Civil Law o No.

The phrase unless otherwise provided only refers to the

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

PRELIMINARY TITLE Mistake of fact v. mistake of law

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

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

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

What is the general rule? Computation of period of laws

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

Mere restrictions, which do not exempt the person from certain

obligations: PERSONS AND FAMILY RELATIONS
o Minority,
o insanity and imbecility, MARRIAGE
o deaf-mutism,
Took effect 3 August 1988
o prodigality,
o Does not change the regime of property relations of those who
o civil interdiction
got married prior to the FC
o [For juridical persons this is the issue of ultra vires acts]
o But those who selected CPG are affected by the new
Modifications, which affect a person depending on the type of
provisions as to this property relation, post 3 Aug 1988
transaction, who one is dealing with:
Definition of marriage (elements)
o Age (because it is not minority per se), etc. (See Art. 39)
o 1. Special contract
o Ex. foreigners ownership of land
Compare and contrast marriage from ordinary
Domicile contracts:

6
 As a general rule, ordinary contracts are provision on legal guardians here,
subject to parties stipulations, as long as not because upon turning 18, then he
against law, PP, morals. already has legal capacity.
But marriage contract is governed by law, 21 to under 25: need parental advice
and is only subject to stipulation for regime o Without: issuance of ML is delayed
of property relations at the moment of for three months
marriage. B) Sex
o 2. Permanent union C) Absence of legal impediments: (see full discussion
Only terminated by death below)
Grounds for voiding or avoiding a marriage: because 37. Incestuous relationships
the marriage was never deemed to have existed 38. Relationships against PP
o 3. Between man and woman 35. Prior existing marriage
Note: P v. Silverio and other spec pro cases on 36. Psychological incapacity
change of sex in registry 52, 53. Failed to comply with distribution of
o 4. In accordance with law properties and presumptive legitimes
o 5. Purpose: establish conjugal and family rights Is there such a thing as defective legal capacity?
No, its either you have it or not.
Effect of lack/defect of essential and formal requirements of marriage: o 2. Consent freely given
Before a solemnizing officer, at the time of the
Essential:
celebration of marriage
o Lack/absence void
Do you have to speak out your consent? No need
o Defect voidable
to verbally explicate it; as long as you can
Formal:
communicate your consent effectively to the
o Lack/absence void
solemnizing officer
o Irregularity still valid, but the person responsible is liable
Is there such a thing as defective consent? Yes,
when it is vitiated. Ex. when one is of unsound mind.
What are the essential and formal requisites of marriage?
A person actually said yes, but there was problem in
Essential requirements: the voluntariness.
o 1. Legal capacity Is it possible for a party not to give consent at all?
A) Age No. Ex. mistake in identity there is total absence of
Under 18: void consent.
18 to under 21: need parental consent Formal requirements:
o Without: voidable o 1. Authority of solemnizing officer
o Whose consent is required? When does the good faith exemption apply, and
when does it not? Will NOT apply for mistakes of
Ideally, both. But one is allowed to
decide, if one is absent, has passed law, such as if you thought one designation of people
away, lost capacity, etc. Ignore the (ex. president or senator) can solemnize a marriage,

7
 when in fact it cannot. It applies to mistakes of fact.
(ex. you thought the janitor posing as a priest was the
parish priest.) Also, even if only one party believed in
good faith that the solemnizing officer had authority,
the marriage is valid.
If the solemnizing officer committed fraud or an
irregularity in obtaining authority, it has no validity for
the marriage to be solemnized.
o 2. Valid marriage license
A party thinks that the marriage license is valid,
when it is not. Can the rule on good faith apply?
No. There is no good faith exemption for marriage
license. The exceptions provided by the FC are not
based on GF, but on law.
Aranes v. Occiano: A ML gotten after a marriage
without an ML does not cure the lack thereof. It is still
void.
Examples of defects in marriage license:
1. Not applied for in the proper place
2. Just signed by the employee of the LCR,
although acting with authority of the LCR (if
no authority, void ML)
3. 10 day posting of ML not complied with
o 3. Marriage ceremony
There is no particular requirement for the ceremony,
except for:
1. Both must personally appear before the
solemnizing officer
2. Must openly declare that they take each other as
husband and wife
3. Two witnesses of legal age
If there is just one witness, is it an
absence or an irregularity? No resolution
yet.
Other requirements:
o 1. Marriage certificate
8
What is this? The document signed after marriage
ceremony. It is the evidence of the celebration of
marriage. This is neither a formal or essential
requisite. It is merely evidentiary, although the best
evidence.
What is the difference between a ML and a MC?
The absence of a ML results in a void marriage. The
absence of a MC will not affect the marriage.
o 2. Place of celebration
What about article 8? It is merely directory. If the
solemnizing officer agrees to marry the couple in
another place, then it is perfectly fine.
Is there any instance where the place of the
celebration of marriage affects the marriage?
Yes, for those marriages celebrated by persons with
limited jurisdiction. For instance, the ship captain or
airplane captain can only solemnize the marriage in
the vessel or during a stopover. For instance, for
military commanders, it must be within the zone of
military operations.
What about members of the judiciary? Within their
judicial region. If it is SC, CA, or Sandiganbayan, it is
nationwide.
What is the effect of marriages celebrated by
judges outside judicial regions? As of now, it is a
mere irregularity, according to the SC. This rule is
different as opposed to ship captains, etc. (Navarro
v. Domagtoy)
Can this decision apply to mayors? For instance,
the mayor of Makati solemnized a marriage in QC.
According to Dean Del, the SC rule on judges must
not extend to mayors they must strictly comply with
their territorial jurisdiction.
Legal impediments (in depth)
o A) Incestuous relationships:
1. Ascendants and descendants, regardless of degree
How many degrees does this rule cover?
Unlimited.
 2. Brothers and sisters, whether full or half blood
o B) Marriages against public policy
By blood:
1. Between collateral blood relative, up to fourth civil
degree (whether legitimate or illegitimate)
NOTE: no prohibition for collateral relatives
by half-blood
Created by marriage:
2. Between step-parents and step-children
NOTE: no prohibition for step-brother and
step-sister
3. Between parent-in-law and children-in-law
If your wife dies, can you now marry your
parent in law? No. Not even death
terminates this relationship. Not unless you
terminate your marriage first through court
declaration that the marriage was not valid in
the first place.
Created by adoptive relationship:
4. Adopter and adopted
5. SS of the adopter and adopted
6. Adopter and SS of adopted
7. Legitimate child of adopter and adopted
NOTE: the reason is because legitimate
children are asked to give their consent to
the adoption. Illegitimate children are not
asked.
Hence the illegitimate children and adopted
children may marry.
8. Between adopted children of same adopter
Created by criminal intent
9. When one party kills his own spouse or the other
partys spouse, with the intention of marrying the
other
If the killing was to obtain insurance
benefits, but there was subsequent
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marriage, is the latter valid? Yes, because
the killing was not with intent to marry.
No need to be convicted
Who can marry each other?
1. Brother-in-law and sister-in-law
2. Stepbrother and stepsister
3. Guardian and ward
4. Adopted child and illegitimate child of the
same person
5. Parties convicted of adultery or
concubinage
6. Adopted child of husband, adopted child
of wife
o C) Prior existing marriage
What if the prior marriage has a problem? There
must still be a judicial declaration that the prior
marriage is a nullity or is annulled. You have to wait
for this.
Wiegel v. Sempio-Diy: Need to have prior judicial
declaration of nullity or annulment first, or else the
second marriage is bigamous.
If the purpose is some other thing, like succession
issues, then there is no need for prior judicial
declaration prior to questioning the marriage.
Authority of solemnizing officer:
Who can solemnize:
o 1) Any member of the judiciary, as long as:
Incumbent
When does incumbency start? From
when one has taken his oath of office.
What if the judge was on leave or is on
vacation? Still incumbent.
Is there a need for further authority or
license? None; it is an inherent function of
office.
 Within territorial jurisdiction
Who in particular? RTC, MTC, CA, CTA, SC,
Sandiganbayan, etc. Even if their jurisdiction is
limited, like the CTA. Contrast this to executive
branch, where only the mayor can.
o 2) Member of religious group, authorized by religious group.
Does the religion officer per se possess the
authority to solemnize marriage? No. The
authority does not come from the office itself. He
needs special authority from the group or sect first.
What is the requirement for the group or sect?
The church, sect or group must be recognized.
Either or both of the parties must be part of that
religion or church.
What if both are not members of that
religion? Strictly, invalid. But a lot of
people are invoking that this is a gray area,
where the good faith defense can apply, or
one can treat this as a mere irregularity.
o 3) Ship captain or airplane chief
Who is the captain or chief? The head of the ship,
or the chief pilot.
When can they solemnize marriages? In articulo
mortis, where one or both are at the point of death.
A person is diagnosed as terminally ill,
and given two weeks to live. Is he in
articulo mortis? No, the person is not yet
at the point of death. Terminal illness is still
uncertain.
Who can they solemnize?
Members of crew or passenger
What about stowaways?
Can still marry them, as long as on board the
vessel.
When and where can they solemnize?
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During the voyage, from the point of
embarkation, until one reaches the final
destination, including a stop-over.
The stop-over must be in a continuous flight.
This is different from a break where one
disembarked and put down all the luggage
and went around already.
For purposes of marriage, do we adopt
transportation laws?
No decision yet.
o 4) Military commander
Who is a military commander?
Commissioned officer, at least second
lieutenant up, must be the head of a
battalion
There is a person who is preferred, before the
military commander is allowed. Who is this?
There has to be a chaplain assigned to the
battalion in the zone of operations, and he
has to be absent.
If he is present, then the chaplain must be
the one to solemnize.
What if there is no chaplain assigned?
Dean Del prefers the liberal interpretation:
when there is no chaplain assigned, then the
military commander can solemnize.
What is military operation?
Involves State action. This is different from
mere police operations for petty crimes.
Who?
No need to be a member of the military or a
combatant. As long as someone is within
the zone of military operation.
o 5) Consuls
No need to be dying
As long as abroad and both Filipinos
o 6) Mayors
 Reinstated in the LGC of 1991
Marriage license
Valid marriage license
o What is the consequence of lying about ones place of
residence?
It is a public document, so one can be charged for
falsification of a public document.
BUT this is a mere irregularity, and should not affect
validity
o If you lie about your age, and you are not yet 18?
VOID marriage, not because of the irregularity in the
ML, but because of lack of capacity.
Procedure to obtain a Marriage License
1. What do you need to present when you get married (FIRST
MARRIAGE)?
o 1. Birth certificate, but just for the purpose of verifying legal
capacity based on age. Absent this, you can submit a
baptismal certificate.
If none, either:
Residence certificate
Instrument containing sworn declaration of
two witnesses of lawful age testifying on this
o 2. Additional requirements:
18-21: consent of parents; order
Father
Mother
Surviving parent
Legal guardian (but ignore this provision,
since when they turn 18, there is no more
need for a legal guardian since he is of full
capacity.)
What is the nature of the consent given
by the parents? The consent is with
respect to a specific person. If the child
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decides to marry someone else, he or she
cannot use that same consent.
21-25: parental advice
o 3. Certificate of marriage counseling.
When does this apply?
Parties below 25 years old
What if one party is 80 years old, but the other is
23? BOTH must attend, even if the other party is
older than 25.
Lack thereof results in 3 month suspension of
issuance of Marriage License
2. What do you need to present for a SUBSEQUENT MARRIAGE?
o Proof of termination of marriage:
Death certificate
Judicial declaration of nullity
Judicial declaration of annulment
o If one is previously married but is still 18-21 years old, do
you still need parental consent? Not anymore, because the
prior marriage has fully emancipated the person.
Jurado says otherwise
o What about those between 21-25, and this is the second
marriage, do you still need parental advice? Yes, because
there is no stated exception of emancipation for prior marriage,
unlike for parental consent. This is not anymore based on
parental authority, but is based on filial love and respect from
parents.
3. What about alien applicants?
o The diplomatic or consular officials will issue a certificate of
legal capacity. This is usually taken by face value.
4. What about Stateless persons?
o For these people without citizenship and if they can prove that
they are political refugees, all one needs is an affidavit
declaring oneself as having legal capacity. Again, this is taken
by face value.
What is the nature of a marriage license?
 o It is a license to marry a specific person. You cannot use it to
marry another person. The impediments and capacities of
people are different.
o There is no good faith exemption for a ML. A fake marriage
license is no good.
What is the validity of the ML?
o For 120 days, then automatically cancelled after
o In any part of the Philippines
o An expired license is NOT a mere irregularity but an absence
of a requirement.
Marriages exempt from requirement of ML
What are the marriages exempt from the ML requirement?
1. Marriages in articulo mortis.
o Because there is no time.
o The only exemption is the ML. There is no exception as to
other essential and formal requisites.
o The solemnizing authority determines whether there is legal
capacity between the parties to be married.
o Can the solemnizing officer refuse to solemnize the
marriage? Yes, the solemnizing officer has discretion to
refuse. There is no law compelling solemnizing officers to
marry.
o Are marriages in articulo mortis exempt from requirement
of ML limited to those in an airplane, military operation,
Marriages celebrated outside the Philippines
etc? No. It can occur anywhere, and the ML requirement is
still waived.
o If the person miraculously survives, is the marriage valid?
Yes.
2. People who have been living together as husband and wife for at
least five years.
o Purpose: to save face, because they have already presented
themselves as husband and wife.
o When must there be an absence of impediment? The
entire five-year period of cohabitation. (Ninal v. CA)
12
o Another issue in Ninal: do the children have standing to
ask for the nullification of the parents marriage based on
lack of ML? The court held that the children have standing.
BUT this has been changed when the administrative rules
came out. Ninal was decided before these rules came out.
o What are the requisites:
1. Exclusivity absence of 3rd parties
2. Continuity cohabitation as husband and wife 5
years immediately preceding marriage
3. No impediments during the 5 year period
3. Parties who live in a remote place
o Ratio: no means of transportation to get to LCR
o Not based on distance: it doesnt matter how many kilometers
there are. What matters is lack of means of transportation.
o Means of transportation need not be public.
4. Muslims and cultural minorities
o Look into customs, rites, practices
5. Marriage celebrated abroad and there is no ML requirement in the
country where it was celebrated
For marriages in articulo mortis and where a party lives in a remote
place, the law requires that the solemnizing officer state the
circumstances of the marriage in an affidavit. What is the effect of
the lack of such?
o No effect. It is merely evidentiary. It is not a replacement to
the ML requirement.
What is the general rule?
o Art 26: Lex loci celebrationis. When the marriage is valid in
that country, it is valid in the Philippines.
Does this provision apply to marriages of aliens outside the
country?
o No. It doesnt matter, our law doesnt care. Their own national
laws determine whether the marriage is valid.
Two Filipinos get married outside the country. Do we apply Art
26?
o Yes.
 o Art 26 only applies ONLY when at least one of the parties is a 2 Fil 1 Alien, 1 Fil Old view: not allowed to
Filipino. circumvent the law through this
What are the exceptions to this rule? NOW: the Alien is not anymore
under our jurisdiction, so he can
o Art 35 (1, 4, 5, 6), Art 36, Art 37, Art 38
obtain divorce. Then Art. 26
(1) under 18 applies.
(4) bigamous 2 Fil 2 Aliens Amor-Catalan case: recognize as
(5) mistaken identity being a divorce entered into by 2
(6) void under Art 53 aliens. Art. 26 does not apply
o All of these exceptions deal with the essential requisites of because there is no Filipino to
marriage. But as to the formal requisites, then that is equalize.
determined by the law of the place where the marriage is 1 Alien 1 Fil 1 Alien 1 Fil Art. 26
1 Alien 1 Fil 2 Aliens Valid as well
celebrated.
What if two male people get married abroad?
o No settled rule yet. Difference between void and voidable marriages:
What is the rule on divorces obtained abroad?
o If the alien obtained a divorce decree abroad allowing him to VOID VOIDABLE
subsequently remarry, then the Filipino may remarry as well. Inexistent from the beginning Valid until annulled
o Van Dorn v. Romillo and Pilapil v. Ibay-Somera Does not prescribe Generally, 5 years prescription
In Van Dorn, alien husband got a divorce abroad, but No ratification May be ratified by free cohabitation
sought to administer community property in the or prescription
No community property. Only co- ACP unless provided otherwise
Philippines. The basis of the court was estoppel
ownership.
Pilapil: she is married to you but you are not married
Directly or collaterally attacked Must be directly attacked
to her [but subject to recent rules: check
NOTE: both cases were decided before the Family discussion below]
Code
Requisites?
o 1. Marriage between Alien and Filipino
o 2. Alien files for divorce The common statement is that void marriages can be collaterally
o 3. Divorce decree capacitated the alien to remarry attacked. But what does Art. 40 say?
What if the Filipino obtains the divorce? o Art. 40 For purposes of remarriage, one has to obtain a
o Not allowed. The article only applies if the alien was the one judicial declaration of nullity.
who obtained the divorce. o So there has to be a direct proceeding. You cannot do this by
The requirement that one is an alien and one is Filipino: must it collateral attack.
occur during the time of marriage, during the time of divorce, or RULES ON STANDING re: nullity
both? o SC 02-11-10 only husband and wife have standing in a
direct action
Time of marriage Time of divorce Effect EXCEPT: a) for those commenced before 15 March
2 Fil 2 Fil X 2003, b) marriages under CC
13
 EXCEPT: for intestate and testate proceedings, allow
collateral attack
So the rule in Ninal was technically not changed
o BUT the main determinant is whether the person has standing
(as in an heir)
o In Carlos v. Sandoval, since the one questioning was the
brother of the deceased, it doesnt matter if the marriage was
valid or not because he only inherits in default of descendants
or ascendants.
What are the grounds for nullity?
o Arts. 35, 36, 37, 38
o Art. 35:
A. party below 18 years old
B. solemnized by unauthorized solemnizing officer
EXCEPT if either or both parties believed in
GF that the officer had authority
C. no marriage license
EXCEPT when license is not required
D. bigamous or polygamous
EXCEPT: see below (presumptive death)
E. Mistake in identity
F. subsequent marriage void under Art. 53
Failure to partition and distribute properties
and deliver presumptive legitimes of
children, and recorded in the ROP and LCR
o Art. 36: Psychological incapacity
o Art. 37: Incestuous marriage (see above)
o Art. 38: Void due to public policy
A. by blood
B. by adoptive relationship
C. by marriage
D. by criminal intent
When is a marriage entered into without termination of a previous
marriage valid?
14
o When there is a declaration of presumptive death. Article 41 is
the only article which provides for a situation where there can
be 2 valid subsisting marriages.
Four years for ordinary situations
Two years for extraordinary situations
o The declaration is not of DEATH but of PRESUMPTIVE
DEATH.
o This takes the place of the usual requirement of death
certificate to allow the other spouse to remarry.
The declaration of presumptive death obviously only
empowers the present spouse to remarry.
o For other grounds, any subsequent marriage is automatically
null and void.
o What if both spouses in the subsequent marriage acted in
BF?
The marriage is void ab initio.
Art. 41
What if the spouse who was declared presumptively dead
reappears?
o If no one does anything, we have a situation where there are
two valid subsisting marriages
o Reappearing spouse files an affidavit of reappearance to the
LCR
But other people may file an objection to the affidavit
If there is no objection: then the subsequent marriage
is deemed terminated upon filing of the affidavit
Who can file reappearing spouse or persons
interested (ex. children in first marriage)
Legal effect: not void ab initio, just terminated
o If there are objections, then a court of law must rule on the
objections. The LCR cannot rule upon the objections.
o What is the basis for objection or opposition?
The only basis: this is an impostor.
o Is there a prescriptive period for filing an objection for the
affidavit of reappearance?
These questions have not been settled yet.
 What is required to be proved in declaration of presumptive death?
o Proof that there is reasonable ground to believe that the
spouse has died.
o Republic v. Nolasco: Not enough to just ask people around and
say that the people havent seen her to prove that a person is
presumptively dead. Need more than that.
Mistake in identity as ground for nullity
Spirit of provision consent to marriage is for a SPECIFIC person. If
there is mistaken identity, there is no consent.
This is NOT mistake in particulars of a person (ex. you thought he was
rich, but he was actually a pauper)
Psychological incapacity
One that has a lot of cases. Members of the committee who drafted the
FC did not define what psychological incapacity. They wanted
jurisprudence to develop the concept.
What is the distinction between physical and psychological
incapacity?
o Psychological incapacity is NOT physical incapacity, which is
impotence. The latter is a ground for voidable marriage only.
o It is NOT mental incapacity, which is also for voidable
marriage.
What is psychological incapacity?
o He is normal under any other circumstance, but he cannot
carry out the essential obligations of marriage
o Ex. Narcissistic complex
o Inability to perform obligations to the spouse and obligations to
the family (220, 221, 225)
Santos: It was a cut and paste case from different sources. In the end,
it did not say how we should define it in the Philippines. Only value is
that it gave the 3 requirements:
o 1) gravity
o 2) juridical antecedence
o 3) incurability
15
There is no case yet where the court says that psychological incapacity
is such that he will never be able to perform marital obligations. So after
declaration of nullity, both parties can still marry again. So
psychological incapacity is relative.
Molina: Eight point test. This is the first case where the court actually
set down, point by point, what one should look for to establish Art. 36:
o 1) plaintiff has burden of proof to show P.I.
o 2) Root cause must be something medically proven and
clinically identified and clearly explained in the decision
This has received so much flip-flopping from other
decisions
o 3) it must exist at the time of the celebration of the marriage
o 4) the PI is incurable [from Santos case]
o 5) it is grave and it prevents him from performing essential
marital obligations
Molina included obligations to family and children too,
not just to the spouse
o 6) Essential marital obligations are Arts. 68-71 of FC, and Arts.
220, 221, 225 of FC
o 7) Interpretation of the National Marital Tribunal must be given
weight
But its decision is not public in character; so its effect
is really just to the parties, and is not jurisprudence
o 8) The trial court must order the public prosecutor and the Sol
Gen to act as counsel for the state
Paras: This should be the case to read if you want to know what DOES
NOT amount to psychological incapacity. In this case the manifestation
relied upon is infidelity of the spouse, going out having drinks with
friends, falsifying signature all these were struck down by Paras
Marcos v. Marcos: You dont need to have a psychiatrist or
psychologist to examine the party. Absence of such is not fatal. What
you need is the totality of evidence. (Totality of evidence approach)
You can use whatever evidence to prove PI.
Te v. Te: Courts must be allowed to make a decision on a case-by-case
basis without being tied down by the Molina requirements. This came
out strong. Molina gave us a straitjacket and we dont want this.
 Suazo v. Suazo: You dont have to be strictly bound by cases (open
case policy). We are not throwing away Molina but the court must be
open to situational differences.
o The SC is not bound to accept with finality the findings of fact
by the TC.
What is the end result of all this jurisprudence?
o It is still case-to-case. There is no set doctrine.
Declaration of nullity
Domingo v. CA:
o Judicial declaration of nullity only needed for remarriage.
o Otherwise, no need for judicial declaration to establish nullity of
the marriage.
Tamano v. Ortiz:
o RTC has jurisdiction over all actions relating to marriage and
marital relations.
o Jurisdiction based on allegations of the plaintiff in the
complaint; not dependent on the defenses set up. The
complaint said that the parties were married under the civil
code.
Ninal v. Bayadog:
o There must be no impediment or interruption in the five-year
cohabitation period in the marriage license exemption.
o Declaration of nullity may be collaterally attacked after the
death of either party. (Ex. heirs, in succession.)
De Castro v. De Castro
o As in Ninal, the nullity of a void marriage may be established
even collaterally in an action not for that purpose. (ex.
support). Here, the affidavit stating circumstances establishing
5-year cohabitation contained false statements; hence, there
was no ground to exempt from ML requirement. No ML = void.
Declaration of nullity v. bigamy
Marbella-Bobis v. Bobis
16
o The question of nullity of a previous marriage not judicially
declared void is NOT a prejudicial question to a charge of
bigamy. The marriage lawfully subsists.
Mercado v. Tan
o Subsequently getting a declaration of nullity will not invalidate a
conviction for bigamy.
Morigo v. People
o The parties merely signed a marriage contract on their own,
without any ceremony there is no semblance of any valid
marriage. No need for prior declaration of nullity. Bigamy
dismissed.
Tenebro v. CA
o The subsequent declaration of nullity of the second marriage
under Art. 36 does not negate the criminal action for bigamy.
(The mere act of contracting a second marriage during the
firsts subsistence is punishable.) Article 36 marriages are not
completely without effect (ex. legitimacy of children). So this
means that there can be prosecution for bigamy.
Voidable marriages
Grounds
1. Lack of parental consent
o Who has standing?
1. Parent/guardian who did not give consent
2. Party whose parent/guardian did not give consent
o What if both parties didnt get parental consent?
Both can file, separate or joint
Pari delicto doesnt apply
o When can the party who didnt get consent file?
Upon reaching 21 years old
o When can the action be filed?
BEFORE reaching 21 parent or guardian who didnt
consent
UPON reaching 21, until 26 party whose parent or
guardian didnt consent
o How is marriage ratified?
 Free cohabitation by the parties upon reaching 21.
o Specific rules on form of consent:
Mere attendance in wedding is not automatically
consent. Must be in ML application.
Consent must be before wedding.
2. Insanity
o When should insanity exist?
Time of marriage
o When is there a presumption of insanity?
If the party was insane right before and after the
precise moment of giving consent.
o Who may file?
1. Sane spouse if no knowledge of insanity
2. Relative, guardian, etc. even with knowledge of
insanity
3. Insane spouse
o What are the periods?
Sane spouse 5 years from discovery of insanity of
the other spouse [because no period was provided]
N.B. Sempio-Dy pegs the period at anytime
before death of either party
Relative, guardian, etc.
Anytime before death of either party
Insane spouse 5 years from regaining sanity
[because no period was provided]
o How is the marriage ratified?
Free cohabitation by the parties upon regaining of
sanity by the insane spouse
3. Fraud
o Grounds:
1. Non-disclosure of a previous conviction by FJ of
the other party for crime involving moral turpitude
If the conviction is pending appeal, is the
non-disclosure fraudulent?
o No. It must be by FINAL judgment.
What if the crime was alleged in the same
annulment case?
17
o Cant apply because there must be
previous conviction by final
judgment.
2. Concealment by wife that at the time of marriage,
she was pregnant with another man
3. Concealment of STD, regardless of nature, at time
of marriage
4. Concealment of drug addiction, habitual
alcoholism, homosexuality, lesbianism at time of
marriage
o N.B. No other misrepresentation is ground for fraud.
o Ratification?
Free cohabitation upon knowledge of fraud
5. Force, intimidation, undue influence
o Intimidation must be evil and imminent and based on a well-
grounded fear
o What if intimidation has a legal basis?
It does not count.
Ex. I will prosecute you for rape if you dont marry my
daughter, and the guy really committed rape anyway.
o Prescriptive period?
5 years from cessation of cause
o Standing?
Injured party
o Ratification?
Free cohabitation after cause ceases.
6. Impotency
o Potency must be at the point of marriage. Becoming impotent
after is not a ground for annulment.
o What if both are impotent?
Sempio-Diy: there is no injured party
Dean Del: both are injured parties and can file
o Period?
5 years after marriage
o Cannot be ratified by cohabitation.
o NOTE: the other party must not have known it at the time of
marriage
o What is the doctrine of triennial cohabitation?
 If the wife is still a virgin after three years of living
together, it is presumed the husband is impotent
o What is relative impotency? Procedure and effects of termination of marriage
You are only impotent as to one person but not
another. It is still voidable. Procedure
7. Serious and incurable STD
For all cases of nullity or annulment:
o Differentiate: Here, it is serious and incurable. If it is a ground
o Court orders prosecutor or fiscal to appear on behalf of the
for fraud, it was concealed but no need to be serious and
State
incurable.
o Take steps to:
o Who can file?
1. Prevent collusion between parties
Injured party
2. Make sure evidence is not fabricated or
o Cannot be ratified by cohabitation
suppressed
No judgment based on stipulation of facts or confession of judgment
Pendency of action:
Ground Who can file When Ratification o Follow written agreement between spouses
Lack of parental Underaged party Within 5 years Yes, but only o 1. Court provides for support of spouses
consent upon turning 21 upon reaching o 2. Custody and support of common children
21 Consider mutual written agreement first
Parent, guardian Until child or No ratification by Consider best interest of children
who did not ward turns 21 subsequent
And Tender Years Doctrine
consent consent
Insanity Sane party Within 5 years of And choice of parent
discovery of Visitation rights for other parent
insanity
Insane party Within 5 years of Yes, but only in Effects
lucid interval a lucid interval
Parent or Before death of What are the effects of nullity/annulment of marriage?
guardian, either party o 1) share of party in BF over net profits forfeited in favor of:
relative of insane Common children
party If none, children of guilty spouse in previous marriage
Fraud Injured party 5 years from Yes
If none, innocent spouse
cessation of
cause o 2) donations propter nuptias: valid, except:
Force, Injured party 5 years from Yes Donations in favor of guilty spouse revoked by
intimidation, cessation of operation of law
undue influence cause o 3) designation of guilty spouse as beneficiary in life insurance:
Impotence Potent party 5 years from No may be revoked
marriage Even if deemed irrevocable
Serious and Healthy party 5 years from No
incurable STD marriage
18
 o 4) spouse in BF cannot inherit from innocent spouse by testate
or intestate succession
o 5) if both spouses guilty, revoke by operation of law:
Donations propter nuptias to each other
Testamentary dispositions to each other
[N.B. these two provisions were just included because
Art. 43 mentions an innocent and guilty spouse; in Art.
44, both are guilty]
What does final judgment provide?
o 1) liquidation, partition, distribution of properties of spouses
Includes adjudication of common lot
o 2) custody and support of common children
o 3) delivery of presumptive legitime
Computed as of date of final judgment
Delivered through cash, property, or sound securities
Unless there was a judicially approved
mutual agreement
Who may ask for enforcement of judgment:
1. Children
2. Guardian
3. Trustee of property
Will not prejudice ultimate successional rights
delivered presumptive legitimes are deemed
advances
What must be done with judgment, partition and distribution of
properties, and delivery of presumptive legitime?
o This must be recorded in the appropriate civil registry and
registry of properties in places where the properties are
located.
What is the effect of non-recording?
o It will not affect third persons
What is the effect of non-compliance with partition, distribution,
delivery of presumptive legitime?
o Any subsequent marriage is null and void
Which children are legitimate?
o 1. Born before annulment
o 2. Born before Art. 36 nullity
19
o 3. Born of subsequent marriage which didnt comply with
Article 53 (registration)
o 4. Born before reappearance of presumptively dead spouse
When do you not have to deliver presumptive legitime?
o 1. Legal separation (because marriage not dissolved)
o 2. Death (failure to liquidate, etc., will only make dispositions
post-one-year void and mandate separation of properties for
marriage #2)
o 3. Presumptive death (which has the same effects of death)
LEGAL SEPARATION
Grounds:
Violent stuff
o 1. Repeated physical violence or grossly abusive behavior v.
spouse, common child, or child of spouse
o 2. Physical violence or moral pressure to change
religious/political affiliation
o 3. Attempt to corrupt or induce to engage in prostitution:
spouse, common child, child of spouse
Or connivance in such
o 4. Attempt against the life of spouse
Character stuff
o 5. Final judgment of more than 6 years in prison
Even if pardoned
o 6. Drug addiction or habitual alcoholism
o 7. Abandonment of spouse without justified cause for more
than a year
N.B.: after 3 months from initial abandonment, there
can already be judicial separation of property (JSP).
When a year passes, there is a ground for LS.
Sex stuff
o 8. Lesbianism or homosexuality
o 9. Contracting bigamous marriage
o 10. Sexual infidelity or perversion
Defenses:
 1. Collusion Court must take steps towards reconciliation of the spouses, and satisfy
o Agreement between the spouses itself that despite such efforts, reconciliation is highly improbable
o Covered by proscription of legal separation based on No decree of LS based on:
stipulation of facts o Stipulation of facts
2. Connivance o Confession of judgment
o Luring (not entrapment) Prosecutor or fiscal assigned to take steps to prevent collusion between
3. Consent parties and ensure evidence is not fabricated or suppressed
o Express or implied
o Prior to the act Effects pendente lite, of death, and after finality
o Agreement between spouses against law and morals may be
null and void, but it may be considered consent that would bar What are the effects of pendency after filing of petition?
litigation. o 1. Spouses entitled to live separately from each other
4. Condonation o 2. Administration of properties:
o Forgiveness/pardon Based on written agreement
o May be express or implied If none, court designates either or a third person
o Sexual intercourse is implied condonation Same powers and duties as those of a
But not when it was just to save the marriage, and it guardian
was unsuccessful o 3. Support of spouses
o Each sexual intercourse with another person is a separate act Lerma v. CA: The court may make a preliminary
of adultery. Forgiveness for the first does not extend to ruling of the case during its pendency, to determine
subsequent acts whether support is justified. In this case, where one
5. Mutual guilt spouse was adulterous, the court deemed it proper to
o May be on different grounds deny him support pendente lite.
o Even when one party has pardoned the other and the other Sabalones v. CA: A decree of LS was issued, where
has not the husband was denied share in the profits and
6. Prescription denying him support from the wife. The husband
o Even if not alleged, court can take judicial notice appealed. Pendente lite of the appeal, the wife filed a
o If there are multiple acts, count from the last separate act petition for preliminary injunction against the husband
o From knowledge of the ground, not just from mere hearsay alienating conjugal properties. The court said this
was valid to preserve the wifes rights in the pendency
Prescription for all: within 5 years of occurrence of cause
of the appeal
Procedure o 4. Support and custody of children
What is the effect of death of a party?
What is the mandatory Cooling off period after filing of the o The action is dismissed, since it is purely personal between the
petition? spouses
o Only try an action for LS after 6 months have elapsed since o Macadangdang v. CA: Spouse died after the decree of LS
filing of petition was issued but before liquidation. The LS was deemed final

20
 o However, now Rules say that if this happens, the decision in
the LS case, where there has been entry of judgment is final
and binding, will be accorded such finality in the settlement of
the estate proceedings.
Dean Dels interpretation: Because the finding in LS
case is final, even in the settlement of estate, one
may invoke forfeiture provisions.
o You dont do liquidation and partition in the same LS case
anymore when one party dies after entry of judgment. But the
decision of the LS case is already final and binding in the
settlement of estate proceedings of the deceased person.
(IMPT!!)
What are the effects after issuance of the decree?
o 1. Spouses entitled to live separately
o 2. Dissolve ACP or CPG
Offending spouse not entitled to net profits
Siochi v. Gozon: what is forfeited are net profits and
not the undivided share in the community property
o 3. Custody of minor children to innocent spouse
o 4. Disqualify offending spouse from inheriting by intestate
succession AND revoke testamentary provisions by operation
of law
But if the spouse makes another will with
testamentary provisions in favor of the guilty spouse,
then the latter can inherit, obviously
What are the optional effects?
o 1. Innocent spouse may revoke his or her donations to
offending spouse FIVE YEAR period
Record revocations in the registries of property where
located
Alienations, liens, encumbrances prior to recording
the revocation are respected
o 2. May also revoke designation of spouse as beneficiary in life
insurance policy No prescription, as long as the policy exists
Takes effect upon written notification to the insured
o [N.B. so while life insurances are still optionally revocable (the
rule didnt change from Art. 43/44, the difference between Art.
43/44 and this provision donations are just revocable here]
21
Reconciliation
What is the procedure for reconciliation?
o Execute joint manifestation under oath
o Signed by both
o Filed with court in same proceeding
What are the effects of reconciliation?
o 1. If proceedings pending, terminate in whatever stage
o 2. If final, set aside final decree
o 3. What shall persist:
Separation of property
Forfeiture of shares
UNLESS spouses agree to revive former property
regime
What do the spouses revive former property regime?
o Execute joint manifestation under oath
o Filed in the same proceeding for legal separation
Copies furnished to creditors
Creditors protected by court
o What must be specified?
1. Properties contributed anew to restored regime
2. What are retained as separate properties of each
spouse
3. Names of all known creditors (addresses, amounts)
o How does the order bind third persons?
Record order in registries of property. It will not
prejudice a creditor not listed or notified.
Unless debtor-spouse has sufficient separate
properties to satisfy debtors claim
RIGHTS AND OBLIGATIONS BETWEEN HUSBAND AND WIFE
Became important due to Molina doctrine (if you cannot perform these,
it can indicate psychological incapacity)
What are the obligations?
o 1. Live together
o 2. Mutual love, respect, fidelity
o 3. Render mutual help and support
 Who fixes the family residence?
o Jointly fixed by husband and wife
o Otherwise, court decides
If you dont want to live in the same dwelling, what is the
consequence?
o General rule: they must live together.
o If they cannot, they go to court, and ask for an exemption only
for valid and compelling reasons.
o What are the consequences of refusal to live in the same
dwelling without valid and compelling reasons?
1. Not entitled to support
2. Charged with abandonment.
3. Transfer of administration to the other spouse
What does Respect imply?
o Lack thereof can lead to criminal and civil consequences
o Includes the woman being allowed to work and exercise her
profession
o When can a spouse object to profession?
Valid, serious, moral grounds
What happens when you incur liability pursuant to this profession
objected to? Who bears the liability and charges?
o General rule: no prior consent necessary to exercise
profession
o This should be the rule:
Before any objection absolute community
After objection liabilities towards separate property
o BUT this is what was erroneously printed:
Before any objection separate property
After objection absolute community
o Nancy Go: obligation was charged against separate property.
Principle: because this is a separate endeavor by the liable
spouse and the contract cannot bind both spouses. (This is
the fall back analysis)
Support of the family comes from:
o 1. Community or conjugal property
o 2. Income from separate property
o 3. Separate property
Administration of community properties
Who administers the community properties?
o Spouses, jointly (whether ACP or CPG)
When it is possible for one spouse to have administration of the
community property?
o A. Before the marriage
Place in the marriage settlement that the H or W
alone will administer the property.
o B. During the marriage
In case of disagreement, decision of H prevails. No
need to go to court for this.
What is the relief the wife can ask for in court?
Must establish in court that it amounts to
mismanagement and it prejudices the
community property
Can ask for receivership, transfer of admin,
or in extreme cases, separation of property
NOTE: NOT to overturn the husband, but to
get certain reliefs (stated above)
o C. Need approval of court
When the other spouse became incapable to jointly
administer (ex. one spouse became guardian of the
other)
N.B. only ground where there is no need for court
approval
What is the rule for acts of ownership?
o Both spouses MUST give consent before it becomes valid.
o Either:
1. The other spouse must give written consent, or
2. There must be court order
o What are examples of acts of ownership?
Ex. selling the house.
Ex. making donation, except for small donations
o What is the effect if one of the spouses does not give
consent to these acts?
1. Its void, but

22
 2. It is a continuing offer from the spouse who gave o No, it must be the parties themselves who enter into the
consent and the third party. It can be validated by the contract.
objecting spouses consent. o If a party is 18 to below 21 years old, the parents must be part
o How much time does the non-consenting spouse have? of the marriage settlement.
The law does not provide. When can there be a change of property regime?
But the parties (consenting spouse or third party) may o 1, Separation of property
withdraw the offer any time. o 2. Legal separation
What are the rules on donations? o 3. Ordinary dissolution
o A. To each other What are the formal requisites for MS?
General rule: void o 1. In writing
o B. To third party What kind of document is needed?
Must be a joint act Private/public document, but it must be
Except: moderate donations for charity or family public document for it to be registered
rejoicing What if its not in writing?
o C. To the children Unenforceable
Valid as long as it is for education, etc. But it would Can compel to be reduced to writing
need consent of the other spouse, because its still an o 2. Signed by the parties
act of ownership. N.B. General rule is ONLY the future spouses are
Otherwise, still valid, but charged to the separate parties to the MS
property of the other spouse. o 3. Executed before the marriage
Who manages the household? o 4. Those who need parental consent must make parents party
o It is a joint role between both spouses. to the MS
Otherwise, MS is void (for lack of consent)
o 5. If under civil interdiction or disability, must make guardian
PROPERTY RELATIONS BETWEEN HUSBAND AND WIFE party to the MS
Otherwise, MS is void
What governs the property relations between the spouses?
o Is there need for judicial approval for a marriage
o 1. Marriage settlement (MS) executed before the marriage
settlement?
o 2. FC provisions
No. Only need to register with the civil registrar to
o 3. Local customs
bind third persons
When can you enter into marriage settlement?
How can a MS affect third parties?
o Anytime before you celebrate marriage.
o 1. All above requirements
o What are the additional requirements?
o 2. MS registered in LCR where marriage contract is recorded
Legal capacity to enter into contracts
and in the property registries of property
The marriage must take place after
o N.B. or else, as to these third persons, ACP will be presumed
Can the parents enter into a marriage settlement on behalf of
to govern
minor children?
Rule if marriage does not take place:

23
 o Everything stipulated in MS in consideration of future marriage o Any modification in marriage settlements must be made before
is void the celebration of marriage.
Including donations between respective spouses o Exception: judicial separation of property
contained therein In any case, the only change is from ACP/CPG
o Does NOT invalidate stipulations that do not depend on CSP, with court approval
celebration of the marriage. There can be no situation where CSP changes to
ACP or CPG because what is only allowed is revival
What are the Choices for property regime? of the old property regime
o 1. ACP o What is the status of an extrajudicial agreement between
o 2. CPG spouses to separate their properties?
o 3. CSP Void
o 4. Other regime What governs property relations between the spouses?
When does ACP govern? o Philippine laws, regardless of place of celebration of marriage
o 1. When it is expressly chosen and regardless of residence
o 2. When none is chosen o In absence of contrary stipulation in MS
o 3. When regime chosen is void. o Exceptions:
o Examples of void provisions: 1. Both spouses are aliens
Prohibited one party from marrying another, or a 2. Extrinsic validity of contracts affecting property
second marriage for surviving spouse located abroad, executed there
Spouses live separately 3. Extrinsic validity of contracts affecting property
Imposing fine on infidelity located abroad, executed here
Depriving parties from asking for LS when there is
sufficient ground to do so Donations by reason of marriage
Third person will manage conjugal properties
All properties of the wife belong to the husband Requisites of a valid donation propter nuptias?
N.B. Invalidity of some provisions will not nullify valid o 1. Made before marriage
ones. o 2. In consideration of the marriage
What properties are covered by the regime? o 3. To one or both of future spouses
o When a regime is chosen, all properties are governed by that
Donations propter nuptias (DPN) Ordinary donations
regime. Cannot exclude particular properties from the regime.
Does not require express Requires express acceptance
What if the parties expressly rejected ACP but did not agree on any acceptance
system to govern? May be made by minors Cannot be made by minors
o Determine intent of the parties. If it cannot be ascertained, May include future property (if done Just present property
then apply local custom. When there is no local custom, apply by either of the spouses); if done by
co-ownership. other persons, just present property
When can modifications in MS be done? If present property donated by a Only limit: non-impairment of
spouse and regime is not ACP, legitimes
limited to 1/5. If future property

24
donated by a spouse, limit is on non-
impairment of legitimes.
Grounds for revocation in FC Grounds for revocation in CC What are the grounds for which a donor may revoke a DPN?
o 1. Marriage not celebrated, or declaration of nullity
What is the limit on donations made by a spouse to the other in an o 2. No consent of parents or guardians to the marriage
MS? o 3. Marriage annulled and donee is in bad faith
o If future spouses agree upon regime other than ACP, cannot o 4. Legal separation and donee is guilty
donate to each other in MS more than 1/5 of present property. o 5. Resolutory condition
Excess: considered void o 6. Acts of ingratitude
o Why other than ACP? Prescriptive periods to revoke:
In ACP, their properties will become part of AC
anyway (except for some) Ground Period Remarks
What governs donations of future property in the MS? Marriage not DPN in MS, no The written and oral
o Governed by law on wills celebrated; declaration marriage takes place: donations that
o Therefore, these are revocable, unlike donation of present of nullity operation of law arent revoked by
Nullity, donor is operation of law just
properties in MS
spouse, donee in BF: follow the general
What is the rule on property subject to encumbrances? operation of law civil code rules on
o Property subject to encumbrances can be donated. Written donation: 10 prescription
o If foreclosed to secure an obligation: years (because theres no
In case of deficiency, donee not liable for difference Oral donation: 6 years marriage under law)
In case of excess, donee entitled to difference No consent of parents 4 years Expressly provided
When will a DPN be revoked by operation of law (Arts. 43, 81) and or guardians period
when will it be by option (Art. 86)? Annulment, donee in Donor is other spouse: Expressly provided
BF operation of law period
Article 43 Article 81 Article 86 Otherwise: 4 years
Marriage not Legal separation, 5 years Almost everything
N/A DPN made in an DPN not in an
celebrated donee is guilty related to legal
MS: void if there SM: revocable
separation has a 5-
is no resulting
year period
marriage
Marriage Revoked by N/A Revocable;
Resolutory condition Written donation: 10 Contract law
celebrated, but operation of law everything else years
terminated after if donee is in bad is covered here. Oral donation: 6 years
faith, and donor Even if youre Acts of ingratitude 1 year from knowledge of
is the other the spouse in the fact
spouse GF, some
donations are
revocable under What are the acts of ingratitude covered?
Art. 86 (ex. void o 1. Offense against person, honor, or property of donor, spouse,
ab initio children under parental authority
marriage)
25
 o 2. Donee imputes to donor criminal offense or any act involving When does ACP commence?
moral turpitude, even if proven o Precise moment of celebration of marriage
Except if act is against donee, spouse, children under o Any stipulation which makes the commencement at any other
authority time is VOID
o 3. Donee unduly refuses to support donor when legally or Basic concept:
morally bound to do so o Upon marriage, all properties brought into marriage and
What is the status of donations during marriage between the acquired during marriage are included in ACP
spouses? o Upon dissolution, the entire common mass is divided between
o Void. the spouses
o Except: moderate gifts on family rejoicing Contra: in CPG, only the net profits are divided
Determined by social position of the family, and between them
customs Waiver of rights, interests, shares, and effects of ACP:
o What about those who are merely living together as o Disallowed by law.
husband and wife without valid marriage? o Except during:
Same prohibition 1. Judicial separation of property
Examples: 2. Dissolution of marriage (ex. death) or annulment
Common law marriage thereof
Adulterous relationship o How is this done?
o What does the prohibition cover? 1. In a public instrument
Grants of gratuitous advantage, direct or indirect 2. Recorded in LCR
Ex. donation to a child of the other spouse by another o What is the recourse of prejudiced creditors of the waiving
marriage (since if the child dies, the other spouse spouse?
inherits) May petition to the court to rescind the waiver to
Who has standing to question the validity of the donation between extent of amount sufficient to cover credits
spouses? What is included in the AC?
o ONLY persons prejudiced, like the donor or his heirs o All properties belonging to spouses before marriage and during
Case: Husband donated a car to his wife. The wife marriage
insured it. It was destroyed and the wife sought to o Cannot exclude specific properties from the community
collect insurance. The insurance company What are excluded?
challenged the validity of the donation. HELD: The o 1. Property acquired during marriage by gratuitous title
insurance company has no standing to question, (donation, succession)
since it has no rights or interests over the car in As well as its fruits and income
question. Except: if the donor expressly provides that the
o Donor has standing since there can be a case where a property is included in the AC
stronger spouse takes advantage of the weaker one o 2. Property for personal and exclusive use by either spouse
Except jewelry
Absolute Community of Property (ACP)

26
 o 3. Property acquired before marriage of spouse with legitimate
descendants from prior marriage
Exclude fruits and income as well
What is the presumption?
o Property acquired during marriage are presumed to be
included in the AC, unless proven otherwise
o There must be strong, clear, and convincing evidence
Apply rules on co-ownership, suppletorily
Conjugal Property of Gains (CPG)
When does CPG apply?
o 1. Chosen by the spouses in the MS
o 2. Marriages under NCC by default
What is included in COMMON FUND?
o 1. Fruits, income, proceeds, products of separate property
o 2. Acquired through their efforts
o 3. Acquired through chance
What is the rule upon dissolution of CPG?
o Divide net gains equally, unless they agreed to a different
division in the MS
What is the nature of the spouses right over conjugal property?
o Each spouse has a mere inchoate right over conjugal property:
Cannot alienate of the interest.
Cannot be attached by creditors.
o Only ripens into actual title upon dissolution and liquidation of
partnership.
Apply same rules on:
o 1. Commencement: upon precise moment of marriage
o 2. No waiver of rights, shares, interest unless in JSP or
dissolution, and only in public instrument recorded in LCR
Apply rules on contract of partnership, suppletorily
o If the CP is not enough, use separate properties
o But unlike ordinary partnership (pro rata), liability is solidary
What are exclusive properties in CPG?
o Property by direct acquisition as exclusive:
1. Brought into marriage as his or her own
27
Includes installment-basis property, if
ownership vested before marriage (but
reimburse CP for payments on installments)
Includes property alienated before marriage
but reacquired through rescission,
annulment, or revocation of contract
2. Acquired during marriage through gratuitous title
Includes unearned increments
Includes moral damages (but not
hospitalization expenses, medical
assistance, or loss of salary)
o Property by substitution:
3. Acquired by right of redemption, barter, or
exchange of exclusive property
If money used for redemption was CP, just
reimburse CP
4. Purchased with exclusive money of wife or
husband
What about exclusive property that is alienated under pacto de
retro and then subsequently repurchased?
o Still exclusive. If the other spouse paid for the redemption, he
can be reimbursed.
Who manages exclusive or separate properties?
o 1. The spouses retain ownership, possession, administration,
enjoyment of exclusive properties
o 2. May mortgage, encumber, alienate, or dispose separate
property without consent of other spouse.
o 3. May appear in court alone to litigate it.
o What is the exception?
May transfer administration to other spouse (or even
another person) by public instrument recorded in
ROP, where located
Alienation of the property terminates administration by
the other spouse. Obviously, proceeds go to the
owner-spouse
For joint donations of property to the spouses, who owns the
property?
 o If shares therein are designated, those shares are their
exclusive property
N.B. Because the disposition is gratuitous
o If no designation of shares, it is 50-50
o When does right of accretion exist?
1. when one spouse refuses to accept
2. incapacity to accept
3. predecease or death before perfection of donation
What about onerous donations?
o Still exclusive property of donee-spouse
o But reimburse CP for advances made
What is the presumption?
o All property acquired during marriage is presumed to be
conjugal.
o Regardless of registration.
Specific enumeration of conjugal property:
o Acquired by efforts
1. Those acquired by onerous title through common
fund, even if placed in the name of one spouse
2. Obtained from labor, industry, work of either
spouse
3. Acquired through occupation such as hunting or
fishing
o Fruits of property
1. Fruits (natural, industrial, civil) of common property
2. Net fruits of exclusive property of each spouse
Net fruits only because use the income first
to pay for administration, preservation, etc.
3. Livestock in excess of number of each kind brought
into the marriage of each spouse
Only matters upon dissolution
o Chance
1. Share of either spouse in hidden treasure
Even if it belongs to the exclusive property of
either spouse, because effort was involved
2. Acquired by chance
28
But losses borne exclusively by the loser
spouse
o By presumption
1. All property acquired during the marriage is
presumed to be conjugal unless contrary is proved
Rules on life insurance:
o General rule:
The right to annuity itself is considered the exclusive
property of the purchasing spouse.
The monthly pensions are conjugal.
o If the beneficiary is the insured himself or his estate:
If paid out of conjugal funds, proceeds are conjugal
If paid out of separate funds, proceeds are separate
If part conjugal, part separate, proceeds are part
conjugal and part separate
o If the beneficiary is the other spouse
Proceeds belong to the beneficiary spouse, even if
paid out of conjugal funds
Deemed a donee of the premiums paid.
(Must return of premiums to conjugal
partnership)
If both spouses are jointly insured in a single policy,
proceeds belong to the surviving spouse (obviously),
even if paid from conjugal funds
No obligation to return of the premiums,
because it is deemed a reciprocal donation
If the insured is a third person, then the beneficiary
spouse owns it as separate property (deemed a
donation)
On benefits, pensions, annuities, usufructs, etc.:
o General rule applies.
Gratuitous = exclusive;
Onerous = conjugal.
o Annuities:
The annuity itself (ex. purchased for P100K) is
exclusive property
 Pensions from that annuity (ex. P5K a month) is o Goes against usual rules on accession (accessory follows the
conjugal principal), which doesnt care about value
o Usufruct: o If the land is separate property, in CPG, whichever is more
The harvests or fruits of the land given as usufruct is valuable becomes the principal
conjugal So if the conjugal house is more valuable than the
o What is the determining factor? separate land, then the land becomes conjugal upon
If it was given out of pure liberality, then consider it reimbursement during dissolution
gratuitous (exclusive) o When should reimbursement be made?
If it is a pension, which is given for services rendered, Not required UNTIL there is liquidation of the CP
then it is onerous (conjugal) property.
Special cases: But there is no prohibition against early
o For SSS, the beneficiary is the exclusive owner of the reimbursement.
proceeds o BUT change in ownership only vests upon respective
o Intellectual property like copyright and patent is the exclusive reimbursements, which only happens during liquidation of the
property of the creator-spouse (since it is part of ones person partnership
and is just external manifestation of his genius) Determine whether there is a change in ownership
For loans and credit: upon the time the improvement was made
o Principal is exclusive property of lending spouse, if from own o If the land is conjugal, the usual rule on property applies (the
money land is always the principal)
o Interests falling during marriage is conjugal property o What if the house gets destroyed prior to liquidation of the
On tips received by waiters, etc.: partnership?
o Service charge entitled to it, so conjugal (onerous) There is no conversion because conversion only
o Beyond the service charge it is separate (gratuitous) happens upon reimbursement during liquidation.
On damages:
o If actual damages conjugal Charges upon the ACP/CPG
But can be separate if losses are based on losses
ACP CPG
from separate/exclusive funds
Support of: a) spouses, b) common Same
o If moral, etc. separate because these are paid for suffering, children, c) LC of either spouse
etc. and not actual loss Debts and obligations: a) contracted Same
Rule on fruits? by both spouses, or b) by one
o Fruits from conjugal property gross fruits belong to conjugal spouse for benefit of community
property Expenses, taxes, repairs: a) major or Same, except for: b) for mere
o Fruits from separate property net fruits (total fruits minus minor upon CP; b) for mere preservation during marriage of
preservation during marriage of separate property (no qualification
expenses incurred) are conjugal
separate property used by the family because the family already benefits
Compare with ACP? There, fruits from separate from the fruits of these)
properties are always separate Expenses for: a) either spouses Same
Rule on improvements? self-improvement b) what both

29
spouses donated or promised to o It is deemed as not redounding to the benefit of the AC/CP
common LCs self-improvement because while there can be incidental benefits (e.g. increase in
Ante-nuptial debts of either spouse Same goodwill) the benefit is not directly redounding to the AC/CP.
that redounded to the benefit of the
family Administration of property
Expenses of litigation between Same
spouses, unless found to be CONJUGAL PROPERTY
groundless
If exclusive property is insufficient, N/A
Who administers conjugal property?
but subject to deduction of share of
debtor-spouse upon liquidation: 1) o The spouses, jointly
ante-nuptial debts not redounding to What if there is disagreement?
benefit of family; 2) support for o Husbands decision prevails
illegitimate children; 3) liabilities due o But wife may file for proper remedy within 5 years of contract
to crime or quasi-delict implementing the decision
No need to prove first that
What is one spouse is unable to participate or is incapacitated?
the other obligations of the
AC have been covered o The other spouse may assume sole powers of administration
(unlike in CPG where the (with no need for judicial declaration)
other charges must first be What is not within the scope of powers of the sole-administrator-
covered), because usually spouse?
there are no separate o Does not automatically include power to encumber or dispose,
properties in ACP unless:
1. With consent of other spouse in writing
2. With judicial authorization
What is the rule when community property is insufficient to cover
o Without this, deemed void. But it is a continuing offer on the
for expenses (except for the last one, which has a special rule)?
part of the offering spouse and the third person. Perfected by
o The spouses are solidarily liable with separate properties for
other spouses consent or judicial authorization.
unpaid portion
What is the nature of the other spouses consent
o Reimbursement from AC due upon liquidation.
that is needed?
What is the difference in rules for debts not redounding to the
It must be written consent because mere
benefit of the family, support of IC, and liabilities for quasi-delicts
participation or awareness in the negotiation
and delicts?
is not enough.
o For ACP: No need to prove first that the other obligations of the
o What if the other spouse is not incapacitated or is not
AC have been covered
unable to participate in administration, can the other
o For CPG: Will only be covered by CP after covering other
spouse obtain judicial authorization to dispose?
charges
No. The judicial recourse is available only when the
What is the nature of one spouse acting as surety or guarantor to
other spouse is incapacitated or cannot participate.
another obligation?
Can a spouse make donations alone?

30
 o No. He or she cannot make donations from 4. LS
community/conjugal property unless with other spouses 5. Judicial separation of property
consent What is Voluntary dissolution of regime?
o Exception: o May be jointly filed in a verified petition by the parties
MODERATE donations for charity or family o What is specially required for a voluntary dissolution?
rejoicing/distress Notify all creditors. Court takes measures to protect
What may be disposed by will? them.
o Interest in community property, but not specific properties Compare abandonment to separation in fact?
therein o Separation in fact is physical separation. It can be with or
without just cause (if without just cause, no right to be
EXCLUSIVE PROPERTY OF SPOUSES supported). It doesnt follow that when there is de facto
separation that the spouse is not complying with marital
What is the general rule? obligations. Abandonment implies failure to comply with
o Spouses administer their exclusive properties familial obligations too.
When can the courts transfer administration of exclusive property o What is abandonment?
of one spouse to the other? Left conjugal dwelling without intention of returning
o 1. One becomes the others guardian Prima facie assumed if one left conjugal dwelling for 3
o 2. Spouse judicially declared an absentee months or failed to give any information about his
o 3. Spouse sentenced to penalty carrying with it civil interdiction whereabouts for same period
o 4. Spouse becomes fugitive from justice or in hiding as How does separation in fact affect the property regime?
accused in criminal case o 1. Spouse who leaves conjugal home without just cause loses
o N.B. Distinguish this from administration of conjugal property right to demand support
where there is no need for court approval to assume o 2. When consent is needed from that spouse by law, judicial
administration authorization is in summary procedure
What if the other spouse is incompetent, has conflict of interest, or o 3. In absence of sufficient community property, separate
there is similar other just cause? properties of spouses are solidarily liable for support.
o The court can appoint some other person as administrator The present spouse, in summary proceedings, may
N.B. Administrating spouse cannot dispose of other spouses separate be given judicial authority to administer or encumber
properties specific separate property of the other spouse and
use fruits/proceeds to cover absent spouses share.
Dissolution of ACP/CPG same rules
Contra: Abandonment by one spouse, or failure to comply with familial
obligations (marital, parental, property)
What are the grounds to dissolve the regime?
o Aggrieved spouse may petition court for:
o Where marriage is dissolved:
1. Receivership
1. Death of one party
2. Judicial separation of property
2. Nullity
3. Sole administration of the AC/CP
3. Annulment
o Where marriage is not dissolved: Liquidation of ACP/CPG and liabilities
31
 ACP
1 Inventory of assets (community,
exclusive)
2 Credit CP with amounts advanced
3 Reimburse spouses for:
4 Pay community debts from assets
5 Deliver remaining exclusive
property
6 CP pays spouse for deteriorated
7 Deliver net assets of community,
considering, if present:
1. Agreement (equal by
default)
2. Waiver of share
3. Forfeiture by spouse in
BF
8 Deliver presumptive legitimes
9 Deliver conjugal dwelling and lot to
spouse with majority of children
CPG
Inventory of assets (community,
exclusive)
to spouses personal obligations
1. Exclusive funds used for
acquiring conjugal
property
2. Value of exclusive
property converted to
conjugal property
Pay community debts from assets
Deliver remaining exclusive
property
movables that benefited family
(unless indemnified elsewhere)
Deliver net assets of community,
considering, if present:
1. Agreement (equal by
default)
2. Waiver of share
3. Forfeiture by spouse in
BF
Deliver presumptive legitimes
Deliver conjugal dwelling and lot to
spouse with majority of children
Simultaneous liquidation of two marriages contracted before
Family Code of 1988:
o Default: divide property depending on agreement
o If none: Determine the capital, fruits, income of each
community prove by evidence
o If there is doubt: Divide between two communities in proportion
to capital and duration of each
o When does this apply?
In a situation as in where H and W got married, W
died, but H did not liquidate. H gets married to W2,
and then their marriage is dissolved. Liquidation
would be simultaneous.
NOTE, however, that this will not happen under the
FC because if there is no liquidation of the first
marriage, the second marriage is under mandatory
regime of CSP.
For CPG support during liquidation:
o Taken from fruits and income pertaining to their shares in
properties under liquidation
o If the support exceeds fruits and income pertaining to them
excess is considered advances on shares
o If the liabilities of the CP exceed the assets, SS is not entitled
to any support during liquidation
Separation of properties during marriage

Rule on dissolution by death (ACP and CPG): What is the general rule?
o Liquidate in judicial estate settlement proceedings o Separation of property can only take place by judicial order
What if there is no judicial estate settlement proceeding? (even voluntary separation)
o Within one year, must: o Either: voluntary or for sufficient cause
1. Judicially liquidate AC/CP, or 1. List of sufficient causes (see below)
2. Extra-judicially liquidate AC/CP 2. Voluntary dissolution
o What if there is no liquidation within the one year period? 3. Mandatory regime of CSP
Any disposition or encumbrance of the Grounds for judicial separation of property:
community/conjugal property is VOID o [Judicially declared grounds]
o What if there is subsequent marriage without liquidation? o 1. Civil interdiction
Mandatory regime of CSP for the subsequent o 2. Judicially declared an absentee
marriage o 3. Judicial declaration of loss of parental authority
32
 o [Those that have to be proved] When does CSP apply?
o 4. Abandonment by spouse or failure to comply with familial o Chosen through MS
obligations What are the kinds of separation of property?
o 5. Administrator-spouse has abused privilege o Extent:
o 6. At time of petition, spouses are sep-in-fact for at least 1 year 1. Total
and reconciliation is highly improbable 2. Partial: those not agreed upon as separate shall be
o N.B. For grounds 1, 2, and 3 enough to present judicial AC property
declaration o As to kinds of property:
Procedure for voluntary separation: 1. Present property
o 1. Spouses file verified joint petition to court 2. Future property
o 2. Petition lists all creditors 3. Both
o 3. Creditors personally notified What are the rules in administration and ownership?
No need for publication o Each spouse administers and owns, disposes, encumbers, etc.
o 4. Pendency: AC or CP supports spouses or children own property without others consent
o 5. Court enters decree to convert regime to CSP o Each spouse gets his earnings from profession, business, and
o 6. Record in LCRs and registries of property all fruits from property
What are the effects of separation of property? How are family expenses borne?
o 1. Liquidate old property regime and apply CSP o Borne by both spouses, in proportion to income
o 2. Creditors not prejudiced o In case of insufficiency or default: in proportion to market value
Spouses still solidarily liable with separate properties of separate properties
to creditors What is the rule on liability to creditors?
o 3. Mutual obligation to support still continues unless there was o Liability is solidary [note!]
legal separation
How can there be revival of prior property regime? PROPERTY REGIME OF UNIONS WITHOUT MARRIAGE
o File motion in court for decree of revival
o When can there be a revival: Parties capacitated to marry and living together exclusively (147)
1. Civil interdiction terminates
2. Absentee returns Requisites for 147?
3. Court satisfied that abusive admin will not abuse o 1. Man and woman capacitated to marry each other
again o 2. Live exclusively with each other as husband and wife
4. Parental authority restored o 3. Without marriage or under void marriage
5. Abandoner returns o 4. Both have no existing valid marriage with someone else
6. Separated-in-fact spouses resume common life Who owns wages and salaries?
7. Agreement, after voluntarily dissolving regime o Owned in equal shares
NO voluntary separation may be granted Who owns property acquired jointly through work or industry?
again o Governed by co-ownership (proportionate ownership)
Thus, according to shares actually put in
CSP Regime o What is the presumption?
33
 Party who did not participate in acquisition of property o Share in co-owned properties accrue to AC or CP of prior
contributed jointly, through care and maintenance of marriage
family and household o If party in BF, forfeit shares to:
o Where does this rule not apply? 1. Common children
1. Gratuitous title 2. Descendants of that child in case of predecease
2. Acquired in exchange for exclusive properties 3. Innocent party
When can there be disposition of properties owned in common? o If both are in BF rules on forfeiture still apply. [Dean Del:
o Cannot dispose unless with consent of the other (this is so magpapalitan lang sila ng property.]
different from normal co-ownership)
o Until termination of cohabitation THE FAMILY AND FAMILY HOME
What is the rule on termination of cohabitation if marriage is void,
and only one party is in GF? Which relations fall under the family?
o Share of party in BF in co-ownership forfeited in favor of: o 1. H and W
1. Common children o 2. Parents and children
2. In case of predecease of common child, to o 3. Ascendants and descendants
descendants of that child o 4. Brothers and sisters, whether full or half-blood
What is the special pre-requisite for suits between family
Repudiation leads to representation for
members?
descendants
3. If none, to innocent party o Prior earnest efforts to compromise
o Forfeiture upon termination of cohabitation What are exceptional cases, because they cannot be
compromised?
Parties not capacitated to marry or not living together exclusively (148) o 1. Civil status of persons
o 2. Validity of marriage/LS
To which does this apply to? o 3. Ground for LS
o 1. Bigamous marriages o 4. Future support
o 2. Adultery or concubinage o 5. Future legitime
o 3. Both man and woman are married to other persons o 6. Jurisdiction of courts
o 4. Multiple alliances of same married man Who may constitute a FH?
What properties are owned in common? o Jointly by spouses
o ONLY properties actually acquired by joint contribution are o Unmarried head of family
owned in common, proportionate to contributions. So: Can FH be on rented land?
Wages and salaries are EXCLUSIVE o No. The implication is a FH must be permanent, and hence
Care by other party to home, children, etc. or moral must include the land.
inspiration is not included What is the exemption of a FH?
o What is the presumption for actual contributions? o It is exempt from execution, forced sale, or attachment to the
Actual contributions deemed to be equal value allowed by law
If one party is married to another: o Except:
1. Non-payment of taxes
34
 2. Debts prior to constitution of FH Children by nature
3. Debts secured by mortgage on the premises before
or after construction A. Legitimate:
4. Debts due to laborers who constructed or rendered o 1. Conceived OR born during marriage of parents:
materials for the building o 2. Children conceived through artificial insemination of wife
How is a FH constituted? Either with sperm of husband, of a donor, or both
o Automatic, by operation of law o What is the special requirement for artificially inseminated
But this provision of the FC does not retroact to FHs children?
constructed prior to 3 August 1988 Husband and wife must both authorize or ratify
o Only one FH allowed procedure in a written instrument
o Value must be: Record it in the civil registry, with birth certificate
300K for urban areas before the birth of the child
200K for rural areas B. Illegitimate:
Who are the beneficiaries of a FH? o Those conceived AND born outside valid marriage
o 1. H and W or the unmarried head of family o Exceptions?
o 2. Ascendants, descendants, brother and sisters (whether 1. Void marriages where solemnizing officer had no
legitimate or illegitimate) who are actually living in the FH and authority, but at least one spouse in GF
dependent on the head for support 2. Art. 36 nullity
How is a FH sold? 3. Art. 53 nullity
o By the owner, with written consent of person constituting it, the C. Legitimated
latters spouse, and majority of beneficiaries of legal age o Who can be legitimated?
What if one of the spouses (or both) or the unmarried head die? Children conceived and born outside of wedlock of
o The FH continues for 10 years or as long as there is still a parents NOT disqualified by any impediment to marry
minor beneficiary each other
o Heirs cannot partition it unless there is compelling reason for it 2009 amendment: if the only impediment is age, then
What if the FH increases in value beyond that allowed by law? the child can be legitimated
o If it is due to voluntary improvements introduced by the owners o How are they legitimated?
or beneficiaries, then the FH can be executed. Through subsequent valid marriage between the
parents
PATERNITY AND FILIATION N.B. Annulment of voidable marriage does not affect
o What is the effect?
Kinds of filiation 1. Effects retroact to time of childs birth
2. Legitimation of children who died before the
1. By nature marriage benefits descendants
o Legitimate So it can benefit a dead child with his own
o illegitimate descendants
2. Adoption o Who can file an action to impugn legitimation?
Only by those prejudiced in their rights
35
 Ex. testamentary and intestate heirs
Creditors excluded because they only step
into the picture when there is repudiation of
inheritance by heirs
From five years from time their cause of action arises
Cause of action accrues from death of
putative parent (From minutes of committee
meeting)
B and G are college sweethearts in Manila. When they graduated,
G was 7 months pregnant. Unknown to G, B promised to marry his
childhood friend C in Cebu after graduation. 2 months before B
and C married, G gave birth to W. During B and Cs marriage, C
gave birth to X. Unbeknownst to C, whenever B has a business
trip in Manila, he still sees G and because of this, G gave birth to Y.
Unbeknownst to B, when hes away, C has relations with the
plumber, P. C gave birth to Z. C died. Afterwards, B and G got
married. What is the status of the children?
o 1. W is legitimated, because W was born when B and C were
not yet married, so there was no impediment. The subsequent
marriage of B and G legitimated W.
o 2. X is the legitimate child of B and C. G is Xs step mother.
o 3. Y is the illegitimate child of B and G because Y was
conceived and born outside of valid marriage.
o 4. Z is the legitimate child of B and C. Even if P was the real
father, Z was conceived and born within a valid marriage and
will remain that way until or unless B impugns his legitimacy.
NOTE: the rule is different from Y, because in Ys
case, its obvious that C was not the mother. Its
more difficult in the case of fathers.
Actions regarding filiation
A. To claim filiation
o What are the methods to claim legitimate filiation?
Primary methods:
1. Record of birth in civil registrar
2. Admission of legitimate filiation in:
o A. Public document or
36
o B. Private handwritten instrument
and signed by parent concerned
Secondary methods:
1. Open and continuous possession of status
of legitimate child
2. Other means in ROC and special laws
o When must action to claim legitimate filiation be filed?
1. By child, during his or her lifetime
2. Transmitted to heirs (for up to 5 years), if:
Child dies during minority
Or in state of insanity
N.B. Action filed by child survives even if either party
dies
o What are the methods to claim illegitimate filiation?
Same way, and with the same evidence as legitimate
filiation
o When must action to claim illegitimate filiation be filed?
1. PRIMARY methods: up to childs lifetime
2. SECONDARY methods: up to alleged parents
lifetime
o H and W were married and during their marriage, children
A and B were born. X, in a notarized instrument,
acknowledged A and B as his illegitimate children. X died.
On the strength of this declaration, A and B sought to
participate in the settlement of Xs estate, which the heirs
of X contested. Does the acknowledgement of illegitimacy
hold water?
No. Both A and B were conceived/born under a valid
marriage and are thus legitimate. Recognition of
illegitimacy, even through proper means, cannot
defeat presumption of legitimacy of children, which
was not impugned by H in this case.
B. To impugn filiation
o How may the legitimacy of a child be attacked?
ONLY in a direct action or proceeding. (Sayson v. CA)
o Who may impugn a childs legitimacy?
1. Husband ONLY, by default
 2. Heirs of husband, if:
A. Husband dies before expiration of period
fixed to bring action
B. Husband dies after filing complaint, and
did not desist
C. Child born after death of husband
o What are the only grounds to impugn a childs legitimacy?
1. Physically impossible for H to have sexual
intercourse with W within first 120 days of 300 days
(first 4 months of the 10 months) which immediately
preceded birth of the child; due to:
Physical incapacity of H to have sexual
intercourse with W
H and W living separately, and sexual
intercourse not possible
Serious illness of H preventing sexual
intercourse with W
2. Proved through biological or scientific reasons, that
the child could not have been that of the H
Human Leukocyte Antigen (HLA) test
conclusive determination
Blood tests can disestablish paternity
DNA tests A.M. No. 06-11-5-SC
o CONCLUSIVE of non-paternity
o If probability of paternity value is
less than 99.9% = corroborative
o If probability of paternity value =
99.9% or higher, then it creates a
disputable presumption of paternity
3. Artificial insemination with no written authorization
or ratification
Or gotten through mistake, fraud, violence,
intimidation, undue influence
o What is the period to impugn?
A. Within 1 year from knowledge of birth or recording
in civil register: if husband (or heirs) resides in city
where birth took place or was recorded
37
B. 2 years, if residing in Philippines but not in place of
birth or recording
C. 3 years, if abroad
If birth concealed or unknown, when do you start
counting the period?
From knowledge of birth or recording,
whichever came first
o Considered legitimate even if:
Mother declared against its legitimacy
Or mother has been sentenced as adulteress
Mother contracting a second marriage within 300 days (10 months)
after termination of first marriage:
o Child belongs to the first marriage if:
Child born within first 180 days (6 months) after
second marriage is solemnized
AND MUST BE within 300 days after first marriage
terminated
o Child belongs to the second marriage if:
Child born after 180 days after second marriage
solemnized
(Even if within 300 days after first marriage
terminated)
So the rule is: BOTH periods must concur for the first
marriage to have the child. Else, second marriage
wins.
o N.B. these are mere presumptions. And regardless, the child
will be legitimate
o What about children born after 300 days (10 months) of
termination of the first marriage?
No default status. Up to the one alleging legitimacy or
illegitimacy.
ADOPTION
RA 8552
Who may adopt:
Filipino adopter Alien Alien under Inter- Alien: (same, capacity, residence, age, no abuse)
country adoption act o 1. SAME as above
18+ years old 27+ years old 27+ years old o 2. Certified by diplomatic/consular office that he has legal
At least 16 years older At least 16 years older At least 16 years older capacity to adopt under his laws and that the country allows
than adoptee (subject than adoptee (subject than adoptee (subject
the adoptee to become his son/daughter
to exceptions) to exceptions) to exceptions)
Full civil capacity Legal capacity to adopt Legal capacity to adopt o 3. Country has diplomatic relations with Philippines
certified by diplomatic certified by diplomatic o 4. Living in Philippines at least 3 years before adoption
or consular office or consular office application, and maintains residence until adoption decree
Country has diplomatic Country has diplomatic entered, except:
relations with the relations with the 1. Former Filipino who seeks to adopt relative by
Philippines Philippines consanguinity within 4th degree
GMC, not convicted of GMC, not convicted of GMC, not convicted of 2. Adopting legitimate son/daughter of Filipino spouse
crime involving moral crime involving moral crime involving moral
turpitude turpitude turpitude 3. Married to Filipino spouse and seeks to jointly
Agrees to uphold adopt a relative by consanguinity within 4th degree of
relevant UNCRC, Filipino spouse
Philippine law, R&R of o 5. At least 27 years old and 16 years older than adoptee at
inter-country adoption time of application
Emotional and Emotional and Emotional and Guardians, with respect to their wards:
psychological capability psychological capability psychological capability o 1. After termination of guardianship
(has undergone
counseling) o 2. Clearance of liabilities
Can give care/support Can give care/support Can give care/support Who must adopt?
3 year residence before o By default, the husband and wife must jointly adopt
adoption and until o Exceptions to this?
decree has been 1. Spouse adopted legitimate child of the other
entered (subject to 2. Spouse seeking to adopt own child
exceptions)
Other spouse must consent
3. Spouses legally separated
When can a Filipino adopt: (capacity, character, age) o N.B.: This rule is important. BOTH the H and W must jointly
o 1. Legal age adopt. If one spouse is qualified but the other is not, then there
o 2. Full civil capacity and legal rights can be no adoption.
o 3. GMC, and not convicted of crime involving moral turpitude Ex., a former Filipina who became American wanted
o 4. Emotionally and psychologically capable of caring for to adopt her younger minor brother. This is fine. But
children if her American husband is not qualified (ex. there is
o 5. Can provide care/support no residency requirement yet), then he cannot adopt.
o 6. At least 16 years older than adoptee, except if: The petition will fail.
Adopter is biological parent
Spouse of adoptees parent

38
 Note: in the case above, the waiver of residency
period does not apply to the alien husband because
the brother is not the legitimate child of the wife yet.
Who may be adopted?
o 1. Person below 18 judicially or administratively declared
available for adoption
o 2. Legitimate child of one spouse by the other spouse
o 3. Illegitimate child of adopter, to improve status
o 4. Person of legal age, if prior to adoption and since minority,
consistently treated and considered as own child by adopter
o 5. Child whose adoption has been previously rescinded
o 6. Child whose biological/adoptive parents died
But not within 6 months of death of parents
Whose consent is needed for the adoption?
o 1. Adoptee, if 10 years old or above
o 2. Biological parents of child if known or government
instrumentality caring for the child
o 3. Legitimate and adopted children of adopter and adoptee, if
over 10 years old
o 4. Illegitimate children, if over 10 years old and living with
adopter and spouse
o 5. Spouse of adopter or adopted, if any
What are the effects of adoption?
o 1. All legal ties between the biological parents and the adoptee
are severed
Except when it is the biological parent that is the
adopter
o 2. The adoptee becomes the LC of the adopter
o 3. Adopter and adoptee obtain reciprocal successional rights
(just them)
What is the effect on succession rights under FC, Articles 189-90?
N.B. There is controversy whether these still apply,
but these were included in the Bar syllabus, so take
note.
o 1. The adoptee remains an intestate heir of his biological
parents and blood relatives
39
o 2. If adopters concur with parents/legitimate ascendants of the
adoptee, they divide the estate to the parents, to the
adopters
o 3. If adopters concur with SS or ICs of the adoptee, then divide
the estate to adopters and SS or ICs
o 4. If adopters concur with SS and ICs of the adoptee, then
divide the estate 1/3 to adopters, 1/3 to SS, 1/3 to ICs
o 5. If only adopters, they get everything
o 6. If only biological relatives, follow ordinary succession rules
o N.B. if the adoptee has legitimate children/descendants, then
just like ordinary succession, the adopters are excluded.
Who can rescind adoption?
o JUST the adopted child. Never the adopter.
Grounds to rescind?
o 1. Repeated physical or verbal abuse by adopter
o 2. Attempt on life of adoptee
o 3. Sexual assault or violence
o 4. Abandonment/failure to comply with obligations
Effects of rescission:
o 1. Restores parental authority of biological parents, if adoptee
is still a minor/incapacitated
o 2. The amended birth certificate is cancelled
o 3. Rights to succession are restored, but not as far as there are
already vested rights
Who may adopt under the Inter-country Adoption Act (RA 8043)?
o 1. At least 27 years old and at least 16 years older than the
prospective adoptee
Except:
1. Adopter is biological parent
2. Adopter is spouse of biological parent
o 2. If married, the spouse must jointly file for adoption
o 3. Has capacity to act under national laws and undergone
counseling in his country
o 4. Not convicted for crime involving moral turpitude
o 5. Eligible to adopt under national law
o 6. Can give proper care and support to the child
 o 7. Agrees to uphold UNCRC, Philippine Law, and the R&R of
the Inter-country adoption act
o 8. Country has diplomatic relations with the Philippines
o 9. Possesses all qualifications and none of the disqualifications
under Philippine law
Where is a petition under RA 8043 filed?
o 1. RTC with jurisdiction over the child
o 2. With the Inter-country Adoption Board through a
governmental or accredited private intermediate agency in the
country of the prospective adopters
What supporting documents must be filed?
o 1. Birth certificate of parents
o 2. Marriage contract if married or divorce decree
o 3. Written consent of their biological children above 10 years of
age (sworn statement)
o 4. Physical, medical, and psychological evaluation by licensed
physician and psychologist
o 5. ITRs or other documents showing financial capability
o 6. Police clearance
o 7. Character reference of local church or minister, employer,
and member of immediate community knowing the applicant
for at least 5 years
o 8. Recent postcard-size pictures of applicant and immediate
family
What applies for judicial proceedings?
o Rules of Court
SUPPORT
What is covered by support?
o Everything necessary for sustenance
o Food, clothing, medicine, education, transportation
How long does support last?
o Support doesnt end at age of majority
o It is still the parents obligation
What is the order of support?
o There is a system of priority in support
o This is valuable if there is not much resources to provide
support with
o System of priority found in FC
Who are the persons required to support each other?
o 1. Ascendants and descendants
No matter how far removed
In the case of illegitimate ascendants or descendants
in the direct line:
Seems to stop at parents, and their
children, whether legitimate or illegitimate,
and their descendants, whether legitimate or
illegitimate
But the effect is really just the same. The
code just wants to make it clear that there
are no illegitimate parents or illegitimate
ascendants. But basically it is the same. So
illegitimate children can claim from their
illegitimate grandparents.
o 2. Collateral relatives: limited to brothers and sisters
No other collateral relatives
Half-brothers and sisters are considered legitimate
and are entitled to support
If the illegitimate brother or sister is a minor, you are
required to support him or her
If he or she is no longer a minor, you ask for the
reason why he needs support
E.g. he is indolent, then you are not required
E.g. he is a paraplegic, sick, and has no job
opportunities, then you are required to
o 3. Spouses
The only thing that binds them together is the
marriage contract. If you remove the validity of the
marriage, then there is no obligation to give support.
This is why the guilty spouse may still be required to
provide support to the innocent spouse.
Can you refuse to give support to a philandering
spouse?

40
 No. Unless there is actual LS, there is no
legal defense to deny support.
However, an unjustifiable refusal to live with PARENTAL AUTHORITY
ones spouse is a ground to refuse to give
How does the rule on parental authority differ from support?
support.
o Parental Authority is time-bound: it only lasts until the children
Priority of support:
reach age of majority
o 1. Spouse
o Thus, the only freak situation is the giving of consent for
Different from succession, where spouse is only #4
marriage, even until 21 years old. This is the outlier.
o 2. Nearest descendant
What does Parental authority cover?
o 3. Nearest ascendant
o 4. Brothers/sisters o 1. Custody
o Order: o 2. Discipline (proportionate to offense)
Spouse What are the concomitant obligations?
Children o Support
Parents o Moral and spiritual guidance
Grandchildren o Provide good environment, etc. (PD 603)
Grandparents Two types of PA:
Etc. o 1. Parental authority over the person
N.B. Thus the rule is you do not exhaust going down Parents
before going up. It alternates ARE ALWAYS FIRST
Rule on plurality: Parents only lose if shown to be unfit
o When you have enough, you do not have to worry about the Having more resources has never been the
priority of support. Just give enough to everyone. criteria
o It will be prorated based on the ability of the provider to give. Take note of tender years doctrine (in
So a child who earns more must support the parent more than custody cases, a child under 7 goes to the
the child who earns less. mothers custody unless there are
o The court can demand one person to advance, and then the compelling reasons otherwise)
person demands from the rest. If parents are gone, substitute parental authority
Can the right to receive support be levied upon by attachment or (BOTH parents must be gone)
execution? 1. Grandparents no preference, whether
o No. Legal support is exempt from attachment and execution. parental or maternal line. If there is clash,
But contractual and testamentary support is NOT exempt from they go to court
attachment and execution. 2. Eldest B/S over 21
o The latter are in excess of what one is required to give 3. Anyone with custody over the child
Can judgment for support be considered final and res judicata? And concomitantly, special parental authority
o No. Its always subject to modification, depending on need and Teacher, in the classroom or outside the
capacity to support. classroom, for recognized school activity

41
 Implication: responsible for injury or death
over child
o Defense: due diligence
The teacher exercising special parental
authority is SOLIDARILY AND PRIMARILY
liable. The parents and those with substitute
parental authority: subsidiarily liable
o 2. Parental authority over property of the children
Legal guardianship
Automatic if value of childs assets are less
than P50,000
If more than P50,000: required to file a bond
and must be appointed by the court in a
summary proceeding
Even if you are granted authority by the
court, legal guardianship authorizes only
acts of administration; NOT acts of
ownership
There is separate approval if you want to sell the
childs properties
Rules on property of minor children:
1. Properties of children (regardless of how
acquired)
o OWNED by the children. Even
minors can own property.
o Parents only have legal
guardianship. They can administer
it, and must account in a fiduciary
capacity.
o If LC joint admin by father and
mother; if disagreement, father
wins, but mother can seek court
redress
2. Fruits and income of the property
o Can be used by the parents
o Not for their own; ONLY to support
the child
42
o If there is excess, it can be used for
collective needs of the family
3. Properties owned by parents
o There can be minor children tasked
to administer certain parents
properties
o OWNED by parents
o Fruits and income go to:
Parents (but parents must
pay the children, which
should be the same
amount they wouldve paid
a 3rd person administrator)
Children (as earnings, not
treated as advance on
legitime)
When is parental authority terminated?
o 1. Death of parents or death of child
o 2. Emancipation of child
o 3. Adoption of child
o 4. Appointment of general guardian
o 5. Judicial declaration of abandonment
o 6. Final judgment by court divesting parental authority
o 7. Judicial declaration of absence or incapacity
Grounds for suspension and deprivation of parental authority?
o 1. Conviction of parent that has civil interdiction
Automatically reinstated upon service of penalty,
pardon, or amenesty
o 2. Court, in action, finds that the parent:
A. compels child to beg
B. Treats child with excessive harshness or cruelty
C. Gives child corrupting orders, counsel, example
D. subjects child or allows him to be subjected to acts
of lasciviousness
o 3. Subjected child or allowed him to be subjected to sexual
abuse.
What is the special rule under this ground?
 Deprivation of PA is permanent o What appears in the birth certificate
To change: Rule 103 of ROC
Funerals
What can you use as surname?
Who has the duty and right to make funeral arrangements?
o 1. Spouse Legitimate and legitimated children:
o 2. Descendants of nearest degree o MUST use fathers surname
o 3. Ascendants of nearest degree Illegitimate children:
o 4. Brothers and sisters o Only mothers surname
o What if there are descendants of same degree or several o Revilla law: allows use of fathers surname even if illegitimate,
siblings? if recognized in a private handwritten instrument or public
Older is preferred document
o Who has preference for ascendants? This is not mandatory
Paternal side Adopted children:
Against what property are funeral expenses chargeable? o If adopted by both H and W, use husbands surname
o Property of deceased o If solely adopted, use sole adopters surname
o If married, charge to conjugal property o If solely adopted by married woman, use married womans
surname
Emancipation Married women:
o Not required to use surname of the husband. Can retain
When is someone emancipated?
maiden name
o Just by reaching 18 If you change your surname to your husbands,
Still pegged at 21: theres no turning back
o 1. Parental consent for marriage o Options:
o 2. Art. 2180 of NCC (respondeat superior) 1. Keep maiden name
Ms. Gloria Macapagal
Retroactivity of the FC
2. Use maiden name plus husbands surname
Does the FC retroact? Ms. Gloria Macapagal-Arroyo
o Yes, as long as it does not affect vested rights (ex. Illegitimate 3. Use Mrs., then husbands surname
children) Mrs. Jose Miguel Arroyo
Remo v. DFA
SURNAMES o Woman adopted legally her husbands surname. Her passport
was under that name. In renewal, she asked the DFA if she
Purpose: can return to her maiden surname. But there is no annulment,
o 1. Interest of the State: because it seeks to prevent confusion or whatever ground to revert. She claimed that she had the
of identity option.
o 2. To prevent escaping from criminal liability o HELD: Cannot do this.
What is the legal name of a person? Rules:
43
 o ANNULMENT Stages:
If guilty spouse, MANDATED to return to maiden
surname 1. Provisional absence
If innocent spouse, may retain husbands surname or o An ad hoc stage, since there are certain things that have to be
revert, unless she or the husband has remarried done (ex. Signing contracts, withdrawing from bank)
o NULLITY same o Legal representation: spouse is preferred
o LEGAL SEPARATION Only exception: when there is legal separation
Whether guilty or not, retain since they are still But court can appoint someone else if there is
married reasonable ground
o DEATH of husband 2. Declaration of absence
Can still use the husbands surname o Two years from time of disappearance, unless administration
May revert to maiden name of power of attorney was left with someone else, then five
Or add Vda. de Surname years
What is the rule on junior? o Procedure; prove that he has been missing/absent for a certain
o You can only give junior to the son. period of time
o There is no rule on giving daughters junior Administrator of absentee is appointed
What entries in the Civil Registry may be changed or corrected o If he reappears, he takes back his properties
without judicial order? 3. Presumptive death
o ONLY clerical or typographical errors and first/nicknames may o Here, transfer to administrator of presumptively dead person
be changed under the Clerical Error Law (RA 9408) o If proven to be dead, then transfer to administrator or executor
o Cannot change: of estate
Nationality Then proceed to settlement of estate
Sex o Periods?
Age 7 years of absence presume dead
Status 10 years for purposes of succession
o NOTE: name can only be changed once If over 75 years of age down to 5 years
When can there be change of name under Rule 103? o Periods for purposes of declaration of presumptive death
o N.B. you can change surnames through Rule 103 for remarriage?
o 1. Name is ridiculous, tainted with dishonor, extremely difficult 4 years for ordinary absence
to write or pronounce 2 years for extraordinary absence
o 2. Consequence of change of status, such as when child is What is the difference?
legitimated 4 years there is no danger of death
o 3. Change is necessary to avoid confusion 2 years there is danger of death
o 4. To improve social standing, as long as in doing so, there is o If the person reappears, return his assets to him
no injury to the State or third persons (Caledron v. Republic) If the spouse remarried, then follow Arts. 42 and 43 of
FC
ABSENCE

44
PROPERTY o Does incorporation always have to be to the soil?
No. Incorporation can be to another immovable; need
not be to the soil per se.
CLASSIFICATION OF PROPERTY Another consideration is if it cannot be separated
without breaking the material or the obect (this refers
How does the code define property? to the attached object, obviously, because even if
o Those subject to appropriation by man. land breaks, it still has value.)
o Things would thus be a broader concept since it covers even o X constructs a building on a piece of land he is merely
those not subject to appropriation. leasing from Y. Is it real or personal?
o The code weirdly interchanges the use of these two words. Real. It doesnt matter that who owns the land if by
What are the classifications? incorporation. It only matters if by destination.
o Real/immovable or personal/movable properties o If a painting is embedded into the cement wall of a house,
o Public dominion or private ownership thus becoming part of the wall, what happens to it?
What are real properties? The painting becomes immovable by incorporation.
o 1. Immovable by nature Because the painting will be destroyed when you try
Land to remove it.
o 2. Immovable by incorporation It doesnt matter what the intent is; the fact of
Buildings, constructions adhered to the soil incorporation is the controlling factor.
Trees, plants and growing fruits, while attached to the Does ownership of the painting and the wall
land matter?
Those that cannot be separated without damage No. The fact of incorporation is what matters
o 3. Immovable by destination What is the controlling factor for immovable by destination?
Ornaments o Intention of the owner of the property in question.
Machines o Give examples of immovable properties by destination.
Animal houses Statues, etc, used for embellishment.
Loading docks o If I hang the painting on the wall of Justitia (and I dont
Fertilizer actually used own Justitia)?
o 4. Immovable by analogy It does not become immovable by destination
Contracts for public works because it has to be placed by the owner of the place
Servitudes and other real rights over immovable where the painting is found, and he intends that it be
property an embellishment.
What is the only real property which is immovable by nature? o Ateneo owns a St. Thomas More painting and hangs it in
o Land the walls of Justitia. What happens?
Why do we consider buildings immovable? It is immovable property by destination, because there
o Because they are incorporated/adhered to the soil. is intent to make it an ornament and to keep it there
o If the bahay kubo can easily be moved and transported, then it indefinitely.
is personal property, not real property. When do machines or equipment become immovable by
destination?
45
 o If they are placed in building or tenement where work or
industry is done, they are immobilized by intent of the owner.
o Ex. Computers used in a computer shop, and owned by the
owner of the building.
N.B. Does not apply to rented spaces in malls,
because you do not own the place; it is just for lease.
o Ex. Sewing machines in a clothing manufacturing warehouse,
if the machines and the warehouse are both owned by the
person.
o Animal houses:
If you intend to keep it there forever, then it and the
animals become immovable property.
Ex. Dog house in ones house and the dog itself
becomes immovable property.
o Loading docks:
This covers, for instance, a floating platform made
of wood and metal where machinery of a
petroleum corporation are attached. The platform
was tethered to a ship, which was anchored on
the seabed. Real or personal?
If intended to remain at a fixed place, real.
If it can be moved around and towed to other
vessels, personal.
o Fertilizers:
Also immovable by destination
What are those by analogy?
o Contracts for public works, and real rights over immovable
properties.
o Is a mortgage on land movable or immovable?
Immovable if registered in ROP
Movable if just between parties
o What about shares of stock for real estate property?
PERSONAL property. Shares of stock are always
personal property.
Machines placed in a chocolate-making factory were subjected to a
writ of seizure, which can only apply to personal property. The
46
lease agreement stated that they are considered personal property.
What are they?
o Personal property, based on stipulation between the two
parties.
o As to third persons in GF, they are real property, consistent
with the code.
But if X and Y enter into a contract that deems the building as
chattel, can it be treated as such?
o Yes (Navarro v. Pineda). So while constructing the building on
leased property does not per se affect the buildings status,
coupled with the declaration, it can. (Tumalad v. Vicencio)
o But as to third persons, its considered real property. So if its
publicly sold, one must compl with conditions precedent for the
sale of real property. Else, it is void. (Manarang v. Ofilada)
o When there is a chattel mortgage between two persons over a
building and a real estate mortgage over the same property
towards another, the latter wins out because the CM is void as
regards third persons. (Associated Insurance v. Isabel Iya)
What about a CM over machinery?
o It can be valid even as to third persons, since the machine is
only real property by destination if it directly meets the needs of
the business. If its just stored in the factory, then its personal
property.
What are the tests to determine personal property?
o 1. Exclusion test
If not included in the list of immovable property, it is
personal property
o 2. Description test
Can move from one place to another without
impairment to the real property to which they are fixed
o 3. Considered movable properties by law
Ex. Growing fruits and plants because under Chattel
Mortgage Law, they are movables
Even if they are listed as immovable property in 415.
How to resolve: only considered as chattels under
Chattel Mortgage Law. Otherwise, immovable under
415
o 4. Considered as personal property by analogy
 Contracts, choses of action (right to sue or be sued) o 2. Cannot be subject matter of contracts (no alienation or
Radio frequencies encumbrance)
Shares of stock of ANY corporation, even if the o 3. Cannot be acquired by prescription
corporation owns immovable property o 4. Cannot be subject to attachment or execution
Classification in fungible or non-fungible/consumable or non- o 5. Cannot be burdened by voluntary easement
consumable:
o Only applies to personal or movable properties OWNERSHIP
o Fungible/non-fungible: based on intent of the parties
Fungible: can be substituted by others of same kind What are the rights of the owner?
or quality o 1. Right to enjoy the property
o Consumable/non-consumable: based on nature Jus possidendi
Cannot be used in manner appropriate to their nature Jus fruendi
without being consumed Jus utendi
o Money is ALWAYS fungible Jus abutendi
Although Arrovo bills are not fungible o 2. Right to dispose of the property (Jus disponendi)
Other classifications? Sell, encumber, dispose, etc.
o Constitution: o 3. Right of action to recover (Jus vindicandi )
Public domain Note: there is no such thing as absolute ownership. What are these
Private land restrictions?
o Civil Code: - for purposes of ownership o 1. Those in the Constitution
A. Properties of public dominion Eminent domain
1. Properties intended for public use Police power
2. Properties intended for public service National economy/patrimony powers
o Being used by the government to o 2. Contractual restrictions
render some service to the people, o 3. Provisions in the NCC
but not open to everybody Nuisance
o Ex. Police car Right of way
3. Patrimonial property Art 431: use property the way you want it, but not in
o Private property of the State; used manner injurious to others
for entering into some business or Art 432: doctrine of incomplete privilege the greater
utility right of more people can prevail
o Also includes those from first two Ex. Destroying ones fence to prevent
classifications that are not anymore flooding
for public use/service What are means to protect ones rights?
B. Privately-owned property o Doctrine of self-help Art 429: can use reasonable force to repel
What are the characteristics of property of public dominion? actual or imminent aggression
o 1. Cannot be appropriated Elements?

47
 1. Force employed by owner or lawful o For there to be 50-50 split, the other person must have found
possessor the treasure by mere chance. Here, X already knew there was
2. Actual or threatened physical invasion treasure buried in his land.
3. Invasion/usurpation is unlawful N.B. some commentator believe by mere chance
4. Force employed is necessary to repel can cover even mere tips, because there is no reason
When does this not apply? to distinguish between one who finds treasure by pure
When the property has already been stolen. stroke of luck and one with an unsure tip.
The provision only applies to repel the o Remember, the requisites are:
aggressor. 1. Treasure is money, jewelry, precious objects
o What are your actions when you lose your property? 2. Hidden and unknown
Accion publiciana 3. Lawful ownership does not appear
Accion reivindicatoria 4. Discovery is by chance
Physical boundaries of property 5. Discover is not a trespasser
o Horizontal aspect o If the thing is of interest to science or the arts, the State may
o Vertical aspect acquire it by paying just price.
Until Rules of Aerial Navigation
Ex. If your property is near an airport, you have
special requirements to comply with
Accession
What are the rules on hidden treasure?
o If you own the building, it is yours Its an incident of ownership. Not a means of acquiring originally.
o Unless it is deemed to have been part of national treasure Two things:
o If of interest to the science or arts, the State may acquire it at o 1. Those produced from property (fruits) whether real or
their just price divided 50-50 as well personal (Accession discreta)
o Ownership must not be indicated internally generated accession
Ex. Golden spoon engraved: Imelda Marcos Natural fruits
o Only manufactured products Industrial fruits
Because if it is gold in raw state belongs to State Civil fruits
To whom does the property belong to, and what are the rules on o 2. Those attached or incorporated into ones property and
finders fee? cannot be separated without damage (Accession continua)
o Finder owns property 100% External forces or additions to the property
o Finder and owner split 50/50 Accessory follows the principal
As long as the finder is NOT a trespasser
X owned a piece of land where treasure was believed to have been Accession discreta
buried. He knew Y had a metal detector that could be used to find
treasure. Y agreed and he found treasure. To whom does it What are the kinds of fruits (accession discreta)?
belong? o 1. Natural
o To X. o 2. Industrial

48
 o 3. Civil
What are civil fruits?
o Income from use of property, ex. Lease, rent of buildings
o These are synthetic because it is based on income of property.
o Who gets dividends?
For corporate law whoever is the registered owner
as far as dividends are concerned,
For civil law if you only bought the shares the day
before, you dont get all the dividends. You have to
split it proportionately.
What is the difference between natural and industrial fruits?
o Natural fruits spontaneous products of the soil; products and
the young of animals
Spontaneous they just grow, without planting,
effort, cultivation
Spontaneous only qualifies soil products. No need
to qualify animal products and young.
For young of animals, what is the rule?
If one person owns both father and mother,
then it doesnt matter.
If there are different owners, the owner of the
mother gets the young.
o Industrial fruits products of the land through cultivation or
labor
These are mostly products of the soil. Does not cover
animals.
One must cultivate, process, plant, etc.
But the difference between natural and industrial fruits is mostly
academic, unlike planting and sowing. What is the difference
between planting and sowing?
o Planting produces something relatively long-term or
permanent, like trees
o Sowing a one-crop harvest like rice, corn, etc.
o N.B. the rules that apply to planting differ from rules applicable
to sowing.
How does the rule differ?
49
o When someone plants something in ones property, there is a
situation where you can compel the person to buy your
property.
o In contrast, there is NEVER a situation where a sower can be
compelled to buy the property. You can only require him to
pay rents.
What is the rule as to expenses for planting and sowing? Who
pays for cost of the seeds, labor, gathering, preservation, etc.?
o In general, these are charged to the person who receives the
fruits.
o And as a general rule, it is the owner who gets these. But
there are instances when the law gives these fruits away to
some other person apart from the owner.
o What is the exception?
Antichretic creditor (antichresis) the fruits are given
to the creditor, and the creditor deducts it from the
amount of the obligation, first to interest then the
principal
Know difference of Art. 4431 and 4492
o If fruits have not yet been harvested:
Apply Art. 449.
BPS in BF doesnt get indemnified.
o If fruits have already been harvested:
Apply Art. 443.
Even a BPS in BF will get compensated for necessary
expenses
o Contra: What if the BPS is in GF?
He gets compensated for what was built, planted, or
sown, regardless of whether fruits have been
harvested or not
1
Art. 443. He who receives the fruits has the obligation to pay the
expenses made by a third person in their production, gathering, and
preservation.
2
Art. 449. He who builds, plants or sows in bad faith on the land of
another, loses what is built, planted or sown without right to indemnity.
Accession continua Third person is the owner of the materials (OM)

General rules in accession continua: LO/BPS/OM scenarios

o 1. Owner receives the extension/increase
o 2. Accessory follows the principal 1. The ideal scenario is the LO, BPS, and OM is just one person. There
o 3. The things must be so united that they cannot be separated is no problem here. Accessory follows the principal. The presumption
without injuring or destroying the property is that the LO is also the BPS and OM.
o 4. Punitive liability attaches to the party in BF; party in GF is 2. LO and BPS is the same person; OM is a second person
not punished o When is the LO in GF here?
Accession continua those external in character, forming one single When he does not know the materials do not belong
object to him.
o Apply the accessory follows the principal rule o When is the OM in GF here?
o There are different accessions for movable and immovable When he does not know someone else is using it, or
o Immovable property: he thinks the materials used by the LO+BPS belongs
Accession industrial BPS rules (involves industry) to the LO+BPS.
Accession natural brought about by forces of o FIRST THING TO DO: determine whether accession exists. If
nature; no industry involved the materials can be removed, then there is no problem. (Ex.
Alluvium Light bulbs take them out and return them)
o Note the basic rule: when two persons are involved and both
Avulsion
are in GF, give preference to the LO.
Change in river course
o If both are in GF, what are the rights of the LO?
Formation of islands
Can acquire materials by paying indemnity to the
o Movable property:
owner of the materials. Measure of expenses: cost of
-ions (discussed below)
the materials at the time of payment.
Accession industrial
o If the LO was in GF and the OM was in BF, what happens?
o Building, planting, or sowing
Anyone who is in BF loses everything. He loses the
o What is building?
value of the materials and the owner can acquire the
Constructions, improvements using unnatural
materials without need for payment.
materials
o If the LO was in BF and the OM was in GF, what happens?
o Does it matter whether the building construction is
1. OM can remove the materials (whether or not this
permanent or transient (ex. Slums, kubo)?
causes damage) + damages
For purposes of accession, yes. Because for there to
Measure: cost of materials.
be accession, the joining together must have some
2. If OM doesnt want to remove the materials, the LO
degree of permanence.
has to pay the OM cost of materials + damages.
o How many persons are involved in the B/P/S problems?
o If both are in BF, what happens?
2 or 3
Both are deemed in GF.
There is always a land owner (LO)
3. LO is one person; BPS+OM is another person
Second personality is B/P/S (BPS)
o When is the LO in GF here?
50
 He is not aware that someone has B/P/S in his
property.
o When is the BPS in GF here?
He doesnt know he is not the owner of the land. (So
he has to own land in the same area also, to think the
LOs land was his.) This is why most cases involving
this involves only portions or property and boundary
disputes.
o In all likelihood, there is going to be accession here, unlike in
scenario 2 since here, he builds, plants, or sows. But if it can
be removed without damage, just allow removal.
o If both are in GF, what happens?
1. LO can acquire what was built, planted, or sown,
but pay indemnity.
This option is always present.
Building
o If necessary improvement
Measure of indemnity:
actual costs.
o If useful improvement
Measure of indemnity:
actual costs or plus value
(amount of increase of
value in land).
o If luxurious improvement
Measure of indemnity:
value at the time you enter
into possession.
(Strange rule because it
gives the LO option to
acquire the property or
not. But it would have to
stay in the property
regardless, because there
is accession.)
2. LO can compel the BPS to purchase the land.
NOTE: you can only exercise this option
when the value of the land is not
51
considerably [key word] higher than what is
planted or built. (Depra v. Dumlao)
3. Alternative: Can ask for rentals instead.
Value agree on a lease contract, or if they
cannot, court decides.
When the lease period is done, cannot
compel to renew.
If he cannot pay the rentals, then you can
eject him.
BPSs rights:
1. Receive indemnity
2. If there has been no indemnity given yet,
there is right of retention and no need to pay
rents.
o N.B. there is right of retention if
there is GF
When is there right of removal by the LO against a
BPS, if both are in GF?
Note that this is NOT a principal remedy. It is
subsidiary: you have to choose option #2,
and then the BPS is unable to pay the
purchase value of the land.
o If the LO is in GF, and the BPS is in BF?
NOTE: EVEN IF what was built, planted, or sown can
be removed without damage, BPS cannot remove
what he built, planed, or sown.
1. LO can acquire what was built, planted, or sown,
BUT with different rules.
The only time he must pay indemnity is for
NECESSARY improvements.
MWSS case: for USEFUL expense can
acquire without indemnity.
LUXURIOUS improvements LO will pay, if
he wants it. If LO doesnt want it, he doesnt
have to take it. Problem is, of course, its
going to be attached so LO really gets it free
of charge.
 2. LO can always compel the BPS to purchase the
land, regardless of valuation.
For sower in BF cannot be compelled to
purchase the land, whether in GF or in BF.
Sower only pays rent. If in GF, just rentals.
If in BF, rentals and payment of damages.
3. LO can demolish/remove what was built or planted.
This is now a principal remedy in this case.
Recall: this is just subsidiary if both are in
GF, after BPS cannot pay purchase price of
land.
BPS:
If LO takes first option:
o Is entitled to indemnification ONLY
for necessary expenses.
o BPS also has no right of retention,
even if not paid.
If LO takes second option:
o BPS must purchase it. If he doesnt
pay, LO may sue.
Sulo ng Nayon v. Nayong Filipino: rights of parties in
this case not governed by these NCC rules. Instead,
the rights are governed by the lease agreement
existing between the two entities. The lease is an
acknowledgement of the rights of the parties; thus, a
lessee neither a builder in GF or BF. He is just a
lessee, governed by the laws on lease.
o If the LO is in BF, and the BPS is in GF?
First, ask the BPS in GF what he wants to do. He has
first dibs.
BPS can:
1. Ask for removal. It doesnt matter whether
it causes damage or not.
2. If he doesnt want to remove it, the ball
passes to the LO, who has the following
choice [just one valid]
LOs choice:
52
1. LO must acquire it, with indemnity plus
damages.
2. N/A. NOTE: cannot compel the BPS to
purchase the land
3. N/A. NOTE: cannot compel the BPS to
remove what was built or planted.
BPS here cannot compel the LO to sell him the land.
It is just an option available to the LO.
o If they are both BF?
Then both are in GF.
4. Three persons: LO, BPS, and OM
o When is the LO in GF?
If he did not know that some BPSed in his land.
o When is the BPS in GF?
He thought he owned the land.
o When is the OM in GF?
He did not know someone used his materials.
o As a general rule, the claims are:
OM, as against the BPS
BPS, as against the LO
o First thing to consider: Is there accession? The BPS can
remove if there is no damage to materials AND the LO did not
choose to buy what was built, planted, or sown.
o What if they are all in GF?
Primary option belongs to the LO.
1. LO can acquire was has been built, planted, or
sown with payment of indemnity including for
materials (to the OM).
2. LO can sell the land, as long as not considerably
more valuable. Etc.
NOTE: These are the same rules as scenario 3.
BPS:
IF LO chooses to acquire the thing, BPS has
no right to remove the thing.
OM
LO chooses OPTION #1:
 o Principal remedy is against the No right of
BPS, since he took your materials. retention in case of
o Subsidiary remedy is against the non-payment
LO if the BPS is insolvent. (Basis: Can sell land (if not BPS pays for land. Right of removal comes
material rent lien because in this considerably more Becomes new owner of in (if it wouldnt cause
case, the LO received what was expensive) the land and what was any damage only, since
built or planted) built or planted both in GF).
LO chooses OPTION #2:
No subsidiary liability of
o OM can choose to remove the thing
LO.
if there is no damage suffered.
o If there is damage suffered
Remedy is against the
BPS. Illustration of LO, BPS, OM; OM in BF:
There is no subsidiary
remedy against LO. LO BPS OM (in BF)
o For the scenarios in BF,
Just apply the rules in scenarios #2 and #3. Can acquire BPS (pay Until payment, has right Loses everything. Not
indemnity for materials of retention; even subsidiary action
+ labor) against LO.
Illustration of LO, BPS, OM all in GF: Pays OM for cost of
materials
LO BPS OM
Can sell land (if not BPS pays for land. Loses everything
Can acquire BPS (pay Until payment, has right Cannot remove considerably more Becomes new owner of
indemnity for materials of retention; what was expensive) the land and what was
+ labor) built/planted, built or planted
Pays OM for cost of regardless of
materials whether there
would be damage
of not.
Right to receive Illustration of LO, BPS, OM; BPS and OM both in BF:
payment from
BPS. If BPS is LO BPS (in BF) OM (in BF)
insolvent, can
subsidiarily go Can acquire BPS. No Receive payment only Entitled to receive
after LO. [In latter indemnity, except for for necessary indemnity from BPS,
scenario, LO in necessary improvements. No who used his materials.
effect pays twice improvements. right of retention. [Since both in BF
for the same
becomes in GF as
materials]

53
 regards BPS] There is LO-gf, and BPS-gf. LO-gf filed an action to recover the lot,
including the portion upon which the BPS-gf built his house. The
But no right to Trial Court ordered the BPS-gf to vacate and pay monthly rental
subsidiarily go against until the time they vacate. Correct?
LO [since LO in GF] o NO. First since, both are in GF, look at the options of the LO.
Since the LO doesnt want to buy the house, it looks as if the
Can sell land Pays for land. Can exercise right of LO chose option 2.
regardless. removal only when it o The TC mistakenly ordered the BPS to pay monthly rental,
does not cause because being in GF, he has the right of retention until the LO
damage. [Since both pays for the value of the expenses incurred by the BPS.
OM and BPS in BF
becomes in GF] Alluvium

Alluvium is gradual deposit.

When does subsidiary liability of LO occur?
o Three requisites:
1) LO chose to acquire what was built or planted
2) BPS is insolvent [not mere refusal to pay]
3) OM is in good faith
What is the basic rule on BPS liability in favor of LO?
o BPS is always liable in favor of the LO, if the LO is in GF.
o [Or both BPS and LO are in BF becomes GF]
When is there right of removal?
o Only enforceable against BPS, by the OM. So the LO has to
always choose option 1.
o The only modification: whether BPS is in GF or BF
If in GF must not cause damage
If in BF regardless
What are the remedies of the LO-gf if the chooses to compel the
BPS-gf to buy the land, and the BPS-gf fails to pay?
o 1. Leave things as they are and assume lessor-lessee relation
(Miranda v. Fadullan)
o 2. LO entitled to have improvement removed when the BPS-gf
fails to pay (Ignacio v. Hilario)
o 3. Sale of land and improvement in public auction, applying
proceeds to payment of value of land first to LO-gf, and the
excess delivered to BPS-gf
Four things to remember:
o 1. Gradual deposit of SOIL
o 2. Must deposit in banks of rivers (and maybe lakes and
creeks, since they empty into a larger body of water too)
Not applicable to seas, etc. since these are public
property
For banks of inland waters (like lagoons), do not apply
alluvium
o 3. Deposit must be done on basis of natural current of the river
Meaning, not man-made
o 4. Right of ownership belongs to the riparian owner
No need to report, ask permission, etc. By provision of law, the gradual
deposit becomes yours, automatically.
Does this mean you are protected in this additional area?
o No. Any land in the additional area is unprotected.
o So better if you subject it to the Torrens system, or else you
can lose it through acquisitive prescription.
o Even if the land receiving the alluvion is registered, the new
land is not yet. So it can be acquired by prescription by other
people. (Grande v. CA)
Avulsion

54
 This is abrupt. The transfer of a perceptible piece of land caused by the If the new area is smaller or bigger than the land lost, it doesnt make a
current of the river, but involving a VIOLENT and SUDDEN action of the difference. The law doesnt qualify.
water.
Prescription: two years to remove Formation of islands
o Or for uprooted trees carried by the current to another land: six
months to remove How are islands formed?
What happens if you dont take it out after two years? o When the water goes to a lower level
o Dean Del thinks if you dont remove it after two years, its gone. What is the rule?
Its not yours anymore. o If in the seas or navigable rivers, they become part of public
o It belongs to the person to whom that property is incorporated property.
into o If not in seas or navigable rivers, then the island belongs to the
o BUT some commentators dont think it will belong to the nearest riparian owner near the island.
person Ex. A and B on opposite river banks, are riparian
What about trees? owners. If the island appears on the left side, it goes
o If trees were uprooted and transferred to the other side, they to A. If on the right, to B. If in the middle, split
do not become trees. They are just logs. equidistantly
o Six months to remove
Accession in movable properties
Change of river course
N.B. Just one set of rules
Anything beneath the river is public property. So by default, when a
1. Adjunction
river bed dries up, its public land. The change in river course
provision is an exception. Ex. The table and the varnish
Example, a river goes through As property. But it changed course to Form one single object cannot distinguish one from the other.
Bs and Cs properties.
The two objects must belong to different owners
What happens?
Who owns the single object?
o B and C, the ones who lost property, own the new dry land due
o If you can separate them without injury (close to impossible)
to the change of course.
then just return
o In proportion to the land lost (ex. 2 meters of water for B, 4
o If it cannot be separated without damage the accessory
meters for C, so 1:2 ratio for B and C on the new dry land)
follows the principal
What is As right?
How do you know why is the principal, which is the accessory?
o He can choose to acquire the new dry land. Pay B and C what
o First test: What property is attached to what?
is due, in proper proportion.
o Second test: What is more valuable?
The government may choose to redirect the water. Only apply this if you cannot determine which is
Under the Water Code: the owners of the affected lands may undertake attached to what
to return the river/stream to its old bed at their own expense; but they o Third test: Based on volume
have to secure a permit from DPWH, and they must commence works
within 2 years of the change in course
55
 Only apply this if values are the same or you cannot There is a co-ownership on the basis of the
determine what is more valuable. agreement.
In a diamond ring, which is the accessory and which is the They agree on the sharing. If there is none,
principal? determine by proportion of contribution.
o The band is the principal, the diamond is the accessory. This o 2. If not by the will of parties, but by chance:
is notwithstanding relative values. Pro-rata sharing by both
But if the accessory is worth much more than the principal, owner of the Determine proportionate share based on VALUE,
accessory can ask for separation, but he has to pay for the value of the and not anything else
principal since there would be damage caused. o 3. If only one owner was the cause of the mixture determine
o Ex. Diamond ring if in GF or BF:
For art, and similar materials which employ skill: In GF (thought other sack of rice was his): apply same
o DIFFERENT rule. rule on co-ownership by chance
o The work of art or intellect is the principal. The canvass or In BF: he loses whatever is his share in the mixture,
medium is the accessory. and he can be required to pay damages
If one of the parties is in bad faith, how do the rules change?
o If the owner of the accessory is in BF, the owner of the 3. Specification
accessory simply loses his accessory without remuneration, There is a thing, and it is turned into a finished product through the labor
and he is liable for damages. of another
o If the owner of the principal is in BF, the owner of the A has (Labor of one + material of another)
two choices: The labor is ALWAYS the principal, and the material, the accessory
1. Demand return of the accessory whether there is regardless of value
damage or not What is the rule?
2. Demand value of accessory, plus damages o Determine whether the worker is in GF or BF.
Measure of indemnity: o If in GF, he gets the appropriate the thing, but indemnify the
o Of same kind and quality, or give cash equivalent based on other guy for the cost of the materials
valuation. o If the worker is in BF, the owner of the materials can simply get
his stuff, and charge the worker with damages
2. Mixture Exception: work of art or scientific work the worker
The two properties must lose their respective identities, so you cannot can appropriate the whole thing:
determine which is which. But if with BF pay damages + value of
Ex. Two piles of rice get mixed together. You cannot determine who materials
owns which grain. But if with GF no damages
Two types of mixture:
o 1. Commixtion If solids are mixed Quieting of title
o 2. Confusion if liquids are mixed
Requisites for quieting?
What is the rule on mixture?
o 1. Plaintiff has legal or equitable title, or interest in the real
o 1. If the mixture occurred with the will of each owner:
property
56
 o 2. There is cloud on such title o You cannot register a co-ownership as having separate
o 3. Cloud is due some instrument, record, claim, encumbrance, juridical personality.
or proceeding which is apparently valid or effective but is o Co-ownership can be created by various ways (above), while
actually invalid, ineffective, voidable, unenforceable, and partnership must be based on agreement (since it is based on
prejudicial to plaintiffs title fiduciary relationship, trust, confidence)
o 4. Plaintiff must return to defendant all benefits he received What is the right of a co-owner over the entire property?
from latter or reimburse defendant for expenses that benefited o A co-owner has borderless rights; one can use the entire
plaintiff thing. So an owner of one third of a table can use the whole
Are tax declarations conclusive evidence of ownership? table.
o No. Its just an indicia of possession in concept of an owner at What are the limitations on the right to use the thing owned in
best, but its not considered as title to property per se. common?
What is the prescriptive period? o 1. It must be according to the purpose for which it was
o If one possesses the property, there is no prescription. intended
Can it be filed against physical intruders? o 2. It must not injure the interest of the co-ownership
o No. It must be against an instrument, record, claim, o 3. It must not prevent other co-owners from using it according
encumbrance, proceeding to their rights
Does he have right to possession?
Co-ownership o Yes, over the whole thing.
o You cannot prevent other co-owners from using the thing.
What are the elements of co-ownership? o One co-owner can file for a suit for ejectment, no need to bring
o 1. Two or more owners in the others.
o 2. Unity of object If he wins the ejectment suit, it will benefit the other
o 3. Recognition that there is a co-ownership co-owners.
If I say this part is yours, this part is mine, etc. is it a co- If he loses the ejectment suit, what happens?
ownership? This is a point of contention among authors.
o No. Because there has to be undivided, aliquot shares. Can a co-owner sell the entire property?
How is co-ownership created? o No, not without the consent of other co-owners.
o 1. By law o But if one does, the sale is only over the undivided share of the
Ex. Party walls, etc. co-owner
o 2. By succession What is ones right over ones aliquot share?
Ex. Co-heirs before there is actual partition o As far as ones share is concerned, this is aliquot so there is
o 3. By agreement of the parties no specific possession. One talks about RIGHTS. You are an
o 4. By chance absolute owner of that right; you can sell or transfer it without
Ex. Mixture by chance the others consent.
o 5. By occupation o The buyer will stand in the same shoes as you did before the
Ex. Getting a wild pig together disposition.
Distinguish partnership from co-ownership. Do the co-owners have a right of first refusal?

57
 o No. They do not have right of first refusal or preemptive right
to purchase ones share, under law.
o N.B. Of course if there is an agreement otherwise, respect that.
What is the right of redemption?
o Co-owners have right to redeem.
o Upon receipt of notice of sale.
o Ratio: the law does not like co-ownership. As long as there is
a means to constrict co-ownership, the law favors that.
Redemption brings the thing back to the original co-owners;
thus there will be fewer co-owners.
How do you exercise this right?
o Provided the buyer is a third person (not one of the original co-
owners)
o Within 30 days from notice of sale
o Can repurchase the thing from the buyer pay amount that
was paid by the purchaser
o But if one paid a value grossly excessive, pay reasonable price
as determined by courts
Is there any preference among the remaining co-owners as to who
can exercise of redemption?
o Ex. There are 5 of us, 1 sold his 1/5 share. How do you divide
this?
o Take the proportion among the remaining co-owners. So if the
other four have equal shares, each can purchase 1/20 of the
1/5th share.
o If one does not exercise example, only 3 want to exercise his
right, what happens the other 1/20?
The 1/20 is divided into 3. It becomes 1/60.
What if one of the co-owners advances the share of the others to
the purchaser does he gain interest over the whole redeemed
thing?
o No. He acquires only his own share, and he has right to get
reimbursement from the others.
o If the others dont pay their share, the shares still do not go to
the one person he can attach over their properties:
Properties
And even the pro rata share over the co-ownership
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Cabales case was a minor at time of sale. He became of age, the
court told him he had 30 days to exercise right of redemption.
How do you determine ones pro rata share in the co-ownership?
o Respective interest in the property how much the person
actually contributed
o Can you agree over the proportionate interest of each? Or
should you fix it to the amount of contribution?
Yes, you can agree over the proportionate interest; it
need not correspond to amount of contribution.
Ex. A gave 1M, B gave 2M, C gave 3M. They can all
own the thing by 1/3.
If there is no agreement, it is pro rata (1/6, 1/3, 1/2)
o But with respect to income and expenses, can the parties
stipulate?
Nope. The law renders it void.
o So you can agree on the proportionate interest, but you cannot
stipulate on the share on income and expenses, which must
follow the proportionate interest.
Property must be used for the purpose that it is intended for.
For an act of alteration, what is the rule?
o To change the purpose of the thing, there must be unanimous
consent of the co-owners.
o Same with sale, mortgage, or another act tantamount to
alteration
o What is the rule on lease?
If it is either recorded in the ROP or is more than one
year: it is an act of ownership and requires unanimous
consent.
If neither: it is an act of administration and just
requires a majority.
A, B, C co-own a house and lot in equal shares. What is the status
of the following acts?
o A repaired the foundation of the house, which was tilting
to one side Binding upon B and C. They must contribute 2/3
of the expense, since it is for preservation.
 o B and C mortgaged the house and lot to secure a loan
Will only bind Bs and Cs interest, so As 1/3 is not covered by
the mortgage.
o A built a concrete fence around the lot Not binding upon B
and C since expenses to improve the thing must be decided by
majority of the controlling interest.
o C built a grotto in the garden Does not bind A and B, since
it is for mere embellishment, and it was not decided by majority
of the controlling interest.
o A and C sold the land to X The sale does not bind Bs 1/3
share of the property. B can redeem the 2/3 share sold by A
and C to X, since X is a third person.
Distinguish:
o Preservation: may be at the will of any one co-owner; but he
must notify other co-owners first as far as practicable
o Administration: only with concurrence of majority of co-
owners
But they may designate one co-owner as
administrator; the latter becomes an agent
o Alteration: only with unanimous concurrence of the other co-
owners
If you perform an act of ownership or administration, and you do
not get the required number of votes, what happens?
o Your act is considered not authorized, and the other co-owners
can require you to undo what you have done.
o The other co-owners can ask you to destroy what you have
built, and you have to restore it in its original condition.
What if a co-owner wants to make an improvement on the property
but he cannot secure the majoritys consent, or if the majority
resolution is seriously prejudicial?
o At the instance of an interested co-owner, may petition the
court to order measures it deems proper ex. Appointing an
administrator
If you want to get out of the co-ownership, what is the remedy?
o 1. Sell your undivided share.
o 2. Partition absolute right of any co-owner
No need to give a reason
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It is a RIGHT by any co-owner
The other co-owners can remain to be co-owners as
to the remaining shares, after there was distribution to
the outing co-owner of his share.
Is there a way to prevent a co-owner from asking for partition?
o A provision preventing partition until a certain time is valid.
o Any prohibition for division including transfer good only for
TEN YEARS
o Can extend again, but for another 10 year period. In the
intervals, those who want out can get out again.
o N.B. For testators can stipulate a longer period (20 years) but
this is not extendable
o What is the exception provided in the FC?
For family homes, there can be no partition of FH as
long as there are still minor beneficiaries.
What is the rule on party walls?
o You cannot partition party-walls, and it will continue forever.
Partitioning it would injure the building. So as long as
someone is using it, it will persist.
If partition would render the thing chop-chopped, what should one
do?
o Sell the entire thing, and then divide the proceeds among the
co-owners.
How does a co-ownership terminate?
o 1. Consolidation of ownership in one co-owner
o 2. Destruction of the thing
o 3. Prescription in favor of a third person or a co-owner
o 4. Partition
How do you terminate the co-ownership?
o Main way: by partition.
As to the process of partition, see the ROC. There is
judicial and extra-judicial partition.
No need for a reason. You can ask anytime.
o What happens about total partition?
There is obligation of mutual accounting for the co-
owners. This is for the benefits and profits earned by
the co-ownership.
 E.g. If one lot is divided into three equal parts (30
sqm. Each) A, B, and C, then A loses his part to a
real owner with title, because it wasnt actually part of
the co-ownership, he can receive 10 sqm. each from
B and C. Same if A ends up with a ravine, as
opposed to Bs and Cs flatlands. Same rule for
proceeds (150K for B, 150K for C, 0K for A, but they
agreed to equal sharing 50K each from the
proceeds of Bs and Cs lands.)
o Another way: prescription
Requisites:
1. Repudiates the rights of other co-owners
2. Repudiation is brought to the knowledge
of the other co-owners
3. Evidence is clear and conclusive that he
may acquire exclusive ownership
4. After lapse of period fixed by law
One co-owner sets up prescription against the other
co-owners, claiming the property to be entirely his.
You must have an act considered adverse to the co-
owners; you repudiate the co-ownership through overt
acts or express communication to the other co-
owners.
From the time of repudiation, count the period
necessary provided for by law for acquisitive
prescription. If completed without protest by the
others, a co-owner can acquire the entire property.
If you expressly start in co-ownership and you
repudiate it after, then you are surely in BF, so you
have to follow the 30 year period.
Spouses H and W mortgaged their house to a bank. They failed to
pay, so the bank foreclosed the property. They died and left
behind 3 heirs. One of the heirs redeemed the property within the
one year period for redemption. Is she the sole owner or a co-
owner?
o Co-owner with her co-heirs. Redemption by one would benefit
the others.
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What should the heir do to receive sole ownership?
o Wait for redemption period to expire, and then wait for the
mortgagee/purchaser to consolidate his title, and a new title is
issued in the mortgagee/purchasers name. Then the heir can
offer to purchase the property from the mortgagee.
Condominium Act
There is an aspect of co-ownership in the Condo Act.
Art. 490 is the predecessor of the Condo Act:
o Building with several stories, and with different owners. There
are common areas, too.
o You only share on the expenses of the stairs that you actually
use. So GF person spends nothing on stairs. 2nd F person
and up spend on the first floor stairs. And so on.
Two things in condominium system:
o 1. Interest in separate and independent unit (inside inner wall)
you get a CCT (Condominium Certificate of Title)
o 2. Interest in the common areas (elevator, lobby, gym, etc.)
N.B. there is constitutional restriction on ownership of land (not the
building). But the land is always part of the common area, since it is
constructed on the land.
Two options in so far as ownership of common areas:
o 1. Direct ownership unit owners own the common area in
common (1 unit, and there are 20, you own 1/20 of the
common areas, including the lot)
o 2. Indirect ownership Condominium corporation, and the unit
owner owns shares in proportion to the number of units owned
(see below)
How do you get around the restriction on land?
o Condominium Corporation: it is a corporate entity. As long as
60% of the ownership is for Filipinos, then the condominium
corporation can own land.
o Transfer of this land to the Condominium Corporation is not
subject to transfer taxes (tax incentive)
Can you build a condominium on leased land?
o Not many are built on leased land, but actually, in this case,
there are no ownership restrictions unlike if the land is owned.
 o But this is not marketable; some people think that when the o 3. Existing more than 50 years, or obsolete/uneconomic and
lease expires, there would be no security. more than 50% interest in the common areas are opposed to
How do you register a condominium project? renovation
o 1. Master deed o 4. Material part of the condominium was expropriated and the
Indicates how many units, how big each is, etc. project is no longer viable
Because in the Condo Act, 1 unit = 1 share/vote Or more than 70% of the interest are opposed to
regardless of the size of unit continuation of the project after expropriation
The master deed changes this, usually: a studio gets o 5. Conditions for partition by sale in the deed of restrictions
1 vote, two bedroom condominiums get 2 votes, have been met
penthouses get 3 votes, etc.
o 2. Deed of restrictions Water Code
o Most of these documents are drawn up by the developers
before the building has been constructed. Waters are owned by the State (waters in their natural state not
Its hard to physical partition for common areas. So the only way you commodity water)
can partition is to sell the entire project (the whole building, including Right to appropriate water based on beneficial use
your units), because there is no one who will just buy the common o You have to ask for a water permit before you can draw water
areas. from these natural sources of water (if commercial), not small
How do you partition if there is direct co-ownership? drawings of water
o If DIRECT co-ownership: It is not like ordinary co-ownership For those who want to bathe/swim in the waters
where a partition can be for no reason. There has to be a
ground under Sec. 8 of the Condominium Act. (ex. Destruction
or damage for period of three years; 50% damage or injury and POSSESSION
more than 30% are opposed to repairing the building, etc.)
o If owned by a CONDOMINIUM CORP: Unlike Corp. Code Requisites of possession:
where 2/3 vote would lead to dissolution regardless. But here, o 1) modes of possession
you need any of the grounds in Sec. 13 (similar to grounds in o 2) intention to possess
Sec. 8). So its vote + reason for partition. o 3) own rights
Another difference with other corporations, where How do you determine GF/BF?
there is a 50 year maximum life span; condominium o GF:
corporations have no life span and will exist as long 1. Possessor acquired thing through title or mode of
as the project exists acquisition
What are these grounds under Sec. 8? 2. There is a flaw or defect in the title or mode,
o 1. 3 years after damage or destruction to projects which makes 3. He is not aware of it
a material part unfit for use, and not repaired o BF:
o 2. Damage to at least 50% of units and more than 30% interest 1. Same
ownership of common areas are opposed to repair 2. Same
3. He is aware of it

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 o When does possession cease to be in GF? Contrast: this cannot ripen into ownership
When facts exist which show that the possessor is through acquisitive prescription because he
aware that he possesses the thing wrongly is not considered to be in legal possession of
Else, from the moment possessor receives judicial a property, because the law does not
summons to appear in trial consider him as such.
What are the modes of possession? Possession acquired through violence can never
o 1) Actual possession ripen into ownership.
o 2) Symbolic delivery o 2) Possession with juridical title
Ex. Giving someone a key to a car its symbolic You recognize that ownership belongs to another
possession of the thing the key pertains to person, but has turned over possession to you
Ex. Pointing to a property and saying that is yours Ex. A lessee
o 3) Constructive delivery Generally, this does not and cannot ripen into
On the basis of execution of legal formalities ownership.
What does intention to possess mean? Exception: repudiation of juridical title may
o Subjective element lead into acquisition of the property
What does own rights mean? Can fall under #3 under extraordinary
o Excludes those who possess something on behalf of other acquisitive prescription (always BF)
people (so the principal is actually the one in possession of the o 3) Possession with a just title
thing possessed). Example: Titulo colorado
Agent Possession acquired through just title but there a flaw
Guardian in the title
Attorney-in-fact Ex. The transferor has no right to transfer
Etc. Basis of just title: there is a mode of acquisition
o An agents possession could never ripen into ownership, Ex. Tradition (through sale), donation,
unless ratified by the principal succession
What are the kinds of possession? Can ripen into full ownership through acquisitive
o 1) Possession with no title prescription
Has no legal right at all. o 4) possession with just title and there is no flaw
Ex. Squatter Titulo verdadero y valido
Ex. Your phone was stolen by a thief. You took In the concept of an owner, just like #3, but in this
efforts to get it back. After a week you gave up. case, he really is the owner
Does the thief gain legal possession of the In case of conflict between 2 persons regarding possession of a
property? certain property, who shall be preferred?
The property becomes res nullius, because it o As a general rule, there can be no simultaneous possession of
has been abandoned. Thus, occupation is more than 2 distinct personalities, except for co-possession
the mode of acquiring ownership. (see below)
o Rules:

62
 1. Present possessor prevails
2. If both are present, longer possession
3. If same length, one with a title
4. If all are equal, place the thing in judicial deposit
pending determination by court
What kind of possession can serve as title for acquiring dominion?
o ONLY possession acquired and enjoyed in the concept of an
owner. Must be Titulo verdadero y valido.
o BUT its possible that one acquires possession by some
recognized mode, but from a person who could not transfer
right of ownership
Tet he can still become an absolute owner, if he
proves acquisitive prescription, whether ordinary or
extraordinary. The title here can be Titulo Colorado.
Acquisitive prescription must it be only your own possession
that could lead to this?
o No. There is principle of tacking. Those that came before
the person claiming possession.
o You have to trace your title directly to those preceding you.
There must be someone before you and you can
point at the relationship of the predecessor with you
(there must be privity of title)
o If all the possessors are in possession of such character (ex.
BF), just add all of the years together to figure out how many
years are left
Ex. A = 3 years, B = 3 years, C = 3 years 21 years
left
o Once the line is broken, you have to start counting again.
o On issue of ratio: you cannot take credit for BF possession
preceding yours. No credit, no tacking, no ratio.
While Paras says you can use ratio (ex. Credit 1 year
of possession for 3 years of BF possession), Dean
Del Castillo disagrees. If the preceding possession is
in BF, your possession is already tainted.
Inheritance
If repudiated, deemed to have never possessed it in the first place.
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Transfer of possession, once accepted, is seamless. You are deemed
to have possessed it since death of decedent.
Rights of Legal Possessor:
Peaceful and uninterrupted possession
Is there such a thing as co-possession?
o Yes. But in co-possession, you dont have rights of ownership.
Can be no valid transfer of title, since there is a flaw. The
difference with co-ownership is that in there, there is right of
ownership.
Can co-possession ripen to co-ownership?
o YES. Same rules on acquisitive prescription will apply.
How is co-possession credited?
o If there is partition, before ownership is acquired, the co-
possessors can take credit for the years of possession before
partition, in counting acquisitive prescription,
o It is possible that one co-possessor is possessor in BF, and
one co-possessor is possessor in GF. Each of you will have to
take your own character of possession. If you have 3 years of
co-possession, and you are in BF, and other is GF, then the
BF doesnt affect period or number of years of GF co-
possessors.
When is there interruption of possession?
o Two kinds: natural interruption and legal interruption
o How long should natural interruption be before you say
that acquisitive prescription is lost?
1 year. If gone for 6 months, but you came back and
redeemed possession, you are deemed never to have
lost possession. 6 months will be counted in favor of
acquisitive period.
o In legal interruption, there are judicial summons against you.
How do you lose possession of property, aside from interruption?
o 1. Absolute loss or destruction
o 2. Assignment
o 3. Abandonment
o 4. Possession by another
Actions in case of deprivation of possession of immovable
property:
o 1. Forcible entry/unlawful detainer within 1 year from cause
of action
 Within 10 days from filing this complaint, may secure refuses this concession, he loses all
preliminary mandatory injunction to restore indemnity
possession o 2. Share the fruits based on period
o 2. Accion publiciana within 10 years after possession was of possession (possession of
lost cultivator is not from the time he
Plenary action to recover possession of property actually took possession, but from
o 3. Accion reivindicatoria within 10 or 30 years, as the case time of pending fruits).
may be What if the possessor is in bad faith?
Action to recover possession based on ownership of Only entitled to be reimbursed for necessary
the property expenses.
Action in case of deprivation of possession of movable property: o B. Gathered fruits
o Action for replevin What if the possessor is in good faith?
Entitled to gathered fruits during possession.
Right of a dispossessed possessor over fruits What if the possessor is in bad faith?
Either:
A. Civil fruits o 1. Deliver gathered fruits from time
o What are civil fruits? he lost good faith
Rents, profits, and other forms of compensation for o 2. Reimburse the true owner for
use of property during time when you were in their value + interest
possession He shall also reimburse the true owner for
o When can you keep the civil fruits of the property you fruits the true owner could have received
possess? with exercise of due diligence.
As long as you are in good faith, you can keep the But he can deduct expenses he incurred in
fruits and there is no need to pay rentals for production, gathering, harvesting (necessary
possession expenses)
o What happens when GF is lost?
Once good faith is lost, you have to give the fruits Indemnity for expenses of a dispossessed possessor from the new
after that to the owner, and you have to pay rent. possessor
o What is the effect of a legal interruption?
If legal interruption, you have to allocate time when A. Necessary improvements
you received summons and were still in GF. After o Rights of possessor in GF:
summons, you have to turn over fruits and pay rent. 1. Right of reimbursement
B. Natural and Industrial Fruits 2. Right of retention
o A. Pending fruits o Rights of possessor in BF:
What about pending fruits? 1. Right of reimbursement only
Pending fruits are those that have not been B. Useful improvements
gathered, and are still standing in the o Rights of possessor in GF:
property. 1. Right of reimbursement
What if the possessor is in good faith? Either actual amount of expenses, or
Either: Increase in value of the property
o 1. Allow prior possessor to cultivate 2. Right of retention
the fruits. If the prior possessor 3. Limited right of removal
There must be no damage caused
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 And the new possessor must not have 1. True owner lost the movable
chosen to reimburse the prior possessor 2. True owner unlawfully deprived thereof
o Rights of the possessor in BF: Exception to the exceptions:
None. When the present possessor acquired the
C. Luxurious improvements movable in GF in a public sale.
o Rights of possessor in GF: What is the remedy of the true owner in
Limited right of removal. this situation?
o Rights of possessor in BF: o Reimburse the possessor for the
Limited right of removal as well. price paid for it
D. For deterioration or loss What if the good was sold in a merchants store?
o Rights of possessor in GF: Then the buyer acquires better rights than
No liability the true owner
Unless due to fault or negligence after he had G lost his ring. After a few days, he found it in the possession of H
become a possessor in BF. who had loaned money to Z and received the ring as security, in
o Rights of possessor in BF: GF. What are the relative rights of G and H?
Always liable, even if due to his fault or negligence, or o Default rule: possession of movable in GF is already equivalent
fortuitous event to title.
o BUT in this case, G lost the ring. So he can still recover from
Special Rule re: movables H without obligation (first exception).
o The exception to the exception does not apply because H
Rules on acquisitive prescription: received it as pledge, and not from purchase in a public sale.
o Period for movable property is shorter Besides, only the lawful owner can pledge a movable, so the
What is the legal interruption for possession of movables? pledge is void.
o Replevin suit A agreed to sell his car to B, and they registered it in the name of
What is the rule in natural interruption? B. While waiting to get paid money in Bs sala, A never saw B or
o Even if you lose actual physical possession over it, you still the papers again. B sold the car to C, who sold it to D, both in GF.
possess it as long as it remains under your control. Can A recover the car from D?
o As long as you havent abandoned the property, it is still o Yes, since A was unjustly deprived of his car. The usual
subject to your control. common law rule that where two people (A and D here) would
What if it was misplaced? suffer from a fraud, the one whose acts enabled the fraud to be
o You still have possession committed should suffer does not apply by mandate of Art.
What if you were unlawfully deprived of the movable? 559.
o You still have possession but you have to recover the property o What if the car was bought in a public sale?
o As long as you havent abandoned the property The possessor is entitled to reimbursement
What is the rule on recovery of movables? o What if the car was bought from a merchants store?
o A. Possessor is in BF: The possessor wins. As between a purchaser at a
The owner can recover it from him without any mechants store and a legitimate owner of the thing
obligation whatsoever who lost it, the former wins (Art. 1505, NCC)
o B. Possessor is in GF: When can the owner of a movable who has lost it or who has been
The owner cannot recover it because possession in unlawfully deprived thereof no longer recover the property?
GF is equivalent to title. o 1. Prescription
Exceptions (where the true owner can still recover o 2. Possessor acquired thing from a person whose authority the
without obligation): owner is estopped from denying
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 o3. Possessor acquired the thing from a merchants store, fairs,
markets, etc.
o 4. Thing is a negotiable instrument and possessor is purchaser
in GF and for value
o 5. Possessor is owner of thing in accordance with finders-
keepers principle (Art 719)
What is the finders-keepers principle?
o Where one finds a lost item, he must turn it over to the mayor.
o After publication for 2 weeks of announcement of finding, and
lapse of 6 months thereafter, the finder becomes the owner.
N.B. If the real owner comes forward, the finder gets
a reward of 1/10 the value of the thing
Usufruct
What is the nature of usufruct?
o A person was given the right to use the property owned by
another.
o It is a real right.
What is the most important aspect of usufruct?
o The right of possession over property held in usufruct is not
matter of legal necessity. What will make it usufruct, where you
are entitled to, is the right to receive fruits.
How is usufruct created?
o 1. Voluntary act of owner not possessor. Possessor can lease,
but not usufruct.
o 2. Legal usufruct. But this is no more.
If children, mere act of administration by parents.
Husband now no longer owns properties of wife.
What is the right of the one enjoying usufruct?
o Usufruct has ABSOLUTE right over fruits of property.
o Preservation of substance and form of thing: only if you have
been granted possession of property in the first place. If not,
you only really get the fruits.
o Owner cannot control how usufruct uses the fruits.
What can be the subject of usufruct?
o There can be usufruct over movable, immovable properties, or
even rights, but not personal rights
o Differentiate usufruct and easement:
Easement is only for immovable properties.
What is the usufructuarys obligation?
o Preserve the form and substance of the thing lent in usufruct.
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Substance: no operation, except with consent of
owner, that would prejudice the thing given
Cannot appropriate the thing subject of usufruct
o But can appropriate the fruits
What are the exceptions?
o 1. Can appropriate the thing
Abnormal usufruct
o 2. Can alter the form of the thing, leading to a slightly
deteriorated form
Quasi usufruct
What is a abnormal usufruct?
o For consumable things. So when returned, there is some or all
of it consumed.
o Instead, you have to pay the propertys value based on
appraisal (for movable properties)
If there was appraisal at the beginning, pay that.
If there was no appraisal, replace with another object
of same quality and quantity
What is quasi usufruct?
o For properties that easily depreciate
Ex. Cars
o You cannot really return the thing in the same form and
substance.
o Instead, you return the object itself. As long as its normal
wear and tear, you have no other obligation to the owner.
If a property has been encumbered, can it still be subject to
usufruct?
o Yes. The usufructuary does not compete with the mortgagee
as far as fruits. There is no inconsistency.
o If the mortgagor defaults in the principal obligation, what
happens?
The mortgagee can foreclose the property. This is his
right.
o If you are the usufructuary, how do you stop the
foreclosure? Should you pay the obligation?
No need; there is no legal obligation to pay for the
principal obligation.
 His right to usufruct continues. It is a real right and
can be enforced against any mortgagee.
Can there be usufruct over pledged properties?
o No. There is a conflict.
o The pledgee is entitled to the fruits of a pledged property. The
fruits stand as security as well for the obligation.
o So you cannot give the fruits to a usufructuary.
o N.B. I assume, same goes with antichresis
What about a leased property? Can it be given in usufruct? (Ex. A
leased to B, A gave usufructuary rights to C)
o Yes.
o Use and possession goes to the lessee.
o The usufructuary need not have use and possession; all he
needs to get are fruits. The usufructuary gets the rentals from
that property.
Requirements for usufruct?
o Form is not a matter of validity, just a matter of convenience.
o It is valid between the parties.
o You want it to be in a public instrument, so that you can
register it.
o NOTE: a usufruct is always a real right, and will follow the
property. A lease is only a real right if registered.
Modes of extinguishing a usufruct?
o 1. Death of usufructuary, unless contrary intent appears
o 2. Expiration of period or fulfillment of resolutory condition
o 3. Merger of usufruct and ownership in one person
o 4. Renunciation of usufruct
o 5. Total loss of the thing
o 6. Termination of the right of the person constituting usufruct
o 7. Prescription
A sold a parcel of land to B. There were two buildings on the land.
There was a condition that 1/3 of the rents of the two buildings
should go to A. Subsequently, without Bs fault, the buildings
were totally destroyed. Did this extinguish the obligation?
o No. What was constituted was a usufruct. Rentals are not
only due from buildings, but also the land. There can be no
67
building without land. So the loss was not a total loss that
would extinguish the usufruct.
o A is thus entitled to 1/3 of the land + materials thereon, as a
temporary measure until the buildings are reconstituted.
A owned a parcel of land and gave B usufructuary rights. The land
was still empty then. After, A constructed commercial buildings
on the lot. Is B entitled to the fruits from rentals of the buildings?
o No. The usufruct was constituted on the land, not the
buildings.
o But since the construction diminished the rights of the usufruct
over the land, he must be indemnified for the loss. In a case
(Gaboya v. Cui), the owner was made to pay monthly rentals to
the usufructuary.
Default provisions of usufruct
The other provisions in the Code: are those that apply by default, in the
absence of specific stipulations of the parties.
If the property has pending fruits, when the contract of usufruct
was entered into, to whom do these belong?
o Growing fruits at the time usufructuary enters into the property:
belong to the usufructuary
o No indemnification
At the time the usufruct terminates, what happens to the pending
fruits?
o Belongs to the owner
o Owner pays indemnification for expenses to plant, cultivate,
and other expenses for the fruits
Gathered fruits?
o Belong to the usufructuary.
What is the nature of the usufructuarys possession?
o Possession with juridical title
Can the usufructuary grant possession to another person (ex.
Lease)?
o Yes. Here, it is mere possession that is transferred, the right of
which the usufructuary possesses
o What is the exception to this right?
 Caution juratoria - Giving possession to a person who
has nothing
What happens if the period of the lease is longer than the period of
the usufruct?
o Rentals after termination of the usufruct belong to the owner.
o If the lease has become a real right, then the owner must
respect
1. Leases longer than 1 year
2. Leases of property registered in the ROD
Obligations of the usufructuary?
o 1. Make an inventory of the property
o 2. Give necessary security
Exceptions to bond requirement?
Easements
1. No one will be injured by lack thereof
2. Donor has reserved usufruct of the
property donated
3. Parents, who are usufructuaries of
unemancipated childrens property, except
when the parents contract a second
marriage
4. Caucion juratoria
Obligations of the usufructary during the usufruct?
o 1. Take care of the property as a GFF
o 2. Make ordinary repairs
o 3. Inform owner for extraordinary repairs
o 4. Pay annual charges, taxes, and liens over fruits
N.B. if the taxes, charges, or liens are over the
property itself, the owner is liable
o 5. Notify owner of any act of a third person that may be
prejudicial to right of ownership
o 6. Pay expenses, costs, liabilities in suits with regard to
usufruct
Obligations upon termination of the usufruct?
o 1. Deliver the thing to the owner
o 2. Right to retention for taxes over property and extraordinary
expenses, which must be reimbursed
Rights over necessary, useful, and luxurious expenses?
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o Necessary expenses: right to demand reimbursement
o Useful and luxurious:
No reimbursement
But may remove these if there is no damage to
property caused
N.B. TAKE NOTE! For BPS and for dispossessed
possessor, useful expenses are usually reimbursed.
Here they are not.
o May set-off these improvements against damage on the
property
What is the nature of an easement?
o Also a real right. The right attaches to a specific property until
the right is extinguished. Only difference from usufruct: it is
something that attaches to personal property, while easement
only applies to real property
Further qualify: easement is applicable to land,
buildings, tenements, and not other kinds of
immovables
o No easement over another easement, for instance, even if the
easement is also a real property. Likewise, those by analogy:
cannot receive easements.
What is an easement?
o It is an encumbrance over an immovable property, for the
benefit of:
o Another immovable property belonging to someone else (Real
easement)
o Or a person or community (Personal easement)
Dominant estate is the one benefited.
Is there any difference between easement and servitudes?
o For purposes of the NCC, these are used interchangeably
o Servitude used in common law (personal and real
easements), and they only use easement only for real
properties
 Distinguish between positive and negative easements:
o Positive the servient estate is either obliged to allow
someone to do something on his property, or to do it himself
o Negative the servient estate is prohibited from doing
something on his property which he could otherwise do
o Give examples of positive easement.
Right of way, because the servient estate is required
to let other people pass through his property
Tree with branch hanging out over neighbors
property required to cut
o Give examples of negative easement.
Easement of light and view cannot block neighbors
view
Distinguish from continuous and discontinuous.
o Discontinuous only used in intervals, and with intervention of
man
o Continuous constant, no need for intervention of man
Apparent from non-apparent.
o Non-apparent no external signs
o Apparent made known and with external signs
Why is the classification needed?
o Positive/negative determines rights
o Continuous/discontinuous and apparent/non-apparent
determines how to acquire
Prescription only applies to apparent continuous
How to acquire easement?
o Title
Juridical act (there is a mode of acquiring ownership
ex. Donation, succession, etc.)
Or law
o Prescription
10 years of use of servient estate
Only covers apparent continuous easements
E.g. Easement of right of way can never be
acquired by prescription, because it is
apparent, but discontinuous
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Ex. On another note, easement over
aqueducts can never be acquired by
prescription even if it is A + C, by express
provision of the Water Code.
How to count prescription of A+C?
1. Positive: Count period from actual use
2. Negative: from notarial act will contain
the prohibition. Not just sending a letter to a
neighbor. You have to have a basis; that
you are a dominant estate.
X owned a piece of property, where there was a house on the
southern portion overlooking the northern portion through doors
and windows. X subdivided the property into two: the empty
northern portion and the southern portion with the house. He sold
it to Y and Z respectively. Y wanted to build a house on the
northern property. Z said that it should be not less than 3 m from
their boundary. Who wins?
o Z wins. Under the NCC, when there is an apparent sign of
easement between two properties maintained by the same
owner and these are subsequently alienated to different
owners and there is no intent to the contrary the new
owners must respect the easement.
o Apparent easement here is of light and view: demonstrated by
the windows and doors overlooking the northern portion.
o What are the requisites for this rule to apply?
1. Apparent sign of easement in two estates originally
owned by one owner
2. The sign was established by the owner
3. One or both are alienated
4. The contrary was not provided in the deed of
conveyance
Title is there a specific form?
o Under Statute of Frauds, any transaction over real right over
immovable property must be put into writing
E.g. if you acquire it through tradition, you have to put
it into writing
If not put into writing, it is unenforceable
 o If granted on basis of donation: it must be a public writing (both
donation and acceptance) and in writing
Otherwise, it is void
o If through succession, it must be through a will
What is the meaning of permanence as a characteristic of
easement?
o General use: non-use will not extinguish easement
o Although, non-user for ten years will also extinguish the right
E.g. drainage you are required to have neighbors
water pass by you. You see the water and block it. It
is an act contrary to the easement. Non-use kicks in
upon the blocking.
Inseparability?
o You cannot separate the easement from the immovable.
When you sell property, and you do not inform the buyer about the
registered encumbrance?
o The encumbrance exists
o But you are guilty for breach of warranty, and the buyer can
sue you for not telling him about the encumbrance
o When does registration of an estate without mention of the
easement extinguish the voluntary easement?
If the dominant estate is registered without annotation
of the voluntary easement in its favor, it still exists
If the servient estate is registered without annotation
of the voluntary easement, the easement is
extinguished
Indivisibility
o Increase in number of owners does not increase the burden on
the servient estate. There is just one easement.
o If servient estate partitioned or alienated, it still doesnt change
anything.
Rights of the Dominant Estate
o To make all works necessary for the use and preservation of
the servitude
Obligations of the Dominant Estaete
o 1. Cant alter the easement (only for the benefit of the movable
originally contemplated)
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N.B. Check the intent. If a railroad company was
given right of way over several lots to transport sugar
canes, check whether it is only sugar canes that can
be transported, or if he can transport other goods or
transport for other persons, etc.
o 2. Cant make the easement more burdensome
Villanueva v. Velasco it is the need of the dominant
estate that determines the width of the easement
Rights of the Servient Estate
o To register the easement, even without permission from
dominant estate
If servient estate registers land without mentioning
easement, the voluntary easement is extinguished. If
dominant estate registers his land without mention of
the easement, the easement still subsists.
o Retains ownership of the portion where the easement is
established and may use it in a manner not affecting exercise
of the easement
Obligations of the Servient Estate
o Cannot impair in any manner the easement
o But if the easement becomes very inconvenient to the owner of
the servient estate, or prevents him to make important works,
repairs, or improvements thereon, it may be changed at his
expense
He must provide another place or manner equally
convenient
How does an easement terminate?
o 1. Merger in the same person of ownership of both dominant
and servient estates
o 2. Non-use for 10 years
For discontinuous easements: count from last use
For continuous easements: count from contrary act
o 3. When either or both of the estates fall into condition that the
easement cannot be used
But it shall revive if the condition of either or both
should again permit its use
Except if prescription has set in
o 4. Expiration of term or fulfillment of condition
 o 5. Renunciation of owner of dominant estate 1. Owner of dominant estate must prove he
o 6. Redemption agreed upon both owners can dispose of the water and it is sufficient
for the use for which it is intended
Legal easements 2. Show that the proposed right of way is the
most convenient and lease onerous to others
Not an exclusive list. There are other kinds.
3. Indemnify the owners of the servient
o Ex. Easements for aerial navigation
estates
1. Easements relating to waters
4. Secure a water right from the National
o What is the legal easement of drainage of waters?
Water Resource Council
Lower estates are obliged to receive waters which
o IMPLICATION: cannot acquire
naturally and without intervention of man descend
aqueduct by prescription
from higher estates, as well as the stones/earth
o Banks of rivers, etc. 3 m, etc. covered by Water code
carried along
2. Right of way
The lower estate cannot construct works that impede
o Most common right of way: road right of way
the flow. The higher estate cannot construct works
o Requisites:
the increase the burden
1. Dominant estate surrounded by other immovables
Water code governs
and there is no adequate outlet to a public highway
To extent not covered by Water code, use
There must be NO outlet, not merely
Civil Code
inconvenient
So lower estates still obliged to receive
2. Payment of proper indemnity
waters from higher estates; and higher
3. Isolation not due to acts of dominant estate
estates cannot construct something to
4. Right of way claimed is at the point least prejudicial
hasten down-flow of water
to the servient estate
Addition by Water Code: servient estate can block this
5. Shortest distance to public highway
flow, but must provide an alternative method of
o Generic rule: you have to pay indemnity to get road right of
drainage
way
o What is the legal easement of aqueduct?
You are not paying rentals, because you have a right
Any person who may wish to use upon his own estate
of way
any water which he can dispose has the right to make
It is a one-time indemnity
it flow through intervening estates
o Exception: Isolation on account of sale/transfer or donation
He must indemnify the owners of those estates AND
[N.B. the rules on sale and donation are inverse]
the owners of the estates where the waters may filter
If you are the buyer of the property and you property
or descend
is in the middle, and is isolated. You are entitled to
What is the nature of this easement?
ask the vendor to give you a right of way. You do not
Continuous and apparent have to pay for that.
Requisites?

71
 If the one that is isolated is the sellers property, he is
also entitled to demand right of way. But he has to
pay
Donation: if you receive property through donation,
you can demand for right of way, but you have to pay,
because its too much to ask if you get it for free na
nga, you burden the donor more pa.
If its the donees property that surrounds the property
of the donor, the donor can demand right of way and
he doesnt have to pay indemnity.
o Can the width of the easement of right of way be
changed?
Yes, from time to time, to suit the sufficient needs of
the dominant estate. For instance, when the
dominant estate used to use a tricycle to pass through
the road but changed to a jeep to suit the flourishing
plant nursery business, it can acquire from the
servient estate a bigger width.
o What is the measure of indemnity?
1. If easement is permanent and general value of
land and damage caused
Because here, youre practically taking it
2. If easement is limited and merely temporary just
damage caused
3. No indemnity for the two above situations:
Sale of land surrounded by other estates of
vendor
Donation of land surrounding other estates
of the donor
o When can the servient estate demand that the right of way
be extinguished?
When the dominant estate joins with another, which
has a right of way abutting a public road.
In this case, the servient estate returns what he may
have received by way of indemnity. The interest on
the indemnity is deemed payment of rent for use of
the easement.
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3. Party walls
o Rules on co-ownership can apply
o The party wall itself is the servient estate, and the estates are
dominant
o You cannot open a window on a party-wall
If someone does and the other does not object, you
can acquire it after 10 years by prescription
o Maam did not choose to discuss the dimensions, heights, etc.
of windows in detail.
4. Light and view
o How do you count prescription for acquisition of
easement of light and view
1. From opening of a window, if through a party wall
2. From time of formal prohibition upon the adjoining
estate, if window is through a wall of the dominant
estate
Through a notarial instrument
o When is it positive? When negative?
Positive open window through party wall or wall of
adjoining tenement
Negative open window through wall of dominant
estate
o What is the implication of failure to follow minimum
distances?
Cannot acquire by prescription
Distances:
2 meters from other lot if direct view
60 cm from oblique view
When the easement already exists, any other
construction must be at least 3 meters away as to not
block the view
o X built a house adjoining the lot owned by Y. It had
several windows overlooking Ys half a meter away from
the boundary line. After 15 years, Y brought an action to
close the window. Has X acquired the easement by
prescription?
 No. There was no notarial prohibition, so no
prescription can vest.
Will the action of Y prosper?
No. Because the action has prescribed after
10 years.
Doesnt this mean X acquired the easement of
light and view by prescription?
No. Because Y can validly build something
or raise a wall that block Xs view.
5. Drainage of buildings
o What is the rule?
Roof must be constructed in a way that the rainwater
falls on his own land or street/public place
NOT on the land of his neighbor
o What is an easement on drainage of buildings?
When rainwater cannot be collected in the required
areas stated above, it can be made to pass through
contiguous lands or tenements where egress may be
easiest and it causes least damage to the servient
estate
6. Trees extending over anothers property
o Who owns the fruit on the trees?
Still the owner of the tree
But if the naturally fall on the other owners land, the
other owner gets them
o What is the right of the adjacent lots owner?
Demand that branches extending over his property be
cut off by the trees owner.
CANNOT cut them off himself
But for roots, he may
Nuisance
What is a nuisance?
o Any act, omission, establishment, business, condition of
property, or anything which:
o 1. Injures or endangers health/safety of others
o 2. Annoys or offends the senses
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o 3. Shocks, defies, or disregards decency or morality
o 4. Obstructs or interferes with free passage of any public
highway or street, or body of water
o 5. Hinders or impairs the use of property
Classify nuisances:
o Nuisance per se always a nuisance
o Nuisance per accidens nuisance by circumstance
o Public nuisance affects a considerable number of persons,
even if the extent may be different
1. Criminal prosecution
2. Civil action
3. Extrajudicial abatement
o Private nuisance only a person or small number of persons
1. Civil action
2. Extrajudicial abatement
X has a small house where he sells shabu and other drugs. X was
caught by the police. The police demolished the house for being a
nuisance per se. Are they right?
o No. It is not a nuisance per se because it is not a nuisance in
itself and at all times it was just the venue for the illegal act.
What are the requisites before there can be summary abatement of
nuisance by a private person?
o 1. Specially injurious to him
o 2. Demand must first be made to owner/possessor, but was
rejected
o 3. Abatement approved by district health officer and executed
with assistance of local police
o 4. No breach of the peace or unnecessary injury is done
o 5. Value of destruction not exceeding P3000
What is the doctrine of attractive nuisance?
o A person who maintains in his premises a dangerous
instrumentality of any character which is attractive to children
of tender years at play and fails to exercise due diligence to
prevent them from playing therewith
o Even if the child is technically trespassing
 o Ex. a swimming pool per se is not an attractive nuisance but if Domesticated animals are those taken from
there is an artificial condition or feature that will add another the wild and then tamed.
danger to children, it is an attractive nuisance Occupation over domestic animals cannot be
acquired by occupation unless they had
Modes of acquiring ownership been abandoned. Domestic means that they
are never wild to begin with.
How do you acquire property?
o Intellectual creation
o Occupation o Acquisitive Prescription
o Law Possession + just title (acquired through mode of
o Donation acquiring ownership) + 30 years
o Tradition So valid only if acquired through res nullius (in this
o Intellectual Creation case, its really occupation)
o Prescription Derivative Mode dependent on former owner or title of another
o Succession person
Sale is not a mode, it is tradition o Succession from whom you inherit
Mode:
o Donation from donor
o Process of acquiring ownership o Law
o Mode does not need a corresponding title o Tradition
Title:
o Juridical justification for a mode Donation
o Title needs a corresponding mode
Original Mode not dependent on former owner Requisites of donation:
o Occupation o 1. Decrease or reduction in the patrimony of the donor
Seizing of the property physically o 2. Increase of patrimony of the donee
Not owned by anyone or because there is a previous o 3. Animus donandi or intent to make a donation
owner and has abandoned it Classes of donation:
You do not occupy land; you occupy corporeal things. o 1. Donations inter vivos
Land is never without an owner the State owns it by Simple
default. Except if land was previously owned and it pure liberality
has been abandoned: this does not revert to the Remunerative
State. On account of services rendered by the
If intangible acquired by (1) intellectual creation, or donee, but not a demandable debt
(2) tradition Conditional
Occupation of animals Imposes a charge or burden on the donee
If the animal is wild a person becomes the less than the thing given
owner upon capture. Onerous
Occupation over domesticated animals, after Given in consideration of demandable debt
20 days, unless claim has been made. Actually governed by rules on contract
74
 o 2. Donations mortis causa indicates that the donor parted with ownership of the land prior
Actually governed by rules on wills to his death.
Distinguish between illegal and impossible conditions in a simple Property is donated in a deed named donation inter vivos. It
donation from illegal and impossible conditions in an onerous said that the land donated shall be delivered immediately to X
donation: upon the perfection of the donation, with all the fruits thereof, but
o In simple donation, considered not written title shall only pass to the donee upon the donors death. What
o In onerous donation, annul the donation (since governed by is this?
rules of contract) o Mortis causa: the fact that no title or ownership is conveyed
Distinguish between inter vivos and mortis causa donations: until the death of the transferor controls.
Capacity of donor and donee:
Inter vivos Mortis causa o Donor:
1. Must have capacity to enter into contracts
Takes effect independently of Takes effect upon death of donor 2. Must be able to dispose of property
donors death 3. Must not be prohibited or disqualified by law from
Title or ownership conveyed before Title or ownership conveyed only making the donation
death of transferor upon death of the transferor o Donee:
1. Must not be prohibited or disqualified by law from
Valid if transferor survives transferee Void if transferor survives transferee accepting the donation
A, from Manila, offered B, who lived in Cebu, in writing to donate
Generally irrevocable Always revocable his car. Two days after , Bs letter of acceptance reached A, but
before it reached A, A has been confined in the psychiatric/mental
Comply with formalities on donations Comply with formalities on wills
ward. Is the donation binding?
o No. The donors capacity is determined from the perfection of
donation. A donation is perfected the moment the donor
A donation provides that it will take effect after the death of the
knows of the acceptance. Here, before he found out, he
donor, that the donor will not dispose of it or take it away from the
already lost capacity.
donee, that he had beneficial ownership while he lived. Is it inter
Prohibited donations:
vivos or mortis causa?
o By reason of relationship
o Inter vivos, since the donor intended to part with ownership
1. Between husband and wife, except moderate gifts
during his lifetime. Providing that the donor will not dispose of
in family rejoicing or distress
it or take it away means that the donation is irrevocable; thus,
2. And those with amorous relationships, living
inter vivos. It is also clear that he parted with naked title, while
together as husband and wife [here, there is no
maintaining beneficial ownership.
criminal act, unlike adultery/concubinage]
What does a habendum clause and a reddendum clause signify?
o By reason of public policy
o Inter vivos. Habendum cause indicates a grant of the property
1. Parties guilty of adultery/concubinage at the time
before death of the donor, while the reddendum, in so far as it
the donation is made
imposes a condition on how the donees should spend some of
Do they have to be convicted? No.
the income of the property and limits on how to dispose it

75
 If they have already parted, then it is valid.
2. Guilty of committing the same crime AND in
consideration thereof
You dont have to be both principals
When must it be given?
o It can be given before committing a
crime (donation as the inducement)
o It can be during or after (reward)
Distinguish: for adultery/concubinage it
cannot be after, and it must be in
consideration of the relationship. Here, it
can be after, but it must be in consideration
of the crime.
3. Made to public officers, spouses, etc. by reason of
his office
4. Those disqualified under wills apply as well:
A. Priest who heard confession or minister
who extended spiritual aid during last illness
B. The relatives within 4th degree of
abovementioned person, or his church/sect
C. Ward to guardian, before final accounting
o Except if guardian is ascendant,
descendant, or sibling
D. Physician, or other health officer who took
care of donor during last illness
5. Made by individuals, associations, corporations not
permitted by law to do so
Formalities of a donation:
o A. MOVABLE
Oral:
Must have simultaneous delivery of thing
Or simultaneous delivery of document
representing the right
Writing:
If the propertys value exceeds P5K
Acceptance must be in writing too
o B. IMMOVABLE
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Public document specifying the property + charges
Acceptance must be:
In same deed
Or separate public document. Here, the
donor must be notified in an authentic form,
and the step noted in both instruments.
o C. Special rules on form:
Onerous donation ordinary contract
Mortis causa donation formality of wills
What is the effect of non-registration? Registration? Actual
knowledge?
o Non-registration, although the donation of immovable is in a
public document only binds the parties thereto
o Registration binds the whole world
o Third party with actual knowledge bound by the donation
between the parties, even if unregistered
X wrote Y, donating in the letter a piece of land. Y accepted by
means of public instrument. X died. His surviving son, B, wanted
to cure the defect of the donation by executing a public instrument
of ratification. Effect?
o No effect. A void contract cannot be ratified. The contract is
void because it was not in a public instrument.
X donated land to Y in a public instrument. Y accepted in a
separate public instrument. X died before the acceptance could be
communicated to him. Valid?
o No. The constancia autentica (notification of the donor in
authentic form) is an essential formal requisite not complied
with. The donation has no effect.
X donated land to Y. Y accepted in a separate instrument, but did
not communicate it formally to the donor. Y paid taxes over the
land, since it was in the black list for non-payment of taxes. Was it
an onerous donation? Was the donation valid?
o It was a gratuitous donation, because payment of the taxes
was not a condition/burden imposed upon Y. It was just a
consequence of the donation.
o Thus, since it was NOT an onerous donation, it must follow the
formal requisites of a contract. The formal requisite of
 constancia autentica was not complied with; thus, the donation
was invalid until communicated formally.
Incapacity that would prevent a person from succeeding:
o Testamentary Art. 1027
Applicable to testamentary succession, but not to
donation: Witnesses to the will, because there are no
witnesses required to a donation
o Intestate unworthiness (Art. 1032)
Limitations on donations:
o 1. Donor must reserve sufficient means to support himself and
all relatives, who at the time of the acceptance of the donation,
are entitled to support
Reduce upon petition of such persons
o 2. Donations cannot comprehend future property
Exception: donations propter nuptias in a marriage
settlement
o 3. No more than he may give or receive by will
Reduce what is inofficious
A donated all his property to a foundation bearing his name,
ignoring claims of wife and children, except for a provision for
their maintenance and education during their lifetime. Effects of
this donation during As lifetime and after As death?
o Valid during lifetime of A. The donee can appropriate all the
fruits.
o Once A dies, it is inofficious. It must be reduced to avoid
impairing the heirs legitimes, upon petition.
Is there a right of accretion in donation?
o None, by default.
o Exception: H and W jointly.
When may a donation inter vivos be revoked?
o 1. Supervening BAR
o 2. Non-fulfillment of condition
o 3. Acts of ingratitude
o 4. Inofficious donations
When may a donation inter vivos be reduced?
o 1. Donor did not reserve sufficient means to support himself
and relatives entitled to support
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o 2. Supervening BAR
o 3. Inofficious donations
Revocation of donations:
o As a general rule, these are irrevocable. These cover
donations inter vivos. Donations mortis causa are really based
on succession, so they are revocable.
o 1. BAR for those with no descendants
A. Birth
B. Adoption
C. Reappearance of child
These apply to those who have made donations
thinking they will not have successors, and these
would affect their legitime.
Subject to reduction or revocation. This ground does
not consider the donation per se as revoked. It is only
reduced to the extent that it is inofficious
Determine the legitimate at that point in time (this is
where presumptive legitime is first introduced in the
NCC), then determine if what was given exceeded.
What is the prescriptive period?
Period of four years from birth, adoption, or
filiation, or receipt of information re: missing
child
Cannot be renounced
Transmissible to LCs, ICs, or descendants
upon death of donor
o 2. Ingratitude:
1. Donee commits an offense against person or
property of donor, spouse, or children under parental
authority
2. Imputation of a crime involving moral turpitude
Is veracity of the claim a defense? No.
The only time it is a defense, is if the crime is
committed to the donee, his spouse, or
children under parental authority.
3. When donee unduly refuses to support the donor
when there is a legal or moral obligation
 Prescriptive period? One year from knowledge of
the donor.
It is purely personal and thus intransmissible
to ones heirs.
What are the exceptions to
intransmissibility?
o 1. Donor already brought action but
died
o 2. Donor prevented from filing
action due to sickness, fortuitous
event, etc.
o 3. Donee killed the donor
o 4. Donor died without knowing act
of ingratitude
o 5. Donor already instituted criminal
proceedings but died before filing
civil case for revocation
o 3. Inofficiousness of the donation
When does this action accrue?
This action ONLY arises when the donor
dies
Unlike supervening BAR which can be filed
while donor is alive
Only compulsory heirs and heirs/successors in
interest may bring action
The creditors may only bring about
rescission if it was in fraud of them
Prescription of four years is counted from the death of
the donor. So even if he donated the inofficious
donation in 1960, and he died in 1984, the heirs have
up until 1988 to challenge the donation.
o 4. Non-compliance with a condition imposed
This is a modal issue
The donor has discretion
Prescription?
4 years from non-compliance
Also transmissible to heirs
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X donated property to Y, with a condition. Y failed
to comply. X sold the property to Z. Valid?
No. He has to file a judicial action first within
4 years to revoke, unless there is an
automatic revocation clause in the donation.
Rule on fruits for these revoked donations?
o Based on BAR donee entitled to fruits until filing of
complaint
o Based on non-fulfillment of condition donee must return the
fruits which he may received after failing to fulfill the condition,
along with the property
o Based on inofficiousness donee entitled to fruits while the
donor lives
SUCCESSION
General provisions
(774) A mode of acquiring ownership
o It is not delivery (tradition) that vests ownership. Succession
itself is the mode. You do not need delivery of the thing to the
successors.
o In due time, the successor acquires a right to possession of the
thing, which may be in the hands of someone else. But this is
an action of assertion/vindication of possession based on
ownership.
What is transferred?
o The inheritance.
o Inheritance is defined in 776 as the transmissible rights and
obligations of a person
o Are there intransmissible rights and obligations?
Yes.
1. Purely personal;
2. Intransmissible by stipulation
3. Intransmissible by operation of law
Are these conveyed by succession?
 No.
What are examples?
A purely personal obligation or right
Ex. Right to receive support from ones
parents
Give an example of a transmissible obligation.
X entered into a perfect contract to sell his
car to Y, but it has not been consummated.
X died. This transfers to his heirs.
o Is a money debt a transmissible obligation?
Yes.
But is it transmitted directly to the heirs?
No. It is paid by the estate, upon claim by
the creditor. (Unionbank v. Santibanez)
Does this not violate Article 774?
No. Although the creditors do not claim
directly from the heirs, the effect is the same
what the heirs would have otherwise
gotten is diminished, so they are indirectly
and ultimately paying the debt.
Does this provision on money claims affect other
claims?
No. They are still transmitted to the heirs.
When does transmission take place?
o (777) Transmission takes place from the moment of death
o This is legal fiction, because you dont really physically get the
inheritance at the moment of death.
o Why is it proper to say the rights to succession vest
instead of get transmitted?
Because you already have that right, albeit inchoate.
It only vests upon death of the predecessor.
What are the consequences of Art. 777?
o 1. Determination of who the heirs will be is determined at the
moment of death; also, what law is in effect; what portions they
will get, etc.
Uson v. Del Rosario: Decedent died during
effectivity of the old Civil Code, so the spurious
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children are excluded (unlike in the NCC, where they
would get something)
o 2. Even before the actual partition of the estate, the heir can
dispose can dispose of his/her interest over the inheritance.
De Borja v. De Borja the heir was allowed to
onerously dispose of her share even if she did not
know how much exactly she would get.
Could she have disposed of it gratuitously?
Yes.
o 3. Heirs have a right to substitute their predecessor in an
action that survives.
Bonilla v. Barcena
Patrimonial right right to prosecute an action
Updates on the abovementioned jurisprudence:
o Lee v. RTC (423 SCRA 497)
An heir can sell his right/interest in property under
administration. However, an heir can only alienate
such portion of the estate allotted to him in the
division of estate.
So he can only sell his ideal or undivided share in the
estate, and not specific properties.
o Liu v. Loi (405 SCRA 316)
An heir can sell his interest in the decedents estate,
but always subject to the rights of the creditors and
the result of the partition.
So if you end up having no share in the estate, then
what you sold is subject to the creditors claim.
o Heirs of Conti v. CA (300 SCRA 345)
Reiterated Bonilla case: prior settlement of estate not
necessary for heirs to commence action or continue
action pertaining to the estate.
o Heirs of Pinchay [?] v. Del Rosario
Prevented from filing action because the plaintiffs
have not established proof that they are the
decedents heirs.
How to resolve: you can continue an action if you are
indisputably an heir.
What are the three kinds of succession?
 o 1. Compulsory o 3. SS
o 2. Testamentary o 4. ICs
o 3. Intestate Which are primary and which are secondary?
In absence or default of valid will o Primary those who are never excluded
(781) is a WRONG provision. The heirs acquire rights to the Legitimate children/descendants
inheritance upon death. Any fruits/accruals after will indeed belong to o Secondary those who receive only in default of the primary
the heirs, but not through succession, but through accession discrete or Legitimate parents/ascendants
continua. Illegitimate parents
What is the importance of distinguishing between heirs and N.B. does not go beyond parents
legatees/devisees? o Concurring compulsory heirs
o This is an important distinction because of the rules on Surviving spouse
preterition. Illegitimate children/descendants
o Heirs succeeds to an aliquot part of the estate, whether What are the two principles?
through testate or intestate o A) Exclusion and B) concurrence
o These two principles simultaneously operate to establish
COMPULSORY SUCCESSION combinations of compulsory heirs
Legitimary combinations [recit]
Legitimes
1 LC, 1 IC LC = ; IC =
(886) Legitime 1 LC, 2 IP LC =
o A part of the testators property 3 IC, 2 LP, SS LP = each; 3 IC = 1/12 each; SS =
An aliquot or fractional part 1/8
o Which he cannot dispose of gratuitously 2 IP; SS IP = 1/8 each; SS =
Why is gratuitously underlined? 2 AC; 1 LC; 1 IC LC = 1/6 each; IC = 1/12
Because he can dispose of it onerously. He 1 LC; 2 IC; SS LC = ; SS = ; IC = 1/4 each, but
cannot donate to an extent that will eat into reduced to 1/8
6 LC; 3 IC LC = 1/12; IC = 1/24
the value of the legitime.
5 IC; SS SS = 1/3; IC = 1/15
But he can sell his properties. Onerous 1 AC; 2 LP; SS AC = ; SS =1/4; LP = 0
dispositions do not impair the legitime. 3 LGP; SS 1 LGP (one line) = ; 2 LGP (other
(Joaquin v. CA) line) = 1/8; SS =
So he can gratuitously dispose? 1 IC; SS IC = 1/3; SS =1/3
YES. But, he cannot eat into the legitime. 2 AC; 2 LP AC = each
Manongsong v. Estimo: Sale does not affect the 3 LC; 2 IC; SS LC = 1/6 each; IC = 1/12 each; SS =
value of the decedents estate. There is an exchange 1/6
2 AC; 1 LP; SS AC = each; SS =
of value.
Who are the compulsory heirs? (887)
o 1. LC and descendants Legitimate children or descendants
o 2. LPs and ascendants (in default of #1)
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 o Get a constant Now, she can concur, and is in fact always an heir. But her
Note: There are only three cases where nobody gets share is variable.
: o What kind of marriage is needed to become a SS?
SS 1/3; IC 1/3 Valid or voidable
SS, exceptional circumstance of in articulo o What is the effect of legal separation?
mortis 1/3 Final decree will disqualify the guilty spouse from
SS 1/4; IP 1/4 inheriting through compulsory, testamentary, or
o They are the primary compulsory heir intestate succession.
o The nearer exclude the more remote. So children exclude Unless there is reconciliation.
grandchildren. Lapuz v. Eufemio: If pending a case for legal
o BUT the grandchildren can inherit if representation is proper separation, one of the spouses dies, the action is
Predecease automatically extinguished and there will be no LS.
Disinheritance o What are the prerequisites to have the SS inherit only 1/3?
Incapacity/Unworthiness 1. SS inherits alone
o N.B. If all the children renounce, then the grandchildren will all 2. The marriage was in articulo mortis
inherit equally (per capita) 3. Decedent dies within 3 months of the marriage
But if only a few renounce and not all, the remaining 4. Couple did not live together for at least 5 years
child/children will get what is left to the exclusion of 5. The decedent was the one at the point of death
the grandchildren upon marriage
o The adopted child is, for purposes of succession, in the exact Illegitimate Children or descendants
position as a LC o No more distinction between natural and spurious children.
Must be legally, not de facto adopted o What if they concur with legitimate children?
o Does the adopted child retain the right to succeed his Always get of one LCs share
biological parents? Their share can be reduced pro rata if the shares
This is still an open question. There is an obiter in the exceed 1 whole. They are less preferred than SS and
Stephanie Garcia case that the adopted child does, LC.
but it is a mere obiter, and it cites a Family Code o What if they do not concur with legitimate children?
provision that might have been repealed by the Variable shares. If with SS, then 1/3. If with IP, then
Domestic Adoption Act. . Alone, collectively. If with LP and SS, then .
Legitimate parents or ascendants o What is the rule on representation?
o Nearer exclude more remote. Parents exclude grandparents. The illegitimate children of an illegitimate child can
o Equal division by line. So paternal and maternal lines split by represent the latter. The illegitimate children of a
half then divide between the parents. legitimate child cannot represent the latter.
Surviving spouse Illegitimate Parents
o Before, in the Spanish Code, she cannot concur with LC; she o Excluded by BOTH legitimate and illegitimate children.
would only get usufructuary right over the property of the LC. o No succession for illegitimate ascendants beyond IPs

Preterition (854)
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 What is preterition?
o Total omission of a compulsory heir in the direct line from the
inheritance.
o What is the mistake of the judge in Seangio?
He said that it is total omission from the will. It must
be total omission from the inheritance.
When is a compulsory heir completely omitted?
o When he gets nothing in the way of:
1. testamentary (institution of heir) disposition
2. legacy or devise
3. intestate succession
4. donation inter vivos
Dont forget donation inter vivos!
and he was not disinherited.
Why does it mention compulsory heirs in the direct line? Who is
a compulsory heir not in the direct line?
o The surviving spouse.
o So who is covered?
It can be LC, IC, and as circumstances apply, LP or
IP
o How do you determine who are the compulsory heirs?
Determine only at the time of death because that is
only when the rights to succession vest.
What if there is something is given but is insufficient?
o Remedy is completion of legitime (906)
What is the effect of preterition?
o Annulment of the institution of heir. But legacies and devises
are valid in so far as they are not inofficious.
o If there are no legacies or devises, the entire estate is thrown
open to intestacy.
Does the fact that an heir is not mentioned in the will mean that he
is preterited?
o No, if the will does not dispose of the entire estate. (Seangio)
If someone dies intestate, can there be preterition?
o No.
Does the fact that an heir is mentioned in the will mean he is not
preterited?
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o Not always! [ex. there was no disposition in his favor]
X has two children, A and B. X made a will giving B of his
estate, and the other half to Ateneo. X did not give A anything by
way of donation inter vivos either. But A predeceased X. Is there
preterition?
o No. A predeceased. You only determine fact of preterition
upon death of testator. (JLT Agro)
[Same facts] A, however, had a son A1. A predeceased X still. Is
there preterition?
o Yes. But not of A, but of A1.
o Does it matter than A1 was born after the will was made?
It does not matter. The reckoning point is still time of
death of the testator, not time of making the will.
o What is the effect?
The entire estate is thrown open to intestacy because
there are no legacies or devises.
X said I will disinherit my son B because he took up law, not
medicine. Is this a valid disinheritance?
o No. It is not one of the grounds. It is rendered ineffective, and
therefore, there is no preterition.
[Same facts] But the second sentence now says, in addition, so
I give of my estate to Ateneo, and the other 1/2 to my brother Z.
What happens here?
o There was no preterition. So X will get his legitime because
the disinheritance is ineffective. The dispositions in favor of
Ateneo and Z are valid but inofficious, so these will just be
reduced but not rendered invalid. [Take note of this
scenario]
o Why does it become like this? Because preterition will only
apply when there is inadvertent omission from the will (without
the heir being expressly disinherited). An ineffective
disinheritance, thus only results into the heir being able to
demand his rightful share. Preterition does not vest.
Disinheritance (915-923)
What is the effect of disinheritance?
o Primary effect exclusion from the legitime
 o Actual effect TOTAL exclusion of the heir from all manner of o There must have been a prior demand, and the demand must
succession: exclusion of the heir from the legitime and the have been unjustifiably refused.
intestate portion, if any, and also from testamentary succession What is maltreatment by word or deed?
is instituted in an earlier will. o It covers a wide range of misdeeds, but it must be verbal or
Requisites? physical assault of a serious nature
o 1. Made in a will o No need for conviction
Can you disinherit in a medium other than a will? What is abandonment as a ground to disinherit a parent?
No. ONLY through a will. o Complete withholding of presence, love, care, and opportunity
o 2. Done for a cause specified by law. to display maternal affection; total denial of support and
o 3. Specify the cause maintenance
o 4. Must be unconditional o See discussion below in unworthiness
o 5. Must be total Must there be conviction in Attempt against virtue?
o 6. Cause must true o No.
o 7. If the truth of the cause is challenged, the truth of the cause What is giving cause for legal separation as ground to disinherit
must be proved by the proponent a spouse imply?
What is the policy of the law? o No need for decree of legal separation, because merely giving
It is reluctant to grant disinheritance. This is ground is enough
why the burden of proof is automatically with o Contrast this with loss of parental authority as a ground
the proponent of the will. The rebutting heir to disinherit a parent:
is not tasked to prove the denial. Need actual loss of parental authority for this ground
Take note of the following: Is there representation in disinheritance?
o 1. Some of the requisites require conviction by final judgment. o Yes, if the disinherited heir is a descendant.
Example: Number 1. Mere attempt to take the life is Also for brothers/sisters being represented by
not enough; there must be conviction. nephews/nieces but only in intestacy and not
But some do not need final conviction, like compulsory (because brothers/sisters are not
Maltreatment by word or deed compulsory heirs)
Living a dishonorable life o No, if the disinherited heir is an ascendant.
o 2. The grounds are exclusive. o N.B. representation does not apply to testamentary succession
o [The grounds are discussed in a table below] (obviously).
Which grounds require conviction by final judgment? o What does representation cover?
o 1. Attempt against life of testator, spouse, descendant, Compulsory and intestate succession
ascendant See rules on representation for further distinction
o 2. Adultery/concubinage with spouse of testator Does the disinherited parent have right to usufruct or
o 3. Conviction of crime which carries with it penalty of civil administration of the property constituting the legitime?
interdiction o No. The usual rule in the FC that the parents are legal
What is the special requirement for the ground of refusal to give guardians of the childs property does not apply to a
support? disinherited parent.

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 How can disinheritance be lifted? Abandonment has no precise meaning. How do
o Reconciliation between the parties. we understand it here?
o It may be oral, in writing, or by conduct (implied). When the parent/ascendant culpably
o What must be the form of express pardon? neglects the support of the child. Culpably
It must be a pardon expressly and concretely means without justification.
extended to the offender, and not a mere general What about giving consent to adoption, is it
pardon extended to all who have offended him abandonment?
o What is the nature of pardon through conduct? No. It is not a culpable act. It is encouraged
The intent to forgive must be clear. This is a question by law.
of fact. o 2. Inducement by parent for daughters to live a corrupt or
What is the effect of reconciliation? immoral life
o It removes the disinheritance. Re: inducement. What about
o Does he recover legitime? grandchildren/granddaughters? What about
Definitely. The heir recovers his right to the legitime. grandsons?
o Does he receive anything by intestate succession? A liberal interpretation would include all
He recovers the right to the intestate portion, if there these.
is any left. o 3. Attempt against virtue of daughter
o Does it revive testamentary dispositions in a prior will? Attempt against virtue?
Yes, unless it was revoked. This should include grandparents
o What if there is reconciliation before disinheritance is Does this need conviction?
made? No.
The right to disinherit is extinguished What does attempt cover?
All stages of commission.
Unworthiness (1032-1040)
Also not limited to rape: it should cover other
offenses against chastity.
1032 enumerates causes for incapacity to succeed/unworthiness and
Are the grounds exclusive?
there is a close parallel with disinheritance. As with disinheritance,
o Yes.
there is need for final conviction for some, not for others, and one
Do you need actual disinheritance?
requires exoneration.
o No. The law itself excludes the heir.
First ground (actually three):
What is the extent of the disqualification?
o 1. Abandonment of child
This article refers to unworthiness of compulsory o Total, like in disinheritance no compulsory, testamentary,
heirs. Parents who have abandoned their intestate
children. But what if the child is under the Is there representation here?
authority of grandparents, will this apply? o Yes, in the same way as disinheritance.
RFB thinks so. It should probably be How does one set aside unworthiness?
ascendants who abandon descendants. o 1. Written condonation

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 o 2. Execution by offended party of a will with knowledge of the In good faith if he acquired the thing for value (cant
cause of unworthiness be a donation) and without knowledge of the defect of
o Viz: in disinheritance, there can be implied reconciliation the transferors title
Why is the code stricter in unworthiness than disinheritance? o 2. But the co-heirs can recover damages regardless from the
o This is an inconsistency, because there are many grounds disqualified heir
common between both unworthiness and disinheritance. This o 3. But for necessary expenses, regardless of GF or BF, there
happens when if the offended party avails himself of that must be indemnification of the disqualified heir
ground and actually disinherits. What is the nature of the possession of the disqualified heir?
o Ex. X is the son of Y. X attempts to take Ys life. A case for o Possession in BF. Thus, must return the thing, with all its
frustrated parricide was filed, and he was convicted with final accessions, and all the fruits he actually and could have
judgment. It is a common ground in unworthiness and received
disinheritance. So in this case, he is automatically unworthy. What is the prescriptive period to declare incapacity and recover
But Y still disinherits X, which he can do. There is no problem property from the disqualified heir?
here; he is just double dead. But what if X and Y reconcile? o Five years from time of possession
Y admitted X back into his house, and forgave him orally.
Under the rules on disinheritance, reconciliation is enough to Grounds for disinheritance and unworthiness:
set aside the disinheritance. But because there is no written
pardon, the unworthiness persists. D of child/des D of parent/as D of spouse Unworthiness
o How do we resolve this? Attempt against Attempt against Attempt against Attempt against
life3 life life life
Commentators like Tolentino say that it is the rules on
Accusation of Accusation of Accusation of Accusation of
disinheritance that prevail, because disinheritance is crime4 crime crime crime
the express will of the aggrieved party. It should Adultery/conc.5 Adultery/conc. Adultery/conc.
prevail over unworthiness. Force to change Force to change Force to change Force to change
If the facts are the same but Y did not disinherit X, will will will will
unworthiness will apply. So there has to be a written Refuse to Refuse to Refuse to
pardon. support support support
When is capacity or incapacity determined? Maltreatment by
word/deed
o 1. In general, upon time of death of decedent
Dishonorable life
o 2. If institution is subject to a suspensive condition: Crime with civil
Time of decedents death AND interdiction
Happening of the condition Abandoned, Abandoned,
o 3. If judgment is a requisite of unworthiness, time of final induced to induced to
judgment corrupt life, corrupt life,
What if the disqualified heir makes alienations of hereditary attempt v. virtue attempt v. virtue
property and acts of administration?
3
o 1. As to third persons in GF, these are valid Of testator, spouse, ascendants, or descendants need conviction
4
Crime must be 6 years or more and found groundless
5
With testators spouse; Needs conviction
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 Loss of P.A. Loss of P.A. 1. Abandonment, corrupting influence, attempt at
Attempt by one virtue
parent against 2. Prevent making or revocation of will
life of other 3. Falsification or forgery of will
Cause for LS
Prevent from Representation
making will or
revoking one
Definition of representation?
Falsification or
forgery of will o The representative is raised to the place and degree of the
person represented and acquires the rights which the latter
would have if her were living or if he could have inherited
Tips to remember the grounds: When does representation apply?
o A. Common five grounds: o 1. Predecease,
1. Attempt against life o 2. Disinheritance,
2. Accusation of crime o 3. Unworthiness/incapacity
3. Forced to change will o There is no representation in renunciation
4. Adultery/concubinage with testators spouse In what kinds of succession does representation operate?
Except D of spouse, because obviously o 1. Compulsory
he/she cannot screw him or herself o 2. Intestate
5. Refusal to support In what lines does representation obtain?
Except U; its not automatic o For compulsory succession
o B. Grounds for children: involve being a disappointment to their ONLY in the descending direct line.
ascendants: N.B. NEVER in ascending.
1. Maltreatment o For intestate succession
2. Dishonorable life 1. Direct descending line
3. Civil interdiction 2. One instance in collateral line: nephews and nieces
o C. Grounds for ascendants: being bad parents/examples representing brothers and sisters of the deceased
1. Abandonment, corrupting influence, attempt at What is the rule on adopted children?
virtue o Cannot represent nor be represented, because the legal
2. Loss of PA relationship in adoption is strictly between adopter and
3. Attempt against life by one against the other adopted.
o D. Grounds for spouse: just loss of PA and cause for legal What is the rule on representation by illegitimate children? (iron
separation curtain)
1. Loss of PA o Illegitimate child of a legitimate child cannot represent the
2. Cause for legal separation latter.
o E. Grounds for unworthiness: two grounds involving fraud in o Illegitimate child of an illegitimate child can represent the latter.
making of the will + triple-ground o If the child is legitimate, he can always represent his parents.
What is the rule on shares of the succeeding representatives?
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 o Since they are only stepping into the shoes of the person
represented, they could get unequal shares (per stirpes). Ex.
A had 2 children, B had 3. Both A and B predecease their
father, X. The 2 children of A split As share by each and
the 3 children of B split Bs share by 1/3 each.
o When does the rule change from per stirpes to per capita?
The rule changes when ALL, and not just some, of the
children renounce. The grandchildren will inherit per
capita.
o What if all children predecease?
The grandchildren still inherit by representation, and
not per capita.
o How does the rule change for the sole case of
representation in the collateral line?
A, B, and C are brothers and sisters of X. If A and B
predecease X, then the children of A and B inherit per
representation.
But if ALL of A, B, and C predecease (or are
disqualified) the nieces and nephews of X will inherit
per capita. NOTE that this is different because in the
descending line, it will be still succession by
representation.
What if there is renunciation by all collateral
heirs?
Same rule as direct line heirs: the nephews
and nieces will inherit per capita.
N.B. there is no distinction among the kinds of
disqualifications in collateral representation, so as
long as all brothers/sisters die or renounce (no such
thing as disinheritance or unworthiness for brothers
and sisters), the nephews/nieces inherit per capita
o Is it even relevant to talk about disinheritance or
unworthiness for collateral heirs?
Its not. You cannot disinherit a brother or sister
because hes not a compulsory heir.
What are the 3 rules on qualification?
o 1. Representative must be qualified to succeed the decedent
(e.g. C must be qualified to represent A)
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o 2. Representative need not be qualified to succeed the person
represented (e.g. C need not be qualified to succeed B)
o 3. The person represented need not be qualified to succeed
the representative (e.g. B need not be qualified to succeed C)
What is the difference between representation OF and BY a
renouncer?
o Representation OF renouncer does not happen
o Representation BY renouncer can happen.
Illustrate this rule. ABC. C renounced Bs
inheritance. But C can represent B if B predeceases
A, because C is inheriting from A, not B.
Reserva troncal
What is Reserva Troncal?
o See Article 891
Whats the purpose of reserva troncal?
o To keep property or return property to the line of origin.
(Sanchez Roman view)
What are the requisites of RT?
o 1. Person acquires property from ascendant or brother/sister
through gratuitous title
o 2. Dies without legitimate issue
o 3. Inherited by another ascendant through operation of law
o 4. There are relatives within the 3rd degree of consanguinity
from the prepositus belonging to the line from where the
property came
Why is the reserva troncal included in compulsory succession?
o The RT can limit the operation of the legitime
o If that part which is reservable passes as legitime, the law says
that it should pass with no burden. But if it passes as RT, it will
be under the burden of RT because the law says so.
o Its better to take it up as part of compulsory succession
because it can become an encumbrance on the legitime.
What are the two transmissions that have to take place?
o 1. By gratuitous title, from the origin to the prepositus
This can include donation or any kind of succession
o 2. By operation of law, from the prepositus to the reservista
 ONLY compulsory or intestate succession
What if there is only one transmission?
o There is no RT. There have to be two transmissions for there
to be RT.
o Solivio: there was just one transmission from the mother to the
son, by donation. When the son died, he had no ascendants
at all or descendants either. Because there was no other
ascendant, the second transmission could not happen. The
closest relatives are two aunts, who are not ascendants.
Who are the parties in RT?
o But first, two basic rules:
1. All of these parties must be legitimate. If any of the
relationships is illegitimate, there can be no RT.
2. No further inquiry beyond the origin is required
o 1. The origin
Ascendant of prepositus, of any degree, of either line
Or brother/sister of prepositus, either full or half blood
If full blood, Manresa says yes. JBL says
no, because there is no possibility of the
property leaving the line. The ascendant
lines are common.6
o 2. Prepositus
o 3. Reservista
Has to be a different ascendant from the origin
Must he be another ascendant from another line
or can it be same line?
If another line, no question he can be a
reservista. (Ex. F S M)
If same line (Ex. GF grandson F [same
line as grandfather, since he is the son of the
grandfather]), according to JBL, there is no
6
The difference is explained by different theories. JBLs view is that RT is
curative or remedial; if it does not leave the line, no need for RT. Manresa
says that it is preventive, too the RT seeks to prevent the property from
leaving the line as well.
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RT. According to Manresa and Sanchez-
Roman, there is an RT.7
o 4. Reservatarios
They must be related within the third degree, in
relation to the prepositus, and of the line where the
property originally came from
N.B. Of course exclude legitimate
descendants, since if the prepositus had
decendants, there would have been no RT
Who are these possible reservatarios?
Parent, grandparent, great grandparent,
Brother, sister, nephew, nieces, uncles,
aunts
Note: in the situation that JBL seeks to exclude (but
Manresa favors), there is no need to make a
distinction since there is no change in lines.
When do you determine who the reservatarios?
When the reservista dies. They do not have
to exist when the prepositus dies.
If there are several, but of different degrees, how
do you determine who gets what?
Tolentino: Selection is made on preferential
basis, not integral and indiscriminate, as
Scaevola believed.
Apply the rules on intestate succession
(direct over collateral). Another rule of
intestacy that applies is representation of
nephews or nieces of brothers/sisters [so the
brothers/sisters do not exclude
nieces/nephews].
What is the consequence?
Gonzales: The reservista cannot choose, by
will who the reservatarios will be. The law
chooses for her.
7
Again, the source of disagreement is a different in theories on nature and
purpose of RT. RFB leans towards Manresas and Sanchez Romans view.
 Should the reservatario be related to the origin?
A1 and A2 have a child, B1. B1 is married to
B2, and have a child C. A1 donates property
to C. B1 died, when C dies, it goes to B2.
Thus, there is an RT here. When B2 dies,
A2 survives and claims the property as
reservataria (since she is related by 2nd
degree to C, the prepositus).
MANRESA she is a reservataria, she
meets the purpose and requirements
SANCHEZ ROMAN she is not, because
you didnt return it to A1s line and A1s
relatives. A2 is not related .
So what is the majority view?
The reservatarios must be related by blood
to the origin.
This is not yet established by jurisprudence,
but this is a good view point.
What is the nature of the right of the reservista? (Edroso)
o 1. Right of ownership
o 2. Subject to the resolutory condition that there will be
reservatarios present upon the reservistas death
o 3. The right is alienable, subject to the same resolutory
condition
4. The right of ownership is registrable
What is the right of the reservatarios? (Sienes)
o 1. Right of expectancy
o 2. Subject to a suspensive condition, that there will be
reservatarios present upon the reservistas death
o 3. The right is alienable, subject to the same suspensive
condition
o 4. The right of expectancy is registrable
o Dont these two rights of registration conflict with each
other?
No. Theres only one title. The right of the reservista
is annotated as ownership; the right of the
reservatario is annotated as an encumbrance.
89
What kind of property can be reserved?
o Any type
o What is the effect of substitution (e.g. the prepositus sells
the property)?
No RT because it must be the very same property
that goes through the two transmissions for RT to
arise
What is the nature of the reserved property when the reservista
dies?
o Its not part of his estate upon death. It passes by strict
operation of law to the reservatarios.
What are the rights and obligations of the reservatarios and
reservistas?
o Reservista prepares inventory
o Right of reservatarios to annotate in case the reservista
alienates (within 90 days from acceptance by the reservista)
o Appraise the movables
o Secure by means of mortgage
o Registration is demandable Sumaya
What are the causes for extinguishment of RT?
o 1. Death of reservista (causes it to transfer)
o 2. Death of all the reservatarios
o 3. Renunciation by all the reservatarios, and none is born
subsequently
o 4. Total fortuitous loss of the property
o 5. Merger or confusion of rights
o 6. Prescription or adverse possession
TESTAMENTARY SUCCESSION
In general
What is the nature of making of a will?
o It is a strictly personal act. It cannot be delegated.
o The mechanical aspect is delegable but not the disposing
power.
o What cannot be delegated?
1. Designation of heirs, legatees, devisees
 2. Duration or efficacy of the designation Putting it positively, one must be a natural person 18
3. Determination of the portions they get years old or above and of sound mind.
o What is the exception to non-delegation? What must you know to establish a sound mind?
The testator must determine: a) property or amount of 1. Character of estate
money given, and b) the class or cause to be 2. Proper objects of your bounty
benefited. 3. Nature of the testamentary act
And then he may delegate to a third person: a) the Is there a presumption?
designation of persons, institutions, establishments Yes, a rebuttable presumption of
within the class or cause, or b) manner of distribution testamentary capacity
Testamentary succession can never impair the legitime When is there no presumption?
What is a will? o 1. If the testator, 1 month or less
o An act instrument whereby a person is permitted, with the before the making of the will, was
formalities prescribed by law, to control to a certain degree the publicly known to be of unsound
disposition of his estate to take effect after his death mind
What are the two kinds of wills? o 2. When the testator has been
o Holographic and attested/notarial placed under guardianship for
What are the three common requisites for both attested and insanity
holographic wills (first two, textual; one is non-textual)? What is the presumption then?
o 1. It must be in writing o There is a presumption of insanity,
o 2. Executed in a language or dialect understood by the testator not just a presumption of sanity.
Is this rule mandatory? Again, this is rebuttable
Definitely. Where must the testator sign?
So can the will be translated to the testator? o 1. He must sign the will
No. It must be written in a language known o 2. Also every page at the left hand margin, except the last.
to him. Do not confuse this with the o How can the testator usually sign?
attestation clause, which can be translated. He writes his name
Must the will state it was written in a language o What are the other recognized ways?
known to the testator? Affixing thumbmark (Matias v. Salud)
No. It can be shown by extraneous Is the thumbmark for the testator always a valid
evidence/evidence aliunde. way to sign the will?
o 3. Testamentary capacity Yes. Under all circumstances, even if not
Who can make a will? infirm or ill.
Natural person (juridical person cannot make Is a cross allowed (Garcia v. Lacuesta)?
a will) No, in general.
Who are the two classes of disqualified persons? THE EXCEPTION: If that is his usual way of
Those below 18 years old signing.
Those of unsound mind

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 o There are two ways of interpreting the word the end,
where the testators signature should be. What are these?
1. The physical end, where the writing stops
2. The logical end, if there are non-dispositive
portions written in the will
o Must the signing always be at the left margin?
No. It can be any margin.
Why is there no requirement for marginal signing
on the last page?
Because it would be superfluous. He also
signs at the end.
The testator must sign in the presence of the witnesses. The
witnesses must also sign in the presence of the testator and of one
another. What does the law mean by in the presence?
o Nera: The requirement of presence does not mandate that the
person must actually see the other party signing; what is
required is that he could have seen, by casting his eyes in the
proper direction (without changing his physical position).
One of the options given to the testator is that he/she may ask
someone else to sign for him, provided some conditions are
present (1. Express direction; 2. In his presence).
o Should the testator be physically prevented from signing
or have any particular reason to get an agent?
No.
o What should the agent write?
He must write the testators name
It must be in the agents own handwriting
o Must the agent write his own name?
It is not required.
Must the attestation clause be signed?
o Yes.
o By whom?
The witnesses.
o What about the testator?
No. The attestation clause is purely an affair of the
witnesses.
o Where should the witnesses sign the attestation?
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At the end of the attestation clause.
Can they sign at the margin or elsewhere
(beside)?
No. The attestation clause is deemed
unsigned.
o What must the attestation clause state?
1. Number of pages of the will
2. Fact that the testator signed the will and all the
pages thereof, or caused some other person to write
his name under his express direction, and in the
presence of the instrumental witnesses
3. That the witnesses signed the will and all the pages
thereof in the presence of the testator and of one
another
Must the attested will bear a date?
o No.
o Why?
The certification in the acknowledgement will be dated
anyway.
o Who certifies?
The notary public as required by the notarial law.
o Viz: should a holographic will be dated?
Yes.
What if the notary public acted outside his notarial jurisdiction?
o It is void and tantamount to not being notarized.
If the will was notarized by one of the witnesses, who was also a
notary public, will this make the will void?
o No, if there are three other witnesses apart from the notary.
o If there are less than three witnesses including him?
The will is void. There is a failure to meet the
required number of witnesses.
o But can a notary public be a witness?
Definitely. But the notary public cannot be counted as
a witness, and the witness cannot be the notary public
too. For the latter, you are undermining the notary
publics impartiality.
What is the requirement if the testator is blind?
 o Two readings by the notary public and by one of the attesting
witnesses.
o Is this mandatory?
Yes. Non compliance makes the will void.
Should this mandatory nature extend to illiterate
deaf mutes?
Yes.
Of course, the two persons need not be the
notary and one witness; it can be whoever
can practicably communicate the wills
contents to him
o Must the will or attestation clause mention compliance
with this mandatory requirement?
No. It can be established by extrinsic evidence.
o Garcia: The lawyer who assisted the testator read the will.
It was read only once. The lawyer, however, read it aloud
in the presence of the attesting witnesses and the notary
public, who had their own copies of the will. The testator
was also listening. Art. 808 was hence not complied with.
But is this valid?
This is valid, because there was substantial
compliance. The intent of the law was achieved to
prevent fraud upon the testator.
o Alvarado: Invalid because it was done by the lawyer who
drafted the will who read it aloud, so it wasnt even one of the
two parties enumerated. And he read it out loud only once.
Art 809 is the provision on substantial compliance with respect to the
attestation clause, which needs three things (# of pages, fact that the
testator signed at the end in the presence of the witnesses, and that the
witnesses did the same in the presence of the testator and of one
another). How strict must this be in light of Art. 809?
o In the code itself, there is no clear rule about how liberal
interpretation could be.
o Caneda: defect was failure to state that the witnesses signed
in the presence of the testator and of one another. HELD:
This was a fatal defect. Adopting JBL Reyess suggested
standard, it could not be remedied by visually examining the
will.
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o Azuela: Deficiency was failure of the clause to state the
number of pages, which was left blank. HELD: valid omission,
because it can be supplied by a visual examination of the will.
Requirements of a Holographic will?
o Completely written, dated, and signed by the testator
o Roxas v. de Jesus: Feb/61 was held as a sufficient date this
is a problematic decision. Fortunately, there was no other will
also made in Feb/61, which could have possibly repealed it. In
a very liberal decision, it was upheld.
o Where should the date be?
There was no mention where it should be. It could be
in the body.
o Can you sign by a thumbmark, as in an attested will?
Seems unlikely. It must be written by the hand not
a thumbmark. Though there is no jurisprudence on
this.
813-4 dispositions after the signature
o Some commentators say that this implies that the signature
must be at the bottom of the holographic will.
o If there is only one additional disposition, it must be written and
signed by the testator.
o If there are several, what is the rule?
1. Dated and signed
2. Or each additional disposition may be signed,
provided the last one is dated and signed
What is required for insertions, cancellations, erasures, or
alterations in holographic wills?
o It must be authenticated by the testator through his signature
o Kalaw v. Relova: Cancellation of the name of the original heir
and writing above it of the name of another heir invalid
because it was not validated, because it was not signed.
o But the court weirdly held that the cancellation was valid! But it
was not signed. This is an odd decision, because it had an
internal contradiction.
Are joint wills allowed?
o No.
 o But for aliens, if they execute their will abroad and their
national law allows it, then its valid.
o If aliens execute it locally, there are two views: its either valid
because national law allows it, or it is void due to public policy.
o If a Filipino and alien execute a joint will, its always void as to
the Filipino.
What are the requisites to become a witness to a will executed in
805?
o 1. Of sound mind
o 2. At least 18 years old
o 3. Not blind, deaf, dumb
o 4. Able to read and write
o 5. Domiciled in the Philippines
o 6. Not convicted for falsification of document, perjury, or false
testimony
o What do these qualifications establish?
Competence only, but not credibility per se
o When is competence of the witnesses needed?
During attestation only. If they become incompetent
after, it has no effect.
When is a witness to a will disqualified to succeed?
o When he is a witness to a will where something is given to him,
his spouse, parent, or child
o What is the effect?
The will is valid but the witness cant succeed to the
will
o How many witnesses are needed for this provision to
apply?
Only three witnesses. If there are at least three other
competent witnesses, there is no disqualification
o What kind of succession is affected?
Only the testamentary dispositions, but not legitime or
intestate share because this is not affected by the
witnessing (i.e. if the witness is a son of the testator)
Codicils and incorporation by reference (825 and 827)
o Article 825 defines a codicil. This is exam material. It assumes
the existence of a prior will. You cannot have a codicil without
a prior will. It can explain or alter the prior will.
93
o Sometimes its hard to determine whether it is a codicil or a
second will.
If it makes an independent disposition, it is a second
will.
If it alters, modifies, changes, it is a codicil.
o But honestly, this distinction is academic, because the
requirements of a codicil and a will are just the same.
o 827 An incorporated document. It is attached to a will and
is intended to explain. It cannot make a testamentary
disposition because otherwise, it has to comply with the
requisites and form of a will.
Requisites?
1. It must predate the will
2. It must be signed on every page by the
testator and witnesses, except if it is
voluminous
3. It must be clearly referred to in the will
4. It must be referred to in probate as that
document
So since it requires witnesses, can you not have
an incorporated document with holographic wills?
Some say you cannot because there are no
witnesses. RFB says that you must interpret
it liberally, and since there are no witnesses,
then it just means its just the testator that
signs.
Two modes of testamentary succession:
o 1. Institution of an heir
o 2. Institution of devisee or legatee
What is the permissible form of instituting a successor, whether
heir, devisee, or legatee?
o Only thing required is that the identity of the successor is
adequately determined in the will. No need to mention by
name, as long as the successors identity is determinable.
I institute my brothers and sisters to of the share of my estate.
What does this mean?
 o Siblings, whether legitimate, illegitimate, or half, inherit in equal TYPE OF CIRCUMSTANCES EFFECT
shares. DISPOSITION
o This is different from intestacy, where whole, half, and General rule Giving a thing in legacy Decedent just gives what his
illegitimate siblings inherit in 2:1:0 ratio. (You cannot inherit or devise interest covers
He gives more than he The estate will attempt to
from your illegitimate sibiling)
owns acquire it. Failing to do so, it
What is the rule on statement of false causes on a will? gives the monetary
o In general, it is deemed not written. equivalent.
o Exception requisites: He gives less than he He gives just that
1. Cause must be false owns
2. It must be shown to be false Legacy or He can give an order to The estate will attempt to
3. It must appear on the face of the will that the devise of acquire it acquire it. Failing to do so, it
something gives the monetary
testator would not have made the institution had he
belonging to equivalent.
known of the falsity of the cause another
If heirs are given different fractions each, and the total is less than Testator thought he Void disposition, except if
the free portion, what happens? (852/3) owned the thing subsequent to the disposition,
o The rest of the free portion goes into intestacy. the testator acquired the thing
o But what if it is shown that the testator intended to gratuitously or onerously
dispose the entire free portion? He knew he did not own Implied order to acquire
it, but did not give an
If the disposition is less than the portion, you increase
order to acquire
proportionately. If more, you decrease Thing already If it already belongs to Void disposition. Subsequent
proportionately. belongs to the the devisee/legatee alienation by the D/L does not
devisee/legatee validate it, unless it was in
924-959 Legacies and devises (D/L) favor of the testator.
Testator thought he Void disposition; the testator
Some provisions are inaccurate. It is the estate that is liable for owned the thing, and was still in error
legacies and devises, not compulsory heirs as 925 says. You cannot then the D/L acquired
charge the compulsory heir for the legacies and devises. Exception: the thing
indirect legacy Testator knew it did not The estate pays the value
belong to him, and then
What is the liability of two or more heirs who take possession of the D/L acquired it
the estate? onerously
o Solidarily liable for loss or destruction of the thing devised or Testator knew it did not There is nothing left to be
bequeathed, even if only one is negligent belong to him, and then done
Who is liable for eviction? the D/L acquired it
o In general, the estate onerously
Testator owned it when Void disposition (because any
o For subsidiary legacy or devise the heir, legatee, or devisee
he made the will, but subsequent disposition, even
charged the D/L acquired the to the D/L himself nullifies the
thing from him after disposition)
929-937 outline: D/L directing In general The estate pays for it
94
the estate to o It exists if one provides that among several things mentioned
remove only one is given.
encumbrance o Who has right of choice?
from anothers 1. In general, the estate, acting through the E/A
property
2. In a subsidiary legacy or devise, the heir, legatee,
Pledge/mortgage The estate pays for it first
Any other kind of Passes with the things or devise charged
encumbrance like If he dies, his heirs choose
easement 3. If so provided, the legatee or devisee
Legacy of Giving to the legatee Effective as to the remaining o What is the nature of the choice?
credit or the debt owed to the debt owned upon the testator Irrevocable
remission testator by another when he dies What is the rule on validity of generic legacies/devises?
person
o 1. Generic legacy valid even if no such movables exist in the
If the testator sues that Ipso facto revokes the legacy.
other person Mere filing in court already testators estate upon his death (estate just acquires it)
revokes the disposition; o 2. Generic devise valid only if there exists such an
however, extrajudicial immovable in his estate upon death
demand does not revoke the o Who chooses?
disposition. The executor or administrator
Generic disposition of Covers debts existing when Except if the choice is expressly given to someone
debts the disposition was made.
else
Ex. X owed Y 2 debts in o What is the limitation?
1999. Y, in his will, gave Z Neither superior nor inferior in quality
the debts X owed Y. X o What is the nature of the choice?
owed Y 3 more debts in Irrevocable
2001. Y died. What debts Legacy of education, support, or periodical pension:
transfer?
o A. Education
Just the 2 existing when the
will was made. Lasts until age of majority or completion of the course,
whichever comes later
Amount as fixed by the testator; secondarily, that
which is proper, depending on social standing or
What is the treatment of a legacy/devise to a creditor? value of disposable portion of the estate
o It will be treated like any other legacy or devise and will not be o B. Support
imputed to the debt. Lasts until the legatees lifetime, unless the testator
o What is the exception? provides otherwise
Imputed to the debt if the testator provides so. If the Amount as fixed by the testator; secondarily, that
debt exceeds the legacy/devise, the remainder may which the testator used to give when he was alive
be demanded as an obligation of the estate unless disproportionate to the estate value; tertiarily,
When are there alternative legacies or devises? social standing or value of the disposable portion of
the estate
95
 o C. Legacy of a periodical pension
Demandable upon the testators death, and
succeeding ones at the beginning of the period
without duty to reimburse should the legatee die
before the lapse of the period
What is the order in 950 for reduction? (i.e. what is the order of
payment of legacies/devises if there is not enough)
o 1. Remuneratory
o 2. Preferred
o 3. Legacy for support
o 4. Education
o 5. Specific thing
o 6. All other, pro rata
What is the rule in 911?
o 1. Reduce pro rata non-preferred legacies and devises
o 2. Reduce pro rata preferred legacies and devises
When do you use which?
o If the reason for reduction is impairment of legitimes, use Rule
in 911 (non-preferred, then preferred).
o If the reason for reduction is something else, use Rule 950.
o What other reasons could exist?
A testator has no compulsory heirs, but he gave away
too many legacies and devises, by sheer
mathematical necessity. Rule 950 is followed.
Or maybe the testator already covered for the
compulsory heirs legitimes through donations inter
vivos, so the remaining parts are all free portion.
What is the rule on acceptance and repudiation of legacies and
devises?
o Acceptance may be total or partial
o Except: if the legacy/devise is partly onerous and partly
gratuitous, the recipient cannot accept the gratuitous part and
renounce the onerous part
Other combinations are allowed
In case of repudiation or incapacity of the legatee/devisee, what
are the applicable rules (in order)?
o 1. Substitution
96
o 2. Accretion
o 3. Intestacy
When is a legacy or devise without effect?
o 1. Transformation
Converted the thing
o 2. Alienation
Either onerous or gratuitous, and even if the thing
reverts to the testator
Exceptions?
1. Reversion was caused by annulment of
alienation because there was vitiated
consent
2. Reversion due to redemption in a pacto de
retro sale
o 3. Total loss before the testators death
Rules common to heirs, legatees, and devisees
Capacity to succeed:
o In fact, the basic rules are common to all kinds of succession
(Alive + qualified to succeed at the time succession opens.
There is no exception here.)
Art 1025 The heir, legatee, or devisee must be living when the
testator dies. There is NO exception, contrary to what this provision
suggests.
o Representation is not an exception because the representative
must at least be conceived already.
o For juridical persons, it must exist juridically when the testator
dies.
1027 First 5 paragraphs are important because they enumerate
instances where one is incapacitated to succeed in testamentary
succession. It does not apply to other kinds of succession.
o 1. Priest who heard confession of testator during last illness or
minister of gospel extending spiritual aid in this period.
Requisites:
A. Will executed during last illness
B. Spiritual ministration extended during last illness
 C. Will executed during or after the spiritual Predecease, incapacity, renouncement
ministration o How do you make it?
o 2. Relatives of priest/minister within 4th degree or his institution Enumerate all the three causes
o 3. Guardian, from ward before final accounts of guardianship o Can you restrict vulgar to 1 or 2 grounds?
approved Yes. Just specify.
Except if guardian is A/D/sibling/spouse What are the requisites for fideicomissary?
o 4. Attesting witness to the execution of a will, spouse, parents, o 1. First heir takes the inheritance
children, or anyone claiming under that witness, spouse, o 2. Second heir takes the thing after tenure of the first heir
parent, or children o 3. The second heir must be one degree from the first heir
Put in the exception, where there are three other What does first degree mean?
competent witnesses to the will, under here too It refers to relationship.
o 5. Physician or health officer who took care of the testator o 4. The first heir must have absolute obligation to preserve and
during last illness transmit
1028 only applies to testamentary succession: extend to prohibited o 5. Both heirs are alive and capacitated at the death of the
donations in 739 testator
What if the disposition is for prayers and pious works for the What is the tenure of the first heir?
benefit of his soul and no specifications are given? o What is specified by the testator
o to the church/denomination of testator o If not specified, it is the lifetime of the testator
o to the State Does the first heir have a right to alienate?
1032 disqualifications (unworthiness) these are general; these bar the o NO. This rule is unlike the reserva troncal.
DQ heir from compulsory, testamentary, or intestate succession
Conditions, terms, modes
Substitutions (857-870)
These all burdens in succession, especially since the testator has free
For what kind of succession does this apply? disposal of his property.
o Only testamentary succession. You cannot have substitution What are the types of conditions?
in compulsory and intestate succession. o Suspensive
What are the two kinds of substitutions? o Resolutory
o 1. Vulgar What are the special rules on suspensive conditions?
o 2. Fideicomissary o An impossible condition (873) considered not imposed. The
o The code seems to enumerate two more: disposition is valid and becomes pure.
1. Reciprocal o What about condition not to contract first marriage?
2. Compendious ALWAYS considered not written
(Several heirs one substitute) o What about subsequent marriages?
but these actually are just variations. They go into Generally void, unless imposed by the deceased
mode. spouse or the latters ascendants/descendants
What is substitution vulgar?
o Instituting an heir in default of the one instituted
97
 o BUT what is allowed is to impose a usufruct or some personal
prestation as long as one remains unmarried or a widow is
valid.
o A disposition on condition that the heir/legatee/devisee
must also in turn make a disposition in favor of the
testator or another person?
The entire disposition is void. Take note of this. The
purpose is to prevent the whole system from being
corrupt.
This is also called the disposition captatoria
When does a suspensive condition take effect?
o If both conditions exist: 1) the heir is alive when the testator
dies, 2) the heir is alive when the condition happens
What happens while waiting for the suspensive condition to
happen?
o Place the property under administration of
executor/administrator
What is the difference between a term and condition?
o A term is certain, a condition is not.
What are the two types of terms?
o Suspensive term
o Resolutory term
When does an institution based on a term vest?
o A disposition with a term vests upon the death of the testator,
unlike a conditional disposition (esp. suspensive) which only
vests upon the happening of the condition. Since a term is
certain to happen, it follows the general rule in 777 that it vests
upon death.
So must the heir be alive when the term arrives?
No. Just when the testator dies.
So he can transfer his vested right upon his
own successors.
What do you do as you wait for a suspensive term to arrive?
o Governed by 885. While you wait for the term to arrive, you
give it to the legal heirs (intestate heirs).
For resolutory terms?
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o After the testators death, you give it to the instituted heirs, and
when the term arrives, they turn it over to the legal heirs.
A condition suspends, but not obligates. A term obligates, but does not
suspend. A term does not delay the efficacy of the disposition, but it
places an obligation upon the instituted heir (even suspensive, since the
instituted heirs have an obligation to turn the property over to the
instituted heir when the term arrives).
What is a mode?
o You have to do something alongside the disposition.
What if the heir fails or refuses to perform the act required?
o The beneficiary can ask for the performance of the obligation.
o The legal heirs can ask for the forfeiture of the disposition.
How must a mode be stated?
o It must be a clear command, not just a request.
When is a caucion muciana needed?
o 1. In a potestative suspensive condition (879)
It is under the sole control of the heir (ex. I give X my
house and lot, as long as he doesnt use it as a drug
den. In order to guarantee that the legal heirs, who
will then be entitled to the property upon violation of
the condition, then X has to put up a bond the
caucion muciana).
o 2. Resolutory term, before the term arrives
The legal heirs have the right to enjoin disposition of
the property, but they have to put up a caucion
muciana
o 3. In case of a mode (882)
As security for compliance with the testators wishes
Accretion (1015-23)
To which kinds of succession does it apply?
o Applies only to testamentary and intestate succession.
Requisites?
o 1. Two or more heirs, legatees, devisees, called to the same
inheritance or portion thereof pro indiviso
What does pro indiviso here mean?
 Some commentators say they must have
equal shares (like Tolentino), but this is
wrong. Theres no requirement of equality,
just as long as they have aliquot shares.
This means even the shares can be unequal.
There is no accretion is the shares are
earmarked.
o 2. One or more must predecease the testator, become
incapacitated, or renounce the inheritance.
X gives his BPI account to A, Citibank account to B, PNB to C. C
predeceases. Is there accretion?
o No. The shares are earmarked.
X gives of his estate to A, 1/3 to B, 1/6 to C. C predeceases. Is
there accretion?
o Yes, because they got aliquot shares. A and B receive Cs
shares according to the proportion they received their shares.
In testamentary disposition, what wins out, accretion or
substitution?
o Substitution
In intestate disposition, what wins out, accretion or
representation?
o Representation, when proper
o So if the intestate decedent has three brothers (X, Y, and Z)
and X has X1 and X2, if X dies, representation applies. If X
has no children and X dies, accretion applies.
Revocation of wills (828-834)
Republication and revival
There is no such thing as an irrevocable will. It only becomes
irrevocable when the testator dies.
What are the three ways of revoking a will, whether total or partial?
o 1. By operation of law
Legal separation (offending party is instituted as a
beneficiary in a will)
Preterition
Where the testator disposes property that is given as
legacy or devise in a will (the legacy/devise is
revoked)
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o 2. Subsequent will/codicil
1. The will must comply with the requirements of wills
2. Testamentary capacity
3. Either an express revocatory clause or
incompatibility in the dispositions
4. The will must be admitted to probate
o 3. Physical destruction
Either by the testator personally or in the case of
attested wills, it can be done by his agent acting
under his express direction and in his presence
Molo: There must be both a) corpus (actual
destruction), and b) animus (intent)
What if a will is revoked based on a false cause?
o The revocation is null and void.
o What are the requisites for this situation to apply?
1. Cause must be concrete, factual, and not purely
subjective
2. It must be false
3. The testator must not know of its falsity
4. It must appear in the will that the testator is
revoking because of the cause which is false
What if the revocation was unauthorized?
o If it is an attested will, it can be proved, if there are people
available who can attest to the contents of the will
o If it is a holographic will, too bad if no copies survive. Theres
no way of probating it.
835 and 836 are inconsistent with each other.
Republication/revival is giving efficacy to a will which somehow lost its
efficacy
o Ex. it has been revoked, and now you want to revive it.
If it is defective as to form?
o You have to reproduce it in the form of a valid will or codicil.
o You cannot revive it by reference.
What if it is inoperative by some other reason other than form?
o You can merely revive it by reference.
Executors and administrators (1058-1060) Except there is a photocopy that survives (Rodella v.
Aranza)
What if the decedent dies with a will? With no will? o 2. If the holographic will is contested as probate, three
o It has to be probated, and if the will has appointed someone to witnesses who can identify the will and attest to its validity
take care of the estate, then he becomes the executor. must be presented.
o If there is none appointed or no will, then the court appoints an Is this mandatory?
administrator. The leading case of Azaola says that it is
only directory
Probate Godoy: Says that it is mandatory, although it
is criticized
Two aspects of validity of a will?
When is it deemed contested?
o Formal (Extrinsic validity)
If it is challenged as a forgery. If it is
including capacity of witnesses
admitted as genuine but admitted on other
o Substantive (intrinsic validity)
grounds such as mistake, fraud, or duress, it
Ex. impairment of legitimes, preterition, capacity of
is not a contest under 811 and you do not
heirs, legality or possibility of conditions
need three witnesses.
What is probate?
o Mandatory proceeding to determine only the formal validity of Conflicts rules
the will
o There is no substitute for probate. Substantive validity?
o Guevarra v. Guevarra, Seangio v. Reyes, Heirs of Lasam: o Time law as of time of death
All lay down the rule that probate is mandatory. o Place law of citizenship of decedent
Probate is determinative or conclusive of the validity and due execution Formal validity?
of the will. o There are always five choices:
How does it become final? o 1. Law of citizenship
o Just like any decision of court. o 2. Philippine law
o Once it becomes final, it becomes res judicata it becomes o 3. Law of residence
unassailable as to matters of form of the will. o 4. Law of place of execution
o Even if the decision is wrong. o 5. Law of domicile
What cannot be assailed after finality of probate decree?
o 1. Testamentary capacity INTESTATE SUCCESSION
o 2. That he acted freely
o 3. Followed all the requirements of the will, as to witnesses, In general
etc.
o 4. It is genuine and not forged What is intestate succession?
For probate of holographic wills, what must one remember? o Takes place by operation of law in default of a valid will
o 1. You have to present the will itself (Gan v. Yap) Look at the instances in 960 where total or partial intestacy occur:
o 1. No will, void will, or ineffectual will

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 o 2. Does not dispose of all property (partial intestacy) o Is there representation if the collateral line?
o 3. Suspensive condition did not occur, predecease, repudiation Nephews and nieces exclude predeceased or
And there is no substitution (testate) unworthy brothers/sisters of decedent
And there is no accretion (testate/intestate) What is the nature of the spouse?
o 4. Heir is incapacitated/unworthy o Concurs with both direct and collateral (up to third degree)
o 5. Resolutory condition happens What is the rule of proximity of degree?
o 6. Resolutory term expires o Nearer exclude the more remote
o 7. Preterition o What is the exception?
What are the principles of intestacy? Representation (see above direct descending and
o Exclusion and concurrence, just like compulsory succession nephews/nieces only for collateral)
What is the rule of relationship? What is rule of equality of relatives of the same degree?
o The intestate heir must be related to the decedent o Relatives of equal degree inherit equally
o Jus familiae (ascendant/descendant) o Exceptions?
o Jus sanguinis (collaterals up to fifth degree) 1. Preference of lines
o Jus xxx (husband and wife) ex. legitimate direct descendant of 1 degree
o Jus imperii (decedent and State) excludes legitimate direct ascendant of 1
Jus familiae and sanguinis requires blood relationship. What is degree
the exception? 2. In collateral relationships, full blood and half-blood
o Legally adopted children and legally adoptive parent distinction
What are the limits? Siblings
o Going down, there is no limit Nephews and nieces
o Going up, there is no limit 3. Representation
o Collateral line, the limit is up to the fifth degree See the combinations in the book.
How do you count degrees? Can the adopted succeed to his biological parents?
o For direct line, count degrees o This is the same problem as in compulsory succession so see
o For collaterals, count up to the nearest ancestor the discussion above.
2nd brothers, sisters o But for the purposes of the Bar, the answer is yes, because the
3rd nephews, nieces, uncles, aunts provision in the FC pertaining to succession by adoptee from
And so on biological parents is within the coverage.
Rule of preference of lines? Combinations 2 and 4 in the book are dangerous, so take note that
o Direct excludes collaterals here (children and illegitimate children) each legitimate child gets
o As a general rule, descending excludes ascending double what the illegitimate children will get. What is the usual
Except: legitimate ascendants not excluded by pitfall?
illegitimate descendants o If you observe the 2:1 ratio intestacy, remember that you still
o Is there representation in the direct line? have the legitimes. You might end up impairing the legitime of
Yes, only in the descending the legitimate children, which cannot be impaired. The
o Collateral nearer excludes more remote

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 illegitimate children can suffer impairment if there are a lot of
them, but never the legitimate children.
o This problem doesnt apply in any other instance apart from
these two cases.
What is the successional bar?
o Art. 992. An illegitimate child has no right to inherit ab intestato
from the legitimate children and relatives of his father or
mother; nor shall such children or relatives inherit in the same
manner from the illegitimate child.
o Compare:
In representation, an IC cannot represent his
legitimate parent, IC can represent IP, and LC can
represent either LP or IP.
Here, in inheritance, an IC cannot inherit per se from
the legitimate relatives of his parents and vice versa.
Situations to take note of:
o In case of the concurrence of the SS and 1 LC, the SS will get
, and the LC gets .
o SS, brothers, sisters, nephews, nieces SS gets , brothers
sisters nephews nieces get .
According to the rules of division.
o Nephews and nieces concurring with aunts/uncles of the
decedent nephews and nieces exclude the aunts/uncles
even if they are in the same degree.
What is the difference in rules for brothers/sisters in testate and
intestate succession?
o TESTACY: Difference in the rule of brothers and sisters if
they are instituted indiscriminately, they receive equal shares
whether full or half blood.
o INTESTACY: Take note of the 2:1 ratio [for full and half blood]
and the successional bar.
Is partial intestacy possible?
o Yes, there is a will but it doesnt dispose of the entire free
portion.
Give an example of the difference between total and partial
intestacy.
o Full intestacy:
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Legitimes to LC, to SS
Thus, to LC, to SS (entire free portion went to
the SS)
o Partial intestacy: Ex. I gave 1/8 of my estate to Ateneo.
Note that the legitimes are to LC, to SS.
to legitimate children, 1/8 to Ateneo, 3/8 to spouse
Note: the entire remaining free portion of 1/8 went to
the SS.
Acceptance and repudiation of the inheritance (1041-57)
Acceptance and repudiation are always free acts. A person may always
accept or reject, whether compulsory, testatamentary, intestate.
Exception: accion pauliana
o If there are creditors and the decedent does not have enough
property to pay the creditors, the creditors can compel the heir
to accept to the extent of the credit
What is the difference in form?
o Laxer rules in acceptance, and stricter rules in renunciation,
because it is prejudicial
There is need for judicial approval for renunciation of
incapacitated person. For acceptance, no need.
o Acceptance there can be express acceptance in writing, oral,
or there can be tacit acceptance (by doing nothing).
o Renunciation you have to do it in writing or by judicial
approval.
What is the retroactivity rule?
o Acceptance as if the property passed at the moment of death
(Art 777)
o Renunciation as if the renouncer never owned or possessed
the property (the substitute, co-heir, or intestate heir receives it
at the moment of death)
o Conditional institutions retroactivity still applies even if the
condition happens later
What is the rule for public official establishments?
o Can neither accept nor repudiate an inheritance without the
approval of the government
When is there deemed acceptance?
 o 1. Heir disposes onerously or gratuitously his right to one or o 2. Imputation donations inter vivos by decedent are charged
more co-heirs or stranger either to the donees legitime or against the disposable portion
o 2. Heir renounces it gratuitously to one or more co-heirs o 3. Return donations inter vivos is found to be inofficious and
o 3. Heir renounces it onerously to all co-heirs indiscriminately the inofficious value is actually returned to the estate to satisfy
What about a gratuitous disposition to all co-heirs legitimes
indiscriminately? N.B. if property is to be returned, following Art. 777,
This is a true renunciation and thus there is the fruits will pertain to the proper person (ex. entirely
no acceptance inofficious donation fruits go to compulsory heir;
What about a gratuitous disposition to all co-heirs partially inofficious donation some to compulsory
but in different portions? heir and some to donee)
Still a conveyance and is thus tacit For return, what expenses must be reimbursed by
acceptance the final recipient?
What if an heir dies without have accepted or repudiated the Necessary expenses full extent
inheritance? Useful expenses full extent as long as
o The right passes on to his heirs improvement still exists
What if a renouncing person is both a testamentary and interstate You have to collate:
heir? o 1. Inventory
o A. If he renounces the testamentary disposition he impliedly What results are his gross assets
renounces the intestate share too o 2. Deduct debts
o B. If he renounces as intestate heir without knowledge of being This is where the Santibanez and Hemady doctrines
a testamentary heir, he can still accept the disposition come in. The estate, after all pays money debts, prior
o N.B. this doesnt affect compulsory succession to the heirs receiving their shares.
What is the nature of acceptance/renunciation? What results: available assets
o Final, except: o 3. Add the value of donations inter vivos
1. Vitiated consent Net hereditary estate results.
2. Appearance of an unknown will What are not included?
Support, education, medical attendance,
Collation and partition customary gifts, etc. (since these are
impractical to calculate)
What is the effect upon death of the decedent? What about expenses for professional,
o The immediate effect of death is the vesting of successional vocational, or other career expenses of
rights. But at this point, nobody knows what part of the estate the child, as given by the parents?
goes to whom. o Charged against the free portion,
o The heirs co-own the mass of properties. unless:
What are the three ways by which collation is understood? 1. Provided otherwise
o 1. Computation simple accounting process where value of 2. Inofficious
donation inter vivos is added to the available assets

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 o If imputable (the two above), deduct
what the parents would have spent
on the child had he stayed home
and loafed
What is the measure of the value of the property
donated?
Value when the donation was made, since
this was when it was perfected. Any
subsequent increase inures to the benefit of
the donee.
What if the recipients of the donations are the
compulsory heirs?
You impute against their legitimes what they
have received as donations inter vivos.
Exceptions?
o 1. Donor provides otherwise
o 2. The donee renounces the
inheritance, because he gives up
the status as compulsory heir
What if the donation to the compulsory
heir exceeds his legitime?
o The excess is taken out of the free
portion
What if the recipients of the donations are
strangers?
You impute it against the free portion.
What if the free portion can accommodate all
those donations?
You take it all out from there
What is the special rule for grandchildren
inheriting by representation, concurrently with
their uncles/aunts and other grandchildren?
Compute both: a) what their parents would
have been obliged to collate and b) whatever
they themselves are obliged to collate.
Does collation mean you have to physically obtain the assets?
o No. Collating means a purely mathematical computation.
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If he died with a will and the free portion cannot accommodate all
the dispositions?
o Reduce testamentary dispositions
o First to be reduced are the non preferred testamentary
dispositions
After reducing them to zero, what if the legitimes are still
impaired?
o Reduce the donations to strangers or donations to compulsory
heirs considered strangers
o How do you reduce?
NOT pro rata but in reverse order. The latest
donation gets reduced first.
o N.B. contrast this with legacies and devises, which are
reduced pro rata (non-preferred, then preferred)
Afterwards, the heirs can agree on a partition or go to settlement
proceedings. Partition here is the physical division of the estate.
How is partition done?
o 1. Extrajudicial agreement by the heirs or
o 2. Judicial order in settlement proceedings
What are the kinds of partition?
o 1. Actual physical division of the thing
o 2. Constructive any act other than physical division that
terminates the co-ownership (e.g. sale to third person)
What are the characteristics of partition made by the decedent
himself?
o 1. It only takes effect upon death
o 2. It is revocable as long as he is still alive
o How can the decedent/causante make partition?
1. Will
2. Act inter vivos
Must be in writing and in public document
It must be accompanied by a prior will
because disposal of property mortis causa
can only be done through a will
N.B. unless the partition through act inter
vivos conforms strictly to intestate
 succession portions, so it does not make a
disposition
o What is partition to keep an enterprise intact?
A parent can keep an enterprise intact by covering for
his compulsory heirs legitimes through cash or other
property
Who can the decedent designate as a mandatary?
o One who is not a co-heir can be chosen. He is designated to
make the partition after death.
What is the nature of the right to demand partition?
o Generally, it is a mater of right, so any co-heir may demand
partition at any time.
o Exception:
A. Partition forbidden by testator for period not
exceeding 20 years
Exceptions to this exception:
o 1. Any of the causes for dissolution
of partnership
o 2. Court finds compelling reasons
for partition
B. Co-heirs agree on indivision for period not
exceeding 10 years, renewable for like periods
o What about heirs upon whom some suspensive condition
has been imposed?
Cannot demand partition since he has no rights yet.
But the other co-heirs can demand partition but must
issue a security to protect the inchoate right of the
conditional heir.
What if an heir sells his undivided share prior to partition to a
stranger?
o The other heirs may exercise right to redemption within one
month from written notice of the sale and prior to partition.
o N.B. some decisions say written notice is mandatory, while
some say that it can be replaced by actual knowledge.
Effects of partition:
o 1. Absolute ownership over share
o 2. Each co-heir warrants the share of the others
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Period: within 10 years from date of right to action
What is the liability for co-warranty?
Proportional liability of co-heirs
If one of the obligors is insolvent, his portion
are borne proportionally by all, including the
one entitled to the warranty
o 3. Co-heirs warrant solvency of debtor of the estate whose
credit is assigned to a co-heir
But they only warrant against insolvency during
partition and not subsequent insolvency
Period: 5 years from partition
o When is there no mutual warranty?
1. Partition by the testator himself, except when the
legitime has been impaired
2. Agreement among co-heirs to suppress the
warranty
3. Supervening events causing loss or diminution in
value
4. Fault of the co-heir
5. Waiver
What are the causes to annul or rescind a partition?
o Same as causes for voidable and rescissible contracts
o N.B. the special provision on lesion in partition, however,
provides that it must be at least rather than the usual more
than value.
o When is the partition not subject to rescission due to
lesion?
When it was the testator who made the partition
himself, except:
1. Impairment of the legitime (even if the
lesion was less than )
2. Mistake by the testator or vitiation of his
intent
o What are the options of the co-heir who is sued for
rescission?
1. Have a re-partition
2. Indemnify the co-heir the amount of lesion suffered
OBLIGATIONS
Trends in Obligations and Contracts:
1. Obligations have been progressively spiritualized
o There is very little requirement as to form. Upon meeting of
the minds, in general, there is a K.
2. The principle of autonomy of will, which is still the general rule in K
law, has been restricted.
o There are prohibited obligations from being entered into
o Art. 1306 Contracting parties may establish clauses and
terms as they may deem convenient
Provided they are not contrary to law, morals, public
order, good customs, or public policy
There are five categories of restrictions. They restrict
freedom but promote the greater good.
Ex. labor contract with consideration less than the
minimum wage.
Ex. Those that violate environmental considerations,
social justice, gender issues, etc.
3. Mitigation of the principle that the debtor must answer with all his
property
o Before: you enter into a K and the creditor can pursue all your
properties to exact fulfillment of the obligation
o Now: In the interest of social justice, there are many things that
the creditor cannot levy upon, although the principle is still
good the creditor csan pursue the property of the debtor to
exact fulfillment of the obligation
o In the Rules of Court, there is a list of properties exempt from
attachment, for instance:
1. The Family Home
2. What you receive from support
Etc.
4. Weakening of the principle that liability results from responsibility
o In general, under the law, you are only liable if you are
responsible. Ex. if you are guilty of driving recklessly.
106
o Ex. employer can be responsible for employees wages if not
paid
5. Unity in modern legislation
o This is especially important in global commerce
o Ex. Bills of Lading, Trust Receipts, Intellectual Property, etc.
Essential requisites of obligations
What are the requisites of obligations?
o Four generally accepted requisites:
o 1. Active subject
A.K.A. Creditor (to give) or obligee (to do)
Has right to demand that the obligation be performed
o 2. Passive subject
A.K.A. Debtor or obligor
Has to perform the obligation (reciprocal obligations)
Note: In a sale of a thing, both parties are
debtors and creditors of each other, with
correlative obligations (as to the thing; and
as to the money)
o 3. Object
o 4. Vinculum juris
For both the active and passive subject, what is required?
o They must be determined or determinable.
What are the types of determined/determinable subjects?
o 1. Obligations where subjects are completely and absolutely
determined at the birth of the obligation
Most common type
o 2. One of the parties is determined, but one is determinable
with a previously-established criterion
Ex. Negotiable instrument: I promise to pay X or
order the amount of P5000, on November 15, 2011.
One of the parties (i.e., me) is determined. The other
is determinable, because X can negotiate it. The
instrument lays down the criterion.
o 3. Subject/s is/are determined in accordance with their relation
to a thing. (Real contracts)
 The subject/s may change at the thing passes from
one person to another.
Ex. X borrowed 3M from Y, and placed his house and
lot as security. There is a K of loan and a K of
mortgage, which is registered. X sold his house and
lot to Z, who registered the property in her name. The
mortgage in favor of Y is still annotated. X doesnt
pay by the due date. Y sought to foreclose the
mortgage, and Z cannot deny the mortgage, because
Z is the mortgagor now.
What is the object of the obligation?
o Its the prestation. It consists of conduct or an activity to be
performed by the debtor or obligor.
o Its not the physical thing to be delivered in an obligation to
give. That is merely the object of the prestation.
o Ex. Y has to deliver a car to X on Feb 15, 2011. The object of
the obligation of sale is the act of delivering to X the ownership
the car (tradition). The car is the object of the prestation.
o This distinction is, not, however always observed even by the
NCC.
o What are the requisites for the prestation?
1. Licit
Cannot enter into contract of sale for shabu,
because the object of the prestation is illicit.
2. Possible
Cannot deliver Mount Apo
3. Determinate or determinable
Cannot enter into a K with no defined
prestation
4. With pecuniary value
What is the vinculum juris?
o The compulsive element; the obligatory element in an
obligation. It makes an obligation an obligation.
o This is why an obligation dependent solely on ones will is void.
o Ex. X tells Y, I will sell my car to you when I feel like it. Here,
there is no obligatory force.
Yu v. Asuncion: Enumerated requisites of an obligation.
107
o 1. Vinculum juris, the efficient cause of the obligation
o 2. The object (prestation/conduct to be observed)
o 3. Subject persons, the active and passive subject
Combined #s 1 and 2 into one.
What is the fifth element, according to Castan?
o The causa. It is the why of the contract.
o Ex. Why is Y bound to deliver the car to X? Because X will
deliver P400000 to Y. Why is X bound to give P400000 to X?
Because Y will deliver the car to X.
o What is the causa for a gratuitous contract?
Liberality.
o What is the causa for a quasi-delict?
Causing an injury to the other.
What is the sixth requisite?
o The form. But it does not refer to a specific form, like putting it
in writing. It refers to the outward or external manifestation of
the obligation.
Sources of obligations
Art 1157 Obligations arise from:
o 1. Law
o 2. Contracts
o 3. Quasi-contracts
o 4. Crimes
o 5. Quasi-delicts
Arts. 1158-62 regulate these five sources
Is this list exclusive?
o Sagrada Orden v. NACOCO: The Japanese during the war
seized the Sagrada Ordens property during the war. Upon
liberation, the US seized enemy property, which included
Sagradas property. The US entered into a custodianship
agreement with NACOCO. Sagrada Orden wanted to collect
rentals from NACOCO. Issue: is there an obligation to pay
rentals to Sagrada? HELD: No obligation to pay rentals. The
court, to arrive at this answer, the court looked at the five
sources of obligations there was no contract, quasi-delict, no
provision of law that requires payment of rental, crime, or
 quasi-contract. The implication the court forwarded is that this
is a closed list.
But is it, really? Or should it, really?
o Many commentators believe it is not exclusive.
What are the other obligations?
o Public offer is a sixth source of obligation, for instance
(auslobung in the German code or the unaccepted offer). A
person who by public notice advertises an award in exchange
for a particular result is bound to grant this award.
Ex. Proctor and Gamble announces on TV: For 30
wrappers of Tide, you get a glass imported from
Switzerland. Offer good until Feb 28, 2011 only! X
saw this advertisement, and on Feb 27, 2011,
presents 30 wrappers to the P&G office. Issue: is
there an obligation here? Held: yes. There is a public
offer here.
Ex. X left his important papers inside a cab. X
advertised that whoever returns his papers will get a
P20000 reward. There is a public offer here.
Some commentators say there are only two sources: law and contract.
Some say: laws and acts of persons (whether voluntary or involuntary).
What is the nature of a contract as a source of obligation?
o What the contracting parties establish has the force of law
between them, and must be complied with in GF. They are
free to enter into any contract, provided the stipulations do not
violate Art. 1306. In general, there is no specific form needed.
o How must compliance be done?
1. It must be complied with according to its terms (ius
civile pacta sunt servanda)
2. And according to good faith (ius gentium bona
fide).
What is the general rule for obligations arising from delicts
(crimes)?
o If you commit a crime, you are liable both criminally and civilly,
except if there is no private offended party.
Distinguish a quasi-delict from a contractual obligation:
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o Quasi-delict only arises when there is a violation. The breach
itself gives rise to the obligation.
o In contractual obligations, the obligation precedes breach and
is not dependent on one in order to exist.
Are quasi-delicts and contracts mutually exclusive?
o No.
o They can co-exist separately.
Ex. a bus and car collided, and a bus passenger
suffered injuries. The cars driver was a minor and
incompetent driver. The passenger sued them all.
The liability of the owner of the bus and bus driver
rests on contract. The fathers responsibility for his
childs act is based on quasi-delict.
o They can also overlap.
Ex. A bus driver drives recklessly and the bus hits a
tree. A passenger is injured and sues. The bus
driver is liable based on quasi-delict or crime (criminal
negligence). The bus company is liable based on
contract of carriage or quasi-delict (negligence is
selection and supervision of driver).
You are driving a car. Your car gets into an accident with a bus.
Who do you sue? What are your options?
o 1. Bus driver
o 2. Bus company
o 3. Sue both because theyre joint tortfeasors, and thus
solidarily liable
Do you have to prove negligence when you sue under quasi-
delict?
o Yes, you have to prove negligence of the bus driver. It is not
presumed.
Do you also have to prove the negligence of the bus company?
o Yes, in the selection and supervision of the bus driver. (Culpa
in eligiendo, culpa in vigilando)
o This is a rebuttable/disputable presumption.
As opposed to conclusive and quasi-conclusive
presumptions
 In a situation where damage or injury is caused to a party, and o Accessory obligations:
there is a contract between him and the person who caused the 1. After constitution of obligation and before delivery:
damage, there is no question he can sue under contract. But can take care of the thing with diligence of GFF
he also sue under quasi-delict? Except when law or stipulation requires
o There is an old line of SC decisions in this country which says another standard
that you cannot sue under quasi-delict if there is a contract. If the thing is damaged, debtor is liable for
There is some basis for this, because Art. 2176 says that the damages
act or omission must occur when there is no pre-existing 2. Account and deliver to creditor the fruits of the thing
contractual relation between the parties. from the time of obligation to deliver
o There is, however, the theory of concentric circles (the smaller What is the nature of the right of the
circle of contract is always within the bigger circle of quasi- creditor?
delict). So if you sue under quasi-delict, you are disregarding o Before delivery, merely personal
the contract between the parties. This is valid. o Upon delivery, real
o You can sue under quasi-delict if it is the tort breaches the o A sold B a mango orchard to be
contract. If an act that constitutes breach of contract would in delivered Jan 1. A did not deliver
itself constitute the source of a quasi-delictual liability had there on Jan 1, and instead sold fruits
been no contract, then there is breach of contract through tort. to C, a buyer in GF. B sued for
o So you can choose to sue under quasi-delict or contract. specific performance and won.
Theory of vicarious liability: Can B recover the fruits?
o If you sue under quasi-delict and you choose to sue the As against A, yes.
company and not the employee, you are really suing under Art. But as against C, no
2180. because Bs right is merely
o This is actually a wrong term because vicarious means you are personal, not real. He can
answering for the liability of someone else. sue A for the fruits value.
o But the theory under 2180 is that the company/employer itself 3. To deliver accessories
is negligent as well. What are the creditors remedies for an obligation to give a
determinate thing?
Nature and effect of obligations o 1. Specific performance
o 2. Equivalent performance damages
What are the kinds of prestations?
Either exclusively or in addition to specific
o 1. To give performance
To give a determinate thing
Rules on improvement, deterioration, and loss
To give a generic thing
o When do these rules apply requisites?
o 2. To do
1. Obligation has suspensive condition (1189),
o 3. To not do
resolutory condition (1190), or a term (1194)
What is the primary obligation in giving a determinate thing? The
2. Obligor is obligated to deliver a determinate thing
accessory obligations?
o Primary obligations give what must be given
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 3. There is improvement, loss, or deterioration before 1. Substitute performance
the fulfillment of the condition or arrival of the period 2. Equivalent performance
4. The condition is fulfilled or period arrives What are the creditors remedies if the obligation is not to do?
o What are the rules on loss? o 1. Substitute performance
Without fault of debtor: o 2. Equivalent performance
Extinguish obligation Exclusive or in addition
With fault of debtor:
Pay damages SPECIFIC EQUIVALENT SUBSTITUTE
o What are the rules on deterioration? PERFORMANCE PERFORMANCE PERFORMANCE
To give
Without fault of debtor:
Determinate Yes Yes No
Creditor must accept the thing (bear loss) thing
With fault of debtor, either: Determinable Yes Yes Yes
1. Resolution and damages thing
2. Fulfill obligation and damages To do
o What are the rules on improvement? Very personal No Yes No
Improved by time or nature: Not very No Yes Yes
personal
Creditor benefits
Not to do No Yes Yes
Improved by debtors expense:
Same rights as a usufructuary
o (579) he can remove improvements Irregularity in performance
if no damage is caused to the
property What are the types of irregularity of performance?
o (580) he may set-off the o I. Culpable (1170)
improvements he made against any 1. Malice (fraud)
damage to the same 2. Negligence
What are the creditors remedies if the obligation is to give a 3. Delay
generic thing? o II. Non-culpable
o 1. Specific performance Fortuitous event/force majeure
o 2. Substitute performance MALICE (FRAUD):
Done by someone else at the debtors expense o Responsibility arising from fraud is demandable in all
o 3. Equivalent performance obligations. Any waiver of an action for future fraud is void.
Damages, by itself o What about waiver of malice already committed?
Damages in addition to #1 and #2 This can be waived.
What are the creditors remedies if the obligation is to do? o What is another word for fraud?
o Something only the obligor can do (personal): Malice (This means it is intentional or deliberate
Equivalent performance (damages) evasion of the normal fulfillment of an obligation.)
o Anyone else can do it:

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 o Differentiate this from the other kind of fraud mentioned in 3. Damages, either way
Obligations and Contracts (1338). DELAY/DEFAULT (MORA)
Deceit. This refers to vitiation of consent by a party o What are the three kinds of mora?
(through insidious words or machinations without 1. Solvendi
which the other party would not be induced to enter Delay in performance
into the contract). This applies here, in this provision
o Is there a difference in effect? 2. Accipiendi
Yes. Delay of creditor in accepting performance.
Deceit makes the obligation annullable, because it This applies in payment/performance
preceded the obligation. (particularly, consignation).
Malice only succeeds the obligation. The creditor 3. Compensatio morae
may insist on performance (specific or substitute), Reciprocal delay. (Taken alongside mora
resolution, and in either case, damages. solvendi)
o What are the effects of malice? o What is mora solvendi?
1. Creditor may insist on specific/substitute Non-performance with respect to time, whereas
performance, whichever applies malice and negligence are with respect to quality.
2. Resolution [for reciprocal obligations] o What are the requisites?
3. Damages, either way 1. Obligation is liquidated and demandable
NEGLIGENCE: 2. Debtor delays in the performance due to dolo or
o Always refers to the omission of something that should be culpa (thus, w/o justifiable reason)
there required degree of diligence. This differs depending 3. The creditor requires performance, judicially or
on attendant circumstances. extra-judicially (demand)
o What are the kinds of negligence? General rule: demand is required prior to
Simple mora solvendi applying (this requirement is
Gross/wanton if it is so reckless, that it practically called mora solvendi ex persona. If demand
amounts to malice, and is treated as such is not required mora solvendi ex re).
o What is the default standard of diligence required? o N.B. Jurado defines these
The fictional standard of a good father of a family. differently his ex persona is delay
(In common law, they refer to it as diligence of a in obligation to do, and his ex re is
prudent businessman.) delay is obligation to give
o Is waiver of future negligence allowed? When is demand not required?
Accepted view: waiver of future gross negligence is o 1. The obligation/law expressly so
not allowed, because its tantamount to malice declares.
Waiver of future simple negligence is allowed It is not enough that the
o Effects of negligence?
contract states specific
1. Creditor may insist on specific/substitute dates. Mere setting of
performance, whichever applies
2. Resolution [for reciprocal obligations]
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 date is not enough. Need
to demand still.
o 2. Time is of the essence.
Look at intent of the
parties and attendant
circumstances.
o 3. Demand is useless
N.B. under the law on partnership, a promise
to make contributions on a particular date,
and then failing to do so, would make the
person a debtor of the partnership and is
liable for interest and damages
o Can you have mora solvendi in negative obligations?
You cannot have mora in negative obligations
o What are the effects of mora solvendi?
Obligations to deliver a determinate thing: place the
risk on the debtor
Liable for damages
Basic remedy: performance or resolution
The provision also mentions contravene the tenor of the
obligation. What is this?
o Just as all-around term that encapsulates all the culpable
violations. But actually nothing will get through the three
above.
What is compensatio morae?
o If both sides are in delay, these cancel out.
o But when one party complies or is ready to comply with his
obligation, delay by the other begins
FORCE MAJEURE
o What are the requisites of casa fortuito?
1. The cause was unforeseen and unexpected and
was independent of human will
2. Impossible to foresee, or if foreseen, impossible to
avoid
3. Impossible for the debtor to fulfill his obligation in
the normal manner
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4. Obligor must be free from participation in the
aggravation of the injury to the creditor
o If any of the four is not present, there is no fortuitous event
o If there is a fortuitous event, what is the effect?
As a general rule, the debtor is free from liability
What are the exceptions?
1. If the parties agree
2. If the law so declares (ex. in delay)
3. Nature of the obligation requires
assumption of risk
o Ex. insurance
o Are defective brakes, blown tires, and other similar
problems fortuitous events?
Our SC is consistent in denying such claim.
Other provisions
What are the presumptions re: interest and debt?
o 1. If principal has been received without reservation re: interest
presume the interest has been paid
o 2. If later installment has been received without reservation re:
prior installments presume the prior installments have been
paid
o N.B. these are rebuttable presumptions
What are the four types by which creditors can satisfy their
claims?
o 1. Levy and execution on debtors non-exempt property
o 2. Accion subrogatoria
Creditor sues on behalf of his debtor, against his
debtors debtor
Requisites?
1. Creditor has credit against the debtor
2. Credit is due and demandable
3. Failure of debtor to collect his own credit
from a third person (through malice or
negligence)
4. Insufficiency of assets of debtor to satisfy
creditors credit
 5. Right is not intuit personae o Suspensive, potestative, and is dependent on the sole will of
o 3. Accion pauliana the debtor the obligation is void.
Right of creditors to rescind alienations by their o Ex. I will sell you my car when I feel like it.
debtors to defraud them o Because there is no juridical tie here.
Requisites? What if its a suspensive, potestative condition dependent on the
1. There is credit in favor of plaintiff sole will of the creditor?
2. Debtor performed an act subsequent to o Ex. I will sell you my car when you feel like it.
the contract giving advantage to other o Its VALID. In fact, it becomes pure.
persons Obligation that depends on an impossible or illegal suspensive condition
3. Creditor is prejudiced by the debtors act o What is contemplated by this provision, original or
4. Creditor has no other legal remedy supervening impossibility?
5. Debtors acts are fraudulent ORIGINAL impossibility.
o 4. Accion directa The supervening impossibility does not annul the
Direct action by the creditor against his debtors obligation; it just extinguishes it.
debtor the creditor acts in his own name o A positive obligation to do an impossible thing:
Exception to relativity of contracts Both the condition and obligation are void.
Give examples: o Negative obligation not to do an impossible thing:
1. Lessor against sublessee (skip lessee) Condition is disregarded. The obligation is valid.
2. Laborer against principal (skip Ex. X sells Y his house and lot on condition that Y
independent contractor) does not transfer the house and lot to California.
3. Principal against subagent (skip agent) o Negative condition not to do an illegal thing:
Both the condition and obligation are valid.
4. Vendor-a-retro against transferee of
Ex. X sells Y his house and lot on condition that Y
vendee (skip vendee)
does not turn the house into a shabu den.
Types of obligations Obligations with supensive conditions:
o That X will happen by a certain time
Classes of obligations? Extinguished when time passes
o Pure Or indubitable that it will happen
o Conditional o That X will not happen by a certain time
Happening gives birth/death to the obligation Take effect when time passes
o With a term Or indubitable that it will not happen
Happening makes it demandable What are the requisites of constructive compliance/fulfillment of
What is a potestative condition? conditions?
o Something that depends solely on one of the parties o 1. Intent of the obligor to prevent fulfillment of the obligation
What is casual? o 2. Actual prevention
o Depends solely on chance or a third partys will. o What is the effect?
What condition will make obligation void? The condition is deemed complied with.

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 o To which does constructive compliance apply? o Those produced from the constitution of the obligation to the
Only to potestative conditions or mixed conditions happening of the condition: not covered by the rule on
with potestative conditions. retroactivity
Ex. X sells Y a lot, if Y builds a road from the lot to the Resolution in 1191 what is the effect?
highway. The only road Y can build must go through o Mutual restitution. They are returned to status quo ante.
Xs property, but X refuses to allow. 1191
X sells Y a piece of land in year 2000, subject to the condition that o Compare rescission and resolution:
Y pass the Bar examinations. Y passes the Bar in 2005. What is Resolution primary remedy
the effect? Rescission subsidiary
o The condition is deemed to have arisen in year 2000. There must be no other remedy
o But not fruits. It has to be a last recourse
X sold the land to Z in 2001, when the condition had o Compare the basis:
not yet happened. Y sold the land to W in 2002. Ys Resolution non-fulfillment of obligation
sale wins out because the sale of X to Y retroacted to Rescission based on economic prejudice (lesion)
2000. o Resolution can be extrajudicial or judicial. Either is valid, but
o What is the right of the creditor in the mean time? extrajudicial resolution is always subject to court checks and
The creditor can take any action that protects his balance, so its at the risk of the party who resolves.
rights. o Is an express provision allowing extra-judicial resolution
Ex. He can put an adverse annotation on the title. mandatory?
When can the debtor recover due to payment by mistake? No. Parties can resolve even without an express
o 1. Performance by mistake provision allowing so.
o 2. Action for recovery is brought before condition happened or Outline of 1191 (resolution):
its apparent the condition will not happen o 1. Only applies to reciprocal obligations
What are the rules re: deterioration and improvement and loss Elements:
before the happening of the suspensive condition? 1. 2 prestations arising from same source
o 1. Fortuitous loss obligation is extinguished 2. Each prestation designed to be the
o 2. Culpable loss debtor liable for damages counterpart or equivalent of the other
o 3. Fortuitous deterioration borne by creditor Ex. Contract of sale
o 4. Culpable deterioration creditor chooses: o 2. There is a tacit resolutory condition: breach
A) rescission with damages o 3. The party seeking to rescind must be ready to comply with
B) fulfillment with damages the obligation, otherwise he is in BF
o 5. Fortuitous improvement benefit to the creditor o 4. The injured party can elect resolution even without court
o 6. Intentional improvement governed by Art. 579 of the action
usufruct o 5. Effect: mutual restitution
Can take it out if it does not lead to damage What if the other party does not want to return
If it would cause damage, no compensation what you have given him, after resolution?
Rule on fruits:

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 Go to the court to recover. The action is not
for resolution, but recovery, because
resolution does not need court action.
Obligations with a term/period what is the difference from a
condition?
o Term is certain, condition is uncertain. They are alike in the
sense that theyre both future.
o Only demandable when the day arrives.
In case of loss, deterioration, or improvement before the day
certain, what do you follow?
o Follow the same rules as in suspensive conditions.
Anything paid before the day arrives
o If made consciously, what is the implication?
Nothing can be recovered, because the term was
effectively waived.
o What if it was made out of mistake?
Old code: only fruits and interests can be recovered
Now: The thing and the fruits and interests can be
recovered.
Who is entitled to the fruits received from the constitution of the
obligation until the arrival of the term?
o One view: fruits belong to the debtor
o Other view: fruits belong to the creditor, even if they should not
be delivered til the term arrives
o RFBs view: The debtor keeps the fruits in the interim.
What are the instances when the fruits cannot be recovered
notwithstanding premature delivery?
o 1. When the obligation is reciprocal and there is pre-payment
on both sides (so both things are fruit producing)
o 2. The obligation is a loan where the debtor is bound to pay
interest
o 3. When the period is exclusively for the benefit of the creditor
o 4. When the debtor, aware that the period has not yet arrived,
pays anyway
When is a term for the benefit of the debtor? For the creditor?
o Presumption: a term is beneficial for both
o What is the consequence of this?
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The creditor cannot demand, and the debtor cannot
insist on pre-payment
o If it is for the benefit of the debtor:
I promise to pay you on or before March 2011 this
is for the benefit of the debtor.
This is an example of a term benefit for the debtor
When can the court fix the duration of the period?
o 1. If it does not fix a period but a term is assumed to have
been intended
o 2. If the period entirely depends upon the will of the debtor
o Two requisites for the application of this article?
1. Parties did not fix the period but from the nature of
the circumstances, it can be inferred that the period
was intended by them
OR there was a period, but it was made
dependent on the will of the debtor
2. The court must decide what period the parties
probably intended. The court cannot decide for itself,
it must infer the parties intent
o Action for 1197 can only be for the fixing of the period. It
cannot be for fixing of the period and specific performance at
the same time, because the period is presumed not to have
arrived yet.
o Exception: if a separate action for performance would be only
dilatory (i.e. whatever the period was, it already has passed)
When can the court fix the period for an obligation?
o 1. 1197, par. 1 (above): Parties did not fix the period but from
the nature of the circumstances, it can be inferred they
intended a period
Exceptions:
A. 1682, 1687 these are leases payable
monthly or yearly; these terminate at the end
of the month/year (the K fixed the period)
B. Pacto de retro under 1606 the law fixes
the period of redemption for four years
C. Contracts of service for indefinite period
(involuntary servitude)
 o 2. 1197, par. 2 (above): Period entirely depends on the will of o Two or more obligations are agreed upon but one, some, or
the debtor not all have to be performed.
o 3. 1191, par. 3 o Who has the choice?
This is resolution instead of decreeing the Depending on whom the parties name as having to
resolution, the court decides to fix a period instead make that choice.
o 4. 1687 If there is no choice, the debtor chooses.
Contracts of lease falling under the 2nd-4th sentences o How must a choice be made?
o 5. 1180 Any form writing, oral, or implied/passive
If the debtor binds himself to pay when his means o Why must a choice be communicated?
allow him to do so If it depends on the creditor, duh, because the debtor
Deemed to be one with a term is not a mind reader.
Supposing the court fixes a period, can the parties agree to extend Ong: But even if it depends on the debtor, it gives the
it further? creditor the chance to consent to or impugn the
o Yes, it is contractual freedom. It is a novation there has to be choice. RFB does not agree with this, because the
an agreement between the parties, however. creditor has no right to impugn because the debtor is
When does the debtor lose right to avail of the period? these acting within his right.
obligations become pure What is the real reason?
o 1. After the obligation have been contracted, he becomes 1. To give the creditor the chance to prepare
insolvent, unless he gives security/guarantee for the debt for acceptance.
This is not limited to judicial insolvency 2. Because once the choice is
o 2. He does not furnish to the creditor the guarantees/securities communicated, it is irrevocable and the
promised obligation ceases to be alternative
o 3. By his own acts, he impaired said guarantees/securities, and Implications when debtor has right of choice?
by fortuitous event, they are lost. UNLESS he replaces them o 1. Limitation of choice
with securities just as good. What if there is one choice left due to the
o 4. He violates undertaking in consideration of which the fortuitous event?
creditor agreed to a period. The debtor has no choice but to perform it
o 5. He attempts to abscond. What if is limitation of choice left due to the
o 6. Article 2109 Creditor is deceived as to the substance or creditors acts?
quality of the thing Right to resolution, with damages.
o 2. Own fault
Classification according to number of prestations. If all of the things are lost due to the debtors
o Conjunctions 2 or more prestations, all of which must be fault?
performed. No special rules apply here. Creditor entitled to damages
o Alternative 1199-1205 If some of the things are lost due to the debtors
o Facultative 1206 fault?
What is an alternative obligation? Can perform what remains

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

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 What if the debt has been garnished?
The payment is no good, provided that the
notice of garnishment has been served on
the payee. This is because the funds are
held in escrow on behalf of another person.
When is time/place of payment?
o Time when it is due
Generally, when there is judicial or extra-judicial
demand
Except the three exceptions on mora solvendi ex re
o Place
Primary rule: stipulated place
Secondary rule: place where the thing was located
at the time of constitution of obligation (only if the
obligation is to deliver a determinate thing)
Tertiary rule: (for instance, if it is a generic thing, or
an obligation to do) debtors domicile
1. Dacion en pago (dation in payment)
o Filinvest: The delivery and transmission of the ownership of a
thing by the debtor to the creditor as an accepted equivalent of
the performance of an obligation.
o Go: A special form of payment by virtue of which the debtor
offers another thing to the creditor who accepts it as the
equivalent of payment for an outstanding debt.
o Note: There is no requirement that it must be to satisfy a
money debt. It can be for some other obligation.
o What is the legal effect, as stated before?
The debtor becomes the seller, the creditor becomes
the buyer, and the debt becomes the purchase price
Since it is governed by the law of sales, there are
implications: warranty against eviction, etc.
This has been criticized precisely because of this.
o What is the other point of view?
Dacion en pago is a novation.
This has also been criticized because in a novation,
the original obligation is extinguished and a new one
takes its place. Here, there is no new obligation that
takes the place of the old one.
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o So what is it, really (Castan)?
Its a special form of payment.
Because it departs from the rule on identity
o To what extent is the obligation extinguished?
To the extent of the value of the thing given
Unless the parties agree on total extinguishment
generally the parties do
o What is the essential requirement?
Both parties must consent
o What are the requisites of dacion en pago?
1. Performance of a prestation in lieu of payment
2. Some difference between the prestation due and
that which is given
3. Agreement between the debtor and creditor that
the debt is extinguished by the performance of the
substitute prestation
2. Imputacion (application of payment)
o What is it?
Designation of debt which is being paid by the debtor
who has several debts of the same kind to the creditor
who is paid
o Give an example.
X owes Y four debts: 10k, 20k, 30k, 40k. They are all
due. X remits 100k to Y. No need to apply the rules
on imputacion.
X remits 90k to Y. In this case, this is less than what
he owes in total. How is the payment applied?
See rules below
o What are needed?
1. Debtor
2. Creditor
3. Several debts which are due
4. Remittance of a payment which is less than the
total
o How do you apply the amount paid to the several debts?
Primary rule apply according to the agreement of
the parties (1)
 Next the debtor may apply if there is no agreement,
subject to rules on indivisibility of performance (2)
What if the debtor does not apply?
The creditor may apply (3)
What if neither the debtor nor creditor applies?
Apply to the most onerous first. (4)
Ex. interest-bearing debt > non-interest
bearing debt
Ex. secure debt > non-secure debt
Ex. debt with penal clause > without one
What if there are equally onerous?
Apply proportionally to all (5)
o What makes imputacion a special form of payment?
It departs from the rule on indivisibility and integrity
3. Payment by cession
o When does it apply?
When there is one debtor and many creditors.
o What happens?
The debtor turns over all his assets to the creditors,
allows them to sell the assets, and then the creditors
divide the proceeds proportionally
o Does cession require creditors acceptance?
Yes.
o Does ownership over the thing pass to the creditors?
No, they just receive authority to sell.
As opposed to dacion en pago, where ownership
transfers.
o What is the extent of extinguishment of the debts?
Only to the extent of the proceeds.
Unless there is an agreement that the entire debt is
extinguished.
o Why is it a special form of payment?
Departs from integrity and indivisibility
o Does this contemplate voluntary or legal cession?
Voluntary. It is extra-judicial.
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It is legal if the debtor goes to court and applies for
public auction and receives an acquittal (under
Insolvency Law)
4. Consignation
o N.B. Tender of payment on consignation is not the correct
term
o What is this?
Act of depositing the thing due with the court or
judicial authorities whenever the creditor cannot
accept or refuses to accept payment
It generally presupposes or requires prior tender of
payment
o Requisites?
1. There must be a debt due
2. Consignation was made due to some legal cause
There was a prior tender which was unjustly
refused
Or there exist circumstances that make a
prior tender unnecessary or impossible
3. First notice of consignation given to interested
parties
4. Actual deposit with court
5. Second notice given after consignation
o What is a tender?
Manifestation made by debtor of his desire/willingness
and ability to make immediate payment
o When is prior tender dispensed with?
1. Creditor is absent or unknown or does not appear
in place of payment
2. Creditor incapacitated during time of payment
3. When without just cause, he refuses to give a
receipt
Odd: this still presupposes tender of
payment
4. When two or more persons claim the same right to
collect
5. Title of the obligation has been lost
 o Why is consignation a special form of payment?
Departs from requisite of parties
o What if it is a case of mora accipiendi, where the creditor
unjustifiably refuses payment?
Go to court and consign it there. (The French and
German Codes just provide that the obligation is
extinguished. This is probably better and easier.)
LOSS/IMPOSSIBILITY (fortuitous event)
When is it loss, when is it impossibility?
o Loss, if to give
o Impossibility, if to do
What happens when loss occurs in an obligation to give a
determinate thing (1262)?
o The obligation is extinguished
Does it apply to an obligation to give a generic thing? (1263)
o No.
o Genus nunquam perit- the genus never perishes
Except: if the thing is deemed contraband before
delivery, so the genus perished
o Ex. X had an obligation to deliver a sack of rice, and the stocks
perished. X just has to buy rice.
What about a limited generic thing?
o The obligation can be extinguished.
o Ex. X entered into an agreement to sell Y one of his cars. If he
lost all of them in a fortuitous event, the obligation perishes.
What about obligations to do? (1266)
o Released from the obligation is the prestation becomes
impossible.
What do all of these presuppose?
o That when the obligation was entered into, the obligation was
possible. The loss or impossibility simply supervened.
o If the obligation was initially impossible, there is no obligation
to begin with.
In a reciprocal obligation, one of the prestations is lost under
fortuitous event. Does it affect the other obligation? (Ex. X
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promised to sell Y his Innova for P1M. It was then lost. Does Y still
have the obligation to give the money?)
o One view (Germanic view) the entire obligation is
extinguished
Res perit domino the debtor in effect bears the
burden
N.B. we generally follow this
o Other view (Romanic view) Y still has to pay the money
Res perit creditori the creditor in effect bears the
burden
Exceptions:
o 1504 sales of goods: res perit domino applies
o 1655 destruction of the thing leased through fortuitous event
If total: extinguish lease
If partial: lessee chooses between rescission or
proportional reduction of lease payment
o 1717 contract for a piece of work, where the contractor
furnishes the material
Contractor bears the loss of the materials if prior to
delivery
Unless the creditor delayed in receiving the thing to
be delivered
What is another mode of extinguishment hidden in the folds of this
provision?
o Rebus sic stantibus When the services become so difficult as
to be manifestly beyond the contemplation of the parties, the
obligor is excused
o Contracts which have stipulations on successive performances
(several prestations) or dependent on the future
o Must interpreted in accordance with the situation that existed
when the obligation was entered into
o Requisites?
1. The event of change could not have been foreseen
at the time of the agreement
2. Makes the performance extremely difficult, but not
impossible
What if it makes it impossible?
 o You can invoke impossibility of
performance
o You do not need to invoke rebus sic
stantibus
3. The event was not due to the act of any of the
parties
4. The K of the obligation was a future prestation
o To what kind of obligation does it apply?
Only to do, but not to give
But in the Philippines, it has evolved into including
even obligations to give, see Naga Telephone
Because it just says obligations in general
CONDONATION/REMISSION
What is this?
o Act of liberality wherein without receiving any equivalent, the
creditor renounces the debt
o Extinguishes the debt in whole or in part
Requisites?
o 1. Debt existing at the time the remission is made
No need for the debt to be due, as long as it exists
o 2. The remission or the waiver must be gratuitous
o 3. Acceptance by the debtor
o 4. Capacity between the parties to enter into a contract of
donation
What is the form?
o If it is express remission, it must follow the rules on donations
as to form
o If it is an implied remission, and thus not governed by any
form. (Here, the creditor just does not collect)
In case there is a debt evidenced by a private document and then
later on, it is voluntarily surrendered by the creditor to the debtor,
what is the implication?
o The creditor is impliedly remitting the obligation
Because he will lose his proof to collect
o It does not apply to a public document because there will be a
copy of the document in the notarial archives
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o What if there is delivery by mistake?
The creditor can claim this and rebut the presumption
What is the debtors defense in this case?
He can claim that he actually paid the debt
o What is the presumption that gives rise to this
presumption above?
If the debtor has the instrument in his possession, it is
presumed the creditor delivered it to him
MERGER/CONFUSION
What is this?
o When the debtor and the creditor in the obligation is the same
person
Requisites?
o 1. Takes place between the creditor and the principal debtor
o 2. The very same obligation is involved
What is the most common cause of merger?
o Intestate succession, where you inherit your own debt/credit.
Ex. X owes his brother Y a sum of money. Y dies intestate and
X receives the credit, so there is confusion.
Y has a debt to X. The debt is guaranteed by Z. X assigns the debt
to Z. Did remission happen?
o No. Z is not the principal debtor, he was just a guarantor.
o The guaranty is extinguished, and Z can go after Y.
COMPENSATION/SET-OFF
What is this?
o Concurrent amount of two persons who in their own right are
reciprocal debtors and creditors of each other
How similar is this to merger?
o There are at least two debts in both, but in merger, it is
concentrated in one person. In compensation, in two persons.
What are the kinds of compensation?
o 1. Legal compensation (1279)
Automatically when all requisites are present
o 2. Facultative compensation
 Can only be claimed by one party, but not the other o But now, before legal compensation takes place, X
(READ 1287-8) assigns to A credit 1. So for credit 1, A becomes the new
o 3. Conventional/contractual compensation creditor. There are three possibilities:
Parties agree to compensate, even if the requisites 1. The assignment was with Ys consent
are not complete (1282) A goes against Y when the assigned
o 4. Judicial compensation credit becomes due. Can Y set up
By means of court order/decree against A credit 2 (what X owes Y)?
What is legal compensation? o No, because Y consented to the
o 1. Parties are mutually debtors and creditors of each other assignment.
as principals 2. The assignment was with Ys knowledge, but
and in their own right without his consent
X owed Y 10,000. X lent Ys son 5,000 which the A goes against Y. Can Y set up against A
son used for nightclubbing. When the debt was credit 2?
due, X only gave 5,000 claiming compensation. o Yes, as long as credit 2 existed by
Correct? the time credit 1 was assigned.
No. Compensation must be between two Does not cover subsequent debts.
parties who are mutually creditors and 3. The assignment was without Ys knowledge
debtors of each other. Regardless of how the A goes against Y. Can Y set up against A
son spent the money, hes not part of the K. credit 2?
o 2. Both debts consist of sum of money, or fungible goods of the o Yes, as long as it arose before he
same kind/quality learned of the assignment
Note: it must be fungible the code wrongly says Facultative compensation
consumable o 1287 when legal compensation does not automatically take
o 3. The two debts are due place
o 4. They be liquidated and demandable 1. Deposit
Liquidated the amount is determined already X deposited 1000kg rice with Y (depositary).
o 5. Neither of the debts must be garnished In another unrelated transaction, Y owes X
o 6. Must not be prohibited by law 1000kg rice. There is no legal
Conventional requisites? compensation here because one of the
o 1. Each of the parties contracts is a contract of deposit.
o 2. The parties agree to mutually extinguish the credit But the depositor can claim in his favor
(See 1285) Assignment of credits confusing wording in the compensation. (Facultative in his favor)
provision, so heres the explanation 2. Commodatum
o Y owes a debt to X (credit 1). X owes a debt to Y (credit 2). 3. Support
In any other case, when both debts fall due, there is automatic o 1288 one of the debts arises from civil liability from a crime
compensation. This is not the concern of 1285. The victim of the crime from which the liability arises
can invoke this

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 o N.B. usually the creditor is the one entitled to this option o 4. Validity of new
(bailor, depositor, recipient of support, victim of crime) Two types of novation?
When do the modes of compensation take place? o 1. Express
o 1. Legal when all the requisites concur o 2. Implied
o 2. Conventional upon agreement of the parties The two obligations must be incompatible
o 3. Facultative when the creditor entitled to the option What is expromission?
communicates his decision o The consent of the creditor and the new debtor are required,
o 4. Judicial final judgment but the consent of the old debtor is not required
Not covered by compensation: o X owes Y 50000. Z approaches Y and tells him that he will
o 1. From deposit K pay the debt. Is this valid?
o 2. From commodatum K Yes.
o 3. From support due by gratuitous title o Consequence?
o 4. Obligations from criminal offense The release of the old debtor is absolute, even if the
o 5. Taxes, fees, duties due to government new debtor becomes insolvent.
o N.B. what is common is that these are not debts per se What is delegacion? (conventional subrogation)
o The consent of all three creditor, original debtor, new debtor
NOVATION are all required. The initiative comes from the old debtor.
Delegante old debtor
When does it arise? Delegatario creditor
o 1. Changing object or principal conditions Delegado new debtor
o 2. Changing the debtor o X owes Y 50000. X approaches Z to ask him to pay for his
o 3. Subrogating third person to rights of the creditor debt. Y agreed. Is this valid?
Types? Yes.
o 1. Subjective/personal novation o Consequence?
Change in one or more parties The old debtor is absolved, in general. Exceptions:
Active subjective change in person of creditor 1. If the new debtor was already insolvent at
Passive subjective change in person of debtor the time of the novation AND
Expromission 2. Such insolvency was known to the old
Delegacion debtor or public knowledge
o 2. Objective/real novation o What about assignment of credit, do you need the consent
Change in the object or in the principal conditions of all three parties too?
o 3. Mixed novation No. Just the old creditor and the new creditor. The
Requisites of novation? consent of the debtor is not required. He must just be
o 1. Previous valid obligation notified.
Includes voidable When the principal obligation is extinguished, are the accessory
o 2. Agreement by the parties to the new obligation oligations extinguished too?
o 3. Extinguishment of the old obligation o As a general rule, yes. (Art. 1296)
This is actually a consequence
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 o So pledge, mortgage, antichresis, guaranty, etc. are Definition of contract?
extinguished. o Meeting of the minds between two or more parties
o Exception? o Can one contract with oneself?
When there is benefit for a third person (stipulations Yes, an auto-contract one person acting as two
pour autrui) parties. (Ex. an agency to borrow money: he can also
o What is problem, as to subrogation? act as the lender)
In subrogation, Art. 1303, the guarantors, sureties, This is why party is the proper term.
mortgagors, etc. continue to be bound. Characteristics of obligations?
How to resolve the conflict Art. 1303 is the o 1. Obligatory force
exception to 1296. It only refers to one kind of o 2. Mutuality
novation: active subjective novation. (When the Performance cannot be left to the will of one of the
change is just from one creditor to another.) parties
Distinguish conventional subrogation from legal subrogation: o 3. Relativity
o Conventional with consent of original creditor, new creditor, o 4. Autonomy of parties
and debtor Elements of contract?
Distinguish from assignment of rights: o A. Essential
In assignment, no need for consent of the 1. Consent
debtor 2. Subject matter
Assignment doesnt extinguish the old 3. Cause
obligation and create a new one; it is just a o B. Natural
transmission of rights. Any vice in the Those incorporated by law into the contract
obligation carries over automatically
o Legal by operation of law due to acts of the new creditor Ex. Warranties in sales (against eviction, of
When is legal subrogation presumed? fitness, etc.)
1. Creditor pays another creditor who is Ex. Right to resolve in reciprocal contracts
preferred even without debtors consent o C. Accidental
2. Third person not interested in the Need to be stipulated by the parties
fulfillment of the obligation pays the debt with Ex. Purchase price in sales
the debtors express or tacit approval Ex. Conditions for performance of the
3. Even without knowledge of the debtor, contract
person interested in the fulfillment of the Classification of contracts?
obligation pays without prejudice to o A. Degree of dependence
confusion as to the latters share 1. Preparatory
One intended to lead into another K (ex. K of
agency)
CONTRACTS 2. Principal
Complete in themselves

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 3. Accessory o H. According to name
Cannot exist alone (ex. mortgage) 1. Nominate
o B. According to perfection Ex. sales, lease, etc.
1. Consensual 2. Innominate
Most Ks are consensual Do ut des I give, you give
o Ex. Sales Do ut facias I give, you do
2. Real Facio ut des I do, you give
Perfected by consent + delivery of the Facio ut facias I do, you do
property What is autonomy of will?
o Ex. deposit, pledge, commodatum o Generally, you can enter into contracts depending on what you
3. Formal want
Need form for validity o This principle, however yields to various restrictions:
o Ex. donation of property 1. Law
o C. According to purpose [just theoretical] 2. Public policy
1. Transfer of ownership 3. Public order
2. Conveyance of use 4. Morals
3. Rendition of service 5. Good customs
o D. According to subject matter What is the rule on usury?
1. Involving things o Its now not a crime anymore.
2. To render service o The only limit is that it is not unconscionable
o E. According to the nature of the obligation produced o When is it unconscionable?
1. Bilateral It changes from decision to decision. Some decisions
2. Unilateral say that 5.5%/month is invalid, while some say
Ex. commodatum 7%/month is valid
o F. According to cause Latest Macalinaw v. BPI: Interest rate of the credit
1. Onerous card is 3%/month (36%/annum). HELD: Any interest
2. Gratuitous/lucrative of 3%/month and above is invalid, and will be reduced
Implication? to 1%.
Can determine degree of diligence required. What is mutuality of contracts?
For instance a gratuitous deposit requires o The K must bind both contracting parties. The legal tie must
less diligence be mutual.
o G. According to risk o What about contracts with escalation clause (adjustment
1. Commutative of interest)?
Exchange of value, so there is no risk It is valid as long as it is tied to a factor not entirely
2. Aleatory dependent on the will of the creditor (purely
Contract of risk/chance/hazard potestative)
o Ex. buying a lotto ticket What is relativity of contracts?

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 o Acts between two persons cannot affect, positively or the contract. HELD: not a stipulation pour autrui because
negatively, a third person there was no deliberate benefit intended for the agents.
o Third persons neither can sue or be sued for the benefits of the When can you sue a third party for damages due to tortuous
contract interference?
o What if the contract is transmissible? o 1. There is a valid contract
If the contract is transmissible, it can pass on to heirs, o 2. Knowledge by the third party of the existence of that contract
assignees, or successors-in-interest o 3. Interference by that third person on the contractual
o When do contracts affect third parties? relationship without legal justification
1. Stipulation pour autrui Is it required that third person act maliciously?
2. Accion pauliana No. As long as it was deliberate.
3. Accion directa For instance, in an old case, the Augustinian
4. Contracts involving real rights fathers thought an old lady was being
Ex. mortgages, etc. cheated in a contract so they induced her to
What is a stipulation pour autrui requisites? break it.
o 1. Contracting parties clearly and deliberately conferred a N.B. So good faith/bad faith is not a measure it is
favor/benefit to a third person legality/illegality of justification that prevails
Not merely incidental What if one enters into a contract in the name of another without
o 2. The stipulation in favor of a third person is a part, not the authority or beyond the scope of his authority?
whole of the entire contract o The contract is unenforceable
o 3. It must not be compensated by any obligation whatsoever
o 4. Neither of the contracting parties must bear the legal Consent
representation of the third party
o 5. The third party communicated his acceptance to the obligor What are the elements of consent?
before the revocation by the original parties o 1. Plurality of subjects
Give examples showing/not showing stipulations pour autrui. o 2. Capacity
o There were squatters living in Krus na Ligas, near UP. For o 3. Intelligent and free will
humanitarian considerations, UP entered into a contract with o 4. Express/tacit manifestation of the will
the QC government to develop the area. The contracting o 5. Conformity of the internal will and its manifestation
parties are QC and UP. The informal settlers were third What are the requisites of a valid offer?
parties. Later on, there were snags in the arrangements, so o 1. Definite
the squatters filed a suit under the contract to carry out the o 2. Complete
project. HELD: it is a stipulation pour autrui o 3. Intentional
N.B. the most important element is the clear and What are the requisites of acceptance?
deliberate benefit conferred o 1. Unequivocal
o There was a sale of two parcels of property which was on a o 2. Unconditional
precipice. The sale was eventually rescinded because the If it is qualified, it is a counter-offer
land was unsuitable. The commission agents protested, saying What about an amplified acceptance?
that their commissions must be paid nonetheless, suing under
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 It may or may not be an acceptance. It What if S sells the car to someone before the
depends on the circumstances period is done?
o Is silence acceptance? S is guilty of contractual breach.
Depends on the circumstances. For instance, X What if there is no consideration given?
delivers rice to A and B, who own rice stalls. X S can withdraw the offer anytime.
delivers rice to A every Sunday, and when A is not Does S still have to communicate the
there, his employee takes the rice. There is no such withdrawal?
prior arrangement with B. If both As and Bs o No. There is no separate option
employees were silent when X delivered rice to them, contract that requires him to do so.
A is deemed to have accepted, and B not. Original facts (B gave consideration). Within the
What is the cognition theory of acceptance? 30 day period, B told S that he wanted to buy the
o Offer and acceptance take effect only from the time knowledge car. S refused. What is Bs remedy?
is acquired by the other person. If during the intervening time, Specific performance, because upon
the party dies or becomes insane, the acceptance (or offer) communication of the option, there is an
has no effect. acceptance of the offer already. (Carceller
o X made an offer in Davao on Feb 1, through mail to Y, who v. CA)
received it Feb 5. Y accepted the offer Feb 5 through mail What if S had withdrawn the offer
to X. On Feb 8 Y becomes insane. The mail reaches X on contrary to the period or has already sold
Feb 13. Is the offer accepted? the car to X when B communicated his
No, under the cognition theory. acceptance what is Bs remedy?
o X made an offer in Davao on Mar 1, through mail to Y, who o Recover damages from S.
received in Mar 3. On Mar 4, Y sent his acceptance to X. o He cannot sue for specific
On Mar 5, X countermanded the offer. Both the performance because X is an
acceptance and countermand are in the mail. Which innocent purchaser.
prevails? Differentiate an option contract from the Right of First Refusal
Whichever reaches the other party first. (RFR):
Can an offeror withdraw his offer even if he gave the offeree a o RFR is the right to have first opportunity to purchase, or the
certain time to accept? right to meet any other offer.
o In general, yes. o An option contract limits the offerors power to revoke the offer.
What is the exception? o What is determined in an RFR? What is undetermined?
o When there is an option contract, which is supported by a The object is determined.
separate consideration. The terms are not.
o Give an example. Does RFR need separate consideration?
S is offering to sell B a car. B asked for 30 days to o Equatorial v. Mayfair says no. RFB disagrees with this.
think about it and paid S P5000 for this period. This is o Lintonjua v. CA says that the consideration for the loan or
a distinct contract an option contract. mortgage is already the consideration for the RFR.
Does RFR allow actions for specific performance?

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 o Yes. The actual vendee may be required to sell the property to 1. Substance of the thing which is the object
the holder of the RFR at the price which he bought it for. of the contract
(See Equatorial and Paranaque Kings as examples 2. Conditions which principally moved either
where there was specific performance to enforce a or both parties to enter into the contract
RFR. This can be differentiated from Ang Yu which What if mistake is as to identity?
didnt allow specific performance of the RFR because Generally, not a ground to annul a contract.
in Equatorial and Paranaque Kings, the right was EXCEPT if the identity or qualifications is the
integrated into contract in these cases, for lease. principal cause of the contract
Ang Yu didnt stipulate RFR into contract) What about mistake as to accounting?
o Contrast: not allowed for option contracts. It only gives rise to correction
What if the one with the RFR refuses to exercise his option? o 2. Fraud
o If the one with the RFR refuses to exercise his option, the Different from fraud in 1170
seller cannot sell the property to another person on better It must be dolo causante, or one that has a decisive
terms. It has to be equal or more onerous. effect on the giving of consent
Who cannot give consent to a contract? Requisites:
o 1. Minors 1. Employed by one party against the other
Only the minor can sue to annul the contract. 2. Induced the other to enter into the contract
What about a minor who actively misrepresents 3. It must have been serious
himself as a non-minor? Can the minor still sue What if both parties employ fraud?
to annul the contract? No annulment.
He still can. If he is too young to enter into a Compare with dolo incidente?
contract, he is also too young to be held in Does not annul the contract because it did
estoppel. not induce the giving of consent
o 2. Insane or demented persons, and illiterate deaf-mutes
The consequence of incidental fraud is
N.B. Different from insanity of in testamentary law
merely damages
Being a deaf-mute is not enough; you have to be
What about dolus bonus?
illiterate too.
This is tolerable fraud and does not lead to
What is the exception to the insanity rule?
damages
When he entered into the contract during a
(Usual exaggerations in trade, when the
lucid interval
other party had an opportunity to know the
What are the situations where there is vitiation of consent?
facts) Art.1340
o 1. Mistake
o 3. Violence
When is mistake as to legal effect a vitiation of
Requisites of violence?
consent?
1. Physical force is irresistible
If the mistake is mutual and it frustrates the
2. It is the determining factor to give consent
real intent of the parties
o 4. Intimidation
To which must the mistake of fact refer to?
Requisites?
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 1. Threat is determining factor to give
consent
2. Threat is unjust and unlawful
o What if the threatened act is
lawful, for instance, You, Mr. X
from Surigao Institute of Law, got
my daughter pregnant. You
better marry her, or I will report
to the SC that you got her
pregnant?
This is a lawful threat, so it
does not vitiate consent.
o When will there be intimidation
even if the threatened act is
lawful?
When there is no
connection between the
threatened act and the
situation behind it (ex. sell
me your house or else I
will report the crime I saw
you did).
3. Threat is real and serious
4. Threat produces a well-grounded fear that
the person making it can and will inflict harm
o 5. Undue influence
What do you consider for undue influence?
Consider both the person invoking influence
and one being influenced
Consider:
o Confidentiality, family, relations
If the person was mentally weak, ignorant, or
financially distressed
It must be influence that deprives one of freedom. So
it cant be lawful or due influence (ex. parental
guidance).
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What is the effect of violence if perpetrated by a third person (Art.
1336)?
o It still makes it voidable. The contract is still voidable even if
employed by a third person who did not take part in the
contract.
o What about undue influence by a third person?
By analogy, same rule.
o What about fraud by a third person (Art. 1342)?
Does not vitiate consent
Unless it led to substantial mistake and it is mutual
What are the two kinds of simulation of contract?
o 1. Absolute
There is no underlying contract, and no intent to be
bound
What is the effect?
It is void, because there is no consent
o 2. Relative
They intend to be bound, but concealing the real
agreement
Ex. making a donation to a son seem like a
sale as to not make siblings jealous
What is the effect?
It will be treated in accordance with the rules
of the concealed contract
Object
Requisites of object of contract?
o 1. It must be within the commerce of man, whether existing or
in potency
o 2. It must be licit
o 3. It must be possible
At the time of perfection of the contract
What if it is impossible from the very start?
The contract does not exist because the
prestation does not exist
What if it becomes impossible in the middle of the
contract?
 Extinguishes the obligation o 4. Partnership where real property is contributed
o 4. It must be determinate as to its kind and determinable as to o 5. Interests in mutuum
quantity Must be expressly stipulated
o 6. Sale of land by an agent
Causa Power of agent must be in writing, else, sale is void
o 7. Chattel mortgage
What is the causa in onerous reciprocal obligations, like a contract o 8. Stipulation limiting common carriers duty of extraordinary
of sale? diligence to ordinary diligence
o For the seller, the payment of the money to him o Can one party require the other to follow the correct form?
o For the buyer, the delivery of the thing bought No, because that would presuppose a valid contract.
What about a remuneratory obligation? There is none here for failure of form.
o The service performed There are cases when form is required but not for validity but for
For donations? registration. What are these?
o Gratuity or liberality o Those in Art. 1358
Distinguish object form causa: 1. Acts and contracts for real rights over immovable
o Object is what is owed? property,
o Causa the proximate why of the contract. EXCEPT sales of real property or interest
Not the ultimate why, which is motive therein, which is governed by the SOF
Requisites? 2. Cession, repudiation, renunciation or hereditary
o 1. It must exist rights or those in CPG
o 2. It must be real 3. Power to administer property or any other power
o 3. It must be licit which:
Is there any instance when failure of the motive will lead the Should appear in a public document
contract to fail? Or should prejudice a third person
o Yes. 4. Cession of actions or rights from a public document
o 1. When the motive is stipulated to be a suspensive condition o Failure to follow form makes it valid and enforceable but
o 2. The realization of the motive is the cause of the contract and cannot be registered
there is an intervening serious mistake of fact o Can one party require the other to follow the correct form?
Yes. One party can require the other party to follow
Form the correct form needed (since they are valid)

General rule: no specific form required Defective contracts

When is it required?
o 1. Donation of property What are the types of defective contracts?
o 2. Sale of large cattle o 1. Rescissible
o 3. Antichresis o 2. Voidable
Requires statement of the principal and interest in o 3. Unenforceable
writing o 4. Void/inexistent
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 When is it rescissible? o1. Entered into by guardians when wards suffer lesion by more
o When there is particular economic damage to one of the than of the value of the thing
parties or a third person Ex. the guardian of a ward who owns harvest with
How does the law treat the contract? value of P100K sells it for P80K.
o It is intrinsically valid but external factors allow it to be Is there lesion?
rescinded o Yes.
When is it voidable? Is there rescissible lesion?
o Defect in consent in one of the parties o No, because P20K is less than of
How does the law see it? the harvests property.
o Valid until annulled A guardian is judicially appointed. If the sale is
When is it unenforceable? made with court consent, what is the effect?
o For lack of authority, or writing, or incompetence of parties There can be no rescission.
How does the law see it? Sale of fruits and personalties are acts of
o Cannot be given effect unless ratified administration. These do not need judicial approval,
When is it void? so lesion can result. But for sale of real property, for
o Lack of requisites instance, where there must be court approval, there
Which can be cured? can be no rescission.
o Voidable and unenforceable N.B. its more than not at least
o 2. Same, but for representatives of absentees
Rescissible o 3. Disposition in favor of third person in fraud of creditors
What is the extent of rescission?
What is rescission? Only to the extent of creditor prejudice
o A process or remedy designated to render inefficacious a o 4. Refer to things under litigation if entered into without
contract validly entered into and normally binding by reason of knowledge of litigants or consent of judicial authority
external conditions creating an economic prejudice, either to a Rescissible at plaintiffs instance
party or to his creditors o 5. By special provision of law
What are the requisites for rescission? o (1382) 6. Payments made under state of insolvency for
o 1. The contract must be rescissible under 1381-2 obligations to whose fulfillment the debtor would not be
o 2. Last resort for plaintiff compelled at the time they were effected
o 3. Plaintiff must be able to return what he would be obliged to Does this require judicial insolvency?
return if rescission takes effect No, just actual insolvency
Sometimes, there is nothing to return, like a creditor in What is the effect?
action pauliana o Return what he may be obliged to return
o 4. The object of the contract must not have passed to an o When does it apply?
innocent third person Only instances #3 and 4 since for the rest there is
What are the rescissible contracts? nothing to return

Voidable
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 What are the characteristics of voidable contracts? return the fruits, value of the thing at the time of the
o 1. Effective unless set aside loss, interest
o 2. It may be assailed only for an action specifically for that o What if it is lost fortuitously?
purpose Return fruits and value of the thing at the time of the
Cannot attack it collaterally loss, but no interest
o 3. It can be confirmed o What if the thing the plaintiff must return is lost through
N.B. the law uses ratify confirm is a better term fault or fraud?
Ratification is for 1403 par. 1 Action is extinguished
Acknowledgement is for 1403 par. 2 Even if the party was incapacitated. If the party was
Confirmation may be express or tacit (implied waiver) incapacitated, he has to prove there was no fault or
May the guardian effect the ratification? fraud, if he wants the action to prosper.
Yes. o What if it is lost fortuitously?
o 4. May be assailed only by the party with vitiated consent, his Tolentino: action is extinguished unless the plaintiff
heirs, or subsidiaries offers to pay the value of the thing
What are the requisites of confirmation? Caguioa: plaintiff can still recover
o 1. Contract is voidable o What is the rule for restitution if one of the parties is
o 2. Confirmation made with knowledge of voidability incapacitated?
o 3. The cause for voidabilty has been removed The incapacitated person is not obliged to make
o 4. The one who is doing so if the one whose consent is restitution except insofar as he has been benefited by
defective the thing or price or received by him
When will action for annulment not prosper?
Unenforceable
o 1. If it has been confirmed
o 2. Prescription
What are the kinds?
What is the period to file the action?
o 1. Entered into in the name of another by one with no authority
4 years from the disappearance of the cause or legal representation, or acting beyond powers
for intimidation, violence, or undue influence o 2. Both parties are incapable of giving consent
4 years from discovery, for mistake or fraud What if one becomes capacitated and confirms it?
4 years from cessation of guardianship, in It becomes voidable
case of minor or incapacitated persons And if the other does so too?
o 3. Loss of the thing due to fraud or fault of person with right to Becomes valid
institute proceedings o 3. Falling under the Statute of frauds
o 4. Estoppel A. Agreement whereby its terms, cannot be begun
1400 and 1401 In a voidable contract, upon annulment, there within one year from the agreement
must be mutual restitution (just like resolution and rescission).
Refers to commencement, not completion
Are there any instances when the duty of mutual restitution is not
B. Special promise to answer for debt, default, or
present?
miscarriage of others
o The thing is lost due to defendants fault or fraud:
Contract of guaranty or suretyship
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 C. Agreement made in consideration of marriage
except mutual promise to marry
D. Sale of chattel/goods/things in action for price
P500 or more
Unless there is payment of price or delivery
of goods
E. Agreement for leasing for period longer than 1 year
or sale of real property/interest therein
Amount is immaterial for real property
F. Representation as to the credit of a third person
G. (Art. 1443) no express trust concerning an
immovable or any interest therein may be proved by
parol evidence
How does the contract get out of the SOF?
o 1. There is a note or memorandum in writing
o 2. Subscribed to by the party charged or his agent
What are the rules re: Statute of frauds?
o 1. Only applies to actions which are for specific performance or
breach
o 2. Does not make void the contracts falling under the
enumeration if not in writing. It just bars action for specific
performance or breach
o 3. Applies only to executory, and not executed contracts in
whole or in part
Executory one where there is no performance in
either side
If either side has performed, then it gets out of SOF
(1405 acceptance of benefit)
o 4. Cannot be proved by parol evidence.
How do you resist a claim on an unenforceable contract?
o File a motion to dismiss
o Or use SOF as affirmative defense
o Or object to presentation of parol evidence during trial
Failure to object: waiver
Can a third person assail the enforceability of an unenforceable
contract?
o No, only the parties.
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Void
What is it?
o No force and effect, as if never entered into
o Never validated, either by time or ratification
Enumeration in 1409:
o 1. Cause, object, or purpose is against law, morals, GC, PP,
PO
o 2. Absolutely simulated
o 3. Cause or object could not exist at the time of the transaction
This says those whose cause or object did not exist
at the time of the transaction. This is wrong,
because there can be a contract over a future thing.
It must be cause or object could not exist original
impossibility.
o 4. Object is outside commerce of men
o 5. Contemplates an impossible service
o 6. Intent of the parties relative to the principal object of the
contract cannot be ascertained
o 7. Expressly prohibited or declared void by law
Characteristics?
o 1. No effect whatsoever
o 2. No action for annulment necessary because the nullity exists
ipso jure
Judgment of nullity is merely declaratory
o 3. It cannot be confirmed, ratified, or acknowledged
o 4. If performed, the restoration of what has been given is in
order
o 5. Right to set-up defense of nullity cannot be waived
What are the special instances of void contracts?
o 1490, 1491 ex. contract between husband and wife
What is the pari delicto rule (1411-2)?
o It literally means in equal fault.
What if the act constitutes a criminal offense?
o 1. Its a void contract which happens to constitute a criminal
offense
o 2. If they are in pari delicto: no action for specific performance
or restitution for either side both are prosecuted
 o 3. What if only one party is guilty? LAND TITLES
For the guilty party, no action for restitution
For the innocent party, there can be What are the purpose and advantages of the Torrens system?
What if the object/cause is unlawful but not criminal? o 1. Make a title indefeasible
o 1. If both are guilty, there can be no specific performance or o 2. Make it imprescriptible
restitution o 3. Make it immune to collateral attacks
o 2. What if only one party is guilty? When is an attack direct?
For the guilty party, no action for restitution When the object is to annul or set aside the
For the innocent party, there can be decree of title
N.B. So whether criminal offense or not, no action for specific Can a counter-claim be considered a direct attack
performance. Restitution depends on guilt/innocence. on the title?
Article 1412-19: exceptions to pari delicto rule Yes. (Erman v. Erman)
o N.B. The parties are in pari delicto, but despite that, due to o 4. Conclusive (after lapse of period for remedies)
social considerations, allows one of the parties recovery: o 5. Declares the titled property free from liens and
o 1. Interest paid in excess of allowable by usury laws encumbrances not annotated, except:
o 2. Money paid for illegal purpose, but before it was A. Those not required to be annotated
accomplished or damage has been caused to third persons B. Unpaid real estate taxes within 2 years prior to
o 3. One of the parties to the illegal contract was incapacitated purchase (the taxes pre-2 years are paid by the
o 4. Agreement is not illegal per se but merely prohibited, and delinquent taxpayer alone)
prohibition is to protect the party seeking recovery of the C. Existing:
money paid public highways, government irrigation canal;
o 5. Payment of price beyond maximum price allowed by law for legal right of way under private law;
a commodity and the like
o 6. Employer and employee voluntarily agreeing on wages D. Limitations on disposition or use, under law
below the minimum wage or more hours than allowable But is registration a mode of acquiring title?
working hours (can ask for OT pay) o No, its not. There has to underlying basis for title before
What is pactum commissorium? registration.
o The creditor cannot appropriate the things given by way pledge o Such as?
or mortgage, or dispose of them. 1. Possession
Contrary stipulation is null and void. 2. Succession
What is pactum de non alienado? 3. Donation
o There can be no stipulation prohibiting the mortgagor from 4. Accretion
alienating his own property. 5. Sale
What is pactum leonina? 6. Acquisitive prescription (10/30 years)
o A stipulation which excludes one or more partners from any Can land registered under the Torrens system and for which a
share in the profits or losses of the partnership is void. certificate of title has been issued be taken?
o No.

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 o What is the exception? It must not be contested by fellow IPs in the
If taken by the Dept. of Agrarian Reform (CARL) community
Police Power, Eminent Domain, Taxation Which lands are treated as alienable and
Who can register under PD 1529? disposable agricultural lands?
o 1. Those with open, continuous, exclusive, and notorious Those ancestral lands which are agricultural
(OCEAN) possession and occupation in character and actually used for
Of what? agricultural, residential, pasture, and tree
Alienable and disposable lands of public farming purposes
domain Including those with a slope 18% or more
What if the land is not alienable (ex. Until when can this right be exercised?
forest or park reservation)? Unless extended, until 29 Oct 2017
o It cannot be registered. The o What is the rule on Ancestral Domains?
certificate of title is void. It is communally owned. Registration is with the
Since when? Ancestral Domains Office of the NCIP, which shall
June 12, 1945 or earlier cause notice through publication and subsequent
Possession by whom? survey.
The registrant or his predecessors-in-interest Is this communal ownership the same as co-
o 2. Acquired ownership of private lands by prescription ownership under the NCC?
o 3. Accretion No.
What can be acquired? o What is the relationship of A.D. registration with existing
Private lands property rights?
Or abandoned river beds Existing property rights prevail.
When is there accretion (requisites)? o What is the priority as re: natural resources in these
1. The deposit is gradual and imperceptible Ancestral Domains?
2. Made through effects of water current The IP groups possess priority rights in using such.
3. Land is adjacent to river banks Non members of the IP group may develop and use
What does registration do? these resources for agreements not exceeding 25
To confirm and make the title imprescriptible years, renewable for not more than 25 years
o 4. Acquired ownership of land in any other manner provided by What is specially required?
law There must be a formal and written
Who can register under RA 8371 (IPRA)? agreement
o Individual members of IP communities, as to ancestral lands Extractions must be used to facilitate
(not domain), which they continuously possessed and development and improvement of ancestral
occupied in the concept of an owner since time immemorial or domains
at least 30 years before 29 Oct 1997 (approval of IPRA) Can a corporation register public land?
What else is required? o No. It can only lease public lands.
o But can a corporation acquire private land?

139
 Yes, as long as it is a Philippine corporation (60% N.B. contrast with accretion
rule). o [public waters]
N.B. If land is held by an individual from June 12, 1945 or ealier, it ipso o 1. Rivers
jure becomes private land (akin to #1 in the enumeration) o 2. Lakes
o THUS, if a corporation has personally possessed or is claiming o 3. Water sheds
under a predecessor-in-interest who has possessed the o [reservations]
property since June 12, 1945, the land is ipso facto converted o 1. Military reservations
to private land, which it can own. o 2. Other reservations
o Is forest land registrable? o [previously titled]
No, it cannot be registered. o 1. Previously titled lands
o Who can declassify it? What is the process of land registration?
Executive branch of government o 1. Survey
o Is payment of land taxes sufficient? Who performs this step?
No. It must be couple with possession in the concept Survey plan is signed by geodetic engineer
of an owner Approved by Director of Lands
o If it is not held since June 12, 1945, then what is required Is this an essential requisite?
apart from adverse possession for the proper period? YES.
The claimant must prove, by government act, that the o 2. File application for registration
land was classified as public and alienable lands. Where?
What is the status of reclaimed lands? In RTC where the land is actually situated
o Lands reclaimed by government are not available for sale to Can be to MTC is value is 100k or less
private parties unlike other alienable public lands. (Chavez v. What to identify?
PEA) 1. Basis of ownership
o The general rule that the grant of patent or certificate of title 2. Identity of Land
makes alienable land of the public domain automatically 3. Adjacent owners
become private land does not apply to government units and
4. Occupants/tenants
entities like the PEA.
5. Encumbrances
o When then can it become private land?
o 3. Set date of initial hearing
When it is transferred to qualified private parties or
o 4. Publication/posting
government entities not tasked to dispose public
What is the time frame?
lands (unlike the PEA)
It must precede the initial hearing or else the
What properties cannot be registered?
court has no jurisdiction
o [public lands]
Publication:
o 1. Forest lands
1. Official Gazette
o 2. Mineral lands
2. Newspaper of general circulation
o 3. Grazing lands
N.B. both must be done (Director v. CA)
o 4. Mangroves
Notice:
o 5. Manmade alluvial deposits along a river
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 1. To all persons whose addresses are 2. In favor of oppositor/s
known 3. Dismiss case because nobody proved
o Within 7 days of publication in OG ownership
2.To DPWH, governor, and mayor if o 10. Court issues order for Decree
adjacent to road or public highway o 11. Issuance of Decree
3. To DAR, if river, farm, etc. Becomes incontrovertible after 1 year from issue
4. Others, by discretion (because the law allows the remedy of Petition for
Posting by ex-officio sheriff: Review within this period, under PD 1529)
1. Conspicuous place o 12. ROD issues OCT
o At least 14 days before hearing What are the remedies from an Order of Default?
2. Bulletin board in municipality or city o 1. Before decision
o 5. Oppositor files verified opposition Motion to lift order of default based on FAME
When? o 2. After decision
On or before hearing Petition for relief based on FAME
o 6. Otherwise, court issues order of general default What are the remedies from a Decision?
What if the oppositor attends hearing but does not o 1. MR on ground that decision is contrary to law/evidence
file an opposition? o 2. MNT on grounds of FAME or newly discovered evidence
1. Can be declared in default o 3. Appeal, on ground that it is contrary to law/evidence
2. Or can be given extension, after which, o When must any of these be filed?
failure to comply leads to default Within 15 days from receipt of decision
o 7. Ocular inspection What are the remedies from a Final Judgment?
What is checked? o (N.B. decision becomes final after lapse of 15 days)
1. Improvements o A. When a decree has not been issued
2. Lot owners 1. Petition for relief under ROC Rule 38
3. Adjacent owners What grounds?
What happens after? o FAME
The court prepares a report What are the requirements?
o 8. Hearing/trial o 1. Verified
What must the applicant prove? o 2. Filed 60 days from notice but no
1. Proof of publication (jurisdictional matter) more than 6 months from entry of
decision
2. Proof of ownership
o B. When a decree has been issued
3. Proof of identity of land
1. Petition for review under PD 1529, Sec. 32
What can the oppositors introduce?
What grounds?
Rebuttal evidence
o Actual and extrinsic fraud
o 9. Decision
When may it be filed?
What are the 3 situations?
1. In favor of applicant
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 o Within 1 year from issuance of o 2. No negligence of the party
decree deprived
Exception? o 3. Reconveyance is not possible
o When there is an innocent o 4. Action filed within 4 years
purchaser for value What is the effect of a final decision with publication?
When is there an IPV? o It binds all parties in rem (binds the whole world)
o 1. No knowledge of defect in title o How can oppositors and squatters who entered before the
o 2. Payment of just price decree be evicted thereafter?
o 3. Examined sellers duplicate Writ of possession from the court
certificate of title o What about those who entered after the issuance of the
2. Action for reconveyance decree?
When do you file this? Ejectment suit
o If more than 1 year has elapsed What is a certificate of title?
Ground? o It is evidence of title, that the land is registered under the
o Extrinsic fraud or breach of trust Torrens system
Exception? o How many copies of the certificate?
o When there is an IPV Original with the ROD
o What is the remedy then? Duplicate with the registered owner
Action for damages ( value o What happens when there are conflicting certificates?
of land + damages) Earlier one prevails unless it is defective
When can it be filed? Compare cadastral registration with ordinary land registration:
o 1. Within 4 years of discovery of o In cadastral registration, it is the government, through the
fraud when there is need to annul Director of Lands, that commences the petition and NOT the
fraudulent deed persons claiming.
o 2. Within 10 years from breach of o Those claiming are merely compelled to go to court to make a
implied trust if aggrieved party is claim or make known their interest in the land.
not in possession of the land What is the procedure in cadastral registration?
o 3. Imprescriptible from breach of o 1. Survey conducted
implied trust if aggrieved party is in President tells Director of Lands to conduct the survey
possession of the land Notice and publication to those with interest and
Akin to a quieting of title general public
o 4. Imprescriptible from breach of Official Gazette
express trust Conspicuous place on municipal building
3. Action for damages bulletin board
Requisites for award of damages? Copy sent to mayor, barangay captain, and
o 1. Unlawful deprivation of land Sanggunian

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 Persons claiming interest inform the geodetic 2. Clerical error in certificate
engineers of boundaries of claimed land 3. No serious dispute as to error or change of status
Parcels are designated as lots 4. Not amount to reopening
o 2. Petition 5. Not impair rights of IPV
Filed by Director of Lands (represented by Sol-Gen), o What if there is substantial change in the CT?
filed with RTC, and showing public interest involved. It must go through ordinary registration proceeding
Describe the land and the plan. 2. Reconstitution
o 3. Notice given (same as usual) o `What if the duplicate OCT is lost?
Publication File action for replacement
Mailing o What if the original OCT is lost?
Posting File action for reconstitution
o 4. Answer to petition filed by claimant What is the requirement for this?
1. Identity of claimant Petition that notifies occupants, adjacent
2. What is the lot claimed and what is the interest owners, adverse claimants by publication,
therein or time of possession/manner of acquisition posting, and personal notices
3. Provide adjoining owners and encumbrances or Otherwise, the reconstituted title is void
adverse claims, if any o What is the special requirement re: IPVs on reconstituted
When is a MTD allowed? titles?
Already subject to prior patent If a title has been reconstituted the buyer must
Or res judicata applies exercise extraordinary diligence to be deemed an IPV
o 5. Hearing, judgment, and issuance of decree o X pretends to be owner of land, files, for reconstitution,
What are the possible results? obtains reconstituted certificate, and mortgages to Z. Y,
1. Judgment of ownership the true owner, still has his TCT copy. Does Z have a right
o Usual remedies allowed through the mortgage?
o If no appeal performed, court orders No. Z has no better right than X, especially where Y,
LRA to issue certificate of title the true owner, still has his TCT copy.
o Registration of decree by the LRA o When is notice to owners or adjacent lots or actual
2. Declare land as public occupants NOT needed for reconstitution?
3. Order correction of technical description of When the source of reconstitution is the owners
the land or resolve overlapping titles duplicate copy thereof
o For both, as long as no impairment 3. Double sale
of substantive rights of owners o In a double sale situation, to whom does ownership
passes?
Actions, dealings, and subsequent registration The buyer in GF who first records the sale in the ROP
o What is a notice of adverse claim?
1. Amendments of CT
o When can amendment be done summarily?
1. Registered interest has terminated
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 A measure to protect interest of person dealing over a
piece of land, and to warn third persons dealing with
that property
What is specially required in the notice?
It must state how and under whom the right
was acquired
When is a notice of adverse claim effective?
Upon entry in the day book, even if the
owners duplicate has not been surrendered
What is subsequent registration?
o When the land is already titled and you deal with it
o When is there registration of voluntary transactions?
Once the deed is entered into the day book, the
registrant surrenders the owners duplicate of title,
and pays fees
o Example of voluntary transactions?
Sale and mortgage
o When is mortgage deemed registered?
Entry in the day book, even if it is not annotated at the
back of the title
NOTE: for involuntary dealings, entry in the day book
is enough, even if the title is not surrendered. The
reason is obvious: the owner is likely not to surrender
his title in an involuntary dealing, unlike a voluntary
one.
o How long is the life of an adverse claim?
30 days, after which it lapses
What must be done and what is the effect?
The affidavit of adverse claim must be
entered into the day book, so the
subsequent buyer is constructively bound
If there is a notice of lis pendens or adverse claim,
how does it affect the double sale situation?
The party seeking to register cannot invoke
good faith when there is an annotation at the
back of the title
Can a private individual bring an action for reversion?
144
o No he cannot.
o What is the prescriptive period for reversion?
None, because its the right of the State to recover
properties registered but are not capable of private
appropriation
Chain of title
Can the buyer have title even if the seller does not?
o Yes, on certain situations. This is an exception to the civil law
doctrine that the stream cannot be higher than the source.
In general, what is the effect of a forged deed?
o It is a nullity and cannot serve as just title.
Situation 1: X is the registered owner of TCT 12345. X goes to the
US and gives title to Y in trust. Y forges Xs signature in the deed
of sale in Ys favor. Y gets TCT 12346. Y sells land to Z as IPV. Z
registers the land and gets TCT 12347.
o Does Y have a valid title?
No, its void.
o Does Z have a valid title?
Yes.
o X returns from the US and learns of the sale. Can X
recover from Z?
No. Z is an IPV.
What is Xs remedy?
Go after Y for damages.
When can X recover from Z?
If Z had not yet obtained his TCT.
o Hypothetically, could Y have mortgaged the land in favor
of Z, and would it have been valid?
Yes and yes. While legally Y is not the owner of the
land and cannot mortgage it, as far as Z is concerned,
Y is the registered owner. X must respect the
mortgage.
Situation 2: X is the registered owner of TCT 12345. Y
misrepresents to Z that he is X and sells the land to Z. Z gets title
TCT 12345.
o Does Z have a valid title?
 No. Z is negligent because he has the duty to find out Distinguish the two.
if the seller is the registered owner. (This duty also
applies if the price is suspiciously low.) Commodatum Mutuum
Note that there is no chain of title, since Y did not get SM is non-consumable SM is consumable
title in his name. Thus, Z has no title either. Ownership retained by bailor Ownership transferred to bailee
o What is Xs remedy? Essentially gratuitous Gratuitous or onerous
Return same thing Pay same amount or same
Since the title is void, X can recover the property from
kind/quality
Z. Real or personal property Personal property only
Situation 3: Y forges the deed of sale but does not register it to get Loan for use or temporary Loan for consumption
a new title. Y shows it to Z, and Z buys. Y makes deed of title in possession
favor of Z. Right to demand return of the thing No right to demand return before
o Can X recover the property from Z? in case of urgent need, even before lapse of term agreed upon
Yes, he can. There is no chain of title. expiration of term
o Who should shoulder the loss? Loss shouldered by bailor Loss shouldered by bailee even if
the loss is caused by fortuitous event
The one who is negligent. In this case, it was Z.
Distinguish between commodatum and lease.
What is the requirement of diligence for those dealing with
property covered by a Torrens title? Commodatum Lease
o Not required to go beyond what appears on the face of title. Real contract Consensual contract
SM is non-consumable thing SM can be even work or service
Essentially gratuitous Onerous
CREDIT TRANSACTIONS Distinguish between commodatum and usufruct.

Loan Contracts Commodatum Usufruct

By law or by contract By law, contract, testamentary
What are the characteristics of a loan contract? succession, or prescription
o 1. Real Contract, because delivery of the thing loaned is Purely personal right to use Real right to the fruits of anothers
anothers property property
necessary to perfect the K
Essentially gratuitous May be onerous
o 2. Unilateral Contract only the borrower has obligations upon Real contract Consensual contract
perfection Bailee only acquires use of thing, but Usufructuary acquires right to both
What are the kinds of Loan? not fruits use and fruits of the property
o 1. Commodatum (hiram) Consumable goods may be the SM May be over consumables like
The bailor delivers to the bailee a non-consumable only when the purpose of the K is for money
thing and the bailee may use it for a certain time and mere exhibition
return the same thing
o 2. Mutuum (utang) What are the characteristics of commodatum?
The bailor delivers to the bailee money or some o 1. Essentially gratuitous
consumable thing and the latter will pay the same What if its not?
amount or the same kind/quality Its a lease.
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 o 2. Purpose: temporary use of the thing loaned
Can acquisitive prescription in favor of the bailee
vest?
No. There is no just title. The duty to return
prevails.
o 3. Use is limited to the thing, but not the fruits
Exception?
If stipulated otherwise
o 4. SM is generally non-consumables unless the purpose of the
contract is exhibition of consumable things
X lent Y P200000 to deposit in Ys corporations
bank account to meet the minimum capitalization
requirement. Y would be tasked to return it after a
month. What is the contract?
Commodatum, even if the SM was
consumable goods. The purpose was
merely to show requisite capitalization, not
for consumption.
o 5. Bailor need not be the owner, as long as he has possessory
interest
o 6. Personal contract
What if one of the parties dies?
The contract is extinguished; it doesnt get
inherited.
Cf. for usufruct, this is not the rule because
usufruct is a real right over the property. It
attaches.
o 7. Bailee cannot lend or lease the SM of the contract to a third
person
What is the exception?
Member of the bailees household
What are the exceptions to the exception?
1. Stipulated to the contrary
2. Nature of the thing forbids its use
What are the obligations of the bailee?
o 1. Liable for ordinary expenses for use and preservation of the
thing
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Is the bailee liable for ordinary wear and tear of
the thing due to use?
No.
What are the exceptions?
o 1. If done with fault or negligence
o 2. Devoted the thing to a different
purpose from what was stipulated
o 2. Bailee not liable for loss due to fortuitous event
What are the exceptions?
1. Bailee devoted thing to different purpose
2. Bailee kept thing longer than period
stipulated
3. Thing was delivered with appraisal of its
value
o Unless stipulated otherwise
4. Balee lent the thing to a third person
outside his household
5. Bailee, given a choice to save either the
thing or his own thing, chose the latter
X lent Y his jeep to bring Ys sick wife the
hospital. On the way back, Y took on paying
passengers who paid money. The jeep then was
struck by lahar and was destroyed. Is Y liable?
Yes. The contract is commodatum, and Y
devoted the jeep to a purpose different from
what it was lent for.
o 3. Bailees are solidarily liable when the thing is loaned to 2 or
more bailees in the same contract
o Can the bailee retain the thing loaned as security for
claims against the bailor?
No, not even due to extraordinary expenses incurred
What are the obligations of the bailor?
o 1. Allow the bailee the use of the thing loaned for the period
stipulated, or until accomplishment of the purpose
What are the exceptions?
1. Urgent need, which suspends the
commodatum
 2. Precarium: What are the exceptions?
o A. Duration not stipulated 1. Debtor is in delay liable to pay legal
o B. Use or purpose not stipulated interest as indemnity, even in the absence of
o C. Use of thing merely tolerated by stipulation of interest
the bailor 2. Interest due shall earned interest from the
When else can the bailor demand the thing to be time its judicially demanded (interest on the
returned? interest)
Acts of ingratitude by the bailee o 2. Usury Law has been suspended
o 2. Refund extraordinary expenses for preservation of the thing But in case the interest rate is too exorbitant, the
What is the notice requirement? obligation is still valid although the interest may be
The bailor must be notified before the reduced
expenses were incurred o What is the legal interest?
What is the exception to this? 12% for loan or forbearance of money
Urgent need to repair 6% for other obligations
o 3. Refund 50% of extraordinary expenses from actual use of Ex. damages for personal injury, unearned
thing loaned profits, etc.
What is the exception? But it becomes 12% from the time when
Contrary stipulation judgment becomes final and executory
o 4. Pay damages to bailee for known hidden flaws in the thing until payment of such
loaned From whence can legal interest be counted?
What are the characteristics of mutuum? Usually, from rendition of judgment, not
o 1. Borrower acquires ownership of the thing and can dispose of demand
it But when the demand is established with
o 2. If the thing loaned is money, it must be in legal tender and in reasonable certainty, the interest begins to
case of extraordinary inflation or deflation, basis of payment run from when judicial or extrajudicial claim
may be value of the currency at time of creation of obligation is made (from default)
o 3. If consumable thing is loaned, borrower must return thing of o What are examples of SC rulings re: interest rate?
same kind/quality 5.5%/month is excessive and unconscionable (E and
Distinguish between mutuum and lease: U)
6%/month (72% per annum) is E and U
Mutuum Lease 3%/month (36% per annum) reduced to 1%/month
SM is money or consumable thing Anything (12% per annum)
Ownership is transferred Ownership is retained by lessor Penalty charge of 5%/month is E and U
Relationship is creditor-debtor Relationship is landlord-tenant or o Is an escalation clause valid?
lessor-lessee
Yes, if it also includes a de-escalation clause or a
stipulation that the rate of interest shall be reduced in
What are the rules on interest?
o 1. Interest must be expressly stipulated in writing
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 the event that the maximum rate of interest is reduced
by law or the Monetary Board
Can an escalation clause stipulate that escalation What are the kinds of deposit?
is dependent on one of the parties? o 1. Judicial
No. That would violate mutuality of o 2. Extra-judicial
contracts. Voluntary
o Can a debtor be made liable for both stipulated monthly necessary
interest and the stipulated penalty charge? Distinguish between judicial and extra-judicial deposits.
Yes.
o Can there be compounding of the penalty or Extra-judicial Judicial
compensatory interest (adding to the principal)? By will of the parties By order of court
SM is movables SM may be immovable or movables
Yes, and this shall earn new interest.
Purpose is safekeeping Purpose is to secure or protect
owners right
Deposit
Essentially gratuitous Always onerous
Return upon demand by depositor Thing delivered only upon court
What are the characteristics of deposit? order
o 1. Real contract
o 2. If gratuitous, unilateral. If onerous, bilateral. What are the characteristics of voluntary deposit?
o 3. Principal purpose is safekeeping of the thing delivered o 1. Delivery made upon will of depositor
o 4. Essentially gratuitous o 2. Depositor need not be the owner of the thing, although thats
Exceptions? usually the case
1. Contrary stipulation o 3. May be oral or in writing
2. Depositary is in business of storing goods What are the obligations of the depositary?
3. Property saved from destruction during o 1. Keep the thing safely and return it when required, even if a
calamity without owners knowledge (must specific term was stipulated
compensate depositary) What are the special requirements in return if it is
Distinguish deposit from mutuum. locked or sealed?
1. Return the thing deposited in the same
Deposit Mutuum condition, if delivered closed and sealed
Purpose is safekeeping Purpose is consumption of SM
2. Pay for damages if the seal or lock is
Depositor can demand return at will Lender must wait for period to expire
SM is movables (extra-judicial) and SM is money or consumable thing broken through his fault (which is presumed)
immovables (judicial) 3. Keep secret of the deposit when the
seal/lock is broken
Distinguish between deposit and commodatum. When can the depositary open the thing
deposited, even if locked and sealed?
Deposit Commodatum 1. Presumed authority (ex. keys were
Purpose is safekeeping Purpose is transfer of use delivered)
May be gratuitous Always gratuitous
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 2. In case of necessity
o 2. Liable for loss if through fault or negligence
What is the presumption?
If lost while in the possession of depositary,
there is presumption of fault
How does the degree of negligence differ?
For gratuitous deposit, the standard of care
required is less than for onerous deposit
o 3. Cannot deposit the thing to a third person
o 4. Liable for loss of the thing deposited, if:
1. Transferred to a third person without authority
Negligence need not be proved
2. Transferred to a third person, with authority, but the
third person is manifestly careless or unfit
Negligence need not be proved
3. Thing is lost due to negligence of own employees
When is the depositary not liable?
Loss of the thing without negligence of the
third person, if transfer was authorized, and
the person was not manifestly careless or
unfit
o 5. Notify the depositor and wait for decision if he will change
the way or manner of deposit
Exception?
If the delay will cause danger
o 6. If the thing earns interest, must 1) collect interest as it
becomes due, and 2) take steps as may be necessary to
preserve its value and the rights corresponding to it
o 7. Not to commingle things deposited if so stipulated, even if
they are the same kind/quality
So usually he can commingle?
Yes.
o 8. Not to make use of the thing, otherwise, liable for damages.
Exceptions?
1. Express permission of depositor
2. Preservation of the thing requires its use
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What if the thing is non-consumable and the
depositary has permission to use it?
It becomes commodatum
What if it is money or consumable thing?
It becomes mutuum
But what if the principal purpose is still
safekeeping?
o Then it becomes an irregular
deposit
o When is the depositary liable even if loss is due to
fortuitous event?
1. Stipulated
2. Used the thing without depositors permission
3. Delays in return
4. Allows others to use it, although the depositary
himself may be authorized to use it
To whom can return of the thing deposited be made?
o 1. To the depositor, heirs, or successors, or to the person
designated in the contract
o 2. If the depositor was incapacitated when the deposit was
made (ex. minor):
Return to his guardian or administrator
Or the depositor himself if he acquires capacity
o 3. If the depositor was capacitated, but he lost it, then return to
his guardian/legal representative
Where must it be returned?
o 1. Place agreed upon
o 2. If no stipulation, place where the thing deposited is
Even if it was transferred?
Yes, even if it should not be the same place
where the original deposit was made
Exception?
When there is malice on the part of the
depositary who transferred the thing
Who shoulders transportation costs?
The depositor
When must the thing be returned?
 o Generally, upon demand or at will, regardless of period
stipulated
o Exceptions?
1. Thing is judicially attached while in depositarys
possession
2. Depositary was notified of the opposition of a third
person to the return or removal of the thing
When can the depositary return the thing deposited at his will
(Requisites)?
o 1. The deposit must be gratuitous
o 2. Justifiable reasons exist
What are the rules on alteration by the depositarys heir (i.e. heir of
the depositary sold the thing deposited)?
o 1. If in GF, the heir may either return the price he received or
assign his right of action against the buyer in case the price
was not yet paid
o 2. If in BF, heir liable for damages and may be sued for estafa
What is the relationship between a bank and depositor?
o The depositor is the creditor, and the bank is the debtor
o It is NOT a deposit contract, but a mutuum
So what is the legal effect of failure to pay
deposited money?
Its failure of debtor to pay a loan, and not
breach of trust from depositarys failure to
return the SM
When does the obligation of a bank to pay interest
on a deposit cease?
When the operations of the bank are
completely suspended by the C.B.
What are the obligations of the depositor?
o 1. Pay expenses for preservation of the thing if deposit is
gratuitous
o 2. Pay for losses incurred due to character of the thing
deposited
What are the exceptions?
1. Depositor was unaware
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2. Depositor was not expected to know the
dangerous character of the thing
3. Depositor notified the depositary about it
4. Depositary was aware, even without
depositors advice
o Can the depositary retain the thing deposited in pledge
until full payment of what is due him by reason of deposit?
Yes, he may.
Cf. The rule is different from commodatum, which
does not allow retention
When is there necessary deposit?
o 1. In compliance with legal obligation
A. judicial deposit of thing where multiple persons
dispute possession of such
B. deposit with bank or public institution of public
bonds/instruments of credit [payable to order/bearer]
given in usufruct, when the usufructuary does not give
proper security for their conservation
C. Deposit of thing pledged when the creditor uses it
without authority of the owner or misuses the thing
D. In suits, when provided by the ROC
E. Constituted to guarantee contracts with the
government
o 2. Made during a calamity
o 3. By travelers, in hotels and inns
What are the required actions of the depositor?
1. Depositary is informed about the effects
brought by the guests
2. Guests took precautions for safekeeping
When is the hotelkeeper liable, regardless of
amount of care exercised?
1. Loss or injury is caused by servants,
employees, or strangers [if the two requisites
concur above]
2. Loss is caused by robber or thief acting
without irresistible force
When is the hotelkeeper not liable?
 1. Loss is caused by force majeure or If there is doubt, what is presumed, guaranty or suretyship?
theft/robbery attended by irresistible force o Guaranty. Suretyship is never presumed.
2. Loss is due to acts of guests, his family, o Is an unconditional guaranty a suretyship?
servants/visitors No. It just means that unlike a conditional guaranty, it
3. Loss due to character of the things needs no other extraneous event to trigger the
brought into the hotel guarantors liability. But the principle remains that the
Can a hotelkeeper stipulate absolute exemption principal must first default.
from liability? Differentiate insurer of debtors insolvency (G) and insurer of
No. This is void. the debt:
Can the hotelkeeper retain the things of guests as o 1. Surety promises to pay the principals debt if the principal
security for unpaid lodging expenses and will not pay.
supplies? Must a surety be notified of the principals default
Yes. first?
See the usual rule on deposits, with which No. In fact, no prior demand is needed;
this is consistent. direct suit against the principal is the
Contra commodatum cant do this. demand in itself.
Judicial deposit: see above table for distinction vis--vis extra-judicial Is there need to demand the principal to pay first?
deposits No, especially where demand would be
useless. A suretyship is a direct contract to
Guaranty and Suretyship pay the debt of another. The surety is
absolutely liable as soon as default is made,
Distinguish between guaranty and suretyship without need for demand from the principal
or notice of default.
Guaranty Suretyship o 2. Guarantor promises to pay the principals debt if the
G is secondarily liable S is primarily liable and not entitled principal cannot pay. So this requires due diligence and
to benefit of excussion
exhaustion of remedies against the debtor.
G binds himself to pay only when S assumes liability as a regular party
principal cannot pay to the undertaking and promises to X Corp is liable to Y Corp for P5M. Z is X corp.s surety. X Corp
pay if the principal does not pay defaulted and was placed in a state of suspension of payments.
G is insurer of debtors insolvency S is an insurer of the debt Can Y Corp. proceed against Z?
Usually embodied in a separate Usually embodied in the same o Yes. The suspension only applies to X Corp, and as surety,
agreement before or after the instrument as the principal there is no need to exhaust X corp.s property before going
principal obligation obligation; thus, the surety is a party against Z.
to the contract
H and W are spouses. H signed a suretyship agreement to cover
for the liabilities of XYZ corp. Can the conjugal partnership be
Is there need for a separate consideration which the surety must
made liable when XYZ defaults?
receive?
o No. This act did not redound to the benefit of the partnership
o No. The surety is bound by the same consideration that
and is thus borne alone by H.
makes the contract effective between the primary parties.
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 What is the nature and extent of guaranty?
o 1. Guarantee is generally gratuitous
What is the exception?
Contrary stipulation
o 2. Accessory contract
What if the principal obligation is void?
The guaranty cannot exist.
o 3. Guarantors liability cannot exceed the principal obligation
But does this provision include interest and other
costs?
No. The liability for interest and other costs
does not stem from contract but from the
default. So the guarantor can technically
pay more than the obligation secured.
o 4. Doubt must be resolved in favor of the guarantor or surety
What is the exception?
Compensated sureties
What are the qualifications of a guarantor?
o 1. Possesses integrity
o 2. Capacity to bind himself
o 3. Sufficient property to answer for obligation
o What if the creditor required and stipulated a specific
person should be the guarantor, can there be
substitution?
No. The selection of the guarantor is part of the terms
of agreement.
What are the effects of guaranty between the guarantor and
creditor?
o 1. Guarantor has right to benefit of excussion
o Exceptions?
[waiver]
1. G expressly renounced excussion
2. G fails to set-up benefit of excussion and fails to
point out to the creditor available property of the
debtor in the Philippines
3. G fails to interpose it as defense before judgment is
rendered against him
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[nature of obligation]
4. Suretyship
5. He is a judicial bondsman and sub-surety
6. Pledge or mortgage has been given by the G as
special security
[debtor clearly insolvent]
7. Debtor is insolvent
8. Presumed that execution of debtors property will
not satisfy the obligation
[absconding]
9. G absconded or cannot be sued in the Philippines
Unless he left a manager/representative
o 2. Compromise between the creditor and principal can
benefit but not prejudice the guarantor, otherwise, he would be
released
o 3. If there are several guarantors and only one debtor, the
guarantors are entitled to benefit of division. Their liability is
joint.
Exceptions?
1. Solidarity
2. Any of the circumstances in 2057 taking
place
o A. A guarantor is convicted of crime
involving dishonesty
o B. Guarantor becomes insolvent
When can a guarantor who paid the entire debt
seek reimbursement from co-guarantors?
1. He paid by virtue of judicial demand
2. AND because the principal debtor was
insolvent
o What is a continuing guaranty or suretyship?
One that is constituted to cover even future debts, the
amount of which is not yet known.
What are the effects of guaranty between the debtor and
guarantor?
o A. Guarantor who pays for a debtor must be indemnified by the
latter.
 What does the indemnity cover? 6. Debt has become demandable because period for
1. Amount of debt payment has expired
2. Legal interest from the time payment was 7. After lapse of 10 years when the principal
made known to the debtor obligation has no fixed period for maturity
3. Expenses incurred by guarantor after Unless the nature of the obligation is such
notifying debtor that payment has been that it cannot be extinguished except for a
demanded of him period longer than 10 years
4. Damages, if due o In all these cases under #3, what are the options of the
What are the exceptions to indemnity rule? guarantor (what does proceed against the debtor
1. Guaranty constituted without knowledge mean)?
or against the will of the debtor. In this case, 1. Obtain release from the guaranty
the guarantor can only recover to extent 2. Demand security to protect him against creditors
debtor was benefited. claims or insolvency of the debtor
2. Guaranty did not intend to be paid back How is guaranty extinguished?
(donation) although in this case, debtors o 1. When the principal obligation is terminated (the usual ways
acceptance is needed see oblicon)
o In any case, payment is valid as to Also, material alterations (where there is additional
the creditor who has accepted it obligation, new burden, etc.)
3. Waiver o 2. Release of one guarantor by the creditor
Can the guarantor demand more than what he has What is the effect if it is without the consent of the
paid? other guarantors?
No. Then they benefit to the extent of the share
o B. Guarantor has right to be subrogated against the debtor to of the released guarantor
enforce the indemnity o 3. Extension of term granted by the creditor to the debtor
o C. Guarantor can proceed (see below what proceed means) without guarantors consent
against debtor even before payment when: What if theres a continuing guaranty allowing for
[Just causes for guarantor] extensions?
1. He is sued for payment Then extension of term does not extinguish
2. Reasonable grounds to fear the debtor intends to the guaranty.
abscond Does the creditors neglect to immediately sue the
[Insolvency] principal constitute an extension of term?
3. Insolvency of debtor No. There has to be a separate agreement
4. Debtor is in imminent danger of insolvency for a definite period without the consent of
[Expiration of period, etc.] the guarantor.
5. Debtor bound himself to relieve him from the o 4. If there can be no subrogation because of the fault of the
guaranty within a specific period, and this period has creditor
expired What is an example of this?

153
 When the creditor releases or fails to register Because the obligation solely rests on the part of the
a mortgage creditor: to return the thing upon fulfillment of the
What if the guarantors are solidary? principal obligation
Same effect. Can the pledgee keep the thing for himself after
Does this provision apply to sureties? default?
No. (Zobel v. CA) No. This is pactum commissorium
What about legal and judicial bonds? o 4. Subsidiary contract
o They are not entitled to the benefit of excussion because they Obligation does not arise until fulfillment of the
are guarantors but sureties whose liability is primary and principal obligation
solidary. X borrowed 400K from Y, pledging shares of stock worth 800K to
secure the obligation. An economic crisis occurred, plunging the
Pledge value of the stocks to 100K. Can Y demand X surrender other
shares worth 700K?
What is a pledge? o No. There is no showing the fall in value was due to Xs fault.
o It is a contract by virtue of which the debtor delivers to the Likewise, there was no showing Y was deceived as to the
creditor or third person a movable or document evincing substance or quality of the shares, where would have the right
incorporeal rights to claim another thing in their place or immediate payment of
o Purpose is to secure a principal obligation the obligation.
What are the essential requirements of pledge? o And more importantly, the right of a pledgee is to just sell the
o 1. Constituted to secure fulfillment of principal obligation pledged share at a public sale.
o 2. Pledgor or mortgagor is absolute owner of the thing May the pledge secure future advancements that the pledgor may
What if the thing is conjugal property of spouses procure from the pledge?
and only one acted as pledgor? o Yes.
The pledge is only over of the property o Contra: chattel mortgage cannot secure future debts
What if the property is covered by certificate of Distinguish pledge from REM:
title (this actually applies more to REM, not
pledge)? Pledge REM
The innocent pledgee or mortgagee for value Movable property Immovable property
can rely on the certificate, if there is no Delivery of object pledged Delivery of the thing NOT necessary
reason to further inquire, and is protected Pledge not valid against third REM not valid against third persons
persons unless description of the if not registered
o 3. Person has free disposal of the property, or legally
thing pledged + date of pledge is in
authorized to do so public instrument
o 4. Thing pledged is delivered to the creditor or third person by
common agreement Who has ownership of the thing pledged?
Characteristics of pledge? o Still the pledgor
o 1. Real contract thing must be delivered o Can he sell the thing pledged?
o 2. Accessory contract Yes, as long as the pledgee assents
o 3. Unilateral contract
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 o Does this sale extinguish the pledge?
No, it survives and follows the thing, even if
ownership is transferred
o What happens then?
1. The pledgee still possesses the thing until the
obligation is paid
2. The pledgee may still sell the thing in case of
default
Can the debtor demand its return before the debt is paid?
o No, possession is the security of the creditor.
o What is the exception?
If the thing is in danger of being impaired or
destroyed, the pledgor can substitute it with a thing of
the same kind and quality
o What presumption arises upon return of the thing
pledged?
That the pledge has been extinguished
Is there a presumption that the main obligation
has been extinguished too?
No.
What is the obligation of the pledgee?
o Take care of the thing pledged with the diligence of a GFF
o When is he entitled to reimbursement?
Expenses incurred for preservation
o When is he liable?
Loss or deterioration by reason of fraud, negligence,
delay, or violation of terms of contract
Is a pledgee authorized to transfer possession of the thing to
another?
o No. Remember, hes not the owner. He has to be authorized
to do this.
o Can the pledgee use the thing pledged?
None. He needs authority, again.
o X borrowed P10K from Y, payable Dec. 1. X pledged his
car to Y, allowing Y to use it by express stipulation. X
wanted to pay his debt on June 1, demanding that Y
155
accept the money and return the car. Can X compel Y to
accept?
No. The debt was due Dec. 1. When a period is
stipulated, it is presumed to be for the benefit of both
the debtor and creditor. In fact here, Y is authorized
to use the car, which is the presumed benefit. X
cannot pre-pay.
When can the pledgor request the thing pledged be deposited
judicially or extra-judicially?
o 1. Creditor used the thing without authority
o 2. Creditor misused the thing
o 3. Thing is in danger of being lost or impaired due to
negligence or willful act of the pledgee
What is the effect of sale of the thing pledged upon default of the
debtor?
o The principal obligation is extinguished whether the price of
sale is more or less than the amount due
o 1. If the price is more than the amount due, the debtor is not
entitled to excess
o 2. If the price is less than the amount due, the creditor is not
entitled to recover the deficiency
o Differentiate from CM:
In CM, the excess is returned, and the deficiency is
demandable
(Take note of Recto Law, however)
What are examples of legal pledges under the law?
o 1. Possessor in GF exercising right of retention for necessary
and useful expenses
o 2. Usufructuary exercising right of retention for taxes paid on
the capital and for extraordinary expenses
o 3. Mechanics lien
o 4. Agent exercising right of retention for necessary expenses
for execution of agency and for damages which execution of
agency caused him
o 5. Bailee exercising right of retention for damage caused by
flaws in the thing loaned where the bailor knew about it but did
not inform the bailee
 o 6. Depository exercising right of retention for necessary
expenses if deposit is gratuitous or for fortuitous damages
caused him by the character of the thing deposited
o 7. Hotel-keeper, over guests things for unpaid board and
lodging
o How does the pledgee/creditor exercise his remedy?
But must first demand payment of the amount due
Have the thing retained sold at public auction, within 1
month after demand
Real Estate Mortgage (REM)
What is a REM?
o A contract where the debtor secures to the creditor the
fulfillment of a principal obligation, by subjecting to such
security immovable property or real rights in case the principal
obligation is not complied with.
What are the characteristics of a REM?
o 1. Accessory and subsidiary contract
o 2. Unilateral because the only obligation is for the creditor to
free the property from encumbrance upon payment
o 3. Mortgagor retains possession of the property in general
Remember: pactum non alienando is void (prohibition
for the mortgagor to dispose the property)
o 4. Over immovable or alienable real rights over immovables
o 5. REM must appear in a public document recorded in the
ROP
If not registered, just binding between the parties
o 6. REM is a real right that attaches to the property
So the REM is both a real right and real property by
itself
o 7. Mortgagor must be the absolute owner of the property,
otherwise, it is void
REM Pacto de retro sale
Accessory contract Principal contract
No transfer of title Conditional title
No transfer of possession Conditional transfer of possession
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Creditor has no right to fruits Vendee entitled to fruits
Upon default, creditor is not the Upon consolidation, vendee is the
owner (no pactum commissorium) owner
What is the effect of REM?
o It subsists until after payment of obligation.
o The right of the mortgagee in case of non-payment is
foreclosure of the REM. Pactum commissorium is against
public policy.
What is the extent of the mortgage?
o REM is not limited to the property itself, but also its accessions,
improvements, growing fruits, rents, income, proceeds of
insurance in case it perishes, or expropriation value if
condemned.
o EXCEPT: contrary stipulation.
Can the mortgage be alienated or assigned?
o Yes and the assignee or transferee is entitled to foreclose the
mortgage in case of non-payment of the obligation. If the
transferee becomes the owner of the property this is a void
pactum commissorium.
What if the mortgagor transfers the property?
o 1. It does not relieve him from his obligation to pay the debt to
the creditor, in the absence of novation.
o 2. Creditor must make demand against the debtor. If the latter
cannot pay, then the creditor can demand payment of the
credit from the possessor of the property (transferee), and
foreclose thereafter if there is non-payment.
1. Judicial foreclosure under Rule 68 of the ROC.
o Is there redemption here?
No, just equity of redemption where the mortgagor is
given the chance to pay the debt within the 90-120
days period after the judgment becomes final OR
after the foreclosure sale but before confirmation.
o There is redemption, however, if the mortgagee is a banking
institution (1 year for natural person mortgagors and 3
months/before registration whichever comes first for juridical
person mortgagors)
 2. Extrajudicial foreclosure under Act 3135.
o When does this apply?
When the mortgagee is given specific power or
express authority to foreclose.
If there is none, there can be no EJ foreclosure.
o Where must auction be conducted?
Province where the property is found
o What is the requirement of notice?
1. Posting of notice of sale in 3 public places therein
2. Publication in newspaper of GC once a week for 3
consecutive weeks
If the sale is postponed, republish.
Is personal notice to the mortgagor required?
No. Unless, of course, the contract provides
for it.
Can these notice requirements be waived?
No, its for the benefit of the public, not the
parties.
o How long does the mortgagor have to redeem?
Within 1 year from date of sale. If the land is
registered property, then from registration of
certificate of sale.
But if the mortgagor is a juridical person and the
mortgagee is a bank, quasi-bank, or trust entity, then
redemption is only within 3 months from foreclosure
or registration of certificate of sale with ROD,
whichever is first.
o What is required for a valid redemption?
1. Within proper period
2. Payment of purchase price of property plus 1%
interest per month
Taxes with same 1% interest if paid by
purchaser
3. Written notice of redemption served on officer who
made the sale, and duplicate filed with ROD
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o What if the purchaser contends the right of the redeeming
person to do so (e.g. it was not the mortgagor but one of
his heirs that is redeeming)?
The sheriff cannot usurp judicial functions. He cannot
decide, so he must advice judicial redress to the
parties.
Does the mortgagee have a right to recover deficiency post-
foreclosure?
o Yes, he may. The action to recover the deficiency prescribes
after 10 years from right of action.
If a mortgagor dies, what are the 3 mutually exclusive options of
the mortgagee?
o 1. Waive mortgage and pursue claim against estate as an
ordinary claim
o 2. Judicial foreclosure of the mortgage, and recover deficiency,
if any as an ordinary claim against the estate
o 3. Rely on the mortgage exclusively (e.g. EJ foreclosure),
without right to file claim for deficiency
What if the mortgagor files a collection suit?
o It bars foreclosure of mortgage. The creditor cannot avail both
remedies because it is in essence a splitting of his cause of
action into two.
What is the nature of a writ of possession?
o The purchaser may petition for a writ of possession within the
redemption period by filing an ex parte motion under oath.
o He files a bond. Upon approval of the bond thereafter, the
court must issue a writ of possession. It is a matter of course
and not a matter of discretion.
o Since, its ex parte, any questions regarding the validity of the
sale, the mortgage, etc. must be tried in separate proceedings.
When else may the purchaser file for a writ of possession?
o When ownership has been consolidated upon himself, at the
end of the redemption period.
o The bond is no longer necessary in this case because he is the
absolute owner already.
 Can an ex-parte writ of possession be enforced against a third o 1. Accessory contract
party who is in actual possession of the foreclosed property and is o 2. Formal contract because the amount of the principal and
not in privity with the mortgagor? of the interest must be in writing or else the antichresis contract
o No, it cannot. Under Art. 433 of the NCC, one who claims to is void
be owner of a property possessed by another must bring Is delivery of the property a requisite for the contracts validity (i.e.
appropriate judicial action in this case, it must be an action is it a real contract)?
for ejectment (or publiciana). o NO. The delivery is only to allow the creditor to receive the
o To rule otherwise would unduly prejudice the third person who fruits and apply them, and not to make the contract valid.
did not have a chance to oppose the claim, since the o But note, it is a formal contract.
proceedings to issue a writ of possession are ex parte. What is the requirement of appraisal?
What are the remedies of such third party claimants to property o The fruits of the immovable must be appraised at their actual
involved in a foreclosure sale, when the third party was not part of market value at the time of application (to know how much is
the foreclosure and there is no privity? deducted).
o Two options: a) terceria where he serves upon the sheriff an Can the debtor demand the return of the property before the debt
affidavit of his title and a copy is given to the judgment is totally paid?
creditors; in this case, the officer is not bound to keep the o No. It stands as security.
property; b) independent separate action, to recover ownership What are the obligations of the antichretic creditor?
and possession of the contested property (Rule 39, Sec. 16 of o 1. Pay taxes and charges of the estate and necessary
the ROC) expenses on the property
Is a purchaser in a foreclosure sale who hasnt turned over the Where does he take the funds?
excess of the proceeds of sale to the mortgagor entitled to a writ of From the fruits of the property
possession? Failure to do so damages in favor of debtor
o In a case, the SC ruled that hes not entitled. There can be contrary stipulation as re: payment of
Can a REM cover future loans or advancements? taxes and charges
o Yes, if stipulated by the parties in the contract. o 2. Apply fruits to the interest, and then the principal of the debt
What are the creditors remedies in case of default?
Antichresis o 1. Bring action for specific performance
o 2. Petition for sale of real property in foreclosure sale under
What is a contract of antichresis?
Rule 68 of the ROC, or if the parties agreed upon it, extra-
o A contract where the creditor acquires right to receive the fruits judicial foreclosure under Act 3135
of an immovable of his debtor, with the obligation to apply the
proceeds to the payment of interest (if there is), and then to the Antichresis Pledge
principal of the credit Real property Personal property
o What if the loan does not earn interest? Formal contract Real contract
There can still be a contract of antichresis. The
payments are applied directly to the principal, then.
o Again, take note that pactum commissorium is void. Antichresis REM
What are its characteristics? Property delivered to creditor Debtor usually retains the property

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Creditor acquires only the right to
receive fruits of the property. It is
NOT a real right.
Creditor pays taxes and charges
unless stipulated otherwise
Creditor given possession of the
property must apply the fruits to the
interest then the principal
No right over fruits, but it is a real
right that attaches to the property
Creditor has no such obligation
Mortgagee has no such obligation
one can file for replevin)
Registration in CM Registry is
necessary to be valid beyond the
parties
If foreclosed, excess goes to debtor
and deficiency can be recovered by
the creditor. EXCEPT: if Recto Law
applies
Registration in ROP not necessary
for validity (just in a public
document)
If sold, excess and deficiency are not
recoverable in general

Chattel Mortgage What are the offenses involving CM?

What are the characteristics of a CM contract?
o 1. Accessory contract
o 2. Formal, because it must be registered in the CM Registry to
be valid
What if its not registered?
Its not null and void, but it only binds the
parties.
o 3. Unilateral only the creditor has obligation: to free the thing
from encumbrance upon fulfillment of the obligation
o 4. It must be constituted by the absolute owner of the thing with
free disposal of the property
X went abroad and left his car with its certificate of registration
with Y. Y falsified Xs signature and sold it to Z. Z, in order to pay
for the amount, executed a CM over the car in favor of a savings
and loan association which lent money to him. Z failed to pay and
the car was sold at a public auction where the SLA won. X
returned to the country and sought to recover possession of the
car. Can he?
o Yes. A CM can only be constituted by the absolute owner with
free disposal thereof, which Z was not since the seller, Y, had
no title over the car. Since X was unlawfully deprived of
possession of a movable, he can recover possession.
o However, since Z purchased the car from a public sale, X must
reimburse the SLA for the price at which it was bought for.
CM Pledge
Delivery is not necessary (to get it, Delivery is necessary
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o 1. Knowingly removing personal property covered by CM to
any other province or city without written consent of the
mortgagee
o 2. Selling or pledging such personal property without consent
of the mortgagee written on the back of the mortgage and
recorded in CM Registry
o What if the mortgagor thereafter pays the debt anyway or
informs the mortgagee post-sale?
He is still criminally liable under the RPC.
o Is the sale valid?
Yes, but the mortgagor is liable criminally.
What is valid subject matter of CM?
o 1. Shares of stock in corporation
o 2. Interest in business
o 3. Machinery and house of mixed materials treated by the
parties as personal property
And no third party will be prejudiced thereby
o 4. Vessels, if the mortgage is recorded with MARINA
o 5. Motor vehicles, if mortgage is recorded with both the LTO
and the CM Registry
o 6. House intended to be demolished
o 7. Growing crops and large cattle
What is the rule when the parties constitute a CM over a building?
o In general, this cannot be done, but the parties are estopped
from questioning it. Thus, the CM is valid. But if it will be
foreclosed, follow procedure for foreclosure of REM, because
third parties are not bound by the constitution of a CM over
immovables.
 What if the property is found in a place other than where the
mortgagor resides?
o Register it in both registers in both provinces. Otherwise, the
CM is void as to third parties.
o But again, the CM is valid as between the parties this is
always the rule if there is some infirmity: valid between the
parties, but not against the world.
What is the effect of registration?
o Makes the CM effective against third parties. It creates a
lien/real right which follows the chattel wherever.
What if the mortgage is assigned to another?
o 1. No need to record the assignment in the registry
o 2. The assignee is subrogated to the rights of the transferee to
the CM
What is an Affidavit of GF?
o It is an oath in a contract of CM that the parties:
severally swear that the mortgage is made for the
purpose of securing the obligation specified therein
and for no other purpose
and that it is a just and valid obligation and not one
entered for fraud
o If it is not appended, same rule as above: it cannot bind third
persons without notice or subsequent creditors.
o In effect: an Affidavit of GF gives the CM preferred status.
o What is the implication of the Affidavit of GF which has
then become doctrinal in CMs?
Because it only secures the obligation specified, a CM
cannot cover future debts, unlike a REM.
What are the options in foreclosure?
o 1. Public sale
o 2. Private sale needs express stipulation in the contract
EXCEPT: a) fraud or b) duress
o When can a CM be foreclosed?
After 30 days from time that the condition is broken
N.B. the 30 day period is a grace period to
help the mortgagor discharge the obligation
After there is 10 day notice:
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1. Given to the mortgagor
o N.B. unlike REM, where it isnt
essential to give personal notice to
the mortgagor
2. Posting of public notice of time, place, and
purpose of the sale
o Is there right of redemption after sale?
No, there is none, unlike in a REM.
o Can the mortgagee recover deficiency post-sale?
Yes, unlike in a pledge.
Action accrues within 10 years from sale.
What is the exception?
Recto Law, if it is a sale of personal property
in installments.
So if it is foreclosed, no deficiency. But
under the Recto Law, after specific
performance which leads to execution sale,
there can be recovery of deficiency because
it is not a foreclosure.
Quasi-contracts
When does negotiorum gestio arise?
o When one voluntarily takes charge of the management of
business or property of another, without any power from the
latter
o What is he obliged to do?
Continue such management until termination of the
affair and its incidents, or the owner is in a position to
substitute him
o When does negotiorum not arise?
1. Property or business has been abandoned
2. Manager has been tacitly authorized
What are the obligations of the officious manager?
o 1. Perform duties with diligence of GFF
o 2. Liable for damages through fault or negligence
o 3. Liable for acts of a delegate, if he appoints one
o 4. Liable for fortuitous event if:
 A. He undertakes risky operations
B. Prefers own interest to that of the owner
C. Fails to return the property or business upon
demand of owner
D. Assumption of management in BF
E. He is manifestly unfit to carry on the management,
unless done to save the property or business from
imminent danger
F. His intervention prevented a more competent
manager from taking over, unless done to save the
property or business from imminent danger
o 5. Liable for contracts entered into with third persons, unless:
A. owner ratified
B. the contract refers to things pertaining to the owner
What are the obligations of the owner?
o If he derived benefit or the property was saved from imminent
danger:
1. Liable for obligations incurred in his interest
2. Reimburse officious manager for necessary and
useful expenses, and damages the manager may
have suffered
o If he did not derive benefit:
Still liable as above if: a) the manager acted in GF,
and b) property or business is intact and ready to be
returned to the owner
When does negotiorum end?
o 1. Owner repudiates it or ends it
o 2. Manager withdraws from management
o 3. Death, civil interdiction, insanity, or insolvency of owner or
manager
When does solutio indebiti arise?
o Something is received when there is no right to demand it and
it was given through mistake
What is the obligation of the recipient?
o He must return it.
o What if he accepted it in BF?
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1. He must pay legal interest if a sum of money is
involved
2. Liable for fruits received or fruits that should have
been received if it bears fruits
3. Answerable for loss or impairment
o What if he accepted it in GF?
1. Answerable for loss or impairment only so far as it
has benefited him
2. If he already alienated it, return the price or assign
the action to collect the sum
3. Exempt from returning/restoring it if in GF, he
already destroyed the document, allowed action to
prescribe, gave up pledges, or cancelled guaranties
Concurrence and Preference of Credits
What are properties exempt from liability for obligations?
o Survival necessities
o 1. Family Home, except for:
A. non-payment of taxes
B. debts prior to constitution of FH
C. debts secured by mortgage on premises of the FH
D. debts due to laborer, mechanics, architects, etc. for
the construction of the FH
o 2. Clothing and necessaries of the family
o 3. Furniture and household things not exceeding 1K
o 4. Provisions for family for 3 months
o Money received for support
o 1. Right to receive support and things procured from such
support
o 2. Earnings within the month to support the family
o 3. Proceeds of life insurance
o 4. Right to receive legal support from government or those
procured from such
o Employment/trade necessities
o 1. Tools and implements for trade/employment
o 2. 2 beasts of burden used in occupation
o 3. Professional libraries
 o 4. One fishing boat and net for fishermen
o Specially enumerated
o 1. Lettered gravestones
o 2. Copyrights and other properties exempted by law
o 3. Property in custodia legis, and of public dominion
What are preferred credits as to specific movable property? (2241)
o 1. Taxes on the movable
o 2. Malversation by public officials of such movables
o 3. Vendors lien
As long as debtor still possesses it
if resold, on the proceeds of sale
o 4. Credits secured by pledge, chattel mortgage
o 5. Mechanics or repairmans lien, on the thing
o 6. Laborers wages, on the thing
o 7. Salvage, on the goods saved
o 8. Tenancy, on the share of fruits/harvest
o 9. Carriers lien, on the goods carries
o 10. Hotels lien
On movables belonging to guests, but not for money
loaned to guests
o 11. Crop loan, over the fruits harvested
o 12. Rentals for one year, on the movables in the property
leased
o 13. Claim of depositor, on goods wrongfully sold by the
depositary
o For these cases, what if the movables on which the lien
exists have been wrongfully taken?
The creditor can demand them from any possessor,
within 30 days from unlawful seizure
What are preferred credits over specific immovable property?
(2242)
o 1. Taxes, on the immovable
o 2. Vendors lien, for sale of real property
o 3. Contractors lien, over the property
o 4. Lien of material-men, when material was used for property
o 5. Mortgages recorded in ROP
o 6. Expenses of preservation, when the law authorizes
reimbursement (see property law and oblicon)
162
o 7. Recorded attachments, by virtue of judicial order
o 8. Warranty in partition of co-heirs of property
o 9. Conditional donations, on the immovable donated as to
pecuniary charges and other conditions
o 10. Premiums for 2 years in favor of insurers, on the insured
property
What is the order of preference as to other properties of the
debtor? (2244)
o 1. Funeral expenses
o 2. Wages of employees for one year
o 3. Expenses of last illness
o 4. Workmens compensation
o 5. Support for one year
o 6. Support during insolvency
o 7. Fines in crimes
o 8. Legal expenses for administration of insolvents estate
o 9. Taxes other than those over specific property
National government first
Then to province
Then to city or municipality
o 10. Torts
o 11. Donations
o 12. Credits in public instrument or covered by final judgment
Have preference among themselves in order of
property of dates of instruments or judgments
What is the order of preference of credits?
o 1. Credits which enjoy preference as to specific movables
exclude all others to the extent of the value of the movable
o 2. If there are two or more credits as to the same movable,
claims are pro rata (meaning, the enumeration is not in order)
Except for payment of taxes due the State; this
always goes first
o 3. APPLY SAME RULES TO SPECIFIC IMMOVABLES
o 4. For enumeration in 2244, follow the order
o 5. For common credits, no preference; just apply property pro
rata regardless of dates
X purchased an aircraft in cash, and had outstanding balance of
P500K. He incurred indebtedness of P300K for repairs with a
 repair company over the aircraft. He borrowed P1M from a bank o It applies to situations where a debtor has properties, but not
for additional capital and constituted a CM on the aircraft. During enough to pay debts as they fall due. He is still solvent, but not
a flight, a passenger was injured and was awarded P200K in liquid.
damages. The aircraft was sold for 1M. The following claims thus What is the effect of suspension of payments?
exist o 1. No disposition of property of debtor except in ordinary
o A. Vendors lien on movable course of business
o B. Repairmans lien on movable o 2. No payment except in ordinary course of business
o C. CM lien on bank loan o 3. Upon request to court, all pending executions against debtor
o D. Tort claim shall be suspended
o What is the order of preference? Except those covered by mortgage
C CM lien on bank loan prevails over the tort claim. Which creditors are not affected by suspension of payments?
The liens of the vendor and repairman do not exist o 1. Those with claims within 60 days immediately preceding
anymore because the property has been sold and filing of petition:
thus the debtor is not in possession of the thing. The A. claims for personal labor
claims become ordinary claims that are defeated by B. claims for maintenance
the CM lien of the bank. C. expenses of last illness of debtor
When does the preference of workers to wages apply? D. Funeral of spouse or children of debtor
o When there is a declaration of bankruptcy or judicial liquidation o 2. Those possessing legal or contractual mortgages
of the company What is the procedure to petition for suspension of payments?
What happens when there is a distressed corporation that asks for o 1. File petition in RTC where debtor resides 6 months prior.
rehabilitation and suspension of payments? o 2. Along with the petition, file:
o Preferred creditors cannot assert preference anymore, and A. Verified list of creditors
stand in equal footing with other creditors. This allows the B. Debts and liabilities
receiver to exercise discretion free from legal interference that C. Statement of assets and liabilities
might hinder rescue of the company. D. Proposed agreement/schedule
o 3. Court issues order calling all creditors to a meeting (2-8
Insolvency Law (old law) weeks from order)
Publication and notice
What is the difference between suspension of payments and o 4. Meeting of creditors
insolvency? Quorum: represent at least 60% of liabilities of the
o In suspension, purpose is to delay payments; in insolvency, debtor
purpose is to discharge debtor from debts o 5. Creditors approve the proposition
o In suspension, amount of debt is not changed; in insolvency, Need double majority vote to approve:
creditors receive less than their credits (or where there are A. 2/3 of creditors
preferences, some may not receive at all)
B. 2/3 of 60% of the liabilities
N.B. correlate with concurrence and preference
o 6. Objections can be made within 10 days of meeting
What is suspension of payments?
A. Defects in call for meeting or the meeting itself

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 B. Fraudulent connivance between one or some
creditors and the debtor to vote in favor of the
agreement
C. Fraudulent conveyance of claims to obtain a
majority
o 7. Court issues order directing the agreement to be carried out
What is the procedure for voluntary insolvency?
o 1. Debtor files petition that he is insolvent and cannot pay
debts in full, accompanied by:
A. verified schedule of liabilities
B. verified inventory of properties
o 2. Court issues order of adjudication
Publication and service of order to creditors
Is hearing needed?
No, not in voluntary insolvency
o 3. Meeting of all creditors to elect assignee of debtors property
Clerk of court conveys property to him
What is the effect?
The assignee gets legal title over the
property
What if someone has a mortgage over the
property?
File a motion to be excluded from the
insolvency proceedings because he will
pursue the mortgage lien
What if there is an existing claim being filed in
court?
The case will only determine how much is
due the creditor, but he has to join the other
creditors when he takes what is due him
What attachments and judgments shall be set
aside?
Those levied or secured within 30 days
before insolvency proceeding (again, there is
badge of fraud)
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SAME RULE for dispositions within 30 days
before insolvency proceedings, unless there
is value received in GF for the property
o 4. Liquidation of assets and payment of debts
o 5. Composition
Offer of terms of composition is made after filing of
schedule of liabilities and creditors
The offer must be accepted in writing by the same
double majority of creditors
It is made after depositing the consideration to be
paid and the cost of proceedings
The court must approve the terms of composition
o What is the effect?
The debtor is discharged from debts, except if
corporation
o What are available remedies?
Objection
Appeal to SC
What is the procedure for involuntary insolvency?
o 1. Three or more creditors file petition
When should they have been creditors?
More than 30 days prior to petition, to avoid
fraudulent conveyance
The creditors must be residents of the Philippines
o 2. Court issues order requiring debtor to show cause why he
must not be declared insolvent
Debtor files MTD or answer
o 3. Hearing of the case
Issuance of order declaring debtor insolvent
Then he will be required to submit schedule of assets
and liabilities
Publication and service of order
o (N.B. procedure from this point is the same as voluntary
insolvency including commentaries)
o 4. Meeting of all creditors to elect assignee of debtors property
Clerk of court conveys property to him
o 5. Liquidation of assets and payment of debts
o 6. Composition
 o What is the effect? (whichever secured secured
The debtor is discharged from debts, except if is higher) creditors obligations
corporation holding more approved
o What are available remedies? -and- than 50% of
secured -and-
Objection
The claims claims and
Appeal to SC are at least unsecured Creditors
more than creditors with at least
FRIA 60 days old holding 50% 75% of
or a creditor of unsecured unsecured
N.B. see how FRIA has modified the above rules has initiated claims obligations
What is the biggest change introduced by the FRIA? foreclosure approved
o There are new rules for out-of-court settlement of liabilities of proceedings
that makes -and-
debtors. Before, its purely contractual. Now there are rules
debtor
governing these. insolvent Approved by
How does the FRIA define an insolvent? creditors
o One who is unable to pay his liabilities as they fall due in the holding at
ordinary course of business or has liabilities greater than his least 85% of
assets total
liabilities
What are the three methods of rehabilitation of a corporation under
(secured
the FRIA? and
o 1. Court-supervised rehabilitation unsecured)
o 2. Pre-negotiated rehabilitation
o 3. Out-of-court restructuring agreements When is a petition for voluntary rehabilitation deemed to
commence?
Voluntary Involuntary Pre- Informal o Upon the court issuing a commencement order, indicating that
rehab rehab negotiated rehab
the petition is sufficient in form or substance
rehab
o Issued within 5 working days from filing of the petition
Petitioner Debtor Creditors Debtor who None
may be o What if the petition is deficient?
joined by Instead of dismissing it, the court may order the
any of his issuance of an amended/supplemental petition or the
creditors submission of additional documents
How to Corporations: Creditors Plan Debtor What does the commencement order do?
initiate majority of have approved by agreed o 1. Declare the debtor under rehab
BOD + 2/3 aggregate creditors
votes of SH claim of 1M+ with at least -and- o 2. Orders publication of order and notice to creditors
interest or at least 2/3 of o 3. Appoints a rehab receiver
25% of debtors Creditors General rule: Courts discretion
Partnerships: subscribed liabilities, with at least
majority capital stock including 67% of
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 1. But if the debtor is a securities market participant, by these agencies to reimburse themselves for transactions
court prioritizes nominee of the appropriate securities settled for the debtor
or investment protection fund What is the difference of effect of the SO on secured and
2. If nominated by at least 50% of secured creditors unsecured claims?
and unsecured creditors, court must appoint him o It applies with equal force. The SO does not impair the
o 4. Sets date for initial hearing security or lien of a secured creditor, except that it suspends
Covers w/n the debtor can be rehabilitated the right to enforce the claim.
o 5. Directs creditors to file claims within 5 days from initial What are the other effects of commencement?
hearing o 1. The court can issue can order prohibiting suppliers from
o 6. Invites government through BIR to file a comment to the withholding essential goods and services from the debtor.
petition or file claims against the debtor This ensures the continuous delivery of goods and
When does the stay or suspension order (SO) issue? services necessary for the debtors business.
o In addition to the commencement order o 2. Waiver of all taxes from commencement order to approval of
What is the SO? the rehabilitation plan or its dismissal
o It prohibits sale and disposition of assets of the debtor and How long does the commencement order last?
orders suspension of all actions against him or his estate. o For as long as there is a substantial likelihood that the debtor
What are the actions not covered by the SO? will be successfully rehabilitated
o [SC or QJA] When can the court modify the terms of the SO or relieve from
o 1. Appeal already pending in the SC suspension a creditors claim?
Once there is FJ, directed to the rehab court o Either:
o 2. Subject to rehab courts discretion, actions pending in QJAs 1. A creditor does not have adequate protection over
Any FJ will be directed to court as a non-disputed the property securing his claim, or
claim Lack of adequate protection:
o [Nature of action] o A. Debtor fails to honor pre-existing
o 3. Claim against sureties and those solidarily liable with debtor, agreement with creditor to keep the
accommodation mortgagors, issuers of LOC property insured
o 4. Criminal actions o B. Debtors fails to take reasonable
o [Securities transactions] steps to preserve the property
o 5. Actions by customers of a securities market participant to o C. Property has depreciated to
recover those entrusted to the latter in the ordinary course of extent that creditor is under-
business or action by the securities market participant to pay secured
off these claims 2. The value of the claim exceeds the FMV of the
o 6. Actions by licensed broker or dealer to sell pledged property securing it
securities of the debtor (pursuant to pledge or margin o What can the court order?
agreement) 1. Additional securities or steps to preserve the
o 7. Clearing and settlement of financial transactions through property; or
facilities of SEC/BSP accredited clearing agency and actions 2. Allow creditor to enforce security claim on debtor

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 For what purposes can the debtors property still be used? o 3. Rehab plan not supported by voting creditors
o 1. Ordinary course of business What is the period for confirmation of the plan?
o 2. Admin expenses during rehab proceedings o Within1 year, or else there will be automatic liquidation (to
o When is the debtor allowed to dispose of encumbered avoid delaying)
property?
When necessary for continuation of ordinary course of
business PRESCRIPTION
o What is new money?
Post-commencement-order loans or obligations
approved by court. These are considered admin What are the kinds of prescription?
expenses. o 1. Acquisitive
What is the rule on cancellation or confirmation of contracts? What are the requisites of acquisitive
o Within 90 days from the commencement order, the debtor may prescription?
elect to confirm or cancel contracts. This is to get out of 1. Capacity to acquire by prescription
onerous obligations. 2. Thing is capable of acquisition by
o Any contract not confirmed in 90 days is deemed cancelled. prescription
o What is the remedy of creditors with cancelled contracts? 3. Possession of the thing under certain
Can claim actual damages (if any), which will be conditions
considered a pre-commencement-order claim. 4. Lapse of required time under law
What are the powers of the rehab receiver? o 2. Extinctive or statute of limitations
o Annul pre-commencement transactions intended to defraud the Who may acquire by prescription?
creditors o 1. Person capable of acquiring property through other modes
o N.B. Creditors may file or commence it if receiver refuses the o 2. State
creditor benefits from such action to extent of his claim o 3. Minors through guardians or personally
Who approved the rehab plan drawn by the receiver? Against whom may prescription run?
o Just majority of each sub-class of creditors (as determined by o 1. Incapacitated person/minors with guardians
the plan) o 2. Absentees with administrators
o Unlike the old law, the debtor does not vote o 3. Persons abroad with administrators
o What if the creditors do not approve? o 4. Juridical persons except the state as to non-patrimonial
The court may still confirm the plan if its proven that property
the creditors would still receive a net present value When does prescription not run?
greater than what they would have received if the o 1. Between husband and wife even if there is CSP or JSP
debtor had been under liquidation o 2. Between parents and children, during minority/insanity
What are the only grounds by which the creditors can oppose a o 3. Between guardian and ward, during guardianship
plan if approved by court? Which are subject to prescription?
o 1. Creditors support induced by fraud o All things within the commerce of men private property and
o 2. Documents or data relief upon were false or misleading patrimonial property of State

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 o What are not subject to prescription? o Reasonable belief by the person that he is the owner and could
1. Public domain validly transmit ownership
2. Intransmissible rights o Must exist through the entire period required for prescription
3. Movables possessed through crime What does just title mean as applicable to both ordinary and
4. Registered land extraordinary acquisitive prescription?
What is the rule on renunciation of prescription? o Titulo Colorado where there was a mode of transferring
o Person may renounce prescription already obtained, but not ownership but something is wrong because the grantor was
right to prescribe in the future not the owner
o How is renunciation done? Had the grantor been the owner, the mode would
Express or tacit. Tacit is when acts imply have transferred ownership
abandonment of the right acquired o How does this differ from mere titulo putativo?
o Who may impugn renunciation? Here, there was no mode of acquiring ownership,
Creditors and other persons interested in making although the person believes he has obtained title
prescription effective notwithstanding renunciation What is in concept of owner?
o X borrowed money from Y on November 29, 1933 as o It not out of mere tolerance of the owner, but is actually
evidenced by a PN. Y said that he waives prescription and adverse to the latter. It is a claim that the acquirer owns the
may still collect even after the 10 year period under law. X property.
failed to pay after repeated demands so Y sued him on What is public, peaceful, uninterrupted?
January 7, 1953. Can Y collect? o Known to the owner of the thing
Yes. What happened here was not an actual waiver o Not acquired through violence
of prescription (which cannot be done) but since there o And continuous enjoyment of the property
was a 10 year grace period, the period only started o When is there an interruption?
running from November 29, 1943. So the 10 year 1. If natural
period ends on November 29, 1953. January 7, 1953 If through any cause, possession ceases for
is within the period. more than 1 year.
What are the kinds of acquisitive prescription and their requisites? If 1 year or less, as if no interruption.
2. If civil (judicial summons)
Ordinary acquisitive Extraordinary acquisitive interrupts, by default
Possession in GF Possession in BF
Exceptions?
Just title Just title
Period: Period: o 1. Lack of legal solemnities
Movables 4 years Movables 8 years o 2. Plaintiff desists from complaint,
Immovables 10 years Immovables 30 years or allows lapse of proceedings
In concept of owner In concept of owner o 3. Possessor is absolved from
Public, peaceful, uninterrupted Public, peaceful, uninterrupted complaint
3. Renunciation by possessor
What is the concept of good faith that differentiates ordinary from 4. Possession during wartime
extraordinary prescription? What are the rules in computing the period?

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 o Tacking is allowed to predecessor-in-interest Declare contract void
When does this happen? Recover property under express
There must be privity; possible when there is trust
succession of rights Probate of will
Quieting of title if possessed
What if the character of possession
differs?
o Predecessor in bad faith, possessor
SALES
in GF use extraordinary
acquisition
Introduction
o Presumed to be in possession in intervening periods unless
disproved What are the obligations created by a contract of sale?
o Exclude first day, include last o Seller:
Transfer ownership
Prescription of actions:
Deliver possession of the subject matter
30 years Recovery of immovables (from loss o Buyer:
of possession) To pay the price
What are the elements of a contract of sale?
10 years Mortgage o 1. Consent
Written contract o 2. Subject matter
Obligation created by law Upon perfection: determinable
Judgment Capable of being made determinate without
further agreement between the parties
8 years Recovery of movables (from loss of
possession) Is a generic-determinable subject matter
subject to loss?
6 years Oral contract o No.
Quasi-contract Upon consummation: determinate (requires physical
segregation or particular designation)
5 years Default period o 3. Price
What are the stages in the life of sale?
4 years Injury to rights of plaintiff o 1. Negotiation
o 2. Perfection
Quasi-delict
A contract of sale (COS) is already perfected at this
1 year Forcible entry/unlawful detainer point
Defamation A contract to sell (CTS) is already perfected too, but
has a suspensive condition payment of full price
Imprescriptible Demand right of way o 3. Consummation
Abate public/private nuisance What are the characteristics of a sale contract?

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 o 1. Nominate, principal POW if it can only be made upon receipt of
o 2. Consensual specifications (ex. A/C specially fitting building space)
Non-performance does not void the contract Otherwise, sale (ex. window sashes that can be
Does the seller need to own the thing during customized)
perfection of the contract? o 2. POW is unique and always different from other orders
No. Only upon consummation. o 3. Essence of sale is object; essence of sale is service
o 3. Bilateral and reciprocal Service takes into account the plan and the labor.
Obligation of one party is the cause of the other Sale just requires that an object be delivered at some
Recall: future date.
Compensatio morae rules o Is research output POW?
Resolution for failure to comply with No. There is no transfer of ownership.
reciprocal obligation o Why is it important to distinguish?
o 4. Onerous Sale is obligation to give. POW is obligation to do.
o 5. Commutative Remedies differ.
Inadequate price does not invalidate sale, but may be Distinguish from agency to sell:
a badge of vitiated consent o There is sale, not agency, if the middle man had to pay the
o 6. Title, not a mode price for the thing, and then sell it thereafter. There are two
Tradition is the mode to transfer ownership contracts of sale here.
Sale just creates the obligation to transfer and deliver o Agency is fiduciary, and the agent must act with loyalty.
Distinguish from barter: Distinguish Contract of Sale (COS) from Contract to Sell (CTS):
o Barter is thing-for-thing; sale is thing-for-money o CTS, upon perfection, must:
o Special rules for barter: Have a stipulation that the SM remains with the seller
1. If the thing received in barter is found not to be the until full payment of the price
other partys, cannot be compelled to deliver what he Specific right granted to the seller to extra-judicially
promised rescind the contract in case of default
2. If he lost by eviction the thing received in barter, he If missing, its a COS
may recover what he gave in exchange, with OR, there is a stipulation that upon payment of full
damages price, the seller executes a deed of sale in favor of the
As long as it didnt fall in the hands of a third buyer
person in GF o Upon consummation:
o Special rules for sales: COS title passes upon delivery
1. SOF Non-payment is a substantial breach
2. Right of legal redemption to adjoining owners of CTS title not passed to the buyer until payment of
urban lands full purchase price
Distinguish from piece-of-work: Payment of the full purchase price is a
o 1. Check if it is possible to produce the product ahead of any suspensive condition
special order o Remedies:

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 COS need to rescind to recover ownership
There can be forfeiture of payments already
made by the buyer to the seller as long as
its provided for in the contract and its not
unconscionable
CTS ownership retained, so the contract is
automatically extinguished
Only action is for recovery of possession
Return payments made
But there can be decision based on equity if
there were sufficient payments already made
Parties
Who has capacity to enter into a sale contract?
o Anyone with capacity to enter into a normal contract.
o For minors, follow usual rule.
What is the status of a Contract for sale of
necessaries to minor?
If perfected and delivered, it is a valid
contract.
If just perfected, it is voidable, as per usual
rule.
What do prohibited sales here include?
o Also legal redemption, compromises, and renunciations
Can spouses sell to each other?
o In general, no.
o Exceptions?
1. CSP
2. JSP
o N.B. prohibition also applies to common law spouses
What are the special disqualifications?
o 1. Agents over principals property
Unless the principal consented. This is the only
relationship that can be validated by the principal by
consent.
o 2. Guardian over wards property
o 3. Executor or administrator over estate property
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What if the executor or administrator bought the
property after administration ceased?
Generally, valid.
But void if there was an agreement entered
into with the heir during administration.
Short gap of time between termination of
administration and sale is a badge of fraud.
o 4. Public officers and employees over property of the State,
subdivision, or GOCC entrusted to them
o 5. Officers of the court over property under litigation or levy in
the court they function in
What is the rule on sale of property after litigation
or levy?
If it was offered before, it cannot be ratified
after.
If its just the first time, its valid.
o 6. Lawyers over property and rights under litigation
Are contingency fees valid?
Yes. Transfer of property only happens after
favorable judgment.
Courts may only nullify it if the lawyer
exercises undue influence.
Can there be ratification?
o No. These are void contracts.
o But there can be a new contract entered into, applying to:
Agent
Guardian
Executor/administrator
o The following cannot ratify through new contracts:
Public officers and employees
Officers of court
Lawyers
Subject matter
What are the requisites for a valid subject matter?
o 1. Possible subject matter
o 2. Licit
 o 3. Determinate or at least, determinable
What does possible subject matter mean?
o The person need not be the owner of the subject matter upon
perfect of the sale contract, and only during delivery must he
have a right to do so
o Possible means that it may not exist at the moment but it can
definitely exist.
So you cannot sell a fountain of youth, because its an
impossible thing.
What is emptio rae speratae"?
o A sale based on the suspensive condition that the thing comes
into existence.
What is emptio spae?
o Sale of a vain hope or expectancy. It is void. (Under Jurado, it
says that its valid and perfected because what was sold was
hope itself)
What are examples of illicit subject matters?
o Sale of intransmissible rights, sale of future inheritance, etc.
What is determinable and what is determinate?
o Determinable upon perfection of the contract, the thing is
capable of being made determinate, without necessity for a
new agreement between the parties.
Ex. a contract refers to an existing document
o Determinate particularly designated or physically segregated
already
o If neither determinable nor determinate, no contract.
What is essential for perfection as re: quantity and quality?
o Identity and quality of the subject matter is ESSENTIAL for
perfection.
o Quantity is not as important, but the standard is that there is no
need to enter into a new contract to determine it.
o What is the status of generic things sold?
Upon perfection, they are determinable.
They are not subject to loss.
Upon consummation, they are determinate.
o What about sale of undivided interest in property?
Co-ownership comes about
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o What about sale of undivided share in mass of fungible
goods?
Proportional co-ownership over the mass
If mass is less than the measure bought, the buyer
owns the entire mass and the seller must make up the
deficiency
But if a specific mass is sold without weighing, the
subject matter is a definite object even if there are
minor differences in measure
What is the effect of failure to deliver the subject matter?
o It does not affect the validity of the contract.
o If the person sold something not his, the buyer does not obtain
better right over the goods, unless the real owner is estopped.
o What is the exception to this rule?
Judicial sale. The owner of property sold on judicial
sale must be the absolute owner.
This is why the mortgagor must be the absolute
owner of the thing mortgaged.
o What if the seller subsequently obtains title over the thing
sold?
It passes to the buyer by operation of law.
But of course, there must be physical delivery.
Price
What are requisites of valid price?
o 1. Real
o 2. Must be in money or its equivalent
Note: there can be post-perfection agreements like
dacion en pago to give something else other than
money
o 3. Certain or ascertainable at the time of perfection
What is real?
o When the buyer has every intention to pay and seller has every
intention to receive.
o Take note of absolutely or relatively simulated contracts.
o What if the price indicated is false but not simulated?
The contract is valid.
 The contract may be reformed to reflect the true intent
of the parties.
o What if the price indicated is only nominal/meager (ex. P1),
is it valid?
If it masks the true price given, its valid.
But note that Philippine law requires not just
consideration but valuable consideration, so if it is
found out that there is none, the price is invalid
(because it might actually be a donation).
So gross inadequacy in itself does not invalidate the
contract but it may indicate vitiation or that its a
donation.
What is certain or ascertainable?
o Certain if it is in a definite amount.
o Ascertainable if reference can be made to another thing certain
or judgment of another person.
Can a third party fix the price?
Yes, it is valid. The third partys act is a
suspensive condition.
What if the third party refuses or cannot fix the
price? Or what if the price cannot be determined
through the thing certain?
The contract is inefficacious because of
failure of suspensive condition.
So there is a valid contract at one point.
Can either party fix the price?
No.
When can the courts fix the price?
1. Third party is in BF
2. Mistake
What is the rule for sales where there is no price agreed upon?
o Attempt to determine the price in any other matter.
But most of the time, it becomes an inefficacious
contract (because for instance, the thing certain
cannot determine the price, or a third person
designated to do so does not or cannot).
o If there is delivery and appropriation already:
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Seller is estopped. He cannot ask for the thing
back. Also, return of the thing would violate mutuality
of contract because the buyer already appropriated it.
Buyer is unjustly enriched. He must pay a
reasonable price.
What is the rule on manner of payment?
o It must also be certain or ascertainable. It is essential, being
part of the prestation of the contract.
o What is the presumption?
Immediately demandable and payable, if nothing is
provided
o What is the exception?
If the intent clearly shows some other manner apart
from immediate payment but the contract does not
provide for it, there is no contract (no price).
o X wanted to buy a car from ABC Company, on the
condition that X would procure a loan from DEF Finance,
as stipulated on the agreement. The loan was denied. Is
there a void contract for lack of manner of payment?
No. There is a valid contract, but with a suspensive
condition that did not come into fruition.
For an executory contract of sale, how is it taken out of the SOF?
o 1. Written memorandum must evince all the essential
requisites of a contract of sale, or
o 2. If it has been partially or fully executed
What is the effect of deficiency of price?
o Does not affect validity of the sale contract, but may indicate
vitiated consent or that it is a donation contract.
o For a judicial sale, inadequacy can avoid a sale if:
1. Price is shocking to the conscience
2. And one can get a better price
3. And there is no right to redeem
Because if there is right to redeem, the low
price would make it easier to get the property
back
o What if its sale for an inadequate price by a guardian or
absentees representative?
 Remember the more than lesion rule, which can
lead to rescission.
o What if a sale with right to repurchase has a deficient
price?
There is a presumption that it is an equitable
mortgage. The remedy for the seller is to reform the
contract, while the buyer can foreclose the equitable
mortgage.
Formation of contract of sale
What is the rule on offers and acceptance?
o See OBLICON notes.
What is the difference of Contract to Sell (CTS) from an option
contract (OC)?
o CTS promise to buy and sell a determinate thing for a price
certain
o OC contracted offer, securing the privilege to buy, so the
other party cannot enter into a contract with another
What is their similarity?
o Both contracts are subject of specific performance.
o Both are perfected contracts, but not the COS per se
What is required for an OC to be valid?
o 1. Agreed time
o 2. Determined price
o 3. Separate consideration
Need not be in cash. It can be a mortgage, buying
the lands in half a property, etc., as long as its an
undertaking of value.
Does the OC fall under the SOF?
o No. But the resulting sale contract will.
What if the requisites for an OC are not complete?
o Its a VALID offer but a VOID option contract.
o So it can be withdrawn with no consequence. But if its
accepted before withdrawal, a contract of sale ensues.
How is the option exercised?
o Merely advising the offering party. No need to pay stipulated
price of the sale yet upon exercise of the option.
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What is the rule and remedy when an option contract is perfected?
o The optionee has the right to exercise the option anytime
during the period, and this will bring about a valid contract of
sale.
o If the offer is withdrawn, then it results in a breach of the option
contract, but the offer cannot be accepted anymore. (Ang Yu)
CLVs opinion: if the offeror withdraws the offer
during the period, it is void. The offeree can still
accept the offer.
o If the offeror withdraws the offer and sells the thing it to a third
person in BF, the optionee can exercise the option and compel
specific performance from the third person.
o If the offeror withdraws the offer and sells the thing to a third
person in GF, the optionee can recover damages from breach
of contract of sale, and not just breach of the option contract.
What is the Right of First Refusal (RFR)?
o A promise on the part of the owner that he will sell it first to the
promisee should he decide to sell the thing.
o What is certain among perfection of the RFR?
Just the object of the contract. NOT YET the price
and manner of payment.
o Must there be a consideration?
Yes, but need not be separate from the main contract.
o Must it be in a written contract?
Yes, otherwise it is unenforceable. (SOF)
What if a RFR is not honored?
o No specific performance
o Damages only
What if the property is offered to a third person after being offered
to one with a RFR?
o The offered price to the third person must at least be under the
same terms and conditions as the prior offer.
N.B. Take note of the usual rule offer must be certain, acceptance
must be absolute, otherwise its a counter-offer.
What is the nature of earnest money?
o Its part of the purchase price.
o Its given only when there is already a sale.
 o Buyer is bound to pay the balance. When there is failure to material possession of the thing from a third
pay the balance, the earnest money is returned upon person
resolution; it is not forfeited. 3. Seller did not have control or ability to transfer
What are the rules on form that you must take note of? physical possession of the property for a reasonable
o 1. Sale of real property by an agent (must be in SPA) length of time after execution of the public instrument
o 2. Sale of large cattle (in writing and registered w/ municipal What is the rule on delivery by carrier?
treasurer) o GENERALLY, delivery to carrier is delivery to buyer
o 3. Sale of land by non-Christians o Exceptions:
o 4. Transactions involving rights over real property must be in 1. FAS sales (Free Alongside Ship)
public document to be registrable (1358) Delivery when goods placed alongside
But not a requirement for perfection vessel
o 5. SOF 2. FOB sales (Free On Board)
FOB shipping point delivery to carrier is
Transfer of ownership/performance of sale contract delivery to buyer
o Buyer must pay freight
When is there tradition?
FOB destination delivered to buyer only
o When the thing sold is placed in the control and possession of
upon reaching destination
the vendee
o Seller must pay freight
o With intent to deliver
3. CIF sales (Costs, Freight, Insurance)
What are the types?
The buyer pays fixed price while seller pays
o 1. Actual
insurance and freight up to the point of
o 2. Constructive any manner signifying transfer of possession
destination
Constitutum Possessorium: sold as owner, continue
In delivery of movables, what if the seller delivered less goods
to possess as lessee
than what he contracted to sell?
Traditio Brevi Manu: bought as lessee, and become
o 1. Buyer may reject.
owner
o 2. If buyer accepts and retains the goods knowing the contract
Traditio Longa Manu: delivery by agreement
wont be performed in full, he must pay at contract rate
o 3. Symbolic ex. delivery of keys to a car
(meaning, lessen the cost).
What is the effect of execution of public instrument?
o 3. If buyer used or disposed the goods before he knew the
o For both movables and immovables, it is equivalent to delivery
contract wont be performed in full, he just pays fair value.
of the thing, unless the contrary can be inferred.
What if the seller delivered more than what he contracted to?
o What are the exceptions to this rule?
o 1. Buyer may reject the excess.
1. Contrary stipulation in the instrument
o 2. If its indivisible subject matter, he may reject the whole.
2. Seller did not control the subject matter at the time
o 3. If he accepts the whole, he still pays contract rate.
of execution of the instrument
o 4. Same rule if the seller delivers goods where some match the
Except: when there is express agreement
contract specifications and some do not.
that the buyer will take steps to obtain
What is the rule for sale of immovables where the area is stated?

175
 o The seller must deliver all that is stated in the contract.
o If the area is less or the quality is different:
1. Proportional reduction of price OR
2. Resolution of contract (as long as the lack is more
than 1/10 of the area)
But if the buyer would not have bought the
property had he known the smaller area or
inferior quality, he can still resolve even if
less than 1/10
o If area is more than stated:
1. Reject excess OR
2. Accept all, but pay contract price
o What if the sale of property is by lump sum?
No change in the price even if the area is less or more
than what is in the contract.
Usually indicated by lack of price-per-unit
When does delivery not transfer title?
o 1. On sale or return
Buyer has option to return instead of paying the price
Delivery vests ownership but the buyer may return the
goods within the time stipulated/reasonable time
o 2. Sale on acceptance (or on approval or on trial)
Delivery is transfer only, until:
Buyer signifies approval
Buyer does not signify approval but retains
goods without notice of rejection
o N.B. for #1 and 2, there must be clear and written agreement
that sale is on sale or return or sale on acceptance
o 3. Reservation of ownership
o 4. Sale is not valid
o 5. Seller is not owner
What are the exceptions?
1. True owner is estopped
2. Sale made by registered or apparent
owner according to registration laws
3. Sale pursuant to statutory power of sale or
under order of court
176
4. Purchased in merchants store, fairs,
markets
Double sales
What is the general rule for double sales (registered immovables)?
o The Torrens system prevails in setting priorities.
o When the property is covered by two different titles, the earlier
one prevails.
o When one buyer bought the land as registered under Act 3344
(old registration law), and another bought the land as
registered under Torrens title (PD 1529), the latter prevails.
What if there was a prior unregistered sale and a subsequent
judicial sale?
o 1. If the land was registered, the judicial sale wins
Because the rule that first-registrant-wins applies
and in this case, the ordinary sale was unregistered
while the judicial sale is
o 2. If the land was unregistered, the unregistered sale wins
Because there are no rights to step into for the
second buyer
What is the rule for movables?
o First person to take possession of it in GF wins (no need to
register for movables)
What is the rule for unregistered immovables?
o 1. First person who registers the land in the ROP in GF
o 2. If neither, the first person who possessed it in GF
o 3. If neither,s the person who presents older title in GF
o N.B.: this pertains to unregistered lands, and registration
here is registration of the land in the ROP (Torrens)
o When does this rule apply?
1. Two valid sales
2. Same subject matter
3. From same person
4. Conflicting interests
What does purchaser in GF mean?
o No notice of other persons right or interest. Paid full and fair
price upon purchase, and before notice.
 o If the circumstances call for an investigation and he did not,
hes in BF (ex. lis pendens or annotated adverse claim).
o So what is required for second person:
Second buyer must show continuing GF until full
ownership vests.
The first buyer can simply defeat this continuing GF
by registering.
As soon as he second buyer obtains knowledge of the
first sale, its akin to registration in favor of buyer #1,
because second buyer loses GF.
What is the subsidiary rule?
o Primus tempore, potior jure (First in time, first in right). This
applies when the above rule doesnt apply for lack of
requisites, or if one is a CTs and one is a COS.
o If one is a CTS and one is a COS, the CTS wins if the CTS
buyer fulfilled all the conditions already and there was a
subsequent COS after.
Risk of loss
What are the general rules to remember?
o 1. Generic things do not perish
o 2. The 6 rules on loss, deterioration, and improvement with or
without fault (Art. 1189)
What if the loss occurred prior to perfection?
o The seller obviously bears the loss
What if the loss occurred after perfection but before delivery of the
thing?
o If entirely lost, then the contract is extinguished.
o If partially lost, the buyer may either resolve the contract or
demand delivery with reduction of price.
o What if there is sale of specific goods and the seller did
not know that the goods perished in part or have
deteriorated as to change the goods character?
1. Buyer may avoid the sale or
2. Treat the sale as valid as to existing or non-
deteriorated goods and pay price for such
What if the loss occurred when ownership is transferred?
177
o Follow res perit domino. The goods remain at the sellers risk
until ownership is transferred to the buyer. When the
ownership of the goods has been transferred to the buyer, then
the risk transfers to him.
o What are the exceptions?
1. If the possession has been transferred to the buyer
or the latters bailee, but the ownership remained with
the seller as a security (think: trust receipts), then risk
has passed to the buyer;
2. If delivery has been delayed due to the buyers or
sellers fault, then the party at fault bears the risk
Documents of title
Recall WAREHOUSE RECEIPTS notes, esp. on warranties and how to
garnish/levy a negotiable document of title and a non-negotiable
document of title
o Ex. need to surrender receipt, can ask help from court for
injunction, conflict between assignment of document and levy
of the same document and the rule on notice, etc.
What is a document of title and its purpose?
o It is a document used in the ordinary course of business in the
sale or transfer of goods, as proof of possession or control of
the goods, or authorizing the possessor of the document to
transfer or receive (by endorsement or delivery) the goods
represented by the document
What are the warranties of seller of documents of title?
o 1. The document is genuine
o 2. He has legal right to negotiate or transfer it
o 3. He has no knowledge of any fact that would impair the
validity or worth of the document
o 4. He has right to transfer title to the goods and that the goods
are merchantable or fit for a particular purpose
What are the rules on levy/garnishment of the goods?
o If a document of title has been transferred but not negotiated to
a person:
The person acquires right title over the goods as
against the transferor only
 If the document is non-negotiable, he may inform the
bailee-issuer of the receipt of the transaction and
have the bailee hold the goods for him
What happens prior to the transferee informing
the bailee?
He may be defeated in right by an attaching
creditor, or by the transferor/another
transferee who informs the bailee of another
sale
o How goods can be garnished:
Before the bailee can heed a garnishment order, the
receipt must either be:
1. Surrendered or impounded by court, or
2. Further negotiated be enjoined by court
What is the remedy of such creditor?
May ask help from the court for injunction or
attachment
Remedies of unpaid seller
What is an unpaid seller?
o 1. Whole price has not been paid or tendered
o 2. Negotiable instrument received as conditional payment and
the condition was broken due to dishonor, insolvency, etc.
What are the ordinary remedies of an unpaid seller?
o 1. If ownership has been transferred to the buyer, specific
performance for price
o 2. If ownership has not yet been transferred to the buyer, it can
be resold for a reasonable price. The seller can also offer to
deliver to the buyer.
If the buyer refuses to receive the goods, the seller
becomes a bailee for the buyer.
The seller can ask for specific performance for the
price.
o 3. If price is payable on a certain day, the seller can ask for
specific performance for the price regardless of delivery
The buyer can launch as a defense the sellers
incapability to perform his obligation
178
What are the special remedies for an unpaid seller? (Note: these
are special because they are self-help remedies and can be done
as long as there is no physical intrusion)
o 1. Possessory lien over the goods
When ownership has been transferred:
Seller has lien on goods or right to retain
goods if he still possesses them.
When ownership has not been transferred:
Seller has right to withhold delivery.
Buyers disposition of the goods does not terminate
lien. Exceptions:
1. If seller assents
2. What was sold was a negotiable
instrument held by a possessor in GF
When can possessory lien be exercised?
1. Goods sold without credit stipulation or
term of credit has expired already OR
2. Buyer has become insolvent
When does the possessory lien terminate?
1. Seller delivers goods to carrier or bailee
without reservation of ownership
2. Buyer lawfully obtains possession of
goods
3. Waiver
o 2. Stoppage in transitu
Right to stop goods in transit
Buyers disposition of the goods does not affect
stoppage. Exceptions:
1. If seller assents
2. What was sold was a negotiable
instrument held by a possessor in GF
N.B. Same exceptions as in possessory lien
When are the goods in transit?
Carrier/bailee has them before buyer takes
delivery of the goods
Goods rejected by buyer and carrier/bailee
continues in possession
 BUT if the goods are being carried on behalf 1. Express reservation of right to rescind
of the buyer already or the carrier wrongfully 2. Default for unreasonable time
refuses to deliver goods to the buyer, they What is the prerequisite?
are deemed NOT in transit The unpaid seller should have a right of lien
How is this right exercised? or should have stopped the goods in transitu
1. Actual possession Buyer is liable for breach
2. Notice to carrier Give notice to buyer of rescission, not in order to
3. If there is negotiable document of title, exercise the right, but to determine whether default
need to cancel it first before carrier gives has been for unreasonable time period
goods back to seller
[N.B. the next two special remedies require prior exercise of possessory Warranties
lien over the goods or stoppage in transitu]
What are express warranties?
o 3. Special right of resale
In what instances does this right apply? o Those provided in the contract
What are implied warranties?
1. Perishable goods
o 1. Implied warranty by seller that he has a right to sell the thing
2. Seller expressly reserves right of resale in
at the time ownership is to pass and that the buyer from that
case of default
time will have legal and peaceful possession of the thing
3. Buyer has been in default for
o 2. Implied warranty that the thing is free from any hidden faults
unreasonable time
or defects, or any undeclared charges/encumbrances
What is the prerequisite?
o BUT this cannot hold liable a pledgee, mortgagee, sheriff,
The unpaid seller should have a right of lien
auctioneer, with authority under fact or law, for the sale of a
or should have stopped the goods in transitu
thing where a third person has legal or equitable interest
What is the effect?
What are the buyers remedies for breach of warranty by the
Seller may resell even without rescinding the
seller?
original sale contract
o 1. Accept the goods but recoup price or have it reduced
Buyer is liable for:
o 2. Accept the goods and file for damages
o 1. Damages and
o 3. Refuse to accept the goods and file for damages
o 2. Difference for the price, if the
o 4. Resolve COS and refuse to accept the goods OR have
subsequent sale is for a lower price
mutual restitution, if applicable
When does seller have to give notice?
When can the buyer not rescind?
1. If goods are perishable, no need for notice
If he knew of breach of warranty but
2. When the goods are not perishable, to see accepted goods without protest
if the default has been for an unreasonable
Failed to notify the seller within reasonable
time
time
Seller cannot buy the goods for himself.
If he fails to return the goods or offer to
o 4. Special right to rescind
return them
When may this right be exercised?

179
 If the goods are not in good condition
anymore due to the buyers fault
What if the seller refuses to accept the goods
back?
The buyer becomes a bailee
With lien to secure price which has already
been paid
With no prejudice to sellers right to enforce
liens of an unpaid seller
Are these remedies mutually exclusive?
Yes
Except: may seek rescission even after
choosing fulfillment if it becomes impossible
o 5. If there is breach of warranty of quality, the loss is the
difference between the actual value of the goods and the value
of the goods had they complied with the warranty
When is there an implied warranty on quality or fitness of the
goods?
o 1. Buyer expressly/impliedly makes known to the seller the
particular purpose for which the goods were acquired and the
buyer relies on the sellers judgment or skill implied warranty
that the goods are suited for the purpose
o 2. Goods are bought by description from a seller who deals in
goods of that description implied warranty that the goods are
of merchantable quality
What is warranty in case of eviction?
o It is an implied warranty wherein if the vendee is deprived of
the whole or part of a thing purchased by FJ based on a right
prior to the sale by the vendor, the vendor is answerable for
the eviction
o What are the requisites?
1. Deprivation of the vendee of the whole/part of the
thing bought
2. By virtue of final judgment
3. Based on a right prior to the sale or an act
imputable to the vendor
180
4. Vendor must be summoned in the suit for eviction
at the vendees instance
o What can the vendee demand of the vendor in case of
breach of warranty against eviction?
1. Return value of the thing when sold
2. Income or fruits if he has been ordered to deliver
them to the party who won the suit
3. Cost of suit which caused eviction (or suit brought
against vendor)
4. Expenses of the contract if vendee paid
5. Damages and interests, and ornamental expenses
if sale was in BF
When can the vendee demand the rescission of
the contract?
1. If due to the eviction a part of the thing
sold was so important that the vendee would
not have bought it without said part
2. Two or more things jointly sold for lump
sum (or for separate price for each if it is
clear the vendee would not have purchased
one without the other)
o What are the two kinds of waiver of warranty against
eviction?
1. Consciente voluntary renunciation made by the
vendee of the right
Effect: liability of the vendor in case of
eviction only extends to the payment of the
value of the thing sold
2. Intencionada voluntary renunciation by the
vendee of the right to warranty against eviction with
knowledge of the risk of eviction and assuming its
consequences
Effect: no liability whatsoever for the vendor
What is an accion redhibitoria?
o Actions instituted by the vendee against the vendor to avoid a
sale on account of some vice or defect in the thing which
renders it unfit for the use intended
 What is accion quanti minoris? The buyer can launch as a defense the sellers
o Action to procure return of a part of the purchase price paid by incapability to perform his obligation
the vendee to the vendor due to the defect What is the remedy for sale of movables on installment (RECTO
What is the prescriptive period for either? LAW)?
o 6 months from date of delivery o Three options:
o Except redhibitory actions based on faults/defects of animals, 1. Exact fulfillment of the obligation, if buyer fails to
which is 40 days from date of delivery pay an installment
Can there be recovery of deficiency?
Breach of contract o Yes.
2. Cancel the sale, if buyer fails to pay 2 or more
What are the remedies covered by this section (overview)? installments
o 1. Ordinary remedies of seller for breach of sale of movables Is there return of price?
o 2. Recto Law o Usually, none, to compensate for
o 3. Ordinary remedies of seller for breach of sale of immovables deterioration
Art. 1592 for failure to pay What is the validity of an agreement not
Anticipatory breach to return price already paid?
o 4. Maceda Law o Valid as long as not unconscionable
o 5. Remedies of buyer in sale of movables
What is the nature of rescission?
Specific performance
o It bars further recovery (because
Four actions in case of breach of warranty
payments are returned and the SM
Anticipation of breach
is returned)
o 6. Remedies of buyer in sale of immovables
3. Foreclose CM on the thing, if buyer fails to pay 2 or
Anticipation of breach
more installments
Condominium law
NO ACTION to recover unpaid balance
What are the remedies of the seller for breach of contract of sale of
Does this bar foreclosure on another
movables?
guarantee and another security?
o 1. If ownership has been transferred to the buyer, specific
o Yes.
performance for price
What if the seller forecloses on additional
o 2. If ownership has not yet been transferred to the buyer, it can
securities instead of the CM?
be resold for a reasonable price. The seller can also offer to
o Loses lien on the CM.
deliver to the buyer.
What is the effect of taking back the SM
If the buyer refuses to receive the goods, the seller
by the seller?
becomes a bailee for the buyer.
o Its tantamount to foreclosure
The seller can ask for specific performance for the
What if property is sold for two
price.
installments only?
o 3. If price is payable on a certain day, the seller can ask for
specific performance for the price regardless of delivery o There can be no failure to pay 2 or
more installments, so even if CM is

181
 foreclosed, the unpaid balance can
still be recovered (exception to
1484)
o What else is deemed a purchase of movables on
installment?
1. Financing agreements
2. Lease with option purchase
o Are the remedies mutually exclusive?
Yes.
But if the chosen remedy fails, can choose another.
Remedies of seller for sale of immovables? (if not covered by
Maceda Law)
o 1. For anticipatory breach
If the seller has reasonable fear of breach or loss,
may immediately sue for rescission of sale
Or else, he can only rely on substantial breach
o 2. For failure to pay the price
It does not bar the transfer of ownership or nullify the
sale K
But he can rescind it through judicial or notarial
demand
What does Art. 1592 provide?
Even if it is stipulated that failure to pay the
price leads to rescission, there has to be a
demand for rescission first, to grant the
buyer of every opportunity to comply with the
obligation
So if there is no judicial demand or notarial
act, the buyer can still pay what is due
When does Art. 1592 apply?
o Ordinary sale of real property transferring ownership
simultaneously with the delivery of the real property sold
What is the remedy for seller of immovable on installment
(MACEDA LAW)?
o When ML applies:
1. Sale in installments AND
182
2. The immovable is residential real estate or condo
unit (not commercial, industrial, or agrarian reform
land) AND
3. Either a CTS (notice of cancellation) or COS
(demand for rescission)
Even applies to financing transactions
o If buyer has paid at least 2 years of installments:
1. Grace period of 1 month for every 1 year of
installment payments to pay (without interest)
Can only be availed once every 5 years
What if there is a stipulation that there is
no grace period or there is payment of
interest?
o INVALID.
2. If the seller cancels the contract, he must refund to
the buyer the cash surrender value of payments
already made: 50% + 5% for every year beyond 5
years of installments (not exceeding 90% total)
When does actual cancellation take place?
AFTER expiration of grace period, the seller
gives:
o 1. Cash surrender value
o 2. Notarial demand for rescission
o 3. And there is lapse of 30 days
from receipt of notarial demand
What if the lot has been sold to an innocent
purchaser for value at this time?
Option 1: Buyer can demand return of actual
market value + 12% interest
Option 2: Buyer may demand substitute lot
What is the nature of this 30 day period after
notarial demand?
It, in fact, is a 2nd 30 day grace period for
which payment can be made.
But in this grace period, there are interests
and penalties.
Can there be judicial rescission under the ML?
 No. The law requires notarial rescission. If
a judicial rescission is filed instead, the court
will dismiss it.
Note again if the situation involves Maceda Law,
then judicial rescission (actually, resolution), does not
apply because the action must be a notarial
rescission
If Art. 1592 (not ML) applies:
Either judicial or notarial rescission.
Rescission cannot be extra-judicial; buyer
can otherwise still continue paying.
o If buyer has paid less than 2 years of installments:
1. Grace period: only 60 days from date the
installment became due
2. After grace period, the seller may either cancel the
contract (CTS) by giving notarial notice of rescission
(COS). There is another 30 day period before the
cancellation or rescission takes effect.
What about the cash surrender value?
It doesnt apply to this situation. The buyer
does not get it back.
What are the remedies of the buyer in a sale of movables?
o 1. Specific performance
o 2. Recall four actions above for breach of warranty:
1. Accept goods, but recoup/reduce price
2. Accept goods, with damages
3. Refuse goods, with damages
4. Resolve contract
o 3. Suspension of payments in anticipation of breach
If buyer has a reasonable fear of disturbance,
vindicatory action, or foreclosure
Until when must suspension last?
1. Seller has caused disturbance to stop
2. Seller issues a security for return of the
price
3. There is stipulation that the buyer must
pay nonetheless
183
Is trespassing considered as a valid ground to
suspend payments?
No.
What are the remedies of the buyer in a sale of immovables?
o 1. Suspension of payment if there is reasonable fear of
disturbance or danger
Unless the seller gives security for return of price
o 2. Subdivision or condominium projects (PD 957)
No forfeiture of payments where there is failure to
develop condominium projects or subdivisions and
then the buyer stopped payments
Buyer can ask for refund of what he paid notice and
demand can be simultaneous
Extinguishment of sale
What are the causes to extinguish a contract of sale?
o 1. Ordinary causes to extinguish an obligation
o 2. Breach (discussed directly before)
o 3. Conventional or legal redemption
What is conventional redemption (sale pacto de retro)?
o When the seller expressly reserves the right to repurchase the
thing sold. It must be reserved by the seller in the same
instrument of sale.
Once consummated, cannot make pahabol the
stipulation in a separate document. In fact, it cannot
be in a separate document (unless its something else
like an option to buy).
It MUST be in the same sale instrument and
stipulated before consummation.
o It does not prevent the consummation of the sale.
o Can enforce the right from third persons or possessors deriving
right from the buyer, even if the subsequent sale contract did
not mention the conventional redemption.
Of course, respect laws on Mortgage and Property
Registration Decree.
Compare with option contract?
 o Conventional redemption need not have separate and distinct
consideration to be valid.
o The period of the conventional redemption cannot exceed 10
years, while an option contract may exceed this period.
o Option contract need to just give notice that you are
exercising the option.
o Conventional redemption give notice AND tender payment
with consignation
What is the period for redemption?
o 1. If none agreed upon, 4 years
o 2. If there is a period agreed upon, cannot exceed 10 years
o 3. 30 days from judgment of the court, if there is judgment
declaring a contract one with conventional right to redeem and
not something else (ex. Equitable mortgage)
o When is the period suspended?
Pendency of action in GF questioning the validity of
the underlying sale contract suspends the
prescription. But mere failure to pay the price does
not suspend it.
What is the effect of the agreement?
o It is a valid contract of sale with a resolutory condition that the
seller exercising right to redeem.
What must be returned to the buyer by the seller?
o 1. Price
o 2. Expenses of the contract
o 3. Necessary and useful improvements/expenses
When is a contract presumed to be an Equitable Mortgage (EM)?
o 1. Price of sale with right to repurchase is unusually
inadequate
o 2. The seller remains in possession of the property as lessee
or otherwise
o 3. The period of redemption is extended in another instrument
o 4. The buyer retains for himself a part of the purchase price
o 5. The seller binds himself to pay for the taxes of the thing sold
o 6. Any other similar case
In case of doubt, what is the rule?
184
o A sale purporting to be pacto de retro (with conventional
redemption) is deemed an EM.
o Same with absolute sales, but the real intent is to secure an
obligation.
What is the consequence if a contract is declared an EM, and not
pacto de retro?
o Title of buyer cannot ripen into full ownership because his
possession is not in the concept of an owner.
o There can be no consolidation of title in the buyers hands
(otherwise its pactum).
o The seller can redeem as long as the buyer hasnt foreclosed
yet.
How is consolidation of ownership in the vendee by failure of the
vendor to exercise option in a pacto de retro done?
o Through an ordinary civil action (so all indispensable parties
i.e. those with interest must be impleaded)
What is legal redemption and when does it apply?
o Mechanism of law to minimize co-ownership.
o 1. Among co-heirs
Selling to a stranger prior to partition
Can redeem within 1 month from receipt of notice of
sale to stranger
Applies only to hereditary rights (co-heirs)
o 2. Among co-owners
Selling to a stranger of a co-owners share
If two or more co-owners decide to redeem, they
acquire in proportion to their existing shares
o 3. Adjoining owners of:
A. Rural land
Sale of land which does not exceed 1
hectare
Not applicable to lands separated by
servitudes
If two or more are requesting redemption,
prefer the one with the smaller lot. If equal,
prefer the first requestor to redeem.
Purpose: maximize use of rural lands
 B. Urban land
ONLY applies when there is sale of a small
piece of land which was bought by a seller
for mere speculation (sold when prices go
up)
Purpose: prevent speculation in real estate
when there is housing problem already in
urban area
What is the special rule for sale of
adjoining urban land?
o The right is not just of redemption
but also preemption. It means if the
resale has not yet been perfected,
the adjoining owner can preclude
sale because he is preferred.
o 4. Sale of credit in litigation by the creditor
When does legal redemption start to run?
o Within 30 days of receipt of notice in writing by the prospective
seller or seller
o Written notice is indispensable even if the redeemer gains
knowledge of the sale some other way
o Exceptions?
1. Suit in court to eject or collect rentals from co-
owners
2. Laches by redeemers
3. The co-owner himself acted as middleman or
intermediary in the sale to the third party
PARTNERSHIP
Contract of partnership
What are the elements of a Partnership contract?
o 1. Meeting of the minds to form a partnership
A partnership is consensual contract
185
You cannot add a new person to the partnership
unless everyone consents
Mere co-ownership does not make a partnership
o 2. Agreement to contribute to common fund with joint interest
in the profits or losses thereof
Share of profits must come from the equity position
and not some other role (ex. creditor, employee)
o 3. Consideration: promised contributions
Partners are debtors to the partnership to the extent
of promised contribution. They pay damages and
interest for failing to do so.
Industrial partners contribute their service, so they
cannot engage in a business for themselves.
What are the two essential requisites of any partnership contract?
o 1. Two or more persons bind themselves to contribute money,
property, or industry to a common fund
N.B. mere co-ownership does not per se constitute a
partnership
o 2. Intention by the partners to divide the profits amongst
themselves
What is the presumption?
Receipt of share in net profits is prima facie
evidence that the person is a partner
What are the cases where this rule does not
apply?
1. Wages of an employee
2. Rentals paid to landlord
3. Annuity of surviving spouse or
representative of deceased partner
4. Consideration for sale of goodwill or other
property
Key attributes of Partnership:
o 1. Consensual, but weak juridical personality
Arises even if the partnership is not registered
Can be extended beyond term if the partnership is not
liquidated or settled at end of term
 Really merely for convenience of transacting with the
public
o 2. Mutual agency
o 3. Delectus personae
There is special fiduciary relationship between
partners. There is utmost trust. When it is breached,
any partner can dissolve the partnership midstream,
even before stated period.
In fact, even if there is bad faith, a partner may
dissolve the partnership midstream, but with
damages.
The moment one partner is gone, the partnership is
dissolved.
o 4. Subject to unlimited liability
Partners are liable pro rata with their separate
property after all partnership assets have been
exhausted
Does this include even industrial partners?
Yes
Can there be a contractual stipulation denying
unlimited liability?
No. But it can be valid only as an internal
agreement among partners.
Characteristics of a partnership contract:
o 1. Nominate and principal
o 2. Consensual
Failure to register and provide a public instrument is
not fatal to the existence of the partnership
o 3. Onerous and bilateral
o 4. Preparatory and progressive
Distinguish universal from general partnership:
o Universal partner contributes all his property
o Particular determinate things, or specific undertaking, or
exercise of profession or vocation
o Why is the distinction important?
Those who cannot donate to each other cannot enter
into contract of universal partnership
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o Can spouses enter into a partnership?
No. This would indirectly change their property
relations.
o What is the default rule?
Particular partnership
o X and Y are partners in real estate projects. X was abroad and
Y stumbled upon a potentially lucrative piece of property. Y
was convincing X to commit to the new venture but X refused.
Y initially temporarily used partnership property to secure the
new property but returned it and used his own property when X
refused. The property earned big profits. X is claiming part of
the earnings. Is X entitled?
HELD: No. They are not universal partners, and only
particular partners. Without sufficient basis, the law
cannot presume a partnership between X and Y as to
the new property.
Term of partnership:
o 1. Fixed term or particular undertaking
But partners may choose to continue after, which will
turn it into a partnership at will
Even if there is specific duration or purpose, any
partner may choose to dissolve the partnership
But if there is no cause or there is BF,
damages
o 2. Partnership at will
Any partner may dissolve it at will, but if there is BF,
damages
What is the extent of a general partners liability?
o 1. Liable pro rata when partnership properties have been
exhausted
o 2. Solidarily liable with the partnership for wrongful acts or
omissions causing injury to third persons when the partner acts
in the ordinary course of business
o 3. Also solidarily liable with the partnership when a partner
acting with apparent authority receives money from a third
person and misappropriates it
o What about a subsequent partner?
 He is not personally responsible for liabilities arising
prior to his joining the partnership
Distinguish a capitalist partner from an industrial partner:
o Capitalist:
Contributes money or property
Liable for losses (cannot stipulate otherwise)
Cannot engage in competing business or venture
o Industrial:
Contributes services
Not liable for losses (except when all the partnership
assets have been exhausted)
Cannot engage in any other business at all
o Terms of a partnership contract provide Participation: A
40%, B 40%, C 20%. Both A and B provide the entire
capital and C was industrial partner. The partnership went
bankrupt. Can a creditor hold C liable for losses?
Yes, because third parties are not subject to internal
agreements between the partners as to losses. So
the creditor can hold C liable for 20% since that is his
participation.
C, in turn, can ask for reimbursement from A and B
because of their agreement that C does not share in
losses.
What is a partner by estoppel?
o He is not really a partner, but because of his acts, he has led
third parties to believe so. He is liable as a regular partner as
to these creditors.
Pro rata with other partners who consented to the
representation.
The partnership itself is only liable as the partnership
per se if all the partners acceded to the representation
What is the registration requirement?
o 1. If capital contributed is 3K or more, must be in a public
document and registered with SEC
What is the consequence of failure to register?
187
None. It has no adverse legal consequence.
It does not affect partnership liability to third
persons.
Purpose of registration:
Prevent tax evasion by large partnerships
Allow public to determine nature of the
partnership more accurately
o 2. For partnerships where real rights or immovable properties
are contributed there must be a public document, inventory,
and registration with the SEC
What is the consequence of failing to register this
public document?
The partnership is void, under express
provision of law. But this cannot prejudice
liability towards third parties.
N.B. The partners lose the benefit of
excussion. They are solidarily liable, and not
just jointly and subsidiarily liable.
N.B. But under CLVs blog discussion, failure
to register really has no adverse effect even
here because third parties cannot be
prejudiced by failure to register, and as
among the partners, there are still
contractually bound (consensual
agreement).
Priority rules if registered
A. Partnership creditors over partnership
properties
B. Separate creditors over separate
properties
Can a corporation enter into a partnership? What about a JV?
o Cannot enter into partnership.
o But can become a limited partner because there is no unlimited
liability in this case and it will not participate in the
management of the partnership.
o Can enter into a JV (because there is a particular purpose
only)
 What is the rule on liabilities as regards the firm name?
o If a non partner has his name in the firm name, he is subject to
the liability of a partner.
Rights and powers of the partners
What are the three general rights of the partners?
o 1. Right to participate in management of the partnership
(manager)
o 2. Right over specific property of the partnership (agent of
other partners)
o 3. Interest in the partnership (equity holder)
What is the management right of the partners?
o Presumption is that there is mutual agency acts of one can
bind the partnership. But what is stipulated in the partnership
articles is what prevails.
o BUT the doctrine of apparent authority prevails. Third persons
cannot be prejudiced; they are not expected to look up the
articles of partnership, even if registered.
What is the rule as to acts within the ordinary course of business?
o Representations by partners bind the partnership, if acting
within scope of his authority.
o Wrongful acts in ordinary course of business:
Solidarily liable with the partnership for wrongful acts
or omissions causing injury to third persons when the
partner acts in the ordinary course of business
Also solidarily liable with the partnership when a
partner acting with apparent authority receives money
from a third person and misappropriates it
What are the other acts exhibiting that the partners generally act
as agents for the partnership?
o 1. Admission or representation made by any partner
concerning partnership affairs within scope of authority:
evidence against the partnership
o 2. Notice to any partner regarding partnership affairs,
knowledge acquired by a partner while a partner, and
knowledge of a partner who reasonably could and should have
188
communicated it to the acting partner operate as notice to
the partnership
o 3. See the two rules on solidary liability as re: wrongful acts or
omission in ordinary course of business and misapplication of
property received from third person
What is the rule as to acts NOT within ordinary course of
business?
o NOT valid unless approved by all the partners.
o Examples:
Assigning partnership property in trust, mortgaging, or
pledging it
Disposing of the goodwill of the business
Confession of judgment
Entering into compromise as to liability or claim
Renouncing claims by partnership or submitting it to
arbitration
What if management is stipulated in favor of one partner?
o He may execute all acts of administration despite opposition by
other parties.
o If stipulated in the articles of partnership, it is irrevocable
except for just or lawful cause. If not stipulated in the articles
of partnership, it is essentially revocable.
What if management is stipulated in favor of 2 or more partners?
o If there is opposition, majority wins.
o If there is a tie, controlling interest prevails.
What if it is stipulated that none of the managing partners should
act without consent of the others?
o Follow the rule, then.
o Exception is if there is imminent danger or irreparable injury to
the partnership.
What is the nature of power of alteration (ownership/control)?
o Cannot be done without consent of all other partners, even if
useful
o But if the refusal is manifestly prejudicial to the partnership,
court intervention may be sought
What is the rule on sale of real property?
o If the title is in the name of the partnership,
 Conveyance in the name of the partnership, done
with authority valid
Conveyance in the name of the partnership, done
by a partner without authority partnership may
recover it unless the purchaser is in GF and for value
Conveyance in the name of a partner, done with
authority only equitable interest is passed
Conveyance in the name of a partner, done
without authority no effect
o If title is in the name of a partner,
Conveyance by a partner with authority (whether
in the name of the partnership or own name)
only equitable interest is passed
Conveyance by a partner without authority no
effect
o If title is in the name of some but not all of the partners:
If the records disclose partnership interests
partners named in the title can convey title, but the
partnership may recover if they acted without
authority, except for purchaser in GF and for value
If the records do not disclose partnership
interests partners named in the title may convey
title over property, but the partnership may recover if
they acted without authority
o If title is in the name of all of the partners:
Conveyance done by all the partners passes all their
rights over the property
What is the nature of their co-ownership interests over the
partnership property?
o Partner has equal right to posses the partnership property only
for partnership purposes
Compare with normal co-ownership: can use the
property as long as non-injurious to other co-owners
o Partners right over partnership property is non-assignable
except in assignment of rights of all partners over the
property
o Partners right over the property is not subject to:
189
1. Attachment or execution on personal claims, unless
on claim against the partnership
2. Legal support
What is the rule on equity rights?
o These can be transferred or assigned. What is passed is the
right of the assignor to receive profits.
o Does this dissolve the partnership?
No. The rights are separable.
o Does this give the transferee management rights?
No. The rights are separable.
When can separate creditors attach and publicly sell the shares of
a partner on assets?
o It must be during dissolution only, and after satisfaction of
partnership creditors.
What is the share of the partners in profits and losses?
o It is done according to agreement.
o A. If only shares are mentioned, losses follow the same
proportion
o B. In absence of stipulation, follow proportion of contribution
But industrial partners do not share in losses
o Can designation of profits and losses be left to one of the
partners?
No.
o Can it be left up to a third person?
Yes, but it can be impugned if manifestly inequitable.
Unless it has been executed or more than 3 months
have passed.
What are the other rights?
o 1. Right to inspect partnership books at reasonable hour
o 2. Right to demand true and full information of all things
regarding the partnership
o 3. Right to demand accounting
Partner who receives partnership profits holds it in
trust for everyone
When can there be demand for formal
accounting?
 1. Excluded from partnership business or 2. Dissolution of the partnership
property NOT rescission, because you cannot have mutual
2. Right is stipulated in articles restitution (will prejudice business)
3. When it is just/reasonable o What is unlimited liability?
o 4. Right to dissolve the partnership When the partnership is insolvent
Can be done whenever It is pro rata and subsidiary
But there are damages if done in bad faith BUT insolvency does not automatically dissolve the
partnership. The partners can continue to pursue the
Duties and obligations of the partners business in hopes of improvement.
2. Fiduciary duties to partners
1. Obligation to contribute to the common fund o A. Duty to account
o The partners are debtors to the partnership to the extent of What is the rule on secret profits/benefits?
what was promised. Only held in trust for the partnership.
MONEY: incurs damages and interest for delay Other partners can seek recovery or dissolve
PROPERTY: the partnership.
Liable for breach of warranty against eviction o B. Duty of diligence
Liable for fruits from date of obligation Liable for damages to the partnership through own
Risk is borne by the partnership if appraised, fault.
up to appraised value, or if fungible and Can he compensate liability for damages with
cannot be used without deteriorating, or profits/benefits he might have earned for the
meant to be sold partnership?
REAL PROPERTY: need registration, as stated No.
above BUT he may equitably lessen his liability if
SERVICE OR INDUSTRY: his extraordinary efforts have led to unusual
No specific performance (obviously), so only profits for the partnership.
damages for failure to perform When can the acts of a designated managing
o Is there obligation to make additional contributions? partner be opposed?
None, generally. If done in BF.
What if there is imminent loss or danger to the And his power may be revoked.
firm? o C. Duty of loyalty
Still no compulsion to contribute. Liable to partnership if he took partnership funds or
But all those who do not contribute are property and applied them to his own use with
obliged to sell their interest to the other interest and damages
partners, except of course for industrial What if there is a debtor to both the partnership
partners. and a partner?
o What if there is default of obligation to contribute what
are the remedies?
1. Specific performance with damages
190
 1. If he pays debt to partner alone split
proportionately between partnership and
partners credit
2. If he pays debt to partnership alone
apply entirely to the partnership
Exception?
o If the debtor provides otherwise and
the debt to the partner is more
onerous
o D. Separate fiduciary duties of an partner
1. Industrial partner cannot engage in any other
business, regardless of nature
Remedies of other partners:
o Exclude industrial partner from the
firm, with damages
o Avail of benefits derived by the
industrial partner, with damages
2. Capitalist partner cannot engage in competing
business
Remedies of other partners:
o Have that partner give all benefits
accrued to the partnership and bear
all the losses to the partnership
because of the competing business
3. Subsequent partner only liable for obligations of
partnership prior to joining with partnership property
(not personally)
o When are non-partners liable?
1. Names appear in firm name
2. Estoppel, as to third persons
Bind the partners who consented or acted under the
representation as well
Obligations of the partnership
1. To the partners
o A. For amounts disbursed for and in behalf of the partnership
With interest
191
o B. For contracts entered into for and in behalf of the
partnership
o C. Keeping of books at principal place of business, accessible
at reasonable hour
2. To third persons
o A. From firm name: for anyone represented as partner therein
o B. Partners are assumed to be mutual agents for the
partnership, and their acts generally bind the partnership
except:
1. Act is not in ordinary course of business and the
one acting has no authority
2. The third person knows the partner acting has no
authority
NOTE: intra-partnership problems cannot prejudice third parties in good
faith, who have expectations that the contract will push through
o Third persons have no duty to know what is stipulated in the
articles of partnership. They can rely on normal right and
authority of the partners to bind the partnership.
Dissolution, winding up, termination
What is the effect of dissolution?
o It breaks up the vinculum juris between the partners but does
not terminate it until there is full winding up.
o But not all dissolution leads to winding up and termination.
The partners can choose to continue on the business.
What are the effects of dissolution?
o Extinguishes the right and power of the partners to represent
each other in the partnership as a going concern.
1. Except winding up and completion of pending
transactions
2. And except acts that would have bound the
partnership had it not been dissolved, when the third
person is not aware of the dissolution, such fact not
advertised in a newspaper of GC.
What are the exceptions to these exceptions?
1. When the partnership purpose was
declared illegal
 2. When the partner acting was insolvent
3. The partner has no authority to wind up
o But since the partners can choose to continue with the
partnership even after dissolution, and so contracts entered
into by the partnership after dissolution are not void. In a case,
there was no termination and there was no publication to warn
third persons: creditors can fully expect transactions to push
through.
What are the grounds that dissolve the partnership without need
for court decree?
o 1. Dissolution without violation of partnership agreement
o 2. Dissolution with violation of partnership agreement
o 3. Dissolution by force majeure
Loss of specific thing to be contributed
Business became unlawful
Death, insolvency, civil interdiction of any partner
What dissolves the partnership with need for court decree?
o [loss of capacity]
o 1. Partner became insane in judicial proceeding
o 2. Partner became incapacitated in performing his part in the
contract
o [wrongful acts]
o 3. Partner guilty of conduct prejudicial to the business
o 4. Partner willfully and persistently breached the partnership
contract
o [equity]
o 5. Partnership business can only be carried out with a loss
o 6. Other equitable grounds
What is the effect of dissolution not in violation of partnership
agreement?
o No damages. Any of the partners can participate in the
winding up.
o Except, of course, when a partner is expelled in good faith.
The one expelled is disqualified.
o The remaining partners have no choice but to wind-up, if the
withdrawing partner insists.
192
They cannot force continuation of the business,
unless they agree to settle the equity interests of the
withdrawing partner.
What is the effect of dissolution in violation of partnership
agreement?
o The partners seeking dissolution are liable for damages. They
cannot participate in continuation of the business.
o Right of the partners who did not dissolve the
partnership?
If the business is discontinued, right to share in net
assets + damages from erring partners.
May decide to continue the business. They may
possess the partnership property by either paying a
bond in court or paying the erring partner the value of
his interest in the partnership.
o Right of the partners who dissolved the partnership?
If the business is discontinued, right to share in net
assets, less damages.
If the business is continued:
Released from liabilities
Have value of his interest in the partnership
secured by a bond in court or paid in cash,
less damages.
What is the right of the partner with lawful/just cause to ask for the
judicial dissolution of the partnership due to
fraud/misrepresentation by other partners (see enumeration
above)?
o He has a lien on:
1. Surplus of partnership property after satisfying
liabilities to third persons
2. Any sum of money paid to purchase interest in the
partnership
3. Any capital or advances contributed by him
o He can stand in the creditors place for payments made by him
for partnership liabilities
o He should be indemnified by the guilty party
What are the priority rules in winding up of partnership?
 o 1. To non-partner creditors
o 2. To partners, other than capital or profits
o 3. To partners, for capital
o 4. To partners, for profits
When a partner dissolves the partnership, can he demand for the
return of his shares, contributions, etc.?
o No. Go through dissolution. This way, the partnership
creditors are given priority.
Limited partnership
What are the requirements to form a limited partnership?
o 1. Execute a certificate of limited partnership
Provide who are general, and who are limited
partners
Provide their contributions and when these are
returned.
Limited partners cannot be industrial partners.
o 2. File certificate with the SEC
N.B. Regardless of compliance, who are limited and
who are general partners are binding inter se.
What is the rule on false statements in the
certificate?
Those who knew of the falsity are liable to
third persons prejudiced. (So if the third
person was not prejudiced by the falsity, no
liability.)
o 3. Name of the partnership must have LTD.
o When can there be cancellation of the certificate?
Dissolution of the partnership
Or all limited partners cease to be such
o How can a certificate be amended?
Signed and sworn by all members
What are the powers of general partners?
o Same as in a normal non-limited partnership.
o But the following acts need consent of limited partners:
[prejudice to the partnership]
1. Any act in contravention of the certificate
193
2. Act that would make the business impossible to
carry on
3. Confession of judgment against the partnership
4. Use of partnership property other than for
partnership purpose
[expansion of participants]
5. Admitting another person as GP
6. Admitting another person as LP
o What is the relationship of general and limited partners?
Not mutual agency, but business trust.
The limited partners thus can engage in other
businesses.
What are the rights and obligations of limited partners?
o [as to contribution]
o 1. Limited liability only to extent of contribution
What if they interfere with management?
A. They become general partners as to third
persons
B. But not as to co-partners, who must
respect the contractual agreement inter se
o 2. Return of contribution
What are prerequisites to return of contribution?
1. All partnership liabilities to third persons
paid
o If there is premature return of
contributions, these are liable for
the obligations to third persons
2. Consent of all members obtained
o Except when there can be legal
demand for return of contribution
(see below)
3. Certificate cancelled or amended to allow
for withdrawal or reduction of members
When can there be legal demand for return of
contribution?
1. Dissolution of partnership
2. Date for return had arrived
 3. After six months notice for return of
contributions (if no return date stated)
What is returned to him?
Cash, regardless of what he contributed.
Unless, of course, there is agreement
otherwise.
o [as to income]
o 3. Receive share by way of income
After liabilities to creditors have been settled
o 4. To assign equity interest
Only gets profits, but does not become limited partner
unless there is consent and amendment of certificate
o [fringe acts]
o 5. To inspect books
o 6. To demand accounting
o 7. To loan money and transact other business, but should not:
Receive partnership property as collateral
Receive payment if there are not enough partnership
assets to discharge other obligations
o [to dissolve]
o 8. To dissolve the partnership
ONLY when he demands rightfully for his
contributions but he did not get them or
partnership does not have enough properties to return
his contributions whence it also has not paid liabilities
Can limited partners be compelled to contribute to assets of
partnership in case there is imminent loss?
o No, unless provided in the contract.
o BUT the usual provision that there is forced sale of partnership
interest to other partners for failure to contribute does not apply
to LPs.
Does death of a limited partner dissolve the partnership?
o No. Only a general partners death (of course, the others can
choose to continue)
o The limited partners estate can simply settle liabilities and
claims of the limited partner.
What is the order of payment of liabilities?
194
o 1. To third party creditors
o 2. To LPs, for profits
o 3. To LPs, for capital contribution
o 4. To GPs, other than capital or profits
o 5. To GPs, for profits
o 6. To GPs, for capital (N.B. 5 and 6 deviate from usual rule)
AGENCY
Define agency:
o Agency is where a person binds himself to render service or to
do something in representation of another, with the latters
consent or authority
Nature of agency:
o Agent acts as a representative and not for himself
o Agent acts within scope of his authority
Elements of contract of agency?
o 1. Consent of the principal and agent
o 2. Object: execution of a juridical act in relation to third parties
o 3. Consideration: either commission or liberality
Characteristics of agency contract?
o 1. Nominate, principal
o 2. Consensual
o 3. Unilateral and generally onerous
o 4. Preparatory and representative
o 5. Fiduciary and revocable
Neither the principal or agent can be forced to remain
in the relationship when they choose to have it
terminated
Consequences of fiduciary relationship:
o 1. Agent estopped from asserting adverse title over subject
matter of agency belonging to the principal
o 2. Must choose best course of action for the principal, and not
one that favors himself to the detriment of the principal
o 3. Cannot acquire for himself property of the principal entrusted
for disposition
 Unless principal consents, or
Agent purchases after agency is terminated
Doctrines flowing from preparatory and representative character of
agency:
o 1. Agent is stranger to the resulting contract between the
principal and third party
No rights
No obligations
No legal standing
o 2. Liabilities pertain to the principal
o 3. All the acts the principal can do in person, he may do
through an agent except those strictly personal
o 4. Agent not liable to a contract, except:
A. if he binds himself to the contract expressly
B. if he exceeds limits of powers without giving the
other party sufficient notice of his powers
o 5. Knowledge of agent is knowledge of principal, except:
A. where agents interests are adverse to the principal
B. agents duty is not to disclose the information
C. person claiming benefit of the rule colludes with the
agent to defraud the principal
Differentiate from a broker:
o A broker is just a middleman between two parties, and he does
not represent either and cannot bind either to the transaction.
o Not prohibited from purchasing property of the primary party,
unlike an agent.
What is the form needed for a contract of agency?
o None in particular; its a consensual contract
o But sometimes a written SPA is needed.
Differentiate an express from an implied agency:
o Express agency there is actual acceptance
o Implied agency implied from:
1. Acts of principal
2. Silence or lack of action
3. His failure to repudiate the agency, knowing that a
person is acting on his behalf without authority
195
4. Principal delivers power of attorney to the agent
and he accepts it without objection if both are in the
same place, physically present
N.B. But if not physically present in the same place,
as when the power is delivered through mail, silence
is not implied acceptance
Exceptions to this?
1. Principal transmits power of attorney to
the agent who receives it without objection
2. Principal entrusts to the agent by letter or
telegram a power of attorney with respect to
the business in which the latter is habitually
engaged in, and he did not reply
o By estoppel
How can the agent be duly authorized as to particular third
persons?
o A. If the principal informs another person that he has given
power of attorney to an agent, the latter becomes a duly
authorized agent as to that third person
o B. If the principal states by public advertisement the
constitution of agency, the agent is duly authorized as to any
person
o How long does this power last?
Until notice is rescinded in the same manner in which
it was given
What is agency by estoppel?
o Even when the agent has exceeded his powers, the principal
should be made liable if he allowed the agent to act as though
he had full powers.
o Elements:
1. Principal manifested a representation of the agents
authority
2. Third person in GF relied on the representation
3. Third person changed his position, to his detriment,
relying on the representation
Differentiate a general from special agency?
 o General agency is one that encompasses all of the business of
the principal. (Universal agency)
o Special agency is to cover only one or more specific
transactions. (Particular agency)
What is the general obligation of the agent who accepts the
agency?
o Legally bound to carry out the terms of the agency
o Breach: principal can sue for damages, but not compel specific
performance because it doesnt apply to obligations to do
o What is the measure of damages?
Based on the prejudice the principal suffered due to
non-performance of the act required
The general rule is that death of the principal terminates the
agency. What is the narrow exception?
o The agent must finish business already began prior to the
principals death, should delay entail any danger
What is the obligation of an agent who declines the agency?
o Bound to observe diligence of GFF in the custody of the goods
until the owner appoints an agent or takes charge of the goods
Is the agent liable for contracts he enters?
o Generally, no.
o UNLESS:
1. He exceeds authority
2. He binds himself to the contract personally
o What if the agent exceeds his powers?
1. The principal may ratify.
Can the third party still invoke the agent
exceeding his authority?
o No, because the principal has
ratified the act already.
2. If the principal does not ratify, the contract is
unenforceable as against principal. But if the third
party did not know the extent of the agents powers,
the contract is binding between the agent and third
party.
Usual rule: agent is bound if he exceeds
authority
196
3. But if the third person was aware that the agent
exceeded his powers, the contract is unenforceable
even between the agent and the third person.
[Both are in pari delicto]
o What if the agent acts within the scope of his authority as
written but contrary to a personal understanding between
him and the principal?
The act will bind the principal as to a third party who
relies on the power of the agent as written.
Private or secret orders will not prejudice a third party
relying on written powers of agent.
o What if the agent acts in a manner more advantageous to
the principal?
He is deemed to have acted within the scope of his
authority.
What is the obligation of one dealing with an agent?
o Must discover, upon his peril, not only the fact of agency but
also the nature and extent of the authority of the agent
When is the third party directly liable to the agent himself?
o 1. Agent contracts in own name on matter within scope of
agency
o 2. Agent possesses a beneficial interest in the subject matter
of agency (ex. selling under a del credere commission)
o 3. Third party commits tort against the agent
What is the duty of diligence of the agent?
o Cannot carry out an agency if its execution will manifestly
result in loss or damage to the principal.
o N.B. the word is manifestly because the agent does not
guarantee against small loses in the exercise of business
judgment
o What if the agent breaches this duty?
Liable for damages to the principal
If an agent is empowered to sell his principals property, may he
purchase it for himself?
o No, he cannot. This is provided in Art. 1491. Of course, the
principal may ratify the sale.
o Special rule in Sales law.
 If an agent is empowered to borrow or lend money, may he
transact with himself?
o 1. If empowered to borrow, he may be the lender at the current
interest
Else, liable for return difference
o 2. If empowered to lend, he may not borrow without the
principals consent
Else, liable for damages
What if the agent acts in his own name?
o The principal has no right of action against the third persons,
neither do the third persons have right of action against the
principal.
o Exceptions to this rule?
1. When the transaction involves the things of the
principal. In this case, the principal is bound.
2. When the principal ratifies the contract or derives
benefit from it.
o What is the remedy of the principal?
The principal can file action as against the agent for
damages.
o What if the agent enters into a contract in his own name
on a matter that falls within the scope of the agency?
He is bound to render an account of his transactions
and deliver to the principal what he received by virtue
of the agency even if it may not be owing to the
principal
This is based on the duty of loyalty and Art. 1891
o What if the agent uses the principals own funds?
The agent owes interest from the day he borrowed
the money
This presumes the transaction was not one in breach
of the duty of loyalty (scope of agency) or else, the
effect is not payment of interest on the loan but an
accounting and turn-over in favor of the principal
What is the rule as bonuses or profits derived by the agent through
the agency, but not owing to the principal?
o He must account it to the principal. Every agent is bound to
deliver to the principal what he may have received by virtue of
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the agency, even though it may not be owing to the principal
(ex. excess price). Any agreement or stipulation to the
contrary is void.
o An agent who derives secret benefit from the contract of
agency is liable to the principal for breach of duty of loyalty,
and will forfeit his commissions.
o When does the duty to account not apply?
The agent may retain in pledge the things which are
the object of the agency until the principal reimburses
and pays indemnity in 1912 (agent advancing costs of
agency) and 1913 (damage caused to agent through
no fault of his)
When can the agent appoint a sub-agent?
o If the principal did not prohibit him from doing so.
o What is the main effect?
Sub-agent is agent of principal too
o When is the agent responsible for the acts of the sub-
agent?
1. When he was not given power to appoint one
2. When he was allowed, but the one chosen was
notoriously incompetent/insolvent
o What if the principal expressly prohibited appointment of a
subagent?
1. All acts of sub-agent are void as to the principal
2. The agent is responsible personally for the
contracts entered into by the sub-agent
What is the scope of the powers of an agent in general?
o General powers: Only acts of administration
o Even if the principal provides that the agency may do whatever
he deems appropriate, or even if the agency authorizes
general and unlimited management
What needs a SPA?
o N.B. these are acts of strict dominion
o 1. Making payments not considered as acts of administration
o 2. Effect novation of obligations
o 3. Compromise, submit to arbitration, renounce right to appeal,
waive objections, renounce prescription
o 4. Waive obligations gratuitously
 o 5. Transfer of immovable (whether onerous or gratuitous)
o 6. Make non-customary gifts
o 7. Loan or borrow money
Unless urgently needed to preserve a thing under
administration
o 8. Lease for more than 1 year
o 9. Contract for principal to perform service without
compensation
o 10. Bind principal in partnership contract
o 11. Obligate principal as guarantor or surety
o 12. Convey or create rights over real property
o 13. Accept or repudiate inheritance
o 14. Ratify or recognize obligations contracted before agency
o 15. Other acts of strict dominion
o Must a SPA be in writing?
Technically no, but if its not the contract is virtually
unenforceable. The principal may however pursue
the resulting contract, while the third-party is estopped
from refusing to comply with a contract he willingly
entered into absent written authority of the agent.
Except sale of piece of land (see below)
For the power of an agent to sell a piece of land, what is required?
o It must be in writing, or else it is void.
o What does this provision really mean in light of Ocfemia?
Its void to the extent that a third person cannot
enforce the obligation against a principal if the
authority of the agent is not placed in writing.
But if the principal wants the sale to push through,
then it can push through. So its an odd void
contract because its subject to ratification.
o Does special authority to sell property include authority to
mortgage it?
No, by express provision of Art. 1879.
What are the obligations of a commission agent?
o 1. Take custody of goods
o 2. Not to commingle similar goods belonging to different
principals
o 3. Cannot sell on credit without principals authorization
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If pre-authorized to sell on credit, inform principal with
the names of buyers or else, deemed sold on cash
basis
o 4. Bear risks of collection of proceeds of the transaction under
del credere commission set-up
o 5. Collect credits for principal
Else, liable for damages
o 6. Take responsibility for fraud and negligence
What are the rights and obligations of the principal?
o 1. The principal is NOT bound by contracts entered into by the
agent without or outside scope of authority, EXCEPT:
1. If he ratified it expressly or tacitly
2. Principal allowed agent to act as if he had full
authority
3. Principal revoked agency but the third party acted
in GF without such notice of revocation
o 2. Principal is liable for torts committed by the agent within
scope of authority
o 3. Principal must advance sums necessary for the agency if
the agent requests. If the agent paid for it first, the principal
must reimburse
o 4. Principal NOT liable for expenses of agent if:
A. Outside scope of authority
B. Incurred due to agents fault
C. Agent incurred them with knowledge of
unfavorable result, if the principal was not aware
thereof
D. Express stipulation
o 5. Must indemnify agent for damages sustained without agents
fault
o 6. Pay agent for his services
o 7. If two or more principals constituted the same agent for a
common undertaking, they are solidarily liable
As opposed to constituting two agents by the same
persons, the usual rule is joint liability, not solidary
liability as between the agents
What is the power given to the agent if the principal has not
reimbursed or indemnified the former?
 o He may hold things which are the subject of agency in pledge The agent continues to act as such for the
A constituted B as an agent to sell a piece of property for 30K, and meantime until the principal is able to
B will get 5% commission. B found a buyer, C, but A said that he constitute a new agency. EVEN IF the
is no longer interested in selling and terminated Bs authority. reason for withdrawing is valid.
Thereafter, A sold the land to C. Can B ask for commission? When is agency extinguished?
o Yes, A acted in bad faith, so B is entitled to his commission. o 1. Revocation
The termination of Bs contract of agency is clearly to evade Even if it is constituted as irrevocable for a definite
paying commission. term or period the principal just pays damages to
o CONTRAST this to another case where the agent found a agent for damages caused if any
buyer, but the buyer was willing to pay only P9/SQM whereas When is there implied revocation?
the agency was for him to sell the property for P10/SQM. The Appointing a new agent for the same
agents authority was terminated, but when he asked for an business, or
extension, he was given it. Three months after, the seller sold The principal directly manages the business
the land to the same buyer the agent found. There was no Or by granting a SPA as regard the same
badge of bad faith here. business to another agent, where he
What is an irrevocable agency? previously granted a GPA to one agent.
o An agency cannot be revoked if: Principal must give notice:
1. A bilateral contract depends upon it To particular third parties
2. It is the means of fulfilling an obligation already Or the world, through publication
contracted N.B. a third party with no notice of
3. A partner is appointed managing partner and there revocation, acting in GF, can still pursue the
is no just cause contract entered with an agent
o What are examples of agency coupled with an interest? Recall: when an is agency irrevocable
X sold Y a parcel of land and to help Y pay for the o 2. Withdrawal of agent
purchase price, constituted Y as an agent to o 3. Death, civil interdiction, insanity, or insolvency of principal or
subdivide and sell the parcels of land. X cannot agent
revoke the agency at will. When does agency remain in full force
X sold Y a vessel on the condition that for the first five notwithstanding death of the principal?
years, Y would appoint X the agent of the vessel. Y A. Constituted in common interest of the
cannot revoke the agency at will. principal and agent
o Otherwise, when can an agent withdraw?
B. There is stipulation pour autrui which has
He just gives due notice to the principal.
been accepted
If the principal suffers damage due to the withdrawal,
C. Agentt did not know the principal was
the agent must indemnify the principal, unless the
dead and third party was in GF
agents basis for withdrawing is impossibility to
o N.B. If the third party was in BF,
continue performance of obligation without grave
void for lack of consent, an
detriment to himself.
essential element
What happens in the meantime?
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 o 4. Dissolution of juridical entity which entrusted or accepted the use of a thing or render some service to another, who pays
agency compensation.
o 5. Accomplishment of purpose or object of agency Define lease of services and lease of things:
o 6. Expiration of period of agency o Lease of things one party binds himself to give to another the
What is the obligation of the agent even after the agency was enjoyment or use of a thing for a price certain, whether for a
terminated? definite or indefinite period
o Keep confidential matters learned during course of agency, if What is the ceiling for the period?
confidential Ninety-nine years
o Lease of service one party binds himself to execute a piece
of work or render some service for a price certain
COMPROMISE Without an agency relationship
Distinguish the two kinds of lease:
What is a compromise? o In things, the object is a thing, and in services the object is
o It is a contract where parties make reciprocal concessions to some service
put an end to litigation or avoid it altogether. o In things, the principal obligation of the lessor is to deliver the
What matters cannot be compromised? thing leased to the lessee, and in series the principal obligation
o 1. Civil status of persons is to perform some service
o 2. Validity of marriage or legal separation o In things, specific performance is a remedy, in service, only
o 3. Ground for legal separation damages
o 4. Future support Is a boundary-based contract between the owner of a jeep and the
o 5. Jurisdiction of courts driver a lease?
o 6. Future legitime o No. The driver does not spend anything to acquire the jeep.
What is the effect of compromise? The boundary and gas obligation which must be covered by
o It has the effect of res judicata between the parties. the driver and the keeping of excess earnings is just a system
o If the one party does not want to comply with the compromise, of compensation. Instead, there is an employer-employee
the other party may: relationship.
Enforce the compromise
OR rescind the compromise and insist on his original Lease of rural and urban lands
demand
May the lessee assign the lease to a third person without the
lessors consent?
LEASE o No. The lessee may not assign the lease without the lessors
consent.
May the lessee sublease the property to a third person without the
What is lease? lessors consent?
o Lease is a consensual, bilateral, onerous, and commutative o Yes. The lessee may sublease the property even without the
contract where one person binds himself to grant temporary lessors consent. But the lessee must still comply with his
responsibility to perform the contract toward the lessor.
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 May the lessor hold the sublessee for rent due from the lessee?
o Yes, there can be an accion directa. But the sublessee cannot
be held liable beyond the amount due from him under the
sublease.
What is the nature of the sublease agreement?
o It must comply with the lease agreement as to the manner of
use and preservation of the thing.
o And so, if the lease agreement provides that the property must
only be residential, the sublease cannot be for the use of the
property as a commercial area.
Is a lessor responsible for hidden defects in the property that is
leased to a lessee?
o Yes. The warranties applicable to sale also apply to lease,
even if the lessor was not aware of such defects.
What are the obligations of the lessor?
o 1. Deliver the thing, which must be fit for the use intended
o 2. To make necessary repairs on the thing to keep it fit for such
use
Unless provided otherwise
o 3. Maintain the lessee in peaceful and adequate enjoyment of
the lease during the contract
What are the obligations of the lessee?
o 1. Pay the price of lease
o 2. Use the thing leased with diligence of GFF, devoting it to
use stipulated (or according to nature of the thing if none is
stipulated)
o 3. Pay expenses for deed of lease
What is the remedy for breach by either party?
o 1. Rescission with damages
o 2. Damages alone
What if the thing leased is lost fortuitously?
o The lease is terminated.
o If the thing is reconstructed, there is no automatic renewal of
the lease contract, if there is no BF involved.
What is tacit renewal of a contract of lease (tacita reconduccion)?
o A new contract of lease is impliedly created or established if at
the end of the lease contract, the lessee continues enjoying the
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lease for 15 days, with acquiescence of the lessor and no
notice to contrary provided by lessor.
o Period of the new lease is according to provisions of law:
A. for rural lands, duration is what is necessary to
gather fruits it may yield for a year
B. for urban lands, duration is depending on rent paid
(yearly if monthly rent; monthly if weekly rent, etc.)
But if lessee has stayed more than 1 year,
the courts may fix a longer term than the
usual monthly rent
If lessee has stayed more than 6 months, the
courts may fix a longer term than the usual
weekly rent
If lessee has stayed more than 1 month, the
courts may fix a longer term than the usual
daily rent
o But all other terms of the contract are the same.
o Of course, if there is an option to purchase the leased property
within the original lease period, and it expires, and only tacitly
extended, the option to purchase is not renewed (it is a
separate contract, and is not a mere clause/term).
What are the grounds to eject a lessee judicially?
o 1. Period has expired
o 2. Lack of payment of price
o 3. Violation of conditions of contract
o 4. Lessee devotes the thing leased to use other than what was
stipulated or its nature
What are the different instances where the purchaser of the thing
leased cannot terminate the lease?
o 1. When the lease is recorded in the ROP
o 2. There is a stipulation in the contract of sale that the
purchaser will respect the lease
o 3. The purchaser actually knows of the existence of the lessee
o 4. The sale is fictitious
o 5. The sale is pacto de retro
What is the rule as to improvements introduced by the lessee on
the property, upon termination of the lease?
 o For useful improvements
PREMISE: these are suitable to the purpose of the
lease and did not alter the form/substance of the
property
The lessor must pay the lessee of the value of
improvement
What if the lessor refuses?
The lessee can remove the thing, even if it
causes damage
o For ornamental improvements
Lessee not entitled to reimbursement
But the lessee may remove it if it doesnt cause any
damage
But the lessor may choose to pay the value of the
thing, which terminates the lessees right to remove
the improvement
o Do the rules for builders in GF under property law apply to
lessees?
No, lessees are not builders or possessors in GF
because they know their right and occupancy of the
land is based on the contract of lease.
If the period of the lease is not fixed, what is the period?
o A. for rural lands, duration is what is necessary to gather fruits
it may yield for a year
o B. for urban lands, duration is depending on rent paid (yearly if
monthly rent; monthly if weekly rent, etc.)
But if lessee has stayed more than 1 year, the courts
may fix a longer term than the usual monthly rent
If lessee has stayed more than 6 months, the courts
may fix a longer term than the usual weekly rent
If lessee has stayed more than 1 month, the courts
may fix a longer term than the usual daily rent
Contract for piece of work
What is a contract for piece of work?
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o One where the contractor binds himself to execute a piece of
work for the employer, in consideration of a certain price or
compensation.
o The contractor may either employ only his skill/labor, or furnish
the material himself.
What is the rule on loss if the contractor bound himself to
purchase the material?
o If the loss occurs before the delivery, the contractor bears the
loss
o EXCEPT: if there is delay in receiving it (mora accipiendi)
TORTS
Principles of torts and classification
Define quasi-delicts:
o Fault or negligence of a person, who by his act or omission,
connected or unconnected with but independent from any
contractual relation, causes damage to another person
o Whether punishable or not punishable by law
o Whether criminal in character or not
Classify torts:
o Whether intentional, voluntary, or negligent
o Key element: it must cause damage to another
Can an act that breaks a contract also be a tort?
o Yes.
What is the rule prohibiting double recovery?
o The injured party cannot recover damages twice.
o Ex. in negligence cases, the aggrieved party can either enforce
civil liability under culpa criminal (Art. 100 of RPC) or file a
separate action for quasi-delict (Art. 2176 of NCC). When he
has recovered from one action, the injured party is barred from
the other remedy because he cannot recover damages twice
for the same act.
Differentiate between double recovery and double remedy?
 o Double recovery is not allowed; double remedies are allowed.
o An aggrieved party may resort to both remedies
simultaneously or successively, but may only recover the
bigger amount. So if he successively files the cases, he can
only recover from the 2nd if the amount adjudged is larger and
only to the extent of the excess.
What are the elements in an action based on quasi-delict?
o 1. Fault or negligence of the defendant
o 2. Damage suffered by the plaintiff
o 3. The relation of cause and effect between the
fault/negligence of the defendant and the damage incurred by
plaintiff
Recall: that for a collision of cars, the passenger has remedies:
o 1. Culpa contractual against employer car wherein he is
riding, because there is a contract of transportation
Defense of ER is extraordinary diligence
o 2. Culpa aquliana against either driver and their companies
(joint tortfeasors)
Defense of ER is diligence of GFF is selection and
supervision
o 3. Culpa criminal against either driver, with the employers
liable subsidiarily if the drivers are insolvent
Defense of ER is solvency of the EE
The tortfeasor
Who are possible tortfeasors?
o 1. Direct tortfeasor
o 2. Persons made responsible for others
Who are the persons who can be made responsible for others?
o 1. Parents, as re: damage caused by minor children who live in
their company
What is the definition of Minor here?
Still 21, and not 18, because RA 6809 has
excepted marriage and torts from the
complete emancipation of one who has
reached 18 years old.
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o 2. Guardians, as re: damage caused by minors or
incapacitated persons under their authority and living in their
company
o 3. Owners and managers of establishment/enterprise, as re:
damage caused by employees on occasion of their functions
o 4. Employers, as re: damage caused by employees and
household helpers acting within scope of duties
Even if the employer is not engaged in
business/industry
N.B. this thus covers responsibility of the registered
owner of a vehicle for acts of his driver
o 5. State, when it acts through a special agent
But not when the damage is caused by the official to
whom the task done properly pertains. In this case,
the official alone is responsible.
What is a special agent?
A government employee who is performing a
job foreign to his usual duties
o 6. Teachers or heads of establishments of arts and trade, as
re: damage caused by students or apprentices when they are
in the formers custody
Differentiate claim for employers liability under Art. 2180 of the
NCc and Art. 103 of the RPC.
o Under the NCC, in quasi-delicts:
Only requires preponderance of evidence
Employers liability is direct and primary
Defense available: due diligence in the selection and
supervision of the employee
The employee need not be insolvent, because the
employee and employer are both primarily liable
(joint tortfeasors)
o Under the RPC, in civil liability for crimes:
Employers liability is subsidiary; so the employee has
to be found insolvent
The felony committed by the employee must be in the
discharge of his duty
Requisites for subsidiary civil liability of
employer?
 1. ER-EE relationship
2. ER is engaged in some industry
3. EE committed criminal act in the
discharge of his duties (not necessarily
*while* in the discharge of duties)
4. EE is insolvent
What if the felony was committed by a minor?
Then it is an exception to the general rule,
because under Art. 101 of the RPC, the
liability of parents for felonies of minor
children is also primary, and not subsidiary
Does the ER need to be impleaded?
No. Enforcing liability subsidiarily is just an
enforcement issue. Therefore, neither can
there be modification or relitigation. The
enforcement motion, however may be
conveniently litigated within the same
proceeding at that which held the EE liable.
Is a hospital liable for the negligence of an independent contractor
physician?
o Generally, hospitals are not liable under the Schloendorff
doctrine, which deems physicians as professionals and
independent contractors whose performance of duties are
beyond the control of the hospital.
o Exceptions to this rule?
1. Apparent authority
If the hospitals actions as principal misleads
the public into believing that the relationship
or authority exists
2. Corporate negligence
If the hospitals fail to give reasonable effort
in monitoring or overseeing the treatment
prescribed and administered by the
physicians practicing in their premises
What is the presumption when an injury is caused by the
negligence of an employee?
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o There s a presumption that the employer is also negligent and
is thus solidarily liable
o Rebuttable by showing exercise of diligence of GFF in
selection and supervision of the employee
X sold his car to Y and Y failed to register it. Y ended up being
responsible for a car accident due to negligence. Since the
registration was still under Xs name, can X be sued?
o Yes, the suit can prosper against the registered owner, but it is
the actual owner who is ultimately liable. The purpose of car
registration is to reduce the difficulty in identifying the party
liable in accidents.
What is the rule if the owner of the vehicle is inside the vehicle
with his driver when the accident happened?
o Art. 2154: if the owner was in the vehicle and could have,
through due diligence, prevented the misfortune, then he is
solidarily liable with the driver
o Thus, his defense is different from the employer who is not in
the car, who can use diligence of GFF in selection and
supervision of employees.
o What is the difference in liability?
If the owner is in the car, he can demand
reimbursement of of the amount from his driver
after paying
If the owner was not in the car, he can demand
reimbursement of the whole amount from his driver
after paying
o When is a driver presumed negligent?
1. Guilty of reckless driving at least twice in the
preceding two months
2. Violation of traffic regulations at least twice in the
preceding two months
3. Violating a traffic regulation during the mishap
What is the liability of joint tortfeasors (Art. 2194)?
o If two or more persons are liable for a quasi-delict, their
responsibility is solidary.
o The responsibility is solidary so long as the accident causing
the injury was due to the concurrent acts of two or more
persons: whether quasi-delict, intentional tort, strict liability (or
 arising from criminal offenses or even if there is an underlying
contract).
When can the State be a tortfeasor?
o 1. Performance of proprietary functions
o 2. State enters into contract with private person
o 3. Imputed liability under Art. 2180 for acts of special agents
Proximate cause
What is proximate cause?
o That cause which, in natural and continuous sequence,
unbroken by any efficient intervening cause, produces the
injury and without which the result would not have occurred
o Remote cause:
One that is removed or separate from the proximate
cause of the injury
o Immediate cause:
Final act in the series of causes leading to a particular
result or event, directly producing the result
(Stricter that proximate cause in torts, only
proximate cause is needed)
What is contributory negligence?
o If the negligence of the plaintiff cooperated with the negligence
of the defendant in bringing about the injury, such negligence
of the plaintiff would be an absolute bar to recovery.
o If the negligence of the plaintiff was merely contributory, the
immediate and proximate cause to the injury still being the
defendants acts, then the amount recoverable by the plaintiff
is mitigated by the courts.
What is imputed negligence?
o The negligence of a certain person in a transaction or act
which gave rise to the injury complained of is imputable or
chargeable against the person for whom he was acting or
against his associates.
What is last clear chance (or discovered peril or humanitarian
doctrine)?
o Where both parties are negligent in such a way that it would be
impossible to determine whose negligence was the proximate
205
cause, then the party with the last clear opportunity to avoid
the accident through proper care and failed to do so is the
party solely responsible for the injury.
o Elements of last clear chance?
1. Prior negligence of the plaintiff
2. Defendant knew the plaintiffs negligence
3. Defendant had last clear chance to avoid the peril
but failed to do so
4. Accident occurs due to the negligence of the
defendant
Intentional torts
What are the elements of abuse of right?
o 1. Legal right or duty
o 2. Exercised in bad faith
o 3. For the sole intent of injuring or prejudicing another
o Ex. creditors already discussed pari passu division of claims
against insolvent person, then one creditor assigned his claim
to a third person so the latter can recover in full
What are the elements of acts contrary to law?
o 1. Act is willful or negligent
o 2. It is contrary to law
o 3. Damages suffered by the injured party
o When does this apply?
When there is no specific law providing for indemnity
for the violation of such and damage is caused
What are the elements of acts contrary to morals?
o 1. Legal act
o 2. Contrary to morals, good customs, public order, or public
policy
o 3. Done with intent to injure
What the elements of unjust enrichment?
o 1. No just or legal ground for defendants enrichment
o 2. Enrichment on the part of the defendant
o 3. Enrichment is at the expense of the plaintiff
o 4. Damage or loss suffered by the plaintiff
o When does this claim apply?
 When there is no other remedy in contract, quasi-
contract, crime, or quasi-delict.
And so if there is failure to pay for services, but there
is a contract, file under the contract and not unjust
enrichment.
What is thoughtless extravagance?
o If done during period of acute public want or emergency
o May be stopped by the courts at the instance of government or
a private charitable institution
What is meddling with social relations?
o 1. Prying into anothers residence
o 2. Meddling or disturbing the private life or family relations of
another
o 3. Intriguing to cause another to be alienated from his friends
o 4. Vexing or humiliating another on account of beliefs, lowly
station in life, place of birth, physical defect, or other personal
condition
What are the elements of dereliction of duty?
o 1. Public servent defendant exercises ministerial duty
o 2. Neglect or refusal to perform a duty owing the plaintiff
o 3. Damage to plaintiff
o Note: it must be done with bad faith. This does not apply
when the officer thought in GF that the plaintiff is not entitled to
some relief or service.
What is unfair competition as a tort?
o It must be through the use of force, intimidation, deceit,
machinations, or other unjust, oppressive, or highhanded
method
o Applies to agricultural, industrial, and commercial enterprises
What is violation of civil/political rights as a tort?
o When public officers or employees or a private individual
directly or indirectly obstructs, violates, or impedes/impairs the
plaintiffs constitutional rights and liberties
This is an independent civil action.
Can have exemplary or moral damages.
o What is the required evidence?
Preponderance of evidence.
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o Is good faith a defense?
No.
o Differentiate this from the Bill of Rights:
Under the Bill of Rights, the act complained of must
be committed by public officers. Under the NCC, it
can be by public officers or private individuals.
Under the NCC, there can be indirect or direct
violations.
o What kind of duty is contemplated here?
Duty that is owed to an individual particularly, and
there is particular injury to him. It does not cover
duties owing in general to the public, collectively.
What are the elements of interference in contractual relations?
o 1. Valid contract
o 2. Outsider knew the existence of the contract
o 3. The third party induces one party to breach the contract
without valid justification or excuse
o 4. Damage
o What are the defenses by the one charged with tortuous
interference?
1. Business competition and lawful means are used
2. Honest advice in GF, in his duty as an adviser
3. Lack of inducement
4. If the interest protected is superior to the interest
broken in social importance
o What is the liability of the party induced to break the
contract?
In bad faith: liable for all the natural and probable
consequences of his act or omission, whether
foreseen or unforeseen
In good faith: only liable for foreseen consequences
Negligence
When is there presumption of negligence?
o 1. Res ipsa loquitur
 o 2. If the death or injury results from possession of dangerous
weapon or substances, except when possession of such is
indispensable to his occupation or business
o 3. Violation of traffic rules
o 4. Common carriers
o 5. Repondeat superior
What is res ipsa loquitur?
o Where a thing is shown to be under the management of the
defendant or his employees, and the accident in the ordinary
course of events would not have occurred had there been
proper care, it gives rise to evidence that the accident was due
to the fault of the defendant, unless rebutted
o What are the elements of res ipsa loquitur?
1. Accident would not ordinarily occur in the absence
of negligence
2. Caused by an agency or instrumentality under the
exclusive control of the defendant
3. Not due to any voluntary action or contribution of
the plaintiff
What are the defenses against negligence?
o 1. Contributory negligence
See above for discussion.
Remember that this is only a partial defense that
mitigates damages.
o 2. Assumption of risk
But note: even if there is an assumption of risk,
measures must be taken by the defendant to
minimize risk to the injured party
Elements?
1. Plaintiff knew the risk is present
2. He understood its nature
3. He freely and voluntarily chose to incur
the risk
o 3. Last clear chance
See above discussion
NOTE: that this doctrine will not apply as a defense
for breach of contract of carriage. Neither can one
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negligent party use this as a defense against liability
to a third person, by pointing at the negligence of
another. It must be between two parties in a situation
where it is impossible to determine whose negligence
it was that was the proximate cause of the accident.
o 4. Prescription
What is the usual prescription?
4 years from discovery of the act (discovery
rule)
1 year if from the act of a public officer
involving exercise of powers/duties
What are the prescriptive periods under the
Consumer Act?
4 years from purchase for apparent defects
2 years from knowledge or purchase for
hidden defects
o 5. Fortuitous events
See Oblicon discussion
o 6. Diligence
For employers: diligence of a GFF is selection and
supervision of employees
o 7. Mistake and waiver
See Oblicon discussion
o 8. Damnum absque injuria
What is this?
Damage without injury, arising from a
persons exercise of his legal rights.
If the injury arises from abuse of right, then damnum
absque injuria does not apply.
o 9. Emergency rule
What is this?
One who suddenly finds himself in danger
and is required to act without time to
consider the best means to avoid the danger
is not guilty of negligence for failing to
choose the best option, in hindsight
 Unless the emergency in which he finds himself in is
of his own doing
Special liability in particular activities
What is the special liability of provinces, cities, municipalities as to
roads and streets?
o They are liable for injuries caused by defective condition of
roads and streets.
o This special liability trumps provisions on liability arising from
charters and general laws.
o The road or street need not necessarily be owned by the LGU
(thus it can be a national road). What matters is that it is under
the control of supervision of the said road/street.
What is the responsibility of a proprietor of a building/structure?
o He is responsible for injuries caused by its total or partial
collapse, if it be due to lack of necessary repairs
o The doctrine of last clear chance does not apply here (De Roy
v. CA)
o Proprietors likewise are responsible for:
1. Explosion of machinery not taken care of with due
diligence
2. Excessive smoke harmful to persons/property
3. Falling trees situated near highways or lanes, if not
due to force majeure
4. Emanations from tubes, canals, sewers, or
deposits of infectious matter constructed without
When can an engineer, architect, or contractor be liable for
precautions
collapse of a building?
What is the responsibility of manufacturers and processors?
o In general, manufacturers and processors of foodstuffs, drinks,
toilet articles, and similar goods are liable for damages for
death and injuries caused by noxious or harmful substances
used, even if there is no contractual relation with the
consumers.
o When is a product defective under the Consumer
Protection Act (CPA)?
When it does not offer the safety rightfully expected of
it, taking into account: a) presentation of the product,
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b) use and hazards reasonably expected out of it, and
c) time it was put into circulation
NOT simply because a better product is on the market
o When is the manufacturer or producer not liable?
1. It did not place the product in the market
2. It placed it in the market but it was not defective
3. Consumer or third party is solely at fault
o When is the seller liable?
1. When it is not possible to identify the manufacturer
or producer or importer
2. The product supplied does not clearly identify the
manufacturer or producer or importer
3. He does not adequately preserve perishable goods
o What is the liability for product or service imperfection?
If the products are unfit or inadequate for
consumption, or there is inconsistency with
information in the container
The provider must correct the imperfection within 30
days of demand by the consumer (parties can change
period to 7-180 days, min and max)
What are the options of the consumer if the
provider fails to correct it?
1. Replacement of the product
2. Immediate reimbursement of the amount
paid
3. Proportionate price reduction
o The engineer or architect who drew up plans and specifications
is liable for damages if within 15 years from completion, if it
collapses due to:
1. defects in the plans OR
2. defects in the ground
o The contractor is liable for damages if within 15 years the
edifice falls due to:
1. defects in construction
2. use of inferior materials
 3. violation of terms of contract
What if the engineer/architect supervises
construction?
He is solidarily liable with the contractor
o What is the effect of accepting the building?
It is not a waiver of action on these claims
o What is the prescriptive period?
Within 10 years of collapse of building
o Can the owner of the building demand reconstruction
thereof if the building collapses due to the fault of the
engineer, architect, or contractor?
Yes, he may. The obligation is an obligation to do. If
a person is obliged to do something in contravention
of an obligation, it may be executed at his own cost.
Or what has been poorly done can be undone, and
then reconstructed.
Strict liability
Who are instances that fall under the doctrine of strict liability?
o 1. Possessors and users of animals
o 2. Nuisance
o 3. Product liability/violations of Consumer Act
What is the liability of possessors and users of animals?
o The possessor, and not just the owner, of the offending animal
is liable even if the animal escapes or becomes lost. It does
not matter that the dog was tame and was merely provoked.
o The owner/possessor is liable as long as the animal causes
injury.
Nuisance: see Property Law
Manufacturers and processors: See above discussion
DAMAGES
What are the different kinds of damages?
o 1. Actual or compensatory
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o 2. Moral
o 3. Nominal
o 4. Temperate or moderate
o 5. Liquidated
o 6. Exemplary or corrective
What are the general principles applied to damages?
o 1. Amount must be fair, just, and commensurate to the damage
o 2. Damage and amount proven by competent evidence
o 3. Only proximate damages, not remote or speculative, may be
recovered
What must be proved so that damages may be recovered?
o 1. Injury (legal invasion of a right)
o 2. Breach of duty (wrongful act, not just hurtful)
o 3. Breach must be the proximate cause of the injury
Actual or compensatory damages
What are actual damages?
o Compensation for pecuniary loss actually suffered and proved
by the plaintiff.
What is the general rule?
o One is entitled to adequate compensation only for pecuniary
loss suffered by him as has been proved.
o Measure is not defendants gain, but plaintiffs loss.
Except in certain cases like in the IP Code (measured
by benefit of defendant)
What is the exception that recovery is limited to proven loss?
o 1. Stipulation
o 2. Provided by law (ex. fixed indemnity)
What are the kinds of actual damages?
o 1. Cano emergente loss of what a person already possesses
o 2. Lucro cesante failure to receive as a benefit that would
have pertained to him
What is restitutio in integrum?
o Amount awarded to the plaintiff must be that sum which will put
the party who was injured or who has suffered in the same
position as he would have been if he had not sustained the
injury
 What is the recoverable value in the following instances
o Damage to property value of the property at the time of
destruction
o Personal injury and death
1. Reasonable expenses incurred to treat his or her
relatives injury
2. Future medical expenses
3. In case of death, for wake and funeral expenses
N.B. Expenses after burial are NOT compensable
Differentiate recoverable damages based on breach of contract or
quasi-contract, depending on GF or BF:
o Defendant in GF liable for natural and probable
consequences of the breach which the parties could have
foreseen when the obligation was entered into
o Defendant in BF liable for all damages reasonably
attributable to the obligation
What about recoverable damages from quasi delicts?
o Defendant is liable for all damages which are the natural and
probable consequences of the act or omission. It need not
have been foreseen or reasonably foreseen by the defendant.
A. What are covered by cano emergente?
o Court only gives credence to those expenses supported by a
receipt and which appear to have been incurred in connection
with the wake, death, or burial of the victim.
o The following cannot be recovered:
1. Incurred after considerable lapse of time from burial
or with no relation death, wake, or burial
2. Incurred for purely aesthetic or social purpose
3. Receipt appears to have been modified
4. Incurred before date of slaying of victim
5. Not in fact shouldered by heirs
Ex. plane tickets of relatives or in-laws
6. Merely incidental
7. Cannot reasonably be itemized
B. What is disability/commercial credit?
o 1. Actual damages for loss or impairment of earning capacity
for personal injury (temporary or permanent)
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o 2. Actual damages for injury to business standing or
commercial credit
C. What is fixed indemnity?
o It does not replace the loss of earning capacity
o P50K payment to heirs of deceased
o P75K payment for qualified rape
D. What is the loss of earning capacity?
o Loss of earning capacity = Life expectancy x (Gross annual
income necessary living expenses)
Note: Life expectancy: (2/3 x [80 age at time of
death])
o How are net earnings proved?
Sufficient evidence to prove net earnings of the
deceased
Exceptions when non-availability of
documentary evidence is fine:
1. Victim was self-employed earning less
than minimum wage
2. Victim was employed as a daily wage
worker earning less than minimum wage
o How are living expenses proved?
Fixed at 50% of the gross income in the absence of
proof of amount of living expenses
o What if the deceased was obliged to give support
according to law?
The recipient who is not an heir called to inheritance
by law may demand support from the person causing
death for a period not beyond 5 years (court sets the
length of time)
E. Interest
o 1. If there is a stipulation as to rate, apply it, unless it is
unconscionable and excessive apply legal rate
o 2. If interest is imposed, but no rate stipulated, apply legal rate
A. Obligation involving payment of damages: 6%
Compute from date of demand if indemnities
can be established with reasonable certainty
 Compute from date of judgment of trial court, Court must state basis for the award, or else its null
if indemnities cannot be established with and void
reasonable certainty As fees go to lawyer
B. Obligation involving loan or forbearance of money: As damages go to client
12% o When can there be attorneys lien?
Compute from date of default (extrajudicial There can be none, over real property subject of
or judicial demand) litigation
o 3. Once there is finality of judgment , interest becomes 12% If the action is for damages, can claim a lien on the
o Can there be interest for unliquidated damages? award
No. There must be certainty of amount of damages o What is the basis of the amount?
before interest is demanded. That which is stipulated in the retainer agreement
F. Attorneys fees If there is none stipulated, it is fixed on the basis of
o What is the general rule? quantum meruit the reasonable worth of his
Attorneys fees cannot be recovered services
o What are the exceptions?
[Based on award] Moral damages
1. Exemplary damages are awarded
What are moral damages?
2. Double judicial costs awarded
o To alleviate the moral suffering the injured party has
[Bad faith]
undergone by reason of the defendants culpable action
3. Malicious prosecution
What are the requisites of moral damages?
4. Clearly unfounded civil actions against plaintiff
5. Defendant grossly acted in BF in refusing to satisfy o 1. Injury sustained by claimant (physical, mental, or
a plainly valid claim psychological)
6. Defendants acts/omissions compelled plaintiff to o 2. Culpable action or omission established
litigate with third persons or incur expenses to protect o 3. It is the proximate cause of the tortuous act (fraud or bad
his interests faith)
[Nature of action] o 4. Award of damages predicated on circumstances
7. Action for legal support enumerated below
8. Action for recovery of wages o 5. Testimony or evidence proves the suffering caused
When is moral suffering presumed?
9. Indemnity under ECSIF and employers liability
laws 1. Rape
10. Separate civil action to recover culpa criminal 2. Murder
liability 3. Homicide
[Equity] In what circumstances may moral damages be awarded?
11. Any other case where the court deems it equitable
o What are the rules in awarding attorneys fees? Culpa aquiliana Physical injuries
Plaintiff must clearly state basis in the complaint Intentional torts (e.g. human
relations chapter)

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Culpa contractual Bad faith (except banks no need to o EXCEPT libel or slander against the corporation (damage of
prove bad faith) corporate reputation)
Gross negligence
Culpa criminal Physical injuries Nominal damages
Lascivious acts
Adultery or concubinage What are nominal damages?
Illegal or arbitrary arrest o In order that a right of the plaintiff, which has been violated or
Illegal search invaded by the defendant, may be vindicated or recognized
Defamation
o Not for the purpose of indemnifying the plaintiff for loss
Contract of carriage Death of passenger
suffered
Fraud or bad faith
Labor cases Bad faith What is the nature of nominal damages?
Oppression against labor o If there is absence of proof of actual damages, only nominal
damages are awarded
o Assessment of nominal damages up to the court. The plaintiff
Who may recover moral damages? has to just prove breach of right no need to prove bad faith,
o Only the party who suffered. fraud, or malice.
o Except: parents of the child seduced, abducted, raped, or Examples of violation of nominal damages:
abused o Violation of due process in labor cases, although dismissal
What are the factors in determining amount of moral damages? may be valid
o 1. Sentimental value o Act of bank which merely relied on entries in a deed of
o 2. Extent of humiliation mortgage without checking or adjusting its records, leading to
o 3. Extent of pain and suffering prejudice to plaintiff
o 4. Standing of the offender and offended Can nominal damages co-exist with actual damages or any other
o 5. Age of the claimant kind of damages for that matter?
What are the elements of malicious prosecution in criminal case? o No. Nominal damages ALWAYS stand alone.
o 1. Fact of prosecution and the action terminated with an
acquittal Temperate damages
o 2. Prosecutor acted without probable cause
o 3. There was legal malice What are temperate or moderate damages?
What are the elements of malicious prosecution in civil case? o These are more than nominal, but less than actual. These are
o 1. False allegation awarded when the court finds some pecuniary loss has been
o 2. Lack of probable cause suffered but the amount, from the nature of the case, cannot
o 3. Malice or bad faith be established with certainty.
o 4. Injury Ex. NAPOCORs construction of geothermal plants resulted into
o 5. Action terminated damages to a nearby resort. There is pecuniary loss, but it cannot be
Can corporations and other artificial beings be entitled to moral ascertained so temperate damages were awarded.
damages?
Liquidated damages
o No.
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 What are liquidated damages? o [acts of other party]
o Those agreed upon by the parties in a contract, in case of o 3. Contributory negligence of the other party
breach thereof. o 4. Plaintiff himself contravened terms of the contract
Can these co-exist with actual damages? o 5. Plaintiff derived some benefit from the contract
o No. Liquidated and actual damages are mutually exclusive. o [equity]
What is the general rule? o 6. When defendant acted upon advice of counsel which led to
o Liquidated damages substitute for damages and interest. exemplary damages being awarded
Exceptions? o 7. Loss would have resulted anyway
o 1. Stipulated otherwise o 8. Defendant has done his best to lessen the plaintiffs loss or
o 2. Interest was not paid injury since the filing of the action
o 3. Fraud What is the duty of the party suffering loss or injury?
o Must exercise diligence of GFF to minimize damages arising
Exemplary or corrective damages from the act or omission in question
What is the doctrine of avoidable consequences?
What are exemplary damages? o A party cannot recover damages from consequences which the
o Those imposed by way of example or correction for the public party could reasonably have avoided
good. o These are acts or omissions of the plaintiff after the
o In addition to moral, temperate, liquidated, or actual damages defendants act or omission (as opposed to contributory
Who determines when exemplary damages are given? negligence, which precedes the act or omission)
o The courts, on its discretion. It cannot be:
demanded Damages in case of death
alleged
waived 1. Indemnity for death: fixed at 50K
What must be established first? 2. Indemnity for loss of earning capacity
o Claimant must first establish its right to actual, moral, o Unless the deceased had no earning capacity at said time
temperate, or liquidated damages o If deceased obliged to give support, the recipient who is not an
When is it awarded? heir may demand support from the accused for a period not
o Culpa aquiliana attended by gross negligence exceeding 5 years, in a period set by court
o Culpa contractual wanton, fraudulent, reckless, oppressive, 3. Moral damages for mental anguish
or malevolent manner o ONLY spouse, legitimate or illegitimate descendants and
o Culpa criminal attended by aggravating circumstances ascendants (SAD)
o Not brothers/sisters
Mitigation of damages 4. Exemplary damages
o If crime attended by aggravating circumstances
What are the factors that mitigate liability? 5. Attorneys fees and expenses of litigation
o [defenses] o When a separate civil action to recover civil liability from a
o 1. Diligence of a GFF crime is filed
o 2. Mitigating circumstances o Or there are exemplary damages awarded
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 6. Interests, if proper

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