of itself, constitute any
extension of time. Effect of Negligence of Creditor
Mere negligence on the part of the creditor in
c. When Subrogation is Not Feasible collecting from the debtor will not relieve the
The guarantors, even though they may be surety from liability.
solidary, are released from their obligation,
whenever by some act of the creditor they IV. QUASI-CONTRACTS
cannot be subrogated to the rights, mortgages
and preference of the latter [Art. 2080, Civil Note: Please refer to the Obligations and
Code]. Contracts part of the reviewer for the
discussion on quasi-contracts (i.e. negotiorum
E. Legal and Judicial Bonds gestio, solutio indebiti, and other quasi-
contracts).
Article 2051, Civil Code. A guaranty may be
conventional, legal, or judicial, or gratuitous or by
onerous title.

It may be constituted, not only in favor of the principal

debtor, but also in favor of the other guarantor, with
the latter’s consent, or without his knowledge, or
even over his objection.

Bond
An undertaking that is sufficiently secured, and
not cash or currency.

Bondsman
A surety offered in virtue of a provision of law
or a judicial order.

Qualifications of Personal Bondsman

[Art. 2082 in relation to Art. 2056, Civil
Code]
1. He possesses integrity;
2. He has capacity to bind himself;
3. He has sufficient property to answer for the
obligation which he guarantees.

Pledge or Mortgage in Lieu of Bond [Art.

2083, Civil Code]
Guaranty or suretyship is a personal security.
Pledge or mortgage is a property or real
security. If the person required to give a legal
or judicial bond should not be able to do so, a
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TORTS AND DAMAGES CIVIL LAW

I. TORTS relation. obligation. contractual

obligation.
Tort
A private or civil wrong violating a right for
which the law provides a remedy in the form of The source The source of The source
damages. of the obligation is of the
obligation of the obligation is
the defendant’s the law
A. Elements defendant to negligence penalizing
pay itself. such act or
1. Duty damages is omission.
2. Breach the breach
3. Injury or non-
4. Proximate Causation fulfillment of
the contract.
Quasi-Delict
Article 2176, Civil Code. Whoever by act or Proof of the The Proof
omission causes damage to another, there being existence of negligence of beyond
fault or negligence, is obliged to pay for the damage
the contract the defendant reasonable
done. Such fault or negligence, if there is no pre-
existing contractual relation between the parties, is and of its must be doubt must
called a quasi-delict and is governed by the breach or proven. be
provisions of this Chapter. non- established,
fulfillment is as it is a
Elements of Quasi-Delict sufficient criminal
1. Act or omission prima facie case.
2. Damage to another to warrant
3. Fault or negligence recovery.
4. Causal connection between the damage
and negligence
5. No pre-existing contractual relationship C. Vicarious liability

B. Culpa aquilana v. culpa 1. Doctrine of Vicarious Liability

Doctrine of Vicarious Liability [Art. 2180,
contractual v. culpa criminal Civil Code]
The obligation imposed under Art. 2176 (i.e., to
Culpa Culpa Culpa pay for injury suffered) is also demandable
Contractual Aquiliana Criminal from those persons (natural or juridical) who
are responsible for the person who has
Negligence Negligence is Negligence committed a quasi-delict (i.e., the direct
is merely direct, is punished tortfeasor).
incidental in substantive by a penal
the and law (e.g., Under this, liability is primary and direct
performance independent. Reckless (solidarily liable with the direct tortfeasor), not
of an Imprudence subsidiary. It is not conditioned upon the
obligation. under Art. insolvency of or prior recourse against the
365 of the direct tortfeasor.
Revised
Penal Note: Art. 2180 only gives rise to a
Code). presumption of negligence on the part of the
persons mentioned. The presumption is
There is There may or There may rebuttable by a showing of the person’s
always a may not be a or may not exercise of the diligence required (Note: See
pre-existing pre-existing be a pre- ‘Available Defense’).
contractual contractual existing

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Rationale
Heads of Apprentices, so long as
To extend liability by legal fiction to those in a
establishments they remain in their
position to exercise absolute or limited control
of arts and custody
over the direct tortfeasor. These persons
trade
become liable for their own omission to
comply with their duty to exercise
supervision over the persons for whom they
are responsible. 3. What must be established for
vicarious liability
When Not Applicable For Employers:
When moral culpability can be directly imputed a. Existence of an employer-employee
to the direct tortfeasor, as when there is actual relationship between company and
intent to cause harm to others. tortfeasor
b. Tortious act had been committed while the
2. Persons Vicariously Liable [Article tortfeasor was acting in the normal course
2180, Civil Code] of employment
Persons For Damages Caused
Defenses available to Employers
Vicariously By:
Proof of due care and diligence in the:
Liable:
a. Selection of employees
• Careful examination of the applicant for
Parents Minor children who live employment as to his qualifications,
in their company experience and record of service
b. Supervision of employees
Guardians Minors or incapacitated • Formulation of standard operating
children who are under procedures, suitable rules and
their authority and live in regulations, and issuance of proper
their company instructions
• Monitoring of their implementation
Owners and Employees in the • Imposition of disciplinary measures in
managers of an service of the branches case of their breach
establishment in which the latter are
or enterprise employed or on the
occasion of their D. Res ipsa loquitur
functions
Definition
Employers Employees and Literally, res ipsa loquitur means “the thing
household helpers speaks for itself” [Professional Services, Inc. v.
acting within the scope Agana, G.R. No. 126297 (2007)].
of their assigned tasks;
even though the former Statement of the Rule
are not engaged in any Where the thing which caused the injury,
business or industry without the fault of the injured, is under the
exclusive control of the defendant and the
State Special agents injury is such that it should not have occurred if
he, having such control used proper care, it
affords reasonable evidence, in the absence of
Teachers of Pupils and students, so explanation that the injury arose from the
academic long as they remain in defendant’s want of care, and the burden of
institutions their custody proof is shifted to him to establish that he has
observed due care and diligence [Professional
Services v. Agana, G.R. No. 126297 (2007)].

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1. Elements procedural rule, a rule of evidence and not a
Elements [Ramos v. CA, G.R. No. 124354 rule of substantive law; thus, it does not create
(1999)] or constitute an independent or separate
a. The accident is of a kind which ordinarily ground of liability.
does not occur in the absence of someone’s
negligence; It is merely a mode of proof or a mere
b. It is caused by an instrumentality within the procedural convenience. It is a rule peculiar to
exclusive control of the defendant or the law of negligence that recognizes that
defendants; and prima facie negligence may be established
c. The possibility of contributing conduct, without direct proof and furnishes a substitute
which would make the plaintiff responsible, for specific proof of negligence and relieves a
is eliminated. plaintiff of the burden of producing specific
proof of negligence [Ramos v. CA, supra].
Note: In Professional Services v. Agana, supra,
the Court added “the absence of explanation 3. Effect of the Rule
by the defendant” as a fourth element. Mere invocation and application of the doctrine
does not dispense with the requirement of
1st element: Nature of the accident proof of negligence.
As a matter of common knowledge and
experience, the very nature of certain types of It is simply a step in the process of such proof,
occurrences may justify an inference of permitting the plaintiff to present along with the
negligence on the part of the person who proof of the accident, enough of the attending
controls the instrumentality causing the injury circumstances to invoke the doctrine, creating
in the absence of some explanation by the an inference or presumption of negligence, and
defendant who is charged with negligence to thereby place on the defendant the burden
[Ramos v. CA, supra]. of going forward with the proof [Ramos v. CA,
supra].
2nd element: Control over the cause
Of the three elements, the fundamental 4. Effect of Direct Evidence
element is the “control of instrumentality” Res ipsa loquitur can only be invoked when
which caused the damage. Such element of under the circumstances involved, direct
control must be shown to be within the evidence of negligence or direct cause of the
dominion of the defendant [Ramos v. CA, injury is absent and not readily available.
supra].
It has generally been held that the presumption
General Rule: The instrumentality causing the of inference arising from the doctrine cannot be
injury must be under the exclusive control of availed of, or is overcome, where plaintiff has
the person sought liable. knowledge and testifies or presents evidence
as to the specific act of negligence which is the
Exception: “Control and management” is cause of the injury complained of or where
sufficient [Professional Services v. Agana, there is direct evidence as to the precise cause
supra]. of the accident and all the facts and
circumstances attendant on the occurrence
3rd element: No contribution to the injury clearly appear [Layugan v. IAC, G.R. No.
from the injured 73998 (1988)].
It is not necessary that the plaintiff be
completely inactive, but merely that there be However, notwithstanding the doctrine in
evidence removing the inference of the Layugan, it does not mean that res ipsa loquitur
plaintiff’s own responsibility [Prosser and can only be invoked in the complete absence
Keeton]. of other evidence. The rule allows the plaintiff
to present enough of the attending
2. Basis circumstances to invoke the doctrine, “along
Nature of the Rule with the proof of the accident” [Ramos v. CA,
Res ipsa loquitur is in the nature of a supra].
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5. Res Ipsa Loquitur vs. Expert had the last fair chance to prevent the
Testimony in Medical Negligence impending harm by the exercise of due
Cases diligence [Canlas v. CA, G.R. No. 112160
It is apparent that medical negligence cases (2000)].
are best proved by opinions of expert
witnesses belonging in the same general F. Damnum absque injuria
neighborhood and in the same general line of
practice as defendant physician or surgeon Under this principle, the legitimate exercise of
[Lucas v. Tuaño, G.R. No. 178763 (2009)]. a person's rights, even if it causes loss to
another, does not automatically result in an
Expert testimony is essential to establish the actionable injury. The law does not prescribe a
standard of care of the profession and whether remedy for the loss [Amonoy v. Gutierrez, G.R.
or not the physician’s conduct in the treatment No. 140420 (2001)].
and care falls below such standard.
In order that the law will give redress for an act
When the doctrine of res ipsa loquitur is availed causing damage, that act must be not only
by the plaintiff, the need for expert medical hurtful, but wrongful. The damage must be
testimony is dispensed with because the injury damnum et injuria or legal injury [Orchard
itself provides the proof of negligence. The Golf and Country Club v. Yu & Yuhico, G.R. No.
reason is that the general rule on the necessity 191033 (2016)].
of expert testimony applies only to such
matters clearly within the domain of medical
science, and not to matters that are within the
common knowledge of mankind which may be
testified to by anyone familiar with the facts
[Ramos v. CA, supra].

E. Last clear chance

Doctrine of Last Clear Chance
The doctrine of last clear chance, stated
broadly, is that the negligence of the plaintiff
does not preclude a recovery for the
negligence of the defendant where it appears
that the defendant, by exercising reasonable
care and prudence, might have avoided
injurious consequences to the plaintiff
notwithstanding the plaintiff's negligence.
The doctrine of last clear chance means that
even though a person's own acts may have
placed him in a position of peril, and an injury
results, the injured person is entitled to
recovery. As the doctrine is usually stated, a
person who has the last clear chance or
opportunity of avoiding an accident,
notwithstanding the negligent acts of his
opponent or that of a third person imputed to
the opponent is considered in law solely
responsible for the consequences of the
accident [Bustamante v. CA, G.R. No. 89880
(1991)].

The antecedent negligence of a person does

not preclude recovery of damages caused by
the supervening negligence of the latter, who
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II. NEGLIGENCE determined in the light of human experience

and the facts involved in the particular case.

A. Negligence Conduct is said to be negligent when a prudent

man in the position of the tortfeasor would have
Article 1173, Civil Code. The fault or negligence of foreseen that an effect harmful to another was
the obligor consists in the omission of that diligence sufficiently probable to warrant his foregoing
which is required by the nature of the obligation and the conduct or guarding against its
corresponds with the circumstances of the persons, consequences [Picart v. Smith, G.R. No. L-
of the time and of the place. When negligence shows
bad faith, the provisions of Articles 1171 and 2201,
12219 (1918)].
paragraph 2, shall apply.
2. Standard of Care Needed in Specific
If the law or contract does not state the diligence Circumstances
which is to be observed in the performance, that
which is expected of a good father of a family shall Operators of Motor Vehicles in Relation
be required. to Cyclists
Because of the inherent differences between
motorists and cyclists, the former being
Negligence
capable of greater speed and destruction,
It is the omission to do something which a
operators of motor vehicles have a higher
reasonable man, guided by those
standard in his duty of care [Anonuevo v. CA,
considerations which ordinarily regulate the
G.R. No. 130003 (2004)].
conduct of human affairs, would do, or the
doing of something which a prudent and
reasonable man would not do [Layugan v. IAC,
Banks
G.R. No. 73998 (1988)]. The law imposes on banks high standards in
view of the fiduciary nature of banking. Section
2 of Republic Act No. 8791 (R.A. 8791), which
To determine whether or not a person has been
negligent requires determining 2 things: took effect on 13 June 2000, declares that the
1. the diligence required of the actor under the State recognizes the ‘fiduciary nature of
circumstances, and banking that requires high standards of
2. whether the actor has performed the integrity and performance.’
diligence required.
The fiduciary nature of banking requires banks
Failing the second requisite would lead to the to assume a degree of diligence higher than
that of a good father of a family [Consolidated
conclusion that one has been negligent.
Bank v. CA, G.R. No. 138569 (2003)].
B. Standard of care Experts (In General)
Those who undertake any work calling for
1. Default Standard of Care: Good special skills are required not only to exercise
Father of a Family reasonable care in what they do but also
Pursuant to Art. 1173, the diligence of a good possess a standard minimum of special
father of a family is the standard of conduct if knowledge and ability.
the law or contract does not provide otherwise.
In all employments where peculiar skill is
Test to determine the existence of requisite, one who offers his services is
negligence: Did the defendant in doing the understood as holding himself out to the public
alleged negligent act use that reasonable care as possessing the degree of skill commonly
and caution which an ordinarily prudent man possessed by others in the same employment
would have used in the same situation? If not, [Far Eastern Shipping v. CA, G.R. No. 130068
then he is negligent. (1998)].

Negligence in a given case is not determined When a person holds himself out as being
by reference to the personal judgment of the competent to do things requiring professional
actor in the situation before him, but is skill, he will be held liable for negligence if he
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fails to exhibit the care and skill of one Unlike the ordinary affairs of life or business
ordinarily skilled in the particular work which he which involve little or no risk, a business
attempts to do [Culion v. Philippine Motors, dealing with dangerous weapons requires the
G.R. No 32611 (1930)]. exercise of a higher degree of care [Pacis v.
Morales, G.R. No. 169467 (2010)].
Doctors
Whether or not a physician has committed an Children
‘inexcusable lack of precaution’ in the Take into account the specific
treatment of his patient is to be determined characteristic of the child in question
according to the standard of care observed The conduct of an infant of tender years is not
by other members of the profession in good to be judged by the same rule, which governs
standing under similar circumstances that of an adult. […]The care and caution
bearing in mind the advanced state of the required of a child is according to his maturity
profession at the time of treatment of present and capacity only, and this is to be determined
state of medical science. in each case by the circumstances of the case
[Taylor v. Manila Railroad, G.R. No. 4977
It is in this aspect of medical malpractice that (1910)].
expert testimony is essential to establish not
only the standard of care of the profession but “Age brackets” standard
also that the physician’s conduct in the No contributory negligence can be imputed to
treatment and care falls below such standard children below 9 years old [Jarco Marketing
[Cruz v. CA, G.R. No. 122445 (1997)]. Corporation v. CA, G.R. No. 129792 (1999)].

Pharmacists Measure the acts of the child against

The profession of pharmacy, it has been said “average conduct of persons his age and
again and again, is one demanding care and experience”
skill. The degree of care required to be exercised
must vary with the capacity of the person
Even under the first conservative expression, endangered to care for himself. […]The
“ordinary care” with reference to the business standard of conduct to which a child must
of a druggist…must be held to signify “the conform for his own protection is that degree of
highest practicable degree of prudence, care ordinarily exercised by children of the
thoughtfulness, and vigilance, and most exact same age, capacity, discretion, knowledge
and reliable safeguards consistent with the and experience under the same or similar
reasonable conduct of the business in order circumstances [Ylarde v. Aquino, G.R. No. L-
that human life may not constantly be exposed 33722 (1988)].
to the danger flowing from the substitution of
deadly poisons for harmless medicine” [US v. Emergency rule
Pineda, G.R. No. L-12858 (1918)]. An individual who suddenly finds himself in a
situation of danger and is required to act
Mistake is negligence and care is no defense without much time to consider the best means
[Mercury Drug v. de Leon, G.R. No. 165622 that may be adopted to avoid the impending
(2008)]. danger, is not guilty of negligence if he fails to
undertake what subsequently and upon
Possessors of Extremely Dangerous reflection may appear to be a better solution,
Instrumentalities unless the emergency was brought by his own
A higher degree of care is required of someone negligence [Gan v. CA, G.R. No. L-44264
who has in his possession or under his control (1988)].
an instrumentality extremely dangerous in
character, such as dangerous weapons or
substances. Such person in possession or
control of dangerous instrumentalities has the
duty to take exceptional precautions to prevent
any injury being done thereby.
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C. Presumptions The law does not require that a person must
possess a certain measure of skill or
proficiency either in the mechanics of driving or
1. In Motor Vehicle Mishaps
in the observance of traffic rules before he may
a. Liability of the owner own a motor vehicle. The test of his negligence,
Article 2184, Civil Code. In motor vehicle mishaps, within the meaning of Article 2184, is his
the owner is solidarily liable with his driver, if the omission to do that which the evidence of his
former, who was in the vehicle, could have, by the
own senses tells him he should do in order to
use of the due diligence, prevented the misfortune.
xxx avoid the accident. And as far as perception is
concerned, absent a minimum level imposed
If the owner was not in the motor vehicle, the by law, a maneuver that appears to be fraught
provisions of Article 2180 are applicable. with danger to one passenger may appear to
be entirely safe and commonplace to another.
[Caedo v. Yu Khe Thai, G.R. No. L-20392
Article 2186, Civil Code. Every owner of a motor (1968)].
vehicle shall file with the proper government office a
bond executed by a government-controlled
corporation or office, to answer for damages to third The owner of the motor vehicle is not liable for
persons. The amount of the bond and other terms the misfortune unless the negligent acts of the
shall be fixed by the competent public official. driver are continued for such a length of time
as to give the owner a reasonable opportunity
to observe them and to direct his driver to
The owner is solidarily liable with the driver for desist therefrom. The act complained of must
motor vehicle mishaps when: be continued in the presence of the owner for
1. The owner was inside the vehicle at the such a length of time that the owner, by his
time; and acquiescence, makes his driver’s act his own
2. The owner could have, by the use of due [Chapman v. Underwood, G.R. No. L-9010
diligence, prevented the misfortune. (1914)].
If the owner was not inside the vehicle, he may
be held liable under Art. 2180.

The presumption is against the owner of the

motor vehicle. He has the burden of proving
due diligence.

Thus, once a driver is proven negligent in

causing damage, the law presumes the vehicle
owner equally negligent and imposes upon the
latter the burden of proving proper selection
and supervision of the employee as a defense
[Carticiano v. Nuval, G.R. No. 138054 (2000),
citing Sangco, Philippine Law on Torts and
Damages, Vol. II, 1994 ed., pp. 555-556].

The registered owner of a motor vehicle is

primarily liable for the damage or injury caused
to another, but he has a right to be indemnified
by the real owner of the amount he was
required to pay. This rule applies both to private
and to common carriers with respect to their
passengers [Tamayo v. Aquino, G.R. No. L-
12634 (1959)].

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ART. 2180 (5) ART. 2184

Relationship of Employer-employee Need not establish Employer-employee

Owner & Driver relationship

Car owner’s Not required at the time of the Required at the time of the mishap
presence mishap.

Presumption of On owner’s part, when his On driver’s part,

negligence driver is negligent when he has been
found guilty of reckless driving/violating
traffic violations at least twice within the
next preceding 2 months

Defense Good father of a family in Due diligence to prevent mishap (greatly

employment and supervision subjective)

Owner’s liability Primary—He may recover the Solidary—The full

full amount from the driver, as amount may be pursued against him, but
per Art. 2181 he may only recover the pro rata share
as to the amount for which he is liable

b. Liability of the driver substantially contributed thereto [Tison v. Sps.

Article 2184, Civil Code. x x x It is disputably
Pomasin, G.R. No. 173180 (2011)].
presumed that a driver was negligent, if he had been
found guilty of reckless driving or violating traffic Article 2185 was not formulated to compel or
regulations at least twice within the next preceding ensure obeisance by all to traffic rules and
two months. regulations. It does not apply to non-motorized
vehicles, in recognition of the unequal footing
of standards applicable to motor vehicles as
Article 2185, Civil Code. Unless there is proof to
opposed to other types of vehicles [Añonuevo
the contrary, it is presumed that a person driving a
motor vehicle has been negligent if at the time of the v. CA, supra].
mishap, he was violating any traffic regulation.
2. Possession of Dangerous Weapons
Art. 2184 establishes a presumption of or Substances
negligence on the part of the driver based on Article 2188, Civil Code. There is prima facie
previous violations of traffic regulations. presumption of negligence on the part of the
defendant if the death or injury results from his
possession of dangerous weapons or substances,
Art. 2185 establishes a presumption of such as firearms and poison, except when the
negligence on the basis of simultaneous possession or use thereof is indispensable in his
violations. occupation or business.

Under Article 2185, a legal presumption of

negligence arises if at the time of the mishap,
a person was violating any traffic regulation.
However, a causal connection must exist
between the injury received and the violation of
the traffic regulation. It must be proven that the
violation of the traffic regulation was the
proximate or legal cause of the injury or that it

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3. Common Carriers a. Natural Persons
Article 1734, Civil Code. Common carriers are
In order for one to be liable as a direct
responsible for the loss, destruction, or deterioration tortfeasor, the requisites of Art. 2176 must be
of the goods, unless the same is due to any of the fulfilled:
following causes only: 1. Act or omission
1. Flood, storm, earthquake, lightning, or other 2. Damage to another
natural disaster or calamity; 3. Fault or negligence
2. Act of the public enemy in war, whether
international or civil;
4. No pre-existing contractual relation
3. Act or omission of the shipper or owner of the
goods; In other words, the direct tortfeasor is liable for
4. The character of the goods or defects in the quasi-delict. Liability consists in the payment
packing or in the containers; of damages for the injury suffered.
5. Order or act of competent public authority.
Note: Damage under the 2nd requisite pertains
Article 1735, Civil Code. In all cases other than
to injury [PNR v. Brunty, G.R. No. 169891
those mentioned in Nos. 1, 2, 3, 4, and 5 of the (2006)].
preceding article, if the goods are lost, destroyed or
deteriorated, common carriers are presumed to b. Juridical Persons
have been at fault or to have acted negligently, For juridical persons, the rules on vicarious
unless they prove that they observed extraordinary liability in the next section applies.
diligence as required in Article 1733.

2. Persons vicariously liable

Article 1752, Civil Code. Even when there is an Article 2180, Civil Code. The obligation imposed by
agreement limiting the liability of the common carrier Article 2176 is demandable not only for one’s own
in the vigilance over the goods, the common carrier acts or omissions, but also for those of persons for
is disputably presumed to have been negligent in whom one is responsible.
case of their loss, destruction or deterioration.
xxx

4. Res Ipsa Loquitur The responsibility treated of in this article shall cease
See "Res ipsa loquitur" in the preceding when the persons herein mentioned prove that they
sections for an exhaustive discussion. observed all the diligence of a good father of a family
to prevent the damage.

D. Persons Liable
Note: See "Vicarious Liability" in the preceding
1. The direct tortfeasor, for his own sections for an exhaustive discussion.
acts
3. Persons exercising parental
Article 2176, Civil Code. Whoever by act or
omission causes damage to another, there being
authority
fault or negligence, is obliged to pay for the damage Parental Authority
done. Such fault or negligence, if there is no pre- It consists, to a large extent, of the instruction
existing contractual relation between the parties, is and supervision of the child. May be exercised
called a quasi-delict and is governed by the by:
provisions of this Chapter. a. Parents/Adoptive parents
b. Court-appointed guardians
The direct tortfeasor is one who is made liable c. Substitute Parental Authorities
for a tort committed through his own acts. The 1. Grandparents
tortfeasor may be a natural or juridical 2. Oldest qualified sibling over 21 years
person. 3. Child’s actual custodian, provided he is
qualified and over 21 years
d. Special Parental Authorities
1. School
2. Administrators
3. Teachers

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4. Individual, entity, or institution engaged authority coupled with presumed parental
in child care dereliction in the discharge of the duties
accompanying such authority.
Available Defense
Proof that the parent/guardian observed all The parental dereliction is, of course, only
diligence of a good father of a family to prevent presumed and the presumption can be
the damage. overturned under Article 2180 Civil Code, by
proof that the parents had exercised all the
a. Parents diligence of a good father of a family to prevent
Article 2180 (2), Civil Code. The father and, in case
the damage [Tamargo v. CA, supra].
of his death or incapacity, the mother, are
responsible for the damages caused by the minor Illegitimate children
children who live in their company. Responsibility is with the mother whom the law
vests with parental authority.

Article 221, Family Code. Parents and other b. Guardians

persons exercising parental authority shall be civilly
liable for the injuries and damages caused by the Article 2180 (3), Civil Code. Guardians are liable
acts or omissions of their unemancipated children for damages caused by the minors or incapacitated
living in their company and under their parental persons who are under their authority and live in
authority subject to the appropriate defenses their company.
provided by law.

The liability of guardians with respect to their

Parents are responsible for their minor wards is governed by the same rule as in the
children who live in their company. liability of parents with respect to their children
below 21 years and who live with them.
“Minors” Defined
Minors refer to those who are below 21 years “Incapacitated” Defined (Rule 92, Rules of
old, not below 18 years. The law reducing Court)
majority age did not amend Art. 2180. The Also known as those who are “incompetent:”
basis is the Art. 236(3) of the Family Code, as 1. Those suffering penalty of civil interdiction
amended by RA 6809, which provides that 2. Prodigals
nothing in the Family Code shall be construed 3. Deaf and dumb unable to read and write
to derogate from the duty or responsibility of 4. Unsound mind, even though they have lucid
parents and guardians for children and wards intervals
below 21 years of age mentioned in Art. 2180, 5. Being of sound mind, but by reason of age,
Civil Code. disease, weak mind, and other similar
causes, cannot take care of themselves or
Death/Incapacity of Father Irrelevant manage their property
The provision in Art. 2180, which makes the
mother liable only upon the death/incapacity of Minors or incapacitated tortfeasors without
the father is no longer operative due to Family a parent or guardian [Art. 2182, Civil Code]
Code provisions: Answerable with his own property in an action
against him. A guardian ad litem shall be
Note: Even if the complaint for damages is filed appointed.
when parental authority is already lodged with
the adoptive parents, the parents who shall c. Teachers and schools
be made vicariously liable are those who
Article 2180 (7), Civil Code. Lastly, teachers or
exercised parental authority at the time the
heads of establishments of arts and trades shall be
quasi-delict was committed. In this case, it liable for damages caused by their pupils and
was the biological parents [Tamargo v. CA, students or apprentices, so long as they remain in
G.R. No. 85044 (1992)]. their custody.

Basis of liability of parents and adopters

Parental liability is anchored upon parental
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Article 218, Family Code. The school, its Custody does not connote immediate and
administrators and teachers, or the individual, entity actual physical control. It refers more to the
or institution engaged in child shall have special influence exerted on the student and the
parental authority and responsibility over the minor discipline instilled in him [Palisoc v. Brillantes,
child while under their supervision, instruction or G.R. No. L-29025 (1971)].
custody.

Authority and responsibility shall apply to all As long as it is shown that the student is in the
authorized activities whether inside or outside the school premises pursuant to a legitimate
premises of the school, entity or institution. student objective, in the exercise of a legitimate
right, or the enjoyment of a legitimate student
privilege, the responsibility of the school
Article 219, Family Code. Those given the authority authorities over the student continues
and responsibility under the preceding Article shall [Amadora v CA, G.R. No. L-47745 (1988)].
be principally and solidarily liable for damages
caused by the acts or omissions of the
unemancipated minor. The parents, judicial Available Defense
guardians or the persons exercising substitute Proof that the teacher/school observed all
parental authority over said minor shall be diligence of a good father of a family to prevent
subsidiarily liable. the damage.
The respective liabilities of those referred to in the
preceding paragraph shall not apply if it is proved Under the Civil Code (Art. 2180)
that they exercised the proper diligence required
under the particular circumstances.
Teachers Heads
All other cases not covered by this and the
preceding articles shall be governed by the
provisions of the Civil Code on quasi-delicts.
Institution Academic Arts and
institutions trades
Under Art. 2180, teachers or heads of establishment
establishments of arts and trades are s
responsible for their pupils and students or
apprentices, so long as they remain in the Liable Teacher in Head of
former’s custody, regardless of age. charge; not establishment
administrator
Under the Family Code, liability attaches to the
school, its administrators and teachers, or the
individual or entity engaged in childcare, so Custody Required
long as the child is under their supervision,
instruction, or custody, and the child is below
18 years old. Rationale Heads of Heads of
academic establishment
Basis of liability institutions s of arts and
The persons vicariously liable stand in loco exercise only trades have
parentis and are called upon to exercise administrative apprentices,
reasonable supervision over the conduct of the authority over who they are
students. the students, in close
and are not in proximity to.
“Custody” Defined close
“Custody” means the protective and proximity to
supervisory custody that the school, its head them.
and teachers exercise over the pupils, for as
long as they are in attendance in school, which
includes recess time. It is not required that the
student must live and board in the school.

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Under the Family Code Nature of employers’ liability

Direct The basis of his liability is not his

School, Parents, employee’s negligence, but his
Administrat Guardians, own negligence in hiring and
ors, etc. supervising the employee.
Teachers,
etc. Primary The amount for which he is liable
may be pursued without having to
Provided by Art. 218 Art. 219 exhaust the employee’s assets,
as opposed to subsidiary liability
under the RPC.
Kind of Special Parental
authority parental authority or Solidary He may recover the full amount of
required authority substitute the liability from his employee, as
parental per Art. 2181, and not merely a
authority prorated amount, unlike in Art.
2184, Civil Code.
Liability if Principal and Subsidiary
tort is solidary What must be established for vicarious
committed liability:
in school 1. Existence of an employer-employee
relationship between company and
tortfeasor
Students covered 2. Tortious act had been committed while the
tortfeasor was acting in the normal course
ARTS. 218-219 ART. 2180 of employment

Minor students only All students, even The basis for liability is not respondeat
those no longer superior, but pater familias.
minors, as long as
they remain in the
Respondeat Pater familias
custody of the persons
superior
responsible
Master is absolutely There is only a
d. Owners/managers of establishments liable to servant’s act presumption of
or omission negligence on the part
or employers of the employer
Article 2180 (4), Civil Code. The owners and
managers of an establishment or enterprise are No defense of Defense of negligence
likewise responsible for damages caused by their negligence available
employees in the service of the branches in which
the latter are employed or on the occasion of their Embodied in the Embodied in primary
functions. subsidiary liability liability under Art.
under RPC – no 2180, where the
defense of diligence; defense of diligence is
Article 2180 (5), Civil Code. Employers shall be only lack of criminal available
liable for the damages caused by their employees
liability
and household helpers acting within the scope of
their assigned tasks, even though the former are not
engaged in any business or industry. Basis of liability
Employer’s negligence in:
1. The selection of their employees (culpa in
eligiendo)
2. The supervision over their employees
(culpa in vigilando)
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The liability imposed upon employers with (1971)].
respect to damages occasioned by the
negligence of their employees to whom they Note: The liability of the employer under Art.
are not bound by contract is based on the 103 RPC is subsidiary.
employer’s own negligence, such as when he
places a powerful automobile in the hands of a Registered Owner Rule
servant whom he knows to be ignorant of the The registered owner of the vehicle is primarily
method of managing such vehicle [Cangco v. responsible to the public for whatever damage
Manila Railroad, G.R. No. L-12191 (1918)]. or injury the vehicle may have caused, even if
he had already sold the same to someone else.
Presumption of Negligence
The presentation of proof of the negligence of The policy is the easy identification of the
its employee gives rise to the presumption that owner who can be held responsible so as not
the defendant employer did not exercise the to inconvenience or prejudice the third party
diligence of a good father of a family in the injured [Cadiente v. Macas, G.R. No. 161946
selection and supervision of its employees (2008)].
[Lampesa v. De Vera, G.R. No. 155111
(2008)]. The registered owner, however, has the right to
be indemnified by the real or actual owner of
Available Defense the amount that he may be required to pay as
Proof of due care and diligence in the: damages for the injury caused to the plaintiff
1. Selection of employees [Orix Metro Leasing v. Mangalinao, G.R. No.
a. Careful examination of the applicant for 174089 (2012)].
employment as to his qualifications,
experience and record of service This rule applies even if the vehicle is leased to
2. Supervision of employees third persons. The liability of the registered
a. Formulation of standard operating owner is subject to his right of recourse against
procedures, suitable rules and the transferee or buyer.
regulations, and issuance of proper
instructions 1. Owners and Managers of an
b. Monitoring of their implementation Establishment or Enterprise [par. 4,
c. Imposition of disciplinary measures in Art. 2180, Civil Code]
case of their breach They are responsible for employees in the
service of the branches in which the latter are
When Applicable employed or on the occasion of their functions.
Vicarious liability arises when there is an
employer-employee relationship. To determine “Manager” Defined
its existence, the “control test” is used. This does not include a manager of a
corporation, as such is not an employer, but
Under this, a relationship exists if the merely an employee of the corporation
“employer” controls both the means and the [Philippine Rabbit v. Philam Forwarders, G.R.
details of the process by which the “employee” No. L-25142 (1975)].
is to accomplish his task [Professional Services
v. CA and Agana, G.R. No. 126297 (2010)]. 2. Employers [par. 5, Art. 2180, Civil Code]
They are responsible for employees and
Criminal Negligence household helpers acting within the scope of
The vicarious liability of the employer for their assigned tasks; even though the former
criminal negligence of his employee is are not engaged in any business or industry.
governed by RPC 103. Conviction of the
employee conclusively binds the employer. “Within the scope of their assigned task” in Art.
Defense of due diligence in the selection and 2180 includes any act done by an employee in
supervision of the employee is not available. furtherance of the interests, or for the account
The employer cannot appeal the conviction of the employer at the time of the infliction of
[Fernando v. Franco, G.R. No. L-27786 the injury or damage [Filamer Christian
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Institute v. CA, G.R. No. 75112 (1990)]. public works.
3. Local Government Code provides for the
Distinguishing Par. 4 and Par. 5 liability of local government units for
The distinction is necessary to determine which wrongful exercise of its proprietary (as
paragraph is applicable: opposed to its governmental) functions. The
a. Kind of employer made liable: latter is the same as that of a private
1. Par. 4: To owners and managers of an corporation or individual [Mendoza v. de
establishment or enterprise Leon, G.R. No. L-9596 (1916)].
2. Par. 5: To employers in general,
whether or not engaged in any “Special Agent” Defined
business or industry One who receives a definite and fixed order or
b. Acts of employees responsible for: commission, foreign to the exercise of the
1. Par. 4: Negligent acts committed either duties of his office (if he is a special official).
in the service of the branches or on the
occasion of their functions Does not pertain to any executive agent who is
2. Par. 5: Negligent acts done within the an employee of the active administration and
scope of their assigned task who on his own responsibility performs
functions which are inherent and naturally
However, essentially, there is no distinction pertain to his office [Merritt v. Government of
between the two. It can be said that Par. 5 is the Philippine Islands, G.R. No. 11154 (1916)].
merely an expansion of what has been
provided for under Par. 4 [Castilex v. Vasquez, A corporate body (e.g., GOCCs) performing
G.R. No. 132266 (1999)]. non-governmental functions becomes liable for
the damage resulting from the tortious act of its
e. The State employee. Liability will be that of an ordinary
Section 3, Article XVI, 1987 Constitution. The
employer under Par. 4 or 5, Art. 2180
State may not be sued without its consent. [Fontanilla v. Maliaman, G.R. No. 55963
(1991)].

Article 2180 (6), Civil Code. The State is Why the State Cannot be Sued
responsible in like manner when it acts through a Neither fault nor negligence can be presumed
special agent; but not when the damage has been on the part of the State in the organization of
caused by the official to whom the task done
branches of public service and in the
properly pertains, in which case what is provided in
Article 2176 shall be applicable. appointment of its agents. Also, suing the
State will divert its focus from the delivery of
necessary public services.
Who may be sued under the State
1. A special agent under Art. 2180 f. Joint tortfeasors
2. Instrumentalities discharging proprietary
functions Article 2194, Civil Code. The responsibility of two
or more persons who are liable for quasi-delict is
a. The power to enter into contracts solidary.
implies the consent to be sued
b. The charter of the instrumentality may
expressly provide that it may be sued Joint tortfeasors are all persons responsible
3. Those that consent to be sued for a quasi-delict. They are all persons who
command, instigate, promote, encourage,
Instances where the State gives its consent advise, countenance, cooperate in, aid or abet
to be sued in the commission of a tort, or who approve of
1. Art. 2180 (6) is an example of an express it after it is done, if done for their benefit.
legislative consent. Here, the State
assumes a limited liability for the acts of its Under Art. 2194, their responsibility is solidary.
special agents.
2. Art. 2189 provides for state liability for When Applicable
damages caused by defective condition of When the concurrent or successive negligent
acts or omissions of two or more persons,
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although acting independently, are together the
direct and proximate cause of a single injury to
a third person, and it is impossible to determine
in what proportion each contributed to the
injury and either of them is responsible for the
whole injury.

Where their concurring negligence resulted in

injury or damage to a third party, they become
joint tortfeasors and are solidarily liable for the
resulting damage [Far Eastern Shipping v. CA,
G.R. No. 130068 (1998)].

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III. PROXIMATE CAUSE should, as an ordinary prudent and

intelligent person, have reasonable ground
to expect at the moment of his act that an
A. Concept of Proximate Cause injury might probably result therefrom.
b. Also known as the proximate legal cause
In order that civil liability for negligence may c. A cause is still proximate, although farther
arise, there must be a direct causal connection in time to the injury, if the happening of it set
between the damage suffered by the plaintiff other foreseeable events into motion
and the act or omission of the defendant. resulting ultimately in the damage [Abrogar
v. Cosmos Bottling Co., G.R. No. 164749
Plaintiff, however, must establish a sufficient (2017)].
link between the act or omission and the
damage or injury. That link must not be remote 2. Differentiated from other causes
or far-fetched; otherwise, no liability will attach. Concurrent Cause
The damage or injury must be a natural and A concurrent cause is one, which along with
probable result of the act or omission [Dy other causes, produces the injury.
Teban Trading, Inc. v. Ching, G.R. No. 161803
(2008)]. Each cause is an efficient cause without which
the injury would not have happened. Injury is
Note: It is not required that it be shown that the attributed to any or all the causes, and recovery
injury would not have occurred without the act may be had against any or all of those
or omission complained of. It only requires responsible.
some reasonable connection between the act
or omission and the injury. Note: These are the same from the point of
view of solidarity.
1. Two Definitions
Proximate cause immediately resulting As a general rule, that negligence in order to
in injury: render a person liable need not be the sole
a. That cause, which, in natural and cause of an injury. It is sufficient that his
continuous sequence, unbroken by any negligence, concurring with one or more
efficient intervening cause, produces the efficient causes other than the plaintiff’s, is the
injury, and without which the result would proximate cause of the injury.
not have occurred [Bataclan v. Medina,
G.R. No. 10126 (1957)]. Remote Cause
b. Foreseen by a person of ordinary care that A remote cause is one, which would have been
the injury complained of or some similar a proximate cause, had there been no efficient
injury would result from the cause as a intervening cause after it and prior to the injury.
natural and probable consequence
[Pilipinas Bank v. CA, G.R. No. 105410 It cannot be made the basis of an action if such
(1994)]. did nothing more than furnish the condition or
give rise to the occasion by which the injury
Proximate cause not immediately was made possible, if there intervened
resulting in injury but sets in motion a between such prior or remote cause and the
chain of events, which eventually result injury a distinct, successive, unrelated, and
in injury: efficient cause of the injury, even though such
a. That cause acting first and producing the injury would not have happened but for such
injury, by setting other events in motion, all condition or occasion [Manila Electric v.
constituting a natural and continuous chain, Remoquillo, G.R. No. L-8328 (1956)].
each having a close causal connection with
its immediate predecessor, the final event in Intervening Cause
the chain immediately effecting the injury as An intervening cause is an event that takes
a natural and probable result of the first place after the first cause and before the injury.
cause, under such circumstances that the
person responsible for the first event Note: See Efficient Intervening Cause
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Cause in Fact apparent safety, and some new force
Whether such negligent conduct is a cause intervenes. But even in such cases, it is not the
without which the injury would not have distinction between “cause” and “condition”
occurred or is the efficient cause which set in which is important, but the nature of the risk
motion the chain of circumstances leading to and the character of the intervening cause
the injury [Bataclan v. Medina, G.R. No. 10126 [Phoenix Construction v. IAC, G.R. No. L-
(1957)]. 65295 (1987)].

An act or omission is not regarded as a cause B. Tests to Determine Proximate

of an event if the particular event would not
have occurred without it.
Cause

Efficient Intervening Cause But-for test

The test of determining whether or not the Otherwise known as "sine qua non" test.
intervening cause is sufficient to absolve a prior
cause of the injury is as follows: whether the The test states that the injury would not have
intervention of a later cause is a significant part occurred but for the negligent act/omission.
of the risk involved in the defendant’s conduct This is essentially a factual question: "but for
or is so reasonably connected with it that the the defendant's negligent act/omission, would
responsibility should not be terminated. the injury occur?"

In the affirmative, such foreseeable intervening That cause, which, in natural and continuous
forces are within the scope of the original risk, sequence, unbroken by any efficient
and hence of the defendant’s negligence. intervening cause, produces the injury, and
without which the result would not have
In the negative, there exists an efficient occurred [Vda. de Bataclan v. Medina, G.R.
intervening cause that relieves the defendant No. L-10126 (1957)].
of liability.
Natural and foreseeable test
Foreseeable Intervening Cause "…the legal and proximate cause of the
If the intervening cause is one which in ordinary accident and of Dionisio's injuries was the
human experience is reasonably to be wrongful or negligent manner in which the
anticipated, or one which the defendant has dump truck was parked — in other words, the
reason to anticipate under the particular negligence of petitioner Carbonel.
circumstances, the defendant may be
negligent, among other reasons, because of That there was a reasonable relationship
failure to guard against it [Phoenix between petitioner Carbonel's negligence on
Construction v. IAC, G.R. No. L-65295 (1987)]. the one hand and the accident and
respondent's injuries on the other hand, is quite
Efficient Intervening Cause clear. Put in a slightly different manner, the
When there is an intervening cause, which is collision of Dionisio's car with the dump truck
not a consequence of the first wrongful cause was a natural and foreseeable consequence of
(not under the control of the first wrongdoer and the truck driver's negligence [Phoenix
could not be foreseen), that eventually leads to Construction, Inc. v. Intermediate Appellate
an injury, the first wrongful cause can no longer Court, G.R. No. L-65295 (1987)].
be considered the proximate cause [Abrogar v.
Cosmos Bottling Co., G.R. No. 164749 (2017)]. Substantial factor test
It is the rule under the substantial factor test
Cause as distinguished from condition that if the actor's conduct is a substantial factor
The distinction between cause and condition in bringing about harm to another, the fact that
has been almost entirely discredited. So far as the actor neither foresaw nor should have
it has any validity at all, it must refer to the type foreseen the extent of the harm or the manner
of case where the forces set in operation by the in which it occurred does not prevent him from
defendant have come to rest in a position of being liable [Philippine Rabbit Bus Lines, Inc.
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v. Intermediate Appellate Court, G.R. Nos.
66102-04 (1990)].

Note: In the case of Philippine Rabbit Bus

Lines, the test was discussed by the appellate
court but not made part of the ratio decidendi
of the Supreme Court. Thus, it cannot be said
to have been adopted in our jurisdiction.

Cause and condition

Many courts have sought to distinguish
between the active "cause" of the harm and the
existing "conditions" upon which that cause
operated. If the defendant has created only a
passive static condition which made the
damage possible, the defendant is said not to
be liable [Phoenix Construction, Inc. v.
Intermediate Appellate Court, G.R. No. L-
65295 (1987)].

Note: See "cause as distinguished from

condition" in the preceding section.

Sufficient link test

Plaintiff must, however, establish a sufficient
link between the act or omission and the
damage or injury. That link must not be remote
or far-fetched; otherwise, no liability will attach.
The damage or injury must be a natural and
probable result of the act or omission [Dy
Teban Trading, Inc. v. Ching, G.R. No. 161803
(2008)].

Mixed considerations test

There is no exact mathematical formula to
determine proximate cause. It is based upon
mixed considerations of logic, common
sense, policy and precedent [Dy Teban
Trading, Inc. v. Ching, G.R. No. 161803
(2008)].

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IV. DAMAGES according to the degrees of their liability,

respective responsibilities and actual
participation. Hence, each principal accused-
A. General provisions appellant should shoulder a greater share in
the total amount of indemnity and damages
Damages may be defined as the pecuniary than someone who was adjudged as only an
compensation, recompense, or satisfaction for accomplice [People v. Halil Gambao, G.R. No.
an injury sustained, or as otherwise expressed, 172707 (2013)].
the pecuniary consequences, which the law
imposes for the breach of some duty or the Start of Delay
violation of some right [People v. Ballesteros, 1. Extrajudicial: Demand letter
G.R. No. 120921 (1998)].When Allowed 2. Judicial: Filing of complaint
The obligation to repair the damages exists
whether done intentionally or negligently Duty to Minimize
and whether or not punishable by law
Article 2203, Civil Code. The party suffering loss
[Occena v. Icamina, G.R. No. 82146 (1990)]. or injury must exercise the diligence of a good
father of a family to minimize the damages resulting
The mere fact that the plaintiff suffered losses from the act or omission in question.
does not give rise to a right to recover
damages.
Art. 2203 exhorts parties suffering from loss or
injury to exercise the diligence of a good father
To warrant the recovery of damages, there
of a family to minimize the damages resulting
must be both a right of action for a legal
from the act or omission in question.
wrong inflicted by the defendant, and damage
resulting to the plaintiff therefrom.
Burden of Proof
The defendant has the burden of proof to
Wrong without damage, or damage without
establish that the victim, by the exercise of the
wrong, does not constitute a cause of action,
diligence of a good father of a family, could
since damages are merely part of the remedy
have mitigated the damages. In the absence of
allowed for the injury caused by a breach or
such proof, the amount of damages cannot be
wrong [Custodio v. CA, supra].
reduced [Lim and Gunnaban v. CA, G.R. No.
125817 (2002)].
Injury vs. Damage vs. Damages [Custodio
v. CA, supra]
Note: The victim is required only to take such
INJURY DAMAGE DAMAGES steps as an ordinary prudent man would
reasonably adopt for his own interest.
The illegal The loss, The
invasion of hurt, or recompense or
B. Kinds of damages
a legal right harm, which compensation
results from awarded for Article 2197, Civil Code. Damages may be:
the injury the damage 1. Actual or compensatory;
suffered 2. Moral;
3. Nominal;
4. Temperate or moderate;
5. Liquidated; or
Elements for recovery of damages 6. Exemplary or corrective.
1. Right of action
2. For a wrong inflicted by the defendant According to Purpose:
3. Damage resulting to the plaintiff 1. For adequate reparation of the injury
a. Compensatory damages (reparation of
Apportionment of Damages pecuniary losses)
The entire amount of the civil liabilities should b. Moral (reparation for non-pecuniary
be apportioned among all those who losses: injury to feelings; physical
cooperated in the commission of the crime
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suffering, etc.) Alleged and proved with certainty
2. For vindication of the right violated: Article 2199, Civil Code. Except as provided by law
Nominal damages or by stipulation, one is entitled to an adequate
3. For less than adequate reparation: compensation only for such pecuniary loss suffered
Moderate damages by him as he has duly proved. Such compensation
4. For deterring future violations: is referred to as actual or compensatory damages.
Exemplary or corrective
The damages must be proven by competent
According to Manner of Determination evidence (admissible or probative).
1. Conventional (or liquidated)
2. Non-conventional, which may either be: There must be pleading and proof of actual
a. Statutory (fixed by law, as in moratory damages suffered for the same to be
interest) recovered.
b. Judicial (determined by the courts)
In addition to the fact that the amount of loss
General Damages must be capable of proof, it must also be
Those which are the natural and necessary actually proven with a reasonable degree of
result of the wrongful act or omission asserted certainty, premised upon competent proof or
as the foundation of liability. It includes those the best evidence obtainable such as receipts,
which follow as a conclusion of law from the cash and check vouchers, and other
statement of the facts of the injury. documentary evidence of the same nature.

Special Damages The burden of proof of the damage suffered is

Damages that arise from the special imposed on the party claiming the same. Self-
circumstance of the case, which, if properly serving statements are not sufficient basis for
pleaded, may be added to the general an award of actual damages [Oceaneering
damages which the law presumes or implies Contractors v. Barretto, G.R. No. 184215
from the mere invasion of the plaintiff’s rights. (2011)].

Special damages are the natural, but NOT the Actual or compensatory damages cannot be
necessary result of an injury. These are not presumed, but must be proven with a
implied by law. reasonable degree of certainty [MCC Industrial
Sales Corp. v. Ssangyong Corp., G.R. No.
1. Actual and Compensatory Damages 170633 (2007)].
Compensatory damages
Damages in satisfaction of, or in recompense When is a person entitled? [PeLoRePLS]
for, loss or injury sustained. The phrase “actual a. When there is a pecuniary loss suffered by
damages” is sometimes used as a synonym of him;
compensatory damages. b. When he has alleged and prayed for such
relief [Manchester Dev’t Corp v. CA, G.R.
Requisites: No. L-75919 (1987)];
To seek recovery of actual damages, it is c. When he has duly proved it;
necessary to prove the actual amount of loss d. When provided by law or by stipulation.
with a reasonable degree of certainty,
premised upon competent proof and on the No proof of pecuniary loss is necessary for:
best evidence obtainable [Asilo, Jr. v. People moral, nominal, temperate, liquidated or
and Sps. Bombasi, G.R. No. 159017-18 exemplary damages. The assessment of such
(2011); ICTSI v. Chua, G.R. No. 195031 damages is discretionary upon the court,
(2014)]. except liquidated ones [Art. 2216, Civil Code].

If the physical integrity of a person’s body is

violated or diminished, actual injury is suffered
for which actual or compensatory damages are
due and assessable. Such violation entitles a
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person to actual or compensatory damages. A Extent or scope of actual damages
scar, especially on a woman’s face, is a
SOURCE EXTENT OF LIABILITY
violation of bodily integrity, giving rise to a
legitimate claim for restoration to her condition
ante [Gatchalian v. Delim, G.R. No. 56487 Art. Contract If the obligor acted in
(1991)]. 2201 s and good faith, he shall be
Quasi- liable for all natural and
a. Components contract probable consequences
Actual damage covers the following: [LIPA] s of the breach, which the
1. Value of loss; unrealized profit parties have foreseen or
2. Attorney’s fees and expenses of litigation could have reasonably
3. Interest foreseen at the time the
obligation was
b. Loss Covered constituted.
IN GENERAL
Article 2200, Civil Code. Indemnification for If the obligor acted with
damages shall comprehend not only the value of fraud, bad faith,
the loss suffered, but also that of the profits which malice, or wanton
the obligee failed to obtain. attitude, he shall be
responsible for all
damages which may be
Two kinds of actual damages [PNOC v. CA,
reasonably attributed to
G.R. No. 107518 (1998)]: the breach or non-
1. Damnum emergens/dano emergente -
performance.
actual loss or loss of what a person already
possesses Crimes Liability extends to all
2. Lucrum cessans/lucro cesante - a and damages which are the
cession of gain or amount of profit lost or Art. Quasi- natural and probable
loss of which would have pertained to a 2202 delicts consequence of the act
person or omission complained
of.
Indemnification for damages is not limited to
damnum emergens but extends to lucrum WON the damage was
cessans. This rule is important when the thing foreseen or could have
lost or damaged either earns income or is used been reasonably
for business. foreseen by the
defendant is irrelevant.
The award of damages for loss of earning
capacity is concerned with the determination of
losses or damages sustained by the [plaintiffs] IN CONTRACTS AND QUASI-
as dependents and intestate heirs of the CONTRACTS
deceased. Such damages consist, not only of Article 2201, Civil Code. In contracts and quasi-
the full amount of his earnings, but also of the contracts, the damages for which the obligor who
support they received or would have received acted in good faith is liable shall be those that are
from him had he not died as a consequence of the natural and probable consequences of the
breach of the obligation, and which the parties have
the negligence of [defendant’s] agent.
foreseen or could have reasonably foreseen at the
time the obligation was constituted.
Only net earnings, and not gross earnings are
to be considered, that is, the total of the In case of fraud, bad faith, malice or wanton
earnings less expenses necessary in the attitude, the obligor shall be responsible for all
creation of such earnings or income and less damages which may be reasonably attributed to the
living and other incidental expenses [Candano non-performance of the obligation.
Shipping Lines, Inc. v. Sugata-on, G.R. No.
163212 (2007)].

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Article 2214, Civil Code. In quasi-delicts, the loss of employment with loss of earning
contributory negligence of the plaintiff shall reduce capacity [Gatchalian v. Delim, G.R. No. 56487
the damages that he may recover. (1991)].

The plaintiff need not be actually engaged in

Article 2215, Civil Code. In contracts, quasi- gainful employment to recover damages due to
contracts, and quasi-delicts, the court may loss or impairment of earning capacity.
equitably mitigate the damages under
circumstances other than the case referred to in the
In determining the amount of damages to be
preceding article, as in the following instances:
1. That the plaintiff himself has contravened the awarded, the Supreme Court considered the
terms of the contract; plaintiff’s age, probable life expectancy, the
2. That the plaintiff has derived some benefit as as state of his health, and his mental and physical
result of the contract; condition before the accident [Mercury Drug v.
3. In cases where exemplary damages are to be Huang, G.R. No. 172122 (2007)].
awarded, that the defendant acted upon the advice
of counsel;
4. That the loss would have resulted in any event; Injury to business standing or commercial
5. That since the filing of the action, the defendant credit
has done his best to lessen the plaintiff's loss or Loss of goodwill should be proven with the
injury. same standard of proof as other compensatory
damages [Tanay Recreation Center v. Fausto,
The damages recoverable upon breach of G.R. No. 140182 (2005)].
contract are, primarily, the ordinary, natural
and necessary damages resulting from the Formula for the net earning capacity
breach. Net earning capacity = Life Expectancy ×
(Gross annual income – Reasonable living
Other damages, known as special damages, expenses)
are recoverable where it appears that the [People v. Aringue, G.R. No. 116487 (1997);
particular conditions which made such Candano v. Sugata-On, G.R. 163212 (2007)]
damages a probable consequence of the
breach were known to the delinquent party at Where: Life expectancy = 2/3 × (80 – age of
the time the contract was made [Daywalt v. victim at the time of death)
Recoletos et al., G.R. No. L-13505 (1919)].
General Rule: Damages for loss of earning
Bad faith does not simply connote bad capacity shall be awarded in every case, and
judgment or negligence; it imports a dishonest that claimant shall present documentary
purpose or some moral obliquity and conscious evidence to substantiate claim for damages
doing of wrong; it partakes of the nature of [Tan, et al. v. OMC Carriers, Inc., G.R. No.
fraud [BPI Family Bank v. Franco, G.R. No. 190521 (2011)].
123498 (2007)].
Exceptions:
c. Earning capacity, business standing 1. If the deceased was self-employed and
earning less than the minimum wage; or
Article 2205, Civil Code. Damages may be 2. The deceased was a daily wage worker
recovered:
earning less than the minimum wage under
1. For loss or impairment of earning capacity in
cases of temporary or permanent personal current labor laws [Philippine Hawk v. Lee,
injury; G.R. No. 166869 (2010)].
2. For injury to the plaintiff's business standing or
commercial credit. Additional Exception: Testimonial evidence
suffices to establish a basis for which the court
Loss or impairment of earning capacity can make a fair and reasonable estimate of the
The Court did not award actual damages loss of earning capacity [Pleyto v. Lomboy,
because it was found that plaintiff’s G.R. No. 148737 (2004)].
employment was lost even before the injury
upon which she was suing. The Court equated Note: Such an exception to documentary proof

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requirement only exists as to the loss of 1. Death by Crime or Quasi-Delict
earning capacity. Article 2206, Civil Code. The amount of damages
for death caused by a crime or quasi-delict shall be
d. Death by Crime or Quasi-Delict at least three thousand pesos, even though there
may have been mitigating circumstances. In
Article 2202, Civil Code. In crimes and quasi-
addition:
delicts, the defendant shall be liable for all damages
1. The defendant shall be liable for the loss
which are the natural and probable consequences
of the earning capacity of the deceased, and the
of the act or omission complained of. It is not
indemnity shall be paid to the heirs of the latter;
necessary that such damages have been foreseen
such indemnity shall in every case be assessed
or could have reasonably been foreseen by the
and awarded by the court, unless the deceased
defendant.
on account of permanent physical disability not
caused by the defendant, had no earning
In cases of crimes, damages are to be capacity at the time of his death;
2. If the deceased was obliged to give
increased or decreased according to support according to the provisions of Article
aggravating or mitigating circumstances 291, the recipient who is not an heir called to the
present. decedent's inheritance by the law of testate or
intestate succession, may demand support from
Contributory negligence of the plaintiff, in case the person causing the death, for a period not
of quasi-delicts, shall reduce the damages to exceeding five years, the exact duration to be
fixed by the court;
which he may be entitled. However, in cases of 3. The spouse, legitimate and illegitimate
crimes, there is no mitigation for contributory descendants and ascendants of the deceased
negligence of the plaintiff. may demand moral damages for mental
anguish by reason of the death of the deceased.
The principal consideration for the award of
damages is the penalty provided by law or In death caused by breach of conduct by a
imposable for the offense because of its common crime
heinousness, and not the public penalty When death occurs as a result of a crime, the
actually imposed on the offender. heirs of the deceased are entitled to the
following items of damages:
The fact of minority of the offender at the time a. Indemnity for the loss of earning
of the commission of the offense has no capacity of the deceased — an amount to
bearing on the gravity and extent of injury be fixed by the Court according to the
caused to the victim and her family. Hence, circumstances of the deceased related to
notwithstanding the fact that the imposable his actual income at the time of death and
public penalty against the offender should be his probable life expectancy, the said
lowered due to his minority, there is no indemnity to be assessed and awarded by
justifiable ground to depart from the the court as a matter of duty, unless the
jurisprudential trend in the award of damages deceased had no earning capacity at said
in the case of qualified rape, considering the time on account of permanent disability not
compensatory nature of the award of civil caused by the accused. If the deceased was
indemnity and moral damages [People v. obliged to give support, under Art. 291, Civil
Sarcia, G.R. No. 169641 (2009)]. Code, the recipient who is not an heir, may
demand support from the accused for not
e. Civil/death indemnity more than five years, the exact duration to
Note: See table re: “Amount of Civil Indemnity, be fixed by the court;
Moral Damages, and Exemplary Damages to b. Moral damages for mental anguish, — an
be paid for the commission of certain crimes amount to be fixed by the court. This may
based on People v. Jugueta (2016)” be recovered even by the illegitimate
descendants and ascendants of the
deceased;
c. Exemplary damages, when the crime is
attended by one or more aggravating
circumstances, — an amount to be fixed in
the discretion of the court, the same to be
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considered separate from fines; and equitable that attorney's fees and
d. Attorney's fees and expenses of expenses of litigation should be recovered.
litigation, — the actual amount thereof (but
only when a separate civil action to recover In all cases, the attorney's fees and expenses of
civil liability has been filed or when litigation must be reasonable.
exemplary damages are awarded);
e. Interests in the proper cases. General Rule: Attorney’s fees and costs of
[Heirs of Raymundo Castro v. Bustos, G.R. No. litigation are recoverable IF stipulated.
L-25913 (1969)].
Exceptions:
2. Civil or Death indemnity If there is no stipulation, they are recoverable
Mere commission of the crime shall entitle the only in the following cases:
heirs of the deceased to such damages. 1. By reason of malice or bad faith
a. When exemplary damages are
In Rape Cases awarded
Civil indemnity, in the nature of actual and b. In case of a clearly unfounded civil
compensatory damages, is mandatory upon action
the finding of the fact of rape [People v. c. Where defendant acted in gross and
Astrologo, G.R. No. 169873 (2007)]. evident bad faith
d. When at least double judicial costs
The Court explained that the principal are awarded
consideration for the award of damages is not 2. By reason of plaintiff’s indigence in
the public penalty imposed upon the offender, a. Actions for legal support
but based on the heinousness of the offense b. Actions for recovery of wages of
of a crime against chastity [People v. Apattad, laborers, etc.
G.R. No. 193188 (2011)]. c. Actions for workmen’s compensation
3. By reason of crimes in
f. Attorney’s fees and expenses of a. Criminal cases of malicious
litigation prosecution
Article 2208, Civil Code. In the absence of
b. Separate actions to recover civil
stipulation, attorney's fees and expenses of liability arising from crime
litigation, other than judicial costs, cannot be 4. By reason of equity
recovered, except: a. Where the defendant’s act compelled
1. When exemplary damages are awarded; plaintiff to litigate with third persons
2. When the defendant's act or omission has b. Where the Court deems it just and
compelled the plaintiff to litigate with third
persons or to incur expenses to protect his
equitable
interest;
3. In criminal cases of malicious prosecution Note: In all cases, attorney’s fees and costs of
against the plaintiff; litigation must be reasonable.
4. In case of a clearly unfounded civil action or
proceeding against the plaintiff; Even if expressly stipulated, attorney’s fees are
5. Where the defendant acted in gross and
evident bad faith in refusing to satisfy the subject to control by the Courts.
plaintiff's plainly valid, just and demandable
claim; Two kinds of attorney’s fees:
6. In actions for legal support; 1. Ordinary - reasonable compensation paid
7. In actions for the recovery of wages of to a lawyer for his services
household helpers, laborers and skilled 2. Extraordinary - awarded to a successful
workers;
8. In actions for indemnity under workmen's
litigant; to be paid by the losing party as
compensation and employer's liability laws; indemnity for damages [Aquino v.
9. In a separate civil action to recover civil liability Casabar, G.R. No. 191470 (2015)].
arising from a crime;
10. When at least double judicial costs are Attorney’s fees in Article 2208 is an award
awarded; made in favor of the litigant, not of his counsel,
11. In any other case where the court deems it just
and the litigant is the judgment creditor who
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may enforce the judgment for attorney's fees point.
by execution [Quirante v. IAC, G.R. No. 73886
(1989)].
Article 2213, Civil Code. Interest cannot be
Attorney's fees cannot be recovered except in recovered upon unliquidated claims or damages,
cases provided for in Article 2208 [MERALCO except when the demand can be established with
v. Ramoy, G.R. No. 158911 (2008)]. reasonable certainty.

Attorney’s fees and expenses of litigation are Interest accrues in the concept of damages
recoverable only in the concept of actual when:
damages, not as moral damages nor judicial 1. The obligation consists in the payment of
costs. Hence, such must be specifically prayed a sum of money;
for and may not be deemed incorporated within 2. Debtor incurs in delay; and
a general prayer for "such other relief and 3. There being no stipulation to the contrary.
remedy as this court may deem just and
equitable” [Briones v. Macabagdal, G.R. No. Interest on the amount of damages awarded
150666 (2010)]. may be imposed at the discretion of the court
and in the prevailing legal interest.
For Art. 2208 (2), an adverse decision does not
ipso facto justify an award of attorney’s fees to No interest, however, shall be adjudged on
the winning party. unliquidated claims or damages until the
demand can be established with reasonable
Even when a claimant is compelled to litigate certainty [Lara’s Gifts & Decors, Inc., v.
with third persons or to incur expenses to Midtown Industrial Sales Inc., G.R. No. 225433
protect his rights, still attorney’s fees may not (2019)].
be awarded where no sufficient showing of bad
faith could be reflected in a party’s persistence Compounding of interest
in a case other than an erroneous conviction of Interest due shall earn legal interest from the
the righteousness of his cause [Bank of time it is judicially demanded, although the
America v. Philippine Racing Club, G.R. No. obligation may be silent on the point.
150228 (2009)].
Note that interest due can earn only at 6%,
g. Interest whether the rate of interest of the principal is
Article 2209, Civil Code. If the obligation consists greater than 6%.
in the payment of a sum of money, and the debtor
incurs in delay, the indemnity for damages, there Determination of legal interest
being no stipulation to the contrary, shall be the 1. When an obligation, regardless of its source
payment of the interest agreed upon, and in the
absence of stipulation, the legal interest, which is
(i.e., law, contracts, quasi-contracts, delicts
six per cent per annum. or quasi-delicts) is breached, the
contravenor can be held liable for damages.
2. With regard to an award of in the concept of
Article 2210, Civil Code. Interest may, in the actual and compensatory damages, the rate
discretion of the court, be allowed upon damages of interest, as well as the accrual thereof, is
awarded for breach of contract. imposed, as follows [Lara’s Gifts & Decors,
Inc. v. Midtown Industrial Sales Inc., supra]:
Article 2211, Civil Code. In crimes and quasi-
delicts, interest as a part of the damages may, in a BASE RATE ACCRUAL
proper case, be adjudicated in the discretion of the
court.
When the obligation is breached and it
consists in the payment of sum of money
Article 2212, Civil Code. Interest due shall earn
legal interest from the time it is judicially demanded,
(i.e, a loan or forbearance of money, goods,
although the obligation may be silent upon this credits or judgments):

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BASE RATE ACCRUAL BASE RATE ACCRUAL

Interest a. That In the absence Interest Legal From the time

due which may of a stipulated due on the interest (6%) of judicial
have been reckoning date, principal demand until
stipulated in shall be amount full payment
writing, computed from accruing as
provided it is default, (i.e., of judicial
not from demand
excessive or extrajudicial shall
unconsciona or judicial separately
ble demand in earn legal
accordance interest
with Art. 1169)
until full
payment No legal interest will be added after the
without judgement becomes final and executory
compounding unlike in Eastern Shipping Lines v. CA, G.R.
any interest No. 97412 (1994) and Nacar v. Gallery
unless Frames, G.R. No. 189871 (2013)
compounded
When an obligation, not constituting a loan
interest is
or forbearance of money, is breached:
expressly
stipulated by When Legal From the time
the parties, by demand is interest (6%) the
law or established claim is made
regulation with extrajudicially
reasonable or judicially
certainty until full
b. In the From
payment
absence of extrajudicial
stipulation, or judicial When Legal From the date
the rate of demand in demand is interest (6%) of the
interest, it accordance not judgment of
shall be 6% with Art. 1169 established the trial court
per annum of the with (at which time
(legal Civil Code, reasonable the
interest) until full certainty) quantification
payment, of damages
without may be
compounding deemed to
any interest have been
unless reasonably
compounded ascertained)
interest is until full
expressly payment
stipulated by
law or No legal interest will be added after the
regulation. judgement becomes final and executory
unlike in Eastern Shipping Lines v. CA, G.R.
No. 97412 (1994) and Nacar v. Gallery
Frames, G.R. No. 189871 (2013)

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Note: The new rate of legal interest (6%) in factually established;
Nacar v. Gallery Frames, G.R. No. 189871 3. The wrongful act or omission of the
(2013), does not apply to judgments that have defendant must be the proximate cause of
become final and executory prior to July 1, the injury sustained by the claimant; and
2013. 4. The award of damages is predicated on any
of the cases stated in Art. 2219 of the Civil
2. Moral Damages Code [Sulpicio Lines v. Curso, G.R. No.
157009 (2010)].
Article 2217, Civil Code. Moral damages include
physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, General Principles of Recovery:
moral shock, social humiliation, and similar injury. 1. Moral damages must somehow be
Though incapable of pecuniary computation, moral proportional to the suffering inflicted.
damages may be recovered if they are the 2. In culpa contractual or breach of contract,
proximate result of the defendant's wrongful act or moral damages may be recovered when the
omission.
defendant acted in bad faith or was guilty of
gross negligence (amounting to bad faith) or
Article 2218, Civil Code. In the adjudication of in wanton disregard of his contractual
moral damages, the sentimental value of property, obligation and, exceptionally, when the act
real or personal, may be considered. of breach of contract itself is constitutive of
tort resulting in physical injuries.
3. By special rule in Art. 1764, in relation to Art.
Moral damages are emphatically not intended
2206, moral damages may also be awarded
to enrich a complainant at the expense of the
in case the death of a passenger results
defendant.
from a breach of carriage.
4. In culpa aquiliana or quasi-delict,
Its award is aimed at the restoration, within the
a. When an act or omission causes
limits of the possible, of the spiritual status quo
physical injuries, or
ante, and it must be proportional to the
b. Where the defendant is guilty of
suffering inflicted [Visayan Sawmill v. CA, G.R.
intentional tort, moral damages
No. 83851 (1993)].
may aptly be recovered. This rule
also applies to contracts when
Mental suffering means distress or serious pain
breached by tort.
as distinguished from annoyance, regret or
5. In culpa criminal, moral damages could be
vexation [Bagumbayan Corp. v. IAC, G.R. No.
lawfully due when the accused is found
L-66274 (1984)].
guilty of physical injuries, lascivious acts,
adultery or concubinage, illegal or arbitrary
a. When awarded detention, illegal arrest, illegal search, or
Awarded when injury consists of: defamation.
1. Physical suffering 6. Malicious prosecution can also give rise to
2. Besmirched reputation a claim for moral damages. The term
3. Mental anguish "analogous cases," referred to in Art. 2219,
4. Fright following the ejusdem generis rule, must be
5. Moral shock held similar to those expressly enumerated
6. Wounded feelings by the law.
7. Social humiliation 7. Although the institution of a clearly
8. Serious anxiety unfounded civil suit can at times be a legal
9. Similar injury justification for an award of attorney's fees,
such filing, however, has almost invariably
Requisites for awarding moral damages been held not to be a ground for an award
The conditions for awarding moral damages of moral damages [Expertravel & Tours v.
are [InAP-2219] CA., G.R. No. 130030 (1999)].
1. There must be an injury, whether physical, 8. The burden rests on the person claiming
mental, or psychological, clearly moral damages to show convincing
substantiated by the claimant; evidence for good faith is presumed. In a
2. There must be a culpable act or omission
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case involving simple negligence, moral acts;
damages cannot be recovered [Villanueva 4. Adultery or concubinage;
v. Salvador, G.R. No. 139436 (2006)]. 5. Illegal or arbitrary detention or arrest;
9. Failure to use the precise legal terms or 6. Illegal search;
"sacramental phrases" of "mental anguish, 7. Libel, slander or any other form of defamation;
8. Malicious prosecution;
fright, serious anxiety, wounded feelings or
9. Acts mentioned in article 309;
moral shock" does not justify the denial of 10. Acts and actions referred to in articles 21, 26,
the claim for damages. It is sufficient that 27, 28, 29, 30, 32, 34, and 35.
these exact terms have been pleaded in the
complaint and evidence has been adduced The parents of the female seduced, abducted,
[Miranda-Ribaya v. Bautista, G.R. No. L- raped, or abused, referred to in No. 3 of this article,
may also recover moral damages.
49390 (1980)].
10. Even if the allegations regarding the amount The spouse, descendants, ascendants, and
of damages in the complaint are not brothers and sisters may bring the action
specifically denied in the answer, such mentioned in No. 9 of this article, in the order
damages are not deemed admitted named.
[Raagas, et al. v. Traya et al, G.R. No. L-
20081 (1968)]. 1. In Criminal Offense resulting in
11. An appeal in a criminal case opens the physical injuries and death
whole case for review and this 'includes the Under paragraph (1), Art. 2219 of the Civil
review of the penalty, indemnity and Code, moral damages may be recovered in a
damages’. Even if the offended party had
criminal offense resulting in physical injuries. In
not appealed from said award, and the only its generic sense, "physical injuries" includes
party who sought a review of the decision of death [People v. Villaver, G.R. No. 133381
said court was the accused, the court can (2001)].
increase damages awarded [Sumalpong v.
CA, G.R. No. 123404 (1997)].
Moral damages are awarded despite the
12. It can only be awarded to natural persons. absence of proof of mental and emotional
The award of moral damages cannot be suffering of the victim’s heirs since a violent
granted in favor of a corporation because,
death necessarily brings about emotional pain
being an artificial person and having and anguish on the part of the victim’s family
existence only in legal contemplation, it has [People v. Villarmea, G.R. No. 200029 (2013)].
no feelings, no emotions, no senses, It
cannot, therefore, experience physical
2. In Quasi-delicts resulting in physical
suffering and mental anguish, which can be
injuries
experienced only by one having a nervous
In culpa aquiliana, or quasi-delict, moral
system [ABS-CBN v. CA, G.R. No. 128690
damages may be recovered (a) when an act or
(1999)].
omission causes physical injuries, or (b) where
13. While it is true that besmirched reputation is
the defendant is guilty of intentional tort.
included in moral damages, it cannot cause
mental anguish to a corporation, unlike in
The SC held that an employer that is
the case of a natural person, for a
vicariously liable with its employee-driver may
corporation has no reputation in the sense
also be held liable for moral damages to the
that an individual has, and besides, it is
injured plaintiff [B.F. Metal v. Lomotan, G.R.
inherently impossible for a corporation to
No. 170813 (2008)].
suffer mental anguish [NAPOCOR v. Philipp
Brothers, G.R. No, 126204 (2001)].
3. In seduction, abduction, rape, and
other lascivious acts
b. When Recoverable
Anent the award of damages, civil indemnity ex
Article 2219, Civil Code. Moral damages may be delicto is mandatory upon finding of the fact of
recovered in the following and analogous cases: rape while moral damages is awarded upon
1. A criminal offense resulting in physical injuries;
2. Quasi-delicts causing physical injuries;
such finding without need of further proof
3. Seduction, abduction, rape, or other lascivious because it is assumed that a rape victim has
actually suffered moral injuries entitling the
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victim to such award [People v. Calongui, G.R. 7. In acts referred to in Arts. 21, 26, 27, 28,
No. 170566 (2006); People v. Lizano, G.R. No. 29, 32, 34 and 35, Civil Code
174470 (2007)]. Article 21, Civil Code. Any person who wilfully
causes loss or injury to another in a manner that is
The award of moral damages in a conviction for contrary to morals, good customs or public policy
simple rape should equal the award of moral shall compensate the latter for the damage.
damages in convictions for qualified rape
[People v. Bartolini, G.R. No. 179498 (2010)].
Acts Contra Bonus Mores
Moral damages are recoverable where the
Where there are multiple counts of rape and dismissal of the employee was attended by bad
other lascivious acts, the court awarded moral
faith or fraud or constituted an act oppressive
damages for each count of lascivious acts and to labor, or was done in a manner contrary to
each count of rape [People v. Abadies, G.R. morals, good customs, or public policy [Triple
Nos. 139346-50 (2002)].
Eight v. NLRC, G.R. No. 129584 (1998)].
Note: Recovery may be had by the offended
party and also by her parents. Article 26, Civil Code. Every person shall respect
the dignity, personality, privacy and peace of mind
of his neighbors and other persons. The following
4. In illegal or arbitrary detention or arrest and similar acts, though they may not constitute a
Since the crime committed in this case is criminal offense, shall produce a cause of action for
kidnapping and failure to return a minor under damages, prevention and other relief:
Art. 270 of the RPC, the crime was clearly 1. Prying into the privacy of another's residence:
analogous to illegal and arbitrary detention or 2. Meddling with or disturbing the private life or
family relations of another;
arrest. Therefore, the award of moral damages 3. Intriguing to cause another to be alienated from
is justified [People v. Bernardo, G.R. No. his friends;
144316 (2002)]. 4. Vexing or humiliating another on account of his
religious beliefs, lowly station in life, place of
5. In case of libel, slander, or any other birth, physical defect, or other personal
form of defamation condition.
The court ruled that the commission of Slight
Oral Defamation caused injury to the Violation of Human Dignity
petitioner’s feelings and reputation as a The law seeks to protect a person from being
barangay captain. Hence, the petitioner is unjustly humiliated so the court awarded moral
entitled to moral damages in the sum of damages to the plaintiff who was accused by
₱5,000.00 [Occena v. Icamina, G.R. No. 82146 the respondent of having an adulterous
(1990)]. relationship with another woman in the
presence of his wife, children, neighbors and
6. In case of malicious prosecution friends [Concepcion v. CA, G.R. No. 120706
A person's right to litigate, as a rule, should not (2000)].
be penalized. This right, however, must be
exercised in good faith [Industrial Insurance v. Article 27, Civil Code. Any person suffering
Bondad, G.R. No. 136722 (2000)]. material or moral loss because a public servant or
employee refuses or neglects, without just cause,
Moral damages cannot be recovered from a to perform his official duty may file an action for
person who has filed a complaint against damages and other relief against the latter, without
another in good faith, or without malice or bad prejudice to any disciplinary administrative action
that may be taken.
faith. If damage results from the filing of the
complaint, it is damnum absque injuria [Mijares
v. CA, G.R. No. 113558 (1997)]. Refusal or Neglect of Duty
Under Art. 27, in relation to Arts. 2219 and
2217, a public officer may be liable for moral
damages for as long as the moral damages
suffered by [the plaintiff] were the proximate
result of [defendant’s] refusal to perform an
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official duty or neglect in the performance 13. The right to take part in a peaceable assembly
thereof. to petition the government for redress of
grievances;
Under Arts. 19 and 27 of the Civil Code, a 14. The right to be free from involuntary servitude
public official may be made to pay damages for in any form;
15. The right of the accused against excessive bail;
performing a perfectly legal act, albeit done in
16. The right of the accused to be heard by himself
bad faith or in violation of the "abuse of right" and counsel, to be informed of the nature and
doctrine. cause of the accusation against him, to have a
speedy and public trial, to meet the witnesses
face to face, and to have compulsory process
Article 28, Civil Code. Unfair competition in
to secure the attendance of witness in his
agricultural, commercial or industrial enterprises or
behalf;
in labor through the use of force, intimidation,
17. Freedom from being compelled to be a witness
deceit, machination or any other unjust, oppressive
against one's self, or from being forced to
or highhanded method shall give rise to a right of
confess guilt, or from being induced by a
action by the person who thereby suffers damage.
promise of immunity or reward to make such
confession, except when the person confessing
becomes a State witness;
Article 29, Civil Code. When the accused in a 18. Freedom from excessive fines, or cruel and
criminal prosecution is acquitted on the ground that unusual punishment, unless the same is
his guilt has not been proved beyond reasonable imposed or inflicted in accordance with a
doubt, a civil action for damages for the same act statute which has not been judicially declared
or omission may be instituted. Such action requires unconstitutional; and
only a preponderance of evidence. Upon motion of 19. Freedom of access to the courts.
the defendant, the court may require the plaintiff to
file a bond to answer for damages in case the In any of the cases referred to in this article,
complaint should be found to be malicious. whether or not the defendant's act or omission
constitutes a criminal offense, the aggrieved party
If in a criminal case the judgment of acquittal is has a right to commence an entirely separate and
based upon reasonable doubt, the court shall so distinct civil action for damages, and for other relief.
declare. In the absence of any declaration to that Such civil action shall proceed independently of any
effect, it may be inferred from the text of the criminal prosecution (if the latter be instituted), and
decision whether or not the acquittal is due to that mat be proved by a preponderance of evidence.
ground.
The indemnity shall include moral damages.
Exemplary damages may also be adjudicated.
Article 32, Civil Code. Any public officer or
employee, or any private individual, who directly or The responsibility herein set forth is not
indirectly obstructs, defeats, violates or in any demandable from a judge unless his act or
manner impedes or impairs any of the following omission constitutes a violation of the Penal Code
rights and liberties of another person shall be liable or other penal statute.
to the latter for damages:
1. Freedom of religion;
2. Freedom of speech; Violation of Civil and Political Rights
3. Freedom to write for the press or to maintain a The purpose of Art. 32 is to provide a sanction
periodical publication; to the deeply cherished rights and freedoms
4. Freedom from arbitrary or illegal detention; enshrined in the Constitution.
5. Freedom of suffrage;
6. The right against deprivation of property
without due process of law; Under Art. 32, it is not necessary that the public
7. The right to a just compensation when private officer acted with malice or bad faith. To be
property is taken for public use; liable, it is enough that there was a violation of
8. The right to the equal protection of the laws; the constitutional rights of the petitioner, even
9. The right to be secure in one's person, house, on the pretext of justifiable motives or good
papers, and effects against unreasonable
searches and seizures;
faith in the performance of one's duties
10. The liberty of abode and of changing the same; [Cojuangco v. CA, G.R. No. 119398 (1999)].
11. The privacy of communication and
correspondence; Art. 32 of the Civil Code provides that moral
12. The right to become a member of associations damages are proper when the rights of
or societies for purposes not contrary to law; individuals, including the right against

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deprivation of property without due process of claiming moral damages must prove bad faith
law, are violated [Meralco v. Spouses Chua, by clear and convincing evidence because
G.R. No. 160422 (2010)]. good faith is always presumed [Francisco v.
Ferrer, G.R. No. 142029 (2001)].
Article 34, Civil Code. When a member of a city or
municipal police force refuses or fails to render aid A conscious or intentional design need not
or protection to any person in case of danger to life always be present to award moral damages
or property, such peace officer shall be primarily since negligence may occasionally be so gross
liable for damages, and the city or municipality shall
as to amount to malice or bad faith. Bad faith,
be subsidiarily responsible therefor. The civil action
herein recognized shall be independent of any in the context of Art. 2220 of the Civil Code,
criminal proceedings, and a preponderance of includes gross negligence [Bankard, Inc. v.
evidence shall suffice to support such action. Feliciano, G.R. No 141761 (2006)].

c. Who may Recover Moral Damages

Article 35, Civil Code. When a person, claiming to Relatives of Injured Persons
be injured by a criminal offense, charges another
with the same, for which no independent civil action
The omission of brothers and sisters of the
is granted in this Code or any special law, but the deceased passenger in Art. 2206(3) reveals
justice of the peace finds no reasonable grounds to the legislative intent to exclude them from the
believe that a crime has been committed, or the persons authorized to recover moral damages
prosecuting attorney refuses or fails to institute for mental anguish by reason of the death of
criminal proceedings, the complaint may bring a the deceased (inclusion unius est exclusion
civil action for damages against the alleged
alterius). The usage of the phrase analogous
offender. Such civil action may be supported by a
preponderance of evidence. Upon the defendant's cases in the provision means simply that the
motion, the court may require the plaintiff to file a situation must be held similar to those
bond to indemnify the defendant in case the expressly enumerated in the law in question
complaint should be found to be malicious. [Sulpicio Lines v. Curso, G.R. No. 157009
(2010)].
If during the pendency of the civil action, an
information should be presented by the prosecuting
attorney, the civil action shall be suspended until Art. 233 of the Family Code states that the
the termination of the criminal proceedings. person exercising substitute parental authority
shall have the same authority over the child as
the parents.
Article 2220, Civil Code. Willful injury to property
may be a legal ground for awarding moral damages Persons exercising substitute parental
if the court should find that, under the authority are to be considered ascendants for
circumstances, such damages are justly due. The
same rule applies to breaches of contract where the the purpose of awarding moral damages
defendant acted fraudulently or in bad faith. [Caravan Travel and Tours International, Inc. v.
Abejar, G.R. No. 170631 (2016)].
In Willful Injury to Property Juridical Persons
To sustain an award of damages, the damage The award of moral damages cannot be
inflicted upon plaintiff’s property must be granted in favor of a corporation because,
malicious or willful, an element crucial to merit being an artificial person and having existence
an award of moral damages under Art. 2220 of only in legal contemplation, it has no feelings,
the Civil Code [Regala v. Carin, G.R. No. no emotions, no senses [ABS-CBN v. CA,
188715 (2011)]. supra].
In Breach of Contract in Bad Faith Although the general rule is that a juridical
To recover moral damages in an action for person is not entitled to moral damages since
breach of contract, the breach must be it cannot experience the same suffering that a
palpably wanton, reckless, malicious, in bad natural person does, Art. 2219(7) expressly
faith, oppressive, or abusive. authorizes the recovery of moral damages in
cases of libel, slander, or any other form of
Bad faith imports a dishonest purpose and defamation.
conscious doing of a wrong and the person
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Art. 2219(7) does not qualify whether the Article 2223, Civil Code. The adjudication of
plaintiff is a natural or juridical person. nominal damages shall preclude further contest
Therefore, a corporation can validly file a upon the right involved and all accessory questions,
complaint for libel or any other form of as between the parties to the suit, or their
defamation and claim for moral damages respective heirs and assigns.
[Filipinas Broadcasting v. Ago, G.R. No.
141994 (2005)]. 1. Violation of a right
Nominal damages "are recoverable where a
Factors Considered in Determining Amount legal right is technically violated and must be
The amount of damages awarded in this vindicated against an invasion that has
appeal has been determined by adequately produced no actual present loss of any kind.”
considering the official, political, social, and
financial standing of the offended parties on Its award is thus not for the purpose of
one hand, and the business and financial indemnification for a loss but for the recognition
position of the offender on the other. The SC and vindication of a right. When granted by the
further considered the present rate of courts, they are not treated as an equivalent of
exchange and the terms at which the amount a wrong inflicted but simply a recognition of the
of damages awarded would approximately be existence of a technical injury [Gonzales v.
in U.S. dollars, the defendant being an PCIB, G.R. No. 180257 (2011)].
international airline [Lopez v. Pan American,
G.R. No. L-22415 (1966)]. Nominal damages may also be awarded in
cases where a property right has been invaded
3. Nominal Damages [Twin Ace v. Rufina, G.R. No. 160191 (2006)].
Nominal damages consist of damages
awarded not for the purposes of indemnifying 2. No actual loss caused or proven
the plaintiff for any loss suffered, but for the When the plaintiff suffers injury not enough to
vindication or recognition of a right violated by warrant an award of actual damages, then
the defendant. nominal damages may be given [Twin Ace v.
Rufina, supra].
Nominal damages are awarded in every
obligation arising from law, contracts, quasi- Nominal damages may also be awarded where
contracts, acts or omissions punished by law, there has been a breach of contract and no
and quasi-delicts [PNOC v. CA, G.R. No. substantial injury or actual damages
107518 (1998)]. whatsoever have been or can be shown
[Areola v. CA, G.R. No. 95641 (1994)].
Requisites and characteristics
a. Invasion or violation of any legal or property The amount to be awarded shall be equal to or
right. at least commensurate to the injury sustained
b. No proof of loss is required. considering the concept and purpose of such
c. The award is to vindicate the right violated. damages [Lufthansa v. CA as cited in PNOC v.
CA, G.R. No. 107518 (1998)].
a. When awarded
Article 2221, Civil Code. Nominal damages are 3. Under conditions of equity
adjudicated in order that a right of the plaintiff, The plaintiffs sought to recover damages from
which has been violated or invaded by the the hotel due to its breach of contract as
defendant, may be vindicated or recognized, and regards food service for the plaintiff’s guests.
not for the purpose of indemnifying the plaintiff for The SC did not award actual and moral
any loss suffered by him.
damages because it found that the plaintiff’s
failure to inform the hotel of the increase of
Article 2222, Civil Coe. The court may award guests was the proximate cause of the
nominal damages in every obligation arising from plaintiff’s injury. Nevertheless, the SC awarded
any source enumerated in article 1157, or in every nominal damages under considerations of
case where any property right has been invaded. equity, for the discomfiture that the plaintiffs
were subjected to during the event, averring
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that the hotel could have managed the case, cannot be proved with certainty.
"situation" better, it being held in high esteem
in the hotel and service industry [Spouses Temperate damages are more than nominal
Guanio v. Makati Shangri-la, G.R. No. 190601 but less than compensatory damages [Tan v.
(2011)]. OMC Carriers, G.R. No. 190521 (2011)].

Nature and determination of amount Temperate damages are incompatible with

The assessment of nominal damages is left to nominal damages hence, cannot be granted
the discretion of the trial court according to concurrently [Citytrust Bank v. IAC, G.R. No.
the circumstances of the case. 84281 (1994)].

Small but substantial Requisites

Generally, nominal damages, by their nature, a. Actual existence of pecuniary loss;
are small sums fixed by the court without b. The nature and circumstances of the loss
regard to the extent of the harm done to the prevents proof of the exact amount;
injured party. However, it is generally held that c. They are more than nominal and less than
nominal damages is a substantial claim, if compensatory;
based upon the violation of a legal right; in such d. Causal connection between the loss and the
a case, the law presumes damage although defendant’s act or omission;
actual or compensatory damages are not e. Amount must be reasonable.
proven [Gonzales v. People, G.R. No. 159950
(2007)]. a. When Recoverable
1. Nature of the case prevents
Commensurate to the injury suffered determination of actual loss
Even if there was no documentary evidence to
justify Maria’s claim for actual damages, she 2. In addition to civil indemnity
was still awarded nominal damages to
vindicate her right and its value was 3. Cases where amount of loss is not
commensurate to the injury she suffered proven
[Pedrosa v. CA, G.R. No. 118680 (2001)]. Temperate damages are included in the
context of compensatory damages. In cases
Special reasons extant in the case where definite proof of pecuniary loss cannot
Since the assessment of damages are being be offered, temperate damages can be granted
left to the discretion of the court, the if the court is convinced that there has been
circumstances of a particular case will such loss. The court awarded temperate
determine whether the amount assessed as damages in lieu of actual damages for loss of
nominal damage is within the scope or intent of earning capacity where earning capacity is
the law [Robes-Francisco v. CFI, G.R. No. L- plainly established but no evidence was
41093 (1978)]. presented to support the allegation of the
injured party’s actual income [Pleno v. CA,
4. Temperate Damages G.R. No. 56505 (1988)].
Article 2224, Civil Codes. Temperate or moderate
damages, which are more than nominal but less 4. In addition to other actual damages
than compensatory damages, may be recovered proven when there is a chronic and
when the court finds that some pecuniary loss has
been suffered but its amount cannot, from the
continuing injury involved
nature of the case, be provided with certainty. In cases where the resulting injury might be
continuing and possible future complications
directly arising from the injury, while certain to
Article 2225, Civil Code. Temperate damages occur are difficult to predict, temperate
must be reasonable under the circumstances. damages can and should be awarded on top of
actual or compensatory damages; in such
These damages are awarded for pecuniary cases, there is no incompatibility between
loss, in an amount that, from the nature of the actual and temperate damages as they cover
two distinct phases [Ramos v. CA, G.R. No.
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124354 (1999)]. c. Breach of the principal contract must be
proved.
b. Factors when Determining Amount
In general Rules Governing Breach of Contract
The court awarded temperate damages where Article 2228, Civil Code. When the breach of the
from the nature of the case, definite proof of contract committed by the defendant is not the one
pecuniary loss cannot be adduced, although contemplated by the parties in agreeing upon the
the court is convinced that the plaintiff suffered liquidated damages, the law shall determine the
some pecuniary loss [De Guzman v. Tumolva, measure of damages, and not the stipulation.
G.R. No. 188072 (2011)].
A penalty clause, expressly recognized by law,
Receipts amounting to less than P25,000 is an accessory undertaking to assume greater
If the actual damages, proven by receipts liability on the part of the obligor in case of
during the trial, amount to less than breach of an obligation. It functions to
₱25,000.00, the victim shall be entitled to strengthen the coercive force of obligation and
temperate damages in the amount of to provide, in effect, the liquidated damages
₱25,000.00, in lieu of actual damages. resulting from such a breach.

In this case, the victim is entitled to the award The obligor would then be bound to pay the
of ₱25,000.00 as temperate damages stipulated indemnity without the necessity of
considering that the amount of actual damages proof on the existence and on the measure of
proven by receipts is only ₱3,858.50. Hence, damages caused by the breach [Suatengco v.
the actual damages shall be deleted. Reyes, G.R. No. 162729 (2008)].

Conversely, if the amount of actual damages General Rule: The penalty shall substitute the
proven exceeds ₱25,000, then temperate indemnity for damages and the payment of the
damages may no longer be awarded; actual interests in case of breach.
damages based on the receipts presented
during trial should instead be granted [People Exceptions:
v. Lucero, G.R. No. 179044 (2010)]. a. When there is a stipulation to the contrary.
b. When the obligor is sued for refusal to pay
Where no receipts were provided the agreed penalty.
When no documentary evidence of burial or c. When the obligor is guilty of fraud.
funeral expenses is presented in court, the
amount of ₱50,000.00 as temperate damages The amount can be reduced if:
shall be awarded [People v. Jugueta, G.R. No. a. It is unconscionable as determined by the
202124 (2016)]. court;
b. There is partial or irregular performance.
5. Liquidated Damages
Article 2226, Civil Code. Liquidated damages are
In Titan v. Uni-Field, G.R. No. 153874 (2007),
those agreed upon by the parties to a contract, to the Supreme Court found that the attorney’s
be paid in case of breach thereof. fees stipulated were too high. Since Uni-Field
was adequately protected by separate
stipulations on the balance, liquidated
Article 2227, Civil Code. Liquidated damages, damages, and attorney’s fees in case of
whether intended as an indemnity or a penalty, breach, the Court reduced the attorney’s fees
shall be equitably reduced if they are iniquitous or
unconscionable.
to 25% of the principal amount instead of the
whole claim. It also allowed the recovery of
both liquidated damages and attorney’s fees
Requisites and characteristics even if both were in the nature of penalty
a. Liquidated damages must be validly clauses.
stipulated. The question of whether a penalty is
b. There is no need to prove the amount of reasonable or iniquitous can be partly
actual damages. subjective and partly objective. Its resolution
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would depend on such factors as, but not to curb socially deleterious actions [PNB v. CA,
necessarily confined to, the type, extent and supra].
purpose of the penalty, the nature of the
obligation, the mode of breach and its a. When Recoverable
consequences, the supervening realities, the
standing and relationship of the parties, and ARISING WHEN
the like, the application of which, by and large, FROM EXEMPLARY
is addressed to the sound discretion of the DAMAGES ARE
court. GRANTED

A penalty may be deleted if there is substantial Art. 2230 Crimes The crime was
performance or if the penalty has a fatal committed with an
infirmity [RCBC v. CA, G.R. No. 128833 aggravating
(1998)]. circumstance/s

6. Exemplary or Corrective Damages

Article 2229, Civil Code. Exemplary or corrective Art. 2231 Quasi- Defendant acted
damages are imposed, by way of example or delicts with gross
correction for the public good, in addition to the negligence
moral, temperate, liquidated or compensatory
damages.
Art. 2232 Contracts Defendant acted
and Quasi- in a wanton,
General Principles
contracts fraudulent,
a. Exemplary damages cannot be awarded
reckless,
alone: they must be awarded IN ADDITION
oppressive, or
to moral, temperate, liquidated or
malevolent
compensatory damages.
manner
b. The purpose of the award is to deter the
defendant (and others in a similar condition)
from a repetition of the acts for which In criminal offenses
exemplary damages were awarded; hence, Article 2230, Civil Code. In criminal offenses,
they are not recoverable as a matter of exemplary damages as a part of the civil liability
right. may be imposed when the crime was committed
c. The defendant must be guilty of malice or with one or more aggravating circumstances. Such
negligence above the ordinary. damages are separate and distinct from fines and
d. Plaintiff is not required to prove the amount shall be paid to the offended party.
of exemplary damages.
1. But plaintiff must show that he is Award of exemplary damages is part of the civil
entitled to moral, temperate, or liability, not of the penalty. Damages are paid
compensatory damage; that is, to the offended party separately from the fines.
substantial damages, not purely An aggravating circumstance, whether
nominal ones. This requirement ordinary or qualifying, should entitle the
applies even if the contract stipulates offended party to an award of exemplary
liquidated damages [PNB v. CA, G.R. damages within the unbridled meaning of Art.
No. 116181 (1996)]. 2230 [People v. Dadulla, G.R. No. 172321
2. The amount of exemplary damage (2011)].
need not be pleaded in the complaint
because the same cannot be proved. It In Rape Cases
is merely incidental or dependent upon Being corrective in nature, exemplary
what the court may award as damages, therefore, can be awarded, not only
compensatory damages. in the presence of an aggravating
Exemplary damages are imposed not to enrich circumstance, but also where the
one party or impoverish another but to serve as circumstances of the case show the highly
a deterrent against or as a negative incentive reprehensible or outrageous conduct of the
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offender. As in this case, where the offender court may consider the question of whether or not
sexually assaulted a pregnant married woman, exemplary damages should be awarded. In case
the offender has shown moral corruption, liquidated damages have been agreed upon,
perversity, and wickedness. He has grievously although no proof of loss is necessary in order that
wronged the institution of marriage. The such liquidated damages may be recovered,
nevertheless, before the court may consider the
imposition then of exemplary damages by way
question of granting exemplary in addition to the
of example to deter others from committing liquidated damages, the plaintiff must show that he
similar acts or for correction for the public good would be entitled to moral, temperate or
is warranted [People v. Alfredo, G.R. No. compensatory damages were it not for the
188560 (2010)]. stipulation for liquidated damages.

In quasi-delicts
Article 2235, Civil Code. A stipulation whereby
Article 2231, Civil Code. In quasi-delicts, exemplary damages are renounced in advance
exemplary damages may be granted if the shall be null and void.
defendant acted with gross negligence.

Requirements for an award of exemplary

While Article 2231 provides that for quasi- damages [Francisco v. Ferrer, G.R. No.
delicts, exemplary damages may be granted if 142029 (2001)]:
the defendant acted with gross negligence, 1. They may be imposed by way of example in
with more reason is its imposition justified addition to compensatory damages, and
when the act performed is deliberate, malicious only after the claimant's right to them has
and tainted with bad faith [Globe Mackay v. CA, been established;
G.R. No. 81262 (1989)]. 2. They cannot be recovered as a matter of
right; their determination depends upon the
In contracts and quasi-contracts amount of compensatory damages that may
Article 2232, Civil Code. In contracts and quasi- be awarded to the claimant;
contracts, the court may award exemplary 3. The act must be accompanied by bad faith
damages if the defendant acted in a wanton, or done in a wanton, fraudulent, oppressive
fraudulent, reckless, oppressive, or malevolent or malevolent manner.
manner.

C. Miscellaneous Rules
The Court held that the airline’s disrespectful
and unhelpful treatment of Andion amounted to
1. Damages that cannot co-exist
bad faith. Andion was awarded exemplary
damages under Art. 2232 [Singapore Airlines Nominal with other damages
v. Fernandez, G.R. No. 142305 (2003)]. Article 2223, Civil Code. The adjudication of
nominal damages shall preclude further contest
Exemplary damages may be awarded to serve upon the right involved and all accessory questions,
as between the parties to the suit, or their
as a deterrent to those who, like Arco, use respective heirs and assigns.
fraudulent means to evade their liabilities [Arco
Pulp and Paper Co., Inc. v. Lim, G.R. No.
206806 (2014)]. Nominal damages are incompatible with
temperate and exemplary damages.
b. Requisites
Nominal damages cannot co-exist with actual
Article 2233, Civil Code. Exemplary damages
or compensatory damages [Armovit v. CA,
cannot be recovered as a matter of right; the court
will decide whether or not they should be G.R. No. 88561 (1990)].
adjudicated.
Actual and liquidated
Article 2226, Civil Code. Liquidated damages are
Article 2234, Civil Code. While the amount of the those agreed upon by the parties to a contract, to
exemplary damages need not be proved, the be paid in case of breach thereof.
plaintiff must show that he is entitled to moral,
temperate or compensatory damages before the

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2. Damages that must co-exist These are the damages that are usually
Exemplary with moral, temperate, increased or decreased by the court depending
liquidated or compensatory on the attendant circumstances according to
There was no legal basis for the award of [People v. Jugueta, G.R. No. 202124 (2016)].
exemplary damages since the private
respondent was not entitled to moral, 1. Civil Indemnity
temperate, or compensatory damages and It is the indemnity authorized in criminal law for
there was no agreement on stipulated the offended party, in the amount authorized by
damages [Scott Consultants & Resource the prevailing judicial policy and is set apart
Development Corp. v. CA, G.R. No. 112916 from other proven actual damages.
(1995)].
This award stems from Art. 100 of the RPC
3. Damages that must stand alone which states that "Every person criminally
liable for a felony is also civilly liable.”
Nominal damages
Article 2223, Civil Code. The adjudication of It is technically, not a penalty or a fine; hence,
nominal damages shall preclude further contest it can be increased by the Court when
upon the right involved and all accessory questions,
as between the parties to the suit, or their
appropriate.
respective heirs and assigns.
2. Moral Damages
Compensatory damages awarded for mental
D. Graduation of Damages pain and suffering or mental anguish resulting
from a wrong.
1. Duty of Injured Party
They may also be considered and allowed "for
Article 2203, Civil Code. The party suffering loss
or injury must exercise the diligence of a good resulting pain and suffering, and for
father of a family to minimize the damages resulting humiliation, indignity, and vexation suffered by
from the act or omission in question. the plaintiff as result of his or her assailant's
conduct, as well as the factors of provocation,
the reasonableness of the force used, the
This clearly obligates the injured party to
attendant humiliating circumstances, the sex of
undertake measures that will alleviate and not
the victim, [and] mental distress.”
aggravate his condition after the infliction of the
injury, and places upon him the burden of
The award of moral damages is aimed at a
explaining why he could not do so [Chua v.
restoration, within the limits possible, of the
Colorite Marketing Corporation, G.R. No.
spiritual status quo ante; and therefore, it must
193969-193970 (2017)].
be proportionate to the suffering inflicted
[Lambert v. Heirs of Rey Castillon, G.R. No.
Principle: A party cannot recover damages
160709 (2005)].
flowing from consequences which the party
could have reasonably avoided.
Art. 2220 does not fix the amount of damages
that can be awarded. It is discretionary upon
2. Rules the court, depending on the mental anguish or
a. In Crimes the suffering of the private offended party so
Article 2204, Civil Code. In crimes, the damages long as it does not exceed the award of civil
to be adjudicated may be respectively increased or indemnity.
lessened according to the aggravating or mitigating
circumstances.
3. Exemplary damages
Also known as "punitive" or "vindictive"
Generally, in criminal cases, there are three damages, exemplary or corrective damages
kinds of damages awarded by the Court, are intended to serve as a deterrent to serious
namely: civil indemnity, moral, and exemplary wrong doings, and as a vindication of undue
damages. Actual damages or temperate sufferings and wanton invasion of the rights of
damages may be awarded in some instances.
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an injured or a punishment for those guilty of pecuniary loss although the exact amount was
outrageous conduct. not proved.

It is based on the theory that there should be When no documentary evidence of burial or
compensation for the pain caused by the highly funeral expenses is presented in court, the
reprehensible conduct of the defendant amount of ₱50,000.00 as temperate damages
associated with such circumstances as shall be awarded.
willfulness, wantonness, malice, gross
negligence or recklessness, oppression, insult Amount of Civil Indemnity, Moral
or fraud or gross fraud that intensifies the Damages, and Exemplary Damages to be
injury. paid for the commission of certain crimes
based on People v. Jugueta, G.R. No.
4. Temperate Damages 202124 (2016):
Under Art. 2224 of the Civil Code, temperate (e.g. Civil indemnity = 100,000; Moral damages
damages may be recovered, as it cannot be = 100,000; Exemplary Damages = 100,000)
denied that the heirs of the victims suffered

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Crime Degree of Consummation of Crime

Consummated Frustrated Attempted

I. For those crimes like Murder, Parricide, Serious Intentional Mutilation, Infanticide, and other
crimes involving death of a victim where the penalty consists of indivisible penalties:

1. Where the penalty imposed is ₱100,000.00 ₱75,000.00 ₱50,000.00

death but was reduced to reclusion
perpetua because of RA 9346

2. Where the penalty imposed is ₱75,000.00 ₱50,000.00 ₱25,000.00

reclusion perpetua, other than the
above-mentioned:

II. For Simple Rape/Qualified Rape:

1. Where the penalty imposed is ₱100,000.00 --------- ₱50,000.00

Death but was reduced to reclusion
perpetua because of RA 9346

2. Where the penalty imposed is ₱75,000.00 --------- ₱25,000.00

reclusion perpetua, other than the
above-mentioned:

III. For Complex crimes under Art. 48 of the Revised Penal Code where death, injuries, or sexual
abuse results, the civil indemnity, moral damages and exemplary damages will depend on the
penalty, extent of violence and sexual abuse; and the number of victims where the penalty consists
of indivisible penalties:*

1. Where the penalty imposed is ₱100,000.00 --------- ----------

Death but was reduced to reclusion
perpetua because of RA 9346

2. Where the penalty imposed is ₱75,000.00 --------- ----------

reclusion perpetua, other than the
above-mentioned

*The above Rules apply to every victim who dies as a result of the crime committed. In other complex
crimes where death does not result, like in Forcible Abduction with Rape, the civil indemnity, moral
and exemplary damages depend on the prescribed penalty and the penalty imposed, as the case
may be.

IV. For Special Complex Crimes like Robbery with Homicide Robbery with Rape, Robbery with
Intentional Mutilation, Robbery with Arson, Rape with Homicide, Kidnapping with Murder,
Carnapping with Homicide or Carnapping with Rape, Highway Robbery with Homicide, Qualified
Piracy, Arson with Homicide, Hazing with Death, Rape, Sodomy or Mutilation and other crimes with
death, injuries, and sexual abuse as the composite crimes, where the penalty consists of indivisible
penalties**

1.1 Where the penalty imposed is ₱100,000.00 --------- ----------

Death but was reduced to reclusion
perpetua because of RA 9346

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*In Robbery with Intentional ₱100,000.00 --------- ----------

Mutilation if the penalty imposed is
Death but was reduced to reclusion
perpetua although death did not
occur

1.2 For the victims who suffered ₱75,000.00 --------- ----------

mortal/fatal wounds and could have
died if not for a timely medical
intervention

1.3 For the victims who suffered ₱50,000.00 --------- ----------

non-mortal/non-fatal injuries

2.1 Where the penalty imposed is ₱75,000.00 --------- ----------

reclusion perpetua, other than the
above-mentioned

*In Robbery with Intentional ₱75,000.00 --------- -----------

Mutilation, if the penalty imposed is
reclusion perpetua.

2.2 For the victims who suffered ₱50,000.00 --------- ----------

mortal/fatal wounds and could have
died if not for a timely medical
intervention

2.3 For the victims who suffered ₱25,000.00 --------- ----------

non-mortal/non-fatal injuries:

1. In Robbery with Physical Injuries, the amount of damages shall likewise be dependent on the
nature/severity of the wounds sustained, whether fatal or non-fatal.

2. The above rules do not apply if in the crime of Robbery with Homicide, the robber/s or
perpetrator/s are themselves killed or injured in the incident.

3. Where the component crime is rape, the above rules shall likewise apply, and that for every
additional rape committed, whether against the same victim or other victims, the victims shall be
entitled to the same damages unless the other crimes of rape are treated as separate crimes, in
which case, the damages awarded to simple rape/qualified rape shall apply.

V. In other crimes that result in the death of a victim and the penalty consists of divisible penalties

1. Homicide, Infanticide to conceal ₱50,000.00 ₱30,000.00 ₱20,000.00

the dishonor of the offender, Duel,
Intentional Abortion and
Unintentional Abortion, etc.

Note: The amount indicated here is

for the payment of civil indemnity
and moral damages only. No
exemplary damages are awarded in
these cases.

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2. Crimes where there are no stages ₱50,000.00 --------- ----------

such as Reckless Imprudence and
Death under tumultuous affray

3. If an aggravating circumstance ₱50,000.00 ₱30,000.00 ₱20,000.00

was proven during the trial, even if
not alleged in the Information,
exemplary damages are to be
awarded in the following manner, in
addition to civil indemnity and moral
damages in V.1.:

VI. In the crime of Rebellion

1. Where the imposable penalty is ₱100,000.00 --------- ----------

reclusion perpetua and death
occurs in the course of the rebellion,
the amount the heirs of those who
died are entitled

1.1 For the victims who suffered ₱75,000.00 --------- ----------

mortal/fatal wounds in the course of
the rebellion and could have died if
not for a timely medical intervention

1.2 For the victims who suffered ₱50,000.00 --------- ----------

non-mortal/non-fatal injuries

VII. In all of the above instances, when no documentary evidence of burial or funeral expenses is
presented in court, the amount of ₱50,000.00 as temperate damages shall be awarded.

5. In case of death be fixed by the court;

a. Death by Crime or Quasi-Delict 3. The spouse, legitimate and illegitimate
descendants and ascendants of the deceased
Article 2206, Civil Code. The amount of damages
may demand moral damages for mental
for death caused by a crime or quasi-delict shall be
anguish by reason of the death of the
at least three thousand pesos, even though there
deceased.
may have been mitigating circumstances. In
addition:
1. The defendant shall be liable for the loss of the In death caused by breach of conduct by a
earning capacity of the deceased, and the
indemnity shall be paid to the heirs of the latter;
common crime
such indemnity shall in every case be assessed When death occurs as a result of a crime, the
and awarded by the court, unless the deceased heirs of the deceased are entitled to the
on account of permanent physical disability not following items of damages:
caused by the defendant, had no earning 1. Indemnity for the loss of earning capacity of
capacity at the time of his death; the deceased — an amount to be fixed by
2. If the deceased was obliged to give support
according to the provisions of Article 291, the the Court according to the circumstances of
recipient who is not an heir called to the the deceased related to his actual income at
decedent's inheritance by the law of testate or the time of death and his probable life
intestate succession, may demand support expectancy, the said indemnity to be
from the person causing the death, for a period assessed and awarded by the court as a
not exceeding five years, the exact duration to matter of duty, unless the deceased had no
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 earning capacity at said time on account of b. Civil or Death indemnity.
permanent disability not caused by the Mere commission of the crime shall entitle the
accused. heirs of the deceased to such damages.

If the deceased was obliged to give support, In Rape Cases

under Art. 291, Civil Code, the recipient who Civil indemnity, in the nature of actual and
is not an heir, may demand support from the compensatory damages, is mandatory upon
accused for not more than five years, the the finding of the fact of rape [People v.
exact duration to be fixed by the court; Astrologo, G.R. No. 169873 (2007)].
2. Moral damages for mental anguish, — an
amount to be fixed by the court. This may The Court explained that the principal
be recovered even by the illegitimate consideration for the award of damages is not
descendants and ascendants of the the public penalty imposed upon the offender,
deceased; but based on the heinousness of the offense
3. Exemplary damages, when the crime is of a crime against chastity [People v. Apattad,
attended by one or more aggravating G.R. No. 193188 (2011)].
circumstances, — an amount to be fixed in
the discretion of the court, the same to be Even though the qualifying circumstance of
considered separate from fines; minority was not alleged in the information for
4. Attorney's fees and expenses of litigation, rape, the court may still award civil indemnity.
— the actual amount thereof (but only when The Court held that the designation of the
a separate civil action to recover civil liability offense only affects criminal liability, and not
has been filed or when exemplary damages civil liability because civil liability is for the
are awarded); benefit of the injured party [People v.
5. Interests in the proper cases. Bartolini, G.R. No. 179498 (2010)].
[Heirs of Raymundo Castro v. Bustos, G.R. No.
L-25913 (1969)]

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CIVIL LAW
PROPERTY CIVIL LAW
I. CLASSIFICATION OF b. Immovables by Incorporation
Movables but are attached to an immovable in
PROPERTY such a way as to be an integral part [Pars. 2, 3,
and 7, Art. 415, Civil Code] [TEF]
A. Based on Mobility [Immovable 1. Trees, plants, and growing fruits while
they are attached to the land or form an
or Movable] integral part of an immovable [Art. 415(2),
Civil Code]
1. Real or Immovable Property [Art.
415, Civil Code] 2. Everything attached to an immovable in
a. Immovables by Nature a fixed manner, in such a way that it cannot
Cannot be moved from place to place; their be separated therefrom without breaking
intrinsic qualities have no utility except in a the material or deterioration of the object
fixed place [Pars. 1 and 8, Art. 415, Civil Code] [Art. 415 (3), Civil Code]
[LBCR-MQS]
Note: The Code does not require that the
1. Lands, Buildings, Roads, and attachment or incorporation be made by the
Constructions of all kinds adhered to the owner of the land, the only criterion being
soil [Art. 415 (1), Civil Code] the union or incorporation with the soil
[Navarro v. Pineda, G.R. No. L-18456
The dismissal of the complaint was proper. (1963)].
A house is classified as immovable property
by reason of its adherence to the soil on 3. Fertilizer actually used on a piece of land
which it is built [Art. 415 (1), Civil Code]. This [Art. 415 (7), Civil Code]
classification holds true regardless of the
fact that the house may be situated on land c. Immovables by Destination
belonging to a different owner. But once the Essentially movables, but partake of the nature
house is demolished, as in this case, it of an immovable because of the purpose for
ceases to exist as such and hence its which they have been placed in an immovable
character as an immovable likewise ceases [Pars. 4, 5, 6, and 9, Art. 415, Civil Code]
[Bicerra v. Teneza, G.R. No. L-16218 [OMAD]
(1962)].
1. Statutes, reliefs, paintings or other
Art. 415 enumerates lands and buildings objects for use or Ornamentation [Art.
separately. This can only mean that a 415, (4), Civil Code]
building, by itself, is considered an
immovable [Soriano v. Spouses Galit, G.R. Requisites:
No. 156295 (2003)]. a. The objects must be placed in the
immovable by the owner of the latter; and
The inclusion of the building, separate and
distinct from the land, in the enumeration of Note: If placed by a person other than the
what may constitute real properties [Art. owner (e.g. lessee, usufructuary), they
415, Civil Code] could only mean one thing must be acting as the agent of the owner.
— that a building is by itself an immovable Otherwise, the object will not attain the
property irrespective of whether or not character of an immovable [De Leon;
said structure and the land on which it is Davao Sawmill v. Castillo, G.R. No. L-
adhered to belong to the same 40411 (1935)].
owner [Tumalad v. Vicencio, G.R. No. L-
30173 (1971)]. b. With intention to attach them
permanently even if separation will not
2. Mines, Quarries, and Slag dumps, while involve breakage or injury.
the matter thereof, forms part of the bed,
and waters either running or stagnant [Art. Note: Where the improvement or
415 (8), Civil Code] ornaments placed by the lessee are not
to pass to the owner at the expiration of

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the lease, they remain movables for Note: The moment the machinery, etc.
chattel mortgage purposes [Davao are no longer used or needed in the
Sawmill v. Castillo, G.R. No. L-40411 industry, they revert to being movables
(1935)]. [De Leon].

The Chattel Mortgage Law was repealed If they are still needed in the industry,
by the Personal Property Security Act they continue to be immovable
(PPSA). although temporarily separated from
the tenement [De Leon].
2. Machinery, receptacles, instruments, or
implements intended by the owner of the 3. Animal houses, etc. or breeding places
tenement for an industry or works which of similar nature, and the animals in
may be carried on in a building or on a piece these places [Art. 415 (6), Civil Code]
of land and which tend to directly meet the
needs of the said industry or works [Art. 415 Requisites:
(5), Civil Code] a. Placed by the owner or the tenant as the
owner’s agent;
Note: These machinery, etc. need not be b. With the intention to have them
attached to an immovable. Their immovable permanently attached to the land; and
character depends upon their use in the c. Forming a permanent part of the land
industry or works carried on in a building [Art. 415 (6), Civil Code]
or on a piece of land [De Leon].
4. Docks, and structures which, although
e.g.: Machineries of breweries used in the floating, are intended by their nature to
manufacture of liquor and soft drinks, remain at a fixed place on a river, lake, or
though movable in nature, are immobilized coast [Art. 415 (9), Civil Code] (e.g. power
because they are essential to said barges [FELS Energy v. The Province of
industries [Mindanao Bus Co. v. City Batangas, G.R. No. 168557 (2007)]
Assessor and Treasurer, G.R. No. L-17870
(1962)]. Note: Vessels are considered as movables,
although they partake the nature of real
Requisites: property, in view of its importance in the
a. The machinery, etc. must be placed by world of commerce [Rubiso v. Rivera, G.R.
the owner of the tenement or his agent; No. L-11407 (1917)]
b. The industry or works must be carried on
in a building or on a piece of land; and d. By Analogy
c. The machinery, etc. must tend directly to Contracts for public works, servitude, and other
meet the needs of the said industry or real rights over immovable property (e.g.
works (must also be essential to the usufruct of real property for a period of 1 year,
business) [De Leon; Mindanao Bus Co. and registered) [Art. 415 (10), Civil Code]
v. City Assessor, G.R. No. L-17870
(1962)]. 2. Personal or Movable [Arts. 416 and
417, Civil Code]
Examples: a. Everything not included in Art. 415 (by
a. Gasoline station equipment and exclusion);
machinery – without these, the gas b. All things that can be transported from
station would be useless [Caltex one place to another without substantial
(Philippines) Inc. v. Central Board of injury to the immovable to which it is
Assessment Appeals, G.R. No. L-50466 attached, unless it is expressly included in
(1982)]. Art. 415 [De Leon];
b. Machines for chocolate-making industry c. Real property by any special provision of
[Serg's Products, Inc. v. PCI Leasing and law is considered a movable;
Finance, Inc., G.R. No. 137705 (2000)] d. Forces of nature brought under the
c. Sawmill machineries in a sawmill control of science (e.g. electricity, gas,
company [Ago v. Court of Appeals, G.R. heat, oxygen)
No. L-17898 (1962)]
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e. Obligations and actions which have for first in good faith possession shall be
their object movables or demandable sums the owner. If there is no registration
(i.e. any credit) and no possessor in good faith, then
f. Shares of stocks of agricultural, the one with the oldest title in good
commercial, and industrial entities, although faith shall be the owner.
they may have real estate (e.g. stock 2. Movables: The first person who
certificates of a corporation) takes possession in good faith shall
g. Other Movables be the owner [Art. 1544, Civil Code].
1. Cultural properties like old buildings, j. Taxation – whether the property would
shrines, documents considered be subjected to real estate taxes
antiques, relic, or artifacts, etc. [RA 4846
or “Cultural Properties Preservation Act,” B. Based on Ownership/ Rights-
as amended by PD 374]
2. A concession granted to a private person Holder
with the right of usufruct in a building
erected on a lot belonging to the Property is either of:
municipality is personal property [Tufexis 1. Public dominion; or
v. Olaguera, G.R. No. 9865 (1915)] 2. Private ownership [Art. 419, Civil Code].

Note: Churches and other consecrated objects

3. Importance and Significance of
are outside the commerce of man; they are
Classification under the Civil Code considered neither public nor private property
a. In the determination of the offenses [Tolentino; Barlin v. Ramirez, G.R. No. L-2832
committed (e.g. Arts. 293, 308, and 312, (1906)].
Revised Penal Code)
b. In the form of contracts
1. Public Dominion
1. (e.g., REM, Antichresis, Pledge)
Property of public dominion is outside the
2. Donations of real property must be in
commerce of man [Republic v. Pasig Rizal Co.,
a public instrument to be valid [Art.
Inc., G.R. No. 213207 (2022)]. As such:
749, Civil Code]. However, a donation
a. It is not alienable or disposable;
of a movable may be done orally or in
b. It is not subject to registration under PD
writing, unless the value of the
1529 (Property Registration Decree) and
movable exceeds five thousand
cannot be the subject of a Torrens title;
pesos [Art. 748, Civil Code].
c. It is not susceptible to prescription;
c. For acquisitive prescription
d. It cannot be leased, sold, or otherwise be
d. Actions for recovery of possession
the object of a contract;
(discussed under Ownership)
e. It is not subject to attachment and
e. Determination of proper venue of
execution; and
actions; Real Actions v. Personal Actions
f. It cannot be burdened by any voluntary
[Secs. 1-2, Rule 4, Rules of Court]
easements [Alolino v. Flores, G.R. No.
f. Determination of governing law (Private
198774 (2016)].
International law; Note: distinction is
unimportant for property situated in the
Philippines) [Art. 16, Civil Code] Public As enumerated by Art. 420,
g. For transactions involving real property, Dominion Civil Code
the same must be recorded in the
Registry of Property to affect third All lands of the public
persons domain, waters, minerals,
h. Preference of credits (Note: Only coal, petroleum, and other
applicable in insolvency proceedings mineral oils, all forces of
[Art. 2242, Civil Code] Public potential energy, fisheries,
i. Double sales – Domain forests or timber, wildlife,
1. Immovables: the first one to register flora and fauna, and other
in good faith the sale to him of natural resources are owned
immovable property shall be the by the State. With the
owner. If there is no registration the exception of agricultural

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contracts or agreements [Republic v. Pasig
lands, all other natural
Rizal Co., supra].
resources shall not be
alienated [Sec. 2, Art. XII,
Conversion of Property of Public
1987 Constitution].
Dominion for Public Use to Patrimonial
Public Land Act, Section 2 Property
Public provides that the statute Property of public dominion, when no longer
Lands applies to lands of the public intended for public use or for public
domain. service, shall form part of the patrimonial
property of the State [Art. 422, Civil Code].

Classifications There must be an express declaration by the

Administered by the State [Art. 420, Civil State, either by Congress or by the President,
Code] if the power was provided by law, that the
a. Those intended for public use. (e.g. roads, property was converted into patrimonial
canals, rivers, torrents, ports and bridges property, even though it was classified as
constructed by the State, banks, shores, alienable or disposable [Heirs of Malabanan v.
roadsteads, and others of similar character) Republic, G.R. No. 179987 (2009)].

b. Those which belong to the State, without The fact that the Roppongi site has not been
being for public use, and are intended for used for a long time for actual Embassy
some public service service does not automatically convert it to
patrimonial property. Any such conversion
Note: May be used only by authorized happens only if the property is withdrawn from
persons but exists for the benefit of all. (e.g., public use [Laurel v. Garcia, G.R. No. 92013
fortresses, unleased mines, and civil (1990) citing Cebu Oxygen and Acetylene Co.
buildings) v. Bercilles, G.R. No. L-40474 (1975)].

c. Those for the development of the national Administered by Municipal Corporations

wealth (includes natural resources such as [Art. 424 (1), Civil Code]
minerals, coal, oil and forests). a. Property for public use, in the provinces,
cities, and municipalities, consist of the
Patrimonial Property [Art. 421, Civil Code] provincial roads, city streets, municipal
Patrimonial property is held by the State in its streets, the squares, fountains, public
private capacity to attain economic ends waters, promenades, and public works for
[Republic v. Pasig Rizal Co., Inc., G.R. No. public service paid for by said provinces,
213207 (2022)]. These include properties cities, or municipalities.
owned by State which are not of the character b. Patrimonial property of Municipal
stated under Art. 420 of the Civil Code [Art. Corporations:
421, Civil Code] and property of the public 1. All other property possessed by any of
dominion that are no longer intended for public them (provinces, cities, and
use or for public service [Art. 422, Civil Code]. municipalities) [Art. 424 (2), Civil Code]
2. The province or municipality, as a
Note: There must be an express declaration by juridical entity, also possesses private
the State that the public dominion property is property to answer for its economic
no longer intended for public service; the necessities.
development of the national wealth; or that the 3. General Rule: In the absence of a title
property has been converted into patrimonial deed to any land claimed by the City of
[Republic v. Pasig Rizal Co., Inc., supra]. Manila as its own, showing that it was
acquired with its private or corporate
Note: Being private in nature, patrimonial funds, the presumption is that such land
property is subject to alienation and disposition came from the State upon the creation of
in the same way as properties owned by private the municipality [Salas v. Jarencio, G.R.
individuals, and may thus be subject to No. L-29788 (1972)]. Such property is
prescription and be the object of ordinary held in trust for the State for the benefit

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of its inhabitants [Sangguniang Private Land Converted to Property of
Panlalawigan of Bataan v. Garcia, Jr., Public Dominion Through Abandonment
G.R. No. 174964 (2016)] and Reclamation
Through the gradual encroachment or erosion
Exception: Those acquired with its own funds by the ebb and flow of the tide, private property
in its private or corporate capacity will be under may become public if the owner appears to
the ownership and control of the political have abandoned the land, and permitted it to
subdivision [Sangguniang Panlalawigan of be totally eaten up by the sea so as to become
Bataan v. Garcia, Jr., supra]. A municipal part of the shore. The land having disappeared
corporation must prove that they acquired the on account of the gradual erosion in case of
land with their own corporate funds [Salas v. natural expropriation, and having remained
Jarencio, supra]. submerged until they were reclaimed by the
government, they are public land [Government
Note: The Local Government Code classifies v. Cabangis, G.R. No. L-28379 (1929)].
property of LGUs into:
a. Property of LGU in its governmental 3. Based on Consumability
character, which is broader than Art. 424 of Only applies to movable property and is
the Civil Code; and determined by nature [Art. 418, Civil Code]
b. Property of LGU in its proprietary character. a. Consumable goods: movables which
cannot be used in a manner appropriate
2. Private Ownership without their being consumed.
Refers to all property belonging to private b. Non-consumable goods: all those
persons and those belonging to the State and excluded in the first category.
its political subdivisions that are patrimonial in
nature [De Leon]. 4. Based on Susceptibility to
Substitution
Kinds Only applies to movable property and is
a. Patrimonial property – Property owned by determined by the intention of the parties
the State and its political subdivisions in a. Fungibles: Those which belong to a
their private capacity, and all property of the common genus which includes several
State not included in Art. 420 of the Civil species of the same kind, perfectly
Code [Arts. 421-424, Civil Code] permitting substitution of one by the others,
b. Property belonging to private persons such as grain, wine, oil, etc. [Tolentino]
either individually or collectively [Art. 425, b. Non-fungibles: Those specifically
Civil Code] determined and cannot be substituted by
others, such as lands, buildings, a horse,
Conversion etc. [Tolentino]. (Note: If the parties agreed
How is alienable Public Land converted to that the same thing be returned, it is not
Private Property through Prescription? fungible) [De Leon].

Alienable public land (Patrimonial property 5. Hidden Treasure

only) held by a possessor – Any hidden and unknown deposit of money,
personally/through predecessors-in-interest, jewelry or other precious objects, the lawful
openly, continuously and exclusively – for 30 ownership of which does not appear [Art. 439,
years is converted to private property by the Civil Code].
mere lapse or completion of the period. The
application for confirmation is a mere formality General Rule: Hidden treasure belongs to the
because land had already been converted, owner of the land, building, or other property on
giving rise to a registrable title [Director of which it is found [Art. 438, Civil Code]
Lands v. IAC, G.R. No. 73002 (1986)].
Exceptions: [Art. 438, Civil Code]
Finder of hidden treasure is entitled to one-half
(1/2) if:
a. Finding is by chance;

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b. Finder is not co-owner of the property where 6. Based on the Constitution
it is found; a. Public Agricultural Land;
c. Finder is not trespasser; b. Mineral Land;
d. Finder is not an agent of landowner; and c. Timber Land;
e. Finder is not owner of the land, building, or d. National Parks.
other property.

If the things found may be of interest to science

or the arts, the State has a right to acquire them
at their just price, which shall be divided in
conformity with the rule stated [Art. 438, Civil
Code].

For purposes of hidden treasure, a

usufructuary is considered a stranger to
property; naked owner gets owner’s share [Art.
566, CC].

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II. OWNERSHIP Forcible Entry
Unlawful
Detainer
A. General Rules
The possession was The possession
already unlawful from was first lawful,
1. Rights of an Owner the time of entry. but became illegal.
a. Right to enjoy and dispose of a thing, (e.g. a lessee
without other limitations than those
refuses to vacate
established by law. the property after
b. Right of action against the holder and the lease contract
possessor of the thing in order to recover it.
has expired)
c. Jus Utendi: right to use and enjoy
d. Jus Fruendi: right to receive the fruits Lawful possessor Possessor refused
e. Jus Abutendi: right to consume a thing by deprived through to vacate upon
use FISTS: demand by owner
f. Jus Disponendi: right to alienate, 1. Force
encumber, transform or even destroy the 2. Intimidation Note: Legal
thing owned 3. Strategy possession (by
g. Jus Vindicandi: right to recover possession 4. Threats, and permission/
of property based on a claim of ownership 5. Stealth tolerance)
h. Jus Possidendi: right to possess the becomes unlawful
property (Implied from all the other rights) upon failure to
i. Jus Accessionis: right to whatever is vacate
attached to the thing in such a way that they
cannot be separated without injury Period to Bring Period to Bring
j. Jus Tresauris: right to hidden treasure Action: 1 year from Action: 1 year
k. Right to Exclude; Doctrine of Self-Help [Art. dispossession (force, from last demand
429, Civil Code] intimidation, threats) or to vacate.
l. Right to enclose or fence [Art. 430, Civil from knowledge of
Code] dispossession
m. Right to receive just compensation in case (strategy, stealth)
of expropriation [Art. 435, Civil Code] but not
if the property seized by competent
authority in the exercise of police power, Accion Publiciana
unless seizure is unjustified. Accion publiciana, also known as accion
n. Right of owner of land to its surface and plenaria de posesion, is an ordinary civil
everything under it, except natural proceeding to determine the better right of
resources - the owner may make any works, possession of realty independently of title.
plantations, and excavations subject to It refers to an ejectment suit filed after the
servitudes and special laws and ordinances expiration of one year from the accrual of the
and reasonable needs of aerial navigation cause of action or from the unlawful
[Art. 437, Civil Code]. withholding of possession of the realty. The
objective of the plaintiffs in accion publiciana is
a. Actions to Recover Ownership and to recover possession only, not ownership.
Possession of Real Property and its However, where the parties raise the issue of
ownership, the courts may pass upon the issue
Distinctions to determine who between or among the
Accion Interdictal / Action for Ejectment parties has the right to possess the property
A summary action for recovery of actual, [Madrid v. Spouses Mapoy, G.R. No. 150887
material or de facto physical possession (2009)].
through an action for forcible entry or unlawful
detainer. It must be filed in the MTC or MeTC Note: Actions for ejectment/accion interdictal
[Sec. 1, Rule 70, Rules of Court]. not filed within one year must be filed as accion
publiciana.

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Accion Reivindicatoria b. Specific Limitations
Accion reivindicatoria seeks the recovery of a. Legal servitudes - Once requisites are
ownership and includes the jus utendi and the satisfied, the servient owner may ask the
jus fruendi brought in the proper regional trial Court to declare the existence of an
court. Accion reivindicatoria is an action easement (e.g. Easement of Right of
whereby plaintiff alleges ownership over a Way, Easement of Light and View etc.)
parcel of land and seeks recovery of its full [Arts. 2191, 677-679, 670, 644, 666,
possession [Spouses Cañezo v. Bautista, G.R. 684-687, 676, 649, 637, 652, Civil Code].
No. 170189 (2010)]. It must be brought in the b. Must not injure the rights of a third
proper regional trial court in an ordinary civil person (Sic Utere Tuo Ut Alienum Non
proceeding [Heirs La Madrid v. Tumaliuan, Laedas) [Art. 431, Civil Code]
G.R. No. 243799 (2021)]. c. Actions in a state of necessity - The
owner of a thing has no right to prohibit
Requisites for Accion Reivindicatoria the interference of another with the
1. The property must be identified; and same, if the interference is necessary to
2. The plaintiff must rely on the strength of his avert an imminent danger and the
title (E incumbit probatio qui dicit, non qui threatened damage, compared to the
negat – “He who asserts, not he who damage arising to the owner from the
denies, must prove”) [Art. 434, Civil Code]. interference, is much greater. The owner
may demand from the person benefited,
b. Actions to Recover Movable Property indemnity for the damage to him [Art.
For manual delivery of movable property, for 432, Civil Code].
either ownership or possession. The party d. Nuisance - A nuisance is any act,
praying for the recovery of the possession may, omission, establishment, business,
at the commencement of the action or at any condition of property, or anything else
time before such action, apply for an order for which:
the delivery of such property to him [Sec. 1, 1. injures or endangers the health or
Rule 60, Rules of Court]. safety of others;
2. annoys or offends the senses;
The applicant must show the following: 3. shocks, defies or disregards decency
1. That the applicant is the owner of the or morality;
property claimed or that he is entitled to its 4. obstructs or interferes with the free
possession; passage of any public highway or
2. Particular description of the property street, or any body of water; or
claimed; 5. hinders or impairs the use of property
3. That the property is wrongfully detained [Art. 694, Civil Code].
by the adverse party, alleging the cause of e. Limitations imposed by the owner
detention thereof to the best of his himself (e.g. voluntary easements) are
knowledge, information, and belief; valid, provided they are not contrary to
4. That the property has not been distrained law)
or taken for tax assessment or a fine f. Limitations imposed by the party
pursuant to law, or seized under a writ of transmitting the property either by the
execution or preliminary attachment, or contract or will (e.g. onerous donations
otherwise placed under custodia legis. or easement constituted when dividing
5. If the property is so seized, the applicant one property)
must show that it is exempt from the
seizure; and B. Rules on Accession
6. The actual market value of the property
[Sec. 2, Rule 60, Rules of Court]. 1. For Immovables
a. Accession Discreta
2. Limitations on Ownership To the owner belongs [NIC]:
a. General Limitations 1. Natural fruits;
a. Taxation 2. Industrial Fruits; and
b. Eminent Domain 3. Civil fruits [Art. 441, Civil Code].
c. Police power
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General Rule: To the owner of the principal Note: But if owner recovers land from
belongs the natural, industrial, and civil fruits. possessor in bad faith, he may choose to
acquire the land and he can make the
Exceptions: possessor, builder, planter, sower
1. Possession in good faith – The possessor account for the fruits that have been
is entitled to the fruits received before the gathered, with the obligation to deduct
possession is legally interrupted [Arts. 526 the expenses for producing, harvesting
and 544, Civil Code] and preservation of the fruits.
2. Usufruct – Fruits belong to the usufructuary
[Art. 566, Civil Code] b. Accession Continua
3. Lease – Fruits belong to the lessee in civil Right pertaining to the owner of a thing over
law lease of agricultural land [Art. 1680, Civil everything that is incorporated or attached
Code]. The lessors receive the rentals as thereto either naturally or artificially (by
civil fruits. external forces) [Art. 440, Civil Code].
4. Antichresis [Art. 2132, Civil Code]
Artificially or Industrially Incorporated
Kinds of Fruits [NIC] [Arts. 445-456, Civil Code]
1. Natural – Spontaneous products of the soil Building, planting, or sowing on land owned by
and the young and other products of another.
animals [Art. 442(1), Civil Code]. Partus
sequitur ventrem: To the owner of female General Rule: Whatever is built, planted, or
animals would also belong the young of sown on the land of another and the
such animals although this cannot apply improvements or repairs made thereon,
when the owner mixes his cattle with those belong to the owner of the land, subject to the
of another and they interbreed, thus co- provisions of the Code with regard to a builder,
ownership is applied [Siari Valley Estate v. planter, and sower in bad faith [Art. 445, Civil
Lucasan, G.R. No. L-13281 (1960)]. Code].
2. Industrial – Fruits produced by the lands of
any kind through cultivation or labor [Art. Presumptions
442 (2), Civil Code] 1. All works, sowing and planting are
3. Civil – Rents of buildings, price of leases of presumed made by the owner and at his
lands, and other property and the amount of expense, unless the contrary is proved [Art.
perpetual or life annuities or other similar 446, Civil Code].
income [Art. 442 (3), Civil Code] 2. The party in bad faith is always liable for
damages [Art. 447, Civil Code].
Principles Applicable to Accession Discreta 3. When both parties are in bad faith, they are
1. Time of accrual depending on kind considered to be in good faith [Art. 453, Civil
a. Annuals: from the time seedlings Code].
appear on the ground. 4. The owner of the principal thing owns the
b. Perennials: from the time fruits actually natural, industrial and civil fruits, except
appear on the plants. when the following persons exist:
c. Young of animals: from the time they a. Possessor in Good Faith [Art. 526, Civil
are in the womb, although unborn – Code]
beginning of maximum ordinary period of b. Usufructuary [Art. 544, Civil Code]
gestation. c. Lessee [Art. 1680, Civil Code]
d. Fowls: from the time of incubation. d. Antichretic creditor [Art. 2132, Civil
2. Pay expenses to third person possessor Code]
in good faith - He who receives the fruits
has the obligation to pay the expenses Good Faith
incurred by a third person in the production, On the Part of the Builder
gathering and preservation of the fruits [Art. To be deemed a builder in good faith, it is
443, Civil Code]. essential that a person:
a. Exception: Owner does not have to pay 1. asserts title to the land on which he builds,
if land is recovered before gathering from i.e., that he be a possessor in the concept
a possessor in bad faith. of owner; and

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2. is unaware that there exists in his title or
mode of acquisition any flaw which
invalidates it [Princess Rachel Development
Corporation v. Hillview Marketing
Corporation, G.R. No. 222482 (2020)].

Bad Faith
On the Part of the Landowner
If the building, planting or sowing was done
with his knowledge and without opposition
on his part [Art. 453 (2), Civil Code].

On the Part of the Owner of Materials

If the materials were used with his knowledge
and without opposition on his part [De Leon].

On the Part of the Builder, Planter, and

Sower (BPS)
One who has knowledge of any flaw or defect
in his title or mode if acquisition [Art. 526, Civil
Code]

He is a possessor in bad faith if at the time he

built, planted, or sowed he knew that:
1. He does not have title to the land (and thus
does not have the right to build thereon); or
2. He has no permission to build, plant, or sow
on the land which he possesses but does
not own.

Note: Bad faith leads to liability for damages

and the loss of the works or the improvement
without right to indemnity [Art. 449, Civil Code].

If both parties are in bad faith, then treat them

as if they are both in good faith [Art. 453 (1),
Civil Code].

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Rules (see end of Section for Summary of Rules)
1. Case where the landowner differs from the owner of materials [Art. 447, Civil Code]

Situation #1: Both the landowner (LO) and the owner of materials (OM) are in Good Faith (GF)
Rights: Shall own what is built, planted, or sown (materials/ improvements).
[Accessio cedit principali: the accessory follows the principal]
LO in GF
Liabilities: shall pay for the value of the materials (no one shall be unjustly
enriched at the expense of another)

Rights:
1. Limited right of removal (can only be resorted to if no injury can be
OM in GF
inflicted on the work constructed); or
2. Right to reimbursement for the value of materials.

Situation #2: Both the LO and OM are in Bad Faith (BF)

Parties will be treated as though both acted in GF [Art. 453, Civil Code].
Both LO and
OM in BF

Situation #3: LO in BF, while OM in GF

Rights: To own what is built, planted, or sown (materials /improvements).

Liabilities: shall pay for:

LO in BF 1. Value of materials; and
2. Damages.

Note: This is subject to OM’s absolute right of removal.

Rights:
1. Absolute right of removal (may be removed even if there will be injury) [Art.
OM in GF 447, Civil Code]; or
2. Right to reimbursement for the value of materials.
3. Right to damages in either case

Situation #4: LO in GF, while OM in BF

Right to acquire the improvements without paying indemnity.
LO in GF

Liable for any consequential damages without right of removal whether or not injury
OM in BF would be caused [De Leon].

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2. BPS Rules: Cases where one builds, plants, or sows on land owned by another (BPS v. LO)
[Arts. 448-454, Civil Code]

Situation #1: Builder, planter, or sower (BPS) in Good Faith (GF) [Art. 448, Civil Code]
Options:
Landowner 1. Acquire improvements after paying BPS for their value; or
[Art. 446, 2. Oblige the one who built or planted to pay the price of the land unless
Civil Code] its value is considerably more than that of the building or trees, and the
one who sowed, the proper rent.
Note: Option
is given solely If the value is considerably more, then the court can force the parties to
to LO, GF of enter into a forced lease [Art. 448, Civil Code].
BPS is
immaterial Note: The difference between a builder and a sower.

1. Generally, has right to reimbursement for the improvement.

2. Pending LO’s payment, has right to retention of the land (during this
period, BPS is not required to pay rent).
3. Whatever fruits (rents) he receives during the period of retention must be
deducted from whatever indemnity is due to him; and in case it exceeds
BPS in GF
the value of the indemnity, the excess shall be returned to the owner of the
land [De Leon, citing Mendoza v. De Guzman, G.R. No. L-28721 (1928)].

Note: Right to reimbursement is available if the LO exercises the right to acquire

the improvements [option 1]

Note: The builder in good faith can compel the landowner to make a choice between appropriating the
building by paying the proper indemnity or obliging the builder to pay the price of the land. The choice
belongs to the owner of the land.

The landowner cannot, for instance, compel the owner of the building to remove the building from the
land without first exercising either option. It is only if the owner chooses to sell his land, and the builder
or planter fails to purchase it where its value is not more than the value of the improvements, that the
owner may remove the improvements from the land [Sps. Briones v. Macabagdal, G.R. No. 150666
(2010)].

Note: In every case, the BPS is entitled to reimbursement of necessary expenses for the preservation
of the land [Art. 452, Civil Code].

Situation #2: Both the LO and BPS are in BF

Both LO and Parties will be treated as though both acted in GF, so apply Art. 446 [Art. 453,
BPS in BF Civil Code].

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Situation #3: LO in BF, while BPS in GF
1. Must indemnify BPS for the improvements AND pay damages as if he
himself did the BPS.
LO in BF
2. Has no option to sell the land and cannot compel BPS to buy the land
without the latter’s consent.

Rights:
1. Absolute right of removal; OR
BPS in GF 2. Right to reimbursement for the value of materials.

Right to indemnification for damages in either case

Situation #4: LO in GF, while BPS in BF [Arts. 449-451, Civil Code]

Right to collect damages in any case and option to:
1. Acquire improvements without paying indemnity if the improvements
are still standing on the land;
2. Sell the land to BP or collect rent from the sower unless value of the
LO in GF improvements in which case there will be a forced lease; or
3. Order demolition of improvements or restoration of land to its former
condition at the expense of the BPS.

Landowner must still pay for necessary expenses for preservation.

1. Pay damages to landowner.

2. Lose materials without right to indemnity.
BPS in BF
3. No right to refuse to buy the land.
4. Recover necessary expenses for preservation of land.

Situation #5: Both the LO and BPS are in BF

Both LO and Parties will be treated as though both acted in GF, so apply Art. 446 [Art. 453, Civil
BPS in BF Code].

Situation #6: LO in BF, while BPS in GF

1. Must indemnify BPS for the improvements and pay damages as if he
himself did the BPS.
LO in BF
2. Has no option to sell the land and cannot compel BPS to buy the land
without the latter’s consent.

Rights:
1. Absolute right of removal; or
BPS in GF 2. Right to reimbursement for the value of materials

There is a right to indemnification for damages for either case.

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Situation #7: LO in GF, while BPS in BF [Arts. 449-451, Civil Code]
Right to collect damages in any case and option to:
1. Acquire improvements without paying indemnity if the improvements
are still standing on the land;
2. Sell the land to BP or collect rent from the sower unless value of the
LO in GF improvements in which case there will be a forced lease; or
3. Order demolition of improvements or restoration of land to its former
condition at the expense of the BPS.

Landowner must still pay for necessary expenses for preservation.

1. Pay damages to landowner.

2. Lose materials without right to indemnity.
BPS in BF
3. No right to refuse to buy the land.
4. Recover necessary expenses for preservation of land.

3. Case where LO, BPS, and OM are b. The BPS who has paid the OM may seek
different persons [Art. 455, Civil Code] reimbursement from the LO (value of
materials + labor) [Art. 455(2), Civil Code].
Note: If there are 3 parties in BPS, solve the
problem by considering the options open to the Requisites
landowner vis-à-vis BPS depending on their 1. The BPS acted in GF; and
good faith or bad faith; apply Art. 455 on one 2. The LO appropriates the improvement to
who acted in good faith. Art. 455 shall not apply himself.
if the owner makes use of the right granted by
Art. 450. c. If only the OM is in BF, he loses his
materials, as well as his right to indemnity.
General Rules [De Leon] He also becomes liable for damages [Arts.
a. OM in GF is entitled to reimbursement for 449, 451, Civil Code].
the value of the materials used (regardless
of the GF or BF of the LO and/or the BPS). d. If only the BPS acted in BF, he becomes
liable to the OM for the value of the
Primarily, from the BPS. If the BPS be materials plus damages. Should he become
insolvent, then the LO shall be subsidiarily insolvent, the LO shall pay for the value of
liable to the OM [Art. 455 (1), Civil Code]. the materials but he will not be liable for
However, this is not applicable if the owner damages. Additionally, he shall still be liable
makes use of the right granted under Art. to the LO [Arts. 450-451, Civil Code].
450 [Art. 455 (2), Civil Code].
e. If only the LO acted in GF, he can exercise
Requisites for the LO’s Subsidiary any of his options under Arts. 449 and 450,
Liability [Art. 455, Civil Code] both having an additional right to ask for
1. The OM acted in GF; damages [Art. 451, Civil Code]. He shall
2. BPS is insolvent; and also not be subsidiarily liable to the OM.
3. The LO appropriates the accession to
himself. f. If ALL acted in BF, they shall be treated as
though all of them acted in GF [Art. 453,
Civil Code]

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c. Naturally Incorporated [Arts. 457- 192956 & 193032 (2019), citing Republic v.
465, Civil Code] Court of Appeals, G.R. No. 100709 (1997)].

1. Alluvium [Art. 457, Civil Code] 2. Avulsion [Art. 459, Civil Code]
Soil is gradually deposited on banks adjoining A known portion of land is segregated from one
the river. estate by the forceful current of a river, creek
or torrent and transferred to another.
Requisites [GCA]
a. Deposit of soil or sediment is Gradual and Requisites [De Leon] [RCT-AI]
imperceptible; a. The segregation and transfer is caused by
b. As a result of the action of the Currents of the Current of a River, creek, or Torrent;
the waters of the river and should have no b. The segregation and transfer must be
human intervention; and sudden or Abrupt; and
c. Land where the accretion takes place is c. The portion of land transported must be
Adjacent to the banks of the rivers known or Identifiable.
(Riparian Land) [Daclison v. Baytion, G.R.
No. 219811 (2016)]. Effect: The ownership of the detached
property is retained by the owner provided
Note: When deemed to exist: When the that he removes the same within 2 years from
deposit of the sediment has reached a level the detachment [Art. 459, Civil Code].
higher than the highest level of the water
during the year, i.e. higher than the 3. Uprooted Trees [Art. 460, Civil Code]
riverbank [Meneses v. CA, G.R. No. 82220 In case of uprooted trees, the owner retains
(1995)]. ownership if he makes a claim within 6 months.
This refers only to uprooted trees and does not
Effect: Accretions which the banks of rivers include trees which remain planted on a known
may gradually receive from the effect of the portion of land carried by the force of the
current become the property of the owners of waters. In this latter case, the trees are
the banks. It is likewise settled that "an regarded as accessions of the land through
accretion does not automatically become gradual changes in the course of adjoining
registered land just because the lot that stream [Payatas v. Tuazon, G.R. No. L-30067
receives such accretion is covered by a (1929)].
Torrens Title. Ownership of a piece of land is
one thing; registration under the Torrens 4. Change of Course of River [Arts. 461-
system of that ownership is another” [Republic 462, Civil Code]
v. Tongson, Sr., G.R. No. 233304 (2020)]. Requisites:
a. Change in the natural course of the waters
Rationale: To compensate the owners of the of the river;
land from forces of nature and to encourage b. Such change causes the abandonment of
riparian owners to cultivate and enrich the land. the riverbeds; Note: “Natural Bed”: ground
covered by its waters during the highest
What is Not Considered Alluvium [Art. 458, floods [Binalay v. Manalo, G.R. No. 92161
Civil Code] (1991)].
a. Deposits due to human action or c. Such change is sudden or abrupt; and
intervention d. Change is permanent.
b. Deposits due to abrupt or unanticipated
flooding brought about by extreme weather Effects
conditions a. Owners whose lands are occupied by the
c. When the sea moved towards the estate new course of the river automatically (ipso
and the tide invaded it, the invaded facto) become owners of the old bed, in
property became foreshore land and proportion to the area they lost [Art. 461,
passed to the realm of the public domain Civil Code]. Owners of the lands adjoining
[Baguio v. Heirs of Abello, G.R. Nos. the old bed are given the right to acquire the
same by paying the value of the land, not
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exceeding the value of the land invaded by Test of whether a river is navigable: Whether
the new bed (the old property of the owner) it can be used as a highway of commerce,
[Art. 461, Civil Code]. trade and travel [De Leon].
b. The new bed opened by the river on a
private estate shall become of public They belong to the private owner of the
dominion [Art. 462, Civil Code]. separated land if:
a. The current of a river divides itself into
Note: branches, leaving a piece of land or part
a. Where the river simply dries up, the thereof isolated;
abandoned riverbed belongs to the State as b. A portion of land is separated from the
property of the public dominion [Art. 502, estate by the current [Art. 463, Civil Code];
Civil Code]. and
b. Sec. 58 of the Water Code (PD 1067) c. The island is formed in a place not
provides that when a river or stream mentioned in Art. 464.
suddenly changes its course to traverse
private lands, the owners of the affected They Belong to the Owners of the Nearest
lands may not compel the government to Margins or Banks if it is Formed [Art. 465,
restore the river to its former river bed, nor Civil Code]:
can they restrain the government from a. through successive accumulation of alluvial
taking steps to revert the river or stream to deposits; and
its former course. The owners of the land b. on non-navigable and non-floatable rivers.
thus affected are not entitled to
compensation for any damage sustained Note: If the island is in the middle of the river,
thereby. However, the former owners of the divide longitudinally in half. If it is nearer to one
new bed shall be the owners of the margin or bank, to the nearer riparian owner
abandoned bed in proportion to the area lost [Art. 465, Civil Code].
by it.
Note: If a landowner allows the sea or a lake to
5. Division of River into Branches [Art. eat up his land completely, it is a case of
463, Civil Code] natural expropriation and if the land later
Whenever the current of a river divides itself reappears, he does not regain ownership
into branches, leaving a piece of land or part thereof [Republic v. Cabangis, G.R. No. L-
thereof isolated, the owner of the land retains 28379 (1929)].
his ownership and there is no accession. He
also retains it if a portion of land is separated 2. For Movables
from the estate by the current. a. Conjunction/Adjunction [Arts. 466-
471, Civil Code]
6. Formation of Islands [Arts. 464-465, Definition: Union, without bad faith, of two
Civil Code] movable things belonging to different owners in
They belong to the State if [Art. 464, Civil such a way that they form a single object. The
Code]: owner of the principal thing acquires the
a. Formed on the seas within the jurisdiction of accessory after indemnifying the owner of the
the Philippines; latter for its value [Art. 466, Civil Code].
b. Formed on lakes; or
c. Formed on navigable or floatable rivers: General Rule: When the things united can be
1. Capable of affording a channel or separated without injury, their respective
passage for ships and vessels; owners may demand their separation [Art. 469
2. Must be sufficient not only to float bancas (1), Civil Code].
and light boats, but also bigger
watercraft; Exception: The owner of the accessory may
3. Deep enough to allow unobstructed demand the separation of the things united
movements of ships and vessels. even if there will be injury if the accessory is
more precious than the principal thing [Art. 467
and 469 (2), Civil Code].

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Note: Under Art. 469 (2), an accessory is the
453, Civil Code by
thing united with the principal for the latter’s
analogy]
use, embellishment, or perfection.
Either of the Treat owners as if both
Adjunction Owners made the acted in good faith [Art.
The union of two movable things belonging to Incorporation 470 (3), Civil Code]
different owners in such a way that they form a with the
single object, but each of the component Knowledge and
things preserves its value [De Leon]. Without
Objection of the
Requisites [Art. 467, Civil Code; De Leon] Other
1. There are two movables belonging to two
different owners;
2. They are united in such a way that they form Rules in Determination of the Principal
a single object; and Thing [Art. 467-468, Civil Code]
3. They are so inseparable that their 1. That which the other has been united as an
separation would impair their nature or ornament or for its use or perfection
result in substantial injury to the other 2. If it cannot be determined by applying #1,
component. the one with the greater value
3. If the values are equal, the one with greater
Ownership of New Object Formed by volume
Adjunction 4. The thing of greater merits, taking into
consideration all the pertinent legal
Acquires the thing with provisions, as well as the comparative
Owner of
the duty to indemnify the merits, utility and volume of their respective
Principal Object
owner of the accessory things [Manresa].
in Good Faith
[Art. 466, Civil Code]
Note: In painting and sculpture, writings,
The owner of the printed matter, engraving and lithographs, the
accessory has the right to board, metal, stone, canvas, paper or
choose between: parchment shall be deemed the accessory
1. receiving thing [Art. 468 (2), Civil Code].
payment from the
owner of the When Separation Allowed [Art. 469, Civil
principal (value of
Code]
the accessory; or
Owner of 1. When separation will not cause any injury,
2. the accessory be
Principal Object the respective owners can demand
separated even if
in Bad Faith separation; or
it would be
2. When the accessory is more precious than
necessary to
the principal thing, the owner of the
destroy the
accessory may demand separation, even
principal.
though the principal thing may suffer.
There is indemnity for
Note: Owner who caused the union shall bear
damages in either case
the expenses for separation even if he acted in
[Art. 470(2), Civil Code].
good faith.
Has a right to demand
Owner of separation even though b. Commixtion/Confusion [Arts. 472-
Accessory in there may be damage if 473, 475, Civil Code]
Good Faith the accessory is more Definition
valuable 1. Mixture: Two or more things belonging to
different owners are combined with the
By analogy, they are respective identities of the component parts
Both are in Bad destroyed or lost.
treated as if they were
Faith 2. Commixtion: Mixture of solid things
both in good faith [Art.
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3. Confusion: Mixture of liquid things [De 2. Demand indemnity for the material [Art. 474
Leon] (2), Civil Code]

Rules [Arts. 472-473, Civil Code] If the owner of the material was in bad faith,
1. Co-ownership based on proportional the maker in good faith may:
value if caused by: 1. Appropriate the new thing without paying
a. the will of the parties; the owner of the material; or
b. chance, and injury will result if things are 2. Require the owner to pay him the value of
separated; or the thing, his work, or labor, with damages
c. will of only one owner, but in good faith. [Applying Art. 470 (2), Civil Code by
2. If caused by the will of one party in bad analogy; De Leon].
faith:
a. He forfeits the thing belonging to him Worker/Maker in Bad Faith [Art. 474 (3),
b. He must pay damages Civil Code]
3. If the mixture is made with the If the maker was in bad faith, but the owner of
knowledge, but without the objection, of the materials was in good faith, the owner may:
the other owner the parties will be 1. Appropriate the work to himself without
considered as if they acted in good faith [Art. paying the maker
470, Civil Code by analogy; De Leon]. a. Exception: if the value of the work, for
artistic or scientific reasons, is
Note: Good faith in accession does not considerably more than that of the
necessarily exclude negligence, which gives material [in this case, only option 2 is
rise to damages [Art. 456, Civil Code by available]; or
analogy]. 2. Demand the maker to indemnify him for the
value of the material and damages.
c. Specification [Art. 474-475, Civil
Code] Worker/Maker Made Use of Material with
Definition [Art. 474, Civil Code] Consent and Without Objection of Owner
Takes place when the work of a person is done Rights shall be determined as though both
on the material of another, and such material, acted in good faith [Art. 474 (1), Civil Code].
in consequence of the work itself, undergoes a
transformation [De Leon, citing Manresa]. Note: For the right of accession with regards to
moveable property, sentimental value is duly
It is the transformation of another’s material by appreciated [Art. 475, Civil Code].
the application of labor, into a thing of a
different kind.

Example: Turning grapes into wine, flour into

bread [De Leon]

Worker/Maker in Good Faith [Art. 474, Civil

Code]
General Rule: The worker in good faith who
employs the material of another to make a thing
of a different kind appropriates the thing thus
transformed after indemnifying the owner of the
materials for the value of the material [Art. 474
(1), Civil Code].

Exception: If the material is more valuable or

more precious than the new thing, the owner of
the material may:
1. Appropriate the new thing to himself after
paying indemnity for the value of the work;
or

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SUMMARY OF BPS/LO/OM RULES
Builder/Planter/Sower
Landowner (LO) Owner of Materials (OM)
(BPS)

ALL Acted in Good Faith

1. Right to acquire 1. Right of retention until 1. Collect value of

improvements and pay necessary and useful material primarily
indemnity to BPS; expenses are paid from BPS and
subsidiary liability to OM 2. To pay value of subsidiarily to
2. Sell the land to BP materials to OM landowner if BPS is
except if the value of the insolvent; and
land is considerably 2. Limited right of
more; or removal (if the
3. Rent to S removal will not
cause any injury)

LO in GF BPS in GF OM in BF

1. Right to acquire 1. Right of retention until 1. Lose the material

improvements and pay necessary and useful without right to
indemnity to BPS; expenses are paid indemnity
2. Sell land to BP except if 2. Keep improvements 2. Must pay for
the value of the land is without indemnity to damages to BPS
considerably more; or OM and collect
3. Rent to S damages from him

LO in GF BPS in BF OM in BF

1. Right to collect damages Recover necessary expenses 1. Recover from BPS

from BPS in any case for preservation of land from (as if both are in
and the option to either LO unless LO sells land GF)
a. Acquire 2. If BPS acquires
improvements improvements,
w/o paying for remove materials if
indemnity; feasible w/o injury
b. Demolition or 3. No action against
restoration; or LO but may be
c. Sell to BP, or to liable to LO for
rent to sower consequential
2. Pay necessary expenses damages
to BPS

ALL Acted in Bad Faith

Same as when all acted in GF under Art. 453

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Builder/Planter/Sower
Landowner (LO) Owner of Materials (OM)
(BPS)

LO in BF BPS in GF OM in GF

1. Acquire improvement after 1. May remove 1. Remove materials at

paying indemnity and improvements any event
damages to BPS unless the 2. Be indemnified for 2. Collect value of
latter decides to remove damages in any event materials from BPS;
2. Subsidiarily liable to OM for 3. Pay OM the value of the subsidiarily from LO, if
value of materials if he materials LO is made to pay for
acquires improvements and improvements and
pays damages to BPS; no damages
subsidiary liability if BPS
chooses removal in any
event.

LO in BF BPS in BF OM in GF

1. Right to acquire 1. No right of retention 1. Collect value of

improvements and pay 2. Pay value of materials to materials primarily from
indemnity to BPS; OM and pay him BPS and subsidiarily
subsidiarily liable to OM damages from LO if LO acquires
2. Has option to: the improvements
a. Sell the land to BP 2. Collect damages from
except if the value of BPS
the land is 3. Absolute right to
considerably more; or remove materials in
b. Rent to S any event (if BPS
acquires
improvements)

LO in GF BPS in BF OM in GF

LO has right to collect damages 1. Right to necessary 1. Collect value of

from BPS in any case and the expenses materials primarily
option to either: 2. Pay value of from BPS and
1. Acquire improvements materials to OM subsidiarily from LO
w/o paying for indemnity; 3. Pay damages to 2. Collect damages
2. Demolition or OM/LO from BPS
restoration; or 3. If BPS acquires
3. Sell to BP or rent to S improvements,
Pay necessary expenses to BPS absolute right of
removal in any event

LO in BF BPS in GF OM in BF

Acquire improvements and pay 1. Receive indemnity for 1. Right to indemnity

indemnity and damages to BPS damages 2. Loses right to the
unless the latter decides to 2. Absolute right of materials
remove materials removal of
improvements in any
event

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III. CO-OWNERSHIP d. Condominium Law: co-ownership of the
common areas by holders of units [Sec. 6,
RA 4726]
A. Requisites
2. Contract
1. Plurality of owners; a. In general [Art. 494, Civil Code]
2. Object must be an undivided thing or right; b. Universal partnership [Art. 1779, Civil Code]
and c. Associations [Art. 1775, Civil Code]
3. Each co-owner’s right must be limited only
to his ideal or abstract share of the
3. Intestate Succession
physical whole [De Leon].
Co-ownership between the heirs before
partition of the estate [Art. 1078, Civil Code]
What Governs Co-Ownership [Art. 484
(2), Civil Code]
4. Testamentary Disposition or
1. Contracts;
2. Special laws; and Donation Inter Vivos
3. The Civil Code. Donations Made to Several Persons Jointly
a. General Rule: When a donation is made to
Characteristics several persons jointly, it is understood to
1. There are 2 or more co-owners. be in equal shares, and there shall be no
2. There is a single object which is not right of accretion among them,
materially or physically divided and his b. Exception: The donor has otherwise
ideal share of the whole. provided [Art. 753, Civil Code].
3. There is no mutual representation by the
co- owners. Donations Made to Spouses Jointly
4. It exists for the common enjoyment of the a. General Rule: In donations to spouses
co- owners. jointly, right of accretion is presumed
5. It has no distinct legal personality. b. Exception: The donor provides otherwise
6. It is governed first of all by the contract of [Art. 753 (2), Civil Code]
the parties; otherwise, by special legal
provisions, and in default of such Prohibition against partition: A donor or
provisions, by the provisions of Title III on testator may prohibit partition for a period
Co-Ownership [De Leon]. which shall not exceed 20 years [Art. 494 (3),
Civil Code].
Only Limitation
Each of the co-owners holds the property pro 5. By Fortuitous Event or by Chance
indiviso and exercises his or her rights with the a. Co-ownership between owners of 2 things
entire property; thus, each co-owner may use that are mixed by chance or by will of the
and enjoy the property with no other limitation owners [Art. 472, Civil Code]
than that he shall not injure the interests of his b. Hidden Treasure [Art. 438, Civil Code] -
co-owners [Silva v. Lo, G.R. No. 206667 When the discovery is made on the property
(2021)]. of another, or of the State or any of its
subdivisions, and by chance, one-half shall
be allowed to the finder.
B. Sources of Co-Ownership
6. By Occupancy
1. Law Harvesting and fishing: co-ownership by two or
a. Cohabitation: co-ownership between more persons who have seized a res nullius
common law spouses [Arts. 147, 148, 90, thing [Art. 713, Civil Code]
Family Code]
b. Purchase creating implied trust [Art. 1452,
Civil Code]
c. Easement of party wall: co-ownership of
part- owners of a party wall [Art. 658, Civil
Code]

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C. Rights of Co-Ownership 4. Right to Compel Other Co-Owners
to Contribute to the Expenses of
1. Right to Share in the Benefits as Preservation and to the Taxes [Art.
Well as the Charges [Art. 485, CC] 488, Civil Code]
a. Proportionality General Rule: Each co-owner shall have a
The share of the co-owners shall be right to compel the other co-owners to
proportional to their respective interests. Any contribute:
stipulation to the contrary is void [Art. 485 (1), a. To the necessary expenses (incurred for
Civil Code]. preservation of the thing or right). If
practicable, he must first notify his co-
b. Presumption of Equal Share owners of the necessity for such repairs
The portions belonging to the co-owners in the [Art. 489, Civil Code]
co-ownership shall be presumed equal, unless b. To the taxes [Art. 488, Civil Code]
the contrary is proved [Art. 485(2), Civil Code]
Exception to paying necessary expenses
2. Right to Use the Thing Owned in and taxes: Co-owner no longer has to pay if he
renounces his undivided interest as
Common [Art. 486, Civil Code] equivalent to his share of expenses and
Each co-owner may use the thing owned in
taxes [Art. 488, Civil Code]. This means that
common.
his/her renunciation does not cover all of
his/her interest in the property co-owned.
Limitations
a. In accordance with the purpose for which Exception to the Exception: No waiver shall
the co-ownership is intended. be made if prejudicial to co-ownership [Art.
• The purpose of the co-ownership may be 488, Civil Code].
changed by agreement, express or a. Expenses to improve or embellish the thing
implied shall be decided upon by a majority as
b. In such a way as to not injure the interest of determined in Art. 492, Civil Code.
the co-ownership b. As for the expenses for pure luxury or mere
c. In such a way as not to prevent the other co- pleasure, these are not refundable for not
owners from using it according to their right. serving purposes of preservation [Art. 548,
Civil Code].
3. Right to Bring an Action in
Ejectment [Art. 487 Civil Code] 5. Right to Reimbursement for
Actions contemplated: All cases for recovery Necessary Repairs [Art. 488-489,
of possession (forcible entry, unlawful detainer,
Civil Code]
accion publiciana, replevin, accion
General Rule: A co-owner has the right to
reivindicatoria).
compel the other co-owners to contribute to the
expenses of preservation, maintenance, or
The Action is considered filed for the benefit of
necessary repairs of the thing or right owned in
all the co-owners.
common and to the taxes [Art. 488, Civil Code].
A co-owner may bring such an action without
Requirement of notice: If practicable, the co-
joining all the other co-owners as co-plaintiffs
owner must first notify the co-owners of the
because the suit is presumed to have been
necessity for the repairs [Art. 489, Civil Code].
filed to benefit his co-owners. If the plaintiff/co-
owner claims to be the sole owner, the action
Exception to the requirement of notice: If
should be dismissed [Clemente v. Republic,
impracticable or where the repairs are very
G.R. No. 220008 (2019)].
urgent, and the other co-owners are in remote
places and cannot be reached by an ordinary
means of communication. This means that
his/her renunciation does not cover all of
his/her interest in the property co-owned.

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Lack of notice even if practicable: Does not 8. Right to Partition [Art. 494, Civil
exempt other co-owners to contribute. The co- Code]
owner who advanced them has the burden of Partition is the separation, division and
proving that they were properly incurred. assignment of a thing held in common among
those to whom it may belong. Every act which
6. Right to Oppose Alterations [Art. is intended to put an end to indivision among
491, Civil Code] co-heirs and legatees or devisees is deemed to
General Rule: Unanimous Consent: None of be a partition. Partition may be inferred from
the co-owners shall, without the consent of the circumstances sufficiently strong to support the
others, make alterations in the thing owned in presumption. Thus, after a long possession in
common, even though benefits for all would severalty, a deed of partition may be presumed
result therefrom. [Spouses Marcos v. Heirs of Bangi, G.R. No.
185745 (2014)].
Rationale: Alteration is an act of ownership.
General Rule
Alteration – a change in the nature or use of a a. No co-owner shall be obliged to remain in
thing; it contemplates a permanent change. the co-ownership; and
Examples: b. Each co-owner may demand at any time the
a. Change of the thing from the state or partition of the thing owned in common,
essence in which the others believe it insofar as his share is concerned [Art. 494
should remain. Withdrawal of the thing from (1), Civil Code].
the use to which they wish it to be intended
b. Any other transformation which prejudices Note: A creditor or assignee of a co-owner may
the condition or substance of the thing or its take part in the division of the thing owned in
enjoyment by the others [Manresa]. common and object to its being effected
without their concurrence. But they cannot
Examples of Alterations impugn any partition already executed unless
a. The construction of a house on the co- there has been fraud or in case it was made
owned property is an act of dominion. It is notwithstanding a formal opposition to prevent
an alteration of the property owned in it, without prejudice to the right of the debtor or
common [Cruz v. Catapang, G.R. No. assignor to maintain its validity [Art. 497, Civil
164110 (2008)]. Code]
b. Mortgage, donation, or sale of a portion or
the whole of the property co-owned Exceptions
c. Allowing or entering into an easement a. An agreement to keep the thing undivided
for a certain period of time, not exceeding
Exception: If the withholding of the consent by 10 years, shall be valid [Art. 494, Civil
one or more of the co-owners is clearly Code].
prejudicial to the common interest, the b. A donor or testator may prohibit partition for
courts may afford adequate relief. a period which shall not exceed 20 years
[Art. 494, Civil Code].
7. Right to Full Ownership of His Part c. Neither shall there be any partition when it
and of the Fruits and Benefits is prohibited by law [Art. 494, Civil Code].
d. When physical partition would render the
Pertaining thereto [Art. 493, Civil
thing unserviceable for the use for which it
Code] is intended [Art. 495, Civil Code].
As a result, the co-owner has a right to:
a. Alienate; Note: If the thing owned in common is
b. Assign; indivisible:
c. Mortgage; and a. The co-owners can agree that it be alloted
d. Substitute another person in its enjoyment. to one of them, and the latter will indemnify
the others; or
Note: Actions above can only pertain to the co- b. If they cannot agree, the thing shall be sold
owner’s ideal share prior to partition. and its proceeds distributed [Art. 498, Civil
Code]
Exception: When personal rights are involved;
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Note: No prescription shall run in favor of a co- 10. Right to Participate in
owner or co-heir against his co-owners or co- Administration of Property
heirs so long as he expressly or impliedly Owned in Common [Art. 492,
recognizes the co-ownership [Art. 494, Civil
Code].
Civil Code]

General Rule
Elements for Prescription to Run in Favor
a. For the administration and better enjoyment
of Co-Owner:
of the thing owned in common, the
a. He has performed unequivocal acts of
resolutions of the majority of the co-owners
repudiation amounting to an ouster of the
shall be binding [Art. 492 (1), Civil Code].
other co-owners;
b. There shall be no majority unless the
b. Such positive acts of repudiation have been
resolution is approved by the co-owners
made known to the other co-owners; and
who represent the controlling interest in the
c. The evidence thereon must be clear and
object of the co-ownership [Art. 492 (2), Civil
convincing [Salvador v. CA, G.R. No.
Code].
109910 (1995)].
Exceptions to Acts of Administration Only
Sample of Acts of Repudiation by Majority
a. Filing of actions in court like quieting of title, a. If there be no majority; or
accion reivindicatoria and other similar suit b. If the resolution of the majority is seriously
b. Co-owner who causes cancellation of the prejudicial to those interested in the
existing title and petitions for an issuance of property owned in common.
a new title in his favor
c. Co-owner who permanently fences the In which case, the court will intervene: the
property and hires security personnel to court, at the instance of an interested party,
prevent other co-owners from entering the shall order such measures as it may deem
property proper, including the appointment of an
administrator.
9. Right to Redemption [Art. 1619, Civil
Code] Examples of Acts Seriously Prejudicial
Definition a. Call for a substantial change of the thing
Legal redemption – the right to be b. Authorizing leases, loans, and other
subrogated, upon the same terms and contracts without the necessary security,
conditions stipulated in the contract, in the thereby exposing the property to serious
place of one who acquires a thing by purchase danger
or dation in payment, or by any other c. Continued employment of an administrator
transaction whereby ownership is transmitted who is guilty of fraud or negligence in his
by onerous title [Art. 1619, Civil Code]. management [Manresa]

General Rule: A co-owner of a thing may Note: A co-owner is entitled to a written notice
exercise the right of redemption in case the from a selling co-owner in order to remove all
shares of all the other co-owners or of any of uncertainties about the sale, its terms and
them are sold to third person [Art. 1620, Civil conditions, as well as its efficacy and status
Code]. [Verdad v. Court of Appeals, G.R. No. 109972
(2000)].
As legal redemption is intended to minimize co-
ownership, once a property is subdivided and
distributed among the co-owners, the
community ceases to exist and there is no
more reason to sustain any right of legal
redemption. Every act intended to put an end
to indivision among co-heirs is deemed to be a
partition [Avila v. Sps. Barabat, G.R. No.
141993 (2006)].

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D. Rules Acts of Majority of co-owners
administration [Art. 492, Civil Code]
1. On Renunciation of Share (ex. Payment of
A co-owner may exempt himself from the taxes/association
payment of expenses of preservation by dues, hiring
renouncing his undivided interest in the co- contractors to do
ownership as may be equivalent to his share in minor repairs)
the necessary expenses and taxes [Art. 488,
Civil Code]. Improvement/ Majority of co-owners
Embellishing the [Arts. 489 and 492,
A co-owner who has not waived his share in Thing/ Useful Civil Code]
the co-ownership may be compelled to pay his expenses (ex.
share in the cost of its maintenance, but he Swimming pool,
may not be compelled to renounce. CCTV, landscaped
gardens, etc.)
Waiver of renunciation is not allowed if it is
prejudicial to the co-ownership [Art. 488, Civil
Code].
3. Rules on Multi-Story House [Art.
490, Civil Code]
2. Repairs for Preservation Applies when:
a. The different stories of a house belong to
Embellishments or different owners;
Improvements b. The titles of ownership do not specify the
Requires consent of majority of co-owners terms under which they should contribute to
representing the controlling interest in the the necessary expenses; and
undivided thing [Art. 489 and 492, Civil Code]. c. There exists no agreement on the subject.
Note: The rules under Art. 492 are applicable,
so judicial intervention may be resorted to. Part of the Manner of
House Contribution
Summary
Main and party All owners contribute in
Act of Co-Owner Consent Needed walls, the roof, proportion to the value of
and the other the story belonging to
things used in each
Preservation (ex. May be made at will common
Critical maintenance by any co-owner, but
work – roof leaks, preferably notice is Floor of the All owners contribute pro
cracks in the walls, given to others [Arts. entrance, front rata or equally
electrical wiring 488 and 489, Civil door, common
system which Code]. yard, and
renders property sanitary works
unsafe/unhealthy to common to all
live in)
The floor of each Each owner bears the
co-owner’s story cost of maintaining the
Alterations (ex. Consensus of all co- floor of his story
Sale, mortgage, owners [Art. 491,
assignment) Civil Code]

Lease for more Consensus of all co-

than 1 year owners (considered
an act of alteration,
see Tolentino)

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Stairs Stairs from the first 4. Partition or Division
entrance to the first story Modes
– pro rata sharing of all a. Extrajudicial partition – The agreement
owners except the may be oral or written, done outside of court
owner of the ground floor [Vda. de Reyes v. CA, G.R. No. 92436
Stairs from the first to the (1991)].
second story - pro rata b. Judicial partition – Governed by the Rules
sharing of all owners of Court insofar as they are consistent with
except the owner of the the Civil Code [Art. 496, Civil Code].
ground floor and that of
the first story; and so on. Action for Partition Will Determine: [Heirs
of Cesar Marasigan v. Marasigan, G.R.
No. 156078 (2008)]
E. Termination or a. Whether or not the plaintiff is indeed a co-
Extinguishment owner of the property
b. How the property will be divided between
Means of Termination the plaintiff and defendant
1. Total destruction of the thing owned in
common Incidents of Partition
2. Merger of all interests in one person a. Mutual accounting for benefits received and
3. Acquisitive prescription reimbursement for expenses made [Art.
4. Partition 500, Civil Code].
5. Sale of property co-owned b. Payment of damages by each co-owner
6. Termination of period agreed upon in co- caused by reason of his negligence or fraud
ownership [Art. 500, Civil Code].
c. Liability of each co-owner for defects of title
1. Total Destruction of Thing or Loss and quality of the portion assigned to each
of the co-owners [Art. 501, Civil Code].
of the Property Co-Owned
Exception: If the building is destroyed, there is Effects of Partition
still co-ownership over the land and the debris
a. Confers exclusive ownership of the property
[Tolentino].
adjudicated to a co-heir [Art. 1091, Civil
Code].
2. Merger of All Interests in One b. Co-heirs shall be reciprocally bound to
Person warrant the title to, and the quality of each
This may take place by any of the causes which property adjudicated [Art. 1092, Civil Code].
are sufficient to transmit title to an obligation, c. Reciprocal obligation of warranty shall be
either by assignment, subrogation, and sale of proportionate to the respective hereditary
inheritance. shares of co-heirs [Art. 1093, Civil Code].
d. An action to enforce the warranty must be
3. Acquisitive Prescription brought within 10 years from the date the
This is a mode of acquiring ownership by a right of action accrues [Art. 1094, Civil
possessor through the requisite lapse of time. Code].
e. The co-heirs shall not be liable for the
It may be ordinary or extraordinary [Art. 1117, subsequent insolvency of the debtor of the
Civil Code]. estate, but only for his insolvency at the time
the partition is made [Art. 1095, Civil Code].
Ordinary Acquisitive prescription requires
possession of things in good faith and with a Rights of Third Parties in Partition
just title for the time fixed by the law [De Leon]. a. The partition of a thing owned in common
Extraordinary Prescription is the opposite. No shall not prejudice third persons, who shall
good faith or just title is required, but long retain the rights of mortgage, servitude, or
possession under Art. 1132 (2) [De Leon]. any real rights belonging to them before the
division was made [Art. 499, Civil Code].

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Note: A “third person” is defined as all those 5. Sale of Property Co-Owned [Art.
who did not in any way participate or 498, Civil Code]
intervene in the partition [Paras citing 3 The sale shall be resorted to only if:
Manresa 54 and Gonzaga v. Martinez, G.R. a. The property is essentially indivisible.
No. L-3196 (1908)]. b. The co-owners cannot agree that the entire
property be allotted or assigned to one of
b. The creditors or assignees of the co-owners them, who shall reimburse the other co-
may take part in the division of the thing owners of their shares.
owned in common and object to its being
effected without their concurrence [Art. 497, 6. Termination of Period Agreed Upon
Civil Code].
by the Co-Owners [Art. 494, Civil
Note: All kinds of creditors whether Code]
preferred or ordinary are included within the An agreement to keep the thing undivided for a
scope of creditors; but they must have certain period of time, not exceeding 10 years,
become creditors during the existence of shall be valid. This term may be extended by a
the co-ownership and not before or after new agreement.
[Paras citing 3 Manresa 528-529].
A donor or testator may prohibit partition for a
Exception: If the partition was already period which shall not exceed 20 years.
executed, the creditors/assignees cannot
impugn the same.

Exception to the Exception: There was fraud

or a previous formal opposition against the
partition, without prejudice to the right of the
debtor or assignor to maintain its validity [Art.
497, Civil Code].

The law does not expressly require previous

notice to the creditors and assignees before a
partition [Tolentino].

If notice is not given, the partition is not binding

on the creditors and assignees.

But once notice has been given, it is the duty of

creditors and assignees to intervene and make
known their stand. If they fail to do so, they
cannot question the division made, except in
cases of fraud.

Partition of an Indivisible Thing [Art. 498,

Civil Code]
a. 1st option: The co-owners can agree that
one of them shall be the sole owner by
paying the value of the other co-owners’
shares.
b. 2nd option: If they cannot agree who
among them shall be the sole owner, the
property will be sold to a 3rd person and the
proceeds will be distributed among them.

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IV. POSSESSION 3. Possession in the Concept of an
Owner
Possession in the concept of an owner refers
A. Kinds of Possession to his overt acts which tend to induce the belief
on the part of others that he is the owner.
1. Possession for Oneself, or Possession in the concept of an owner is jus
Possession Exercised in One’s possidendi.
Own Name and Possession in
the Name of Another If a person possesses in the concept of
a. In One’s Own Name owner—he may eventually become the owner
The fact of possession and the right to such by prescription. Thus, a possessor merely in
possession is found in the same person. the concept of holder cannot acquire property
by acquisitive prescription—one cannot
b. In the Name of Another recognize the right of another and at the same
The one in actual possession is without any time claim adverse possession.
right of his own, but is merely an instrument of
another in the exercise of the latter’s 4. Possession in Good Faith
possession. It can either be: a. Possessor in Good Faith
1. Voluntary: When exercised by virtue of an One who is unaware that there exists a flaw
agreement (e.g. agents or administrators which invalidates his acquisition of the thing.
appointed by the owner or possessor). Third He believes that the person from whom he
persons may also voluntarily exercise received a thing was the owner of the same
possession in the name of another, but it and that therefore he is now the owner based
does not become effective unless ratified by upon ostensible title or mode of acquisition,
the person in whose name it is exercised. e.g. sale, donation, inheritance, or other means
2. Necessary or legal: When exercised by of transmitting ownership [Art. 526, Civil Code].
virtue of law (e.g. representatives who
exercise possession in behalf of a b. Rights of a Possessor in Good Faith
conceived child, juridical persons, persons 1. Fruits [Art. 544, Civil Code]
not sui juris, and the CPG) 2. Refund of necessary expenses [Art. 546,
Civil Code]
2. Possession in the Concept of a 3. Refund of useful expenses [Art. 546, Civil
Holder with the Ownership Code]
Belonging to Another [Art. 525, 4. Right of retention when there are unpaid
necessary or useful expenses [Art. 546,
Civil Code] Civil Code]
One who possesses as a mere holder, not in 5. Removal of useful/ornamental
the concept of owner, acknowledges in another improvements without damage to the
a superior right which he believes to be principal thing [Arts. 546-547, Civil Code]
ownership, whether his belief is right or wrong, 6. No liability for deterioration or loss, except
e.g., tenant, usufructuary, borrower in in cases of fraudulent intent or negligence
commodatum. [Art. 552, Civil Code]
7. May acquire full ownership by prescription
Examples of Possession in Concept of [Arts. 1117-1138, Civil Code]
Holder 8. Presumption of just title [Art. 541, Civil
a. Lessees Code]
b. Trustees, including: parents over the 9. Can ask for the inscription of possession in
properties of their children; and husband the Registry of Property [Art 708, Civil Code]
and wife over each other’s property 10. Generally, he/she can do on the things
c. Antichretic Creditors possessed everything that the law
d. Agents authorizes an owner to do until he/she is
e. Attorneys regarding their client’s properties ousted by one who has a better right
f. Depositaries 11. Can exercise the right of pre-emption and
g. Co-Owners is entitled to indemnity in case of
appropriation
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12. Has presumption of continuity of good faith of the other co-owners with notice to
[Arts. 528-529, Civil Code] them of the exclusive claim of
13. Non-interruption of possession ownership)
(possession during intermediate period) 2. Entitlement to fruits/expenses: Possessor in
[Arts. 554 and 561, Civil Code] Good Faith [Arts. 544, 526-527, Civil Code]
14. Right to be respected and
protected/restored in his/her possession As to the Fruits
by the means established by the laws and 1. Fruits already received [Art. 544 (1), Civil
the Rules of Court [Art. 539, Civil Code]. Code]: Entitled to all the fruits received
These include summary actions (forcible before possession is legally interrupted. (i.e.
entry and unlawful detainer), accion before summons)
publiciana, and action for replevin. Accion 2. Fruits still pending [Art. 545, Civil Code]:
reivindicatoria is not included. “Every Entitled to prorate the fruits already growing
possessor” – includes all kinds of when possession is legally interrupted.
possession, from that of an owner to that
of a mere holder, except that which As to Necessary Expenses [Art. 546(1), Civil
constitutes a crime. Code]
15. Lawful possessor can employ self-help 1. Imposed by the thing itself and have no
[Art. 429, Civil Code] relation to the desire or purpose of the
16. Possession of an immovable extends to possessor; hence they are reimbursed,
the movables within or inside [Arts. 542 whatever may be the juridical character
and 426, Civil Code] (Exception: When it of the person who advanced them.
is shown or proven that such movables 2. The possessor in good faith may retain the
should be excluded) thing until he/she is reimbursed for
necessary expenses.
c. Other Consequences
1. Possession is converted into ownership As to Useful Expenses [Arts. 546 (2) and
after the required lapse of time necessary of 547, Civil Code]
prescription [Art. 540, Civil Code] 1. Incurred to give greater utility or productivity
a. The possession must be under claim of to the thing.
ownership, and it must be peaceful, 2. They are reimbursed only to the possessor
public and uninterrupted [Art. 1118, Civil in good faith as a compensation or reward.
Code]. A possessor in bad faith cannot recover
b. Acts of possessory character done by such expenses.
virtue of a license or mere tolerance on 3. The possessor in good faith may retain the
the part of the real owner are not thing until he/she is reimbursed for useful
sufficient and will not confer title by expenses.
prescription or adverse possession [Art. 4. The other party has the option to:
1119, Civil Code]. a. Refund the amount of expenses; or
c. The following cannot acquire title by b. Pay the increase in value which the
prescription: thing may have acquired.
1. Lessees, trustees, pledges, tenants
on shares or planters, and all those
who hold in the name or in
representation of another.
2. Mere holders placed in possession of
the property by the owner such as
agents and employees.
3. Those holding the title in a fiduciary
character such as receivers,
attorneys, depositaries, and
antichretic creditors.
4. Co-owner, with regard to common
property (Exception: When he/she
holds the same adversely against all

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As to Ornamental Expenses or Expenses d. Liability to the deterioration/loss of a thing
for Pure Luxury [Art. 548, Civil Code] possessed in every case, including
The possessor in good faith is not entitled to a fortuitous events [Art. 552, Civil Code].
refund for ornamental improvements but such
improvements may be removed if they do not B. Acquisition of Possession
cause damage to the principal thing.
(including possession based
5. Possession in Bad Faith on tolerance)
One who is aware that there exists in his/her
title or mode of acquisition any flaw which 1. Ways of Acquiring Possession
invalidates it [Art. 526, Civil Code]. a. By the Material Occupation of a Thing
or the Exercise of a Right
Requisites Possession is acquired through the following
a. Possessor has a title or mode of acquisition; modes of constructive delivery:
b. There is a flaw or defect in said title or mode; 1. Traditio brevi manu – If the
c. Examples of vice or defect in title: transferee/buyer already had possession of
1. Grantor was not the owner the object under a different title even before
2. Requirements for transmission were not the sale (e.g., lessee, depositary
complied with subsequently buys the property)
3. Mistake in the identity of the person 2. Traditio constitutum possessorium – the
4. Property was not really res nullius. transferor/seller continues in the
d. The possessor is aware of the flaw or defect possession of the object, but not in the
in the title. concept of an owner (e.g., owner sells the
property and becomes lessee)
Rights of a Possessor in Bad Faith
a. Right to be respected in possession [Art. For constructive possession, see the
539, Civil Code] discussion under Characteristics of
b. Right to necessary expenses and the Possession.
expenses for production, gathering, and
preservation of fruits [Arts. 545-546, Civil b. By the Fact that the Thing is Subject
Code] to the Action of Our Will
c. Does not have right to reimbursement of Possession is acquired through the following
expenses for luxury but may remove them modes of constructive delivery:
as long as the principal thing suffers no 1. Traditio simbolica – delivering an object or
injury or may sell them to the owner who symbol, and placing the thing under the
opts to buy the removable ornaments [Art. control of the transferee (ex. Giving a key
549, Civil Code] where the thing or object is stored, kept or
d. No right to reimbursement for useful under custody. Since the key is with the
improvements and no limited right of vendee, then it means that the latter can
removal [Art. 546, Civil Code] gain access to the object)
e. Right to remove ornamental improvements 2. Traditio longa manu – the transferor points
or be paid the value of such at the time of out to the transferee the things which are
recovery but at the owner’s option. being transferred, or they merely agree or
consent that delivery has been effected
Obligations of a Possessor in Bad Faith
a. Reimburse the value of fruits received and c. By the Proper Acts and Legal
which the legitimate possessor could have Formalities Established for Acquiring
received [Art. 549, Civil Code] Such Right
b. Pay in proportion to the charges, expenses Acquisition by virtue of a just title such as when
of cultivation and the net proceeds upon property is transmitted by succession,
cessation of good faith [Art. 545, Civil donation, contract, or execution of a public
Code]. instrument, etc.
c. Bear the costs of litigation [Art. 550, Civil
Code]

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2. By Whom May Possession be c. If the dates of the possession are the same,
Acquired [Arts. 532-534, Civil the one who presents a title is preferred
Code] d. If all the foregoing conditions are equal, the
thing shall be placed in judicial deposit
pending determination of its possession or
Who Acquires Possession [Arts. 532-534, ownership through proper proceedings.
Civil Code]
a. The same person who is to enjoy it
4. What Does Not Affect Possession
b. His legal representative
c. His agent
a. Acts Merely Tolerated [Art. 537, Civil
d. Any person without any power whatsoever Code]
1. Those which because of neighborliness or
General Rule: Only acquired upon familiarity, the owner of property allows
ratification. another person to do on the property
[Tolentino].
Exception: In cases of negotiorum gestio 2. Permissive use merely tolerated by the
where a person voluntarily manages the possessor cannot affect possession and
property or business of another, the cannot be the basis of acquisitive
stanger’s possession takes effect even prescription [Art. 1119, Civil Code].
without ratification by the property owner. a. Possession to constitute the foundation
of prescriptive right must be possession
e. His heirs under claim of title; it must be adverse
1. If there is bad faith on the part of the [Cuaycong v. Benedicto, G.R. No. L-
decedent: The effects of the decedent’s 9989 (1918)].
wrongful possession will not affect his
heirs. The heir suffers the consequences 3. A possessor by tolerance is necessarily
of such possession only from the bound by an implied promise to vacate upon
moment he becomes aware of the flaws demand, failing which a summary action for
affecting the decedent’s title [Art. 528 as ejectment is the proper remedy against him
cited in De Leon]. [Peran v. CFI, G.R. No. L-57259 (1983)].
2. If there is good faith on the part of the
decedent: The effects of the decedent’s b. Acts Executed Clandestinely and
possession will benefit the heirs only Without the Knowledge of the
from the date of his death. Possessor [Art. 537, Civil Code]
1. Possession by the possessor is not affected
Legal Capacity to Acquire Possession as long as it remains clandestine and
[Art. 535, Civil Code] unknown.
Minors and incapacitated persons may acquire 2. Clandestine possession” is secret
possession BUT they need the assistance of possession or possession by stealth. The
their legal representatives to exercise their possession here must be unknown to the
rights arising from such possession. owner [Paras quoting 4 Manresa 199].
3. Possession has to be in the concept of an
3. Preference of Possession [Art. 538, owner, public, peaceful and uninterrupted
Civil Code] [Art. 1120, Civil Code].
General Rule: Possession as a fact cannot be
recognized at the same time in two different c. Acts of Violence as long as the
personalities Possessor Objects Thereto [Art. 536,
Civil Code]
Exception: Co-possession
1. Possession cannot be acquired through
In case a dispute arises, the order of force or intimidation as long as there is a
preference is as follows: possessor who objects thereto.
a. The present possessor shall be preferred a. This includes forcibly taking away the
b. If there are two possessors, the one longer property from another, and also when
in possession is preferred one occupies the property in the

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absence of another, and repels the latter d. Co-owner, with regard to common property,
upon his return [Tolentino] except: when he holds the same adversely
b. Force may be: against all of them with notice to them the
1. actual or threatened; exclusive claim of ownership.
2. done by possessor or agent,
3. done against the owner or any other 2. Entitlement to Fruits/Expenses
possessor or the owner’s a. Possessor in Good Faith
representative;
4. done to oust the possessor [Paras]. As to the Fruits
Fruits Already Received [Art. 544 (1), Civil
c. Art. 536 applies to one who believes Code]
himself the owner of real property. If he Entitled to all the fruits until possession is
takes justice into his own hands, he is a legally interrupted (i.e. before summons, or
mere intruder and he can be compelled demand; see Art. 528 for when possession in
to return the property and must suffer the good faith is interrupted)
NECESSARY and NATURAL
consequences of his lawlessness [De Fruits Still Pending [Art. 545, Civil Code]
Leon citing Santiago v. Cruz, G.R. No. Entitled pro-rata to the fruits already growing
31919 (1930)]. when his possession is legally interrupted
2. He who believes that he has an action or a As to the Necessary Expenses [Art. 546,
right to deprive another of the holding of a (1), Civil Code]
thing must invoke the aid of a competent Definition: Necessary for the preservation of
court, if the holder refuses to deliver the the thing [Art. 452, Civil Code by analogy]. The
thing. possessor in good faith may retain the thing
until he is reimbursed for necessary expenses
C. Effects of Possession
As to the Useful Expenses [Arts. 546 (2)
1. Possession in the Concept of and 547, Civil Code]
Owner is Converted into Definition:
Ownership After the Required Incurred to give greater utility or productivity to
Lapse of Time Necessary of the thing
1. They are reimbursed only to the possessor
Prescription in good faith as a compensation or reward
To consolidate title by prescription, the
for him.
possession must be under claim of
a. Possessor in bad faith cannot recover
ownership, and it must be peaceful, public,
such expenses.
and uninterrupted [Art. 1118, Civil Code].
2. Possessor in good faith may retain the thing
Acts of possessory character done by virtue of
until he is reimbursed for useful expenses.
a license or mere tolerance on the part of the
3. The person who defeats the possessor in
real owner do not apply for purposes of
possession has the option to:
acquisitive prescription [Art. 1119, Civil Code].
a. Refund the amount of expenses; or
b. Pay the increase in value which the thing
The following cannot acquire title by
may have acquired.
prescription (i.e. they are not adversely
possessing the property): [RPFC]
4. The possessor has the option of removing
a. Lessees, trustees, pledges, tenants on
the useful improvements, provided there is
shares or planters and all those who hold in
no damage to the principal thing [Art. 547,
the name or in Representation of another.
Civil Code].
b. Mere holders placed in Possession of the
a. Exception: When the option to pay for
property by the owner, such as agents,
the value of the expenses or the increase
employees.
in value of the thing is exercised by the
c. Those holding in a Fiduciary character like
person who recovered possession.
receivers, attorneys, depositaries and
antichretic creditors.
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As to Ornamental Expenses or Expenses 4. Liability to the deterioration/loss of a thing
for Pure Luxury [Art. 548, Civil Code] possessed in every case, including
The possessor in good faith is not entitled to a fortuitous events [Art. 552, Civil Code].
refund for ornamental expenses. But he may
remove the ornamental improvements if they
do not cause damage to the principal thing.

Exception: The one who recovers possession

decides to refund the ornamental expenses/
expenses for pure luxury

b. Possessor in Bad Faith

Definition: One who is aware that there exists
in his title or mode of acquisition a flaw which
invalidates it [Art. 526, Civil Code].

Rights of a Possessor in Bad Faith [R2NV]

1. Right to be Respected in possession; [Art.
539, Civil Code]
2. Right to Necessary Expenses and the
expenses for production, gathering, and
preservation of fruits [Arts. 545 and 546; Art.
443, Civil Code]
3. Remove ornaments provided that the
principal thing is not injured and the lawful
possessor does not prefer to retain the
ornaments by paying their value when the
latter enters into possession [Art. 549, CC]
a. The possessor in bad faith does not have
a right to reimbursement for expenses for
luxury.

4. Right to be paid for the Value of the

ornaments at the time the lawful possessor
enters into possession, provided the latter
prefers to retain them [Art. 549, CC]

Note: A possessor in bad faith is not entitled to

reimbursement for useful expenses and has no
limited right of removal of useful improvements
[Art. 546-547, CC].

Obligations of a Possessor in Bad Faith:

[RPBL]
1. Reimburse the value of fruits received and
which the legitimate possessor could have
received [Art. 549, Civil Code].
2. Pay in proportion to the charges, expenses
of cultivation and the net proceeds upon
cessation of good faith [Art. 545, Civil
Code].
3. Bear the costs of litigation [Art. 550, Civil
Code].

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V. USUFRUCT will of the parties, or the law may provide
otherwise.
d. Usufruct is extinguished by the death of the
A. In General usufructuary.
e. A person cannot create a usufruct over his
1. Characteristics own property and retain it at the same time
Usufruct is a temporary real right which gives a [De Leon quoting Gaboya v. Cui, G.R. No.
right to enjoy the property as well as its fruits of L-19614 (1971)].
another with the obligation of preserving its
form and substance, unless the title Reasons for Preserving Form and
constituting it or the law otherwise provides Substance
[Art. 562, Civil Code]. a. To prevent extraordinary exploitation;
b. To prevent abuse, which is frequent;
Constituted By: [PILL] c. To prevent impairment.
a. Law
b. Will of private persons expressed in acts Exception: In an abnormal usufruct, alteration
Inter vivos is allowed.
c. Will of private persons expressed in a Last
will 2. Classifications
d. Prescription [Art. 563, Civil Code]
As to Manner of Creation
Can be Constituted Over:
a. The whole or part of the fruits of the thing Voluntary Created by the will of
b. A right, provided it is not strictly personal or private persons
intransmissible [Art. 564, Civil Code].
By act inter vivos – such as
General Characteristics contracts and donations;
a. Nature: It is a real right of the use and
enjoyment of the property, whether or not By donation of the usufruct;
the same be registered in the Registry of
Property; By retention of the usufruct
1. It must be registered in the Registry of by donor;
Property to prejudice third persons [Art
709, Civil Code] Where a usufruct is
2. It is transmissible constituted inter vivos and
for valuable consideration,
b. Term: Of temporary duration; the contract is
c. Purpose: To enjoy the benefits and derive unenforceable unless in
all advantages from the thing due to normal writing;
exploitation;
d. Scope: May be constituted on real or By act mortis causa – such
personal property, consumable or non- as testament
consumable, tangible or intangible, the
ownership of which is vested upon another. Legal As provided by law.

Natural Characteristics Usufruct of parents over the

a. Includes jus abutendi, jus utendi, jus fruendi property of unemancipated
and jus possidendi and jus vindicandi. The children (now limited to the
only thing left with the grantor of the usufruct collective daily needs of the
is the jus disponendi. family) [Art. 226, Family
b. Usufructuary must preserve the form or Code]
substance of the thing.
c. Preservation is a natural requisite, not Mixed Created both by law and
essential because the title constituting it, the the acts of persons, i.e. by
acquisitive prescription.

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Normal Involves non-consumable

The rights and duties of the things which the
usufructuary provided by usufructuary can enjoy
law may be modified or without altering their form or
eliminated by the parties. If substance (e.g. form and
the usufructuary is substance are preserved).
authorized to alienate the
thing in case of necessity, it Abnormal or When the usufruct includes
is the usufructuary who Irregular things which cannot be
determines the question of used in a manner
necessity appropriate to its nature
without being consumed,
and if not consumed, may
As to Number of Beneficiaries
be useless (ex: money,
grain, liquors) [De Leon].
Simple Only one usufructuary
enjoys the property. Quasi- Includes things which
Usufruct cannot be used without
Multiple Several usufructuaries being consumed. Money
enjoy the property as co- may be the object of
usufructuaries usufruct [Art. 574, Civil
Code]
Simultaneous At the same time.
As to Effectivity
Successive One after the other.
Pure Without term or condition
Limitations:
a. If by donation, all With a Term With a period, which may
donees must be either be suspensive (from
alive [Art. 756, Civil a certain day) or resolutory
Code]. (to a certain day)
b. Fiduciary and the
second heir must Conditional Subject to a condition which
be alive at the time may either be suspensive
of the death of the (from a certain event) or
testator [Art. 863, resolutory (until a certain
Civil Code]. event)
c. If by testamentary
succession, there As to Extent of the Usufruct
must be only 2
successive As to Fruits Total - all consumed by the
usufructuaries, and usufruct.
both must be alive
or at least already Partial - constituted only on
conceived at the a part or certain aspects of
time of the the usufruct’s fruits
testator’s death and
later born alive [Art. As to the Singular - only on
869, Civil Code]. Object particular property of the
owner.
As to Object of Usufruct
Universal - pertains to the
Rights Must not be strictly usufruct over universal
personal or intransmissible property, i.e. over an entire
patrimony, a whole

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inheritance of a compulsory Without prejudice to Rights of innocent

heir, a dowry; the right of 3rd 3rd parties should not
persons e.g. if the be prejudiced.
fruits arose by
B. Rights and Obligations of the building, planting,
Usufructuary sowing by a
possessor in good
1. Rights faith, the pending
a. Rights as to the Thing and its Fruits crop expenses of
[HIRE FLIERS]: Half of hidden treasure, cultivation and of the
Increase, Remove, Enjoy, Fruits, Lease, net harvest and
Improvements, Expenses, Retain, Set-off charges shall be
a. To receive the Fruits of the property in prorated between
usufruct [Art. 566, CC] said possessor and
b. To enjoy any Increase that the thing in the usufructuary in
usufruct may acquire through accession, proportion to the
servitudes, and all benefits inherent therein time of possession
[Art. 571, CC] [Art. 545, Civil Code]
c. To receive Half of the hidden treasure if he
accidentally finds it on the property [Art. In the case of civil
566, CC] fruits, no need to
d. To personally Enjoy the thing in usufruct prorate, as civil fruits
[Art. 572, CC] accrue daily [Art.
e. To Lease it to another [Art. 568-569 and 544, Civil Code]
572, CC]
f. To make useful improvements or Right to Civil Fruits
Expenses he may deem proper [Art. 579, Deemed to accrue daily and belong to the
CC] usufructuary in proportion to the time the
g. To Remove improvements, provided there usufruct may last [Art. 569, Civil Code].
is no damage to the property [Art. 579, CC]
h. To Set-off improvements he may have Special Rule as to Usufruct on Rent,
made on the property against any damage Pension or Interest
to the same [Art. 580, CC] Whenever a usufruct is constituted on the right
i. To Retain the thing until he is reimbursed to receive a rent or periodical pension, whether
for advances for extraordinary expenses in money or in fruits, or in the interest on bonds
and taxes on the capital [Art. 612, CC] or securities payable to bearer, each payment
due shall be considered as the proceeds or
b. Right to Natural and Industrial Fruits fruits of such right [Art. 570 (1), Civil Code].
Pending at the Beginning of Usufruct
Special Rule as to Benefits from Enterprise
Fruits Pending at Fruits Pending at
with No Date Fixed for Distribution:
the Beginning of the Termination of
Whenever it consists in the enjoyment of
the Usufruct the Usufruct
benefits accruing from a participation in any
Belong to the Belong to the naked industrial or commercial enterprise, the date of
usufructuary owner the distribution of which is not fixed, such
benefits shall have the same character [Art.
Without need to The owner shall 570 (2), Civil Code].
reimburse the reimburse to the
expenses to the usufructuary ordinary Special Rule for a Usufruct Over a Co-
owners cultivation expenses Owned Property
from the proceeds of To exercise all rights of the particular co-owner
the fruits (not to with respect to the administration and
exceed the value of collection of fruits/interests from the aliquot
the fruits) share of property [Art. 582, Civil Code].

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Should co-ownership cease by reason of d. To Enjoy Any Increase Which the
partition, the usufruct of the part allotted to the Thing May Acquire Through Accession
co-owner shall still belong to the usufructuary. The usufructuary shall have the right to enjoy
any increase which the thing in usufruct may
c. Right to Lease the Thing in Usufruct acquire through accession, the servitudes
Can be Leased Without Consent of the established in its favor, and, in general, all the
Owner benefits inherent therein [Art. 571, Civil Code].
Exceptions:
1. Caucion Juratoria, wherein the lease would e. To Make Improvements on the
show that the property is not needed by the Property as He May Deem Proper
usufructuary and therefore the use for which 1. He may improve the thing without altering its
the usufruct was constituted is changed. form and substance.
2. Condition imposed by naked owner i.e., 2. He is not entitled to indemnification.
Usufruct is purely personal, e.g., title 3. He may also remove improvements made
creating usufruct provides that usufructuary by him if it is possible to do so without
shall personally use and enjoy the property damage to property.
given in usufruct.
3. Legal usufructs cannot be leased. Note: The option to remove improvements
belongs to the usufructuary, and the naked
The Period of the Lease is Coextensive owner cannot compel him to do so, neither
with the Period of Usufruct. can the owner compel the usufructuary to
Exception: Lease of rural lands will subsist leave the improvements and just pay for
during the agricultural year despite expiration their value.
of the usufruct [Art. 572, Civil Code]
4. The usufructuary has the right to set-off the
Rules as to Lease: improvements on the property against any
1. A lease executed by the usufructuary before damage to the same [Art. 580, Civil Code].
the termination of the usufruct and
subsisting after the termination of the Note: Registration of improvements – to protect
usufruct must be respected, but the rents for usufructuary against 3rd persons
the remaining period will belong to the
owner. f. Right of Retention
2. If the usufructuary has leased the lands or The usufructuary has the right of retention until
tenements given in usufruct, and the he is reimbursed of the amount he paid for
usufruct should expire before the taxes and the increase in value caused by the
termination of the lease, he or his heirs and extraordinary repairs he made [Art. 612, Civil
successors shall receive only the Code].
proportionate share of the rent that must be
paid by the lessee [Art. 568, Civil Code]. Rights as to the Legal Right of Usufruct
3. A lease executed by the owner before the Itself [ABE – Alienate, Bring action, Exercise
creation of the usufruct is not extinguished all rights]
by such usufruct.
To Alienate or Mortgage the Right Itself [Art.
Notes: 572, Civil Code]
Future crops may be sold but such sale would The usufructuary may alienate his right of
be void if usufruct terminates prior to harvest of usufruct, even by a gratuitous title (e.g.
future fruits. The buyer’s remedy is to recover donation); but all the contracts he may enter
from the usufructuary. into as such usufructuary shall terminate upon
the expiration of the usufruct [Art. 572, Civil
The usufructuary-lessor is liable for the act of Code].
the substitute. A usufructuary who alienates or
leases his right of usufruct shall answer for any Except:
damage which the things in usufruct may suffer 1. Parental usufruct [Arts. 225 and 226, Family
through the fault or negligence of the person Code]
who substitutes him [Art. 590, Civil Code].

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2. Usufruct given in consideration of the the property, which shall contain an appraisal
person of the usufructuary intended to last of the movables and a description of the
during his lifetime condition of the immovables [Art. 583 (1), Civil
Code].
To Bring Action and Oblige the Owner to
Give Him Proper Authority and Necessary Exceptions to Making Inventory
Proof in Cases of Usufruct to Recover Real 1. No one will be injured thereby [Art. 585,
Property, Real Right, or Movable Property Civil Code]
[Art. 578, Civil Code] 2. Title constituting usufruct excused the
The action may be brought in the name of the making of inventory.
usufructuary. If a favorable judgment is 3. Title constituting the usufruct already made
obtained, the usufruct shall be limited to the the inventory.
fruits, and the naked ownership shall belong to
the owner [Art. 578, Civil Code]. To give security, binding himself to fulfill the
obligations imposed upon him in accordance
To Exercise all rights pertaining to the co- with this Chapter [Art. 583 (2), Civil Code].
owner with respect to the administration
and collection of fruits or interest from the Exceptions to Giving Security
proper (Applicable to usufruct of a part of a 1. No prejudice would result [Art. 585, Civil
common property) [Art. 582, CC] Code];
2. Usufruct is reserved by a donor [Art. 584,
2. Rights of the Owner Civil Code];
a. At the Beginning of the Usufruct 3. Gratitude on the donee’s part demands that
See obligations of usufructuary at the the donor be excused from filing the bond.
beginning of the usufruct discussed below. 4. Title constituting usufruct excused
usufructuary.
b. During the Usufruct 5. A usufructuary may take possession under
1. The owner retains title to the thing or a caucion juratoria (bond by oath) [Art. 587,
property. Civil Code]
2. He may alienate the property [Art. 581, Civil 6. When there is waiver by the naked owner
Code]. He may not alter the form or [Paras].
substance of the thing, nor do anything 7. When the usufructuary is the donor of the
prejudicial to the usufructuary. property who has reserved the usufruct [Art.
3. He may construct buildings, make 584, Civil Code].
improvements and plantings, provided: 8. When there is a parental usufruct under the
a. The value of the usufruct is not impaired; Family Code [Art. 225, Family Code].
and
b. The rights of the usufructuary are not Requisites of Caucion juratoria:
prejudiced [Art. 595, Civil Code]. 1. Proper court petition;
2. Usufruct is over a house, furniture or tools
4. He can constitute a voluntary easement of a trade and the necessity for delivery of
over land/building held in usufruct without furniture, implements or house included in
the usufructuary’s consent. But if it affects the usufruct;
the usufructuary’s right, the latter must give 3. Approval of the court; and
his consent [Art. 689, Civil Code]. 4. Sworn promise.
a. If the easement is perpetual, the consent
of both must be obtained [Art. 690, Civil Note: These requirements are not conditions
Code]. precedent to the commencement of the right of
the usufruct but merely to the entry upon the
3. Obligations possession and enjoyment of the property.
a. Obligations at the Beginning of the
Effect of Failure to Give Bond [Art. 586,
Usufruct or before Exercising the
Civil Code]:
Usufruct
1. The owner may demand that the immovable
To make, after notice to the owner or his
properties be placed under administration;
legitimate representative, an inventory of all
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2. That the movable properties be sold and the or has been excused from giving security
proceeds of the sale be the property held in [Art. 599, Civil Code].
usufruct – legal interest of 6% shall be the 9. To notify owner of any Prejudicial act to the
fruits; rights of ownership over the usufruct, by a
3. That the public bonds, instruments of credit third person [Art. 601, Civil Code].
payable to order or to bearer be converted a. Consequence: He is liable for damages
into registered certificates or deposited in a if he fails to give notice.
bank or public institution; and
4. That the capital or sums in cash and the 10. To pay expenses and costs for litigation if
proceeds of the sale of the movable incurred because of the usufruct [Art. 602,
property be invested in safe securities. Civil Code].
5. The owner may, until the usufructuary gives 11. To answer for fault or negligence of the one
security, retain in his possession the he alienated, leased to the object of the
property in usufruct as administrator, usufruct or the fault or negligence of the
subject to the obligation to deliver to the usufructuary’s agent [Art. 590, Civil Code].
usufructuary the net proceeds, after
deducting the sums, which may be agreed c. Obligations at the Time of the
upon or judicially allowed him for such Termination of the Usufruct [RIPP]
administration. 1. To Return the thing upon termination.
2. To Pay legal interest for the duration of the
b. Obligations During the Usufruct usufruct on the expenses for extraordinary
[CAPCORN – Care, Allow improvements, Pay repairs, if naked owner made the repairs
AIDE (Annual taxes, Interest, Debts, Expenses [Art. 594, Civil Code]
for litigation), Collect credit, Ordinary repairs, 3. To Pay proper interest on sums paid as
Replace animals, Notify UP (Urgent repairs, taxes by the owner
Prejudicial act)] 4. To Indemnify the naked owner for any loss
1. To take Care of the property as a good caused by the negligence of the
father of the family [Art. 589, Civil Code] usufructuary or his transferees
2. To make Ordinary repairs – required by the
wear and tear due to the natural use of the C. Extinguishment
thing and are indispensable for its
preservation [Art. 592, Civil Code].
3. To inform/Notify the owner of urgent
1. By the Death of the Usufructuary,
extraordinary repairs [Art. 593, Civil Code] unless a Contrary Intention Clearly
4. To Allow the naked owner to make works Appears
and improvements of which the immovable Usufruct is personal and it cannot be extended
in usufruct is susceptible, or plantings, if beyond the lifetime of the usufructuary
rural [Art. 595, Civil Code] [Eleizegui v. Manila Lawn Tennis Club, G.R.
a. Provided: No. 967 (1903)].
1. The works or improvements are not
prejudicial to the usufructuary’s rights. This is true even if a resolutory period or
2. No diminution in the value of the condition has been stipulated and the
object in usufruct. usufructuary dies before the expiration of the
period or the fulfillment of the condition [De
5. To Pay annual taxes and charges on the Leon].
fruits for the time the usufruct lasts [Art. 596,
Civil Code]. Exceptions
6. To pay interest on taxes on capital paid by a. When a contrary intention clearly appears
the naked owner [Art. 597, Civil Code]. [Art. 603, Civil Code]
7. To pay debts if the usufruct is over the 1. The parties may expressly stipulate that
entirety of a patrimony [Art. 598, Civil Code] the usufruct shall continue even after the
8. To secure the approval of the owner or the death of the usufructuary until the arrival
court to Collect credit which form part of the of a period or the happening of a certain
usufruct, if he has not given proper security event [Paras].

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b. In cases of multiple usufructs, the usufruct 4. By Merger of the Usufruct and
ends at the death of the last survivor [Art. Ownership in the Same Person
611, Civil Code]
1. If constituted simultaneously: All 5. By Renunciation of the
usufracturies must be alive or at least
conceived at the time of the constitution
Usufructuary
[Art. 863, Civil Code; Paras] Limitations [De Leon]
2. If constituted successively [Paras]: a. May be made expressly or impliedly, but
a. By virtue of a donation: All donees- must comply with the forms of donation
usufracturies must be alive at the time b. Does not require the consent of the naked
of donation [Art. 756, Civil Code] owner
b. By virtue of a will: there should only c. If made in fraud of creditors, they may
be 2 successive usufructuaries’, and rescind the waiver through an action under
both must have been alive at the time Art. 1381, Civil Code (accion pauliana).
of testator’s death [Same rule as in
fideicommissary substitution in Arts. 6. By the Total Loss of the Thing in
863 and 869, Civil Code] Usufruct
Total Loss:
c. If the period is fixed using the life of another When the thing in usufruct is completely
person as reference or there is a resolutory destroyed, or perishes, or disappears in such a
condition way that its existence is unknown or it cannot
1. In this case, the death of the usufructuary be recovered, or it goes out of commerce [Art.
would not affect the usufruct and the right 1189, Civil Code].
is instead transmitted to the heirs of the
usufructuary until the expiration of the
term or the fulfillment of the condition. Situation Effect

2. By the Expiration of the Period for Art. 607, Civil Code

which it was Constituted If destroyed property is not insured
Special Cases of Period:
a. Special case of juridical persons [Art. If usufruct is on the If the owner does not
605, Civil Code] building and the rebuild: Usufruct
1. Usufruct cannot be constituted in favor of land [Art. 607 (1), continues over the land
a town, corporation, or association for Civil Code] and materials (plus
more than 50 years. interests).
2. If before the expiration of such period the
If usufruct is on the If the owner does not
town is abandoned, or the corporation or
building only [Art. rebuild: Usufruct
association is dissolved, the usufruct
607(2), Civil Code] continues over the land
shall be extinguished.
and materials (plus
interests).
b. Special case of third person attaining a
certain age [Art. 606, Civil Code]
If the owner rebuilds:
1. Subsists for the period specified (until the
Owner can occupy the
birthday at which the person would’ve
land and use the
attained that age)
materials.
2. Exception: The usufruct has been
expressly granted only in consideration
If the owner occupies
of the existence of such person
the land and uses the
materials: He must
3. By the Fulfillment of any Resolutory pay the usufructuary
Condition Provided in the Title during the continuance
Creating the Usufruct of the usufruct the
interest on the value of
the land and materials

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Art. 608, Civil Code 8. By Prescription

If destroyed property is insured before a. This refers to acquisitive prescription by a
termination of the usufruct stranger [Paras].
b. It is not the non-use which extinguishes the
When insurance If the owner rebuilds: usufruct by prescription, but the use by a 3rd
premium paid by Usufructuary can person [Tolentino].
owner and continue enjoying the c. There can be no prescription as long as the
usufructuary new building. usufructuary receives the rents from the
lease of the property, or he enjoys the price
If the owner does not of the sale of his right [Tolentino].
rebuild: Usufructuary
shall receive interest Effect of Termination [Art. 612, Civil
on the insurance Code]
indemnity. Obligations and Rights of the Usufructuary
[Paras]
When the Owner shall receive a. Must return the property to the naked
insurance is taken the full amount of the owner [Art. 612, Civil Code]
by the naked insurance indemnity in b. Right to retain the property until he is
owner only case of loss, and either reimbursed
because the of the following, 1. For taxes on the capital which had been
usufructuary depending on the case advanced by him [Art. 597 (2), Civil
refuses to (apply Art. 607, Civil Code]; and
contribute to the Code): 2. Indispensable extraordinary repairs or
premium [Art. expenses insofar as there has been an
608(2), Civil Code] If the owner does not increase in the value [Art. 594 (2), Civil
rebuild: Usufruct Code]
continues over the
remaining land and c. Right to remove removable
materials (plus improvements [Art. 579, Civil Code] or set
interests) them off against damages he has caused
[Art. 580, Civil Code].
If the owner rebuilds:
Usufruct does not Obligations of the Owner [Paras]
continue on the new a. Must cancel the security or mortgage
building, but the owner after delivery is made [Art. 612, Civil Code]
should pay interest on b. Must in case of rural leases, respect leases
the value of the land made by the usufructuary, till the end of the
and materials. agricultural year [Art. 572, Civil Code]
c. Must make reimbursements to the
When insurance Insurance proceeds go usufructuary in the proper cases [Arts. 597
taken by to the usufructuary. No and 594, Civil Code].
usufructuary only obligation to rebuild.
depends on value Usufruct continues on ACTS WHICH DO NOT EXTINGUISH THE
of usufructuary’s the land. Owner has no USUFRUCT
insurable interest share in insurance a. Expropriation of Thing in Usufruct
[Labitag Diagrams] proceeds. [Art. 609, Civil Code]
If the Naked Owner Alone was Given the
7. By the Termination of the Right of Indemnity
General Rule: The naked owner has the
the Person Constituting the option
Usufruct 1. To replace it with an equivalent thing; or
Example: A usufruct constituted by a vendee a 2. To pay to the usufructuary legal interest on
retro terminates upon redemption the indemnity. This requires a security to be
given by the naked owner for the payment
of the interest.
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Exception: If both the naked owner and the
usufructuary were separately given indemnity,
each owns the indemnity given to him, the
usufruct being totally extinguished.

If Both the Naked Owner and the

Usufructuary were Separately Given
Indemnity [Paras]
Each owns the indemnity given to him, the
usufruct being totally extinguished.

If Usufructuary Alone was Given the

Indemnity [Paras]
1. He must give it to the naked owner and
compel the naked owner to return either the
interest or to replace the property.
2. He may even deduct the interest himself, if
the naked owner fails to object.

b. Bad Use of Thing in Usufruct [Art. 610,

Civil Code]
Bad use of the thing in usufruct does not
extinguish the right of the usufructuary whether
there is security or not.

If bad use causes considerable injury to the

owner:
• It does not extinguish the usufruct but the
owner is entitled to demand delivery and
administration of the thing with the
obligation to pay annually the net proceeds.

The usufructuary is liable for damages caused

to property.

c. Usufruct over a Building of Thing in

Usufruct [Art. 607 and 608, Civil Code]
[See table above for the application]

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VI. EASEMENTS 1. By Title or by Something Equivalent
to a Title
Something Equivalent to a Title: Refers to
A. Modes of Acquiring law or juridical acts such as donations,
Easements contracts, or wills.
a. Continuous and apparent easements may
An easement is either acquired through a be acquired by virtue of a title [Art. 620, Civil
title/juridical act or by prescription [Art. 620 and Code].
622, Civil Code]. b. Continuous non-apparent easements, and
discontinuous ones, whether apparent or
not, are acquired only by virtue of a title [Art.
How Acquired 622, Civil Code].
Kind of
Easement c. The absence of a document or proof
Title Prescription showing the origin of an easement which
cannot be acquired by prescription may be
Continuous and YES YES cured by a deed of recognition by the owner
apparent (CA) of the servient estate or by a final judgment
[Art. 623, Civil Code].
Continuous Non- YES NO
apparent (CNA) Deed of recognition: By an affidavit or a
formal deed acknowledging the servitude.
Discontinuous YES NO
and apparent Final judgment: Owner of the dominant estate
(DA) must file a case in court to have the easement
declared by proving its existence through other
Discontinuous YES NO evidence.
Non-apparent
(DNA) The existence of an apparent sign of easement
between two estates, established or
When an easement is established, all rights maintained by the owner of both, shall be
necessary for its use are considered granted considered, should either of them be alienated,
[Art. 625, Civil Code]. as a title in order that the easement may
continue actively and passively. This is also
Continuous – Use of which is or may be applicable to cases of co-ownership [Art. 624,
incessant, without intervention of any act of Civil Code].
man.
Exception: At the time the ownership of the
Discontinuous – Those which are used at two estates is divided, the title of conveyance
intervals and depend upon the actions of man of either of the two estates provides for the
contrary (says the easement will not continue)
Apparent – Those which are made known and or the apparent sign of easement is removed
are continually kept in view by external signs before the execution of the deed of
that reveal the use and enjoyment of the same. conveyance [Art. 624, CC].
Not necessary that its sign be seen; it is
sufficient if it may be known or seen on Illustration: The presence of 4 windows was
inspection considered an apparent sign that created a
negative easement of light and view (altius non
Non-Apparent – Shows no external indication tollendi) i.e. not to build a structure that will
of their existence cover the windows [Amor v. Florentino, G.R.
No. L-48384 (1943)].

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2. By Law (Legal Easements) Mere passage which was permitted and is
Easements imposed by law have for their under an implied license cannot be the basis of
object either public use or the interest of private prescription [Archbishop of Manila v. Roxas,
persons [Art. 634, Civil Code]. G.R. No. L-7386 (1912)].

These easements may be modified by B. Rights and Obligations of the

agreement of the interested parties, whenever
the law does not prohibit it, or no injury is
Owners of the Dominant and
suffered by a third person [Art. 636, Civil Code]. Servient Estates

3. By Prescription 1. Rights of Dominant Estate Owner

Continuous and apparent easements may be a. To use the principal easement, and all
acquired by prescription of 10 years [Art. 620, accessory servitudes.
Civil Code]. b. To make, at his own expense, on the
servient estate, any works necessary for the
Requisites: use and preservation of the servitude, but
a. The easement must be continuous and without altering it or rendering it more
apparent; burdensome [Art. 627 (1), Civil Code].
b. The easement must have been used for c. In a right of way, to ask for change in width
10 years; and of easement sufficient for the needs of the
c. There is no need for good faith or just title. dominant estate [Art. 651, Civil Code].
• The needs of the dominant property
ultimately determine the width of the
Computation of Time passage. These needs may vary from
Kind of
Possession [Art. 621, time to time [Encarnacion v. CA, G.R.
Easement
Civil Code] No. 77628 (1991)].
Positive From the day on which the
d. To renounce totally the easement, if he
Easement owner of the dominant
desires to be exempt from contributing to
estate, or the person who
the expenses [Art. 628, Civil Code].
may have made use of the
easement, commenced to
exercise it upon the servient 2. Obligations of Dominant Estate
estate Owner
a. To use the easement for the benefit of the
Negative From the day on which the immovable and in the manner originally
Easement owner of the dominant established [Art. 626, Civil Code]
estate forbade, by an • If established for a particular purpose,
instrument acknowledged the easement cannot be used for a
before a notary public, the different one. However, if established in
owner of the servient a general way, without specific purpose,
estate, from executing an the easement can be used for all the
act which would be lawful needs of the dominant estate.
without the easement
b. To notify the owner of the servient estate
before making repairs and to make repairs
Whether it is negative or positive depends on in a manner least inconvenient to the
the manner by which it is exercised servient estate [Art. 627(2), Civil Code]
a. Positive – Imposes upon the servient c. Not to alter the easement or render it more
owner the obligation of allowing something burdensome [Art. 627, Civil Code].
to be done, or doing it himself [Art. 616, Civil
• In an easement of a right of way,
Code]
widening the road means making the
b. Negative – Prohibits the servient owner
easement more burdensome
from doing something which he could
[Valderrama v. North Negros Sugar Co.,
lawfully do if the easement did not exist [Art.
G.R. No. L-23810 (1925)].
616, Civil Code]

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d. To contribute to expenses of works 4. Obligations of Servient Estate
necessary for use and preservation of Owner
servitude, if there are several dominant a. Not to impair the use of the easement [Art.
estates [Art. 628, Civil Code]. 629(1), Civil Code]
• The contribution is in proportion to the b. To contribute proportionately to expenses if
benefits which each may derive from the he uses the easement [Art. 628(2), Civil
work. Code]
• If one owner does not wish to contribute, • Exception: Unless there is an
he may exempt himself by renouncing agreement to the contrary.
the easement for the benefit of the
others. c. To pay for the expenses incurred for the
change of location or form of the easement
3. Rights of the Servient Estate
Owner C. Modes of Extinguishment
a. To retain the ownership of the portion of the
estate on which the easement is established Ways by which an easement may be
[Art. 630, Civil Code] extinguished: [Art. 631, Civil Code]
b. To use the easement, provided he shall also (MINERRO – Merger, Impossibility, Non-use,
be obliged to pay the expenses necessary Expiration, Renunciation, Redemption, Other
for the preservation and use of the servitude causes)
[Art. 628 (2), Civil Code] a. By Merger in the same person of the
• Exception to paying expenses: When ownership of the dominant and servient
there is an agreement to the contrary. estates – must be absolute, perfect and
definite, and not merely temporary. If the
c. To change the place or manner of the use merger is temporary, there is at most a
of the easement, provided it be equally suspension of the easement, but no
convenient [Art. 629 (2), Civil Code] extinguishment.
b. By Non-user for ten years – there is
In case the easement becomes very inaction, and not outright renunciation. This
inconvenient for the servient estate owner, or if is due to the voluntary abstention by the
it prevents him from making any important dominant owner, and not due to a fortuitous
works, repairs, or improvements, the event.
easement may be changed, provided: • If discontinuous easement, the period
a. He offers another place/manner equally is counted from the day it ceased to be
convenient. used.
b. Does not cause injury to the dominant • If continuous easement, counted from
estate owner. the day an act adverse to the exercise of
c. Does not cause injury to those who have a the right of easement took place.
right to use the easement, if any. • Note: use by a co-owner bars
prescription as to others as well [Art. 633,
Civil Code].

c. Impossibility of use – impossibility

referred to must render the entire easement
unusable for all time. Impossibility of using
the easement due to the condition of the
tenements (e.g. flooding) only suspends the
servitude until it can be used again.
• Exception: If the suspension exceeds
10 years, the easement is deemed
extinguished by non-use.

d. By the Expiration of the term or the

fulfillment of the resolutory condition -

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applies only to voluntary temporary or termination of the necessity [Spouses Castro v.
conditional easements. Spouses Esperanza, G.R. No. 248763 (2020)].
e. By the Renunciation of the owner of the
dominant estate – must be specific, clear, D. Legal vs. Voluntary Easements
express (distinguished from non-user); or
f. By the Redemption agreed upon Legal easements are created by law, whether
between the owners of the dominant and for public use or for the interest of private
servient estates. persons [Art. 619 and 634, Civil Code].
Other Causes Not Mentioned in Art. 631, For Public Easements
Civil Code 1. Special laws and regulations relating
1. Annulment and rescission of the title thereto (e.g. PD 1067 (Water Code) and PD
constituting the voluntary easement; 705 (Forestry Code)).
2. Termination of the right of grantor of the 2. By the provisions of Chapter 2, Title VII,
voluntary easement; Book II, Civil Code.
3. Abandonment of the servient estate;
Owner of the servient estate gives up For Private Legal Easements
ownership of the easement (e.g. the strip of 1. By agreement of the interested parties
land where the right of way is constituted) in whenever the law does not prohibit it and no
favor of the dominant estate. The easement injury is suffered by a 3rd person.
is extinguished because ownership is 2. By the provisions of Chapter 2, Title VII,
transferred to the dominant owner, who now Book II.
owns both properties.
4. Eminent domain; and the government’s Voluntary easements are created by the will
power to expropriate property for public use, of the owners of the estate through contract,
subject to the payment of just last will or donation. These must be recorded in
compensation. the Registry of Property to prejudice third
5. Special cause for extinction of legal persons [Art. 619, Civil Code].
rights of way: if right of way no longer
necessary [Art. 655, Civil Code] Note: Easements cannot be created by courts.
The court’s role is only to declare the existence
Right of Way Ceases to be Necessary of an easement if in reality one exists by virtue
[Art. 655, Civil Code]: of law or will of the parties. Thus, there are no
1. Owner of the dominant estate has joined to judicial easements [Castro v. Monsod, G.R.
another abutting on a public road. No. 183719 (2011)].
2. A new road is opened giving access to the
isolated estate
3. Requisite: the public highway must
E. Kinds of Legal Easement
substantially meet the needs of the
dominant estate. 1. Relating to Waters
4. Owner of the servient estate may demand a. Natural Drainage [Art. 637, Civil Code]
that the easement be extinguished, and he Lower estates are obliged to receive the waters
must return what he may have received by which naturally and without the intervention of
way of indemnity. The interest thereon shall man descend from the higher estates (as well
be deemed payment for rent for the use of as the stones or earth which they carry with
the easement. them).

The opening of an adequate outlet to a The owner of the lower estate cannot construct
highway can extinguish only legal or works which will impede this easement; neither
compulsory easements, not voluntary can the owner of the higher estate make works
easements. The fact that an easement by grant which will increase the burden.
may have also qualified as an easement of
necessity does not detract from its permanency Refer to Art. 46 of the Water Code which states
as a property right, which survives the that “when artificial means are employed to
drain water from higher to lower land, the
owner of the highest land shall select the routes
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and methods of drainage that will cause the e. Aqueduct [Arts. 642-646, Civil Code]
minimum damage to the lower lands, subject to
the requirements of just compensation.” Any person who may wish to use upon his own
estate any water of which he can dispose shall
b. Riparian Banks [Art. 638, Civil Code] have the right to make it flow through the
The banks of rivers and streams, even in case intervening estates, with the obligation to
they are of private ownership, are subject indemnify their owners, as well as the owners
throughout their entire length and within a zone of the lower estates upon which the waters may
of 3 meters for urban areas, 20 meters for filter or descend [Art. 642, Civil Code].
agricultural areas and 40 meters for forest
areas [Art. 51, Water Code] along their Requisites to Establish Easement of
margins, to the easement of public use in the Aqueduct [Art. 643, Civil Code]:
general interest of navigation, floatage, fishing, 1. To prove that he can dispose of the water
recreation and salvage. and that it is sufficient for the use for which
it is intended;
Estates adjoining the banks of navigable or 2. To show that the proposed right of way is
floatable rivers are subject to the easement of the most convenient and the least
towpath for the exclusive service of river onerous to third persons;
navigation and floatage. If it is necessary to 3. To indemnify the owner of the servient
occupy lands of private ownership, the proper estate in the manner determined by the laws
indemnity shall first be paid. and regulations.
4. Acquire a water permit [Art. 13, Water
c. Abutment of a Dam [Art. 639, Civil Code]
Code]
Whenever for the diversion or taking of water What it cannot be imposed on: Easement of
from a river or brook, or for the use of any other aqueduct for private interest cannot be
continuous or discontinuous stream, it should imposed on buildings, courtyards, annexes, or
be necessary to build a dam, and the person outhouses, or on orchards or gardens already
who is to construct it is not the owner of the existing [Art. 644, Civil Code].
banks, or lands which must support it, he may
establish the easement of abutment of a dam, Right of servient estate owner: This
after payment of the proper indemnity. easement does not prevent the owner of the
servient estate from closing or fencing it, or
Note: The Water Code requires a water permit from building over the aqueduct in such
for the establishment of a dam [Art. 18, Water manner as not to cause the latter any damage,
Code]. or render necessary repairs and cleanings
impossible [Art. 645, Civil Code].
d. Drawing Water and Watering Animals
[Arts. 640 and 641, Civil Code] Treatment under law: This easement is
Compulsory easements for drawing water or considered as continuous and apparent, even
for watering animals can be imposed only for though the flow of the water may not be
reasons of public use in favor of a town or continuous, or its use depends upon the needs
village, after payment of the proper indemnity of the dominant estate, or upon a schedule of
[Art. 640, Civil Code]. alternate days or hours [Art. 646, Civil Code].

Easements for drawing water and for watering In the appropriation of water, there is a need to
animals carry with them the obligation of the apply for water rights.
owners of the servient estates to allow passage
to persons and animals to the place where Any person having an easement for an
such easements are to be used, and the aqueduct may enter upon the servient land for
indemnity shall include this service [Art. 641, the purpose of cleaning, repairing or replacing
Civil Code]. the aqueduct or the removal of obstructions
therefrom [Art. 49, Water Code].
The width of the easement must not exceed 10
meters [Art. 657, Civil Code].
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Easements for aqueduct and of right of way c. Even if there is access, it is difficult or
cannot be acquired by prescription because dangerous to use, or grossly
although it may be apparent, it is discontinuous insufficient;
in character. Under the Water Code of the 1. Mere inconvenience in the use of an
Philippines, all waters belong to the state. outlet does not render the easement a
necessity.
Water legally appropriated shall be subject to 2. An adequate outlet is one that is
the control of the appropriator from the moment sufficient for the purpose and needs of
it reaches the appropriator from the moment it the dominant owner, and can be
reaches the appropriator’s canal or aqueduct established at a reasonable expense.
leading to the place where the water will be 3. Does not necessarily have to be by land
used or stored and, thereafter, so long as it is – an outlet through a navigable river or a
being beneficially used for the purposes for lake or the sea if suitable to the needs of
which it was appropriated [Art. 8, Water Code]. the tenement is sufficient.
4. The isolation of the immovable is not due
f. Stop Lock or Sluice Gate [Art. 647, to the dominant owner’s own acts e.g. if
Civil Code] he constructs building to others
The construction of a stop lock or sluice gate in obstructing the old way; and
the bed of the stream from which the water is 5. There is payment of indemnity.
to be taken, for the purpose of irrigating or
improving an estate. If right of way is permanent and continuous
for the needs of the dominant estate = value of
Such person may demand that the owners of the land + amount of damage caused to the
the banks permit its construction, after servient estate.
payment of damages, including those caused
by the new easement to such owners and to If right of way is limited to necessary passage
the other irrigators. for cultivation of the estate and for gathering
crops, without permanent way = damage
2. Right of Way caused by encumbrance.
Who May Demand [Art. 649, Civil Code]
1. The owner of the dominant estate; or Rules for Establishing Right of Way
2. Any person with the real right to cultivate or The easement of right of way shall be
use the dominant estate e.g. a usufructuary, established at the point least prejudicial to
a de jure possessor. the servient estate, and, insofar as consistent
with this rule, where the distance from the
Note: A lessee cannot demand such dominant estate to a public highway may be
easement, because the lessor is the one bound the shortest [Art. 650, Civil Code].
to maintain him in the enjoyment of the
property. The criterion of least prejudice to the servient
estate must prevail over the criterion of
Note: A right of way can be established through shortest distance although this is a matter of
the will of parties as well, and the provisions on judicial appreciation. While shortest distance
the legal easement of right of way will not may ordinarily imply least prejudice, it is not
govern. always so as when there are permanent
structures obstructing the shortest distance;
Requisites for Legal Demand to Establish while on the other hand, the longest distance
the Easement of Right of Way [Art. 649, Civil may be free of obstructions and the easiest or
Code; Floro v. Llenado, G.R. No. 75723 most convenient to pass through [Quimen v.
(1995)] CA, G.R. No. 112331 (1996)].
a. The dominant estate is surrounded by
other immovables owned by other The fact that LGV had other means of egress
persons; to the public highway cannot extinguish the
b. There must absolutely be no access i.e. said easement, being voluntary and not
means of entrance or exit/egress to a public compulsory. The free ingress and egress along
highway; Mangyan Road created by the voluntary
agreement between the parties is thus legally
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demandable with the corresponding duty on
the right of way
the servient estate not to obstruct the same [La
without indemnity
Vista Association v. CA, G.R. No. 95252
(1997)]. Seller, Grantor or Donor as Dominant
Owners
The width of the easement of right of way shall
be that which is sufficient for the needs of the The seller or The donee shall grant
dominant estate, and may accordingly be grantor shall pay the right of way without
changed from time to time [Art. 651, Civil indemnity indemnity
Code].

Who has the Burden of Proof in an action Notes on Extinguishment

for Right of Way? Extinguishment is not automatic. The owner of
The burden of proving the existence of the the servient estate must ask for such
prerequisites to validly claim a compulsory right extinguishment.
of way lies on the owner of the dominant estate.
Indemnity paid to the servient owner must be
Obligations in Permanent and Temporary returned without interest. Interest on account of
Easements of Right of Way indemnity is deemed to be rent for use of
easement.
Permanent Right Temporary Right of
of Way Way 3. Light and View [Arts. 667-673, Civil
Indemnity Code]
Easement of Light (jus luminum)
Consists of the Consists of the The right to admit light from the neighboring
damages and the damages only. estate by virtue of the opening of a window or
value of the land. the making of certain openings.

Necessary Repairs Easement of View (jus prospectus)

The right to make openings or windows, to
Dominant owner to Servient owner to enjoy the view through the estate of another
spend spend. and the power to prevent all constructions or
works which would obstruct such view or make
Share in Taxes the same difficult.

The dominant Servient owner to The easement of view necessarily includes the
owner shall spend on such. easement of light, because it is impossible to
reimburse a have a view only without a light. However, it is
proportionate share possible to have light without a view.
of taxes to the
proprietor of the How Acquired
servient estate. Through a period of prescription of 10 years,
counted depending on whether it was positive
Rules on Indemnity for Estates Enclosed or negative in nature.
Through a Sale, Exchange, Partition or
Donation Nature [Art. 668, Civil Code]
a. Positive: Opening a window through a
Sale, Exchange or party wall.
Donation
Partition 1. Period of prescription begins upon the
opening being made through the wall of
Buyer, Grantee or Donee as Dominant another.
Owners 2. When a part owner of a party wall opens
a window therein, such act implies the
The buyer or The donee shall pay
exercise of the right of ownership by the
grantee shall grant the donor indemnity. use of the entire thickness of the wall.
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3. The easement is created only after the can side or oblique views upon or towards such
lapse of the prescriptive period. conterminous property be had, unless there be
a distance of sixty centimeters [Art. 670, Civil
b. Negative: Opening a window through a wall Code].
on the dominant estate.
1. Period of prescription begins upon the In cases of direct views from the outer line of
formal prohibition upon the owner of the the wall when the openings do not project, the
adjoining land or tenement. distance shall be measured from the outer line
a. Formal means that the prohibition has of the latter when they do, and in cases of
been notarized. Means notice and oblique view from the dividing line between the
demand was given to the owner of the two properties [Art. 671, Civil Code].
possible servient estate [Cortes v. Yu-
Tibo, G.R. No. 911 (1903)]. Exception: In buildings separated by a public
b. When a person opens a window on way or alley, not less than 3 meters wide, the
his own building, he is exercising his distances required do not apply [Art. 672, Civil
right of ownership on his property, Code].
which does not establish an
easement. Exception: The distances may be stipulated
by the parties, provided that the distance
• Coexistent is the right of the owner of the should not be less than what is prescribed by
adjacent property to build or plant on his the law (2 meters and 60 centimeters) [Art. 673,
own land, even if such structures or planting Civil Code].
cover the window.
• If the adjacent owner does not build Whenever by any title a right has been
structures to obstruct the window, such is acquired to have direct views, balconies or
considered mere tolerance and not a waiver belvederes overlooking an adjoining property,
of the right to build. the owner of the servient estate cannot build
• An easement is created only when the thereon at less than a distance of three meters
owner opens up a window and to be measured in the manner provided in
subsequently prohibits or restrains the Article 671 [Art. 673, Civil Code].
adjacent owner from doing anything that
may tend to cut off or interrupt the light and Note: Breach of the required distances results
the 10-year prescriptive period has lapsed into the prescriptive period not running [Art.
by a notarial prohibition. 670, Civil Code].

Note: What is the reason why the easement of Notes on the Acquisition of the Easement
light and view and the easement not to build a Period of acquisitive prescription depends
higher easement (altius non tollendi) cannot go upon whether the easement of light and view is
together? positive or negative.

An easement of light and view requires that the If positive, then the prescription period is
owner of the servient estate shall not build to a counted from the day the window is opened. If
height that will obstruct the window. They are, negative, then the prescription period is
as it were, the two sides of the same coin. counted from the formal prohibition made on
While an easement of light and view is positive, the owner of the servient estate [Art. 668, Civil
that of altius non tollendi is negative [Amor v. Code].
Florentino, G.R. No. L-48384 (1943)].

Limitations as to Measurements
No windows, apertures, balconies, or other
similar projections which afford a direct view
upon or towards an adjoining land or tenement
can be made, without leaving a distance of two
meters between the wall in which they are
made and such contiguous property. Neither
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VII. NUISANCE 1. According to Nature
a. Nuisance per se
Those which are unquestionably and under all
A. Classes circumstances nuisances, such as gambling
houses, houses of ill fame, etc. [Iloilo Cold
Definition [Art. 694, Civil Code] Storage v. Municipal Council, supra].
A nuisance is any act, omission, establishment,
condition of property, or anything else which: Generally defined as an act, occupation, or
1. Injures or endangers the health or safety structure, which is a nuisance at all times and
of others; (e.g. House in danger of falling, under any circumstances, regardless of
fireworks or explosives factory, houses location or surrounding [Aquino v. Municipality
without building permits and without of Malay, G.R. No. 211356 (2014)].
provisions for disposal of waste matter)
[Ayala v. Barretto, G.R. No. L-9966 (1916)]; Abatement: Since they affect the immediate
or safety of persons and property, they may be
2. Annoys or offends the senses; (e.g. summarily abated under the undefined law of
leather factory, garbage cans, pumping necessity [Monteverde v. Generoso, G.R. No.
station with a high chimney, smoke, noise) 28491 (1928)].
[Bengzon v. Prov. of Pangasinan, G.R. No.
L-41941 (1936)]; or b. Nuisance per accidens
3. Shocks, defies, or disregards decency or Those that are nuisances because of
morality; (e.g. Movie actress strips nude in particular facts and circumstances
the lobby of a movie house for sake of surrounding the otherwise harmless cause of
publicity for a movie) [Paras]; or the nuisance [Iloilo Cold Storage v. Municipal
4. Obstructs or interferes with the free Council, supra].
passage of any public highway or street, or
any body of water; (e.g. Permanent Generally a question of fact, to be determined
obstructions on barrio roads, such as in the first instance before the term nuisance
illegally constructed houses, are injurious to can be applied to it.
public welfare and convenience. The
occupation and use of private individuals of That which depends upon certain conditions
public places devoted to public use and circumstances, and its existence being a
constitute public and private nuisances and question of fact, it cannot be abated without
nuisance per se [Alolino v. Flores, G.R. No. due hearing thereon in a tribunal authorized to
198774 (2016)]; or decide whether such a thing does in law
5. Hinders or impairs the use of property constitute a nuisance [Aquino v. Municipality of
(e.g. Illegal constructions or activities on Malay, G.R. No. 211356 (2014)].
another person or entity’s land).
Abatement: No authority has the right to
Differentiate Nuisance from Negligence: compel the abatement of a particular thing or
Negligence is penalized because of lack of act as a nuisance without reasonable notice to
proper care but a nuisance is wrong not the person alleged to be maintaining or doing
because of the presence or absence of care, the same of the time and place of hearing
but because of the injury caused [Paras before a tribunal authorized to decide whether
quoting 39 AmJur 282]. such a thing or act does in law constitute a
nuisance [Monteverde v. Generoso, G.R. No.
Nuisances have been divided into two classes: 28491 (1928)].
Nuisances per se, and nuisances per accidens
[Iloilo Cold Storage v. Municipal Council, G.R.
No. L-7012 (1913)]

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2. According to Scope of Injurious artificial as well as natural, in the absence of
Effects some unusual condition or artificial feature
a. Public Nuisance other than the mere water and its location. If
Nuisance that affects a community or the owner of private property creates an
neighborhood or any considerable number of artificial pool on his own property, merely
persons [Art. 695, Civil Code]. duplicating the work of nature without adding
any new danger, he is not liable because of
having created an “attractive nuisance”
b. Private Nuisance
[Hidalgo Enterprises v. Balandan, G.R. L-3422
One that is not included in the foregoing (public
(1952)].
nuisance) definition [Art. 695, Civil Code].

One which violates only private rights and C. Liability in Case of Nuisance
produces damages to but one or a few specific
persons. Who are Liable [PrEsoPp]
1. Person responsible for creating the
B. Doctrine of Attractive nuisance; If the prejudice exceeds the
inconveniences that such proximity
Nuisance habitually brings, the neighbor who
causes such disturbance is held
One who maintains on his premises dangerous responsible for the resulting damage,
instrumentalities or appliances of a character being guilty of causing nuisance [Velasco
likely to attract children at play, and who fails to v. Manila Electric Co., G.R. No. L-18390
exercise ordinary care to prevent children from (1971)].
playing therewith or resorting thereto, is liable 2. Every successive owner or possessor of
to a child of tender years who is injured property who fails or refuses to abate a
thereby, even if the child is technically a nuisance in that property started by a former
trespasser in the premises [Jarco Marketing owner or possessor is liable therefor in the
Corp. v. CA, G.R. No. 129792 (1999)]. same manner as the one who created it [Art.
696, Civil Code];
Reason for Doctrine: a. Provided that he knew of the nuisance
Although the danger is apparent to those of and must knowingly fail or refuse to
age, it is so enticing or alluring to children of abate the nuisance [Paras citing Lambs
tender years as to induce them to approach v. Roberts, 196 Ala. 679].
[Ibid]. b. To render the new owner or possessor
liable, it is necessary that he has actual
Basis of Liability: knowledge of the existence of the
When one keeps in his premises dangerous nuisance, and that it is within his power
instrumentalities or appliances that are likely to to abate the same.
attract children, and fails to exercise ordinary c. “If he cannot physically abate the
care to prevent children from playing therewith nuisance without legal action against
another person, then he shall not be
Application to Bodies of Water liable for such nuisance.”
1. General Rule: Not applicable to bodies of
water, artificial [merely duplicating nature] or 3. A Private person or public official shall be
natural liable for damages if:
2. Exception: There is some unusual a. In an extrajudicial abatement;
condition or artificial feature other than the b. He causes unnecessary injury; or
mere water and its location c. An alleged nuisance is later declared by
3. Rationale: Children are earlier instructed so the courts to be not a real nuisance [Art.
that they are sufficiently presumed to know 707, Civil Code].
the danger [nature has created streams,
lakes, and pools which attract children]

Note: The attractive nuisance doctrine

generally is not applicable to bodies of water,

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D. Regulation of Nuisances Criminal Prosecution as a Remedy
Criminal prosecution is instituted only for
General Rule “public nuisance” and not for a private
Lapse of time cannot legalize any nuisance, nuisance. The action is brought in the name of
whether public or private [Art. 698, Civil Code]. the “People of the Philippines” since public
nuisances are considered as offenses against
Note: Arts. 698 and 1143(2) do not apply to the State [De Leon].
easements which are extinguished by
obstruction or non-use for ten (10) years under Judgment with Abatement as a Remedy
Art. 631 [Ongsiako v. Ongsiako, G.R. No. L- If a civil action is brought by reason of the
7510 (1957)] maintenance of a public nuisance, such action
shall be commenced by the city or municipal
The abatement of a nuisance does not mayor [Art. 701, Civil Code].
preclude the right of any person injured to
recover damages for its past existence [Art. Process for Judicial Abatement (through
697, Civil Code]. Civil Action):
General Rule: If a civil action is brought by
Note: Remedies of abatement and damages reason of the maintenance of a public
are cumulative and may both be demanded. nuisance, such action shall be commenced by
the city or municipal mayor [Art. 701, Civil
Extinctive Prescription Code].
No Extinctive Prescription to abate a nuisance
or Acquisitive Prescription for the right to use of Exception: A private person may file an action
the property that creates such nuisance. The on account of a public nuisance if it is
action to abate a public or private nuisance is especially injurious to him [Art. 703, Civil
not extinguished by prescription [Art. 1143 Code].
(2), Civil Code].
Extrajudicial Abatement as a Remedy
Defenses to Action Remedies of the a. It must be reasonably and efficiently
Property Owner exercised.
A person whose property is seized or b. Means employed must not be unduly
destroyed as a nuisance may resort to the oppressive on individuals.
courts to determine whether or not it was in fact c. No more injury must be done to the
a nuisance. property or rights of individuals than is
1. An action for replevin; necessary to accomplish the abatement.
2. To enjoin the sale or destruction of the d. No right to compensation if property taken
property; or destroyed is a nuisance.
3. An action for the proceeds of its sale and
damages if it has been sold; or Process for Extrajudicial Abatement:
4. To enjoin private parties from proceeding to a. The district health officer shall take care that
abate a supposed nuisance. one or all of the remedies against a public
nuisance are availed of [Art. 700, Civil
1. Public Nuisance Code].
b. The district health officer shall determine
Remedies Against a Public Nuisance
whether or not abatement, without judicial
a. A prosecution under the Penal Code or any
proceedings, is the best remedy against a
local ordinance; or
public nuisance [Art. 702, Civil Code].
b. A civil action; or
c. Abatement, without judicial proceedings
[Art. 699, Civil Code]. a. Summary Abatement
Nuisances per se
Note: The three remedies against a public Since they affect the immediate safety of
nuisance enumerated under Art. 699 are not persons and property, they may be summarily
exclusive but cumulative [De Leon]. abated under the undefined law of necessity
[Monteverde v. Generoso, G.R. No. 28491
(1928)].
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Nuisances per accidens 4. That the value of the destruction does not
If no compelling necessity requires the exceed P3,000.
summary abatement of a nuisance, the
municipal authorities, under their power to Other Persons Authorized by Law
declare and abate nuisances, do not have the Other persons may be authorized by law to
right to compel the abatement of a particular remove nuisances such as in Sitchon v. Aquino
thing or act as a nuisance without reasonable [G.R. No. L-8191 (1956)], where the Manila
notice to the person alleged to be charter authorized the City Engineer to do so.
maintaining or doing the same of the time
and place of hearing before a tribunal Rules on Abatement
authorized to decide whether such a thing or 1. The right must be exercised only in cases
act does in law constitute a nuisance [Iloilo of urgent or extreme necessity. The thing
Cold Storage v. Municipal Council, G.R. No. L- alleged to be a nuisance must be existing at
7012 (1913)]. the time that it was alleged to be a nuisance.
2. A summary abatement must be resorted to
b. Need for Abatement within a reasonable time after knowledge
One of the most serious hindrances to the of the nuisance is acquired or should have
enjoyment of life and property is a nuisance. been acquired by the person entitled to
Provisions for its abatement are indispensable abate.
[Report of the Code Commission, p.51]. 3. The person who has the right to abate must
give reasonable notice of his intention to
c. Who May Abate Public Nuisances do so, and allow thereafter a reasonable
District Health Officer time to enable the other to abate the
The district health officer shall take care that nuisance himself.
one or all of the remedies against a public 4. The means employed must be
nuisance are availed of [Art. 700, Civil Code]. reasonable and for any unnecessary
damage or force, the actor will be liable. The
Note: If the district health officer or the city right to abate is not greater than the
engineer is not consulted beforehand in the necessity of the case and is limited to the
case of extrajudicial abatement, the person removal of only so much of the
doing the abating is not necessarily liable. They objectionable thing as actually causes the
would be liable for damages under Art. 707 if nuisance.
the abatement is carried out with unnecessary 5. The property must not be destroyed
injury, or if the alleged nuisance is later unless it is absolutely necessary to do so.
declared by the courts to be not a real nuisance
[Paras]. 2. Private Nuisance
Remedies Against a Private Nuisance
Private Persons [Art. 705, Civil Code]:
Any private person may abate a public a. A civil action; or
nuisance which is especially injurious to him by b. Extrajudicial abatement
removing or, if necessary, destroying the thing
which constitutes the same, without committing Requisites for a Valid Extrajudicial
a breach of the peace, or doing necessary Abatement [Art. 706, Civil Code]:
injury [Art. 704, Civil Code]. a. The procedure for extrajudicial abatement
of a public nuisance by a private person will
Requisites of the Right of a Private also be followed.
Individual to Bring a Civil Action to Abate
a Public Nuisance [Art. 704, Civil Code] Note: See municipal health officer under
1. That demand be first made upon the Arts. 700 and 702, Civil Code. No breach of
owner or possessor of the property to abate peace or unnecessary injury
the nuisance;
2. That such demand has been rejected;
3. That the abatement be approved by the
district health officer and executed with the
assistance of the local police; and
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VIII. MODES OF ACQUIRING Claimable by prior owner within twenty days
from occupation by another person [Art. 716,
OWNERSHIP Civil Code].

Modes of Acquiring Ownership [Art. 712, Swarm of Bees

Civil Code] Prior owner has the right to pursue them to
a. Occupation - Arts. 713-720, Civil Code another’s land, but is liable for damages the
b. Donation - Arts. 712, 725-726, Civil Code other person may suffer [Art. 716, Civil Code].
c. Prescription and Laches - Arts. 712,
1106-1107, Civil Code Other persons may occupy or retain the swarm
d. Intellectual Creation - Arts. 721-724, Civil if prior owner:
Code; Intellectual Property Code 1. Has not pursued the swarm; or,
e. Testate and Intestate Succession - Arts. 2. Ceased to pursue the swarm within two
774-1105, Civil Code consecutive days from movement towards
f. By tradition, in consequence of certain other person’s property [Art. 716, Civil
contracts - Arts. 1458-1637, Civil Code Code]

Note: Only items (a), (b) and (c) are discussed Pigeons and Fish
in Property. Item (d) is discussed in the General Rule: Belongs to the owner of the
Intellectual Property Code part of the breeding place into which they have moved
Commercial Law reviewer. Items (e) and (f) are [Art. 717, Civil Code];
discussed in the Succession and Sales part,
respectively, of the Civil Law reviewer. Exception: Belongs to prior owner if
movement was enticed by some artifice or
A. Occupation fraud [Art. 717, Civil Code].

1. Requisites c. On Other Personal Property

a. The subject must have the intention to Abandoned Movables
acquire ownership and the necessary May be acquired, as long as the abandonment
capacity to consent. made by the prior possessor is voluntary and
b. The object must be appropriable by nature intentional [De Leon].
and without an owner.
c. There must be an act of taking Lost Movables (except treasure) [Art. 719,
possession of the thing (not necessarily Civil Code]
material holding so long as the thing is
considered subjected to the disposition of Known/Unknown Possessor
the possessor 1. If prior possessor is known, the thing must
be returned to him/her;
2. Rules 2. If prior possessor is unknown, the thing
must be deposited with the mayor of the
a. On Land
city/municipality where it was found;
Ownership of land cannot be acquired by
occupation [Art. 714, Civil Code].
Procedure [Arts. 719-720, Civil Code]
1. The mayor publicly announces the finding
b. On animals of the thing for two consecutive weeks in the
Wild Animals way he deems best.
Possessed only while under a person’s control 2. If the item cannot be kept without
[Art. 560, Civil Code]. deterioration or without expenses that
considerably diminish its value, it shall be
Domesticated Animals sold at public auction eight days after the
Domesticated animals are those who retain the publication.
habit of returning to the premises of their 3. If the owner does not appear within six
owner [Art. 560, Civil Code]; and, months from publication, the thing or its
value shall be awarded to the finder.

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4. If the owner appeared in time, the owner is Exceptions:
obliged to pay the finder one-tenth of the a. Guardians and trustees cannot donate the
price of the thing. property entrusted to them [Art. 736, Civil
Code];
Hidden Treasure b. Minors and others who cannot enter into a
Definition: Any hidden and unknown deposit contract may become donees but
of money, jewelry, or other precious objects the acceptance shall be done through their
lawful ownership of which does not appear [Art. parents or legal representatives [Art. 741,
439, Civil Code]. Civil Code];
c. For donation to conceived and unborn
Ownership children, acceptance may be made by
General Rule: Belongs to the owner of the persons who would legally represent them if
property where it is found [Art. 438, Civil they were already born [Art. 742, Civil
Code]. Code];
d. Donations made to incapacitated persons
Exceptions [OTI-other, trespasser, interest]: shall be void (though simulated under the
1. If found on (a) property of another, the guise of another contract or through a
State, or any of its subdivisions and (b) by person who is interposed) [Art. 743, Civil
chance; Code]; and,
a. Only one-half shall be allowed to the e. When the same thing is donated to two or
finder; more different donees, rules on double sale
govern [Art. 744, Civil Code];
2. If finder is a Trespasser; 1. If personal property - ownership goes to
a. Finder is not entitled to any share; and, the first possessor in good faith;
2. If immovable property - ownership goes
3. If things are of Interest to science or the to the first registrant in good faith [Art.
arts; 1544, Civil Code].
a. The State may acquire them at their just
price, which shall be divided in 3. Effects and Limitations
conformity with the rules stated Effect. – The patrimony or assets of the donor
is decreased, while that of the donee is
B. Donation increased.

1. Requisites [CADAF] Limitations

a. Capacity of donor to make a donation; a. Reservation of sufficient means for support
b. Donative intent (Animus donandi); of donor and relatives [Art. 750, Civil Code];
c. Delivery (actual or constructive); 1. Donation without reservation is not null
d. Acceptance by the donee; and, and void in its entirety; it is only subject
1. Acceptance by the donee is required to reduction by the court;
because donation is never obligatory. 2. Limitation applies to simple,
One cannot be compelled to accept the remunerative and modal donations but
generosity of another. not to onerous ones nor to donations
2. Although under Art. 725, donation is an mortis causa;
act, it is really a contract. The essential
requisites of consent, subject matter, b. Donations cannot comprehend future
and cause must be present [Tolentino]. property [Art. 751, Civil Code];
1. Future property: understood as
e. Necessary Form prescribed by law. anything which the donor cannot dispose
of at the time of the donation;
2. Rationale: Nobody can dispose of that
2. Persons Who May Give/Receive a
which does not belong to him;
Donation 3. Future inheritance cannot be donated
General Rule: All persons who may contract because it is considered future property.
and dispose of their property [Art. 735, Civil However, upon the death of his
Code]. predecessor, the inheritance ceases to

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be future and consequently, may be the 1. Definition
object of donation [Osorio v. Osorio, G.R. By prescription, one acquires ownership and
No. 16544 (1921)]; other real rights through the lapse of time in the
manner and under the conditions laid down by
c. Amount of donation limited to what donor law. In the same way, rights and conditions are
may give by will [Art. 752, Civil Code]; lost by prescription [Art. 1106, Civil Code].
1. A person may not donate more than he
can give by will. A donation, which Note: For purposes of acquiring ownership,
exceeds what the donor may give or only acquisitive prescription is being referred
receive by will, is considered to.
inofficious.
2. Limitation applies where the donor has 2. Who May Acquire Ownership by
forced or compulsory heirs. Prescription
Persons who are capable of acquiring property
4. Revocation and Reduction or rights by the other legal modes may acquire
Distinguished the same by means of prescription [Art. 1107
Reduction Revocation (1), Civil Code].

Total withdrawal of Amount is only Minors and other incapacitated persons may
amount, whether the insofar as the acquire property or rights personally or through
legitime is impaired legitime is their parents, guardians, or legal
or not prejudiced; representatives [Art. 1107 (2), Civil Code].

3. Types
Benefits the donor Benefits the donor’s a. Acquisitive Prescription
heirs (except when The acquisition of ownership and other real
made on the ground rights through possession in the concept of
of the appearance of owner of a thing in the manner and condition
a child). provided by law.

Revocation due to birth, appearance, or Ordinary

adoption of a child applies only to donations Ordinary acquisitive prescription requires
inter vivos and not to donations mortis causa, possession of things in good faith and with just
onerous donations, and donations propter title for the time fixed by law.
nuptias [De Leon].
Note: Ownership and other real rights over
Situations Contemplated immovable property are acquired by ordinary
a. The existence of children, if the donor has prescription through possession of ten years
no such child when the donation was made [Art. 1134, Civil Code]
[Art. 760, Civil Code];
b. The donee’s failure to comply with any of Extraordinary
the conditions the former imposed upon Extraordinary acquisitive prescription is the
the latter [Art. 764, Civil Code]; acquisition of ownership and other real rights
c. The donee’s ingratitude [Art. 765, Civil without need of title or of good faith or any other
Code]; condition.
d. Inofficious donations [Art. 752, Civil Code];
or b. Extinctive Prescription
e. Multiple donations cannot be covered by It is the loss or extinguishment of property
the disposable portion in case of succession rights or actions through the possession by
[Art. 773, Civil Code]. another of a thing for the period provided by law
or through failure to bring the necessary action
to enforce one’s right within the period fixed by
C. Prescription law.

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Requisites Action to Demand Partition;
1. Capacity to acquire by prescription; Distinguished from Laches
2. A thing capable of acquisition by No prescription shall run in favor of a co-owner
prescription; or co-heir against his co-owners or co-heirs so
3. Possession of the thing under certain long as he expressly or impliedly recognizes
conditions; and the co-ownership [Art. 494, Civil Code].
4. Lapse of time provided by law
Prescription vs. Laches
Periods
Prescription Laches
1. Movables
a. 4 years ‐ If in good faith; and,
Concerned with the Concerned with the
b. 8 years ‐ If in bad faith [Art. 1140 in fact of delay. effect of delay.
relation to Art. 1132, Civil Code]
A matter of time Principally a question
2. Immovables of inequity of
a. 10 years ‐ If in good faith permitting a claim to
b. 30 years ‐ If in bad faith be enforced, this
inequity being
4. When Inapplicable founded on some
By Offender subsequent change
The offender can never acquire, through in the condition or the
prescription, movable properties possessed relation of the
through a crime such as robbery, theft, or parties.
estafa [Art. 1133, Civil Code].
Statutory. Not statutory.
Note: The person who cannot invoke the right
of prescription is the offender or person who Applies at law. Applies at equity.
committed the crime or offense, not a
subsequent transferee who did not participate Cannot be availed of Being a defense of
in the crime or offense, unless the latter knew unless it is equity, need not be
the criminal nature of the acquisition of the especially pleaded specifically pleaded.
property by the transferor. as an affirmative
allegation.
Registered Lands
No title to registered land in derogation of the Based on a fixed Not based on a fixed
title of the registered owner shall be acquired time. time.
by prescription or adverse possession
[Property Registration Decree, PD 1529]. Property of Public Dominion
Prescription, both acquisitive and extinctive,
Actions to Demand a Right of Way; to does not run against the State in the exercise
Abate a Nuisance [Art. 1143, Civil Code] of its sovereign function to protect its interest
Action to Quiet Title if Plaintiff is in except with respect to its patrimonial property
Possession which may be the object of prescription [Art.
When the plaintiff is in possession of the 1113, Civil Code].
property, the action to quiet title does not
prescribe. The reason is that the owner of the 5. Prescription of Ownership and
property or right may wait until his possession Other Real Rights
is disturbed or his title is assailed before taking Ownership and other real rights over
steps to vindicate his right. immovable property are acquired by ordinary
prescription through possession of ten years
Void Contracts [Art. 1134, Civil Code].
The action or defense for the declaration of the
inexistence of a contract does not prescribe
[Art.1410, Civil Code].

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6. Prescription of Actions from the time of the issuance of the Torrens
a. To Recover Movables title over the property [Heirs of Sumagang v.
General Rule: Eight (8) years from the time Aznar Enterprises, G.R. No. 214315
possession was lost [Art. 1132 and 1140, Civil (2019)].
Code]
Interruption of Prescription
Exception: When Interrupted
1. If action is brought after four (4) years when 1. When the action is filed before the court;
the possessor has already acquired title by 2. When there is a written extrajudicial
ordinary acquisitive prescription [Art. demand by the creditors; and,
1132, Civil Code]. 3. When there is any written acknowledgment
2. If the possessor acquired the movable in of the debt by the debtor.
good faith at a public sale, the owner
cannot obtain its return without reimbursing Note: An interruption of the prescriptive
the price paid [Art. 559, Civil Code]. period wipes out the period that has
elapsed, sets the same running anew, and
b. To Recover Immovables creates a fresh period for the filing of an
General Rule: Real actions prescribe after action [Selerio v. Bancasan, G.R. No.
thirty (30) years [Art. 1141, Civil Code]. 222442 (2020)].

Exception: The possessor has acquired Types of Interruption

ownership of the immovable by ordinary 1. Natural – Any natural cause that interrupts
acquisitive prescription through possession of the possession for more than one year [Art.
ten (10) years [Art. 1134, Civil Code]. 1121, Civil Code]
2. Civil – [Art. 1123, Civil Code]
c. Other Actions a. For acquisitive prescription – starts from
Action for Reconveyance the time judicial summons are received;
1. Based on fraud: Four (4) years from the b. For extinctive prescription – starts from
discovery of fraud [Art. 1391, Civil Code] the time action is filed in court, written
2. Based on implied or constructive trust: extrajudicial demand by the creditors is
Ten (10) years from the alleged fraudulent received, or when there is written
registration or date of issuance of certificate acknowledgment of the debt by the
of title over the property [Art. 1144, Civil debtor [Art. 1155, Civil Code].
Code]
Suspension in Case of Acquisitive
Notes: Prescription. – The period of interruption shall
1. An action for reconveyance may be barred be counted in favor of prescription (i.e., as if
by prescription. However, one recognized interruption never happened but is merely
exception is when the property in dispute is suspended) if:
in actual possession of the plaintiff. 1. Judicial summons is void;
Prescription does not run against the 2. The plaintiff should desist from the
plaintiff in actual possession of the disputed complaint;
land because such plaintiff has a right to 3. The possessor was absolved from the
wait until his possession is disturbed or his complaint.
title is questioned before initiating an action
to vindicate his right. As such, his Effects of Interruption
undisturbed possession gives him the 1. All the benefits acquired so far from the
continuing right to seek the aid of a court of possession ceases.
equity to determine the nature of the 2. When the prescription runs again, it will be
adverse claim of a third party and its effect reset (i.e. entirely new prescriptive period
on his title [Heirs of Bernardo and Ronquillo
v. Sps. Gamboa and Caballero, G.R. 23305
(2020)].
2. An action for reconveyance and
cancellation of title prescribes in 10 years
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IX. QUIETING OF TITLE B. Who May File [Sec. 1, Rule
63, Rules of Court]
A. Requisites
Any person interested under a deed, will,
1. Plaintiff has a legal or an equitable title to or contract or other written instrument, or whose
interest in the real property subject of the rights are affected by a statute, executive order
action; and he need not be in possession of or regulation, ordinance, or any other
said property [Art. 477, Civil Code]. governmental regulation may, before breach or
2. The deed, claim, encumbrance, or violation thereof, bring an action in the
proceeding claimed to be casting a cloud on appropriate Regional Trial Court to determine
plaintiff’s title must be shown to be in fact any question of construction or validity arising,
invalid or inoperative despite its prima facie and for a declaration of his rights or duties,
appearance of validity or legal efficacy. thereunder [Bar Matter No. 803, 17 February
1998].
Such cloud must be due to some
instrument, record, claim, encumbrance or
proceeding which is apparently valid but is
in truth invalid, ineffective, voidable or
unenforceable, and is prejudicial to the
plaintiff’s title. Plaintiff must return to the
defendant all benefits he may have received
from the latter, or reimburse him for
expenses that may have redounded to his
benefit [Art. 479, Civil Code].

Note: An action to quiet title applies only to

real property; except to some personal
properties like vessels or stock certificates
which partake of the nature of real property,
or when they are considered as real
property because of special registration
requirements [De Leon].

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C. Quieting of Title vs. Removing or Preventing a Cloud
Action to Quiet Title Action to Remove or Prevent a Cloud

A common law remedy for the A semblance of title, either legal (party is
removal of any cloud upon a the registered owner) or equitable (party
doubt or uncertainty with respect has beneficial ownership), or a claim or
Definition to title to real property [Paras]. a right in real property, appearing in
some legal form but which is, in fact,
invalid or which would be inequitable to
enforce

To put a stop to vexatious To cancel, deliver, remove, or release

Purpose
litigation in relation to the property an encumbrance which can be
considered a claim re: plaintiff’s title

1. Plaintiff must show that 1. Plaintiff has a title to a real

there is an instrument, property or interest therein;
record, claim, 2. Defendant is bent on creating
encumbrance, or a cloud on the title or interest
proceeding, therein. The danger must not be
2. Said instrument, etc. must merely speculative or imaginary
constitute or cast a but imminent; and
Requisites
cloud; doubt; question; or 3. Unless the defendant is
shadow, restrained or stopped, the title
3. Said cloud, etc. is or interest of the plaintiff will be
adverse to the owner's prejudiced or adversely
title to or interest in real affected.
property [Art. 476, Civil
Code]

1. To questions involving interpretation of documents;

2. To mere written or oral assertions of claim, except if made in a
legal proceeding or asserts that an instrument or entry in plaintiff’s
favor is not what it purports to be;
When
3. To boundary disputes;
Inapplicable
4. To deeds by strangers to the title unless purporting to convey the
property of the plaintiff;
5. To instruments invalid on their face; or
6. Where the validity of the instrument involves a pure question of law

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D. Prescription/Non-Prescription of Action
Condition Effect on Prescription

Plaintiff is in possession of the property Action does not prescribe

Plaintiff is a possessor with Action prescribes in 10 years

real right
Plaintiff is not in possession of
the property
Plaintiff is owner of the Action prescribes in 30 years
property

Note: An action to quiet title may be defeated by a claim of ordinary or extraordinary acquisitive
prescription by the defendant.

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X. ACTIONS TO RECOVER PROPERTY
Summary of Actions
Right Sought to be Hearing Court Assessed Value
Enforced on Action
Property [Judiciary Reorganization Act, as amended]

Possession of real Regional Trial Court > Php 400,000 Accion interdictal
property (within one
year from
dispossession or Metropolitan/Municipal < Php 400,000
knowledge of /Municipal Circuit Trial
dispossession) Court

Possession of real Regional Trial Court > Php 400,000 Accion publiciana
property (more than
one year from
dispossession or Metropolitan/Municipal < Php 400,000
knowledge of /Municipal Circuit Trial
dispossession) Court

Ownership of real Regional Trial Court > Php 400,000 Accion reivindicatoria
property
Metropolitan/Municipal < Php 400,000
/Municipal Circuit Trial
Court

Possession of Regional Trial Court > Php 2,000,000 Replevin

personal property
Metropolitan/Municipal < Php 2,000,000
/Municipal Circuit Trial
Court

Forcible Entry vs. Unlawful Detainer

Forcible Entry Unlawful Detainer
Lawful possessor deprived Possessor refused to vacate
through FISTS: upon demand after the
1. Force; expiration or termination of
2. Intimidation; his/her right to possess by
Situation Contemplated
3. Strategy; virtue of any contract.
4. Threats; and,
5. Stealth [Sec. 1, Rule
70, Rules of Court)
One year from dispossession One year from last demand to
Period to Bring Action or on knowledge of vacate.
dispossession.

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CIVIL LAW
CREDIT TRANSACTIONS II CIVIL LAW

I. PERSONAL PROPERTY becomes due.” These personal properties

are no longer covered by Art. 2127
SECURITIES (R.A. No. [Somera]
a. Articles 2093–2123 on Pledges are
11057) repealed, with the exception of Article
2121 on Legal Pledges.
A. Scope of the Personal b. Articles 2140–2141 and Act. No. 1508 on
Property Security Act (PPSA) Chattel Mortgages are repealed.
c. The provisions on special preferred
General Rule: The PPSA applies to ALL credits on movables (Articles 2241,
transactions that secure an obligation with 2243, 2246, 2247) are amended.
movable collateral
The creation of the Registry, as defined in Sec.
Exceptions 3(h) of the PPSA repeals the ff. Laws:
1. Interests in aircrafts 1. Sections. 10 & 114–116 of PD No. 1529
2. Interests in ships (Property Registration Decree) on the
functions of the Register of Deed &
Registration of Chattel Mortgages,
Section 66. Repealing Clause. — The following
laws, and all laws, decrees, orders, and issuances or
2. Section 13 of the Financing Company Act of
portions thereof, which are inconsistent with the 1998 on registry of financial leases and
provisions of this Act, are hereby repealed, 3. Section 5(3) of Rep. Act No. 4136 (Land
amended, or modified accordingly: Transportation Code) on the recording of
a. Sections 1 to 16 of Act No. 1508, otherwise mortgages, attachments and other
known as "The Chattel Mortgage Law" encumbrances on motor vehicles [Somera].
b. Articles 2085-2123, 2127, 2140-2141, 2241,
2243, and 2246-2247 of Republic Act No. 386,
otherwise known as the "Civil Code of the B. Definitions
Philippines";
c. Section 13 of Republic Act No. 5980, as
amended by Republic Act No. 8556, otherwise
Security Agreement
known as the "Financing Company Act of The secured transaction under the PPSA is
1998"; called the security agreement. It is a
d. Sections 114-116 of Presidential Decree No. consensual contract, perfected by the meeting
1529, otherwise known as the "Property of the minds of the grantor and the secured
Registration Decree"; creditor [Somera].
e. Section 10 of Presidential Decree No. 1529,
insofar as the provision thereof is inconsistent
with this Act; and The agreement must be contained in a written
f. Section 5(e) of Republic Act No. 4136, contract [Sec. 6]. Writing, for the purposes of
otherwise known as the "Land Transportation the PPSA, includes electronic records [Sec.
and Traffic Code" 3(k)]. It is an accessory obligation entered into
by a person who grants a property right to
Implications another person, in order to secure the payment
Section 66 provides that the PPSA will now or performance of an obligation [Somera].
apply over the laws it repeals. The following are
the implications in connection with the Security Interest [Sec. 3(j)]
repealing clause: A security interest is a property right in
1. The system of conventional pledges and collateral that secures payment or other
chattel mortgages are “replaced with a performance of an obligation, regardless of:
framework for secured transactions” 1. Whether the parties have denominated it as
[Somera, The Personal Property Security a security interest; and
Act, 2018]. 2. The type of asset, the status of the grantor
2. Article 2127 is modified with regard to or secured creditor, or the nature of the
property included in a Real Estate secured obligation
Mortgage. Under Art. 2127, a REM “extends • Including the right of a buyer of accounts
to natural accessions, to the improvements, receivable and a lessor under an
growing fruits and the rents or income not operating lease for not less than one (1)
yet received when the [principal] obligation year
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Proceeds Such security agreement containing a
Under the PPSA, even when the collateral is provision over future property is akin to a
disposed, the security interest extends to its Contract to Mortgage. Both secured
identifiable or traceable proceeds [Sec. 8]. It transactions are preparatory contracts wherein
covers sales, leases, licenses, exchanges, the security interest is only created or perfected
other forms of disposition. once the grantor is the absolute owner of the
future property.
Proceeds are:
1. Any property received upon sale, lease or Rights to Proceeds and Commingled
other disposition of collateral; or Funds
2. Whatever is collected on or distributed with When the collateral is disposed, the security
respect to collateral, claims arising out of interest extends to the proceeds from such
the loss or damage to the collateral, as well disposition, in the form of funds, even when
as a right to insurance payment or other they are credited to a deposit account or
compensation for loss or damage of the money are commingled with other funds or
collateral [Sec. 3(f)]. money [Sec. 8].
a. Despite the fact that they are no longer
Parties identifiable
The parties to a security agreement under the b. Only to the extent that they remain traceable
PPSA are the grantor and the secured
creditor [Sec. 3]. Rules on Commingled Funds [Sec. 8]
a. The security interest in the commingled
Grantor [Sec. 3(c)] funds shall be limited to the amount of the
1. The person who grants a security interest in proceeds immediately before they were
collateral to secure its own obligation or that commingled.
of another person; b. If at any time after the commingling, the
2. A buyer or other transferee of a collateral balance credited to the deposit account or
that acquires its right subject to a security the amount of the commingled money is
interest; less than the amount of the proceeds
3. A transferor in an outright transfer of an immediately before they were commingled:
accounts receivable; or 1. The security interest against the
4. A lessee of goods. commingled funds or money shall be
limited to the lowest amount of the
Secured Creditor [Sec. 3(i)] commingled funds or money.
A secured creditor is a person that has a 2. The reckoning period for such amount is
security interest. between the time when the proceeds
were commingled and the time the
For the purposes of registration and priority security interest in the proceeds is
only, “secured creditor” includes a buyer of claimed.
account receivable and a lessor of goods under
an operating lease for not less than one (1) Tangible Assets Commingled in a Mass;
year. Continuity of Security Interest
The PPSA provides rules for the continuity of
C. Security Interest the security interest over tangible assets (i.e.,
movable property) which has either:
a. Become a fixture,
1. Asset-Specific Rules - Accounts
b. Undergone accession or
Receivable c. Undergone commingling.
Future Property
Section 5. Creation of a Security Interest. According to the PPSA, the security interest
(b) A security agreement may provide for the creation over the said movable will continue, provided
of a security interest in a future property, but the that it can still be reasonably traced.
security interest in that property is created only
when the grantor acquires rights in it or the
However, as to the question of ownership over
power to encumber it. the said tangible assets, Book II of the Civil
Code will govern [Sec. 25].

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Otherwise, if the tangible asset did not become Section 12. Means of Perfection. — A security
a fixture, or underwent accession or interest may be perfected by:
commingling, a party who obtains the asset a. Registration of a notice with the Registry;
in good faith will take it free from any b. Possession of the collateral by the secured
security interest. However, good faith will not creditor; and
c. Control of investment property and deposit
exist if the movable property was registered
account.
before being obtained [Sec. 21].
A security interest in any tangible asset may be
Accounts Receivables perfected by registration or possession. A security
Under Sec. 10 of the PPSA, security interests interest in investment property and deposit account
in accounts receivable shall be effective may be perfected by registration or control.
notwithstanding any agreement between the
grantor and the account debtor or any secured Perfection by Registration
creditor limiting in any way the grantor’s right to A security interest in the ff. may be perfected
create a security interest [Sec. 10(a)]. by registration of a notice with the Registry
[Sec. 12(a)]:
Likewise, any stipulation limiting the grantor’s a. A tangible movable asset
right to create a security interest shall be void b. Investment property
[Sec. 10(c)]. c. A deposit account
However, the PPSA limits the application of Notice – a statement of information that is
these provisions to accounts receivable arising registered in the Registry relating to a security
from: interest or lien. The term includes an initial
a. A contract for the supply or lease of goods notice, amendment notice, and termination
or services other than financial services; notice [Sec. 3(e)].
b. A construction contract or a contract for the
sale or lease of real property; and Perfection by Possession
c. A contract for the sale, lease or license of A security interest in a tangible movable asset
intellectual property [Sec. 10(d)]. may be perfected by possession of the
collateral by the secured creditor [Sec. 12(b)].
Sec. 10 also shall not affect any obligation or
liability of the grantor for breach of the Possession in Art. 523 of the Civil Code is
agreement in Sec. 10(a). defined as “the holding of a thing or the
enjoyment of a right.”
2. Perfection
General Provisions Perfection by Control
Section 11. Perfection of Security Interest. — A security interest in the ff. may be perfected
a. A security interest shall be perfected when it by control [Sec. 12(c)]:
has been created and the secured creditor a. Investment property
has taken one of the actions in accordance b. A deposit account
with Section 12.
b. On perfection, a security interest becomes
effective against third parties. A security interest in a deposit account or
investment property may be perfected by
control through:
It is not perfection that gives birth to the a. The creation of the security interest in
security agreement, since it is a consensual favor of the deposit-taking institution or the
contract. Rather, perfection gives the security intermediary;
interest third-party effectiveness [Somera]. b. The conclusion of a control agreement;
or
c. For an investment property that is an
electronic security not held with an
intermediary, the notation of the security
interest in the books maintained by or on
behalf of the issuer for the purpose of

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recording the name of the holder of the secured creditor without further consent
securities [Sec. 13(a)]. by the commodity customer or grantor.

The Intermediary’s Role in Control Note: A commodity contract is a

Agreements commodity futures contract, an option on a
Under Sec. 13(b), a deposit-taking institution or commodity futures contract, a commodity
intermediary must consent to the entering of a option, or another contract, if the contract or
control agreement. option is:
a. Traded on or subject to the rules of a
The PPSA does NOT require the intermediary board of trade that has been designated
to enter into such agreements, since its as a contract market for such a contract;
obligation is limited to following the instructions or
of the grantor, who is its depositor. b. Traded on a foreign commodity board of
• i.e., It has the right to refuse to follow the trade, exchange, or market, and is
instructions of the secured creditor carried on the books of a commodity
intermediary for a commodity customer
Should the intermediary refuse to enter into a [Sec. 3(a)].
control agreement, the remedy of the grantor
and secured creditor is to register the security Summary of Perfection of Security
agreement instead, in order to perfect the Interests
security interest.
Regist Posses
Control
ration sion
Three Types of Control Agreements
a. Control Agreement with Respect to Tangible P P
Securities Assets
1. An agreement in writing among the
issuer or the intermediary, the grantor Investment P P
and the secured creditor. Property
2. The issuer or the intermediary agrees to
follow instructions from the secured Deposit P P
creditor with respect to the security, Account
without further consent from the grantor
[Sec. 3(b)(1)].
D. The Registry
b. Control Agreement with Respect to Rights
to a Deposit Account A security interest may be perfected by
1. An agreement in writing among the registration of a notice with the Registry.
deposit-taking institution, the grantor and
the secured creditor. Section 26. Establishment of Electronic Registry. —
2. The deposit-taking institution agrees to a. The Registry shall be established in and
follow instructions from the secured administered by the LRA.
b. The Registry shall provide electronic means for
creditor with respect to the payment of
registration and searching of notices.
funds credited to the deposit account
without further consent from the grantor
[Sec. 3(b)(2)]. Procedure
1. The grantor, or any person authorized by
c. Control Agreement with Respect to the grantor, submits the notice to the
Commodity Contracts Registry, and pays the prescribed fee. The
1. An agreement in writing among the notice is considered sufficient if it:
grantor, secured creditor, and a. Identifies the grantor by an
intermediary. identification number
2. The commodity intermediary will apply b. Identifies the secured creditor by name
any value distributed on account of the c. Provides an address for the grantor
commodity contract as directed by the and secured creditor
d. Describes the collateral [Sec. 28].

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2. The Registry either accepts or rejects the Priority Rules
notice for registration. However, if the The priority of security interests and liens on
notice meets the minimum requirements the same collateral shall be determined
and the fee is paid, it shall not be rejected according to the time of registration of a notice
[Sec. 28(a)] or perfection by other means [Sec. 17].
a. The Registry does not determine the
correctness, authenticity, or validity of General Rule: Such priority is without regard
the information contained in the notice. to the order of creation of the security interests
b. Thus, questions regarding the validity and liens, or to the mode of perfection [Sec.
of the security agreement are expected 17].
to be decided in a proper litigation after
registration [Somera]. Exception: Except as provided in Sections 18-
3. If the Registry rejects the registration of a 25 of the PPSA or Sections 6.02-6.05 of these
notice, it shall promptly communicate the Rules [Rule VI, Sec, 6.01, IRR of R.A. 11057].
fact and reason for its rejection to the
person who submitted the notice [Sec. 1. Priority Rules for Intangible Assets
28(b)] Security Interests Over Deposit
4. If the Registry accepts the registration of a Accounts/Investment Properties
notice, it shall be effective, from the time it
Section 18. Priority for Perfection by Control. —
is discoverable on the records of the a. A security interest in a deposit account with
Registry, until such time that the duration respect to which the secured creditor is the
indicated on the notice lapses [Sec. 30] deposit-taking institution or the intermediary
a. Any person may search notices shall have priority over a competing security
registered in the Registry [Sec. 27]. interest perfected by any method.
b. The electronic records of the Registry b. A security interest in a deposit account or
investment property that is perfected by a
shall be the official records [Sec. 27]. control agreement shall have priority over a
competing security interest except a security
Effects of Registration interest of the deposit-taking institution or the
1. The security interest becomes binding on intermediary.
third parties [Sec. 11]. c. The order of priority among competing security
interests in a deposit account or investment
2. The registered notice is considered a public property that were perfected by the conclusion
record [Sec. 27]. of control agreements shall be determined on
3. Subsequent purchasers of the collateral are the basis of the time of conclusion of the
charged with notice of the security interest control agreements.
burdening the title of said collateral. d. Any rights to set-off that the deposit-taking
• Such notice cannot be overcome by institution may have against a grantor’s
right to payment of funds credited to a
proof of good faith [Legarda & Prieto v. deposit account shall have priority over a
Saleeby, G.R. No. L-8936 (1915)] security interest in the deposit account.

4. Establishes the basis of priority of security

of interest according to time of registration Priority of Security Interests Over Deposit
[Sec. 17]. Accounts/Investment Property
Note: With (1) having the highest priority
1. Right to set-off of the deposit-taking
E. Priority of Security Interest institution against a grantor’s right to
payment of funds credited to a deposit
Priority – the right of a person to derive the account
economic benefit of its security interest in 2. Security interest in a deposit account with
preference to the right of a competing claimant respect to which the secured creditor is the
[Somera, 2018, citing UNCITRAL Guidelines]. deposit-taking institution
3. Security interest in a deposit account or
The perfection of a security interest gives rights investment property that is perfected by a
to the secured creditor against other creditors control agreement
asserting rights over the same collateral.
• The earlier the conclusion of the control
agreement, the higher in priority

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4. Security interest in a deposit account or Priority of Security Interests Over
investment property that is perfected by Security Certificates
registration a. Security interest in a security certificate
perfected by possession of said certificate
Security Interests Over Electronic b. Security interest in a security certificate
Securities perfected by registration of a notice in the
Section 18. Priority for Perfection by Control. — Registry.
---xxx---
f. A security interest in electronic securities not Security Interests Over Instruments or
held with an intermediary perfected by a Negotiable Documents
notation of the security interests in the
books maintained for that purpose by or on Section 19. Priority for Instruments and Negotiable
behalf of the issuer shall have priority over a Documents. – A security interest in an instrument or
security interest in the same securities negotiable document that is perfected by
perfected by any other method. possession of the instrument or the negotiable
g. A security interest in electronic securities document shall have priority over a security interest
not held with an intermediary perfected by in the instrument or negotiable document that is
the conclusion of a control agreement shall perfected by registration of a notice in the Registry.
have priority over a security interest in the
same securities perfected by registration of a
notice in the Registry. Priority of Security Interests Over
h. The order of priority among competing security Instruments or Negotiable Documents
interests in electronic securities not held with a. A security interest in an instrument or
an intermediary perfected by the conclusion of negotiable document that is perfected by
control agreements is determined on the possession
basis of the time of conclusion of the
control agreements. b. A security interest in an instrument or
negotiable document that is perfected by
registration
Priority of Security Interests Over Non-
Intermediated Electronic Securities Security Interests Over Livestock
1. Security interest in non-intermediated
Section 24. Livestock. – A perfected security
electronic securities perfected by a notation
interest in livestock securing an obligation incurred to
of such interest in the books of the issuer enable the grantor to obtain food or medicine for the
2. Security interest in non-intermediated livestock shall have priority over any other security
electronic securities perfected by control interest in the livestock, except for a perfected
• The earlier the conclusion of the control purchase money security interest in the
agreement, the higher in priority livestock, if the secured creditor providing credit for
food or medicine gives written notification to the
holder of the conflicting perfected security interest in
2. Priority Rules for Tangible Assets the same livestock before the grantor receives
Security Interests Over Security possession of the food or medicine.
Certificates
Certificated non-intermediated securities are Priority of Security Interests Over
considered tangible property if the mere Livestock
possession of such instruments results in the a. A perfected purchase money security
ownership of the underlying rights or property interest in the livestock incurred to enable
embodied by them [Rule I, Sec. 1.05(kk), IRR the grantor to obtain food or medicine for the
of R.A. 11057]. livestock, provided that –
1. The secured creditor providing credit for
Section 18. Priority for Perfection by Control. said food or medicine gives written
---xxx--- notification to the holder of the
A security interest in a security certificate
conflicting perfected security interest in
perfected by the secured creditor’s possession
of the certificate shall have priority over a the same livestock.
competing security interest perfected by registration 2. Such notice must be given before the
of a notice in the Registry. grantor receives possession of the food
or medicine
b. A perfected security interest in livestock
securing an obligation incurred to enable
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the grantor to obtain food or medicine for the Section 23. Purchase Money Security Interest. —
livestock a. A purchase money security interest in
c. other security interest in the livestock, equipment and its proceeds shall have
incurred for any other purpose priority over a conflicting security interest, if a
notice relating to the purchase money
security interest is registered within three (3)
Note: A purchase money security interest is
business days after the grantor receives
a security in goods, taken by: possession of the equipment.
a. The seller to secure the price; or b. A purchase money security interest in
b. A person who gives value consumer goods that is perfected by
registration of notice not later than three
to enable the grantor acquire the goods to the (3) business days after the grantor
obtains possession of the consumer goods
extent that the credit is used for that purpose shall have priority over a conflicting security
[Sec. 3(g)]. interest.
c. A purchase money security interest in
3. Priority Rules for Specific Cases inventory, intellectual property or
Security Interests Over Goods that are livestock shall have priority over a
conflicting perfected security interest in the
Subject to the Right of Retention same inventory, intellectual property or
Section 20. Priority and Right of Retention by livestock if:
Operation of Law. – A person who provides services 1. The purchase money security interest
or materials with respect to the goods, in the is perfected when the grantor
ordinary course of business, and retains receives possession of the
possession of the goods shall have priority over inventory or livestock, or acquires
a perfected security interest in the goods until rights to intellectual property; and
payment thereof. 2. Before the grantor receives
possession of the inventory or
livestock, or acquires rights in
Priority of Security Interests Over Goods intellectual property, the purchase
a. Lien over goods created by operation of law money secured creditor gives
written notification to the holder of
in favor of a person who provides services
the conflicting perfected security
or materials with respect to the goods, in the interest in the same types of
ordinary course of business inventory, livestock, or intellectual
b. Any perfected security interest over the property. The notification sent to the
same goods. holder of the conflicting security
interest may cover multiple
transactions between the purchase
Purchase Money Security Interests money secured creditor and the
A purchase money security interest (PMSI) grantor without the need to identify
is a security in goods, taken by: each transaction.
a. The seller to secure the price; or d. The purchase money security interest in
b. A person who gives value equipment or consumer goods perfected
timely in accordance with subsections (a)
and (b), shall have priority over the rights of
to enable the grantor acquire the goods to the a buyer, lessee, or lien holder which arise
extent that the credit is used for that purpose between delivery of the equipment or
[Sec. 3(g)]. consumer goods to the grantor and the time
the notice is registered.

Priority of Security Interests Over

Equipment and its Proceeds [Sec. 23]
a. A PMSI in equipment and its proceeds shall
have priority, provided that –
• A notice relating to the PMSI is
registered within three (3) business
days after the grantor receives
possession of the equipment
b. Right over the same equipment in favor of a
buyer, lessee, or lien holder which arise

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between delivery of the equipment to the 4. Priority of Perfected Security
grantor and the time the notice is registered Interest Prior to Insolvency
c. Any perfected security interest in the same Proceedings
equipment.
Section 22. Effect of the Grantor’s Insolvency on the
Priority of Security Interests Over Priority of a Security Interest. – Subject to the
applicable insolvency law, a security interest
Consumer Goods [Sec. 23] perfected prior to the commencement of
a. A PMSI in consumer goods shall have insolvency proceedings in respect of the grantor
priority, provided that – shall remain perfected and retain the priority it
• A notice relating to the PMSI is had before the commencement of the insolvency
registered within three (3) business proceedings.
days after the grantor receives
possession of the consumer goods This section amends Art. 2241, 2243, 2246,
2247 of the Civil Code or the provisions on
b. Right over the same goods in favor of a special preferred credits on movable property.
buyer, lessee, or lien holder which arise a. The preference created by these Articles
between delivery of the consumer goods to will be SUBORDINATE to the priority
the grantor and the time the notice is perfected pursuant to the PPSA [Somera].
registered b. During insolvency proceedings, the
c. Any perfected security interest in the same perfected security interest shall constitute a
goods. lien over the collateral [Rule VI, Sec.
6.04(b), IRR of R.A. 11057].
Priority of Interests Over Inventory,
Intellectual Property or Livestock [Sec. 23 ] Tangible Assets; Intangible Assets (Sec.
a. A PMSI in inventory, intellectual property or 12)
livestock shall have priority, provided that – Tangible asset – any tangible movable asset,
1. The PMSI is perfected when the grantor including:
receives possession of the inventory or a. Money
livestock, or acquires rights to intellectual b. Negotiable instruments
property; c. Negotiable documents; and
2. The secured creditor gives a written d. Certificated non-intermediated securities
notification to the holder of the • Only if the mere possession of such
conflicting perfected security interest in instruments results in the ownership of
the same types of inventory, livestock, or the underlying rights or property
intellectual property embodied by them [Rule I, Section
• Such notification must be given 1.05(kk), IRR of R.A. 11057].
before the grantor receives
possession of the inventory or Intangible asset – any movable property other
livestock, or acquires rights in than a tangible asset including, but not limited
intellectual property; and to, investment property, deposit accounts,
• The notification may cover multiple commodity contracts and receivables [Rule 1,
transactions between the secured Section 1.05(m), IRR of R.A. 11057].
creditor and the grantor, without the
need to identify each transaction. Means of Perfection [Section 4.02-4.03,
b. Any perfected security interest in the same IRR of R.A. 11057]
inventory, intellectual property or livestock.
Intangible
(Investment
Tangible
Property/Deposit
Account)
Registration
Possession Control

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F. Enforcement of Security Specific Cases of Recovery [Sec. 48]
Interest Action Available to
Specific Case
Secured Creditor
The creditor with the security interest having
the highest priority will be able to enforce
his/her interests via recovery, disposition or Negotiable Proceed as to the
retention. document negotiable document or
perfected by goods covered by the
possession negotiable document;
Section 46. Right of Higher-Ranking Secured.
Creditor to Take Over Enforcement. —
a. Even if another secured creditor or a lien holder Deposit account Apply the balance of the
has commenced enforcement, a secured
maintained by deposit account to the
creditor whose security-interest has
priority over that of the enforcing secured the secured obligation secured by the
creditor or lien holder shall be entitled to take creditor deposit account
over the enforcement process.
b. The right referred to in subsection (a) of this
section may be invoked at any time before the Security interest Instruct the deposit-
collateral is sold or otherwise disposed of, or in a deposit taking institution to pay
retained by the secured creditor or until the account the balance of the
conclusion of an agreement by the secured
perfected by deposit account to the
creditor for that purpose.
c. The right of the higher-ranking secured creditor control secured creditor’s
to take over the enforcement process shall account
include the right to enforce the rights by
any method available to a secured creditor
under this Act. 2. Disposition
Right to Dispose of Collateral
After default, a secured creditor may:
1. Recovery a. Sell or otherwise dispose of the collateral,
Recovery is an enforcement procedure that
publicly or privately, in its present condition
does not require judicial process. It applies only
or following any commercially reasonable
to the special cases provided in Sec. 48.
preparation or processing;
b. Buy the collateral at any public disposition,
Upon default, the secured creditor may
or at a private disposition but only if the
without judicial process:
collateral is of a kind that is customarily sold
a. Instruct the account debtor to make
on a recognized market or the subject of
payment to the secured creditor, and
widely distributed standard price quotations
b. Apply such payment to the satisfaction of
[Sec. 49].
the obligation secured by the security
interest after deducting the secured
Disposition is a method of enforcement
creditor’s reasonable collection expenses.
similar to the general right of the creditor to
alienate the collateral upon default of the
Note: The account debtor may request the
debtor under the Civil Code. The difference in
secured creditor to provide evidence of its
the PPSA is that, it requires commercial
security interest to the account debtor when it
reasonableness of the disposition [Somera].
delivers the instruction to the account debtor
[Sec. 48].
Procedure
Before disposition may be availed of, a creditor
Recovery is conceptually similar to the
must:
exchange in Yau Chu v. CA [G.R. No. L-78519
a. Repossess the collateral, either: Extra–
(1989)], wherein the collateral was also money
judicially [Sec. 47(a) & (b)] or Judicially
or an exchange of “peso for peso” [Somera].
[Sec. 47(c)], and
b. There must be compliance with notification
requirements in Sec. 51.
c. Let those entitled exercise the right of
redemption under Sec. 45.
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a. Repossession of Collateral 1. Entering the private residence of the grantor
Extra-Judicial Repossession without permission,
The secured creditor may: 2. Resorting to physical violence or
1. Take possession of the collateral without intimidation, or being accompanied by a law
judicial process if the security agreement so enforcement officer when taking possession
stipulates: Provided, That possession can or confronting the grantor [Sec. 47(c)].
be taken without a breach of the peace.
2. Remove the collateral from the real property b. Notification of Disposition
to which it is affixed, in case it is a fixture,
without judicial process: Provided that – Not later than ten (10) days before disposition
a. The secured creditor has priority over all of the collateral, the secured creditor shall
owners and mortgagees notify:
b. The secured creditor exercises due care 1. The grantor;
in removing the fixture [Sec. 47(a) & (b)]. Note: The grantor may waive the right to be
notified.
Judicial Repossession
If, upon default, the secured creditor cannot 2. Any other secured creditor or lien holder
take possession of collateral without breach of who, five (5) days before the date
the peace, the secured creditor shall: notification is sent to the grantor, held a
1. Be entitled to an expedited hearing upon security interest or lien in the collateral that
application for an order granting the secured was perfected by registration; and
creditor possession of the collateral. Such 3. Any other person from whom the secured
application shall include a statement by the creditor received notification of a claim of an
secured creditor, under oath: interest in the collateral if the notification
a. Verifying the existence of the security was received before the secured creditor
agreement attached to the application; gave notification of the proposed disposition
and to the grantor [Sec. 51].
b. Identifying at least one event of default
by the debtor under the security Sufficiency of Notification
agreement; A notification of disposition is sufficient if it:
1. Identifies the grantor and the secured
2. Provide the debtor, grantor, and, if the creditor;
collateral is a fixture, any real estate 2. Describes the collateral;
mortgagee, a copy of the application, 3. States the method of intended disposition;
including: and
a. All supporting documents; and 4. States the time and place of a public
b. Evidence for the order granting the disposition or the time after which other
secured creditor possession of the disposition is to be made [Sec. 51].
collateral; and
Exceptions to the Notification Requirement
3. Be entitled to an order granting The requirement to send a notification under
possession of the collateral this section shall not apply if the collateral is:
a. Upon the court finding that: 1. Perishable; or
1. A default has occurred under the 2. Threatens to decline speedily in value;
security agreement; and 3. Of a type customarily sold on a recognized
2. The secured creditor has a right to market [Sec. 51].
take possession of the collateral.
c. Right of Redemption
b. The court may direct the grantor to take General Rule: A party who is entitled to a
such action as the court deems notification is also entitled to redeem the
necessary and appropriate so that the property [Sec. 45(a)].
secured creditor may take possession of
the collateral [Sec. 47(c)].

Note: Breach of the peace shall include:

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Exceptions: The right of redemption may be 2. A disposition will still be treated as
exercised, unless: commercially reasonable even if “a better
1. The person entitled to redeem has not, after price could have been obtained by
the default, waived in writing the right to disposition at a different time or by a
redeem; different method from the time and method
2. The collateral is sold or otherwise disposed selected by the secured creditor” [Sec.
of, acquired or collected by the secured 50(c)].
creditor or until the conclusion of an
agreement by the secured creditor for that 3. Retention
purpose; and Retention of collateral is the result of an offer
3. The secured creditor has retained the on the part of the secured creditor and the
collateral [Sec. 45(b)]. acceptance of the proposal by the parties
entitled to receive the same.
How Exercised
The right to redeem is exercised by paying or After default, the secured creditor may propose
otherwise performing the secured obligation in to the debtor and grantor to take all or part of
full, including the reasonable cost of the collateral in total or partial satisfaction of
enforcement [Sec. 45(a)]. the secured obligation, and shall send a
proposal to:
Disposition and Application of Proceeds a. The debtor and the grantor;
If there is no redeemer, the secured creditor b. Any other secured creditor or lien holder
may dispose of the property, and the proceeds who, five (5) days before the proposal is
will be applied according to Section 52, in the sent to the debtor and the grantor, perfected
following order: its security interest or lien by registration;
1. The reasonable expenses of taking, and
holding, preparing for disposition, and c. Any other person with an interest in the
disposing of the collateral, including collateral who has given a written
reasonable attorneys’ fees and legal notification to the secured creditor before
expenses incurred by the secured creditor; the proposal is sent to the debtor and the
2. The satisfaction of the obligation secured by grantor [Sec. 54].
the security interest of the enforcing
secured creditor; and When Retention May Be Exercised [Sec. 54]
3. The satisfaction of obligations secured by The secured creditor may retain the collateral
any subordinate security interest or lien in in the case of:
the collateral if a written demand and proof a. A proposal for the acquisition of the
of the interest are received before collateral in full satisfaction of the secured
distribution of the proceeds is completed. obligation; or
• Unless the secured creditor receives an
The secured creditor shall account to the objection in writing from any person
grantor for any surplus, and, unless otherwise entitled to receive such a proposal within
agreed, the debtor is liable for any deficiency twenty (20) days after the proposal is
[Sec. 52]. sent to that person

Commercial Reasonableness Requirement b. A proposal for the acquisition of the

After repossession and notice, the collateral collateral in partial satisfaction of the
may be disposed of provided that the creditor secured obligation
acts in a “commercially reasonable manner” • Only if the secured creditor receives the
[Sec. 50(a)]. affirmative consent of each addressee of
the proposal in writing within twenty (20)
Under Sec. 50, a creditor acts in such manner days after the proposal is sent to that
if he/she “disposes of the collateral in person.
conformity with commercial practices among
dealers in that type of property” [Sec. 50(b)].
1. A disposition is presumed commercially
reasonable when approved in any legal
proceeding [Sec. 50(d)].
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G. Transitional Provisions covering assets described in that
agreement under this Act.
1. Prior Interests
Prior interest – A security interest that was: When a Prior Law Over a Prior Interest
a. Created or provided for by an agreement or Applies
other transaction that was made or entered General Rule: The priority of a prior interest as
into before the effectivity of this Act; and against the rights of a competing claimant is
b. Had not been terminated before the determined by the prior law if:
effectivity of this Act [Sec. 55(c)]. a. The security interest and the rights of all
competing claimant arose before the
However, a security interest that is renewed or effectivity of this Act; and
extended by a security agreement or other b. The priority status of these rights has not
transaction made or entered into on or after the changed since the effectivity of this Act
effectivity of this Act is not considered a prior [Sec. 58(a)].
interest [Sec. 55(c)].
Exceptions: The priority status of a prior
Creation of Prior Interest interest has changed (refer to the 2 nd
Creation of prior interest shall be determined instance under the General Rule, i.e. Sec.
by prior laws, which are laws that existed or in 58(a)(2)) only if:
force before the effectivity of this Act [Sec. 56]. a. It was perfected when this Act took effect,
but ceased to be perfected; or
b. It was not perfected under prior law when
Effectivity of Prior Interest
this Act took effect, and was only perfected
A prior interest remains effective between the
under this Act [Sec. 58(b)].
parties, notwithstanding its creation did not
comply with the creation requirements of this
Act [Sec. 56]. Enforcement of Prior Interest [Sec. 59]
If any step or action has been taken to enforce
a prior interest before the effectivity of this Act,
Perfection of Prior Interest [Sec. 57]
enforcement may continue under prior law or
A prior interest that was perfected under prior
may proceed under this Act.
law continues to be perfected under this Act
until the earlier of:
Note: Prior law shall apply to a matter that is
a. The time the prior interest would cease to
the subject of proceedings before a court
be perfected under prior law; and
before the effectivity of this Act.
b. The expiration of the transitional period.
c. If the perfection requirements of the PPSA
are satisfied before the perfection of a prior 2. Transitional Period
interest ceases in accordance with (a), the Transitional Period
prior interest continues to be perfected The period from the date of effectivity of this Act
under this Act from the time when it was until the date when the Registry has been
perfected under the prior law. established and operational [Sec. 55 (d)].
d. If the prior interest was perfected by the
registration of a notice under prior law, the Thus, the transitional period is from September
time of registration under the prior law shall 7, 2018 until the date when the Registry has
be the time to be used for purposes of been established and operational
applying the priority rules of this Act. a. All pledges and mortgages created
e. If the perfection requirements of the PPSA pursuant to the Civil Code and the Chattel
are NOT satisfied before the perfection of a Mortgage Law remain effective between the
prior interest ceases in accordance with (a), parties.
the prior interest is perfected only from the b. But upon expiration of the transitional
time it is perfected under this Act. period, the binding effect as against third
f. A written agreement between a grantor and parties of chattel mortgages is lost,
a secured creditor creating a prior interest is UNLESS the requirements of the PPSA are
sufficient to constitute authorization by the complied with [Somera].
grantor of the registration of a notice

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Establishment of Electronic Registry
Section 68. Implementation. — Notwithstanding the
entry into force of this Act under Section 67, the
implementation of the Act shall be conditioned upon
the Registry being established and operational under
Section 26.

Section 26. Establishment of Electronic Registry.

a. The Registry shall be established in and
administered by the LRA.
b. The Registry shall provide electronic means for
registration and searching of notices.

Based on Sections 68 and 26 of the PPSA, the

implementation of the PPSA is conditioned on
the establishment and operation of the
Registry. The Registry will be administered by
Land Registration Authority (LRA).

To date, the LRA has yet to establish the

Electronic Registry, although it has announced
that it is targeting to launch the same on the
sixth month from the promulgation of the IRR,
which was issued on Nov. 18, 2019.

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II. REAL ESTATE MORTGAGE 1. A stipulation subjecting to the mortgage

improvements which the mortgagor may
subsequently acquire, install or use in
Real Mortgage connection with real property already
A contract whereby the debtor secures to the mortgaged belonging to the mortgagor is
creditor the fulfillment of a principal obligation valid.
(real security transaction), immediately making 2. A stipulation in a registered (or recorded)
immovable property or real rights answerable real estate mortgage that all property taken
to the principal obligation in case it is not in exchange or replacement by the
complied with at the time stipulated. mortgagor (after-acquired property) shall
become subject to the mortgage is binding
A registered real estate mortgage is a right in [Somera].
rem, a lien that a creditor has on the property;
therefore, it is inseparable from the collateral
and until discharged, it follows the property
1. Obligations Secured
[Somera]. General Rule: A real estate mortgage is
limited to the principal obligations mentioned in
the contract (within its four corners) [Lim Julian
Requisites:
v. Lutero, G.R. No. L-25235 (1926)].
a. The mortgage must be constituted to secure
the fulfillment of a principal obligation [Art.
Exception: A real estate mortgage may
2085, Civil Code];
contain a dragnet or blanket mortgage clause
b. The mortgagor must be the absolute owner
which subsumes all debts, whether past or
of the immovable or alienable real rights
future [Philippine Bank of Communications v.
[Art. 2085, Civil Code];
CA, G.R. No. 118552 (1996)].
c. The mortgagor must have free disposal of
the property or is legally authorized for the
Note: This clause will be strictly construed and
purpose [Art. 2085, Civil Code];
its inclusion makes the mortgage a continuing
d. The mortgage must be subjected to the
security, not to be discharged by repayment of
condition that when the principal obligation
the amount named, but by payment of the full
becomes due, the collateral may be
amount of the principal obligation [Somera].
alienated for payment to the creditor [Art.
2087, Civil Code];
Reliance on Security Test: When the
e. Must be recorded in the Registry of Property
mortgagor takes another loan for which
[Art. 2125, Civil Code].
another security was given, it could not be
inferred that such loan was made in reliance
However, if the instrument is not recorded, the
solely on the original security with the dragnet
mortgage is nevertheless binding between the
clause, but rather, on the new security given
parties [Art. 2125, Civil Code].
[Prudential Bank v. Alviar, G.R. No. 150197
(2005)].
A. Objects of Real Mortgage
1. Immovables
B. Characteristics
2. Alienable real rights over immovables.
1. Characteristics of the Collateral
Note: Article 2127 is modified by the PPSA with As a general rule, the mortgagor retains
regard to property included in a Real Estate possession of the property. He may deliver
Mortgage. Under Art. 2127, a REM “extends to said property to the mortgagee without altering
natural accessions, to the improvements, the nature of the contract of mortgage.
growing fruits and the rents or income not yet
received when the [principal] obligation Mortgage creates an encumbrance over the
becomes due.” These personal properties are property, but ownership of the property is not
no longer covered by Art. 2127 [Somera]. parted with. It merely restricts the mortgagor’s
jus disponendi over the property. The
Future property cannot be an object of mortgagor may still sell the property, and any
mortgage; however: stipulation to the contrary (pactum de non
alienando) is void [Art. 2130, Civil Code].
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However, a stipulation prohibiting the Pactum de non alienando (Sp. pacto de non
mortgagor from entering into second or alienando) is prohibited by Art. 2130
subsequent mortgages is valid since there is a. Stipulations forbidding the mortgagor
no law prohibiting it [Litonjua et al. v. L&R from selling the collateral
Corporation, et al., G.R. No. 130722 (1999), b. Stipulations forbidding the mortgagor
citing Philippine Industrial Co. v. El Hogar & from selling the collateral without the
Vallejo, G.R. No. L-20482 (1923)]. consent of the mortgagee

2. Characteristics of the Mortgage Alienation or assignment of mortgage credit is

A registered real estate mortgage is a right in valid even if it is not registered.
rem, a lien that a creditor has on the property;
therefore, it is inseparable from the collateral C. Kinds
and until discharged, it follows the property
[Gomez-Somera]. 1. Voluntary – constituted by the will of the
owner of the property on which it is created
A real estate mortgage that is unregistered
binds the parties to the contract and it only 2. Legal – required by law to be executed in
gives the mortgagee the right to demand the favor of certain persons:
execution and recording of the mortgage. To a. Persons in whose favor the law
bind third parties, a real estate mortgage must establishes a mortgage have no other
be recorded in the Registry of Property. right than to demand the execution and
recording of the document in which the
It is not an essential requisite that the principal mortgage is formalized [Art. 2125, Civil
of the credit bears interest, or that the interest Code]
as compensation for the use of the principal b. The bondsman who is to be offered in
and the enjoyment of its fruits be in the form of virtue of a provision of law or of a judicial
a certain percentage thereof. order shall have the qualifications
prescribed in Art 2056 [integrity, capacity
Mortgage extends to the natural accessions, to to bind himself, and sufficient property to
the improvements, growing fruits and the rents answer for the obligation], and in other
or income not yet received when the obligation laws [Art. 2082, Civil Code]
becomes due, including indemnity from c. If the person bound to give a bond should
insurance, and/or amount received from not be able to do so, a pledge or
expropriation for public use [Art. 2127, Civil mortgage considered sufficient to
Code]. recover his obligation shall be admitted
a. Applies only when the accessions and in lieu thereof [Art. 2083, Civil Code]
accessories subsequently introduced
belongs to the mortgagor. 3. Equitable – One which, although lacking
b. To exclude them, there must be an express the proper formalities of a mortgage, shows
stipulation, or the fruits must be collected the intention of the parties to make the
before the obligation becomes due. property a security for the debt
c. Third persons who introduce improvements a. Lien created by equitable mortgage
upon the mortgaged property may remove ought not to be defeated by requiring
them at any time. compliance with formalities necessary to
the validity of voluntary real estate
The right to alienate the real estate mortgage mortgage. Ex.: Pacto de retro
credit is the right of the mortgagee to assign its b. Provisions governing equitable
rights under the principal obligation secured. mortgage: Arts. 1365, 1450, 1454, 1602,
Although the mortgagee does not become the 1603, 1604 and 1607
owner of the collateral, it owns the real estate
mortgage credit and may alienate the same to
a third person [Art. 2128, Civil Code; Gomez-
D. Principle of Indivisibility of
Somera]. Pledge/Mortgage
A pledge or mortgage is indivisible, even
though the debt may be divided among the
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successors in interest of the debtor or of the E. Recording Required
creditor [Art. 2089, Civil Code].
The real estate mortgage must be recorded in
Note: The principle of indivisibility presupposes the Registry of Property in order to be validly
several heirs of the debtor or creditor and constituted [Art. 2125, Civil Code].
DOES NOT APPLY in the absence of such a
situation [Gomez-Somera]. Note: The mortgage would still be binding
between the parties even if the instrument is
Indivisibility applies only as to not recorded [Art. 2125, Civil Code].
pledgors/mortgagors who are themselves
debtors in the principal obligation, and NOT to
accommodation pledgors/ mortgagors. F. Foreclosure of Mortgage

A mortgage directly and immediately subjects Foreclosure – is the remedy available to the
the property upon which it is imposed. It is mortgagee by which he subjects the
indivisible even though the debt may be mortgaged property to the satisfaction of the
divided, and such indivisibility is likewise obligation secured by the mortgage by causing
unaffected by the fact that the debtors are not its alienation in accordance with the
solidarily liable [Dayrit v. CA, G.R. No. L-29388 procedures allowed by law.
(1970)].
In general, an action for foreclosure of a
Where only a portion of the loan is released, mortgage is limited to the amount mentioned in
the mortgage becomes enforceable only as to the mortgage, except when the mortgage
the proportionate value of the loan [Central contract intends to secure future loans or
Bank v. CA, G.R. No. L-45710 (1985)]. advancements.

The question is whether or not the written Mortgage may be used as a “continuing
instrument in controversy was a mortgage or a security” which secures future advancements
conditional sale. and is not discharged by the repayment of the
amount in the mortgage.
The correct test, where it can be applied, is the
continued existence of a debt or liability Acceleration Clause Allowed
between the parties. If such exists, the Acceleration clause, or the stipulation stating
conveyance may be held to be merely a that on the occasion of the mortgagor’s default,
security for the debt or an indemnity against the the whole sum remaining unpaid automatically
liability [Reyes v. Sierra, G.R. No. L-28658 becomes due and demandable, is ALLOWED.
(1979), citing Cuyugan v. Santos, G.R. No. L-
10265 (1916)]. Kinds of Foreclosure
1. Judicial Foreclosure
Exception to the Principle of Indivisibility 2. Extrajudicial Foreclosure
When several things are pledged or
mortgaged, each thing for a determinate Judicial Extrajudicial
portion of the debt, the pledges or mortgage, Foreclosure Foreclosure
are considered separate from each other. But
when the several things are given to secure the Court intervenes No court intervention
same debt in its entirety, all of them are liable
for the debt, and the creditor does not have to There is equity of There is right of
divide his action by distributing the debt among redemption – period redemption – period
the various things pledged or mortgaged. Even starts from the start from date of
when only a part of the debt remains unpaid, all finality of the registration of
the things are still liable for such balance [Art. judgment until order certificate of sale
2089, Civil Code; Tolentino]. of confirmation

Decisions are Not appealable

appealable

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allowed by law [Rule 68, Sec. 3, Rules of
No need for a Special power of
Court].
special power of attorney in favor of
attorney in the the mortgagee is
Note: A foreclosure sale is not complete
contract of mortgage required in the
until it is confirmed. Thus, after the
contract
foreclosure sale but before its confirmation,
the court may grant the judgment debtor or
1. Judicial Foreclosure [Rule 68, Rules mortgagor the equity of redemption.
of Court]
e. Before the confirmation, the court retains
a. May be availed of by bringing an action in control of the proceedings; Secs. 31, 32,
the proper court which has jurisdiction over and 34 of Rule 39 on the execution of
the area wherein the real property involved judgments apply [Rule 68, Sec. 8, Rules of
or a portion thereof is situated [Rule 68, Court].
Sec. 1, Rules of Court].
f. A certified copy of the final order of the court
b. If the court finds the complaint to be well- confirming the sale shall be registered in the
founded, it shall order the mortgagor to pay registry of deeds.
the amount due with interest and other
charges within a period of not less than 90 If no right of redemption exists: The
days nor more than 120 days from the entry certificate of title in the name of the
of judgment [Rule 68, Sec. 2, Rules of mortgagor shall be cancelled, and a new
Court]. one issued in the name of the purchaser.

Note: The mortgagor may exercise the If a right of redemption exists: The certificate
equity of redemption during this period of of sale and the order confirming the sale
grace in order to extinguish the mortgage shall be registered [Rule 68, Sec. 7, Rules
and retain ownership of the collateral by of Court].
paying the mortgage obligation [Top Rate
International Services, Inc. v. IAC, G.R. g. The proceeds of the sale shall be applied to
Nos. L-67496 and L-68257 (1986)]. the payment of the:
1. costs of the sale;
It is this equity of redemption that is 2. amount due the mortgagee;
conferred on the mortgagor’s successors- 3. claims of junior encumbrancers or
in-interest or on third persons acquiring persons holding subsequent mortgages
rights over the collateral from the mortgage in the order of their priority; and
subsequent. 4. the balance, if any shall be paid to the
mortgagor [Rule 68, Sec. 4, Rules of
Although these subsequent or junior lien- Court]
holders acquire the equity of redemption,
this right is strictly subordinate to the h. Sheriff’s certificate is executed,
superior lien of the first mortgagee [Gomez- acknowledged and recorded to complete
Somera]. the foreclosure.

c. If the mortgagor fails to pay within the at Nature of Judicial Foreclosure Proceedings
time directed, the court, upon motion, shall a. Quasi in rem action. Hence, jurisdiction may
order the property to be sold to the highest be acquired through publication.
bidder at a public auction [Rule 68, Sec. 3, b. Foreclosure is only the result or incident of
Rules of Court]. the failure to pay debt.
c. Survives death of mortgagor.
d. Upon confirmation of the sale by the court,
also upon motion, it shall operate to divest 2. Extrajudicial Foreclosure
the rights of all parties to the action and to A real estate mortgage may be extrajudicially
vest their rights to the purchaser subject to foreclosed only if there is a special power
such rights of redemption as may be inserted or attached to the document in which

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the real estate mortgage appears and only in property sold within 1 year from and after
accordance with the provisions of Act No. 3135 the date of sale.
[Gomez-Somera]. 1. If the mortgagee is a bank, quasi-bank or
trust entity and the debtor is a juridical
Act No. 3135 person, then there is no right of
a. Applies to mortgages where the authority to redemption. However, juridical
foreclose is granted to the mortgagee. mortgagors may redeem the property
b. Authority is not extinguished by death of before the registration of the TCT to the
mortgagor or mortgagee. This is an agency buyer, which is similar to the equity of
coupled with interest. redemption. The TCT must be registered
c. Public sale should be made after proper within three months after the foreclosure
notice to the public; otherwise, it is a [Art. III. Sec. 47, General Banking Law]
jurisdictional defect which could render the 2. The mortgagor can only legally transfer
sale voidable. the right to redeem and the use of the
1. General Rule: Statutory provisions property during the period of redemption
governing posting of notice must be because ownership of the collateral is
strictly complied with and even slight retained by the mortgagor until the
deviations will invalidate the notice. expiration of such period
2. Exception: If the objectives are attained,
immaterial errors and mistakes may not j. During the redemption period, the
affect the sufficiency of the notice purchaser may petition the land registration
[Metropolitan Bank and Trust Company court to give him possession of the property
v. Wong, G.R. No. 120859 (2001) by furnishing a bond in an amount
discussing Olizon v. CA, G.R. No. equivalent to the use of the property for a
107075 (1994)]. period of 12 months. Upon approval of the
bond, the Court shall issue a Writ of
d. Republication of the notice of sale is Possession.
necessary for the validity of the postponed k. Remedy of party aggrieved by foreclosure is
extrajudicial sale. a petition to set aside sale and the
e. There is no need to notify the mortgagor, cancellation of Writ of Possession.
where there is no contractual stipulation However, if the mortgagee is a bank, the
therefor. mortgagor is required to post a bond equal
1. Proper notice consists of: to the value of the mortgagee’s claim.
a. posting notice in three public places l. If no redemption is made within one year
and/or from the date of registration of the
b. publication in newspaper of general Certificate of Sale, the purchaser is entitled
circulation to a conveyance and possession of the
property (Consolidation of Ownership).
2. Purpose of notice is to obtain the best bid 1. General Rule: Upon Consolidation of
for the foreclosed property, and to inform Ownership, possession of the property
the public of: shall be given to the purchaser or last
a. the nature and condition of the redemptioner as a matter of right.
collateral, and 2. Exceptions:
b. the time, place, and terms of the sale a. A third party is actually holding the
property [Rule 39, Sec. 33, Rules of
f. The foreclosure sale shall be made at public Court]
auction through sealed bids, within the b. The mortgagor filed a separate action
province in which the property to be sold is to invalidate the auction sale because
situated. of the unusually low price paid therein
g. Surplus proceeds of foreclosure sale belong [Cometa v. IAC, G.R. No. 69294
to the mortgagor. (1987)]
h. The Clerk of Court shall issue and sign the c. The mortgagee failed to deliver the
Certificate of Sale. surplus from the proceeds of the
i. Debtor (who must be a natural person), his foreclosure sale [Sulit v. CA, G.R. No.
successors in interest, or any junior 119247 (1997)]
encumbrancer has the right to redeem the
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3. Nature of Power of Foreclosure by auction, provided that the public auction
Extrajudicial Sale was regularly and honestly conducted.
a. Conferred for mortgagee’s protection.
b. An ancillary stipulation. A suit for the recovery of the deficiency after
c. A prerogative of the mortgagee. the foreclosure of a mortgage is in the nature
of a mortgage action because its purpose is
Note: precisely to enforce the mortgage contract
a. Both should be distinguished from [Caltex v. IAC, G.R. No. 74730 (1989)].
execution sale governed by Rule 39, Rules
of Court. G. Waiver of Security by Creditor
b. Foreclosure retroacts to the date of
registration of mortgage. 1. Mortgagee may waive the right to foreclose
c. A stipulation of upset price, or the minimum his mortgage and maintain a personal
price at which the property shall be sold to action for recovery of the indebtedness.
become operative in the event of a 2. Mortgagee cannot have both remedies.
foreclosure sale at public auction, is null and This is because he only has one cause of
void. action, the nonpayment of the mortgage
debt.
4. Right to Surplus or Deficiency
Right of the Mortgagor H. Redemption
The mortgagor is entitled to the surplus, if any,
after payment of the proceeds of the sale. It is a transaction by which the mortgagor
reacquires the property which may have
Right of the Mortgagee passed under the mortgage or divests the
a. Mortgagee is entitled to recover deficiency. property of the lien which the mortgage may
This extends to judicial foreclosure of have created.
mortgage arising out of the settlement of
estate, but NOT to extrajudicial foreclosure 1. Kinds
arising out of the same [Heirs of Sps. a. Equity of redemption – in judicial
Maglasang v. Manila Banking Corp., G.R. foreclosure of real estate mortgage under the
No. 171206 (2013)]. Rules of Court, it is the right of the mortgagor
b. If the deficiency is embodied in a judgment, to redeem the mortgaged property by paying
it is referred to as deficiency judgment. the secured debt within the 120-day period
c. Action for recovery of deficiency may be from entry of judgment or after the foreclosure
filed even during redemption period. sale, but before the sale of the mortgaged
d. Action to recover prescribes after 10 years property or confirmation of sale.
from the time the right of action accrues.
A formal offer to redeem preserves the right of
5. Effect of Inadequacy of Price in redemption, e.g., by filing an action to enforce
Foreclosure Sale the right to redeem.
a. Where there is right to redeem, inadequacy
of price is immaterial because the judgment b. Right of redemption – in extrajudicial
debtor may redeem the property. foreclosure of real estate mortgage, the right of
• Exception: Where the price is so the mortgagor to redeem the property within a
inadequate as to shock the conscience certain period after it was sold for the
of the court, taking into consideration the satisfaction of the debt (If the mortgagee is a
peculiar circumstances. bank, the redemption period expires after
registration of the sale).
b. Property may be sold for less than its fair 1. For natural persons – one year from the
market value, upon the theory that the registration of the TCT
lesser the price the easier it is for the owner 2. For juridical persons – until, but not later
to redeem. than, the registration of the certificate of
c. The value of the mortgaged property has no foreclosure sale (no more than 3 months
bearing on the bid price at the public after foreclosure)

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3. Formal offer to redeem must be with tender Note: Under RA 8791, the amount is the
of redemption price to preserve right of amount due under the mortgage deed
redemption
c. Written notice of the redemption must be
In a judicial foreclosure sale, the right of served on the officer who made the sale and
redemption must be allowed by law. a duplicate filed with the Register of Deeds
of the province
The references in Rule 68 and Rule 39 to the
right of redemption are not grants of this
Equity of Right of
statutory prerogative. To claim a right of
Redemption Redemption
redemption in judicial foreclosure, there must
be a specific law that allows it. Sec. 3, Rule 68 Act No. 3135
Example: RA 8791 (General Banking Law of Right to redeem the Right to redeem
2000) property after default the property within
in the performance of 1 year from the
2. Requisites the obligation but date or registration
Requisites for a Valid Redemption before the foreclosure of the certificate of
a. Redemption must be made within: sale. sale
1. For natural persons: one year from the
registration of the TCT Applies to judicial Applies to
2. For juridical persons: until, but not later foreclosure of real extrajudicial
than, the registration of the certificate of estate and chattel foreclosure of real
foreclosure sale (no more than 3 months mortgage. estate mortgage
after foreclosure)
The rule up to now is that the right of a
b. Payment of the purchase price of the
purchaser at a foreclosure sale is merely
collateral involved, plus 1% interest per
inchoate until after the period of redemption
month, together with the amount of any
has expired without the right being exercised.
assessments or taxes if any, paid by the
The title to land sold under mortgage
purchaser after the sale
foreclosure remains in the mortgagor or his
grantee until the expiration of the redemption
period and conveyance by the master's deed
[Medida v. CA, G.R. No. 98334 (1992)].

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LAND TITLES AND
DEEDS
CIVIL LAW
LAND TITLES AND DEEDS CIVIL LAW
I. THE TORRENS SYSTEM to the parcel of land are quieted upon issuance
of said certificate [Cruz v. Secretary of
Environment and Natural Resources, G.R. No.
A. In General 135385 (2000)].

1. The Torrens System B. Concepts

A system for registration of land under which,
upon landowner’s application, the court may, 1. Land Title
after appropriate proceedings, direct the It is the evidence of the right of the owner or
issuance of a certificate of title [Black’s Law the extent of his interest, by which he can
Dictionary]; those systems of registration of maintain control, and as a rule, assert right to
transactions with interest in land whose exclusive possession and enjoyment of the
declared object is, under governmental property [Peña].
authority, to establish and certify to the
ownership of an absolute and indefeasible title Title and Certificate of Title Distinguished
to realty, and to simplify its transfer [Grey Alba Certificate of
v. De la Cruz, G.R. No. L-5246 (1910)]. Title
Title

2. Nature Lawful cause or ground

Judicial in nature. of possessing that
which is ours. Mere evidence of
3. Purpose ownership; it is not
It aims to decree land titles that shall be final, That which constitutes the title to the land
irrevocable and indisputable [Government of a just cause of itself [Castillo v.
the Philippine Islands v. Abural, G.R. No. exclusive possession, Escutin, G.R. No.
14167 (1919)], and to relieve the land of the or which is the 171056 (2009)].
burden of known as well as unknown claims foundation of
[SM Prime Holdings, Inc. v. Madayag, G.R. No. ownership of property.
164687 (2009)].

General Rule: A title once registered cannot Title is a conclusive evidence of ownership
be impugned, altered, changed, modified, and it cannot be attacked collaterally.
enlarged, or diminished.
2. Deed
Exception: Direct proceeding permitted by A written instrument executed in accordance
law, usually for the protection of innocent third with law, wherein a person grants or conveys
persons to another certain land, tenements or
hereditaments [Peña].
4. Background
The Torrens system was introduced in the Elements of A Deed
Philippines by Act No. 496, which took effect on a. Grantor
Jan. 1, 1903. This was later amended and b. Grantee
superseded by P.D. 1529 which took effect on c. Words of Grant
June 11, 1978. d. Description of the property involved
e. Signature of the grantor
The underlying principle of the Torrens system f. At least two (2) witnesses
is security with facility in dealing with land. It g. Notarial acknowledgment
requires that the government issue an official
certificate of title attesting to the fact that the
person named is the owner of the property
described therein, subject to such liens and
encumbrances thereon noted or the law
warrants or reserves. The certificate of title is
indefeasible and imprescriptible and all claims
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3. Estate a. Nature of Land Registration
An estate, strictly speaking, represents the Judicial proceedings for land registration
nature, extent, degree, and quantity of a throughout the Philippines shall be in rem
person’s interest in land. [Sec. 2, par. 1, P.D. 1529].

Types of Estates A proceeding in rem is when the object of the

a. Freehold Estate – Indicates title of action is to bar indifferently all who might be
ownership mined to make an objection of any sort against
1. Fee Simple – An absolute title; Absolute the right sought to be established, and if
estate in perpetuity; Title to land is anyone in the world has a right to be heard on
conferred upon a man and his heirs the strength of alleging facts which if true, show
absolutely and without any limitation an inconsistent interest [Agcaoili].
imposed upon the estate
2. Fee Tail – One designed to pass title Land registration is binding on the whole world
from grantee to his heirs, in the intent of because “by the description in the notice (of
the grantor being to keep the property in initial hearing of the application for registration)
the grantee’s line of issue “To Whom It May Concern,” all the world are
3. Life Estate – One held for the duration made parties defendant” [Aquino, citing
of the life of the grantee; In some cases, Esconde v. Barlongay, G.R. No. L-67583
it may terminate earlier as by forfeiture. (1987)].

b. Less-than-Freehold Estate – Signifies In a registration proceeding, the judgment of

some sort of right short of title the court confirming the title, and ordering its
1. Estate for Years – In the nature of a registration in one’s name constitutes, when
lease short of title; grantee or lessee final, res judicata against the whole world [Ting
takes over possession of the land for a v. Heirs of Lirio, G.R. No. 16891 (2007)].
period agreed upon but the grantor
retains the legal title to the property There is no need to personally notify the
2. Tenancy from period to period – Also owners or claimants of the land sought to be
in the nature of a lease which may run registered if it is involved in a land registration
from month to month or from year to case since it is a proceeding in rem. This gives
year, with the peculiarity of automatic automatic power and authority to the court over
renewal from time to time, unless the res [Guido-Enriquez v. Victorino, et al.,
expressly terminated by either party G.R. No. 180427 (2013)].
3. Tenancy at will – Another form of lease
agreement where a person is permitted b. Laws Implementing Land
to occupy the land of another without any Registration
stipulation as to period, but either party
1. Public Land Act [CA 141, as amended]
reserves the right to terminate the
2. Property Registration Decree [P.D.1529, as
occupation at will or at any time
amended]
3. Cadastral Act [Act 2259, as amended]
4. Land Registration 4. Indigenous Peoples Rights Act of 1997 [RA
A judicial or administrative proceeding whereby 8371]
a person’s claim of ownership over a 5. Emancipation Decree [P.D. 27, as
particular land is determined and confirmed amended]
or recognized so that such land and the 6. Comprehensive Agrarian Reform Law of
ownership thereof may be recorded in a public 1988 [RA 6657, as amended]
registry.
To simplify and streamline land registration
Note: Registration does not vest title. It is not a proceedings, Presidential Decree No. 1529
mode of acquiring ownership but is merely was issued on June 11, 1978, otherwise known
evidence of such title over a particular property. as the Property Registration Decree, governing
registration of lands under the Torrens system
as well as the recording of transactions relating
to unregistered lands, including chattel
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mortgages. This Decree consolidates, in effect, b. Private lands
all pre-existing laws on property registration
with such appropriate modifications as are Non-registrable lands
called for by existing circumstances [Peña]. Those found in the Civil Code dealing with non-
registrable properties (e.g. property of public
c. Purpose of Land Registration dominion)
Registration is merely a species of notice.
The act of registering a document is never C. Administration of the Torrens
necessary in order to give it legal effect as
between the parties. The system maintains a System
permanent record of landholdings, in order to
prevent fraudulent claims to land by 1. Land Registration Authority
concealment of transfers. Agency under the executive supervision of the
Department of Justice charged with the
Another purpose is to notify and protect the efficient execution of the laws relative to the
interests of strangers to a given transaction, registration of lands
who may be ignorant thereof. However, where
a document so registered is invalid or legally Composition:
defective, registration will not in any way render a. Administrator
it valid or cure its defect. b. 2 Deputy Administrators (as assistants)

d. Object of Registration Functions of LRA

Only real property or real rights may be the a. Extend speedy and effective assistance to
object of registration under the existing land the Department of Agrarian Reform, the
registration laws. Land Bank, and other agencies in the
implementation of land reform program of
5. Classification of Lands [Sec, 3, Art. the government
b. Extend assistance to courts in ordinary and
XII, 1987 Constitution] cadastral land registration proceedings; and
a. Agricultural c. Be the central repository of records relative
b. Forestland or timberland to original registration of lands titled under
c. Mineral Lands the Torrens system, including the
d. National Parks subdivision and consolidation plans of titled
lands.
Classification of lands is an exclusive
prerogative of the executive department. In 2. Register of Deeds
the absence of such classification, the lands Public repository of records of instruments
remain as unclassified until it is released affecting registered or unregistered lands and
therefrom and rendered open to disposition. chattel mortgages in the province or city
The President, through a Presidential wherein such office is situated.
Proclamation or Executive Order can classify
or reclassify land to be included or excluded Composition:
from the public domain. The DENR Secretary a. Register of Deeds
is also empowered to approve a land b. Deputy (as assistant)
classification and declare such land as
alienable and disposable [Agcaoili, citing Functions of Registers of Deeds:
Fortuna v. Republic, G.R. No. 173423 (2014)]. a. Immediately register an instrument
presented for registration dealing with real
Registrable lands are: or personal property which complies with
a. Alienable public agricultural lands the requisites for registration;
If the land is in the public domain, the land must b. Shall see to it that said instrument bears the
be classified as alienable and disposable. It proper documentary stamps and that the
must be classified as such at the time of filing same are properly cancelled;
the application for registration [Republic v. CA c. If the instrument is not registerable, he shall
and Naguit, G.R. No. 144057 (2005)]. deny the registration thereof and inform the
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presentor of such denial in writing, stating
the ground or reason therefore, and
advising him of his right to appeal by
consulta in accordance with Sec. 117 of
P.D. 1529;
d. Prepare and keep an index system which
contains the names of all registered owners
and lands registered.

The function of the ROD with reference to

registration of deeds, encumbrances,
instruments, and the like is ministerial in
nature, provided the applicant complies with all
the requisites [Baranda v. Gustilo, G.R. No.
81163 (1988)].

Note: When the ROD is in doubt as to the

proper action to take on an instrument or deed
presented to him for registration, he should
submit the question to the Administrator of the
LRA en consulta [P.D. 1529, Sec 117]

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II. THE REGALIAN 2. Under the Regalian doctrine, all lands of
whatever classification and other natural
DOCTRINE resources not otherwise appearing to be
clearly within private ownership are
presumed to belong to the State which is
A. Concept of the Regalian the source of any asserted right to
Doctrine ownership of land [Republic v. Remman
Enterprises, Inc. G.R. No. 199310 (2014)].
All lands became the exclusive patrimony and 3. The burden of proof in overcoming the
dominion of the Spanish Crown [Agcaoili]. presumption of State ownership of the lands
of the public domain is on the person
The Regalian Doctrine is enshrined in the 1987 applying for registration (or claiming
Constitution [Sec, 2 & 3, Art. XII] which states ownership), who must prove that the land
that all lands of public domain belong to the subject of the application is alienable or
State, thus private title to land must be disposable. To overcome this presumption,
traced to some grant, express or implied, incontrovertible evidence must be
from the State, i.e. The Spanish Crown or its established that the land subject of
successors, the American Colonial application (or claim) is alienable or
government and thereafter the Philippine disposable [Valiao v. Republic, G.R. No.
Republic. 170757 (2011)].
The present Constitution provides that, except
for agricultural lands of the public domain C. Native Title and Ancestral
which alone may be alienated, forest or Domains
timber, and mineral lands, as well as all
other natural resources must remain with
the State, the exploration, development, and 1. Native Title
utilization of which shall be subject to its full Recognizes ownership of land by Filipinos
control and supervision albeit allowing it to independent of any grant from the Spanish
enter into co-production, joint venture, or crown on the basis of possession since time
production-sharing agreements, or into immemorial [Cariño v. Insular Government,
agreements with foreign-owned corporations G.R. No. 2869 (1907)].
involving technical or financial assistance for
large-scale exploration, development, and Lands under native title are not part of public
utilization [Secs. 2 and 3, Art. XII; La Bugal- domain, “lands possessed by an occupant and
B’laan Tribal Association, Inc. v. Ramos, G.R. his predecessors since time immemorial, such
No. 127882 (2004)]. possession would justify the presumption that
the land had never been part of the public
It does not negate native title to lands held in domain or that it had been private property
private ownership since time immemorial [Cruz even before the Spanish conquest [Republic v.
v. Sec. of Environment and Natural Resources, CA, G.R. No. 130174 (2000)].
G.R. No. 135385 (2000)].
2. Ancestral Domains
B. Effects of the Regalian Refer to all areas generally belonging to
ICCs/IPs comprising lands, inland waters,
Doctrine coastal areas, and natural resources therein,
held under a claim of ownership, occupied or
1. All lands of public domain belong to the possessed by ICCs/IPs, by themselves or
State, and that the State is the source of through their ancestors, communally or
any asserted right to ownership in land and individually since time immemorial,
charged with the conservation of such continuously to the present except when
patrimony [Republic v. IAC, G.R. No. 71285 interrupted by war, force majeure or
(1987)]. displacement by force, deceit, stealth or as a
consequence of government projects or any
other voluntary dealings entered into by
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government and private
individuals/corporations, and which are
necessary to ensure their economic, social and
cultural welfare. It shall include ancestral lands,
forests, pasture, residential, agricultural, and
other lands individually owned whether
alienable and disposable or otherwise, hunting
grounds, burial grounds, worship areas, bodies
of water, mineral and other natural resources,
and lands which may no longer be exclusively
occupied by ICCs/IPs but from which they
traditionally had access to for their subsistence
and traditional activities, particularly the home
ranges of ICCs/IPs who are still nomadic
and/or shifting cultivators.

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III. ORIGINAL REGISTRATION C. Who May Apply

A. Concept 1. Under Sec. 14, P.D. 1529, as

amended by Sec. 6, R.A. No. 11573
This is a proceeding brought before the land a. Those who by themselves or through their
registration court to determine title or predecessors-in-interest have been in
ownership of land on the basis of an open, continuous, exclusive and notorious
application for registration or answer by a possession and occupation of alienable and
claimant in a cadastral registration. disposable lands of the public domain not
covered by existing certificates of title or
A decree of registration merely confirms, but patents under a bona fide claim of
does not confer ownership [City Mayor of ownership for at least twenty (20) years
Parañaque City v. Ebio, G.R. No. 178411 immediately preceding the filing of the
(2010)]. application for confirmation of title except
when prevented by war or force majeure.
Registration does not vest title or give title to • They shall be conclusively presumed to
the land, but merely confirms and thereafter have performed all the conditions
protects the title already possessed by the essential to a Government grant and
owner, making it imprescriptible by occupation shall be entitled to a certificate of title
of third parties. The registration does not give under this section.
the owner any better title than he has. He does
not obtain title by virtue of the certificate. He b. Those who have acquired ownership of
secures his certificate by virtue of the fact that private lands or abandoned riverbeds by
he has a fee simple title [Legarda v. Saleeby, right of accession or accretion under the
G.R. No. 8936 (1915)]. provisions of existing laws.

Original Distinguished From Subsequent c. Those who have acquired ownership of land
Original Subsequent in any other manner provided for by law [see
Registration Registration Republic represented by Mindanao Medical
Any transaction Center v. CA, G.R. No. 40912 (1976)]
When right of affecting such 1. Land owned in common: ALL co-
ownership or title to originally registered owners shall file the application jointly.
land is for the first land, if in order, may 2. Land has been sold under pacto de
time made of public be registered in the retro: the vendor a retro may file an
record Office of the Register application for the original registration of
of Deeds concerned the land, provided, however, that should
the period for redemption expire during
the pendency of the registration
B. Voluntary or Involuntary proceedings and ownership to the
property consolidated in the vendee a
1. Voluntary – by filing with the proper court retro, the latter shall be substituted for
under: the applicant and may continue the
a. P.D. 1529, Property Registration Decree proceedings.
b. CA 141, Public Land Act 3. Land subject of a trust agreement: A
c. R.A. No. 8371, The Indigenous People’s trustee on behalf of his principal may
Rights Act of 1997 apply for original registration of any land
held in trust by him, unless prohibited by
2. Involuntary – as in Cadastral Proceedings the instrument creating the trust.
a. This is compulsory registration initiated
by the government to adjudicate Note: R.A. No. 11573 was signed into
ownership of the land law on 16 July 2021. The cutoff date for
b. Involuntary on the part of the claimant the 2022 Bar Coverage is 30 June 2021.
but they are compelled to substantiate
their claim or interest

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Before the amendments: 4. Under R.A. No. 8371:
1. Those who by themselves or through a. Formal recognition of ancestral domains by
their predecessors-in-interest, have virtue of Native Title may be solicited by
been in open, continuous, exclusive ICCs/IPs concerned [Sec. 11]
and notorious possession and b. Option to secure certificate of title under CA
occupation of alienable and 141 or Land Registration Act 496 [Sec. 12]
disposable lands of the public domain 1. Individual members of cultural
under a bona fide claim of ownership communities, with respect to individually-
since June 12, 1945, or earlier. owned ancestral lands who, by
2. Those who have acquired ownership themselves or through their
of private lands by prescription under predecessors-in -interest, have been in
the provisions of existing laws. continuous possession and occupation
3. Those who have acquired ownership of the same in the concept of owner
of private lands or abandoned river since time immemorial or for a period of
beds by right or accession or not less than thirty (30) years
accretion under the existing laws. immediately preceding the approval of
4. Those who have acquired ownership this Act and uncontested by the
of land in any other manner provided members of the same ICCs/IPs shall
for by law [see: Republic represented have the option to secure title to their
by Mindanao Medical Center v. CA, ancestral lands
G.R. No. 40912 (1976)]. 2. Option granted shall be exercised within
20 years from the approval of RA 8371
2. Under Sec. 16, P.D. 1529; Land
Applied for Registration by a Non- D. Jurisdiction
Resident of the Philippines
He shall file his application: Where to File: The court that should take
a. An instrument in due form; cognizance of a registration case is that which
b. Appointing a duly authorized representative has territorial jurisdiction over the property.
or attorney-in-fact, whose authority shall
accompany the application; General Rule: RTC of the province, city, or
c. Giving his full name and postal address; and municipality where the property is situated.
d. Shall therein agree that the service of any
legal process in the proceedings under or The RTC shall have exclusive jurisdiction over
growing out of the application made upon all applications for original registration of title,
his agent or representative shall be of the with power to hear and determine all questions
same legal effect as if made upon the arising upon such applications or petition [Sec.
applicant within the Philippines. 2 (2), P.D. 1529].

3. Under Sec. 12, CA 141 Exceptions: Delegated jurisdiction to the

Any person who: MTC, MeTC, and MCTC by the Supreme Court
a. Is a citizen of the Philippines over the age of in cadastral and land registration cases if:
18, or the head of a family; 1. There is no controversy over the land, OR
b. Does not own more than 24 hectares of land 2. Its value is less than P100,000 [Sec. 34, BP
in the Philippines, or has not had the benefit 129]
of any gratuitous allotment of more than 24
hectares of land since the occupation of the
Philippines by the United States

Note: they may enter a homestead of not

exceeding 24 hectares of agricultural land of
the public domain

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IV. CERTIFICATE OF TITLE A Torrens title, once registered, cannot be
defeated, even by adverse, open and
notorious possession. A registered title
A. The Torrens Title under the Torrens system cannot be defeated
by prescription. The title, once registered, is
Certificate of ownership issued by the Register notice to the whole world. All persons must take
of Deeds naming and declaring the owner of notice. No one can plead ignorance of the
the real property described therein free from registration [Egao v. CA, G.R. No. L-79787
all liens and encumbrances, except such as (1989)].
may be expressly noted thereon or otherwise
reserved by law. C. Effects of Registration under
the Torrens System
1. Original Certificate of Title (OCT)
It is the first certificate of title issued in the
name of the registered owner by the Register 1. Land is placed under the operation
of Deeds covering a parcel of land which had of the Torrens system.
been registered under the Torrens System, by
virtue of judicial or administrative proceedings. 2. Claims and liens prior to the decree
of registration
2. Transfer Certificate of Title (TCT)
General Rule
The subsequent certificate of title pursuant to Claims and liens of whatever character existing
any deed of transfer or conveyance to another against the land prior to the issuance of the
person. The Register of Deeds shall make a certificate of title are cut off by such certificate
new certificate of title and give the registrant an and the certificate so issued binds the whole
owner’s duplicate certificate. The previous world, including the government.
certificate shall be stamped “cancelled.”
A decree of registration bars all claims and
3. Patents rights which arose or may have existed prior to
Whenever public land is by the Government the decree of registration. By the issuance of
alienated, granted or conveyed to any person, the decree, the land is bound and title thereto
the same shall be brought forthwith under the quieted, subject only to certain exceptions
operation of this Decree [Sec. 103, P.D. 1529] under the property registration decree [Heirs of
a. Patents only involve public lands which are Delfin, v. Rabadon, G.R. No. 165014 (2013)].
alienated by the Government pursuant to
the Public Land Act [CA 141, as amended] Exceptions:
b. The patent (even if denominated as a deed a. Those claims noted on the certificate
of conveyance) is not really a conveyance b. Liens, claims, or rights arising or existing
but a contract between the grantee and the under the laws and the Constitution, which
Government and evidence of authority to are not by law required to appear on record
the Register of Deeds to make registration. in the Register in order to be valid
c. The act of registration is the operative act to c. Unpaid real estate taxes levied and
affect and convey the land. assessed within 2 years immediately
preceding the acquisition of any right over
B. Probative Value the land by an innocent purchaser for value

A Torrens Certificate of Title is valid and 3. Title to the land becomes non-
enforceable against the whole world. It may prescriptible
be received in evidence in all courts of the General Rule
Philippines, and shall be conclusive as to all a. Even adverse, notorious, and continuous
matters contained therein, principally the possession under claim of ownership for the
identity of the owner of the covered land period fixed by law is ineffective against a
thereby and identity of the land. Torrens title [JM Tuason and Co. Inc. v. CA,
G.R. No. L-41233 (1979)].

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b. The fact that the title to the land was lost E. Dealings in Land before
does not mean that the land ceased to be
registered land before the reconstitution of Issuance of Decree
its title. It cannot perforce be acquired by
prescription [Ruiz v. CA, G.R. No. 29213 With the filing of an application for registration,
(1977)]. the land described therein does not cease to
c. Lands under a Torrens title cannot be become open to any lawful transaction. If the
acquired by prescription or adverse transaction takes place before the issuance of
possession. Section 47 of P.D. No. 1529, the decree of registration, Section 22 of P.D.
the Property Registration Decree, expressly 1529 provides that the instrument is to be
provides that no title to registered land in presented to the RTC, together with a motion
derogation of the title of the registered praying that the same be considered in relation
owner shall be acquired by prescription or with the pending application.
adverse possession [Dream Village
Neighborhood Association, Inc., v. Bases However, if the motion is filed after the decision
Development Authority, G.R. No.192896 of adjudication has become final but before the
(2013)]. issuance of the decree by the Administrator of
Land Registration Authority, the court shall
Exceptions: require the interested party to pay the fees
a. If previous valid title of the same land exists prescribed as if such instrument had been
b. When the land covered is not capable of presented for registration in the office of the
registration Register of Deeds [Peña].
c. When acquisition of certificate is attended
by fraud F. Laches, When Applicable
4. Torrens certificate is presumed Laches sets in if it takes 18 years for a person
valid and devoid of flaws. to file an action to annul the land registration
Note: Registration is not equivalent to legal proceedings, especially so if the registrant has
title. Under the Torrens system, registration already subdivided the land and sold the same
only gives validity to the transaction or creates to innocent third parties. A party’s long inaction
a lien upon the land. It merely confirms, but or passivity in asserting his rights over disputed
does not confer, ownership [Lu v. Sps. Orlando property precludes him from recovering the
and Manipon, G.R. No. 147072 (2002)]. same [Heirs of Teodoro dela Cruz v. CA, G.R.
No. 117384 (1998); Ignacio v. Basilio, et al.,
D. Effect of Non-Registration G.R. No. 122824 (2001)].

General Rule
If a purchaser, mortgagee or grantee should
fail to register his deed the conveyance,
considering our existing registration laws, it
shall not be valid against any person unless
registered.

Exceptions:
1. The grantor,
2. His heirs and devisees, and
3. Third persons having actual notice or
knowledge thereof.

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Voluntary Dealings Compared to
V. SUBSEQUENT Involuntary Dealings
Involuntary
REGISTRATION Voluntary Dealings
Dealings
Refer to deeds, Refer to the writs,
A. In General instruments, or orders, or processes
documents which issued by the court
A proceeding where incidental matters after are results of the free of record affecting
original registration may be brought before the and voluntary acts of registered land, also
land registration court by way of motion or the parties thereto. other instruments
petition filed by the registered owner or a party which are not willful
in interest. acts of the registered
owner, executed
Necessity and Effects of Registration without his
[Sec. 51 and 52, P.D. 1529] knowledge or
1. The deed, mortgage, lease, or other consent.
voluntary instrument, except a will shall
ONLY operate as: 1. Sale 1. Attachment
a. A contract between the parties and 2. Real property 2. Mandamus
b. Evidence of authority to the Register of mortgage 3. Sale on
Deeds to make registration. 3. Lease execution of
2. The act of registration shall be the 4. Pacto de retro judgment or
operative act to convey or affect the land sale sales for taxes
insofar as third persons are concerned. 5. Extra-judicial 4. Adverse claims
3. Also, by registration, it creates constructive settlement 5. Notice of lis
notice to the world. 6. Free pendens
patent/homestea 6. Expropriation
Registration of a document is ministerial on d 7. Forfeiture
the part of the Register of Deeds. The purpose 7. Powers of 8. Auction sale on
of registering an instrument is to give notice attorney foreclosure of
thereof to all persons, not to destroy or affect 8. Trusts mortgage
already registered rights over the land at the
time of the registration. Registration must first Presentation of the Entry in the day book
be allowed, and validity or effect litigated owner’s duplicate of ROD is sufficient
afterwards [Gurbax Singh Pabla & Co. v. certificate of title is notice to all persons
Reyes, G.R. No. L-3970 (1952)]. required to notify;
mere entry in the day
As between the parties to a contract of sale, book of the Register
registration is not necessary to make it valid of Deeds (ROD) is
and effective, for actual notice is equivalent to insufficient
registration [Agcaoili].

The act of registration creates a constructive

notice to the whole world and binds third
persons [Campillo v. Court of Appeals, G.R.
No. L-56483 (1984)].

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Involuntary Santiago, G.R. No.
Voluntary Dealings
Dealings 147559 (2008)].
An innocent Entry thereof in the
purchaser for value day book of the ROD
of registered land is sufficient notice to
B. Voluntary Dealings
becomes the all persons even if
registered owner the the owner’s Voluntary dealings are deeds, instruments,
moment he presents duplicate certificate documents which are the results of free and
and files a duly of title is not voluntary acts of parties thereto.
notarized and valid presented to the
deed of sale and the ROD [Saberon v. The act of registration shall be the operative
same is entered in Ventanilla, Jr., G.R. act to convey or affect the land insofar as third
the day book of the No. 192669 (2014)]. persons are concerned [Sec. 51, P.D. 1529].
ROD and at the
same time he 1. Innocent purchaser for value and in
surrenders or good faith
presents the owner’s An innocent purchaser for value refers to
duplicate certificate someone who "buys the property of another
of title covering the without notice that some other person has a
land sold and pays right to or interest in it, and who pays a full and
the registration fees. fair price at the time of the purchase or before
It is necessary to Entry in the day book receiving any notice of another person’s claim"
register the deed or of the ROD is [Sps. Villamil v. Villarosa, G.R. No. 177187
instrument in the sufficient notice to all (2009)].
entry book of the persons of an
ROD and a adverse claim Good faith consists in the possessor’s belief
memorandum without the same that the person from whom he received the
thereof shall also be being annotated at thing was the owner of the same and could
made in the owner’s the back of the convey his title, and there was an honest
duplicate certificate certificate of title intention to abstain from taking any
and its original [Director of Lands v. unconscientious advantage from another
[Villasor v. Camon, Reyes, G.R. No. L- [Duran v. IAC, G.R. No. L-64159 (1985); Fule
R-C.A. No. 8551 27594 (1976)]. v. De Legare, G.R. No. 17951 (1963)].
(1951)].
At the time of the Entry of the Where innocent third persons relying on the
filing of the petition attachment in the correctness of the certificate of title issued
for cancellation of books is sufficient acquire rights over the property, the court
encumbrance, the notice to all persons. cannot disregard such rights and order the
lease contract Hence, the fact that total cancellation of the certificate of title for
already lost its the deed of sale was that would impair the public confidence in the
efficacy. Thus, there already annotated is certificate of title [Duran v. IAC, G.R. No. L-
is no basis to save its of no moment with 64159 (1985)].
annotation on regard to third
defendant’s title. persons. The
2. Mortgagee in good faith
The fact that the preference created
cancellation of the by the levy on Even if the mortgagor is not the rightful owner
lease contract was attachment is not of, or does not have the valid title to the
forged is of no diminished by the mortgaged property, the mortgagee in good
moment, for there subsequent faith is entitled to protection [Llanto v. Alzona,
was no violation of a registration of the G.R. No. 150730 (2005)].
right [Sps. Labayen deed of sale [Armed
v. Serafica, G.R. No. Forces and Police 3. Reliance on title
178443 (2008)]. Mutual Benefit General Rule: A person dealing with
Association, Inc. v. registered property need not go beyond, but

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only has to rely on, the title [Campillo v. PNB, secure in their title [Gatioan v. Gaffud, G.R.
G.R. No. L-19890 (1969)]. No. L-21953 (1969)].

He is charged with notice only of such burdens 5. Forged Deed

and claims which are annotated on the title, for General Rule: A forged deed is an absolute
registration is the operative act that binds the nullity and conveys no title.
property.
Exception: If there is good faith, a TCT has
Exceptions: When should a purchaser already been issued to the purchaser, the
investigate? latter being an innocent purchaser for value
a. Banks are required to exercise more care according to Sec. 39, P.D. 1529, then the title
and prudence in dealing with registered is good.
lands for their business is one affected with
public interest. The general rule does not 6. Registration of Voluntary
apply [Omengan v. PNB, G.R. No. 161319
(2007)]. Instruments in General
b. When the purchaser or mortgagee is a Process of Registration [Sec. 55, P.D. 1529]
financing institution [Dela Merced v. GSIS, a. The deed or other voluntary instrument
G.R. No. 140398 (2001)]. must contain:
c. When party concerned has actual 1. The following details of the grantee or
knowledge of facts and circumstances that other person acquiring or claiming
would impel a reasonably cautious man to interest:
make inquiry [Leung Yee v. Strong ● Full name
Machinery Company, G.R. No. L-11658 ● Nationality
(1918)]. ● Residence
d. When purchaser is in bad faith; e.g. he had ● Postal address
full knowledge of a previous sale [Jomoc v. ● Civil status (if married, include name
CA, G.R. No. 92871 (1991)]. in full of spouse)
e. Purchaser of land where the certificate of 2. If grantee is a corporation: It must
title contains a notice of lis pendens. contain a recital showing that such
f. When a person buys land from one whose corporation or association is legally
rights over the land is evidenced only by a qualified to acquire private lands.
deed of sale and an annotation in the
certificate of title but no TCT [Reyes v. CA, b. It must be executed in accordance with
G.R. No. L-28466 (1971)]. Sec. 112. It shall be:
1. In a public instrument executed in
4. Double Sales accordance with law;
Where two certificates of title are issued to two 2. Signed by the parties in the presence of
different persons covering the same parcel of at least 2 witnesses who shall likewise
land in whole or in part, the earlier in date must sign thereon;
prevail as between the original parties and in 3. Where the instrument has for its object
case of successive registration where more 2 or more parcels of land, the number
than one certificate is issued over the land, the thereof shall also be stated in the
person holding title under the prior certificate acknowledgment;
is entitled to the property as against the person 4. Each page of the copy of the instrument,
who relies on the second certificate [National except the page where the signatures
Housing Authority v. Laurito, G.R. No. 191657 already appear at the foot of the
(2017)]. instrument, shall be signed on the left
margin thereof by the parties and their
The purchaser from the owner of the later witnesses, and sealed with the notarial
certificate and his successors should resort to seal. This fact as well as the number of
the vendor for redress, rather than molest the the pages shall be stated in the
holder of the first certificate and his acknowledgment.
successors, who should be permitted to rest

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c. File instrument creating or transferring Process of Registration for Dealings less
interest and certificate of title with Register than Ownership
of Deeds together with: a. Filing of the instrument with the Register of
1. Owner’s duplicate Deeds
● Serves as conclusive authority from b. A brief memorandum thereof is made:
the registered owner to the Register 1. On the certificate of title by the Register
of Deeds to enter a new certificate or of Deeds and signed by him, and
to make a new memorandum of 2. On the owner’s duplicate
registration in accordance with the
voluntary instrument presented [Sec. Cancellation or extinguishment of such
107, P.D. 1529] interests shall be registered in the same
● The issuance of a new transfer manner.
certificate without presentation of an
owner’s duplicate is unwarranted Registration of Deeds of Sale and
and confers no right on the Transfers
purchaser [PNB v. Fernandez, G.R.
a. If entire property is the subject [Sec. 57,
No. 42109 (1935)]
P.D. 1529]
2. Payment of fees & documentary stamp
1. Owner executes and registers the deed
tax
which must be sufficient in form.
3. Evidence of full payment of real estate
2. A new certificate of title is issued and
tax
Register of Deeds prepares and delivers
4. Document of transfer – 1 copy additional
to grantee his owner's duplicate
for city/provincial assessor
certificate
3. Register of Deeds notes upon the OCT
d. Payment of fees and DST
and the duplicate certificate the date of
1. After payment of entry fee, the Register
transfer, the volume and page of the
of Deeds shall enter the instruments in
registration book where the new
a primary entry book [Sec. 56, P.D.
certificate is registered
1529].
4. The original and the owner's duplicate of
2. The national, provincial and city
the grantor's certificate shall be
governments are exempted from
stamped "cancelled".
payment of entry fees.
5. The deed of conveyance shall be filed
3. R.A. No. 456 prohibits registration of
and indorsed with the number and the
documents affecting real property which
place of registration of the certificate of
is delinquent in the payment of real
title of the land conveyed.
estate taxes. Further, if evidence of
such payment is not presented with 15
b. If only a portion of property is the subject
days from the date of entry of said
[Sec. 58, P.D. 1529]
document in the primary entry book of
1. Include a plan which shows all the
the register of deeds the entry shall be
portions already subdivided with verified
deemed cancelled.
and approved technical description.
2. That plan with the certified copy of the
e. Entry of the Instrument in the Primary
technical descriptions shall be filed with
Entry Book: Instruments are regarded as
the Register of Deeds for annotation in
registered from the time the Register of
the TCT.
Deeds enters them in the book.
3. Register of Deeds shall issue a TCT and
cancel the grantor's certificate partially
f. TCT shall then be issued.
OR it may be cancelled totally and a
new one issued describing therein the
Registration of Dealings Less than remaining portion
Ownership [Sec. 54, P.D. 1529]
If an instrument does not divest ownership or c. If there are SUBSISTING encumbrances
title from owner or from transferee of the and annotations: They shall be carried
registered owners, then no new certificate over in the new certificate or certificates;
shall be entered or issued.
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except when they have been purchaser for value and in good faith before its
simultaneously discharged. registration [Sec. 68, P.D. 1529].

Registration of Mortgages and Leases C. Involuntary Dealings

[Sec. 60, P.D. 1529]
Mortgages and leases shall be registered in Involuntary dealings refer to the writ, order, or
the manner provided in Sec. 54 (Dealings less process issued by the court of record affecting
than ownership). registered land, also other instruments which
are not willful acts of the registered owner,
The deed shall take effect upon the title only executed without his knowledge or consent.
from the time of registration.
The entry thereof in the day book is sufficient
When a deed of mortgage is presented, the notice to all persons of such adverse claim
Register of Deeds will enter upon the OCT and [Agcaoili].
upon the owner’s duplicate a memorandum
thereof and shall sign said memorandum. The following involuntary dealings affecting
registered land must be registered:
Registration of Powers of Attorneys 1. Attachments [Sec. 69, P.D. 1529]
[Sec. 64, P.D. 1529] 2. Adverse claim [Sec. 70, P.D. 1529]
3. Sale on execution or for taxes or for any
Powers of attorney and revocations shall be
assessment [Sec. 74, P.D. 1529]
registered with the Register of Deeds of the
4. Notice of lis pendens [Sec. 76, P.D. 1529]
province or city where the land lies.

Any instrument revoking such power shall be 1. Attachments

registered in like manner. Attachment is a writ issued at the institution or
during progress of an action commanding the
Registration of Trusts sheriff to attach the property, rights, credits or
effects of the defendant to satisfy demands of
Registration is by memorandum:
the plaintiff.
a. A memorandum by the words “in trust” or
“upon condition” or other apt words is made
Kinds
if a deed or other instrument is filed in order
a. Preliminary
to:
b. Garnishment
1. Transfer registered land in trust, or upon
c. Levy on execution
any equitable condition or limitation
expressed therein, or
Process of Registration
2. Create or declare a trust or other
a. Copy of writ in order to preserve any lien,
equitable interests in such land without
right or attachment upon registered land
transfer [Sec. 65, P.D. 1529]
shall be filed with the Register of Deeds
where the land lies, containing number of
b. A memorandum by the words “with power
certificate of title of land to be affected or
to sell,” or “power to mortgage” or other apt
description of land [Sec. 69, P.D. 1529]
words is made when: The instrument
creating or declaring a trust or other
b. Register of Deeds to index attachment in
equitable interest contains an EXPRESS
names of both plaintiff & defendant or
POWER to sell, mortgage, or deal with the
name of person whom property is held or in
land in any manner
whose name stands in the records
1. If duplicate of certificate of title is not
However, if an implied or constructive trust is
presented:
claimed, person claiming such must execute a
sworn statement thereof with the Register of ● Register of Deeds shall within 36
Deeds, containing a description of the land, hours send notice to registered
owner by mail stating that there has
the name of the registered owner and a
reference to the number of the certificate of been registration & requesting him to
produce duplicate so that
title. Such claim shall not affect the title of a
memorandum be made
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● If owner neglects or refuses – c. The statement must also state his
Register of Deeds shall report matter residence or the place to which all notices
to court. may be served upon him [Lozano v
2. Court after notice shall enter an order to Ballesteros, G.R. No. 49470 (1991)].
owner to surrender certificate at time &
place to be named therein. Duration of an adverse claim
a. 30 days from the date of registration.
c. Although notice of attachment is not noted b. After that, the annotation of adverse claim
in duplicate, notation in book of entry of may be cancelled upon filing of a verified
Register of Deeds produces effect of petition by the party in interest.
registration already
When cancelled, no second adverse claim
Effect of registration of attachment based on the same ground may be registered
a. Creates real right by the same claimant.
b. Has priority over execution sale
c. But between 2 attachments – one that is Adverse claim is not ipso facto cancelled after
earlier in registration is preferred 30 days, hearing is necessary [Sajonas v. CA,
G.R. No. 102377 (1996)].
Duty of Register of Deeds
Duty is ministerial but may refuse registration 3. Sale on Execution or For Taxes or
in the following circumstances: Assessments
a. Title to land is not in the name of defendant
Execution sale
Exception: If petitioner is an heir a. To enforce a lien of any description on
registered land, any execution or affidavit
b. No evidence is submitted to show that he to enforce such lien shall be filed with
has present or possible future interest in Register of Deeds where the land lies
land b. Register in the registration book &
memorandum upon proper certificate of
title as adverse claim or as an
2. Adverse Claim encumbrance
A claim is adverse when: [Sec. 70, par. 1, P.D. c. To determine preferential rights between 2
1529] liens: priority of registration of attachment
a. Claimant’s right or interest in registered
land is adverse to the registered owner, Tax sale
and a. Sale of land for collection of delinquent
b. Such right arose subsequent to date of taxes and penalties due the Government
original registration, and b. In personam (all persons interested shall
c. No other provision is made in the Decree be notified so that they are given
for the registration of such right or claimant opportunity to be heard)
1. Notice to be given to delinquent
Requisites for registration of an adverse taxpayer at last known address
claim: 2. Publication of notice must also be made
a. The adverse claimant must give a in English, Spanish & local dialect &
statement of the following in writing: posted in a public & conspicuous place
1. His alleged right or interest in place wherein property is situated &
2. How and under whom such alleged right at the main entrance of the provincial
or interest is acquired building
3. The description of the land in which the c. Sale cannot affect rights of other lien
right or interest is claimed and holders unless they are given the right to
4. The number of the certificate of title defend their rights: due process must be
strictly observed
b. The statement must be: d. Tax lien superior to attachment
1. Signed by the adverse claimant
2. Sworn before a notary public Note: No need to register tax lien because it is
automatically registered once the tax accrues.
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However, sale of registered land to foreclose Process of Registration:
a tax lien needs to be registered. By Memorandum or Notice stating
a. The institution of the action or proceeding
Process of Registration b. The court wherein the same is pending
a. Officer’s return shall be submitted to c. The date of the institution of the action
Register of Deeds together with duplicate d. Reference to the number of the certificate
title of title
b. Register in the registration book e. Adequate description of the land affected
c. Memorandum shall be entered in the and registered owner thereof
certificate as an adverse claim or
encumbrance Other parties who need to register
d. After the period of redemption has expired a. Assignee in involuntary proceeding for
& no redemption (2 years from registration insolvency
of auction sale) is made: cancellation of title 1. Duty of the officer serving notice to file a
and issuance of a new one copy of the notice to the Register of
e. Before cancellation, notice shall be sent to Deeds where the property of debtor lies
registered owner: to surrender title & show 2. Assignee elected or appointed by court
cause why it shall not be cancelled shall be entitled to entry of new
certificate of registered land upon
Note: Actual knowledge of a person is presentment of copy of assignment with
equivalent to registration as against him bankrupt’s certificate of title (duplicate)
3. New certificate shall note that it is
4. Lis Pendens entered to him as assignee or trustee in
Literally means “pending suit.” It is an insolvency proceedings
announcement to the whole world that a b. Government in eminent domain
particular real property is in litigation. The 1. Copy of judgment shall be filed in the
inscription serves as a warning that one who Register of Deeds which states
acquires an interest over litigated property description of property, certificate
does so at his own risk, or that he gambles on number, interest expropriated, nature of
the result of the litigation over the property public use
[Marasigan v. Intermediate Appellate Court, 2. Memorandum shall be made or new
G.R. No. L-69303 (1987)]. certificate of title shall be issued

When notice of lis pendens is proper: Effect of registration

a. To recover possession of real estate a. Impossibility of alienating the property in
b. To quiet title dispute during the pendency of the suit –
c. To remove clouds upon the title thereof may be alienated but purchaser is subject
d. For partition to final outcome of pending suit
e. Other proceedings of any kind in court b. Register of Deeds is duty bound to carry
directly affecting the title to land or the use over notice of lis pendens on all new titles
or occupation thereof or the buildings to be issued
thereon
Cancellation of lis pendens [Sec. 77,
When notice of lis pendens is NOT proper: P.D. 1529]
a. Proceedings for the recovery of money Under Sec. 19, Rule 13 of the Rules of Court,
judgments a notice of lis pendens may cancelled on the
b. Attachments following grounds:
c. Proceedings on the probate of wills a. The annotation was for the purpose of
d. Administration of the estate of deceased molesting the title of the adverse party;
persons b. The annotation is not necessary to protect
e. Levies on execution the title of the party who caused it to be
f. Foreclosure [Magdalena Homeowners recorded.
Association, Inc. v. Court of Appeals, G.R.
No. 60323 (1990)] Requisites:
a. Before final judgment

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b. Upon order of the court
c. Upon Action by the Register of Deeds at
the instance of the party that caused the
registration or upon verified petition of the
latter; and
d. Must be due to the grounds mentioned
[Pena].

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VI. NON-REGISTRABLE i. Waters found within the zone of
operation of public works, even if
PROPERTIES constructed by a contractor
j. Waters rising continuously or
Section 2, Article XII, 1987 Constitution. All lands
intermittently on lands belonging to
of the public domain, waters, minerals, coal, private persons, to the State, to a
petroleum, and other mineral oils, all forces of province, or to a city or municipality from
potential energy, fisheries, forests or timber, wildlife, the moment they leave such lands
flora and fauna, and other natural resources are k. The waste waters of fountains, sewers,
owned by the State. With the exception of and public establishments
agricultural lands, all other natural resources shall
not be alienated. xxxx
B. Specific kinds of non-
The classification of public lands is an registrable properties or
exclusive prerogative of the Executive
Department of the Government and not of the lands
courts. In the absence of such classification,
the land remains as unclassified land until it is 1. Forest or timberland, public forest,
released therefrom and rendered open to
disposition [Aquino citing Director Lands and forest reserves
Director of Forest Development v. CA, G.R.
No. L-58867 (1984)]. 2. National parks
Under the present Constitution, national parks
A. Civil Code provisions dealing are declared part of the public domain, and
shall be conserved and may not be increased
with non-registrable nor diminished, except by law [Republic v AFP
properties Retirement and Separation Benefits System,
G.R. No. 180463 (2013)].
1. Properties of public dominion [Art. 3. Mangrove swamps
420, Civil Code] Mangrove swamps or mangroves should be
a. Those intended for public use, such as understood as comprised within the public
roads, canals, rivers, torrents, ports and forests of the Philippines as defined in Sec.
bridges constructed by the State, banks, 1820, Administrative Code of 1917 [Director of
shores, roadsteads, and others of Forestry v. Villareal, G.R. No. L-32266
similar character; (1980)].
b. Those which belong to the State,
without being for public use, and are 4. Mineral lands
intended for some public service or for
Both under the 1987 Constitution and Sec. 2
the development of the national wealth.
of the Public Land Act, mineral lands are not
alienable and disposable [Lepanto
2. Waters under Art. 502, Civil Code Consolidated Mining Co. v. Dumyung, G.R.
c. Rivers and natural beds No. L-31666 (1979)].
d. Continuous or intermittent waters of
springs and brooks running in their 5. Foreshore land and seashore and
natural beds and the beds themselves
e. Waters rising continuously or reclaimed lands
intermittently on lands of public Seashore, foreshore, and/or portions of
dominion territorial waters and beaches, cannot be
f. Lakes and lagoons formed by Nature on registered. Even alluvial formation along the
public lands, and their beds seashore is part of public domain [Aquino
g. Rain waters running through ravines or citing Dizon v. Rodriguez, G.R. Nos. L-20300-
sand beds, which are also part of public 01 (1965)].
dominion
h. Subterranean waters on public lands

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6. Lakes lands of public domain, the use of which is not
Lakes are part of public dominion [Art. 502 (4), otherwise directed by law.
Civil Code].
The land registration court has no jurisdiction
7. Creeks and Streams over non-registrable property and cannot
validly adjudge the registration of title thereof
A dried up creek bed is property of public in favor of a private applicant [Peña].
dominion [Fernando v. Acuna, G.R. No.
161030 (2011)]. Thus, where it has so been adjudged, the river
not being capable of private appropriation or
8. Military or Naval Reservations acquisition by prescription, the title thereto
The reservation made segregates it from the may be attacked, either directly or collaterally,
public domain and no amount of time in by the State which is not bound by any
whatever nature of possession could have prescriptive period provided by the Statute of
ripen such possession into private ownership Limitation [Martinez v. CA, G.R. No. L-31271
[Republic v. Marcos, G.R. No. L-32941 (1974)].
(1973)].
C. Patrimonial Property
9. Watershed
The Constitution expressly mandates the Refers to property that is open to disposition
conservation and utilization of natural by the Government, or otherwise property
resources, which includes the country’s pertaining to the national domain, or public
watershed [Tan v. Director of Forestry, G.R. lands.
No. L-24548 (1983)].
The property of provinces, cities, and
10. Grazing lands municipalities is divided into property for public
While the 1987 Constitution does not use and patrimonial property [Art. 423, Civil
specifically prove that grazing lands are not Code].
disposable, yet if such lands are part of a
forest reserve, there can be no doubt that the Property for public use, in the provinces, cities,
same are incapable of registration [Aquino, and municipalities, consist of the provincial
citing Director of Lands v. Rivas, G.R. No. L- roads, city streets, municipal streets, the
61539 (1986)]. squares, fountains, public waters,
promenades, and public works for public
11. Previously titled land service paid for by said provinces, cities, and
Proceeds from the indefeasibility of the municipalities. All other property possessed by
Torrens title. any of them is patrimonial and shall be
governed by the Civil Code, without prejudice
to the provisions of special laws [Art. 424, Civil
12. Alluvial deposit along river when
Code].
man-made
Such deposit is really an encroachment of a
portion of the bed of the river, classified as
property of the public domain under Art. 420
(1) and Art. 502 (1) of the Civil Code, hence
not open to registration [Republic v. CA, G.R.
No. L-61647 (1984)].

13. Reservations for public and semi-

public purposes
Sec. 14, Chapter 4, Book III of EO No. 292
provides that the President shall have the
power to reserve for settlement or public use,
and for specific public purposes, any of the

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VII. DEALINGS WITH the party in interest in writing of the
ground or grounds for his refusal
UNREGISTERED
The latter may appeal the matter to the
LANDS Commissioner of Land Registration.

No deed, conveyance, mortgage, lease, or Recording by the Register of Deeds is

other voluntary instrument affecting land not ministerial. Recording shall be without
registered under the Torrens system shall be prejudice to a third party with a better right
valid, except as between the parties thereto, [Sec. 113, P.D. 1529].
unless such instrument shall have been
recorded in the manner herein prescribed in Better right
the office of the Register of Deeds for the Refers to a right which must have been
province or city where the land lies [Sec. 113, acquired by a third party independently of the
par. 1, P.D. 1529]. unregistered deed, such, for instance, as title
by prescription, and that it has no reference to
Effects of Transactions Covering rights acquired under that unregistered deed
Unregistered Land itself [Peña].
1. As between the parties – The contract is
binding and valid even if not registered Involuntary Dealings in Unregistered
2. As among third persons – There must Lands
be registration for the transaction to be P.D. 1529 now permits the registration of
binding against third persons involuntary dealings in unregistered lands.

Primary Entry Book and Registration Book Tax sale, attachment and levy, notice of lis
The Register of Deeds for each province or pendens, adverse claim and other instruments
city shall keep a Primary Entry Book and a in the nature of involuntary dealings with
Registration Book. respect to unregistered lands, if made in the
1. The Primary Entry Book shall contain, form sufficient in law, shall likewise be
among other particulars: admissible to record under Sec. 113 [Sec. 113
a. Entry number (d), P.D. 1529].
b. Names of the parties
c. Nature of the document
d. Date, hour and minute it was presented
and received

2. The Registration Book – Provides spaces

whereon the annotation is made after the
instrument has been entered in the Primary
Entry Book

Process of Registration
1. Registration is by way of annotation
2. The instrument dealing with unregistered
land is presented before the Register of
Deeds
3. The Register will then determine if it can be
registered:
a. If, on the face of the instrument, it
appears that it is sufficient in law, the
Register of Deeds shall forthwith record
the instrument
b. In case the Register of Deeds refuses its
administration to record, he shall advise

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VIII. ASSURANCE FUND B. Limitation of Action

Upon the entry of a certificate of title in the Any action for compensation against the
name of the registered owner, and also upon Assurance Fund by reason of any loss,
the original registration on the certificate of title damage or deprivation of land or any interest
of a building or other improvements on the therein shall be instituted within a period of six
land covered by said certificate, as well as years from the time the right to bring such
upon the entry of a certificate pursuant to any action first occurred:
subsequent transfer of registered land, there
shall be paid to the Register of Deeds one- Requisites:
fourth of one per cent of the assessed value of 1. That the right of action herein provided
the real estate on the basis of the last shall survive to the legal representative of
assessment for taxation purposes, as the person sustaining loss or damage,
contribution to the Assurance Fund. Where unless barred in his lifetime; and
the land involved has not yet been assessed 2. That if at the time such right of action first
for taxation, its value for purposes of this accrued the person entitled to bring such
decree shall be determined by the sworn action was a minor or insane or imprisoned,
declaration of two disinterested persons to the or otherwise under legal disability, such
effect that the value fixed by them is to their person or anyone claiming from, by or
knowledge, a fair valuation. under him may bring the proper action at
any time within two years after such
Nothing in this section shall in any way disability has been removed,
preclude the court from increasing the notwithstanding the expiration of the
valuation of the property should it appear original period of six years first above
during the hearing that the value stated is too provided [Sec. 102, P.D. 1529].
small [Sec. 93, P.D. 1529].

A. Action of compensation from

funds
Requisites:
1. That a person sustains loss or damage, or
is deprived of any estate or interest in land;
2. On account of the bringing of land under
the operation of the Torrens System arising
after original registration;
3. Through fraud, error, omission, mistake or
misdescription in a certificate of title or
entry or memorandum in the registration
book;
4. Without negligence on his part; and
5. Is barred or precluded from bringing an
action for the recovery of such land or
estate or interest therein [Agcaoili].

Reversion
Action instituted by the government, thru the
Solicitor General in all cases where lands of
public domain are held in violation of the
Constitution or were fraudulently conveyed.
Indefeasibility of title, prescription, laches, and
estoppel do not bar reversion suits.

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IX. CADASTRAL SYSTEM Cadastral Distinguished from Ordinary
Registration
OF REGISTRATION Ordinary Cadastral
Registration Registration
Voluntary Compulsory
A. In General
Applicant is a
Applicant is the
A proceeding in rem, initiated by the filing of person claiming title
Director of Lands
a petition for registration by the to the land
government, not by the persons claiming Usually involves
ownership of the land subject thereof, and the private land; it may
latter are, on the pain of losing their claim also refer to public
thereto, in effect compelled to go to court to agricultural lands if
All classes of land
make known their claim or interest therein, and the object of the
are covered (private
to substantiate such claim or interest. action is judicial
and public alienable
confirmation of
lands)
Unlike other kinds of registration, this is imperfect or
compulsory as it is initiated by the incomplete title (in
government. which case CA 141
applies)
The government does not seek the Applicant comes to
registration of land in its name. The objective Government asks the
court to confirm his
of the proceeding is the adjudication of title to court to settle and
title and seek
the lands or lots involved in said proceeding adjudicate the title of
registration of the
[Agcaoili]. the land
land in his name
In cadastral
Purpose: registration, if the
1. To serve the public interest by requiring applicant cannot
that the titles to any unregistered lands be prove that he is
settled and adjudicated entitled to the land,
2. To settle all disputes over the land; and If the applicant fails
the land becomes
3. To remove all clouds over land titles, as far to prove his title,
public land.
as practicable application may be
dismissed without
However, the
Period of Filing: Extended up to December prejudice [Santiago
cadastral case
31, 2020 [Sec. 2, R.A. No. 9176] v. Santos, G.R. No.
decision does not
31568 (1930);
constitute res
Only unregistered lands may be the Verzosa v. Nicolas,
judicata as to bar
subject of a Cadastral Survey G.R. No. 9227
even the same
The object of cadastral proceedings is to (1915)].
claimant from
“settle and adjudicate” lands. Private lands are subsequently filing
not contemplated since ownership thereof had If the judgment
an application for
already been finally determined and determines
judicial confirmation
adjudicated [Agcaoili]. ownership, then it is
of title to the same
res judicata upon
land, provided the
When once decreed by a court of competent the parties.
requisites are
jurisdiction, the title to the land thus complied with
determined is already res judicata, and [Director of Lands v.
binding on the whole world, the proceeding CA & Pastor, G.R.
being in rem [Duran v. Olivia, G.R. No. L- No. L-47847 (1981)].
16589 (1961)].

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B. Procedure in Cadastral STEP 8:
Director of Lands represented by Solicitor
Registration [Secs. 35 and General shall institute original registration
36, P.D. 1529] proceedings.
1. Petition is filed in the appropriate RTC
where the land is situated
STEP 1: 2. Contents of the Petition:
Determination of the President that public a. That public interest requires that the title
interest requires title to unregistered lands be to such lands be settled and adjudicated
settled and adjudicated. and praying that such titles be so settled
and adjudicated
President then orders the Director of Lands to b. Description of the lands
conduct a cadastral survey. c. Accompanied by a plan thereof
d. Such other data as may serve to furnish
STEP 2: Director of lands shall make a full notice to the occupants of the lands
cadastral survey. and to all persons who may claim any
right or interest therein
STEP 3: Director of Lands gives notice to
interested persons and to the general public. STEP 9: Publication, mailing posting
Contents of the Notice: STEP 10: Hearing
1. Day on which the survey will begin
2. Full and accurate description of the lands Jurisdiction of the Cadastral Court:
to be surveyed 1. Adjudicate title to any claimant thereto
2. Declare land as a public land
STEP 4: Publication of notice 3. Order correction of technical description
1. Published once in the Official Gazette 4. Order the issuance of new title in place of
2. A copy of the notice in English or the the title issued under voluntary registration
national language shall be posted in a proceedings
conspicuous place on the bulletin board of 5. Determine the priority of overlapping title
the municipal building of the municipality in 6. Order the partition of the property
which the lands or any portion thereof is
situated STEP 11: Decision
A copy of the notice shall also be sent to:
1. Mayor of the municipality
STEP 12: Issuance of the decree and
certificate of title
2. Barangay captain
3. Sangguniang Panlalawigan and
Note: Reopening of cadastral cases no longer
Sangguniang Bayan concerned
allowed. R.A. No. 931, effective June 20, 1953
for five (5) years, authorizing the reopening of
STEP 5: cadastral cases under certain conditions and
Geodetic engineers or other Bureau of Land which had been extended until Dec. 31, 1968,
employees in charge of the survey shall give is no longer in force.
notice reasonably in advance of the date of the
survey. They shall also mark the boundaries Courts are thus without jurisdiction or authority
of the lands with monuments. to reopen a cadastral proceeding since Dec.
31, 1968 [Aquino citing Republic v. Estenzo,
STEP 6: Interested persons should G.R. No. L-35512 (1988)].
communicate with the geodetic engineer if he
requests for any information about the land.

STEP 7: Actual survey and plotting of the

land.

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X. REGISTRATION THROUGH f. Whether or not there are Mortgages or
encumbrances of any kind affecting the
ADMINISTRATIVE land;
g. The manner by which the applicant has
PROCEEDINGS acquired the land in accordance with Sec.
14, P.D. 1529
h. Original muniments of title, and
A. Registration Process and i. If the land is bounded by a public or
Requirements private way or road [Sec. 15, P.D. 1529]

3. Documents to accompany the application

STEP 1: Survey
[from Regulations in Ordinary Land
Survey of the land by the Bureau of Lands or a
Registration Cases]
duly registered private surveyor drawn on a
a. Tracing-cloth plan duly approved by the
tracing cloth plan.
Director of Lands, together with two
blueprint or photographic copies thereof;
Note: No plan of such survey, whether it be
b. Three copies of the corresponding
original or subdivision, may be admitted in land
technical descriptions;
registration proceedings until approved by the
c. Three copies of the surveyor’s certificate;
Director of Lands [Sec. 1858, Administrative
d. All original muniments of title in the
Code]
possession of the applicant which prove
his rights, to the title he prays for or to the
STEP 2: Filing of Application land he claims; and
Filing for application for registration by the e. Certificate in quadruplicate of the city or
applicant at the RTC of the province, city, or provincial treasurer of the assessed value
municipality where the property is located [Sec. of the land, at its last assessment for
17, P.D. 1529]. taxation, or, in the absence thereof, that
of the next preceding year. However, in
1. Form of the application case the land has not been assessed, the
a. In writing application may be accompanied with an
b. Signed by the applicant/s or person duly affidavit in quadruplicate of the fair market
authorized in his behalf value of the land, signed by three
c. Sworn before any officer authorized to disinterested persons.
administer oath for the province or city
where the application was actually signed 4. Land Registration Application Covering
d. Application is presented in duplicate Two or More Parcels:
An application may include two or more parcels
2. Contents of the application: of land belonging to the applicant/s provided
a. Full description of the land as evidenced that they are situated within the same province
by the survey plan; or city. The Court may at any time order an
b. The citizenship and civil status of the application to be amended by striking out one or
applicant, whether single or married, and, more parcels or by a severance of the
if married, the name of the wife or application [Sec. 18, P.D. 1529].
husband, and, if the marriage has been
legally dissolved, when and how the 5. Amendments to the Application
marriage relation terminated. a. Sec. 19, P.D. 1529 permits the applicants
c. The full names and addresses of all to amend the application including
occupants of the land and those of the joinder, substitution, or discontinuance as
adjoining owners, if known, and, if not to parties at any stage of the proceedings
known, it shall state the extent of the upon such just and reasonable terms as
search to find them. the court may order:
d. Whether the property is conjugal, ● Joinder – inclusion of additional
paraphernal, or exclusively owned by the applicants; amended by adding names
applicant. of new applicants;
e. Assessed value of the land and the ● Substitution – replacement of the
buildings and improvements thereon; original party by another
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● Discontinuance – removal of names (OCEN) possession must be shown to
of one or more applicants have started on June 12, 1945 or earlier)

b. However, substantial amendments shall STEP 3: Setting of the date for the
be subject to the same requirements of initial hearing of the application by the
publication and notice as in an original Court
application under Sec. 23 of P.D. 1529. 1. The Court shall issue an order setting the
Such substantial amendments include: date and hour of the initial hearing within 5
● A change in the boundaries days from filing of the application
● An increase in the area of the land
applied for; or 2. The initial hearing shall be 45 – 90 days from
● The inclusion of an additional land the date of the order [Sec. 23, P.D. 1529]
● If the date of the initial hearing was set
c. Only where the original survey plan is beyond the 90-day period, the Court will
amended during the registration still acquire jurisdiction where the
proceedings, by the addition of land not applicant has complied with all the
previous included in the original plan, requirements of the law [Republic v. San
should publication be made in order to Lorenzo Dev’t, G.R. No. 170724 (2007)].
confer jurisdiction on the court to order
the registration of the area added after the
STEP 4: Transmittal to the LRA
publication of the original plan. If the
The application and the date of initial hearing
amendment involves a reduction in the
together with all the documents or other
original area, no new publication is
evidences attached thereto are transmitted by
required [Republic v. Court of Appeals
the Clerk of Court to the Land Registration
and Ribaya G.R. No. 113549 (1996)].
Authority (LRA).
6. Special Cases:
a. If the land is bounded by a road, the STEP 5: Publication of a Notice of the
applicant must state in his application if Filing of the Application and date and
he claims any portion of the land within place of hearing
the limits of the road, or if he likes to have 1. Publication shall be sufficient to confer
the boundaries determined [Sec. 20, P.D. jurisdiction upon the court [Sec. 23, P.D.
1529]. 1529].
b. If the applicant is a non-resident, he shall
appoint an agent or representative who is 2. It is done to charge the whole world of
a Philippine resident [Sec. 16, P.D. 1529] knowledge of the application of the land
c. A person claiming ownership of real involved, and invite them to take part in the
property must clearly identify the land case and assent and prove their rights over
claimed by him [Intestate Estate of Don the subject property thereof [Agcaoili].
Mariano San Pedro v. CA G.R. No.
103727 (1996)]. 3. Form and contents of the notice:
d. An applicant in a land registration case a. Addressed to all persons appearing to
must prove the facts and circumstances have an interest in the land involved
evidencing the alleged ownership of the b. Requires all persons concerned to
land applied for [In re: Application for appear in court on the date and time
Land Registration v. Republic, G.R. No. indicated to show cause why the
147359 (2008)]. General statements application for registration should not be
which are mere conclusions of law and granted
not factual proof of possession are
unavailing. The deeds in its favor only 4. The public shall be given notice of the initial
proved possession of its predecessors-in- hearing of the application by publication
interest as early as 1948. (The law now a. The Commissioner of Land Registration
stands that a mere showing of possession (CLR) shall cause it to be published
for 30 years is not sufficient. Open, once in the Official gazette AND once
continuous, exclusive, and notorious in a newspaper of general circulation

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b. This is sufficient to confer jurisdiction to 2. Posting:
the court a. CLR shall cause the sheriff or his deputy
to post the notice at least 14 days before
5. It is not necessary to give personal notice to the hearing:
the owners or claimants of the land sought to • In a conspicuous place on each parcel
be registered to vest the court with authority of land included in the application and
over the res. Land registration proceedings in a conspicuous place on the bulletin
are actions in rem [Director of Lands v. CA, board of the municipal building of the
G.R. No. 102858 (1997)]. municipality or city in which the land or
portion thereof is situated.
6. Once the registration court had acquired
jurisdiction over a certain parcel, or parcels, b. The court may also cause notice to be
of land in the registration proceedings in served to such other persons and in such
virtue of the publication of the application, manner as it may deem proper.
that jurisdiction attaches to the land or lands
mentioned and described in the application. 3. Notice of application and initial hearing
If it is later shown that the decree of by publication is sufficient and the mere
registration had included land or lands not fact that a person purporting to have a
included in the original application as legitimate claim in the property did not
published, then the registration proceedings receive personal notice is not a sufficient
and the decree of registration must be ground to invalidate the proceedings
declared null and void insofar — but only although he may ask for the review of the
insofar — as the land not included in the judgment or the reopening of the decree of
publication is concerned [Benin v. Tuason, registration, if he was made the victim of
G.R. No. L-26127 (1974)]. actual fraud [Republic v. Abadilla, CA-G.R.
No. 6902-R (1951)].
STEP 6: Service of Notice
Service of notice upon contiguous owners, STEP 7: Answer
occupants and those known to have interest in Filing of answer or opposition to the application
the property by the Sheriff; by any person whether named in the notice or
1. Mailing: not:
a. Within 7 days from publication, the CLR 1. Who may file? Any person claiming an
shall mail a copy of the notice interest, whether named in the notice or not.
b. Copies of the notice shall be mailed to:
● Every person named in the notice 2. When to file? On or before the date of initial
whose address is known. hearing, or within such further time as may
● The Secretary of Public Highways, to the be allowed by the court.
Provincial Governor, and to the Mayor of
the municipality or city, in which the land 3. What shall it contain? It shall state all the
lies, if the applicant requests to have the objections and the interest claimed by the
line of a public way or road determined party the remedy desired.
● Secretary of Agrarian Reform, the
Solicitor General, the Director of Lands, 4. How shall it be made? It shall be signed
the Director of Mines and/or the Director and sworn to by him or by some other duly
of Fisheries and Aquatic Resources, (as authorized person. Sec. 25, P.D. 1529
appropriate) if the land borders on a river, provides for the requisites of an opposition:
navigable stream or shore, or on an arm a. It shall set forth “all the objections to the
of the sea where a river or harbor line has application” and
been established, or on a lake, or if it b. It shall state the “interest claimed by the
otherwise appears from the application or party filing the same”
the proceedings that a tenant-farmer or
the national government may have a 5. Effect of Failure to Answer:
claim adverse to that of the applicant a. If no one appears/files an answer, upon
motion, the court shall order a default to
be recorded.

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b. By the description in the notice "To all d. If he claims private ownership not
Whom It May Concern", all the world are because of his possession, he must prove
made parties defendant and shall be the basis of such claim by submitting
concluded by the default order. muniments of title.
c. Where an appearance has been entered
and an answer filed, a default order shall 2. Proving Private Ownership
be entered against persons who did not a. Spanish titles are inadmissible and
appear and answer. ineffective proof of ownership in land
d. Absence of opposition does not justify registration proceedings filed AFTER
outright registration [Director of Lands v. Aug. 16, 1976 [P.D. 892 as discussed in
Agustin, G.R. No. L-16173 (1921)]. Santiago v. SBMA, G.R. No. 156888
(2006)].
6. Order of Default: b. Tax declaration and receipts are not
If no person appears and answers within the conclusive but have strong probative
time allowed, the court shall, upon motion of value when accompanied by proof of
the applicant, no reason to the contrary actual possession [Municipality of
appearing, order a general default to be Santiago v. CA, G.R. No. L-49903
recorded and require the applicant to present (1983)].
evidence. By the description in the notice “To c. Other proofs such as testimonial
all Whom It May Concern,” all the world are evidence.
made parties defendant and shall be
concluded by the default order. 3. Applicable procedural law:
a. Reception of evidence is governed by
Where an appearance has been entered P.D. 1529
and an answer filed, a special default order b. Rules of Court shall, insofar as not
shall be entered against persons who did inconsistent with the provisions of the
not appear and answer [Sec. 26, P.D. Decree, be applicable to land registration
1529]. and cadastral cases by analogy or in a
suppletory character and whenever
7. Effects of Default: practicable and convenient [Sec. 34, P.D.
a. With respect to the Applicant – he has the 1529]
right to present or adduce evidence ex c. The trial court shall see to it that all
parte registration proceedings are disposed
b. With respect to those covered by the within ninety days from the date the case
default order – they have no legal is submitted for decision [Sec. 27, P.D.
standing in court; therefore, they are no 1529]. The Court may either:
longer allowed to participate and no 1. Hear the parties and their evidence, or
opportunity to present evidence 2. Refer the case or any part thereof to a
referee
8. For relief from an order of default, see ● Referee shall hear the parties, receive
Sec. 3, Rule 9, Rules of Court. their evidence, and submit his report
thereon to the Court within 15 days
STEP 8: Hearing of the case by the after termination of such hearing
court ● Hearing before a referee may be held
1. Proof necessary in land registration at any convenient place within the
a. Proof that land has been declassified province or city as may be fixed by him
from the forest zone, is alienable or and after reasonable notice thereof
disposable, and is registrable (e.g. shall have been served to the parties
Presidential proclamation, legislative acts concerned
b. Identity of the land (survey plan) ● Upon receipt of the report the Court
c. Possession and occupation of the land for may:
the length of time and in the manner a. Adopt the same
required by law [Sec. 4, P.D. 1073 b. Set aside the report
amending Sec. 48(b) and (c) of the Public c. Modify the report
Land Act]

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d. Refer back or recommit the case to STEP 10: Issuance of the decree
the referee for presentation of 1. If the court finds after hearing that the
evidence applicant or adverse claimant has title as
● According to Heirs of Mario stated in his application or adverse claim and
Malabanan v. Republic [G.R. No. proper for registration, a decree of
179987 (2014)], the following matters confirmation and registration shall be
must be established: entered
a. Issue of ownership;
b. Possession and occupation of the 2. The Court declares the decision final and
land; instructs the LRA to issue a decree of
c. Identity and description of the land; confirmation and registration within 15 days
d. That the land is alienable and from entry of judgment
disposable of the public domain;
and Note: It is not the court that issues the
e. The applicant has acquired the land decree, but the LRA who issues the decree
through any other modes of of confirmation and registration. This duty to
acquiring ownership issue the decree of registration does not
prescribe [Republic v. Nillas, G.R. No.
STEP 9: Promulgation of Judgment by 159595 (2007)].
the Court
1. This is the adjudication, determination, and 3. One year after issuance of the decree, it
resolution of the issue of ownership becomes incontrovertible and amendments
of the same will not be allowed except in
2. Forms of Judgment: cases of clerical errors
a. Dismissal of the application
● With prejudice – principle of res Court retains jurisdiction over the case until
judicata applies and the party can no after the expiration of 1 year from the
longer re-file the case issuance of the decree of registration
● Without prejudice – the party may [Gomez v. CA, G.R. No. 77770 (1988)].
refile the case
b. Partial Judgment – in a case where only Note: While a decision in land registration
a portion of the land subject of registration proceeding becomes final after the
is contested, the court may render partial expiration of thirty days from the date of
judgment provided that a subdivision plan service of its notice, the decree of
showing the contested and uncontested registration does not become final until after
portions approved by the Director of Land the lapse of one year from the date of its
is previously submitted to said court [Sec. issuance and entry.
28, P.D. 1529].
c. Judgment Confirming Title - Judgment STEP 11: Entry of the decree of
may be rendered confirming the title of registration
the applicant, or the oppositor as the case This serves as the reckoning date to determine
may be, to the land or portions thereof the 1-year period from which one can impugn
upon finding that the party concerned has the validity of the registration [Sec. 32, P.D.
sufficient title proper for registration [Sec. 1529].
29, P.D. 1529].
1. Decree is entered in the LRA
3. Finality of Judgment - Sec. 30 (1), P.D.
1529 provides that the judgment becomes 2. Every decree of registration shall:
final upon the expiration of 30 days counted a. Bear the day of the year, hour, and minute
from receipt of notice of judgment. of its entry,
b. Be signed by the Administrator of the
Note: This has been MODIFIED to the lapse of Land Registration Authority in his ex
15 days counted from receipt of notice of officio capacity as Clerk of Court in land
judgment as per Sec. 39, B.P. 129. registration matters
c. State whether the owner is:
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● Married or unmarried, and if married, 11. Reversion
the name of the husband or wife, 12. Criminal Prosecution
provided that if the land adjudicated is
conjugal property, it shall be issued in 1. Motion for New Trial
the names of both spouses. The aggrieved party may move the trial court to
● If the owner is under disability, it shall set aside the judgment or final order and grant
state the nature of the disability, a new trial for one or more of the causes
● If the owner is a minor, his age materially affecting the substantial rights of the
d. Contain a description of the land as finally said party [Herrera].
determined by the court,
e. Set forth the estate of the owner, and Grounds:
also, in such manner as to show their a. Fraud, accident, mistake, or excusable
relative priority, all particular estates, negligence which ordinary prudence could
mortgages, easements, liens, not have guarded against and by reason of
attachments and other encumbrances, which such aggrieved party has probably
including rights of tenant-farmer, if any, to been impaired in his rights;
which the land or owner’s estate is b. Award of excessive damages, or
subject, insufficiency of the evidence to justify the
f. Contain any other matter properly to be decision; and
determined [Sec. 31, P.D. 1529]. c. Newly discovered evidence which with
reasonable diligence could have not been
STEP 12: Sending of copy of the discovered and produced at the trial and
decree of registration to the which if presented would probably alter the
corresponding Register of Deeds result.
(Registrar of Land Titles and Deeds)
Period of filing: Within the 15 day period of
perfecting an appeal [Sec. 39, B.P. 129].
STEP 13: Transcription of the decree
of registration 2. Appeal
1. It is transcribed in the registration book of the
Registrar of Land Titles and Deeds Sec. 30, P.D. 1529 as amended by B.P. 129
2. Registrar issues owner’s duplicate OCT of provides that an appeal may be taken from the
the applicant by the Registrar of Land Titles judgment of the court as in ordinary civil cases.
and Deeds, upon payment of the prescribed
fees. Modes of appeal:
a. Ordinary appeal – Appeal to the Court of
Appeals in cases decided by the Regional
B. Remedies Trial Court in the exercise of its original
jurisdiction
Remedies of an Aggrieved Party b. Petition for review – Appeal to the Court of
An aggrieved party in a registration proceeding Appeals in cases decided by the Regional
may avail himself of the following remedies: Trial Court in the exercise of its appellate
1. Motion for New Trial [Rule 37, Rules of jurisdiction, in accordance with Rule 42.
Court] or Relief from Judgment [Rule 38, c. Appeal by certiorari – In all cases where only
Rules of Court] questions of law are raised or involved, the
2. Appeal appeal shall be to the Supreme Court, in
3. Relief from Judgment accordance with Rule 45.
4. Petition for Review of Decree of Registration
5. Action for Reconveyance Period of ordinary appeal: Within 15 days
6. Quieting of Title from notice of the judgment of final order
7. Cancellation of Title appealed from. Where a record on appeal is
8. Action for Damages required, the appellant shall file a notice of
9. Action for Compensation from the Assurance appeal and a record on appeal within 40 days
Fund from notice of the judgment or final order [Sec.
10. Annulment of Judgment or Final Orders 39, B.P. 129].
and Resolutions
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Perfection of appeal: b. That he has been deprived thereof (through
a. A party’s appeal by notice of appeal is fraud);
deemed perfected as to him upon the filing c. That the action is filed within one year from
of the notice of appeal in due time. The Court the issuance and entry of the decree of
loses jurisdiction over the case upon the registration; and
perfection of the appeals filed in due time d. That the property has not been transferred to
and the expiration of the time to appeal of the an innocent purchaser for value [Agcaoili,
other parties. citing Walstrom v. Mapa, G.R. No. 38387
b. A party’s appeal by record on appeal is (1990)].
deemed perfected as to him with respect to • An innocent purchaser for value is one
the subject matter thereof upon the approval who buys the property of another
of the record on appeal filed in due time. The without notice that some other person
court loses jurisdiction only over the subject has a right to or interest in it, and who
matter thereof upon the approval of the pays a full and fair price at the time of
records on appeal filed in due time and the the purchase or before receiving any
expiration of the time to appeal of the other notice of another person’s claim
parties [Sec. 9, Rule 41, Rules of Court]. [Rosales v. Burgos, G.R. No. 143573
(2009)]
Unlike ordinary civil actions, the adjudication of
land in a cadastral or land registration To whom available: Only to an aggrieved
proceeding does not become final in the sense party who has been deprived of land or any
of incontrovertibility until after the expiration of estate or interest therein by decree of
one (1) year after the entry of the final decree of registration
registration. As long as a final decree has not
been entered by the LRA and the period of 1 When to file: Any time after the rendition of the
year has not elapsed from date of such decree, court’s decision and before the expiration of 1
the title is not finally adjudicated and the year from entry of decree of registration
decision in the registration proceeding a. Upon expiration of the 1 year period, every
continues to be under the control and sound decree becomes incontrovertible
discretion of the court rendering it [Gomez v. b. The Court held that the petition may be filed
CA, G.R. No. 77770 (1988)]. at any time after rendition of the court’s
decision (no need to wait for actual entry in
3. Relief from Judgment the LRA) and before expiration of one year
Grounds: from entry of the final decree of registration
a. When a judgment or final order is entered, or [Rivera v. Moran, G.R. No. L-24568 (1926);
any proceeding is thereafter taken against a Director of Lands v. Aba, G.R. No. L-45648
party in any court through accident, mistake, (1939)].
or excusable negligence.
b. When a judgment or final order is rendered Sole and ONLY Ground: Actual Fraud
by any court in a case, and a party thereto, a. Actual fraud proceeds from an intentional
by fraud, accident, mistake, or excusable deception practiced by means of
negligence, has been prevented from taking misrepresentation or concealment of
an appeal. material fact
b. The fraud must consist in an intentional
Period of filing: Within 60 days after the omission of fact required by law to be stated
petitioner learns of the judgment, final order, or in the application or a willful statement of a
other proceedings to be set aside, and not claim against the truth
more than 6 months after such judgment or c. Any fraudulent act of the successful party in
final order was entered, or such proceeding a litigation which is committed outside the
was taken. trial of a case against the defeated party, or
his agents, attorneys or witnesses, whereby
4. Petition for Review of Decree of said defeated party is prevented from
presenting fully and fairly his side of the case
Registration [Sterling Investment Corporation v. Ruiz,
Requisites: G.R. No. L-30694 (1969)].
a. The petitioner has a real and dominical right;
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5. Action for Reconveyance 6. Quieting of Title
An action for reconveyance is the remedy Quieting of title is the remedy for the removal of
granted to the rightful owner of land which has any cloud of doubt or uncertainty with respect to
been wrongfully or erroneously registered in the real property.
name of another for the purpose of compelling
the latter to transfer or reconvey the land to him Who may file: See Sec. 1, Rule 63, Rules of
[Esconde v. Barlongay, G.R. No. L-67583 Court
(1987)].
Requisites:
Reconveyance is also available to the person a. Plaintiff or complainant has a legal or an
with a better right than the person under whose equitable title to or interest in the real
name said property was erroneously registered property subject of the action; and
[Gasataya v. Mabasa, G.R. No. 148147 (2007)]. b. The deed, claim, encumbrance or
proceeding claimed to be casting a cloud on
When to file: his title must be shown to be in fact invalid or
a. Before issuance of decree, or within/after 1 inoperative despite its prima facie
year from entry appearance of validity or legal efficacy.
b. If based on implied trust, 10 years;
c. If based on express trust and void contract, c. Plaintiff or complainant has a legal or an
or if the plaintiff is in possession of the land, equitable title to or interest in the real
imprescriptible property subject of the action; and
d. If based on fraud, 4 years from the discovery d. The deed, claim, encumbrance or
proceeding claimed to be casting a cloud on
It does not reopen proceedings but a mere his title must be shown to be in fact invalid or
transfer of the land from registered owner to the inoperative despite its prima facie
rightful owner [Esconde v. Barlongay, supra]. appearance of validity or legal efficacy.

Requisites:
a. The action must be brought in the name of a
person claiming ownership or dominical right
over the land registered in the name of the
defendant;
b. The registration of the land in the name of
the defendant was procured through fraud or
other illegal means;
c. The property has not yet passed to an
innocent purchaser for value; and
d. The action is filed after the certificate of title
had already become final and
incontrovertible but within 4 years from the
discovery of the fraud [Balbin v. Medalla,
G.R. No. L-46410 (1981)] or not later than 10
years in the case of an implied trust [New
Regent Sources, Inc. v. Tanjuatco, G.R. No.
168800 (2009)].

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XI. RECONSTITUTION OF
TITLES
1. The restoration of the instrument which is
supposed to have been lost or destroyed in
its original form and condition, under the
custody of the Register of Deeds
2. To have the same reproduced after proper
proceedings in the same form they were
when the loss or destruction occurred [Heirs
of Pedro Pinote v. Dulay, G.R. No. 56694
(1990)].

Kinds:
1. Judicial
a. A petition is filed before the RTC
b. Petition is published in the Official Gazette
for 2 consecutive issues and posted on
main entrance of municipality for at least 30
days before hearing
c. Hearing is then conducted
d. Court may then order reconstitution if
meritorious

2. Administrative, which may be

availed only in case of:
a. Substantial loss or destruction of original
land titles due to fire, flood, or other force
majeure as determined by the LRA
b. Number of certificates of title lost or
damaged should be at least 10% of the total
number in possession of the Register of
Deeds
c. In no case shall the number of certificates of
title lost or damaged be less than 500; and
d. Petitioner must have the duplicate copy of
the certificate of title [R.A. No. 6732]

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CIVIL LAW
PRACTICAL EXERCISES CIVIL LAW

I. DEMAND AND AUTHORIZATION LETTERS

A. Demand Letter
[DATE]

[NAME OF ADDRESSEE]
[ADDRESS]
RE: [SUBJECT]

Dear [NAME],

We are writing on behalf of our client [NAME], in the matter of [SUBJECT].

Records disclose that [SUMMARY OF BASIC FACTS SUPPORTING YOUR CLIENT’S

DEMAND/CAUSE OF ACTION].

We wish to inform you that your acts constitute violation of [APPLICABLE LAW OR
CONTRACTUAL STIPULATION].

Accordingly, a demand is hereby made upon you to settle the amount of [AMOUNT] within ___
days from the receipt of this letter. Otherwise, we will be constrained to find recourse in the courts
of law and file the necessary legal action against you to protect the interest of our client.

We trust that you will give this matter your urgent attention.

Sincerely yours,

(Sgd.)
[COUNSEL]

B. Authorization Letter
[DATE]

[BRANCH CLERK OF COURT]

Regional Trial Court
Branch [NUMBER], [VENUE]
RE: [SUBJECT]

To the Branch Clerk of Court:

I am [NAME OF CLIENT], [Plaintiff/Defendant] in [Civil/Criminal] Case No. [NUMBER]

pending before this Honorable Court.

I am writing this letter to introduce my counsel, [FIRM] and to authorize its lawyers and
apprentices, including, but not limited to, [NAMES OF LAWYERS] to obtain copies of records
pertaining to the aforementioned case on my behalf.

For any clarifications or concerns, you may reach me through [NUMBER/E-MAIL

ADDRESS]

Thank you for your kind consideration.

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Sincerely yours,

(Sgd.)
[NAME OF CLIENT]

C. Special Power of Attorney for Sale of Real Property

REPUBLIC OF THE PHILIPPINES )
City/Municipality of ____________ ) S.S.

SPECIAL POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

I, [NAME], of legal age, Filipino citizen, with residence and postal address at [ADDRESS],
do hereby NAME, CONSTITUTE, AND APPOINT [NAME OF AGENT/ATTORNEY IN FACT], of
legal age, Filipino citizen, with postal address at [ADDRESS], as my true and lawful attorney-in-fact
to act for and in my name, place and stead and to perform the following acts:

(A) To sell, offer for sale, and come to an agreement as to the purchase price;
(B) To sign for me and in my name; and
(C) To receive payment from the sale of my property more particularly described as follows:

[DESCRIPTION OF PROPERTY]

HEREBY GRANTING unto said attorney-in-fact full power and authority to execute and
perform every act necessary to render effective the power to sell the foregoing properties, as though
I myself have performed it, and HEREBY APPROVING ALL that he/she may do by virtue hereof
with full right of substitution of his/her person and revocation of this instrument.

IN WITNESS WHEREOF, I have hereunto affixed my signature on this ___ day of [MONTH,
YEAR], in [PLACE OF EXECUTION OF INSTRUMENT].

_____________________ __________________
[NAME OF PRINCIPAL] [NAME OF AGENT]

Signed in the presence of:

__________________ __________________

[PLUS ACKNOWLEDGMENT]

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D. Special Power of Attorney for Purchase of Real Property
REPUBLIC OF THE PHILIPPINES )
City/Municipality of ____________ ) S.S.

SPECIAL POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

I, [NAME], of legal age, Filipino citizen, with residence and postal address at [ADDRESS],
do hereby NAME, CONSTITUTE, AND APPOINT [NAME OF AGENT/ATTORNEY IN FACT], of
legal age, Filipino citizen, with postal address at [ADDRESS], as my true and lawful attorney-in-fact
to act for and in my name, place and stead and to perform the following acts:

(A) To purchase real property or properties situated anywhere in the Philippines, in an

amount acceptable to him/her;
(B) To sign and/or execute any deed conveyance to effect the sale of the property in my
name; and
(C) To receive all documents pertinent to the purchase of any property:

HEREBY GRANTING unto said attorney-in-fact full power and authority to execute and
perform every act necessary to render effective the power to purchase properties, as though I myself
have performed it, and HEREBY APPROVING ALL that he/she may do by virtue hereof with full
right of substitution of his/her person and revocation of this instrument.

IN WITNESS WHEREOF, I have hereunto affixed my signature on this ___day of [MONTH,

YEAR], in [PLACE OF EXECUTION OF INSTRUMENT].

_____________________ __________________
[NAME OF PRINCIPAL] [NAME OF AGENT]

Signed in the presence of:

__________________ __________________

[PLUS ACKNOWLEDGMENT]

E. Special Power of Attorney for Representation in Actions

REPUBLIC OF THE PHILIPPINES )
City/Municipality of ____________ ) S.S.

SPECIAL POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

I, [NAME], of legal age, Filipino citizen, Corporate Secretary of [CORPORATION] (“ABC”),

a corporation duly organized and existing under Philippine laws, by virtue of this authority given to
me pursuant to Board Resolution duly issued by the Board of Directors of [“ABC”] in its meeting on
[DAY MONTH YEAR], as evidenced by the secretary’s certificate attached hereto, do hereby
NAME, CONSTITUTE, AND APPOINT [NAME OF AGENT/ATTORNEY IN FACT], of legal age,
Filipino citizen, with postal address at [ADDRESS], to be [“ABC”]’s true and lawful attorney-in-fact
in Civil Case No. 21324 entitled [TITLE] (“Case”), to act for on its behalf to:

(A) Appear for and represent [ABC] whether at the original or appellate stage, and whether
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as appellant of appellee, petitioner or respondent;

(B) Sign, under oath or otherwise, all necessary and appropriate pleadings, motions,
verifications, certifications, papers and documents;
(C) Act as agent and appear on behalf of [ABC] in the mandatory conciliation, mediation
conference, judicial dispute resolution, and pre-trial proceedings and all other hearings
in the Case, with full power and authority to consider:
(i) The possibility of an amicable settlement or of submission to alternative modes
of dispute resolution;
(ii) The simplification of issues;
(iii) The necessity or desirability of amending the pleadings;
(iv) The possibility of obtaining stipulations or admissions of fact and of documents
to avoid unnecessary proof;
(v) The limitation of the number of witnesses;
(vi) The advisability of a preliminary reference of issues to a commissioner;
(vii) The propriety of rendering judgment on the pleadings, or summary judgment,
or of dismissing the Case should a valid ground therefor be found to exist;
(viii) The advisability or necessity of suspending proceedings; and
(ix) Such other matters as may aid in the prompt disposition of this Case.
(D) Negotiate, conclude, enter into, and execute a compromise or amicable settlement of
the Case, if appropriate.

HEREBY GRANTING unto said attorney-in-fact full power and authority to execute and
perform every act necessary, as though ABC itself has performed it, and HEREBY APPROVING
ALL that he/she may do by virtue hereof with full right of substitution of his/her person and
revocation of this instrument.

IN WITNESS WHEREOF, I have hereunto affixed my signature on this ___ day of [MONTH,
YEAR], in [PLACE OF EXECUTION OF INSTRUMENT].

_____________________ __________________
[NAME OF PRINCIPAL] [NAME OF AGENT]

Signed in the presence of:

__________________ __________________

[PLUS ACKNOWLEDGMENT]

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II. SIMPLE CONTRACTS

A. Unilateral Deed of Sale of Registered Land
REPUBLIC OF THE PHILIPPINES )
City/Municipality of ____________ ) S.S.

DEED OF ABSOLUTE SALE

KNOW ALL MEN BY THESE PRESENTS:

I, [NAME OF SELLER], Filipino, single/married to [SPOUSE, IF APPLICABLE], and
resident of [ADDRESS OF SELLER] for and in consideration of the amount of [TOTAL AMOUNT
IN WORDS (TOTAL AMOUNT IN NUMBERS)], paid to me today by [NAME OF BUYER], Filipino,
single and resident of [ADDRESS OF BUYER] do hereby SELL, TRANSFER and CONVEY
absolutely and unconditionally unto said [NAME OF BUYER] that certain parcel(s) of land, together
with the buildings and improvements thereon situated in the [CITY/MUNICIPALITY OF ___], free
from all liens and encumbrances whatsoever and more particularly described as follows:
(Technical Description of property as indicated in the title)
of which I am the registered owner in fee simple, my title thereto being evidenced by
[TRANSFER/ORIGINAL CERTIFICATE TITLE NO.___], issued by the Register of Deeds of
[CITY/MUNICIPALITY].
IN WITNESS WHEREOF, I have signed this instrument this ___ day of [MONTH, YEAR] at
[PLACE OF SIGNING]

(Sgd.)
[NAME OF SELLER]

[If Seller is married, include spousal consent as follows:]

With my consent:

(sgd.)
[NAME OF SPOUSE OF SELLER]

Signed in the presence of:

_________________ _________________

[PLUS ACKNOWLEDGMENT]

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B. Unilateral Deed of Sale of Unregistered Land
REPUBLIC OF THE PHILIPPINES )
City/Municipality of ____________ ) S.S.

DEED OF ABSOLUTE SALE

KNOW ALL MEN BY THESE PRESENTS:

I, [NAME OF SELLER], Filipino, single/married to [SPOUSE, IF APPLICABLE], and

resident of [ADDRESS OF SELLER] for and in consideration of the amount of [TOTAL AMOUNT
IN WORDS (TOTAL AMOUNT IN NUMBERS)], paid to me today by [NAME OF BUYER], Filipino,
single and resident of [ADDRESS OF BUYER] do hereby SELL, TRANSFER and CONVEY
absolutely and unconditionally unto said [NAME OF BUYER] that certain parcel(s) of land, together
with the buildings and improvements thereon situated in the [CITY/MUNICIPALITY OF ___], free
from all liens and encumbrances whatsoever and more particularly described as follows:
(Description: state the nature of each piece of land and its improvements, situations and boundaries,
area in square meters, e.g. “Bounded on the N. by ___; on the E. by___; on the S. by ___; and on
the W. by ___; with an area of ___ square meters, more or less.”)
THAT the SELLER does hereby declare that the boundaries of the foregoing land are visible
by means of [MONUMENTS, CREEKS, TREES ETC.] that the permanent improvements existing
thereon consist of [LIST VARIOUS IMPROVEMENTS, IF NONE, STATE SO.]; that the land is
assessed for the current year at [TOTAL AMOUNT IN NUMBERS] as per Tax Declaration No.___,
and that the property is in present possession of the SELLER.
The above described real estate, not having been registered under Act No. 496 nor under
the Spanish Mortgage Law, I have agreed to register this instrument under the provisions of Sec.
194 of the Revised Administrative Code, as amended by Sec. 113 of P.D 1159.
IN WITNESS WHEREOF, I have signed this instrument this ___ day of [MONTH, YEAR] at
[PLACE OF SIGNING].
(sgd).
[NAME OF SELLER]

[If Seller is married, include spousal consent as follows:]

With my consent:

(sgd.)
[NAME OF SPOUSE OF SELLER]

Signed in the presence of:

_________________ _________________

[PLUS ACKNOWLEDGMENT]

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C. Bilateral Deed of Sale of Registered Land
REPUBLIC OF THE PHILIPPINES )
City/Municipality of ____________ ) S.S.

DEED OF ABSOLUTE SALE

KNOW ALL MEN BY THESE PRESENTS:

This DEED OF ABSOLUTE SALE is made, executed and entered into by:

[NAME OF SELLER], Filipino, single/married to [SPOUSE, IF APPLICABLE], and resident

of [ADDRESS OF SELLER] (SELLER)

-and-

[NAME OF BUYER], Filipino, single/married to [SPOUSE, IF APPLICABLE] and resident

of [ADDRESS OF BUYER] (BUYER)

WITNESSETH

That the SELLER is the registered owner in fee simple of a parcel of land with improvements
situated in the [CITY/MUNICIPALITY OF ___] with [TRANSFER/ORIGINAL CERTIFICATE TITLE
NO.___], issued by the Register of Deeds of [CITY/MUNICIPALITY] and more particularly
described as follows:

(Technical Description of property as indicated in the title)

That the SELLER for and in consideration of the amount of [TOTAL AMOUNT IN WORDS
(TOTAL AMOUNT IN NUMBERS)], does hereby SELL, TRANSFER and CONVEY absolutely and
unconditionally unto the BUYER that certain parcel(s) of land, together with the buildings and
improvements thereon free from all liens and encumbrances whatsoever.
That it is hereby mutually agreed that the BUYER shall bear all expenses for the execution
and registration of this deed of sale.
IN WITNESS WHEREOF, the parties have signed this contract on this ___ day of [MONTH,
YEAR] at [PLACE OF SIGNING].

(sgd.) (sgd.)
[NAME OF BUYER] [NAME OF SELLER]
BUYER SELLER

[If Buyer and/or Seller are married, include spousal consent as follows:]

With my consent:

(sgd.) (sgd.)
[NAME OF SPOUSE OF BUYER] [NAME OF SPOUSE OF SELLER]

Signed in the presence of:

_________________ _________________

[PLUS ACKNOWLEDGMENT]

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D. Bill of Sale (Personal Property)
REPUBLIC OF THE PHILIPPINES )
City/Municipality of ____________ ) S.S.

BILL OF SALE

KNOW ALL MEN BY THESE PRESENTS:

I, [NAME OF SELLER], Filipino, single, and resident of [ADDRESS OF SELLER] for and
in consideration of the amount of [TOTAL AMOUNT IN WORDS (TOTAL AMOUNT IN
NUMBERS)], paid to me today by [NAME OF BUYER], Filipino, single and resident of [ADDRESS
OF BUYER] do hereby SELL, TRANSFER and CONVEY absolutely and unconditionally unto said
[NAME OF BUYER] the following property:

(Description of property)
I own and have the right to sell and transfer the title and ownership of the above–described
property; I will defend the same against the claims of any and all persons whatsoever.
IN WITNESS WHEREOF, I have signed this instrument this ___ day of [MONTH, YEAR] at
[PLACE OF SIGNING].
(sgd).
[NAME OF SELLER]

Signed in the presence of:

_________________ _________________

[PLUS ACKNOWLEDGMENT]

E. Deed of Sale of Motor Vehicle

REPUBLIC OF THE PHILIPPINES )
City/Municipality of ____________ ) S.S.

DEED OF SALE OF MOTOR VEHICLE

KNOW ALL MEN BY THESE PRESENTS:

That I, [NAME OF SELLER], Filipino, of legal age, single/married to [SPOUSE, IF

APPLICABLE], a resident of [ADDRESS OF SELLER], is the lawful owner of a certain motor vehicle
which is more particularly described as follows:

MAKE : MOTOR NO. :

SERIES : SERIAL/CHASSIS NO. :
TYPE OF BODY: PLATE NO. :
YEAR MODEL : FILE NO. :
C.R. NO. :

That for and in consideration of the sum of [TOTAL AMOUNT IN WORDS (TOTAL AMOUNT
IN NUMBERS)], Philippine Currency, receipt whereof is hereby acknowledged to my entire
satisfaction, I hereby sell, transfer and convey by way of Absolute Sale unto [NAME OF BUYER],
Filipino, of legal age, and resident of [ADDRESS OF BUYER], the above described motor vehicle,

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free from all liens and encumbrances.

IN WITNESS WHEREOF, the parties have signed this agreement this ___ day of [MONTH,
YEAR] at [PLACE OF SIGNING].

(sgd.) (sgd.)
[NAME OF BUYER] [NAME OF SELLER]
VENDEE VENDOR

[If Seller is married, include spousal consent as follows:]

With my consent:

(sgd.)
[NAME OF SPOUSE OF SELLER]

Signed in the presence of:

_________________ _________________

[PLUS ACKNOWLEDGMENT]

F. Contract of Lease
REPUBLIC OF THE PHILIPPINES )
City/Municipality of ____________ ) S.S.

CONTRACT OF LEASE

KNOW ALL MEN BY THESE PRESENTS:

This Agreement made and entered into at [PLACE] this ___ day of [MONTH, YEAR] by and
between [NAME OF LESSOR], of legal age, single/married to [SPOUSE, IF APPLICABLE],
(LESSOR) and resident of [ADDRESS], and [NAME OF LESSEE], of legal age, single and resident
of [ADDRESS] (LESSEE), WITNESSETH that:

1. In consideration of a monthly rental of [TOTAL AMOUNT IN WORDS (TOTAL AMOUNT

IN NUMBERS)] and the covenants made below, the LESSOR hereby LEASES to the LESSEE a(n)
[PROPERTY] located at [ADDRESS OF PROPERTY TO BE LEASED] covered by
[TRANSFER/ORIGINAL CERTIFICATE TITLE NO.___/TAX DECLARATION NO.___] for a period
of TWELVE (12) MONTHS from signing of this contract.

2. The LESSEE covenants, as follows:

2.1. To pay the rentals on or before the fifth day of each month, without need of demand at
the residence of LESSOR;

2.2. To keep the premises in good and habitable condition, making the necessary repairs
inside and outside the house;

2.3. Not to make major alterations and improvements without the written consent of the
LESSOR and in the event of such unauthorized major alterations and improvements,
surrendering ownership over such improvements and alterations to the LESSOR upon

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expiration of this lease;

IN WITNESS WHEREOF, the parties have signed this contract on the date and the place
first mentioned.

(sgd.) (sgd.)
[NAME OF LESSOR] [NAME OF LESSEE]
LESSOR LESSEE

[If Lessor is married, include spousal consent as follows:]

With my consent:

(sgd.)
[NAME OF SPOUSE OF LESSOR]

Signed in the presence of:

_________________ _________________

[PLUS ACKNOWLEDGMENT]

1. Acknowledgment
ACKNOWLEDGMENT

REPUBLIC OF THE PHILIPPINES )

City/Municipality of ____________ ) S.S.

BEFORE ME, this ___ day of [MONTH, YEAR] in the [CITY/ MUNICIPALITY OF___],
personally appeared:

NAME, TYPE OF I.D, AND I.D NO. DATE AND PLACE ISSUED
__________________________________ _____________________________
__________________________________ _____________________________
__________________________________ _____________________________

Known to me and to me known to be the same persons who executed the foregoing instrument, and
who acknowledged to me that the same is their free act and deed.

IN WITNESS WHEREOF, I have set my hand and affixed my Notarial seal on the day, year
and place written.

(Sgd.)
NOTARY PUBLIC

Doc. No.
Page No.
Book No.
Series of [YEAR]

Note: If the instrument consists of 2 or more pages, include the following after the 1st paragraph:
This instrument, consisting of ___ pages, including the page on which this acknowledgment is

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written, has been signed on the left margin of each and every page thereof by ___________ and
his witnesses (if any), and sealed with my Notarial seal.

2. Acknowledgment (Affiant Representing a Corporation)

REPUBLIC OF THE PHILIPPINES )
City/Municipality of ____________ ) S.S.

BEFORE ME, this ___ day of [MONTH, YEAR] in the [CITY/ MUNICIPALITY OF ___],
personally appeared [NAME OF AFFIANT], representing to be [POSITION IN THE
CORPORATION] of [NAME OF CORPORATION] with [VALID IDENTIFICATION DOCUMENT]
(No. ___) issued by the [OFFICIAL AGENCY] on [DATE OF ISSUANCE], known to me to be the
same person who executed the foregoing instrument, and who acknowledged to me that the same
is his free act and deed.

IN WITNESS WHEREOF, I have set my hand and affixed my Notarial seal on the day, year
and place written.

(Sgd.)
NOTARY PUBLIC

Doc. No.
Page No.
Book No.
Series of [YEAR]

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III. COMPLAINT
A. Complaint for Sum of Money
REPUBLIC OF THE PHILIPPINES
[JUDICIAL REGION]
REGIONAL TRIAL COURT
[BRANCH NUMBER], [CITY/MUNICIPALITY]

[NAME OF PLAINTIFF],
Plaintiff,

-versus- Civil Case No. ___

For: Sum of Money
[NAME OF DEFENDANT],
Defendant.
x---------------------------------x

COMPLAINT

PLAINTIFF, by counsel, respectfully states that:

1. Plaintiff is a Filipino, of legal age, and resident of [ADDRESS OF PLAINTIFF]; defendant

is also a Filipino, of legal age and resident of [ADDRESS OF DEFENDANT] where he may be
served with summons and other processes.

2. Sometime in [DATE OF TRANSACTION] and over a period of ___, defendant borrowed

certain amounts from plaintiff. Defendant promised to pay these amounts on an installment basis
monthly. These amounts now total [TOTAL AMOUNT IN WORDS (TOTAL AMOUNT IN
NUMBERS)].

3. Despite repeated demands, both oral and written, defendant failed or has refused to pay
any amount to plaintiff as no installment payment has ever been made. A copy of each of plaintiff's
two (2) demand letters is attached as ANNEX A and B.

4. Resort to the Barangay Conciliation process proved fruitless as defendant failed to

appear, despite notice on him to appear. Thus, a Certification to File Action, a copy of which is
attached as ANNEX C, was issued by the Barangay Chairman.

4. Defendant’s obligation is due and demandable, and plaintiff is entitled to the payment of
the entire amount of [TOTAL AMOUNT IN WORDS (TOTAL AMOUNT IN NUMBERS)] plus legal
interest.

5. By reason of defendant’s unreasonable failure or refusal to pay his due and demandable
obligation, plaintiff was forced to engage the services of counsel to vindicate his rights, thereby
committing himself to pay legal expenses amounting to [TOTAL AMOUNT IN WORDS (TOTAL
AMOUNT IN NUMBERS)].

WHEREFORE, plaintiff respectfully prays for judgment in his favor through a Decision
directing defendant to pay him [TOTAL AMOUNT IN WORDS (TOTAL AMOUNT IN NUMBERS)],
with legal interest, as ACTUAL DAMAGES, and [TOTAL AMOUNT IN WORDS (TOTAL AMOUNT
IN NUMBERS)] as Attorney’s Fees.

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Other just and equitable reliefs are also prayed for.

[CITY/MUNICIPALITY], [DATE OF EXECUTION]

(Sgd.)
[NAME OF COUNSEL]
Counsel for Plaintiff
[Address]
[Contact details, e.g. telephone no., cellular phone
no., fax no., email address]
[Roll of Attorneys No.]
[IBP Official Receipt No. OR Lifetime Membership
No.]
[Professional Tax Receipt (PTR) No.]
[Number and Date of Issue of MCLE Certificate of
Compliance or of Exemption]

[PLUS VERIFICATION AND CERTIFICATE OF NON-FORUM SHOPPING]

B. Replevin
REPUBLIC OF THE PHILIPPINES
[JUDICIAL REGION]
REGIONAL TRIAL COURT
[BRANCH NUMBER], [CITY/MUNICIPALITY]

[NAME OF PLAINTIFF],
Plaintiff,

-versus- Civil Case No. ___

For: Replevin
[NAME OF DEFENDANT],
Defendant.
x---------------------------------x

COMPLAINT

PLAINTIFF, by counsel, respectfully states that:

1. Plaintiff is a Filipino, of legal age, and resident of [ADDRESS OF PLAINTIFF]; defendant

is also a Filipino, of legal age and resident of [ADDRESS OF DEFENDANT] where he may be
served with summons and other processes.

2. Plaintiff is the registered owner of a [CAR MAKE AND MODEL (e.g. Toyota Fortuner)]
with [LICENSE PLATE NO.], which defendant, on 20 July 2021, rented from plaintiff for a period of
one (1) week.

3. On [DATE], plaintiff demanded from defendant the return of the car but defendant failed
and refused to do so. A copy of plaintiff’s letter to defendant is attached as ANNEX A.

4. Resort to the Barangay Conciliation process proved fruitless as defendant failed to

appear, despite notice on him to appear. Thus, a Certification to File Action, a copy of which is
attached as ANNEX B, was issued by the Barangay Chairman.

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5. The car has not been taken for a tax assessment or a fine pursuant to law nor has it been
seized on execution or attachment. Its present value is approximately [TOTAL AMOUNT IN
WORDS (TOTAL AMOUNT IN NUMBERS)].

6. Plaintiff is ready, willing and able to give bond in defendant’s name in double the value of
the property for the return of the property to defendant should that be adjudged or for the payment
of such sum that the defendant may recover from plaintiff in this action.

WHEREFORE, plaintiff respectfully prays that the writ of replevin issue directing the Sheriff
or any other authorized officer to take possession of the car and dispose of it in accordance with the
Rules of Court and, after hearing, judgment be rendered declaring plaintiff to be lawfully entitled to
the possession of the car and sentencing defendant to pay its value.

Other just and equitable reliefs are also prayed for.

[CITY/MUNICIPALITY], [DATE OF EXECUTION]

(Sgd.)
[NAME OF COUNSEL]
Counsel for Plaintiff
[Address]
[Contact details, e.g. telephone no., cellular phone
no., fax no., email address]
[Roll of Attorneys No.]
[IBP Official Receipt No. OR Lifetime Membership
No.]
[Professional Tax Receipt (PTR) No.]
[Number and Date of Issue of MCLE Certificate of
Compliance or of Exemption]

[PLUS VERIFICATION AND CERTIFICATE OF NON-FORUM SHOPPING]

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C. Complaint for Ejectment with Damages
REPUBLIC OF THE PHILIPPINES
[JUDICIAL REGION]
METROPOLITAN TRIAL COURT
[BRANCH NUMBER], [CITY/MUNICIPALITY]

[NAME OF PLAINTIFF],
Plaintiff,

-versus- Civil Case No. ___

For: Ejectment
[NAME OF DEFENDANT],
Defendant.
x---------------------------------x

COMPLAINT

PLAINTIFF, by counsel, respectfully states that:

1. Plaintiff is a Filipino, of legal age, and resident of [ADDRESS OF PLAINTIFF]; defendant

is also a Filipino, of legal age and resident of [ADDRESS OF DEFENDANT] where he may be
served with summons and other processes.

2. Plaintiff owns that property located at [ADDRESS OF PROPERTY] which is leased to

defendant under the terms and conditions stated in the Contract of Lease dated [DATE], which
contract expires on [DATE]. A copy of the contract is attached as ANNEX A.

3. Upon expiration of the contract, the plaintiff informed the defendant of its intention not to
renew the lease as it would use the property for its business expansion. Plaintiff then asked
defendant to vacate the premises. A copy of plaintiff’s letter to defendant is attached as ANNEX B.

4. Despite demand duly made and received, defendant has refused to vacate the premises
and continues to occupy the property without plaintiff’s consent. Resort to the Barangay Conciliation
system proved useless as defendant refused to appear before the Lupong Tagapamayapa. A
Certification to File Action is attached as ANNEX C.

5. Defendant’s act of dispossession has caused plaintiff to suffer material injury because
plaintiff’s business expansion plans could not be implemented despite the arrival of machineries
specifically leased for this purpose at the rental rate of [TOTAL AMOUNT IN WORDS (TOTAL
AMOUNT IN NUMBERS)] per month. Defendant’s continued occupation of the premises has also
forced plaintiff to sue and to incur legal expenses amounting to [TOTAL AMOUNT IN WORDS
(TOTAL AMOUNT IN NUMBERS)].

WHEREFORE, plaintiff respectfully prays for judgment in its favor by ordering defendant to
vacate the property and peacefully turn over possession to plaintiff, and for defendant to pay plaintiff
the amount of [TOTAL AMOUNT IN WORDS (TOTAL AMOUNT IN NUMBERS)]representing
rentals on the machineries for seven (7) months and [TOTAL AMOUNT IN WORDS (TOTAL
AMOUNT IN NUMBERS)] for Attorney’s fees.

Other just and equitable reliefs are also prayed for.

[CITY/MUNICIPALITY], [DATE OF EXECUTION]

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(Sgd.)
[NAME OF COUNSEL]
Counsel for Plaintiff
[Address]
[Contact details, e.g. telephone no., cellular phone
no., fax no., email address]
[Roll of Attorneys No.]
[IBP Official Receipt No. OR Lifetime Membership
No.]
[Professional Tax Receipt (PTR) No.]
[Number and Date of Issue of MCLE Certificate of
Compliance or of Exemption]

[PLUS VERIFICATION AND CERTIFICATE OF NON-FORUM SHOPPING]

1. Verification
REPUBLIC OF THE PHILIPPINES )
City/Municipality of ____________ ) S.S.

VERIFICATION

I, [NAME], of legal age, [CITIZENSHIP], and with address at [ADDRESS], after having been duly
sworn to in accordance with law, hereby depose and say:

1. I am the [PARTY (e.g. complainant, plaintiff, defendant)] in the above case and have
caused the preparation of the foregoing [TYPE OF PLEADING] filed with the
[COURT/OFFICE] last [DATE];

2. I have read and understood the contents therein, and all allegations stated are true
according to my personal knowledge and based on authentic records.

3. The foregoing [TYPE OF PLEADING] is not filed to harass, cause unnecessary delay, or
needlessly increase the cost of litigation.

4. The factual allegations therein have evidentiary support or if specifically so identified, will
likewise have evidentiary support after a reasonable period for a reasonable opportunity
for discovery.

AFFIANT FURTHER SAYETH NAUGHT.

IN WITNESS WHEREOF, I have hereunto set my hand this ___th day of [MONTH/YEAR] at
[CITY], [COUNTRY].

(Sgd.)
[NAME OF AFFIANT]
Affiant

SUBSCRIBED AND SWORN TO before me this [DAY] of [MONTH/YEAR], in [CITY, COUNTRY],

affiant exhibiting to me her [ID] with No. [ID NUMBER] issued on [DATE OF ISSUANCE OF ID] in
[PLACE OF ISSUANCE OF ID].

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Doc. No. ___;

Page No. ___;
Book No. ___;
Series of [YEAR].

2. Certificate of Non-Forum Shopping

REPUBLIC OF THE PHILIPPINES )
City/Municipality of ____________ ) S.S.

CERTIFICATE OF NON-FORUM SHOPPING

I, [NAME], [CITIZENSHIP], of legal age and with address at [ADDRESS], after having been duly
sworn to in accordance with law, hereby depose and say:

1. I am the [PARTY (e.g. complainant, plaintiff, defendant)] in the above case.

2. I have not commenced any other action or filed any claim involving the same issues in any
court, tribunal, or quasi-judicial agency, and to the best of my knowledge, no such other
action or claim is pending therein.

3. If I should thereafter learn that the same or similar action or claim has been filed or is
pending, I shall report that fact within five (5) calendar days therefrom to the court wherein
the aforesaid [TITLE OF PLEADING] has been filed.

[CITY/ MUNICIPALITY], [DATE]

(Sgd.)
[NAME OF AFFIANT]
Affiant

SUBSCRIBED AND SWORN TO before me this [DAY] of [MONTH/YEAR], in [CITY, COUNTRY],

affiant exhibiting to me her [ID] with No. [ID NUMBER] issued on [DATE OF ISSUANCE OF ID] in
[PLACE OF ISSUANCE OF ID].

Doc. No. ___;

Page No. ___;
Book No. ___;
Series of [YEAR].

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IV. CHECKLIST
1. Caption and Title
2. Parties/Capacity and Address of Parties
3. Material Allegations
4. Statement of Causes of Action
5. Prayer/Reliefs
6. Date and Place of Execution
7. Signature of Counsel. An unsigned
pleading produces no legal effect [Rule 7,
Sec. 3, Rules of Court].
8. Other information on the counsel:
a. The En Banc Resolution on Bar Matter
No. 1132 (2003) requires counsels to
indicate the ff. in all papers and
pleadings submitted to the various
judicial or quasi-judicial bodies:
• Roll of Attorneys No.
• IBP Official Receipt No. OR Lifetime
Membership No.
• Current Professional Tax Receipt
(PTR) No.

b. A.M. NO. 07-6-5-SC (2007) requires

counsels to indicate in their pleadings or
other legal documents their contact
details aside from addresses such as
telephone number, fax number, cellular
phone number, or email address.
c. Bar Matter No. 1922 (2008) requires
practicing members of the bar to indicate
in all pleadings filed before the courts or
quasi-judicial bodies, the number and
date of issue of their MCLE Certificate of
Compliance or Certificate of Exemption,
as may be applicable, for the
immediately preceding compliance
period.

9. Verification and Certificate of Non-Forum

Shopping (CNFS)
a. CNFS is required for initiatory pleadings
[Rule 7, Sec. 5, Rules of Court]
b. Except when otherwise specifically
required by law or rule, pleadings need
not be under oath, verified [Rule 7, Sec.
4, Rules of Court].

10. Miscellaneous portions

11. Copy furnished

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