Civ. Castro Notes

CIVIL LAW
BAR 2018
i. persons
1. Retroactivity of Laws, NCC Art. 4 Laws shall have no retroactive effect, unless the
contrary is provided.
Exceptions to Rule:
(1) When the law itself so expressly provides.-- This has two exceptions:
(a) when the retroactivity of a penal statute will make it an ex post facto
law, (“No ex post facto law or bill of attainder shall be enacted.”
Sec. 22, Article III, 1987 Constitution) and
(b) When the retroactive effect of the statute will constitute impairment
of the obligation of contract. (“Sec. 10. No law impairing the obligation of
contracts shall be passed.” Sec. 10, Article III, 1987 Constitution)
(2) In case of Penal statutes.-- Penal laws shall have retroactive effect insofar as
they favor the accused who is not a habitual criminal, even though at the
time of the enactment of such laws final sentence has already
been rendered. (Art. 22, RPC)
(3) In case of Remedial statutes.-- Remedial statutes are those which refer to the
method of enforcing rights or of obtaining redress of their invasion.
(4) In case of Curative statutes.-- Curative statutes are those which undertake to
cure errors and irregularities.
(5) In case of laws interpreting others.-- These are laws which are intended to
clarify doubts or interpret an existing law.
(6) In case of laws creating new rights.-- provided that it does not prejudice
another acquired right of the same origin.
(7) If the law is of an emergency measure and authorized by the police power of
the State.
(8) Tax laws – which impose taxes may be given retroactive effect. Liability for
taxes is incidental to social existence. (Lorenzo vs. Posadas, 64Phil 353)
2. Territoriality Principle – Operation of law is co-extensive with territorial sovereignty

(Art. 14, NCC), particularly in case of penal laws, and laws of public security and safety.
Territoriality and Generality Principle -

Art. 14. Penal laws and those of public security and safety shall be
obligatory upon all who live or sojourn in Philippine territory, subject to
the principles of public international law and to treaty stipulations.
There are 2 principles involved here: Territoriality and Generality. Territoriality

means that our criminal laws are enforceable only within Philippine
territory. Exception to the territoriality principle is Article 2 of RPC.
Civil Law Bar Review Notes Page 1

Generality which means that within the Philippine territory, our criminal laws
will apply to anyone, citizen or alien. Our penal laws equally apply to aliens who
live or sojourn in the Philippines based on the principle that during their stay,
they owe allegiance to the country though temporary in nature. The same rule
is embodied in Article 2 of the RPC.
UNIVERSALITY AND TERRITORIALITY PRINCIPLE:
Universality: Penal laws and those of general welfare and those of public security
are binding on all who reside and sojourn in the Philippine territory. (Art. 14)
Prohibititve laws concerning persons, their acts and their property, and those
intended to promote public order and good morals, shall not be made nugatory
by any foreign laws or judgments nor by an action or agreement made in a
foreign country. (Art. 17, p. 3)
Basis of the rule is the right of the State to protect itself and its policies in order
to achieve its ends.
“Art. 14. Penal laws and those of public security and safety shall be obligatory
upon all who live or sojourn in Philippine territory, subject to the principles of
public international law and to treaty stipulations”
Thus, any offense committed by any person (Filipino or alien) within the territory
of the country is an offense against the State. The State has, therefore, the power
to prosecute and punish the offender, national of foreigner.
Exceptions:
(1.) Those, who under principles of public internal law enjoy diplomatic
immunities (from suit) such as heads of states, foreign ambassadors or diplomats
provided they do not travel incognito.
NOTE: Consuls do not have immunities
(2.) Those expressly excluded from our jurisdiction due to treaty stipulations
EXTRATERRITORIAL JURISDICTION:
“The juridical power of the State extending beyond the physical limits of a
particular state or country.” (Blacks Law Dictionary., 6th Ed.)
Where the State has jurisdiction over specific crimes although the same was
committed outside its jurisdiction.

“Art. 2 (RPC) Application of its provisions. – Except as provided in the
treaties and laws of preferential application, the provisions of this Code shall be
enforced not only within the Philippine Archipelago, including its atmosphere, its
interior waters and maritime zone, but also outside its jurisdiction, against those
who:
1. Should commit an offense while on a Philippine ship or airship;
2. Should forge or counterfeit any coin or currency note if the
Philippine Islands or obligations and securities issued by the Government
of the Philippine Islands;
3. Should be liable for acts connected with the introduction into
these Islands of the obligations and securities mentioned in the preceding
number;
4. While being public officers or employees, should commit an
offense in the exercise of their functions; or
5. Should commit any of the crimes against national security and the
law of nations, x x x
3. Lex Rei Sitae
Art. 16. Real property as well as personal property is subject to the law of the country
where it is situated.
However, intestate and testamentary successions, both with respect to the order of
succession and to the amount of successional rights and to the intrinsic validity of
testamentary provisions, shall be regulated by the national law of the person whose
succession is under consideration, whatever may be the nature of the property and
regardless of the country wherein said property may be found.
EXCEPTIONS TO LEX REI SITAE:
(1) In case of successional rights to real property, the law that governs is the
national law of the decedent (Art. 16, par. 2 Civil Code); as well as capacity to
succeed (in inheritance) is also governed by the national law of the decedent
(Art. 1039, CC);
(2) Contracts involving real property but which do not deal with the title to
such real property shall not necessarily be governed by the lex rei sitae. The
proper law of the contract governs
(3) In contracts where real property is given by way of security, the principal
contract of i.e loan is governed by the proper law of the contract; the accessory
contract of mortgage is governed, however, by the law of the state where the
real property mortgaged is situated.

4. Formalities (LEX LOCI CELEBRATIONIS)
– The forms and solemnities of contracts, wills and other public instruments
are governed by the law of the country in which they are executed. (Art. 17,
par. 1) Refers to the formal or extrinsic validity
5. Renvoi Doctrine – Where our law provides that a foreign law should be applied,
such application takes place despite any provision of that foreign law that
another law should apply in case of conflict.
6. Nationality Principle
“Art. 15. Laws relating to family rights and duties, or to the status, condition and
legal capacity of persons are binding upon the citizens of the Philippines even
though living abroad.”
In the Philippines, we follow the nationality or citizenship theory, that is, the
national law of the person is applied in matters involving personal relations. In
the U.S, and Great Britain, the domiciliary or territoriality theory is followed such
that, the law of the domicile is applied on matters involving personal relations.
ii. FAMILY CODE
VALIDITY OF MARRIAGE – in determining the validity of marriage, it is to be tested by

the law in force at the time the marriage was contracted.
1. REQUISITES FOR VALIDITY OF MARRIAGE:

a. Essential requisites:
i. Legal capacity of the contracting parties who must be a male and
a female; and
 Legal capacity defined: male or female of the age of 18
years or upwards not under any of the impediments in Articles 37
(incestuous marriages), 38 void marriages by reason of public policy).
(Art. 5)
 “to grant the changes in name and sex sought by petitioner

will substantially reconfigure and greatly alter the laws on marriage and
family relations – it will allow the union of a man with another man who
has undergone sex reassignment, a male-to-female postoperative
transsexual. (Silverio vs. Republic, 537 SCRA 373) Such a marriage is void.
ii. Consent freely given in the presence of the solemnizing officer

(Art. 2, FC) – consent of the contracting parties and not their parents should
they 18 years old and up.

b. Formal requisites: (Art. 3)
1. Authority of the solemnizing officer
The authority of the officer or clergyman shown to have performed a marriage

ceremony will be presumed in the absence of any showing to the contrary.
(Alcantara vs. Alcantara, 531 SCRA 446)
Authorized solemnizing officers are:
1.1. incumbent member of the judiciary within the

court’s jurisdiction;
1.2. any priest, rabbi, imam, or minister of any church or
religious sect duly authorized by his church or religious sect and
registered with the civil registrar general, acting within the limits of the
written authority granted him;
1.3. any ship captain or airplane chief only when the
marriage is in articulo mortis;
1.4. any military commander of a unit to which a
chaplain is assigned, in the absence of the latter, during military operation
where the marriage is in articulo mortis;
1.5. any consul-general, consul or vice consul where the
marriage is abroad between Filipino citizens ;
1.6. mayors (Local Government Code)
Absence of authority of the solemnizing officer- the marriage is void,

however, where either or both of the contracting parties believing in good
faith that the solemnizing officer had the legal authority to do so, the
marriage is valid (Art. 35, p. 2)
2. A valid marriage license except where no marriage license is

necessary:
a. marriage in articulo mortis (art. 27)
b. residence of either or both parties are in far areas and
no means of transportation to appear before the local civil registrar; (Art.
28)
c. marriage among Muslims or among members of the
ethnic cultural communities, provided they are solemnized in accordance
with their customs, rites, practices; (Art. 33)
d. co-habitation for at least five years and without any legal
impediments to marry each other; (Art. 34)
3. A marriage ceremony which takes place with the appearance

of the contracting parties before the solemnizing officer and their

personal declaration that they take each other as husband and wife in
the presence of not less than two witness of legal age.
Note that “No prescribed form or religious rite for the solemnization of the
marriage is required. It shall be necessary however, contracting parties to appear
personally before the solemnizing officer and declare in the presence of not less
than two witnesses of legal age that they take each other as husband and wife.”
(Art. 6)
Effect of absence or defect in any of the requisites:
a. The absence of any of the essential for formal requisites

shall render the marriage void (Art. 4)
Note: Case of Navarro vs. Domagtoy, July 19, 1996 where the court held that “where
judge solemnizing a marriage outside his court’s jurisdiction, there is a resultant
irregularity in the formal requisite, which, while it may not affect the validity of the
marriage, may subject the officiating official to administrative liability.”
b. A defect in any of the essential requisites shall render the

marriage voidable; (Art. 4, par. 2)
c. An irregularity in the formal requisites shall not affect the

validity of the marriage but the party or parties responsible for the irregularity shall
be civilly, criminally and administratively liable. (Art. 4 par. 3)
VOID MARRIAGES:
1. Void marriages under Art. 35
1.1. those contracted by any party below 18 years of age

1.2. Those solemnized by any person not legally authorized to perform
marriages
1.3. Those solemnized without a license
1.4. Those bigamous or polygamous marriages not falling under Art. 41
Article 41 refers to a valid bigamous marriage
1.5. Those contracted through mistake of one contracting party as to the

identity of the other; and
1.6. Those subsequent marriages that are void under Art. 53
2. Psychological Incapacity of one or both of the contracting parties to perform his

or her essential marital obligations (Art. 36)

3. Incestuous marriages, whether the relationship between the parties be
legitimate or illegitimate (Art. 37)
3.1 Between ascendants and descendants of any degree; and

3.2 Between brothers and sisters, whether of the full or half-blood
4. Marriages declared void by reason of public policy (Art. 38)
4.1. Between collateral blood relatives, whether legitimate or illegitimate, up

to the fourth civil degree;
4.2. Between step-parents and step-children
4.3. Between parents-in-law and children-in-law
4.4. Between the adopting parent and the adopted child;
4.5. Between the surviving spouse of the adopting parents and the adopted
child;
4.6. Between the surviving spouse of the adopted child and the adopter;
4.7. Between an adopted child and a legitimate child of the adopter
4.8. Between the adopted children of the same adopter
4.9. Between parties where one, with the intention to marry the other, killed
that other person’s spouse or his or her own spouse
5. Marriages under Art. 40

“The absolute nullity of a previous marriage may be invoked for purposes of
remarriage on the basis of a final judgment declaring such previous marriage
void.
6. Marriages under Art. 44

“If both spouses of the subsequent marriage acted in bad faith, said marriage
shall be void ab initio and all donations by reason of the marriage and
testamentary dispositions made by one in favor of the other are revoked by
operation of law.”
7. Failure to comply with the recording requirements under Art. 52 (Art. 53)
Either of the former spouses may marry again after complying with the
requirements in Art. 52; otherwise, the subsequent marriage is void.
“The judgment of annulment or of absolute nullity of the marriage, the partition

and distribution of the properties of the spouses, and the delivery of the
children’s presumptive legitimes shall be recorded in the appropriate civil registry
and registries of property. (Art. 52)
VOIDABLE MARRIAGES (Art. 45)
KINDS:

1. No parental consent for a contracting party who is 18 years of age or over but
below 21 years of age;
2. Unsound mind
3. Consent was obtained through fraud
3.1 Non-disclosure of a previous conviction by final judgment of a crime
involving moral turpitude
3.2 Concealment by the wife of the fact that at the time of the marriage , she
was pregnant by a man other than her husband
3.3 Concealment of sexually transmissible disease, regardless of its nature,
existing at the time of the marriage; or
3.4 Concealment of drug addiction, habitual alcoholism, or homosexuality or
lesbianism existing at the time of the marriage
No other misrepresentation or deceit as to character, health, rank,

fortune or chastity shall constitute such fraud as will give grounds for
action for the annulment of marriage. (Art. 46)
4. Consent was obtained by force, intimidation, or undue influence

5. Physical incapability to consummate the marriage which appears incurable
6. Affliction with a sexually transmissible disease found to be serious and appears
to be incurable
MARRIAGE UNDER ARTICLE 26
All marriages solemnized outside of the Philippines, in accordance with the laws
in force in the country where they are solemnized, and valid there as such, shall
also be valid in the Philippines except:
7. those contracted by any party below 18 years of age

8. Those bigamous or polygamous marriages not falling under Art. 41
9. Those contracted through mistake of one contracting party as to the identity of
the other; and
10. Those subsequent marriages that are void under Art. 53
Art. 26, 2nd par.:
“Where a marriage between A Filipino citizen and a foreigner is validly celebrated and a
divorce is thereafter validly obtained abroad by the alien spouse capacitating him or her
to remarry, the Filipino spouse shall likewise have capacity to remarry”
DONATIONS BY REASON OF MARRIAGE – those made before the celebration of the

marriage, in consideration of the same, and in favor or one or both of the future spouses
(Art. 82)

Limitation – If the future spouses agree upon a regime other than the ACP, they cannot
donate to each other in their marriage settlements more than 1/5 of their present
property. Any excess shall be considered void. (Art. 84)
REVOCATION OF DONATION BY REASON OF MARRIAGE: (Art. 86) DPN may be revoke

by the donor in the following cases:
1. If the marriage is not celebrated or judicially
declared void an initio except donations made in the marriage settlements,
which in these cases are considered void if the marriage does not take place.
2. When the marriage takes place without the
consent of the parents or guardian, as required by law;
3. When the marriage is annulled, and the
donee acted in bad faith;
4. Upon legal separation, the donee being the
guilty spouse
5. If it is with a resolutory condition and the
condition is complied with
6. When the donee has committed an act of
ingratitude as provided in the provisions of the Civil Code on donations in
general.
PROPERTY RELATIONS
Kinds:
b. Absolute Community Property
c. Conjugal Partnership of Gains
d. Complete Separation of Property
e. Any other regime
MARRIAGE SETTLEMENT ; Form and Modification (Art. 76 and 77)

a. Must be in writing
b. Signed by the parties
c. Executed before the marriage
d. Any subsequent modification must be made before the celebration of the marriage
ABSOLUTE COMMUNITY OF PROPERTY

When ACP governs property regime of the spouses:
1. when the spouses have entered into marriage without having chosen any
property regime;
2. when the property regime chosen is void
3. when the choose the ACP to govern their property relations during the
marriage
*What constitutes Community Property

Consists of all the property owned by the spouses at the time of the celebration of the
marriage or acquired thereafter. (Art. 91)
Presumption of property acquired during the marriage, is that it belongs to the

community property (Art. 93)
Winnings is game of chance, betting or any other kind of gambling but not losses which
shall be borne by the loser. (Art. 95)
*Excluded from ACP
1. Property acquired during the marriage by gratuitous title by either spouse, and
the fruits as well as the income thereof, if any, unless expressly provided by the
donor, testator or grantor that they shall form part of the ACP
2. Property for personal and exclusive use of either spouse. However, jewelry shall
form part of the community property;
3. Property acquired before the marriage by either spouse who has legitimate
descendants by a former marriage, and the fruits as well as the income thereof;
CONJUGAL PARTNERSHIP OF GAINS
Concept: The husband and wife place in a common fund the proceeds, products, fruits
and income from their separate properties and those acquired by either or both spouses
through their efforts or by chance, and upon dissolution of the marriage or of the
partnership, the net gains or benefits obtained by either or both spouses shall be
divided equally between them, unless otherwise agreed in the marriage settlement.
(Art. 105)
- What forms Part of CPG –
1. All property acquired during the marriage, whether the acquisition appears to
have been made, contracted or registered in the name of one or both spouses, is
presumed to be conjugal unless the contrary is proved. (Art. 116)
2. Art. 117
1. those acquired by onerous titled during the

marriage at the expense of the common fund;
2. Those obtained from the labor, industry,

work or profession of either or both of the spouses;

3. The fruits, natural, industrial, or civil due or
received during the marriage from the common property, as well as the net
fruits from the exclusive property of each spouse;
4. The share of either spouse in the hidden

treasure which the law awards to the finder or owner of the property where
the treasure is found;
5. Those acquired through occupation such as
fishing or hunting;
6. Livestock existing upon the dissolution of

the partnership in excess of the number of each kind brought to the marriage
by either spouse; and
7. Those which are acquired by chance, such

as winnings from gambling or betting. Losses shall be borne exclusively by
the loser-spouse.
3. Whenever an amount or credit payable within a period of time belongs to one of

the spouses, the sums which may be collected during the marriage in partial
payments or installments on the principal shall be exclusive property of the spouse.
However, interest falling due during the marriage on the principal shall belong to the
conjugal partnership. (Art. 119)
4. Art. 120 Ownership of improvements made on the separate property of the

spouses at the expense of the partnership or efforts of either or both spouses
depending on cost of improvement made by the CP and the resulting increase in
value. If it is more than the value of the property at the time of improvement, the
entire property of one spouse shall belong to the CPG. (Art. 120)
- Excluded from the CPG
a. That which is brought to the marriage as his or her own;

b. That which each acquires during the marriage by gratuitous title;
c. That which is acquired by right of redemption, by barter or by exchange with
property belonging to only one of the spouses; and
d. That which is purchased with exclusive money of the wife or of the husband
(Art. 109)
- Dissolution of the CPG; same grounds as in the ACP (Art. 126)
COMPLETE SEPARATION OF PROPERTY

PROPERTY REGIME OR UNIONS WITHOUT MARRIAGE
Art. 147. When a man and a woman who are capacitated to marry each other, live
exclusively with each other as husband and wife, without the benefit or marriage or
under a void marriage, their wages and salaries shall be owned by them in equal shares
and the property acquired by both of them through their work or industry shall be
governed by the rules on co-ownership. X x x
When only one of the parties to a void marriage is in good faith, the share of the party in
bad faith in the co-ownership shall be forfeited in favor of their common children, in
default of or waiver of all of the common children or their descendants, each vacant
share shall belong to the respective surviving descendants. In the absence of
descendants, such share shall belong to the innocent party.
 Relationships included under Art. 147:
1. the man and the woman must (a) be capacitated to marry each other; (b)
live exclusively with each other as husband and wife; and )c) be without the benefit of
marriage;
2. Void marriages under:
(a) Articles 36 (psychological incapacity;
(b) Art. 44 marriage where the absent spouse has been declared
presumptively dead and the present spouse as well as the 2 nd spouse of the subsequent
marriage are in bad faith; and
© Art. 53. Failure to comply with the recording requirements after a

marriage is declared void
Art. 148. In cases of cohabitation not falling under Art. 147, only properties acquired by
both of the parties through their actual joint contribution of money, property, or
industry shall be owned by them in common in proportion to their respective
contributions. In the absence of proof , their contribution shall be deemed equal.
In one of the parties is validly married to another, his or her share in the co-
ownership shall accrue to the ACP or CPG existing in such valid marriage. If the party
who acted in bad faith is not validly married to another, his or her share shall be
forfeited in the manner provided in art. 147.
 Relationships included under Art. 148:

1. a man and a woman living together as husband and wife, without he
benefit of marriage, but are NOT CAPACITATED to marry;
2. an adulterous relationship;
3. a bigamous or polygamous marriage;
4. incestuous void marriages under Art. 37; and
5. void marriages by reason of public policy under Art. 38
PATERNITY AND FILIATION
Legitimate children - Children conceived or born during the marriage of the parents are
legitimate. (Art. 164)
Illegitimate Children - Children conceived and born outside a valid marriage are
illegitimate; unless otherwise provided by the Family code. (Art. 165)
Legitimated Children -Only children conceived and born outside wedlock of parents who,
at the time of the conception of the former, were not disqualified by any impediment to
marry each other may be legitimated. (Art. 177)
NOTE: R.A. 9858 amended Article 177 of the Family Code, “Children conceived and
born outside of wedlock of parents who, at the time of conception of the former,
were not disqualified by any impediment to marry each other, or were so disqualified
only because either or both of them were below 18 years of age, may be legitimated.”
(passed on October 13, 2009)
Legitimation shall take place by a subsequent valid marriage between parents. The
annulment of a voidable marriage shall not affect the legitimation. (Art. 178)
The effects of legitimation shall retroact to the time of the child’s birth. (Art. 180)
ADOPTED CHILDREN
Purely personal between the adopted child and the adopted parent.
IMPUGNING THE LEGITIMACY OF A CHILD
Art. 166. Legitimacy of a child may be impugned only on the following grounds:
1.) That it was physically impossible for the husband to have sexual intercourse with his
wife within the first 120 days of the 300 days which immediately preceded the birth of
the child because of:
a.) the physical incapacity of the husband to have sexual intercourse

with his wife;

b.) the fact that the husband and wife were living separately in such a
way that sexual intercourse was not possible;
c.) serious illness of the husband, which absolutely prevented sexual

intercourse;
2.) That it is proved that for biological or other scientific reasons, the child could not
have been that of the husband, except in the instance provided in the second par. Of Art.
164; or
3.) That in case of children conceived through artificial insemination, the written
authorization or ratification of wither parent was obtained through mistake, fraud,
violence, intimidation, or undue influence.
Where the husband was able to prove any of the grounds enumerated above, the child
will neither be considered legitimate or illegitimate in so far as he is concerned
because they are not related to each other. In so far as the mother is concerned, the
child will be considered her illegitimate child.
Art. 167. The child shall be considered legitimate although the mother may have
declared against its legitimacy or may have been sentenced as an adulteress.
FAMILY HOME – when is it deemed constituted?
A family home is deemed constituted on a house and lot from the time it is occupied as
a family residence; there is no need to constitute the same judicially or extrajudicially.
Versonla vs. CA, 497 SCRA 385
iii. Property
 A building is by itself an immovable property irrespective of whether or not said

structure and the land on which it is adhered to belong to the same owner. Hence, a
valid real estate mortgage can be constituted only on the building erected on the land
belonging to another.
 Chattel mortgage on real property – Under certain conditions, a property may have a
character different from that provided in Article 415 and 416 (enumerations of
immovable and movable properties). The parties to a contract of chattel mortgage may,
by agreement, treat as personal that which by nature would be real, i.e. building which
by its nature is considered real property. Said chattel mortgage over a building is binding
between the parties to said agreement since they are estopped from claiming
otherwise. With respect to third persons, not parties to the contract, the building is
considered immovable property.

 Machinery, receptacles, instruments, or implements – The machinery, etc. must be
placed by the owner of the tenement or his agent to be considered as immovable
property. Machinery is movable by nature and becomes immobilized only when placed
on a plant by the owner of the property or plant, but not so when placed by a tenant,
usufructuary, or a person having only a temporary right, unless such person acted as an
agent of the owner.
Thus, where a tenant places the machinery under the express provision of lease that it
shall become part of the plant belonging to the owner upon the termination of the lease
without compensation to the lessee, the tenant acts as an agent of the owner and the
immobilization of the machinery takes place by reason of permanent destination to the
machinery. But if the attachment or immobilization is for the use of the lessee which
does not inure to the lessor at the end of the lease contract, then it remains personal
property.
For the machinery, etc. to be considered immovable property, said machinery, etc. must
tend directly to meet the needs of the industry or works carried on in a building or on a
piece land. The movable (machinery, etc.) must first be “essentially and principal
elements of an industry or works without which, such industry or works would be
unable to function or carry on the industrial purpose for which it was established.”
Where the movables are merely incidental e.g. cash registers, typewriters found in
hotels and restaurants are merely incidental for these businesses can continue or carry
on their functions without these equipments and thus retain their nature as movable
property.
 OWNERSHIP – Limitations on the right of ownership:
1. those imposed by the state in the exercise of the power of taxation, police power
and power of eminent domain;
2. those imposed by law such as legal easement and the requirement of legitime
succession;
3. those imposed by the grantor of the property on the grantee, either by contract
e.g. donation, or by last will;
4. those imposed by the owner himself such as voluntary easement, mortgage,
pledge and lease; and
5. those imposed by the Constitution e.g. prohibition of alienation in favor of aliens
 Article 441. to the owner belongs the natural, industrial and civil fruits. Thus all fruits
belong to the owner of a thing. Exceptions; a person, other than the owner of a
property, owns the fruits thereof:

a. possession in good faith by another – the possessor in good faith is
entitled to the fruits received before the possession is legally interrupted
(Art. 544);
b. usufruct – the usufructuary is entitled to all the fruits of the property in

usufruct (Art. 566);
c. lease of rural lands – the lessee is entitled to the fruits of the land
together with the owner, getting the civil fruits in the form of rents paid
by the lessee; (Art. 1680 and 1654);
d. pledge – the pledge is entitled to receive the fruits, income, dividends, pr

interests which the pledge earns or produces but with the obligation to
compensate or set-off what he receives with those which are owing him.
(Art. 2102);;
e. antichresis – the creditor acquires the right to receive the fruits of an

immovable of his debtor, but with the obligation to apply them, first, to
the interest if owing, and then to the principal amount of the credit. (Art.
2132)
 When the fruits or crop have already been gathered or harvested when the owner
recovers the possession, the possessor in bad faith shall return the fruits gathered but
has the right to deduct the expenses of planting and harvesting. A possessor in bad faith
or good faith is entitled to reimbursement for the necessary expenses of preservation of
the land (Art. 452);
 The good faith or bad faith of the possessor is material where the fruits are still pending
(ungathered) at the time he gave up his possession. A builder, planter or sower, in bad
faith has no right of reimbursement for expenses, nor to the fruits. The owner gets the
fruits without indemnity by the principle of accession continua. But the possessor in
bad faith is entitled to reimbursement for the necessary expenses of preservation of the
land.
 Art. 449. Builder, sower, or planter (BPS) in Bad faith – The BPS FORFEITS what he has
built, planted or sown without any right to be paid indemnity therefore. He is, however,
entitled to reimbursement for necessary expenses of preservation of the land incurred
by him (Art. 452) but without the right of retention until reimbursement which is given
to a possessor in good faith (Art. 546)
- If the products have already been gathered (separated from the land) by the
builder, planter or sower and they are ordered delivered to the owner of the
land, the builder etc. should be reimbursed for the expenses incurred for the
production, gathering and preservation of the fruits (Art. 443) if the crop is still

standing or growing at the time the owner of the land recovers it, the planter in
bad faith loses them without the right to any indemnity (Art. 449).
 Accretions affecting lands registered under the Torrens system:
- In case of diminution of area – accretion are natural incidents to land bordering

on running rivers or streams and are not affected by the registration law. Hence,
registration does not protect the riparian owner against diminution of the area of
his land through the gradual changes in the course of the adjoining stream.
Accretions which the banks of rivers may gradually receive from the effect of the
current becomes the property of the owners of the banks.
- In case of increase in area – although an alluvion is automatically owned by the

riparian owner from the moment the soil deposit can be seen, it does not
automatically become registered land, just because the land which receives such
accretion is covered by a Torrens title, thereby making the alluvial property
imprescriptible. Ownership of a piece of land is one thing and registration
under the Torrens system of that ownership is another. So, alluvial deposit
acquired by a riparian owner of registered land by accretion may be subjected to
acquisition through prescription by a third person, by failure of the owner to
register the said accretion within the prescribed period.
 CO-OWNERSHIP
 Co-owners obligation to contribute to expenses:
1. Preservation of the thing co-owned – the expenses of preservation of the

thing or right owned in common and the amount of taxes due thereon should be
borne by ALL. A co-owner who advanced them has a right to demand
reimbursement from the others in proportion to their respective interests in the
co-ownership. These are NECESSARY EXPENSES
2. Useful expenses – even if the value of the community property is thereby

increased, they are not covered, the purpose of co-ownership not being for
profit, unless such expenses were incurred with the consent of the others.
3. Expenses for pure luxury or mere pleasure – are not also refundable not
being for preservation. However, should any improvements be made to
embellish the thing or right owned in common, the consent of the MAJORITY of
the co-owners is required and all shall contribute.
4. Any alteration made on the right or thing owned in common needs the
UNANIMOUS CONSENT of the co-owners and not a mere majority since acts of
alteration is an act of ownership and not mere administration. Alteration is a

change in the thing which involves a change from the state or essence in which
the others believe it should remain, or withdrawal of the thing from the use to
which they wish it to be intended; or any other transformation which prejudices
the condition or substance of the thing or its enjoyment by the others.
 SALE MORTGAGE OF COMMON PROPERTY – each co-owner has the absolute right to
freely dispose of his pro indiviso share and of the fruits and other benefits arising from
that share but the transferee does not acquire any specific or determinate physical
portion of the whole, his right being limited to the portion which may be allotted to him
upon the partition of the property.
- If a deed of sale appears to convey a definite or segregated portion of the

property under co-ownership that is still undivided, does not make the sale a
nullity per se. The sale is valid subject only to the condition that the interests
acquired by the vendee must be limited to the part that may be assigned to
the co-owner-vendor in the division upon the termination of the co-
ownership.
- Even if the co-owner sells the whole property as his own, the sale is valid
insofar as his ideal portion is concerned unless the sale is authorized by the
other co-owners. Since a co-owner is entitled to sell his undivided share, a
sale of the entire property by one co-owner will only transfer the rights of
said co-owner to the buyer, and the buyer thus becomes a co-owner of the
property.
 PARTITION – Article 494 grants the each co-owner the right to demand at any time
partition of the thing owned in common, insofar as his share is concerned for “no co-
owner shall be obliged to remain in the co-ownership.” The action to demand partition
is imprescriptible or cannot be barred by laches absent a clear repudiation of the co-
ownership by a co-owner clearly communicated to the other co-owners.
 EXCEPTION to the right to demand partition:
1. when the co-owners have agreed to keep the thing undivided for a certain period
of time, not exceeding 10 years; which term may be extended provided each
extension does not exceed 10 years.
2. when the partition is prohibited by the donor or testator for a certain period not
exceeding 20 years;
3. when the partition is prohibited by law i.e. the community or conjugal property
of the husband and wife; the family home; party walls and fences ;

4. when partition would render the thing unserviceable for the use which it is
intended. The co=ownership in this case may be terminated in accordance with
Article 498.
5. when another co-owner has possessed the property as exclusive owner and for a
period sufficient to acquire it by prescription ( repudiation of the co-ownership
having been successful)
 REDEMPTION in co-ownership redounds to the benefit of all.
Where a lot and improvement were mortgaged by the deceased parents, a co-
ownership existed among the heirs during the period given by law to redeem the
foreclosed property. Redemption by one heir during this period would inure to the
benefit of all. But where the heir purchased the property from the mortgagee (to whom
the property was sold at the foreclosure sale) after the redemption period had expired
and after the mortgagee had consolidated its ownership and a new title was issued in his
name, there was no longer any co-ownership to speak of. When the heirs allowed the
one year period of redemption to expire without redeeming their parent’s former
property and permitted the consolidation of ownership and the issuance of a new title,
the co-ownership was extinguished.
 After partition, co-ownership ceases to exists; not right of legal redemption exists-
Where the party seeking to redeem is the owner of a portion already determined and
identifies, he cannot be considered a co-owner and, hence, he cannot redeem under
Art. 1620 of the New Civil Code. Once the property is subdivided and distributed
among the co-owners, the community is considered to have been terminated and there
is no reason to sustain any right of legal redemption.
 Registration in the name of co-owner merely creates a trust – registration of land

subject of co-ownership in the name of one co-owner is not repudiation of co-ownership
for purposes of prescription. Article 494(5) provides that no prescription shall run in
favour of a co-owner or co-heirs as long as he expressly or impliedly recognizes the co-
ownership. The registration merely created a trust in favour of his co-owners.
 An oral partition among co-heirs is valid and does not fall under the Statute of Frauds
– Oral partition is valid as there is no law that required partition among heirs to be in
writing to be valid. The requirement that partition be put in a public document and
registered has for its purpose the protection of creditors and at the same time the
protection of the heirs themselves against tardy claims. Partition is not covered by the
Statute of Frauds because partition is not a conveyance of property but simply a
segregation and designation of the part of the property which belongs to the co-owners.
 Possession as a fact cannot be recognized at the same time in two different

personalities except in the case of co-possession –(Art. 538) possession as a fact ma

exist at the same time in two or more distinct personalities but, as a general rule, the
law will recognized only one as the actual or real possessor. Thus the rule on preference
of possession as follows:
1. The present or actual possessor shall be preferred
If X, through force and intimidation, ejected Y, actual possessor, from the land, Y
will still be considered as the present possessor and will be preferred because X cannot
be said to have acquired possession (Art. 536)
2. if there are two possessors the longer in possession

If both X and Y occupied a portion of a land both claiming ownership of the
entire parcel of land but Y was first is taking possession, Y shall be preferred.
3. If the dates of possession are the same, the possessor with a title i.e. right or
document evidencing his right to support his possession; and
If they possessed at the same time but X is a squatter while Y is a lessee,

preference shall be in favor of Y. The lease contract with the owner is Y’s title.
4. if all the above are equal, the fact of possession shall be judicially determined,
and in the meantime, the thing shall be placed in judicial deposit (Arts. 2005-
2009)
 USUFRUCT – gives a right to enjoy the property of another with the obligation of
preserving its form and substance, unless the title constituting it or the law otherwise
provides (art. 562)
 Obligations of the usufructuary:
a. BEFORE the U. begins
 to make an inventory of the property; and

 to give security
b. during the usufruct
 to take care of the property

 to replace with the young thereof animals that die or are lost in certain
cases when the usufruct is constituted on flock or herd of livestock
 to make ordinary repairs
 to notify the owner of urgent extraordinary repairs
 to permit works and improvements by the naked owner not prejudicial to
the usufructuary
 to pay annual taxes and charges of the FRUITS

 to pay interest on CAPITAL paid by the naked owner
 to pay debts when the usufruct is constituted on the whole of a
patrimony
 to secure the naked owner’s or court’s approval to collect credits in
certain cases
 to notify the owner of any prejudicial act committed by third persons ;
and
 to pay for court expenses and costs regarding the usufruct
c. at the termination of the usufruct
 to return the thing in usufruct to the naked owner unless there is a right
of retention
 to pay legal interest at the time that the usufruct lasts, on the amount
spent by the owner for extraordinary repairs (Art. 594); and the proper
interest on the sums paid as taxes by the owner (Art. 596); and
 to indemnify the naked owner for any losses due to his negligence or of
his transferees (Arts. 589-590)
 When no security is needed to be given by the usufurctuary:
1. the donor who has reserved the usufruct of the property donated;
2. the parents who are the usufructuaries of their children’s property, except when
the parents contract a second (or subsequent) marriage;
3. when the naked owner renounces or waives his right to the inventory or security;
4. where the title constituting the usufruct relieves the usufructuary from the
obligation ;
5. where the usufructuary asks that he be exempt from the obligation and no one
will be injured thereby
6. when the usufructuary is under obligation to give security but cannot afford to
do so and no one is willing to give security for them, the court on humane
considerations (i.e. poor family badly in need of a house_ may allow the
usufructuary to enjoy the property upon taking an oath –“by virtue of a promise
under oath”- to take care of the property and retain it until the termination of
the usufruct (Art. 612) I lieu of giving a security.
NOTE: under this instance (no. 6) the usufructuary cannot alienate or lease the
property for this means that he does not need it if he does alienate his right of
usufruct. The oath is what is called “CAUCION JURATORIA”

iv. modes of acquiring ownership
A. donation
o Kinds:
1. SIMPLE – or that cvause of which is the pure liberality of the donor in

consideration of the donee’s merits
2. remunatory or compensatory – that which is given out of gratitude on

account of the services rendered by the donee to the donor, provided they do
not constitute a demandable debt.
3. modal – that which imposes upon the donee a burden (e.g. services to be
performed in the future) less than the value of the gift;
4. onerous – that the value of which is considered the equivalent of the

consideration for which it is given and is thus governed by the rules on
obligations and contracts (Art. 733)
NOTE: Illegal or impossible conditions in SIMPLE and REMUNATORY donations

shall be considered as not imposed. (Art. 727)
In modal donations, a burden (which is necessarily future) less than the value of
the gift is imposed upon the donee. If the burden is considered the equivalent of
the thing or right given, then the donation is an onerous one.
If the donation is onerous (or modal as to the onerous portion), the illegal or
impossible condition will render the donation void. Being contractual in nature,
the rule applicable would be Art. 1183 on obligations and contracts.
 REVOCATION OF DONATION – affects the whole donation and is allowed during the
lifetime of the donor:
1. birth, appearance, or adoption of a child of the donor subsequent to the

donation;
2. non-fulfillment of a resolutory condition imposed by the donor (Art. 765)
3. Ingratitude of the donee (Art. 765)
 REDUCTION OF DONATION – this generally affects a portion only of the donation and is
allowed during the lifetime of the donor or after his death:
1. failure of the donor to reserve sufficient means for support of himself or his
dependent relatives (Art. 750)

2. failure of the donor to reserve sufficient property to pay off his existing debts
(Art. 759)
3. Inofficiousness; the donation exceeds that which the donor can give by will (Arts.
752, 771); and
4. birth, appearance, or adoption of a child of the donor (Art. 760)
 Who may ask for reduction? Only those who at the time of the donor’s death have a
right to the legitime and their heirs and successors in interest may ask for the reduction
of inofficious donations. They cannot renounce their right during the lifetime of the
donor. (Art. 771)
Donees, devisees and legatees who are not entitled to the legitime and the creditors of
the deceased can neither ask for the reduction nor avail themselves thereof (Art. 772)
b. Succession
Q: What is meant by succession?

A: Succession is a mode of acquisition by virtue of which the property, rights and
obligations to the extent of the value of the inheritance, of a person are transmitted through
his death to another or others either by his will or by operation of law. (Art. 774, NCC)
Q: When does succession take place?

A: Succession takes place:
a. Death of the decedent
b. Express will of the testator calling succession and/or provision of law prescribing
successors
c. The rights or properties subject of succession are transmissible
d. Transferee is still alive (did not predecease the testator)
e. Transferee is capacitated to inherit
f. The transferee accepted of the inheritance. (Art. 774-777, NCC)
Q: What does the inheritance consists of?

A: The inheritance includes all the property, rights and obligations of a person which are not
extinguished by his death and also those which have accrued thereto since the opening of
the succession. (Art. 776 and 781, NCC)
Q: When is the right of succession transmitted?

A: The rights to the succession are transmitted from the moment of the death of the
decedent. (Art. 777, NCC)
Q: What are the types of succession?

A: Succession may be:
(1) Testamentary;
(2) Legal or intestate; or

(3) Mixed (Art. 778, NCC)
Q: Define testamentary succession.

A: Testamentary succession is that which results from the designation of an heir, made in a
will executed in the form prescribed by law. (Art. 779, NCC)
Q: How is mixed succession effected?

A: Mixed succession is that effected partly by will and partly by operation of law. (Art. 780,
NCC)
Q: What is a will?
A: An act whereby a person is permitted, with the formalities prescribed by law, to control,
to a certain degree the disposition of his estate, to take effect after his death. (Art. 783,
NCC)
Q: May a testator designate another person to make a will for him?

A: No, because the making of a will is a strictly personal act, hence, it cannot be left in
whole or in part to the discretion of a third person, or accomplished through the
instrumentality of an agent or an attorney. (Art. 784, NCC)
Q: What may be entrusted by the testator to a third person?

A: The testator may entrust to a third person, the distribution of specific property or sums
of money that he may leave in general to specified classes or causes, and the designation of
the persons, institutions or establishments to which such property or sums are to be given or
applied. (Art. 786, NCC)
Q: Does the invalidity of one of several dispositions contained in a will result in the
invalidity of the other dispositions?
A: No. The invalidity of one of several dispositions contained in a will does not result in the
invalidity of the other dispositions, unless it is to be presumed that the testator would not
have made such other dispositions if the first invalid disposition had not been made. (Art.
792, NCC)
Q: What is the rule as regards after-acquired property?

A: Property acquired after the making of a will shall only pass thereby, as if the testator had
possessed it at the time of making the will, should it expressly appear by the will that such
was his intention. (Art. 793, NCC)
Q: What law governs the validity of the will?

A: The validity of a will as to its form depends upon the observance of the law in force at
the time it is made. (Art. 795, NCC)
Q: Who are capacitated to execute a will?

A: A person who executes a will must be:
Not expressly prohibited by law
Aged 18 years old and above
Of sound mind, at the time of its execution (Art. 796-798, NCC)
Q: When is a testator of “sound mind”?

A: To be of sound mind, it is not necessary that the testator be in full possession of all his
reasoning faculties, or that his mind be wholly unbroken, unimpaired, or unshattered by
disease, injury or other cause. It shall be sufficient if the testator was able at the time of
making of the will to know the nature of the estate to be disposed of, the proper objects of
his bounty, and the character of the testamentary act. (Art. 799, NCC)
Q: What is the exception to the general rule on the presumption of soundness of mind of
the testator?
A: The soundness of mind of the testator shall not be presumed:
(1) When the testator, one month or less, before making his will was publicly known to be
insane; or
(2) Was under guardianship at the time of the making of the will (Torres and Lopez de Bueno
v. Lopez, 48 Phil. 117; Art. 799, NCC)
Q: What is the effect of the supervening incapacity of the testator?

A: Supervening incapacity does not invalidate an effective will, nor is the will of an
incapable validated by the supervening of capacity. (Art. 801, NCC)
Q: What are the requisites for a valid notarial will?

A: A valid notarial will must be:
a. In writing
b. In a language or dialect known to the testator
c. Subscribed at the end by the testator himself or by the testator’s name written by
some other person in his presence, and by his express direction
d. Attested & subscribed by three or more credible witnesses in the presence of the
testator and of one another
e. Each and every page, except the last, must be signed by the testator or by the person
requested by him to write his name, and by the instrumental witnesses of the will,
on the left margin
f. Each and every page of the will must be numbered correlatively in letters placed on
the upper part of each page
g. Contain an attestation clause, stating the following:
(a) The number of pages used upon which the will is written
(b)The fact that the testator signed the will and every page, or caused some
other person to write his name, under his express direction, in the
presence of the instrumental witnesses

(c) All the instrumental witnesses witnessed and signed the will and all its pages
in the presence of the testator and of one another
(d) It must be acknowledged before a notary public by the testator and the
witnesses. (Art. 804-806, NCC)
Q: What are the additional requisites of a notarial will if the testator be deaf or deaf-
mute?
A: The additional requirements are:
(1) Testator must personally read the will, if able to do so;
(2) Otherwise, he shall designate two persons to read it and communicate to him, in
some practicable manner, its contents. (Art. 807, NCC)
Q: What are the additional requisites of a notarial will if the testator is blind?
A: The will shall be read to the testator twice:
1. Once by one of the subscribing witnesses
2. Once by the notary public before whom the will is acknowledged. (Art. 808, NCC)
Q: Is the use of the testator of a thumb mark instead of his signature valid?
A: In one case decided by the SC, it was held that since the testator is suffering from partial
paralysis, the act of using his mark instead of his usual signature is valid. It likewise stated
that the manner of using a mark in authenticating his will is a matter of preference. Both
the use of a signature or a thumb mark is good. A statute requiring a will to be "signed" is
satisfied if the signature is made by the testator's mark. (Lopez v. Liboro, 81 Phil. 249)
Q: How about if the testator makes use of a cross as a sign to authenticate the will, is the
will be valid?
A: If the “cross” as used in the will to authenticate the same is the usual signature of the
testator, then the will is valid for complying with the requirements established by law.
However, if the “cross” is not the usual signature of the testator, the will is void. It is for the
reason that a cross does not have the trustworthiness of a thumb mark. (Garcia v. Lacuesta,
90 Phil. 189)
Q: What is the result of an unsigned attestation clause?

A: An unsigned attestation clause results in an unattested will. (Aluad vs. Aluad, October 17,
2008)
Q: What is the two-fold purpose of acknowledgement in a notarial will?

A: The acknowledgement in a notarial will has a two-fold purpose: to safeguard the
testator’s wishes long after his demise; and to assure that his estate is administered in the
manner that he intends it to be done. (Lee vs, Tambago, February 12, 2008)
Q: What excludes the collateral relatives from succeeding to the estate of the decedent?

A: Only the presence of descendants, ascendants or illegitimate children excludes collateral
relatives from succeeding to the estate of the decedent. (Carlos vs. Sandoval, 574 SCRA 116)
Q: Y is one of the three instrumental witnesses in the making of the will of X, a lawyer and
at the same time the Notary Public before whom the will is acknowledged. Is the will
attested and subscribed by at least three credible witnesses?
A: No. The notary public before whom the will was acknowledged cannot be considered as
the third instrumental witness since he cannot acknowledge before himself his having signed
the will. To acknowledge before means to avow; to own as genuine, to assent, to admit; and
"before" means in front or preceding in space or ahead of. Consequently, if the third witness
were the notary public himself, he would have to avow assent, or admit his having signed
the will in front of himself. This cannot be done because he cannot split his personality into
two so that one will appear before the other to acknowledge his participation in the making
of the will. To permit such a situation to obtain would be sanctioning a sheer absurdity. (Cruz
v. Villasor, 54 SCRA 31)
Q: Should the attestation clause be in the dialect or language known by the testator?
A: No, because the attestation clause does not form part of the testamentary disposition.
Q: What are the formalities which are required in the execution of a holographic will?
A: From the provisions of Arts. 804 and 810 of the NCC, it is clear that the testator, in the
execution of the holographic will, the will must be:
(1) entirely written by the hand of the testator himself;
(2) dated by the hand of the testator himself;
(3) signed by the hand of the testator himself; and
(4) executed in a language or dialect known to the testator.
(Arts. 804 and 810, NCC)
Q: Are there exceptions to the rule that the original copy of the holographic will should be
presented to the probate court for visual examination before it can be admitted to
probate?
A: Yes. It is possible that a photostatic copy, or even a mimeographed or carbon copy may be
substituted for the original document. This is so, because in these cases, compliance with
the requirements stated in Article 811 of the NCC would still be possible. (Gan v. Yap, 104
Phil. 509, August 30, 1958)
Q: How do you authenticate additional dispositions?

A: To authenticate additional dispositions, the same must be signed and dated by the
testator. (Art. 812, NCC)
Q: What are the rules when, in a holographic will, there are dispositions which were not
signed by the testator?
A: Jurisprudence provides that when a number of dispositions appearing in a holographic
will are signed without being dated and the last disposition has a signature and date, such

date validates the dispositions preceding it, whatever be the time of prior dispositions. In
case of insertions, cancellation, erasure or alterations in a holographic will, the testator must
authenticate the same by his full signature. The requirements in Article 813, of the NCC
affect the validity of the disposition contained in the holographic will, but not its probate. If
the testator fails to sign and date some of the dispositions, the result is that these
dispositions cannot be effectuated. Such failure however, does not render the whole
testament void. (Art. 813, NCC)
Q: Article 815 of the NCC provides that when a Filipino is in a foreign country, he is
authorized to make a will in any of the forms established by the law of the country in
which he may be. Such will may be probated in the Philippines. Is the law mandatory?
A: No. The Article is merely permissive. The word “authorized” makes it permissive. (Art.
815, NCC)
Q: What law governs the formalities for wills executed by an alien abroad?
A: An alien who executes a will abroad may make a will in accordance with the formalities
(extrinsic validity) prescribed by the law of:
(a) The place of his residence or domicile;
(b) His own country or nationality;
(c) The Philippines;
(d) The law of the place of execution. (Art. 17, par. 1.; Art. 816, NCC)
Q: Why are joint wills prohibited in the Philippines?

A: Joint wills are prohibited in the Philippines because they:
(1) encourage undue influence, murder, or attempt to kill the other because
generally, joint wills benefit each other;
(2) run counter to the idea that wills are revocable. It makes revocation more
difficult. E.g., tearing it up destroys the will of another.
(3) undermine the personal element of a will. It becomes a multiple will. (Art.818,
NCC)
Q: Who are qualified to act as instrumental witnesses to the execution of a will?

A: According to Article 820 of the New Civil Code, a witness to the execution of an ordinary
will must have the following qualifications:
(1) He must be of sound mind;
(2) He must be of 18 years of age or more;
(3) He must not be blind, deaf, of dumb; and
(4) He must be able to read and write. (Art. 820, NCC)
Q: Who are disqualified to act as instrumental witnesses to the execution of a will?

A: The following are disqualified from being witnesses to a will:
(1) Any person not domiciled in the Philippines;
(2) Those who have been convicted of falsification of a document, perjury or false
testimony.

(3) Any person who is not of sound mind;
(4) Any person who is less than 18 years of age;
(5) Any person who is blind, deaf, or dumb; and
(6) Any person who cannot read and write.(Arts. 820 and 821, NCC)
Q: When is a subsequent document a codicil and when is it another will?

A: It is a codicil when it explains, adds to, or alters a provision in a prior will. It is another
will if it makes an independent disposition. (Art. 825, NCC)
Q: If a will, executed as required by this NCC, incorporates into itself by reference any
document or paper, what requisites must be present in before such document or paper
will be considered a part of the will?
A: Such document or paper shall be considered a part of the will if the following requisites
are present:
(1) The document or paper referred to in the will must be in existence at the time of
the execution of the will;
(2) The will must clearly describe and identify the same, stating among other things
the number of pages thereof;
(3) It must be identified by clear and satisfactory proof as the document or paper
referred to therein; and
(4) It must be signed by the testator and the witnesses on each and every page, except
in case of voluminous books of account or inventories. (Art. 827, NCC)
Q: Can the revocation of a will be waived?

A: No, the revocation of a will can never be waived. Any waiver or restriction of this right is
void. (Art. 828, NCC)
Q: How is a will revoked? What law governs revocation?

A: It depends upon the place where the revocation is made.
1. If done outside the Philippines:
a. If the testator is not domiciled in the Philippines:
i. The law of the place where the will was made; or
ii. The law of the place where the testator was domiciled at the time of the
revocation
b. If the testator is domiciled in the Philippines:
(i) Philippine law because his domicile is here; or
(ii) Law of the place of revocation pursuant to Art. 17, NCC
2. If done in the Philippines, follow Philippine law. (Art. 829, NCC)
Q: What is destruction of the will which is contemplated in order to consider the will
revoked by destruction?
A: There must be a physical destruction of the will itself. (Art. 830, NCC)

Q: If the testator totally destroyed the will and he changed his mind, is there revocation?
A: Yes. The act was already consummated. His remedy is to execute another will. (Art. 830,
NCC)
Q: What is the difference between an invalid will and a valid but ineffective will?
A: An invalid revoking will cannot revoke another will. But a valid though ineffective will can
revoke. (Art. 832, NCC)
Q: What is ‘republication’?
A: It is the process of re-establishing a will, which has become useless because it was void, or
had been revoked. (Art. 835, NCC)
Q: How is republication made?

A: Republication may be made by: a) re-execution of the original will; or b) execution of a
codicil. (Art. 835, NCC)
Q: What is the effect of the allowance of a will?

A: Subject to the right of appeal, the allowance of the will, either during the lifetime of the
testator or after his death, shall be conclusive as to its due execution. (Art. 838, NCC)
Q: What are the grounds for the disallowance of a will?

A: Article 839 of the New Civil Code provides “The will shall be disallowed in any of the
following cases:
(1) If the formalities required by law have not been complied with;
(2) If the testator was insane, or otherwise mentally incapable of making a will, at the
time of its execution;
(3) If it was executed through force or under duress, or the influence of fear, or threats;
(4) If it was procured by undue and improper pressure and influence, on the part of the
beneficiary or of some other person;
(5) If the signature of the testator was procured by fraud;
(6) If the testator acted by mistake or did not intend that the instrument he signed
should be his will at the time of affixing his signature thereto.
This enumeration is exclusive. They either make the will void or valid. There is no such
thing as a voidable will. (Art. 839, NCC)
Q: What is meant by institution of heir?

A: Institution of heir is an act by virtue of which a testator designates in his will the person
or persons who are to succeed him in his property and transmissible rights and obligations.
(Art. 840, NCC)
Q: What is preterition and its effects?

A: Preterition or omission of one, some, or all of the compulsory heirs in the direct line,
whether living at the time of the execution of the will or born after the death of the testator,

shall annul the institution of heir. Devises and legacies are valid insofar as they are not in
officious. (Art. 854, NCC).
Q: What is the effect if an heir who was totally omitted was given a donation or given a
very small share?
A: If the heir was given a share, even if very small or minimal, there is no preterition. All he
has to do is to ask for the completion of his share. (ART. 855, NCC; Reyes vs. Barretto-Datu,
19 SCRA 85).
If the heir has been given a donation, there is no preterition since the donation is
considered an advance inheritance. (Art. 1073, NCC).
Q: If an heir was omitted, from where will his share be taken?

A: It shall be taken from:
(a) The estate not disposed of by the will; or
(b) Proportionately from the shares of the other compulsory heirs, if the first is not
enough. (Art. 855, NCC).
Q: What is substitution of heirs?
A: Substitution of heirs is the appointment of another heir so that he may enter into the
inheritance in default of the heir originally instituted. (ART. 857, NCC).
Q: What is fideicommissary substitution?

A: Fedeicommissary substitution is one by virtue of which a testator institutes a
first heir and charges him to preserve and transmit the whole part of the inheritance to a
second heir. (Art. 863, NCC; Rabadillavs CA, et. al., G.R. No. 113725, June 29, 2000).
Q: What are the requisites or limitations of fideicommissary substitution?

A: They are:
(1) There must be a first heir;
(2) Obligation must be imposed upon the first heir to preserve and transmit the
property;
(3) There must be a second heir;
(4)The first and second heirs must be only one degree apart;
(5)Both heirs must be alive or at least conceived at the time of the death of the testator;
(6) It must be expressed (Art. 867);
(7) It must not burden the legitime ( Arts. 864, 872, 904, NCC);
(8) It must not be conditional.
Q: What is substitucion sub modo and state its requisites?

A:Substitucion sub modois what is otherwise known as a modal substitution. Its requisites
are as follows:
1. The testator states the object of the institution;
2. The testator states the purpose or application of the property left by the testator;

3. The testator states the charge imposed by the testator upon the heir. ( Johnny
Rabadillavs CA, et al, G.R. No. 113725, June 29 , 2000)
Q: What is a disposition captatoria?

A: It is any disposition made upon the condition that the heir shall make some provision in
his will in favor of the testator or of any other person. (Art. 875, NCC)
Q: Is disposition captatoria valid? Why?

A: No. It is void, because it makes the making of a will contractual or with a consideration.
Basically, a will is an act of pure liberty.
Q: An adopted child inherits like a legitimate child. Is the said entitled to represent his
father in the inheritance of his father’s ascendants? Why?
A: No. While it is true that the adopted child shall be deemed to be a legitimate child and
has the same rights as the latter, these rights do not include the right of representation.
The relationship created by the adoption is between the adopting parents and the adopted
only and does not extend to the blood relatives of either party. (Republic vs CA, G.R. No.
92326, January 24, 1992; Testico vs. Del Val, 12 SCRA 406; DelaPuerta vs. CA, 181, SCRA
862).
Q: What is reserva troncal?

A: Reserva Troncal is a system of reserve by virtue of which an ascendant who inherits from
his descendant any property which the latter may have acquired by gratuitous title from
another ascendant, or a brother or sister, is obliged to reserve such property as he may
have acquired by operation of law for the benefit of relatives who are within the third
degree and who belong to the line from which said property came. (Art. 891, NCC).
Q: What are the requisites of reserva troncal?

A: They are the following:
(a) Property was inherited by operation of law by an ascendant from a descendant upon
the death of the latter;
(b) Acquisition by the descendant from an ascendant upon the death of the latter
(c) Descendant should have died without any legitimate issue in the direct descending
line who could inherit from him;
(d) There must be relatives of the descendant who are within the third degree and who
belong to the line from which the property came.
Q: What requisites must be complied with in order that the reservatarios may qualify as
such?
A: They are the following:
(a) They must be legitimate relatives of the descendant-propositus and the origin;
(b) They must be related to the descendant-propositus within the third degree;
(c) They must belong to the line from which the reservable property came;

(d) They must survive the reservista.
Q: How is reserva extinguished?

A: Reserva is extinguished by:
(a) The death of the ascendant-reservista;
(b) The death of all relatives of the descendant-propositus within the third degree who
belong to the line from which the property came. In such case, the active subject of the
reserve disappears, as a consequence of which the resolutory condition which limits the
title to the reservista also disappears;
(c) Loss of the reservable property for causes not due to the fault of or negligence of the
reservista;
(d) Waiver or renunciation by the reservatarios. The renunciation may be before or
after the death of the reservista. If the renunciation is made before the death of the
reservista, such renunciation cannot affect other third degree relatives who may be born
subsequently and who survived the reservista; if it is made after the death of the
reservista, the reservation is extinguished but only insofar as the share of the renouncer is
concerned. The renunciation may be either express or implied;
(e) Prescription of the right of the reservatarios, when the ascendant – reservista holds
the property adversely against them in the concept of an absolute owner. (See Maghirang
vs. Balcita, 48 Phil 551; Carillo vs. De la Paz, 18 SCRA 467; Sumaya, et.al. vs IAC, et al.,
September 2, 1991
Q: What is the legal effect of a renunciation or compromise as regards a future legitime?

A: Every renunciation or compromise as regards a future legitime between the person
owing it and his compulsory heirs is void and the latter may claim the same upon the death
of the former; but they must bring to collation whatever they may have receive by virtue of
the renunciation or compromise. (Art. 905, NCC)
Q: What is the effect of testamentary dispositions which are inofficious or excessive?

A: The impaired or diminished legitime of the compulsory heirs shall be reduced upon his
petition. (Art. 907, NCC)
Q: What is meant by Net Asset of the Estate?

A: It is the difference between the gross estate less all debts and charges. (Art. 908, NCC)
Q: What is the meaning of Net Hereditary Estate?

A: It is the sum of net asset of the estate plus the value of collationable donations. (Art.
908, NCC)
Q: What is meant by collation?

A: It is a fictitious mathematical process of adding the value of the thing donated to the net
value of the hereditary estate.
Q: Where shall donation given to children is charged?

A: It shall be charged to their legitime and the excess to the free portion. When it is
inofficious, it shall be reduced. (Art. 909, NCC)
Q: Where shall donation made to strangers is charged?

A: It shall be charged to the part of the estate of which the testator could have disposed by
his last will. When it is inofficious it shall be reduced. (Art. 909, NCC)
Q: Where shall donation received by illegitimate children during the lifetime of his father
or mother is charged?
A: It shall be charged to their legitime. Should they exceed the portion that can be freely
disposed of, they shall be reduced. (Art. 910, NCC)
Q: What is the order of preference in the payment of inheritance to those entitled

thereto?
A: The order of preference is:
(1) The legitimes shall first be paid;
(2) Then the donations inter vivos;
(3) Next, the preferred devises and legacies; and
(4) Lastly, the other devises and legacies and all other testamentary dispositions to take
effect mortis causa, shall be reduced pro rata, without distinction, in case the free
portion is not sufficient. (Art. 911, NCC)
Q: What are the requisite of a valid disinheritance?

A: For disinheritance to be valid the following requisites must be complied with:
(1) It must be done in a valid will (Art 916, NCC);
(2) It must be express (Art. 918, NCC);
(3) It must be with a legal cause (Art. 916, NCC);
(4) There must be a true cause (arts. 917 and 918, NCC);
(5) There must be an existing cause;
(6) It must be total or complete;
(7) The cause must be stated in the will (Art 918);
(8) The heir disinherited must be identified;
(9) The will must not have been revoked.
Q: What is meant by imperfect disinheritance?

A: Imperfect disinheritance refers to disinheritance without specification of the cause, or
for a cause the truth of which, if contracted, is not proved, or which is not one of those
recognized by law. (Art. 918, NCC) In other words, it refers to all of those cases where the
disinheritance is not made in accordance with the requisite formalities prescribed by law.
Q: What are the effects of imperfect or ineffective disinheritance?

A: They are:

1) The institution of heirs is annulled, but only in so far as it may prejudice the person
disinherited, that is, in so far as his legitime is concerned;
2) The devises, legacies, and other testamentary dispositions shall be valid to such
extent as will not impair the legitime. Art. 918, NCC)
Q: What are the grounds for disinheritance of children?
A: The following shall be sufficient causes for the disinheritance of children and
descendants whether legitimate or illegitimate:
1. When a child or descendant has been found guilty of an attempt against the life of
the testator, his or her spouse, descendants, or ascendants;
2. When a child or descendant has accused the testator of a crime for which the law
prescribes imprisonment for six years or more, if the accusation has been found
groundless;
3. When a child or descendant has been convicted of adultery or concubinage with the
spouse of the testator;
4. When a child or descendant by fraud, violence, intimidation, or undue influence
causes the testator to make a will or to change one already made;
5. A refusal without justifiable cause to support the parent or ascendant who
disinherits such child or descendant;
6. Maltreatment of the testator by word or deed, by the child or descendant;
7. When a child or descendant leads a dishonorable or disgraceful life;
8. Conviction of a crime which carries with it the penalty of civil interdiction. Art. 919,
NCC)
Q: What are the grounds for disinheritance of ascendants?

A: The following shall be sufficient causes for the disinheritance of parents or ascendants
whether legitimate or illegitimate:
1. When the parents have abandoned their children or induced their daughters to live
a corrupt or immoral life, or attempted against their virtue;
2. When the parent or ascendant has been convicted of an attempt against the life of
the testator, his or her spouse, descendants, or ascendants;
3. When the parent or ascendant has accused the testator of a crime for which the law
prescribes imprisonment for six years or more, if the accusation has been found to
be false;
4. When the parent or ascendant has been convicted of adultery or concubinage with
the spouse of the testator;
5. When the parent or ascendant by fraud, violence, intimidation, or undue influence
causes the testator to make a will or to change one already made;
6. The loss of parental authority for causes specified in this Code;
7. The refusal to support the children or descendants without justifiable cause;
8. An attempt by one of the parents against the life of the other, unless there has been
a reconciliation between them. (Art. 920, NCC)

Q: What are the grounds for disinheritance of a spouse?
A: The following shall be sufficient causes for the disinheriting a spouse:
1. When the spouse has been convicted of an attempt against the life of the testator,
his or her descendants, or ascendants;
2. When the spouse has accused the testator of a crime for which the law prescribes
imprisonment of six years or more, and the accusation has been found to be false;
3. When the spouse by fraud, violence, intimidation, or undue influence cause the
testator to make a will or to change one already made;
4. When the spouse has given cause for legal separation;
5. When the spouse has given grounds for the loss of parental authority;
6. Unjustifiable refusal to support the children or the other spouse. (Art. 921, NCC)
Q: What are the effects of reconciliation between the offender and the offended in case
of disinheritance?
A: Subsequent reconciliation between the offender and the offended person deprives the
latter of the right to disinherit and renders ineffectual any disinheritance that may have
been made. (Art. 922, NCC)
Q: What is the effect of valid disinheritance?

A: The effects are as follows:
(1)The disinherited compulsory heir is completely excluded from the participation in the
inheritance, not only as a compulsory heir with respect to the legitime and as a voluntary
heir as regard devises and legacies, but also as intestate heir as to the free part, where
there is no institution of any heir, or with respect to the legitime only where there is
institution of heir;
(2)The children and descendants of the person disinherited heir shall take his place and
acquire the right of compulsory heirs with respect to the legitime and, where there is no
institution of heir or the institution does not cover the whole free portion, also to his share
of the free portion; and
(3) The disinherited parents shall not have the usufruct or administration of the property
which constitute the legitime. (Art. 923, NCC)
Q: Is the legacy or devise of a thing belonging entirely to a third person valid or void?
A: If the testator knowing that the thing bequeathed does not belong to him, orders that it
be acquired in order to give it to the legatee or devisee, the disposition is valid.. If the
owner of the property refuses to alienate it or demands an excessive price, the heir or the
estate is bound to give only the just value of the thing. (Art. 931, NCC)
Q: Is the legacy or devise of a thing belonging entirely to a legatee or devisee valid or

ineffective?
A: The legacy or devise of a thing belonging entirely to legatee or devisee at the time of the
execution of the will shall be ineffective. It is obvious that is already owned by the legatee
or devisee cannot be transmitted to him. However if the testator expressly orders the

interest pertaining to another be extinguished or paid, then the legacy or devise is valid to
such interest. (Art. 932, NCC)
Even if the thing is subsequently alienated by the legatee or devisee to a third person, it
remains void. The legacy or devise is not revived because it was void at its inception. But if
the alienation is to the testator himself and he continues in his possession at the time of his
death, the disposition becomes valid. (Art. 933, NCC)
Q: What is the legal effect if the testator orders the payment of what he believes he
owes but does not in fact owe?
A: The disposition shall be considered as not written. (Art. 939, NCC)
Q: If the estate of the testator should not be sufficient to satisfy all the legacies and
devises, what is the order of payment that must be followed?
A: If the estate should not be sufficient to cover all the legacies or devises, their payment
shall be made in the following order:
1. Remuneratory legacies or devises;
2. Legacies or devises declared by the testator to be preferential;
3. Legacies for support;
4. Legacies for education;
5. Legacies or devises of a specific determinate thing which forms a part of the estate;
6. All others pro rata. (Art. 950, NCC)
INTESTATE SUCCESSION
Q: What is legal succession?

A: Legal succession is that kind of succession prescribed by the law and presumed to be the
desire of the deceased which takes place when the expressed will of the decedent has not
been set down in a will.
Q: When may legal or intestate succession take place?

A: If may take place:
if the person dies without a will, or with a void will, or one which has subsequently lost its
validity;
When the will does not institute an heir to, or dispose of all the property belonging to the
testator. In such a case, legal succession shall take place only with respect to the property
which the testator has no disposed;
If the suspensive condition attached to the institution of heir does not happen or is not
fulfilled, or if the heir dies before the testator, or repudiates the inheritance, there being no
substitution, and no right of accretion takes place;
When the heir instituted is incapable of succeeding, except in cases provided in the code.
Q: May a probate court determine ownership of the subject?

A; The jurisdiction of the regional trial court as a probate court or intestate court relates only
to matters having to do with the settlement of the estate and probate of the will of the
deceased persons and does not extend to the determination of questions of ownership that
arise during the proceedings.
Q: What is the effect of the principle the nearest excludes the farthest to the right of
representation?
A: It is without prejudice to the right of representation because by virtue of representation
the farther becomes just as near.
Q: Between a grandfather and a brother, who will inherit intestate from the decedent?
A: Although it is true that both as just as near in degree, still it is the grandfather alone who
should inherit because the direct line is preferred over the collateral line.
Q: How must shares be divided between relatives in the same degree?

A. Relatives in the same degree shall inherit in equal shares, subject to the provisions of art
1006 with respect to relatives of full and half blood, and of art 987 par 2, concerning division
between the paternal and maternal lines.
Q: May a person who repudiates be represented?

A: No, and heir repudiating cannot be represented.
Q: In a situation where is the sole heir or all heirs repudiate the inheritance, who may be
called to succeed?
A: The relatives of the following degree, in their own right and not by right of representation.
Q: Suppose one of the two heirs is incapacitated and the other repudiated, how may their
children inherit?
A: The children of the incapacitated may inherit by right of representation and the children
of the one who repudiated are excluded for he cannot be represented.
Q: Define right of representation.

A: A right created by fiction of law where in a representative is raised to the place and
degree of the person represented, and acquires the rights which the latter would have if he
were living or able to inherit.
Q: When may the right of representation exist?

A: Right of representation exists when there is predecease, incapacity and disinheritance.
Q: From whom does the representative inherit?

A: The representative does not inherit from the person represented but rather from the
person whom the person represented could have inherited from.
Q: In intestate succession, right of representation will cover what properties?

A: The right of representation when proper in intestate succession covers all the person
being represented would have inherited.
Q: In testate succession, the right of representation will cover what properties?

A: The right of representation when proper in testate succession only covers the legitime.
Q: May an adopted child represent?

A: No, because there is no filiation whether by blood or by law between the adopted child
and the parent of the adopter. While a person thru his legal actuation can give himself an
heir, he cannot by the same action gives his relatives an heir.
Q: May an adopted child be represented?

A: No, because there is no filiation whether by blood or by law between the adopted child
and the parent of the adopter. While a person thru his legal actuation can give himself an
heir, he cannot by the same action gives his relatives an heir.
Q: To whom will the representative succeed?

A: The representative does not succeed the person represented but the one whom the
person represented would have succeeded.
Q: Where may the right of representation take place?

A: The right of representation takes place only in the direct descending line but never in the
ascending.
Q: May the right of representation occur in the collateral line?

A: Yes, in the collateral line, it takes place only in favor of the children of the brothers or
sisters, whether they are of the full or half blood.
Q: Between the nephew and grandnephew of the decedent, who will inherit?
A: Only the nephew will inherit, the right of representation in the collateral line takes place
in favor only of the children of the brothers or sisters.
Q: If an illegitimate child predeceased his parents, how will he inherit from his
grandparents?
A: They shall inherit by right of representation. (Art. 990, NCC)
Q: In what extent the right to inherit in the collateral line?

A: The right to inherit ab intestate shall not extend beyond the fifth degree of relationship in
the collateral line. (Art. 1010, NCC)
Q: When will the State entitled to succeed the entire estate of a deceased person?
A: In the absence of compulsory heirs, surviving spouse and collateral relatives up to the fifth
degree. (Art. 1011)

Q: What is accretion?
A: Accretion is a right by virtue of which, when two or more persons are called to the same
inheritance, devise or legacy, the part assigned to the one who renounces, or cannot receive
his share, or who died before the testator, is added or incorporated to that of his co-heirs,
co-devises, or co-legatees. (Art. 1015, NCC)
Q: When does the right of accretion take place?

A: In testamentary succession the right of accretion takes place in the following cases:
(1) Predecease of the instituted heir.
(2) Incapacity of the instituted heir.
(3) Repudiation by the instituted heir.
(4) Nonfulfillment of the suspensive condition imposed upon the instituted heir.
(5) Ineffective testamentary dispositions.
In intestate succession the right of accretion takes place in the following cases:
(1) Predecease of a legal heir.
(2) Incapacity of a legal heir.
(3) Repudiation by a legal heir.
It must be noted, however, that, strictly speaking, it is only in case of repudiation that
there can be accretion in intestate succession because it is only then that there is a vacancy in
the inheritance. However, whether the rules of intestate succession or accretion shall be applied
in case of predecease or incapacity, the results are the same.
Q: What requisites must exists in order that accretion will take place in testamentary
succession?
A: The following must exist:
(1) That two or more persons be called to the same inheritance, or to the same portion
thereof, pro indiviso;and
(2) That one of the persons thus called die before the testator, or renounce the
inheritance, or be incapacitated to receive it. (Art. 1016, NCC)
Q: What is earmarking?
A: It means that there is particular designation or physical segregation from all others of the
same class.
Q: If a person repudiates his share in the inheritance, to whom will his share go?
A: The vacated share will go to his co-heirs. (Art. 1018, NCC)
Q: Can an heir who repudiates his inheritance be represented?

A: No, for one who renounces cannot be represented.
Q: How will the co-heirs inherit if the vacated share is the legitime?

A: Should the part repudiated be the legitime, the other co-heirs shall succeed to it in their
own right, and not by the right of accretion. (Art. 1021, NCC)
Q: How will the co-heirs inherit if the vacated share is the free portion?
A: If the vacated share is the free portion, the other co-heirs shall inherit by accretion. (Art.
1021, NCC)
Q: In testamentary succession, to whom the vacant share go if there is no right of

accretion and no substitution?
A: It shall pass to the legal heirs of the testator, who shall receive it with the same charges
and obligations. (Art. 1022, NCC)
Q: What are the three kinds of relative incapacity?

A: The three kinds of relative incapacity are: first, because of possible undue influence;
second, because of public policy and morality; and third, because of unworthiness.
Q: What are those donations that are considered void by reason public morality?
A: The following donations shall be void:
1. Those made between persons who were guilty of adultery or concubinage at the
time of the donation;
2. Those made between persons found guilty of the same criminal offence, in
consideration thereof;
3. Those made to a public officer or his wife, descendants and ascendants, by reason
of his office. (Art. 1028, NCC)
Q: Is there a need that the spouse be convicted of adultery?

A: No. There need not be any criminal conviction for the guilt of the spouse because the guilt
of the spouse can be proven civilly.
Q: Who are incapable of succeeding by reason of worthiness?

A: The following are incapable of succeeding by reason of unworthiness:
(1) Parents who have abandoned their children or induced their daughters to lead a
corrupt or immoral life, or attempted against their virtue;
(2) Any person who has been convicted of an attempt against the life of the testator,
his or her spouse, descendants, or ascendants;
(3) Any person who has accused the testator of a crime for which the law prescribes
imprisonment for six years or more, if the accusation has been found groundless;
(4) Any heir of full age who, having knowledge of the violent death of the testator,
should fail to report it to an officer of the law within a month, unless the authorities
have already taken action; this prohibition shall not apply to cases wherein, according to
law, there is no obligation to make an accusation;
(5) Any person convicted of adultery or concubinage with the spouse of the testator;
(6) Any person who by fraud, violence, intimidation, or undue influence should
cause the testator to make a will or to change one already made;

(7) Any person who by the same means prevents another from making a will, or
from revoking one already made, or who supplants, conceals, or alters the latter’s will;
(8) Any person who falsifies or forges a supposed will of the decedent. (Art. 1032,
NCC)
Q: What are the instances that the causes of unworthiness will not affect?
A: If the testator had knowledge of the unworthiness thereof at the time he made the will,
or if, having known of them subsequently, he should condone them in writing. (Art. 1033,
NCC)
Q: How may the causes of unworthiness erased?

A: Since acts of unworthiness are offenses directed against the decedent, only the decedent
and no other can erase the effects of such unworthiness. He can do this by pardoning the
offense either expressly or impliedly.
Q: If a person is incapacitated to inherit, may he still be represented?

A: Yes. If the person incapacitated to inherit have children or descendants, the latter should
acquire his right to the legitime. However, the incapacitated heir has no right of usufruct or
administration over the property received by the representative. (Art. 1035, NCC)
Q: What law governs the capacity to succeed of the decedent?

A: Capacity to succeed is governed by the law of the nation of the decedent. (Art. 1039,
NCC)
Q: What are the requisites before acceptance or repudiation is done?

A: The requisites before a person may accept or repudiate an inheritance are:
a. The heir must be certain of the death of the decedent;
b. The heir must be certain of his right to the inheritance; and
c. The heir must have free disposal of his property. (Art. 1043, NCC)
Q: How is acceptance made?

A: Acceptance may be express or tacit.
An express acceptance must be made in a public or private document. A tacit
acceptance is one resulting from acts by which the intention to accept is necessarily implied,
or which one would have no right to do except in the capacity of an heir.
Acts of mere preservation or provisional administration do not imply an acceptance
of the inheritance if, through such acts, the title or capacity of an heir has not been
assumed. (Art. 1049, NCC)
An inheritance is deemed accepted:
(1) If the heirs sells, donates, or assigns his right to a stranger, or to his co-heirs, or
to any of them;
(2) If the heir renounces the same, even though gratuitously, for the benefit of one
or more of his co-heirs;

(3) If he renounces it for a price in favor of all his co-heirs indiscriminately; but if
this renunciation should be gratuitous, and the co-heirs in whose favor it is made
are those upon whom the portion renounced should devolve by virtue of accretion,
the inheritance shall not be deemed as accepted. (Art. 1050, NCC)
Q: How is repudiation made?

A: The repudiation of an inheritance shall be made:
a. by a public instrument;
b. by an authentic instrument; and
c. by a petition to the court having jurisdiction over the testamentary or intestate
proceedings but must be presented within 30 days from order of court for the
distribution of the estate, otherwise, this is deemed to be an acceptance. (Art.
1051, NCC)
Q: What is collation?
A: Collation means computing or adding certain values to the estate, and charging the same
to the legitime. It also means computing or adding certain values to the estate, and charging
the same to the free portion. (Art. 1061, NCC)
Q: What is the status of ownership of the estate of the decedent, before its partition,
where there are two or more heirs?
A: Where there are two or more heirs, the whole estate of the decedent is, before its
partition, owned in common by such heirs, subject to the payment of debts of the
deceased. (Art. 1078, NCC)
Q: What is partition?
A: Every act which is intended to put an end to indivision among co-heirs and legatees and
devises is deemed to be a partition, although it should purport to be a sale, an exchange, a
compromise, or any other transaction. (Art. 1082, NCC)
Q: Can a co-heir have the right to demand the division of the estate?
A: Every co-heir has the right to demand the division of the estate unless the testator should
have expressly forbidden its partition, in which case the period of indivision shall not exceed
twenty years as provided in article 494. This power of the testator to prohibit the division
applies to the legitime. (Art. 1083, NCC)
Q: Can a partition, judicial or extra-judicial, be rescinded on account of lesion?

A: Yes, a partition, judicial or extra-judicial, may also be rescinded on account of lesion, when
anyone of the co-heirs received things whose value is less, by at least one-fourth, than the
share to which he is entitled, considering the value of the things at the time they were
adjudicated. (Art. 1098, NCC)
Q: Can a partition made by the testator be impugned on the ground of lesion?

A: No, the partition made by the testator cannot be impugned on the ground of lesion,
except when the legitime of the compulsory heirs is thereby prejudiced, or when it appears
or may reasonably be presumed, that the intention of the testator was otherwise. (Art.
1099, NCC)
PRESCRIPTION
Q: What are the two kinds and period of acquisitive prescription of rights?
A: Acquisitive prescription is either ordinary or extraordinary. Ordinary acquisitive prescription
requires possession in good faith and with just title for ten years. In extraordinary prescription,
ownership and other real rights over immovable property are acquired through uninterrupted
adverse possession thereof for thirty years without need of title or of good faith. (Gesmundon,
et al. v. CA GR No. 119870, Dec. 23, 1999, citing heirs of Segunda Maningding v. CA, 276 SCRA
601) (Art. 1108, NCC)
Q: Against whom may prescription run?

A: Prescription, both acquisitive and extinctive, runs against:
a) Minors and other incapacitated persons who have parents, guardians or other legal
representatives;
b) Absentees who have administrators, either appointed by them before their appearance,
or appointed by the courts;
c) Persons living abroad, who have managers or administrators; and
d) Juridical persons, except the State and its subdivisions. (Art. 1108,NCC)
Q: Does prescription run between husband and wife, or between parents and children, or
between guardian and ward?
A: Prescription does not run between husband and wife, even though there be a separation of
property agreed upon in the marriage settlements or by judicial decree. Neither does
prescription run between parents and children during the minority or insanity or the latter, and
between guardian and ward during the continuance of the guardianship. (Art. 1109, NCC)
Q: What are the things or properties that cannot be acquired by prescription?

A: Properties of spouses, parents and children, wards and guardians, under restrictions imposed
by law. (Art. 1109,NCC)
Q: Does prescription obtained by a co-proprietor or co-owner benefit the others?

A: Yes, prescription obtained by a co-proprietor or a co-owner shall benefit the others. (Art.
1111, NCC)
Q: What are the two kinds of acquisitive prescription?

A: Acquisitive prescription of dominion and other real rights may be ordinary or extraordinary.
Ordinary acquisitive prescription requires possession of things in good faith and with just title
for the time fixed by law. (Art. 1117, NCC)

Q: What are the characteristics of possession needed for purposes of prescription?
A: Possession has to be in the concept of an owner, public, peaceful and uninterrupted. (Art.
1118, NCC)
Q: Are acts of possessory character executed in virtue of license or by mere tolerance of the
owner available for purposes of possession?
A: No, acts of possessory character executed in virtue of license or by mere tolerance of the
owner shall not be available for the purpose of possession. (Art. 1119, NCC)
Q: How is civil interruption produce?

A: Civil interruption is produce by judicial summons to the possessor. (Art. 1123, NCC)
v. Land titles and deeds
 The Regalian doctrine does not negate NATIVE TITLE to lands held in private ownership
since time immemorial. In Carino vs. Insular the Supreme Court ruled and recognized
the existence of native title to land, or ownership of land by Filipinos b virtue of
possession under a claim of ownership since time immemorial and independent of any
grant from the Spanish Crown as an exception to the theory of jura regalia.
 Registration does not vest title. It is merely evidence of such title over a particular land.
Our land registration laws does not give the holder any better title than what he actually
has.
 Registration is not a mode of acquiring ownership but is merely a procedure to establish

evidence of title over realty. It is merely evidence of ownership previously conferred by
any of the recognized modes of acquiring ownership.
 A certificate of title issued pursuant to a public land patent has the same validity and
efficacy as a certificate of title issued through ordinary registration proceedings.
 A certificate of title shall not be subject to collateral attack nor shall it be altered,
modified or cancelled except in a direct proceeding in accordance with law.
 Private corporations or associations may not hold such alienable lands of the public
domain except by lease, for a period not exceeding 25 years, renewable for not more
than 25 years and not to exceed 1,000 hectares in area.
 Private corporations or associations are disqualified from acquiring alienable lands of the
public domain. However, where at the time the corporation acquired the land, its
predecessor-in-interest had been in possession and occupation thereof in the manner
and for the period prescribed by law as to entitle him to registration in his name, then
the proscription against corporations acquiring alienable lands of the public domain

except through lease does not apply for the land was no longer public land but private
property.
 If the possession of alienable and disposable land commenced only after June 12, 1945,
one can still apply for registration of the property through prescription (Sec. 14[2] PRD).
Properties classified as alienable public land may be converted into private property by
ordinary prescription of 10 years or extraordinary prescription of 30 years, without need
of title or good faith.
 Application for confirmation of title under the PRD:
1. The public shall be given notice of the initial hearing by means of publication,
mailing and posting. The requirement of giving notice by all three modes is
MANDATORY.
 Purpose of publication- (a) to confer jurisdiction upon the court over the
res; and (b) to apprise the whole world of the pending registration case so
that they may assert their rights or interests in the land, if any, and
oppose the application, if so minded.
 A land registration is a proceeding in rem, and the proceeding requires

constructive seizure of the land as against all persons, including the state.
 Publication is a newspaper is necessary to accord with the due process

requirement. Publication in a newspaper of general circulation remains
an indispensable procedural requirement.
2. AMENDMENT OF THE APPLICATION - Where the amendment consists in a

substantial change in the boundaries or increase in area of land, or involve the inclusion
of additional are, the amendment shall be subject to the same requirement of
publication and notice as in the case of an original application.
Where no publication has even been made except the initial publication, and this
did not include the additional area, the registration court had no jurisdiction over the
said included and additional area and its adjudication to the applicant over the
additional area is a nullity.
3. ORDER OF GENERAL DEFAULT – if no person appears and answers within the

time allowed, the court shall, up[on motion of the application, order a default to be
entered and require the applicant to present evidence. The notice states :TO ALL
WHOM IT MAY CONCERN” - all the world are made parties defendants and shall be
included in the default order, the general default is addressed to the whole world.

4. ORDER OF SPECIAL DEFAULT – when an appearance has been entered and an
answer filed, a default order shall be entered against persons who did not appear and
answer. This special order of default is directed only against those who did not enter
their appearance and file an answer.
5. WHEN JUDGMENT BECOMES FINAL – the judgment rendered in a land registration

case becomes final upon the expiration of fifteen (15) days to be counted from the date
the party concerned receives notice thereof, including the Solicitor General who appears
for the State.
6. Writ of possession in land registration cases –
After the registration of a land is decreed in favor of the applicant, he as well as

any subsequent purchaser of the property has the right to the title and possession of the
land, and to that end he may ask the proper court for the issuance of a writ of
possession, provided the same has not been issued before.
A writ of possession may be issued not only against the person who has been
defeated in a registration case but also against anyone unlawfully and adversely
occupying the land or any portion thereof DURING the land registration proceedings UP
TO THE ISSUANCE of the final decree.
7. Writ will NOT issue against persons taking possession AFTER issuance of final
decree
When the parties against whom a writ of possession is sought entered into
possession after the issuance of the final decree, and none of them had been a party in
the registration proceedings, the writ of possession will, not issue. A person who took
possession of the land after final; adjudication of the same in registration proceedings
cannot be summarily ousted through a writ of possession secured by a mere motion and
that regardless of any title or lack of title of persons to hold possession of the land in
question, they cannot be ousted without giving them their day in court in proper
independent proceedings. The remedy is to institute a separate action for unlawful
entry or detainer or for reinvindicatory action, as the case may be.
8. Decree of registration cannot be issued until after the judgment becomes final -
Execution pending appeal is not applicable in land registration proceedings. It is fraught
with dangerous consequences. Innocent purchasers may be misled into purchasing real
properties upon reliance on a judgment which may be reversed on appeal.
9. The Torrens title becomes indefeasible and incontrovertible after one year from
the issuance of the decree.
10. REMEDIES of aggrieved party:

a. Motion for new trial or reconsideration – within the period for taking an
appeal (15 days from receipt of the decision)
GROUNDS (FAME ; newly discovered evidence)
b. Appeal – within 15 days from receipt of a copy of the decision
c. Relief from judgment or relief from denial of appeal
Verified, filed within 60 days after the petitioner learns of the judgment,
final order, or other proceeding to be set aside, and not more than 6
months after such judgment or final order was entered, or such
proceeding was taken
d. Review of Decree (Sec. 32 PD 1529)
Within one (1) year from the issuance of the decree of registration and
that the registration was procured through actual fraud provided that the
property has not passed to an innocent purchaser for value
e. Reconveyance (Sec. 53 and 96) – provided the property has not passed to
an innocent purchaser for value
f. Damages (Sec. 32)

g. Claim against the Assurance Fund
h. Reversion (Sec. 101, CA No. 141
i. Annulment of Judgment
k. Criminal Prosecution under the Revised Penal Code
11. CADASTRAL PROCEEDINGS – in the absence of fraud, title to land in cadastral

proceedings is vested on the owner, upon the expiration of the period to appeal from
the decision or adjudication by the cadastral court, without such appeal being perfected,
and from that time the land becomes registered property which cannot be lost by
adverse possession.
12. Prohibition against alienation of lands acquired under the HOMESTEAD and FREE
PATENT Provisions
Sec. 118. Except in favor of the government or any of its branches, units or
institutions or legally constituted banking corp. lands acquired under the free patent or
homestead provisions shall not be subject to encumbrance or alienation from the date
of the approval of the application and for a term of five years from and after the date of
issuance of the patent or grant nor shall they become liable to the satisfaction of any

debt contracted prior to the expiration of said period; but improvements or crops on the
land may be mortgaged or pledged to qualified persons, associations, or corporations.
No alienation, transfer, or conveyance of any homestead after 5 years and before

25 years after the issuance of title shall be valid without he approval of the Secretary of
Agriculture and Natural Resources, x x x.
Any encumbrance made on the parcel of land acquired under a free patent or
homestead within five years from the grant of such patent results in the cancellation of
the grant and the reversion of the land to public domain.
The prohibition starts from the date of approval up to and including the fifth year from
and after the date of the issuance of the patent or grant. The patent is considered
issued once the order for its issuance is promulgated and therefore, the five year period
is computed from this date and not from the date of registration with the Register of
Deeds or from the date of the certificate of title.
13. PERIOD OF REPURCHASE – When mortgage and conveyance allowed already, the
5-year period for legal redemption starts from the date of the execution of the deed of
sale, and not from the date of registration in the office of the Register of Deeds.
The five year period of redemption fixed in Sec. 119 of the PLA of homestead sold at
extrajudicial foreclosure begins to run from the date after the expiration of the 1 year
period of repurchase allowed in an extrajudicial foreclosure. Five year period starts to
run after the expiration of the redemption period under Act. 3135, as amended, within
which to exercise the right to repurchase under the PLA.
14. FORECLOSURES OF MORTGAGE:
 MORTGAGOR’S EQUITY OF REDEMPTION – After the execution of a real

estate mortgage, the mortgagor has an equity of redemption exercisable
within the period stipulated in the mortgage deed. In case of judicial
foreclosure, the equity of redemption subsists after the sale and before it
is confirmed by the court.
 However, in case of judicial foreclosure of mortgage in favor of banking

institutions, Sec. 78 of the General Banking Laws grants the mortgagor a
right of redemption which may be exercised within one year from the sale
– which is from the registration of the sale with the register of deeds.
vi. obligations and contracts

SOURCES OF OBLIGATION
Art. 1157. Obligations arise from:
(1) Law;
(2) Contracts;
(3) Quasi-contracts;
(4) Acts or omissions punished by law; and
(5) Quasi-delicts. (1089a)
DUTIES OF DEBTOR IN AN OBLIGATION TO GIVE A DETERMINATE THING (See Arts. 1163, 1164,
1166.)
1. To preserve or take care of the thing due with the diligence of a good father of a
family
DILIGENCE OF A GOOD FATHER OF A FAMILY– ordinary care or that diligence which an

average or reasonably prudent person would exercise over his own property
NOTE: Rule on Standard of Care

• That which the law requires; or
• That stipulated by the parties; or
• In the absence of the two, diligence of a good father of a family
2. To deliver the fruits of the thing: Right to the fruits of the thing from the time the
obligation to deliver it arises.
WHEN OBLIGATION TO DELIVER ARISES
• GENERAL RULE: From the time of the perfection of the contract (i.e. meeting of
the minds between the parties)
• EXCEPTIONS
a. when the parties made a stipulation as regards the right of the creditor to the
fruits of the thing
b. when the obligation is subject to a suspensive condition or period; arises upon
fulfillment of the condition or arrival of the period
KINDS OF DELAY
1. Mora Solvendi– default on the part of the debtor:
• Mora Solvendi Ex re– default in real obligations
• Mora Solvendi Ex persona– default in personal obligations

• GENERAL RULE: Those obliged to deliver or to do something incur in delay from
the time the obligee judicially or extrajudicially demands from them the
fulfillment of their obligation.
• EXCEPTIONS (no demand necessary)

a. When the obligation or the law expressly so declare; or
b. When from the nature and the circumstances of the obligation it appears
that the designation of the time when the thing is to be delivered or the
service is to be rendered was a controlling motive for the establishment
of the contract; or
c. When demand would be useless, as when the obligor has rendered it
beyond his power to perform
2. Mora Accipiendi – default on part of creditor when he unjustifiably refuses to

accept the performance of the obligation.
3. Compensatio morae– both parties are in default (in reciprocal obligations); there
is no actionable default on the part of both parties
RULE ON FORTUITOUS EVENT:
• GENERAL RULE: No liability for fortuitous event

• EXCEPTIONS:
1. When expressly declared by law ( bad faith, subject matter is generic,

debtor is in delay )
2. When expressly declared by stipulation or contract
3. When nature of obligation requires assumption of risk
4. When the obligor is in default or has promised to deliver the same thing
to two or more persons who do not have the same interest (Art. 1165[3])
REMEDIES AVAILABLE TO CREDITORS FOR THE SATISFACTION OF THEIR CLAIMS
1. Exact fulfillment of the obligation by specific or substitute performance with a

right to damages in either case;
2. In case of reciprocal obligations, petition the court to resolve the contract;
3. Pursue the leviable (not exempt from attachment under the law) property of the
debtor;
4. Accion directa (Arts. 1729 and 1652):Right of the lessor to go directly to
sublessee for unpaid rents of the lessee. Right of the laborers or persons who
furnish materials for a piece of work undertaken by a contractor to go directly to
the owner for any unpaid claims due to the contractor
5. Accion subrogatoria – to be subrogated to all the rights and actions of the debtor
save those which are inherent in his person

6. Accion Pauliana– asking the court to rescind or to impugn all the acts which the
debtor may have done to defraud the creditors (Arts. 1380-1389)
PURE AND CONDITIONAL OBLIGATIONS
PURE – one whose effectivity or extinguishment does not depend upon the fulfillment or
nonfulfillment of a condition or upon the expiration of a period and is demandable at
once
CONDITIONAL – one whose effectivity is subordinated to the fulfillment or non-

fulfillment of a future AND uncertain event or upon a past event unknown to the parties
CONDITION - Future and uncertain event or a past event unknown to the parties
1. Suspensive – happening of condition gives rise to obligation

• Effects:
a. Effectivity retroacts to the day of the constitution of the obligation
b. No retroactivity with reference to fruits or interest and prescription
c. Creditor may preserve rights
d. Debtor – recovery of payment by mistake or even w/o mistake
IMPOSSIBLE AND ILLEGAL CONDITIONS
• GENERAL RULE: They shall annul the obligation which depends upon them
• EXCEPTIONS:
a. pre-existing obligation
b. if obligation is divisible
c. in simple or remuneratory donations
d. testamentary dispositions
e. conditions not to do an impossible thing
OBLIGATIONS WITH A PERIOD – An obligation which depends on a future and certain event
(See Arts 1193, 1196)
WHEN STIPULATION SAYS “PAYABLE WHEN ABLE” – IT IS WITH A PERIOD, REMEDY:

1. Agreement among parties
2. Court shall fix period of payment when parties unable to agree
KINDS:
1. Resolutory ( in diem ) – demandable at once but terminates upon arrival of the
day certain
• Day certain – that which must necessarily come, although it may not be
known when

2. Suspensive ( ex die ) –obligation becomes demandable on the day stipulated
TERM CONDITION
Interval of time which is future and certain Fact or event which is future or uncertain or a
past event unknown to the parties
Time w/c must necessarily come although it Future and uncertain fact or event which may
may not be known when or may not happen
Exerts an influence upon the time of Exerts an influence upon the very existence of
demandability or extinguishment of an the obligation itself
obligation
Does not have any retroactive effect unless Has retroactive effect
there is an agreement to the contrary
When it is left exclusively to the will of the When it is left exclusively to the will of the
debtor, the existence of the obligation is debtor, the obligation is void
affected
WHEN COURTS MAY FIX PERIOD:
1. If the obligation does not fix a period, but from its nature and circumstances it
can be inferred that a period was intended by the parties
2. If the duration of the period depends upon the will of the debtor
3. In case of reciprocal obligations, when there is a just cause for fixing a period
4. If the debtor binds himself when his means permit him to do so
PERIOD FOR WHOSE BENEFIT
• GENERAL RULE: When a period is designated for the performance or fulfillment

of an obligation, it is presumed to have been established for the benefit of both creditor
and debtor.
• EXCEPTION: When it appears from the tenor of the obligation or other
circumstances that the period has been established in favor of one or the other.
PERIOD FOR THE BENEFIT OF THE CREDITOR
• Creditor may demand the fulfillment of the obligation at any time but the debtor cannot
compel him to accept before the expiration of the period
PERIOD FOR THE BENEFIT OF THE DEBTOR
• Debtor may oppose any premature demand of the creditor but he may renounce the
benefit of the period by performing his obligation in advance (Manresa; WHEN DEBTOR
LOSES RIGHT TO PERIOD:
• Insolvency of debtor, unless security provided

• Did not deliver security promised
• Impaired security through his own acts or through fortuitous event unless he gives new
securities equally satisfactory
• Violates undertaking in consideration of extension of period
• Attempts to abscond
FACULTATIVE - only one prestation has been agreed upon but another may be given in
substitution
EFFECT OF LOSS OR DETERIORATION THRU NEGLIGENCE, DELAY OR FRAUD OF OBLIGOR:
• Of thing intended as substitute- no liability

• Of the substitute after substitution is made – with liability
ALTERNATIVE – bound by different prestations but only one is due

RIGHT OF CHOICE IN ALTERNATIVE OBLIGATIONS • As a general rule the right of choice
belongs to debtor
EFFECT OF LOSS OF OBJECTS OF ALTERNATIVE OBLIGATIONS

1. If the right of choice belongs to the debtor
• If through a fortuitous event all were lost, debtor cannot be held liable for
damages
• If 1 or more but not all of the things are lost or one or some but not all of the
prestations cannot be performed due to fortuitous event or fault of the debtor,
creditor cannot hold the debtor liable for damages because the debtor can still
comply with his obligation
• If all things, except one, were lost, the debtor must comply by performing that
which remain
• If all were lost by fault of the debtor the later is liable for the value of the last
thing or service which became impossible
2. If right of choice belongs to the creditor

• If 1 of the things is lost through a fortuitous event, the debtor shall perform the
obligation by delivering that which the creditor should choose from among the
remainder or that which remains if only 1 subsists
• If the loss of 1 of the things occurs through the fault of the debtor, the creditor
may claim any of those subsisting or the price of that which, through the fault of
the former, has disappeared with a right to damages
• If all the things are lost through the fault of the debtor, the choice by the creditor
shall fall upon the price of any 1 of them, also with indemnity for damages.

ALTERNATIVE vs. FACULTATIVE
A LT E R N AT I V E FA C U LTAT I V E
a)Various things are due but the giving a) Only one thing is due but a substitute may
principally of one is sufficient be given to render payment/fulfillment easy
b)If one of prestations is illegal, others may be b) If principal obligations is void and there is no
valid but obligation remains necessity of giving the substitute; nullity of P
carries with it nullity of S
c) If it is impossible to give all except one, the c) If it is impossible to give the principal, the
last one must still be given substitute does not have to be given; if it is
impossible to give the substitute, the principal
must still be given
d)Right to choose may be given either to d) The right of choice is given only to the
debtor or creditor debtor
C U LTAT I V E
JOINT AND SOLIDARY OBLIGATIONS (See Arts. 1207 – 1222) EXCEPTIONS TO THE
PRESUMPTION
1. when expressly stated that there is solidarity
2. when the law requires solidarity
3. when the nature of the obligation requires solidarity
4. when a charge or condition is imposed upon heirs or legatees and the testament
expressly makes the charge or condition in solidum (Manresa)
5. when a solidary responsibility is imputed by a final judgment upon several
defendants(Gutierrez v. Gutierrez)
EFFECTS OF JOINT LIABILITY

1. Demand on one produces delay only with respect to the debt
2. Interruption in payment by one does not benefit or prejudice the other
3. Vices of one debtor to creditor has no effect on the others
4. Insolvency of one debtor does not affect other debtors
JOINT DIVISIBLE OBLIGATIONS

1. Each creditor can demand for the payment of his proportionate share of the
credit, while each debtor can be held liable only for the payment of his
proportionate share of the debt
2. A joint creditor cannot act in representation of the other creditors while a joint
debtor cannot be compelled to answer for the acts or liability of the other
debtors
JOINT INDIVISIBLE OBLIGATIONS

1. If there are 2 or more debtors, the fulfillment of or compliance with the
obligation requires the concurrence of all the debtors, although each for his own share. The
obligation can be enforced only by proceeding against all of the debtors.

2. If there are 2 or more creditors, the concurrence or collective act of all the
creditors, although each for his own share, is also necessary for the enforcement of the
obligation
EFFECT OF BREACH
• If one of the joint debtors fails to comply with his undertaking, the obligation can no
longer be fulfilled or performed. Consequently, it is converted into one of indemnity for
damages. Innocent joint debtor shall not contribute to the indemnity beyond their
corresponding share of the obligation.ILITY
S
INDIVISIBILITY SOLIDARITY
Refers to the prestation which constitutes the Refers to the legal tie and consequently to
object of the obligation The subjects or parties of the obligation
Plurality of subjects is not required Plurality of subjects is indispensable
In case of breach, obligation is converted into When there is liability on the part of the
1 of indemnity for damages because of breach, debtors because of the breach, the solidarilty
indivisibility of the obligation is terminated among the debtors remains
OLIDARITY
SOLIDARY – must be expressed in stipulation or provided by law or by nature of obligation
• Instances where law imposes solidary obligation:
a. Obligations arising from tort

b. Obligations arising from quasi-contracts
c. Legal provisions regarding obligation of devisees and legatees
d. Liability of principals, accomplices, and accessories of a felony
e. Bailees in commodatum
• EFFECTS:
a. Payment made before debt is due, no interest can be charged, otherwise –
interest can be charged
b. Insolvency of one – others are liable for share pro-rata
c. If different terms and conditions – collect only what is due, later on collect from
any
d. No reimbursement if payment is made after prescription or became illegal
e. Remission made after payment is made – co- debtor still entitled to
reimbursement
f. Effect of insolvency or death of co-debtor – still liable for whole amount
g. Fault of any debtor – every one is responsible – price, damage and interest
h. Complete/ personal defense – total or partial( up to amount of share only ) if not
personal to him
EFFECT OF LOSS OR IMPOSSIBILITY OF THE PRESTATION:

1. If without fault – no liability
2. If with fault – there is liability (also for damage and interest)
3. Loss due to fortuitous event after default – there is liability (because of default)
DIVISIBLE AND INDIVISIBLE OBLIGATIONS (See Arts. 1223 – 1225)
DIVISIBLE- obligation that is capable of partial performance

• Execution of certain no of days work
• Expressed by metrical units
• Nature of obligation – susceptible of partial fulfillment
INDIVISIBLE– one not capable of partial performance

• To give definite things
• Not susceptible of partial performance
• Provided by law
• Intention of parties
OBLIGATIONS WITH A PENAL CLAUSE (See Arts. 1226 – 1230)

One to which an accessory undertaking is attached for the purpose of insuring its
performance by virtue of which the obligor is bound to pay a stipulated indemnity or
perform a stipulated prestation in case of breach
CHARACTERISTICS OF PENAL CLAUSES:

1. Subsidiary - As a general rule, only penalty can be demanded, principal cannot be
demanded, except: Penalty is joint or cumulative
2. Exclusive - takes place of damage, damage can only be demanded in the ff.
cases:
a. Stipulation – granting right

b. Refusal to pay penalty
c. With dolo ( not of creditor )
CAUSES FOR REDUCTION OF PENALTY:

1. Partial/irregular performance
2. Penalty provided is iniquitous/ unconscionable
MODES OF EXTINGUISHMENT OF OBLIGATION (Art. 1231):

1. Payment or performance
2. Loss of the thing due
3. Condonation or remission of debt
4. Confusion or merger of rights
5. Compensation

6. Novation
7. Annulment
8. Rescission
9. Fulfillment of resolutory condition
PAYMENT OR PERFORMANCE- delivery of money and performance, in any other manner of the
obligation
REQUISITES FOR VALID PAYMENT/PERFORMANCE

1. With respect to prestation itself
a. Identity
b. Integrity or completeness
c. Indivisibility
2. With respect to parties - must be made by proper party to proper party

a. Payor
i. Payor - the one performing, he can be the debtor himself or his heirs or
assigns or his agent, or anyone interested in the fulfillment of the
obligation; can be anyone as long as it is with the creditor's consent
ii. 3RD person pays/performs - only the creditor's consent; If performance is

done also with debtor's consent - he takes the place of the debtor. There
is subrogation except if the 3rd person intended it to be a donation
iii. 3rd person pays/performs with consent of creditor but not with debtor's
consent, there payment is only to the extent that the payment has been
beneficial to debtor
b. Payee
i. Payee - creditor or obligee or successor in interest of transferee, or agent
ii. 3rd person - if any of the ff. concur:

• It must have redounded to the obligee's
• benefit and only to the extent of such benefit
• It falls under art 1241, par 1,2,3 – the benefit is total so,
performance is total
iii. Anyone in possession of the credit – but will apply only if debt has not
been previously garnished
PAYMENT MADE TO AN INCAPACITATED PERSON, VALID IF

1. Incapacitated person kept the thing delivered, or
2. Insofar as the payment has been beneficial to him

PAYMENT TO 3RD PARTY NOT AUTHORIZED,VALID IF PROVED AND ONLY TO THE EXTENTOF
BENEFIT; PRESUMED IF
1. After payment, 3rd person acquires the creditor’s rights
2. Creditor ratifies payment to 3rd person
3. By creditor’s conduct, debtor has been led to make the payment (estoppel)
PAYMENT MADE IN GOOD FAITH TO A PERSON IN POSSESSION OF CREDIT SHALL

RELEASEDEBTOR; REQUISITES:
1. Payment by debtor must be made in good faith
2. Creditor must be in possession of the credit and not merely the evidence of
indebtedness
• NOTE: With respect to time and place of payment - must be according to the
obligation
WHERE PAYMENT SHOULD BE MADE

1. In the place designated in the obligation
2. If there is no express stipulation and the undertaking is to deliver a specific thing
– at the place where the thing might be at the moment the obligation was constituted
3. In other case – in the place of the domicile of the debtor
• Time of payment - time stipulated

• Effect of payment– extinguish obligation
Except: order to retain debt
SPECIAL RULES/FORMS OF PAYMENT
1. APPLICATION OF PAYMENTS – the designation of the debt which payment shall be

made, out of2 or more debts owing the same creditor: stipulation or application of party
given benefit of period – OK; to be valid: must be debtor’s choice or w/ consent of
debtor
REQUISITES FOR THE APPLICATION OF PAYMENT:

a. Various debts of the same kind
b. Same debtor
c. Same creditor
d. All debts must be due
• EXCEPTION: there may be application of payment even if all debts are not yet
due if:
a. Parties so stipulate
b. When application of payment is made by the party for whose benefit the
term has been constituted
c. Payment is not enough to extinguish all debts

HOW APPLICATION IS MADE:
a. Debtor makes the designation

b. If not, creditor makes it by so stating in the receipt that he issues – unless there
is cause for invalidating the contract
c. If neither the debtor nor creditor has made the application or if the application is
not valid, then application, is made by operation of law
2. CONSIGNATION WITHOUT PRIOR TENDER – allowed in:
a. Creditor absent or unknown/ does not appear at the place of payment

b. Incapacitated to receive payment at the time it is due
c. Refuses to issue receipt w/o just cause
d. 2 or more creditor claiming the same right to collect
e. Title of obligation has been lost
LOSS OF THE THING DUE
LOSS OF THE THING DUE – partial or total/ includes impossibility of performance
WHEN IS THERE A LOSS

a. When the object perishes (physically)
b. When it goes out of commerce
c. When it disappears in such a way that: its existence is unknown or it cannot be
recovered
WHEN IS THERE IMPOSSIBILITY OF PERFORMANCE:

a. Physical impossibility
b. Legal impossibility
i. Directly – caused as when prohibited by law
ii. Indirectly – caused as when debtor is required to enter a military draft
OBLIGATION TO DELIVER A SPECIFIC THING

• GENERAL RULE: Extinguished
• EXCEPTIONS:
a. Debtor is at fault
b. Debtor is made liable for fortuitous event because of a provision of law,
contractual stipulation or the nature of the obligation requires
assumption of risk on part of debtor
OBLIGATION TO DELIVER A GENERIC THING

• GENERAL RULE: Not extinguished
• EXCEPTIONS:

a. If the generic thing is delimited
b. f the generic thing has already been segregated
c. Monetary obligation
OBLIGATION TO DO
• GENERAL RULE: Debtor is released when prestation becomes legally or physically
impossible without fault on part of debtor
REBUS SIC STANTIBUS - agreement is valid only if the same conditions prevailing at time of
contracting continue to exist at the time of performance; Obligor may be
released in whole or in part based on this ground.
REQUISITES
a. The event or change could not have been foreseen at the time of the execution
of the contract
b. The performance is extremely difficult, but not impossible (because if it is
impossible, it is extinguished by impossibility
c. The event was not due to the act of any of the parties
d. The contract is for a future prestation
CONDONATION
CONDONATION/REMISSION OF THE DEBT – gratuitous abandonment of debt; right to

claim; donation; rules of donation applies; express ori mplied
REQUISITES:
a. There must be an agreement
b. There must be a subject matter (object of the remission, otherwise there
would be nothing to condone)
c. Cause of consideration must be liberality
(Essentially gratuitous, an act of liberality )
d. Parties must be capacitated and must consent; requires acceptance by
obligor; implied in mortis causa and expressed intervivos
e. Formalities of a donation are required in the case of an express remission
f. Revocable – subject to rule on inofficious donation ( excessive, legitime is
impaired and ingratitude and condition not followed
g. Obligation remitted must have been demandable at the time of remission
h. Waivers or remission are not to be presumed generally
F
CONFUSION OR MERGER
Where the character of debtor and creditor is merged n same person with respect to
same obligation

REQUISITES:
a. It must take place between principal debtor and principal creditor only
b. Merger must be clear and definite
c. The obligation involved must be same and identical – one obligation only
d. Revocable, if reason for confusion ceases, the obligation is revived
7. COMPENSATION
COMPENSATION – Set off; it is a mode of extinguishment to the concurrent amount

the obligation of persons who are in their own right reciprocally debtors or creditors
REQUISITES:
a. Both parties must be mutually creditors and debtors - in their own right and as
principals
b. Both debts must consist in sum of money or if consumable , of the same kind or
quality
c. Both debts are due
d. Both debts are liquidated and demandable (determined)
e. Neither debt must be retained in a controversy commenced by 3rd person and
communicated w/ debtor (neither debt is garnished)
KINDS OF COMPENSATION
a. Legal – by operation of law; as long as 5requisites concur- even if

unknown to parties and if payable in diff places; indemnity for expense of exchanges;
even if not equal debts –only up to concurring amount
b. Conventional – agreement of parties is enough, forget other requirement

as long as both consented
c. Facultative– one party has choice of claiming/ opposing one who has benefit of
period may choose to compensate:
i. Not all requisites are present
ii. Depositum; commodatum; criminal offense; claim for future support;
taxes
d. Judicial– set off; upon order of the court; needs pleading and proof; all
requirements must concur except liquidation
e. Total – when 2 debts are of the same amount

f. Partial – when 2 debts are not of the same amount
NOVATION- extinguishment of obligation by creating/ substituting a new one in its place

• Changing object or principal conditions
• Substituting person of debtor
• Subrogating 3rd person in right of creditor
EFFECTS OF NOVATION:
a. Extinguishment of principal carries accessory, except:
i. Stipulation to contrary
ii. Stipulation pour autrui unless beneficiary consents
iii. Modificatory novation only; obliged to w/c is less onerous
iv. Old obligation is void
b. Old obligation subsists if new obligation is void or voidable but annulled already
(except: intention of parties)
c. If old obligation has condition
i. If Resolutory and it occurred – old obligation already extinguished; no

new obligation since nothing to novate
ii. If S us pensive and it never occurred –as if no obligation; also nothing to
novate
d. If old obligation has condition, must be compatible with the new obligation; if
new is w/o condition – deemed attached to new
e. If new obligation has condition

i. If resolutory: valid
ii. If suspensive and did not materialize: old obligation is enforced
KINDS OF NOVATION:
a. REAL/ OBJECTIVE– change object, cause/consideration or principal

condition
b. PERSONAL/ SUBJECTIVE
i. Substituting person of debtor (passive)
• EXPROMISION; initiative is from 3rdperson or new debtor; new debtor and

creditor to consent; old debtor released from obligation; subject to full
reimbursement and subrogation if made w/ consent of old debtor; if w/o consent
or against will , only beneficial reimbursement; if new debtor is insolvent, not
responsible since w/o his consent
• DELEGACION; initiative of old debtor; all parties to consent; full reimbursement;

if insolvent new debtor – not responsible old debtor because obligation
extinguished by valid novation unless: insolvency already existing and of public
knowledge or know to him at time of delegacion

1.Delegante – olddebtor
2.Delegatario – creditor
3.Delegado – new debtor
ii. Subrogating 3rd person to rights of creditor ( active )

1. Conventional - agreement and consent of all parties; clearly
established
2. Legal- Takes place by operation of law; no need for consent; not
presumed except as provided for in law:
PRESUMED WHEN:
a. Creditor pays another preferred creditor even w/o debtor’s knowledge
b. 3rd person not interested in obligation pays w/ approval of debtor
c. Person interested in fulfillment of obligation pays debt even w/o
knowledge of debtorom
DIFFERENT FROM PAYMENT OF 3RD PERSON CHANGE OF DEBTOR

1. debtor is not necessarily released from debt 1. debtor is released
2. can be done w/o consent of creditor 2. needs consent of creditor – express or

implied
3. one obligation 3. two obligations; one is extinguished and
new one created
4. 3rd person has no obligation to pay if 4. new debtor is obliged to pay
Insolvent
pe
CONVENTIONAL SUBROGATION ASSIGNMENT OF RIGHTS
governed by Arts. 1300-1304 governed by Arts. 1624 to 1627
debtor’s consent is not required debtor’s consent is required
extinguishes the obligation and gives rise to a transmission of right of the creditor to third
new one person without modifying or extinguishing the
obligation
defects and vices in the old obligation are defects and vices in the old obligation and not
cured cured
takes effect upon moment of novation or as far as the debtor is concerned, takes effect
subrogation upon notification
PRINCIPAL CHARACTERISTICS OF CONTRACTS:
1. Autonomy of wills – parties may stipulate anything as long as not illegal,

immoral, etc.

2. Mutuality – performance or validity binds both parties; not left to will of one of
parties
3. Obligatory Force – parties are bound from perfection of contract:
4. Fulfill what has been expressly stipulated
5. All consequences w/c may be in keeping with good faith, usage and law
6. Relativity – binding only between the parties, their assigns, heirs; strangers cannot
demand enforcement
EXCEPTION TO RELATIVITY:
1. Accion pauliana
2. Accion directa
3.Stipulation pour autrui
REQUISITES OF STIPULATION POUR AUTRUI

1. Parties must have clearly and deliberately conferred a favor upon a 3 rd person
2. The stipulation in favor of a 3rd person should be a part of, not the whole contract
3. That the favorable stipulation should not be conditioned or compensated by any kind of
obligation whatsoever
4. Neither of the contracting parties bears the legal representation or authorization of 3 rd
party
5. The third person communicates his acceptance before revocation by the original parties
6. Art 1312; Art 1314
KINDS OF CONTRACTS
1. As to perfection or formation
a. Consensual – perfected by agreement of parties

b. Real– perfected by delivery ( commodatum, pledge, deposit )
c. Formal/solemn – perfected by conformity to essential formalities
(donation )
2. As to cause
a. Onerous – with valuable consideration
b. Gratuitous – founded on liberality
c. Remunerative – prestation is given for service previously rendered not as
obligation
3. As to importance or dependence of one upon another

a. Principal – contract may stand alone
b. Accessory – depends on another contract for its existence; may not exist
on its own
c. Preparatory – not an end by itself; a means through which future
contracts may be made

4. As to parties obliged
a. Unilateral – only one of the parties has an obligation
b. Bilateral – both parties are required to render reciprocal prestations
5. As to name or designation
a. Nominate
b. Innominate
I. Do ut des – I give that you may give
II. Do ut facias – I give that you may do
III. Facio ut des – I do that you may give
IV. Facio ut facias – I do that you may do
ESSENTIAL ELEMENTS OF CONTRACTS:

1. Consent
2. Subject Matter
3. Consideration
WHEN OFFER BECOMES INEFFECTIVE:
1. Death, civil interdiction, insanity or insolvency of either party before acceptance is

conveyed
2. Express or implied revocation of the offer by the offeree
3. Qualified or conditional acceptance of the offer, which becomes a counter-offer
4. Subject matter becomes illegal or impossible before acceptance is communicated
RULE ON CONTRACTS ENTERED INTO BY MINORS
• GENERAL RULE: VOIDABLE

• EXCEPTIONS:
a. Upon reaching age of majority – they ratify the same
b. They were entered unto by a guardian and the court having jurisdiction had
approved the same
c. They were contracts for necessities such as food, but here the persons who are
bound to give them support should pay therefor
d. Minor is estopped for having misrepresented his age and misled the other party
(when age is close to age of majority as in the Mercado v Espiritu and Sia Suan v
Alcantara cases.)
DISQUALIFIED TO ENTER INTO CONTRACTS:(contracts entered into are void)
1. Those under civil interdiction

2. Hospitalized lepers
3. Prodigals
4. Deaf and dumb who are unable to read and write

5. Those who by reason of age, disease, weak mind and other similar causes, cannot
without outside aid, take care of themselves and manage their property, becoming an
easy prey for deceit and exploitation
Incapacity
INCAPACITY DISQUALIFI CATION
Restrains the exercise of the right to contract Restrains the very right itself
May still enter into contract through parent, Absolutely disqualified
guardian or legal representative
Based upon subjective circumstance of Based upon public policy and morality
certain person
Contracts entered into are merely voidable Contracts entered into are void
SIMULATED CONTRACTS
1. Absolute – no intention to be bound at all, fictitious only – void from beginning

2. Relative – there is intention to be bound but concealed; concealed contract binds:
a. No prejudice to 3rd persons
b. Not contrary to law, morals, etc.
OBJECT
REQUISITES:
1. Within the commerce of man - either existing or in potency

2. Licit or not contrary to law, good customs
3. Possible
4. Determinate as to its kind or determinable w/o need to enter into a new
contract
5. Transmissible
Absence of Causa Void – produce no legal effect

Illegality of Causa Void – produce no legal effect
Falsity of Causa Voidable – party must prove that cause is
untruthful; presumption of validity but
rebuttable
Causa not stated in contract Presumed to Exist - burden of proof is
on the person assailing its existence
Inadequacy of Causa Does not Invalidate Contract per se
Exceptions:
•fraud
•mistake
•undue influence
•cases specified by law- contracts entered

when ward suffers lesion of more than 25
ause
CAUSE MOTIVE
Direct and most proximate reason of a Indirect or remote reasons
contract
Objective and juridical reason of contract Psychological or purely personal reason
Cause us always same for each contracting The motive differs for each contracting party
party
• NOTE: Legality or illegality of cause affects the existence of validity of the contract;
Legality or illegality of motive does not affect the existence or validity of contract
CAUSA IN SOME CONTRACTS:
1. Onerous contracts – the prestation of promise of a thing or service by the other

2. Remuneratory contracts – the service or benefit remunerated
3. Pure Beneficence – mere liberality of the donor or benefactor
4. Accessory – identical with cause of principal contract, the loan which it derived its life
and existence (ex: mortgage or pledge)
FORMS OF CONTRACT5 – in some kind of contracts only as contracts are generally

consensual; form is a manner in which a contract is executed or manifested
WHEN FORM IS IMPORTANT:

1. For validity (formal/solemn contracts)
2. For enforceability (statute of frauds)
3. For convenience
• GENERAL RULE: contract is valid and binding in whatever form provided that 3
essential requisites concur
• EXCEPTIONS
a. Law requires contract to be in some form for validity - donation and acceptance
of real property
b. Law requires contract to be in some form to be enforceable - Statute of Frauds;
contract is valid but right to enforce cannot be exercised; need ratification to be
enforceable
c. Law requires contract to be in some form for convenience - contract is valid and
enforceable, needed only to bind 3rd parties
Ex: public documents needed for the ff:
i. Contracts w/c object is creation, transmission or reformation of
real rights over immovables

ii. Cession, repudiation, renunciation of hereditary rights/CPG
iii. Power to administer property for another
iv. Cession of action of rights proceeding from an act appearing in a
public inst.
v. All other docs where amount involved is in excess of 500 ( must be
written even private docs )
REFORMATION OF CONTRACTS – remedy to conform to real intention of parties due

to mistake, fraud, inequitable conduct, accident
CAUSES/GROUNDS:
1. Mutual: instrument includes something w/c should not be there or omit what
should be there
a. Mutual
b. Mistake of fact
c. clear and convincing proof
d. causes failure of instrument to express true intention
2. Unilateral
a. one party was mistaken
b. other either acted fraudulently or inequitably or knew but concealed
c. party in good faith may ask for reformation
3. Mistake by 3rd persons – due to ignorance, lack of skill, negligence , bad faith of
drafter, clerk, typist
4. Others specified by law – to avoid frustration of true intent
• Requisites:
a. There is a written instrument
b. There is meeting of minds
c. True intention not expressed in instrument
d. Clear and convincing proof
e. Facts put in issue in pleadings
• NOTE: prescribes in 10 years from date of execution of instrument
WHEN REFORMATION NOT AVAILABLE:

1. Simple donation inter vivos
2. Wills
3. When real agreement is void
4. Estoppel when party has brought suit to enforce it

KINDS OF DEFECTIVE CONTRACTS:
1. RESCISSIBLE CONTRACTS – Those which have caused a particular economic damage

either to one of the parties or to a 3rd person and which may be set aside even if valid. It
may beset aside in whole or in part, to the extent of the damage caused'
REQUISITES:
a. Contract must be rescissible
i. Under art 1381: Contracts entered into by persons exercising
fiduciary capacity
1. Entered into by guardian whenever ward suffers damage

by more than1/4 of value of object
2. Agreed upon in representation of absentees, if absentee
suffers lesion by more than ¼ of value of property
3. Contracts where rescission is based on fraud committed on
creditor(accion pauliana)
4. Objects of litigation; contract entered into by defendant
w/o knowledge or approval of litigants or judicial authority
5. Payment by an insolvent – on debts w/c are not yet due;
prejudices claim of others
6. Provided for by law - art 1526, 1534,1538, 1539, 1542,
1556, 1560, 1567and 1659
ii. Under art 1382 - Payments made in a state of insolvency

1. Plaintiff has no other means to obtain reparation.
2. Plaintiff must be able to return whatever he may be
obliged to return due to rescission
3. The things must not have been passed to 3rd parties who
did not act in bad faith
4. It must be made within the prescribed period (of 4 years)
OBLIGATION CREATED BY THE RESCISSION OF THE CONTRACT: Mutual Restitution

a. Things w/c are the objects of the contract and their fruits
b. Price with interest
MUTUAL RESTITUTION NOT APPLICABLE WHEN

a. creditor did not receive anything from contract
b. thing already in possession of party in good faith; subject to indemnity only; if
there are 2or more alienations – liability of 1stinfract or
BADGES OF FRAUD
a. consideration of the conveyance is inadequate or fictitious

b. transfer was made by a debtor after a suit has been begun and while it is pending
against him
c. sale upon credit by an insolvent debtor
d. evidence of indebtedness or complete insolvency
e. transfer of all his property by a debtor when he is financially embarrassed or
insolvent
f. transfer made between father and son where there is present any of the above
circumstances
g. failure of the vendee to take exclusive possession of the property
Rescission in Art
1191RESCISSION IN ART. 1191 RESCISSION PROPER IN ART. 1381
It is a principal action retaliatory in character it is a subsidiary remedy
Only ground is non-performance of one’s There are 5 grounds to rescind. Non-
obligation or what is incumbent upon him performance by the other is not important
Applies only to reciprocal obligation Applies to both unilateral and reciprocal
obligations
Only a party to the contract may demand Even a third person who is prejudiced by the
fulfillment or seek the rescission of the contract may demand the rescission of the
contract contract.
Court may fix a period or grant extension of Court cannot grant extension of time for
time for the fulfillment of the obligation fulfillment of the obligation
Its purpose is to cancel the contract Its purpose is to seek reparation for the
damage or injury caused, thus
allowing partial rescission of the contract
ResciProper in
2. VOIDABLE CONTRACTS– intrinsic defect; valid until annulled; defect is due to vice of
consent or legal incapacity
• CHARACTERISTICS:
a. Effective until set aside
b. May be assailed or attacked only in an action for that purpose
c. Can be confirmed (NOTE: confirmation is the proper term for curing the defect of
avoidable contract)
d. Can be assailed only by the party whose consent was defective or his heirs or
assigns
WHAT CONTRACTS ARE VOIDABLE:

a. Minors ( below 18 )
b. Insane unless acted in lucid interval
c. Deaf mute who can’t read or write
d. Persons specially disqualified: civil interdiction
e. In state of drunkenness
f. In state of hypnotic spell

KINDS OF FRAUD IN THE PERFORMANCE OF OBLIGATION OR CONTRACTS
a. Causal Fraud (dolo causante) – deception of serious character without which the
other party would not have entered into; contract is VOIDABLE (Art. 1338)
b. Incidental Fraud (dolo incidente) –deception which are not serious and without
which the other party would still have entered into the contract; holds the guilty
party liable for DAMAGES (Art. 1344)
c. Tolerated Fraud – includes minimizing the defects of the thing, exaggeration of its
god qualities and giving it qualities it does not have; LAWFUL misrepresentation
• NOTE:
• Expression of an opinion – not fraud unless made by expert and other party
relied on the former’s special knowledge
• Fraud by third person – does not vitiate consent; only action for damages except
if there is collusion between one party and the third person, or resulted to
substantial mistake, mutual between parties.
CAUSES OF EXTINCTION OF ACTION TO ANNUL
a. PRESCRIPTION -Period to bring an action for Annulment

i. Intimidation, violence, undue influence - 4 years from time defect
of consent ceases
ii. Mistake, fraud – 4 years from time of discovery
iii. Incapacity - From time guardianship ceases
b. RATIFICATION
• REQUISITES
i. knowledge of reason rendering contract voidable
ii. such reason must have ceased, except incase of ratification
effected by the guardian to contracts entered into by
an incapacitated,
iii. the injured party must have executed an act which expressly or
impliedly conveys an intention to waive his right
c. LOSS OF THE THING which is the object of the contract through fraud or fault of
the person who is entitled to annul the contract
• NOTE: Object is lost through a fortuitous event, the contract can still be annulled,
but the person obliged to return the same can beheld liable only for the value of
the thing at the time of the loss, but without interest thereon.

• Ratification cleanses the contract of its defects from the moment it was
constituted.
3. UNENFORCEABLE CONTRACT– valid but cannot compel its execution unless ratified
extrinsic defect; produce legal effects only after ratified
KINDS:
a. Unauthorized or No sufficient authority – entered into in the name of another

when:
i. No authority conferred
ii. In excess of authority conferred ( ultra vires)
b. Curable by Ratification - Both parties incapable of giving consent -2 minor or

2insane persons
c. Curable by Acknowledgment - Failure to comply with Statute of Frauds

i. Agreement to be performed within a year after making contract
ii. Special promise to answer for debt, default or miscarriage of
another
iii. Agreement made in consideration of promise to marry
iv. Agreement for sale of goods, chattels or things in action at price
not less than500; exception: auction when recorded sale in sales
book
v. Agreement for lease of property for more than one year and sale
of real property regardless of price
vi. Representation as to credit of another
TWO WAYS OF CURING UNENFORCEABLE CONTRACTS:
a. Failure of defendant to object in time, to the presentation of parole

evidence in court, the defect of unenforceability is cured
b. Acceptance of benefits under the contract. If there is performance in
either part and there is acceptance of performance, it takes it out of
unenforceable contracts; also estoppel sets in by accepting performance,
the defect is waived
4. VOID OR INEXISTENT – of no legal effect
CHARACTERISTICS:
a. It produces no effect whatsoever either against or in favor of anyone
b. There is no action for annulment necessary as such is ipso jure. A judicial
declaration to that effect is merely a declaration
c. It cannot be confirmed, ratified or cured

d. If performed, restoration is in order, except if pari delicto will apply
e. The right to set up the defense of nullity cannot be waived
f. Imprescriptible
g. Anyone may invoke the nullity of the contract whenever its juridical effects are
asserted against him
KINDS OF VOID CONTRACT:
a. Those lacking in essential elements: no consent, no object, no cause

(inexistentones) – essential formalities are not complied with ( ex: donation
propter nuptias – should conform to formalities of a donation to be valid )
i. Those w/c are absolutely simulated or fictitious – no cause

ii. Those which cause or object did not exist at the time of the
transaction – no cause/object
iii. Those whose object is outside the commerce of man – no object
iv. Those w/c contemplate an impossible service – no object
v. Those w/c intention of parties relative to principal object of the
contract cannot be ascertained
b. Prohibited by law
c. Those expressly prohibited or declared void by law - Contracts w/c violate any
legal provision, whether it amounts to a crime or not
d. Illegal/Illicit ones – Those whose cause, object or purpose is contrary to law,

morals, good customs, public order or public policy ;
Ex: Contract to sell marijuana
KINDS OF ILLEGAL CONTRACTS
PARI DELICTO DOCTRINE
• Both parties are guilty, no action against each other; those who come in equity
must come with clean hands; applies only to illegal contracts and not to inexistent
contracts; does not apply when a superior public policy intervenes
• EXCEPTION TO PARI DELICTO RULE – If purpose has not yet been accomplished
and If damage has not been caused to any 3rd person
OTHER EXCEPTIONS:
a. Payment of Usurious interest

b. payment of money or delivery of property for an illegal purpose, where the party
who paid or delivered repudiates the contract before the purpose has been
accomplished, or before any damage has been caused to a 3rdperson
c. payment of money or delivery of property made by an incapacitated person
d. agreement or contract which is not illegal perse and the prohibition is assigned
for the protection of the plaintiff
e. payment of any amount in excess of the maximum price of any article or
commodity fixed by law or regulation by competent authority
f. contract whereby a laborer undertakes to work longer than the maximum
number of hours fixed by law
g. one who lost in gambling because of fraudulent schemes practiced on him is
allowed to recover his losses (Art. 313 RPC)even if gambling is prohibited.
REQUISITES OF ILLEGAL CONTRACTS:
a. Contract is for an illegal purpose

b. Contract must be repudiated by any of the parties before purpose is
accomplished or damage is caused to 3rd parties
c. Court believes that public interest will be served by allowing recovery
(discretionary upon the court ) – based on remorse; illegality is accomplished
when parties entered into contract; before it takes effect– party w/c is
remorseful prevents it
EFFECTS OF ILLEGAL CONTRACTS
a. If one party is incapacitated, courts may allow recovery of money, property

delivered by incapacitated person in the interest of justice; pari delicto cannot apply because
1. estoppel in pais (by conduct) incapacitated person does not know what
he is entering into; unable to understand the consequences of his own
action
c. estoppel by silence
d. estoppel by acceptance of benefits
2. Technical estoppel
a. Estoppel by record
b. If agreement is not illegal per se but merely prohibited and
prohibition is designated for the protection of the plaintiff – may
recover what he has paid or delivered by virtue of public policy
c. Estoppel by judgment
d. Estoppel by laches

LACHES OR STALE DEMANDS MUTUAL RESTITUTION IN VOID CONTRACTS
• GENERAL RULE: parties should return to each other what they have given by virtue
of the void contract in case LACHES
• Failure or neglect, for an unreasonable and unexplained length of time to do that

which, by exercising due diligence, could or should have been done earlier; it is
negligence or omission to assert a right within reasonable time warranting a
presumption that the party entitled to assert it either has abandoned it or declined to
assert it
• ELEMENTS
• Where nullity arose from defect in essential elements
a. return object of contract and fruits
b. return price plus interest
• EXCEPTION:
No recovery can be had in cases where nullity of contract arose from illegality of
contract where parties are in pari delicto; except:
a. incapacitated– not obliged to return what he gave but may recover what
he has given 1.conduct on part of the defendant, or of one under whom
he claims, giving rise to the situation of which complaint is made and for
which the complaint seeks a remedy
b. other party is less guilty or not guilty
2. delay in asserting the complainant’s rights, the complainant having

knowledge or notice, of the defendant’s conduct and having been afforded the
opportunity to institute a suit
3. lack of knowledge or notice on the part of the defendant that the
complainant would assert the right on which he bases his suit
NATURAL OBLIGATIONS
• they are real obligations to which the law denies an action, but which the debtor may erform
voluntarily.
injury to the defendant in the event relief is accorded to the complainant, or the suit in not held
to be barred.
• It is patrimonial, and presupposes a prestation.

• The binding tie of these obligations is in the conscience of man, for under the law, they
do not have the necessary efficacy to give rise to an action.

LACHES PRESCRIPTION - Concerned with effect of delay Concerned with fact of delay Question
of inequity of permitting the claim to be enforced Question or matter of time
EXAMPLES OF NATURAL OBLIGATIONS ENUMERATED UNDER THE CIVIL CODE:
1. Performance after the civil obligation has prescribed

2. reimbursement of a third person for a debt that has prescribed
3. restitution by minor after annulment of contract
4. Delivery by minor of money or fungible thing in fulfillment of obligation
5. Performance after action to enforce civil obligation has failed
6. payment by heir of debt exceeding value of property inherited
7. payment of legacy after will have been declare
KINDS:
1. estoppel in pais (by conduct)
a. estoppel by silence
b. estoppel by acceptance of benefits
2. Technical estoppel
a. If a a. Estoppel by deed
b. Estoppel by record
c. Estoppel by judgment
d. Estoppel by laches
LACHES : Failure or neglect, for an unreasonable and unexplained length of time to do that
which, by exercising due diligence, could or should have been done earlier; it is negligence or
omission to assert a right within reasonable time warranting a presumption that the party
entitled to assert it either has abandoned it or declined to assert it
vii. Partnership and agency
A. PARTNERSHIP DEFINITION
By the contract of partnership two or more persons bind themselves to contribute

money, property, or industry to a common fund, with the intention of dividing the
profits among themselves. Two or more persons may also form a partnership for the
exercise of a profession (Art. 1767)
B. ELEMENTS
What are the characteristic or elements of the contract of partnership?
The contract of partnership is:

a. CONSENSUAL –because it is perfected by mere consent of the partners, although such
consent must be manifested in certain cases by the proper formalities.
b. NOMINATE – because it has a particular name under the Civil Code
c. BILATERAL/MULTILATERAL – because it gives rise to reciprocal obligations; because it is
entered into between two or more persons.
d. PRINCIPAL: because its existence does not depend on the life of another contract.
e. ONEROUS – because there is a valuable consideration; because certain contributions
have to be made.
f. PREPARATORY – because it is a means for entering into further contracts; in the sense
that after it has been entered into, other contracts essential in the carrying out of its
purposes can be entered into.
g. There must be a contribution of money, property, or industry to a common fund.
h. The object must be a lawful one.
i. There must be an intention of dividing the profit among the partners since the firm is for
common benefit or interest of the partners.
j. There must be the affectio societatis - the desire to formulate an ACTIVE union.
k. A new personality-that of the firm- must arise, distinct from the separate personality
of each of the members.
What are the essential features of partnership?

a. There must be a valid contract;
b. There must be mutual contribution of money property or industry to a common fund;
e. The parties must have capacity to enter into a contract;
f. The object must be lawful;
g. The purpose of the parties must be to obtain profits which shall be divided among
themselves;
h. The articles of co-partnership must not be kept secret among members.
What are the legal characteristics of partnerships?

a. Partnership derives its existence from the voluntary agreement of the members;
b. It has a juridical personality separate and distinct from the partners;
c. The partners are liable pro-rata for the contractual liabilities of the partnership;
d. there is mutual agency between the partners;
e. The partners are liable after exhaustion of partnership assets to the extent of their
personal property except the limited partners.
C. RULES TO DETERMINE EXISTENCE
What are the rules for determining the existence of a partnership?

They are:
1. Except in the case of a partnership by estoppels, persons who are not partners as to
each other are not partners as to third persons.

2. Co-ownership or co-possession does not of itself establish a partnership, whether such
co-owners or co-possessors do or do not share any profits made by the use of the
property
3. The sharing of gross returns does not of itself establish a partnership, whether or not
the persons sharing them have a joint or common right or interest in any property from
which the returns are derived;
4. The receipt by a person of a share of the profits of a business is prima facie evidence
that he is a partner in the business, but no such inference shall be drawn if such profits
were received in payment:
a. As a debt by installments or otherwise;
b. As wages of an employee or rent to a landlord;
c. An an annuity to a widow or representative of a deceased partner
d. As interest on a loan, though the amount of payment vary with the profits of the
business
e. As the consideration for the sale of a goodwill of a business or other property by
installments or otherwise. (Art. 1759)
D. HOW PARTNERSHIP IS FORMED
What are the formalities needed in a partnership?

The following:
a) For validity of the contract (among the parties) as well as enforceability, no form is
required as a general rule, regardless of the value of the contributions. Therefore, the
contract may even be oral. (Magalona v. Pesayco 59 Phil 153)
Exception: Whenever real properties or real rights in real properties are contributed --
regardless of the value – a public instrument is needed.
b) For effectivity of the partnership contract insofar an innocent third persons are
concerned, the same must be registered if real properties are involved.
In what form shall a partnership be constituted?

A partnership may be constituted in any form, hence, it may be oral or in writing; but
where immovable property or real rights are contributed thereto, the partnership
contract must be in a public instrument (Art. 1771)
What are the formalities needed for the creation of a partnership?

a) Personal Property Less than P3,000 (total) – may be oral
b) P3,000 or more – must be in a public instrument and registered in the Securities and
Exchange Commission. But even if this is not complied with, partnership is still valid and
possesses a distinct personality. Evidently, the requirements are merely for
administrative and licensing purposes.

c) Real Property – regardless of the value contributed, a public instrument is needed,
with an attached inventory; otherwise the partnership is VOID and has no juridical
personality even as between the parties. (Art 1773, Civil Code). Moreover, to be
effective against third parties, the partnership must also be registered in the Registry of
Property of the province where the real property contributed is found. After all, there is
an alienation here of a real right on real property.
d) Limited Partnership – must be registered as such in the Office of the Securities and
Exchange Commission; otherwise, it is not valid as a limited partnership. However, even
without such registration, it may still be considered a general partnership, and as such,
possesses juridical personality.
E. PARTNERSHIP TERM
How may the duration of the partnership be agreed upon?

a. Express – This has a definite period
b. Implied – Upon achievement of its purpose
When do the relationships of a partner begin which each other?

The relationship begins from the moment of the execution of the contract.
When does the partnership end?

It ends on the expiration of a fixed term or accomplishment of a particular undertaking.
Except that if it does end on this basis, it becomes a partnership at will.
What are the instances where it becomes a partnership at will?

a. There is no term, express or implied. Hence, there is an agreement that it will continue
to exist.
b. Partners or some of them who have acted habitually continues the business without or
liquidation of the partnership affairs.
F. UNIVERSAL VS. PARTICULAR; GENERAL VS. LIMITED
Classify partnerships? As to object –
1. Universal partnership which are of two kinds:

i. universal partnership of all present property
ii. universal partnership of profits
2. Particular Partnership
i.e. A partnership for the practice of a profession is a particular partnership
As to liability of the partners-

1. General partnership – where all the partners are general partners who are liable with
all their property after all partnership assets are exhausted
2. Limited partnership – where there is at least one general partner and at least one
limited partner, the limited partner being liable only to the extent of his contribution.
UNIVERSAL PARTNERSHIP:
Define a universal partnership of all present property:

A universal partnership of all present property is one in which the partners contribute
all the property which actually belongs to them to a common fund, with the intention
of dividing the same among themselves, as well as all the profits which they may
acquire therewith (Art. 1778)
What is a universal partnership of all present property?

In partnership of all present property, the contribution of the partners consists of:
a) All the properties actually belonging to the said partners;
b) The profits acquired with said properties.
Define a universal partnership of profits:

A universal partnership of profits comprises all that the partners may acquire by their
industry or work during the existence of the partnership (Art. 1780)
Distinguish universal partnership of all profits from universal partnership of all

present property.
The following are the distinctions between universal partnership of all profits and
universal partnership of all present property:
In universal partnership of all profits –
a) Only the usufruct of the properties of the partners becomes the common property
(owned by them and the partnership); naked ownership is retained by each of the
partners. (see also Jacson v.Blum, 1 Phil 4)
b) All profits acquired by the industry or work of the partners become common
property (regardless of whether or not said profits were obtained through the usufruct
contributed).
In universal partnership of all present property –
a) All the property actually belonging to the partners are contributed – and said
properties become common property (owned by all the partners and by the
partnership)

b) As a rule, aside from the contributed properties only the profits of said contributed
common property (not other profits).
Is future property included in universal partnership of all present property?

No. The following are the reasons why future (by inheritance, legacy, and donation)
property cannot be included in the stipulation regarding the universal partnership of all
present property:
a) First, as a rule, contracts regarding successional rights cannot be made.

b) Secondly, a partnership demands that the contributed things be determinate,
known, and certain.
c) Thirdly, a universal partnership of all present properties really implies a donation,
and it is well-known that generally, future property cannot be donated.
PARTICULAR PARTNERSHIP:
What is a Particular Partnership?

Is a partnership where for its object are determinate things for the use of their fruits, or
specific undertaking, or the exercise of a profession.
What are the objects of a particular partnership?

a. Determinate things – their use or fruits
b. Specific undertaking
c. Exercise of profession
How may the duration of the partnership be agreed upon?

a. Express – This has a definite period
b. Implied – Upon achievement of its purpose
When do the relationships of a partner begin which each other?

The relationship begins from the moment of the execution of the contract.
When does the partnership end?

It ends on the expiration of a fixed term or accomplishment of a particular undertaking.
Except that if it does end on this basis, it becomes a partnership at will.
What is a partnership at will?

It is a continued business by the habitual managers although the period has ended or
the purpose has been accomplished.
What are the instances where it becomes a partnership at will?

a. There is no term, express or implied. Hence, there is an agreement that it will continue
to exist.

b. Partners or some of them who have acted habitually continue the business without
liquidation of the partnership affairs.
What are the effects of a partnership at will?

The rights and duties of the partners remain the same as they where at such
termination.
GENERAL DISTINGUISHED FROM LIMITED PARTNERSHIP
As to liability of the partners-
1. General partnership – where all the partners are general partners who are liable with
all their property after all partnership assets are exhausted.
2. Limited partnership – where there is at least one general partner and at least one
limited partner, the limited partner being liable only to the extent of his contribution.
G. PARTNERSHIP BY ESTOPPEL
What is estoppel?
Estoppel is a bar which precludes a person from denying or asserting anything contrary
to that which has been established a truth by his own deed or representation, either
express or implied. Through estoppel, an admission or representation is rendered
conclusive upon the person making it and cannot be denied or disproved as against the
person relying thereon.
What is meant by partner by estoppel?

A partner by estoppel refers to a person who represents himself, or consents to another
or others representing him to any one, as a partner either in an existing partnership or
in one that is fictitious or apparent. (Art 1825, NCC)
When can a partnership by estoppel exist?

If all the actual partners consented to the representation, then the liability of the
person who represented himself to be a partner or who consented to such
representation and the actual partners is considered a partnership liability. This is a
case of partnership by estoppel. The person becomes an agent of the partnership and
his act or obligation that of the partnership.
How does a person not a partner become a partner by estoppel?

He becomes a partner by estoppels under any of the following cases:
a. He directly represents himself to anyone as a partner in an existing partnership

or in a non-existing partnership with one or more persons not actual partners; or

b. He indirectly represents himself by consenting to another representing himself as
a partner in an existing partnership or in a non-existing partnership (Art. 1825)
If a person is admitted as a partner into an existing partnership, shall he be liable for

all the obligations of the partnership incurred by the partnership before his
admission?
Yes, he shall be liable for all the obligations arising before his admission as though he
had been a partner when such obligations were incurred but his liability shall be
satisfied only out of partnership property, unless there is a stipulation to the contrary.
(Art. 1826)
For obligations of the partnership incurred after he was admitted into the
partnership, to what extent shall he be liable?
For these obligations, he shall be liable to the extent of his separate property after the
partnership assets have been exhausted.
When is an existing or actual partnership bound by the representation made by or in

behalf of a person (partner by estoppel) that he is a member of the partnership?
The only instance under our law when an existing partnership is bound by the
representation made by or in behalf of a partner by estoppel is when all of the Partners
had given their consent to such representation. It will be only then that a partnership
obligation shall result. (Art. 1825, NCC.) In such a case, any third person who, relying on
such representations, gave credit to the partnership, can hold the partnership as well as
all of the partners, including the partner by estoppel, liable in accordance with Art 1816
of the NCC. A good example of this would be those who, not being members of the
partnership, include their names in the firm name. (Art 1815, NCC)
What is the character of the liability of a partner by estoppel to persons who, relying
on the representation that the former is a partner in an actual or apparent
partnership, have given credit to such partnership?
The character of the liability of a partner by estoppel to a person who, relying on the
representation that the former is a partner in an actual or apparent partnership, have
given credit to such partnership shall depend upon whether a partnership obligation
has been created or not. If partnership obligation has been created, he is liable as
though he were an actual member of the partnership. However, when no partnership
obligation has been created, such as when there is actually no partnership or even
where there is, not all of the members thereof had given their consent to the
representation, he is merely liable pro rata with the other persons consenting to the
representation. (Art. 1825, NCC)
Does estoppel create a partnership?

It must be emphasized that estoppel does not create partnership as between alleged
partners. A contract, express or implied, is essential to the formation of a partnership.
The law considers them as partners and the association as a partners and the

association as a partnership only in so far as it is favorable to third persons by reason of
equitable principle of estoppel.
H. PARTNERSHIP VS. JOINT VENTURE
Distinguish partnership from joint-stock company

a. In a partnership the capital is not divided into shares while in a joint-stock
company the capital is divided into shares as in a corporation;
b. In a partnership the management as a general rule is vested in all the partners,

while in a joint-stock company the management is entrusted to a board of directors;
c. In a partnership the partner cannot assign his interest in the partnership to a

third person thereby making him a partner without the consent of the other partners,
while in a joint-stock company a member can transfer his share or shares to another at
any time without the consent of the other members;
d. A partnership is an association of persons while a joint-stock company is an

association of capital.
I. PROFESSIONAL PARTNERSHIP
Particular Partnership - i.e. A partnership for the practice of a profession is a particular

partnership
J. MANAGEMENT – Arts. 1800-1803
What are the rights and obligations of a managing partner, whose appointment is
contained in the articles of co-partnership?
a. The partner who has been appointed manager in the articles of co-partnership
may:
1. Execute all acts of administration, despite the opposition of his partners;

unless he should act in bad faith;
2. His power is irrevocable – meaning he can be removed from management
only for just and lawful cause and by vote of controlling interest;
3. He cannot execute acts of strict dominion without the consent of all the
other partners. (Art. 1800)
b. The partner who has been appointed managing partner after the constitution of
the partnership may:
1. Execute all acts of administration, despite the opposition of his partners,

unless he should act in bad faith;

2. His power is revocable – meaning he can be removed from management
at any time for any cause whatsoever.
3. He also cannot execute acts of strict dominion without the consent of all the
other partners. (Art. 1800)
What are the powers of two or more managing partners whose respective duties are
not specified?
If two or more partners have been appointed managing partners without specification
of their respective duties, or without a stipulation that one of them shall not act
without the consent of all the others, their powers are the following:
1. Each one may separately execute all acts of administration;

2. If one or more of the managing partners shall oppose the acts of others, then the
decision of the majority of the managing partners shall prevail;
3. In case of a tie, then the matter shall be decided by a vote of the controlling
interest; but
4. No one may execute acts of strict dominion without the consent of all the other
partners. (Art. 1801)
How shall management be exercised in case it is stipulated that none of the

managing partners shall act without the consent of the others?
1. The concurrence of all shall be necessary for the validity of any act;
2. The absence or disability of any of them cannot be alleged; unless there is
imminent danger or irreparable injury to the partnership. (Art. 1800)
Who shall manage the partnership in case no manner of management has been
agreed upon?
1. All the partners shall be considered agents of the partnership and whatever any
one of them may do alone, provided it is an act of administration shall bind the
partnership;
2. In case one or more oppose the act of one, it shall be settled by the vote of
majority of all the partners;
3. In case of tie, it shall be settled by the vote of controlling interest;
4. None of the partners without the consent of the others, may:
a. Make any important alteration in the immovable property of the

partnership, even if it may be useful to the partnership;
b. If the refusal or consent by the other partners is manifestly prejudicial to
the interest of the partnership, the court’s intervention may be
sought. (Art. 1803)
If appointment is made in the Articles of Partnership, is the power revocable or

irrevocable?
Power is irrevocable without just or lawful cause.

In removing the managing partner appointed in the Articles of Partnership, what is
the vote required?
(1) To remove him for JUST cause, the controlling partners (controlling financial interest)
should vote to OUST HIM. (Art. 1800, par.1)
(2) To remove him WITHOUT CAUSE, or FOR AN UNJUST CAUSE, there must be
UNANIMITY (including his own vote).
What is the extent of power of the managing partner so named in the Articles of
Partnership?
(1) If he acts in GOOD faith, he may do all acts of ADMINISTRATION (not ownership)
despite the opposition of his partners.
(2) If in BAD faith, he cannot (however, he is presumed to be acting in good faith;

moreover, if he really is in bad faith the controlling interest should remove him.)
If appointment is made other than in the Articles of Partnership is the power revocable
or irrevocable?
Power to act may be revoked at any time, with or without just cause.
What is the logic behind the rule stated above?

Such appointment is a mere delegation of power, revocable at any time. (11 Manresa
381).
What is the extent of power of such manager?

Extent of power: As long as he remains manager, he can perform all acts of
ADMINISTRATION, but of course, if the other people oppose and he persists, he can be
removed.
What are the powers of a managing partner?
A managing partner can be presumed to have all the incidental powers to carry out the
object of the partnership in the transaction of business, subject to the exception,
however, that when powers are specifically restricted, he cannot exercise the powers
expressly denied him. When the articles of association do not specify the powers of the
managing partner, he has, on principle, the powers of a general agent, and even more;
and when the object of the company is determined, the manager has all the powers
necessary for the attainment of such object.
What is the rule when there are two or more managers?

Specific Rules - Each may separately execute all acts of administration (unlimited
powers to administer).

What is the exception to the rule?
Except if any of the managers should oppose. (Here the decision of the MAJORITY shall
prevail.)
Who has the right to oppose?

The right to oppose is not given to non-managers because in appointing their other
partners as managers, they have stripped themselves of all participation in the
administration.
When must the other managers make the opposition?

Before the acts produce legal effects insofar as third persons are concerned. Reason –
for them to delay or for them to protest after third parties are affected would be unfair
to said third parties. Moreover, the acts of the firm would be unstable.
Suppose there is a tie, what is the rule?

The partners owning the CONTROLLING INTEREST prevails – provided they are also
managers.
What happens when there has been an effective opposition, but still the manager
goes ahead and execute the act opposed?
Opposition by one partner to the projected act by another is sufficient to prevent it;
and if the latter, ignoring such objection, goes ahead and executes the act, it shall be
void, not only as among the members but also as to third persons, who had knowledge,
or who could have known, of such opposition.
When will the act be valid despite opposition of other managers?

It will be valid with respect to the third person who contracted with a partner, if such
third person is not of the opposition, and the contract is one within the scope of the
administration of the partnership. The partner contracting is an agent of the
partnership and within the scope of his authority, his contract with an innocent third
person binds the principal.
What if there is a specification of duties among the managers?

If the separate duties of the managers are specified, such as when one is given charge
of sales and another of purchases, each one is considered as exclusive and sole
manager as to the acts within the sphere of his authority.
When must there be unanimity in the actuations of the managers?

In case it should have been agreed that none of the managing partners shall act
without the consent of the others, the concurrence of all shall be necessary for validity
of the acts, and the absence or disability of anyone of them cannot be alleged, unless
there is imminent danger of grave or irreparable injury to the partnership.
Suppose one the managers is absent or incapacitated, is unanimity still required?

Yes, for the absence or incapacity is no excuse.
What is the exception to the rule that absence or incapacity is no excuse?When there
is imminent danger of grave or irreparable injury to the partnership.
In joint management, who has the duty in securing the consent of the other partner?
In such case, the obligation to secure the consent of the other partner rests upon the
partner entering into the contract. It is not imposed upon the third person who enters
into the contract and who is not required to verify whether the partner entering into
the contract has previously obtained the consent of the others. It is presumed that such
consent has been given, unless the contrary has been previously manifested to the third
person.
What happens to a contract entered into by one partner made, not only without the
consent of the other but even against his will, if the third person acted in good faith
and the transaction refers to matters within the business of the partnership?
The contract cannot be annulled, without prejudice to the liability of the guilty partner.
What is the reason for the above stated rule?

The reason for this rule is the necessity of protecting third persons from fraud and
deceit, of which they can be easy victims. Furthermore, the requirement of the
previous approval by the other partner obviously refers to the execution of formal
contracts in writing, and not to routine transactions, such as ordinary purchases and
sales for a firm engaged in the business of buying and selling merchandise of all kinds,
naturally come within the scope of the general authority of the manager of a business.
What then is the duty of a third person dealing with a partnership requiring
unanimity in the actuations of its managers?
The rule that third persons are not required to inquire as to whether or not a partner
with whom he transacts has the consent of all the managers, for the presumption is
that he acts with due authority and can bind the partnership applies only when they
innocently deal with a partner apparently carrying on in the usual way the partnership
business. Because under Art. 1802, it is imperative that if unanimity is required it is
essential that there be unanimity; otherwise, the act shall not be valid, that is, the
partnership is not bound. It would be wise therefore if the third person could inquire
whether or not unanimity is required, and if so, if such unanimity is present. This is for
his own protection. Thus, it has been held that a sale by a partner of partnership assets
without the consent of the other managers is not valid.
II. RIGHTS AND OBLIGATIONS OF PARTNERS AMONG THEMSELVES
PROPERTY RIGHTS OF A PARTNER
What are the property rights of a partner?

a. His rights in specific partnership property;
b. His interest in the partnership; and
c. His rights to participate in the management. (Art. 1810)
As regards specific partnership property, what relationship exists between and among
the partners?
A partner is a co-owner with his partners of specific partnership property. (Art. 1811)
What are the incidents of this co-ownership?

They are:
a. A partner has an equal right with his partners to possess specific partnership property
for partnership purposes; subject to any agreement between the partners; but he has
no right to possess such property for any other purposes without the consent of his
partners;
b. A partner cannot assign his right to specific partnership property for his personal
purpose but he can assign it in connection with the assignment of the rights of all the
partners in the same property for partnership purpose.
c. A partners’ right in specific partnership property is not subject to attachment or
execution for his personal obligations, but can be attached or subject to execution for a
claim against the partnership.
d. When partnership property is attached for a partnership debt, the partners, or any of
them, or the representatives of a deceased partner, cannot claim any right under the
homestead or exemption laws.
e. A partner’s right in specific partnership property is not subject to legal support. (Art.
1811)
What is the nature of a partner’s interest in the partnership?

A partner’s interest in the partnership is his share in the profits and surplus. The
partner’s interest in the partnership is his personal property. (Art. 1812)
What are the rights of a partner in a specific partnership property?

(1) A partner has an equal right with is partners to possess specific partnership property
for partnership purposes; but he has no right to possess such property for any other
purpose without the consent of his partners;
(2) A partner’s right in specific partnership property is not assignable except in

connection with the assignment of rights of all the partners in the same property;
(Reason: It is hard to determine how much it exactly is until after liquidation)

(3) A partner’s right in a specific partnership property is not subject to attachment or
execution, except on a claim against the partnership. When partnership property is
attached for a partnership debt the partners, or any of them, or the representatives of a
deceased partner cannot claim any right under the homestead or exemption laws;
(Reason)
(4) A partner’s right in specific partnership property is not subject to legal support
under Art. 291.
What is the effect of this provision to the separate and distinct juridical personality of
the partnership?
This Article seems to be inconsistent with the idea of a separate juridical personality of
the partnership. The partnership, as a juridical person, owns every property in the
common patrimony. The social patrimony does not belong to the partners, but to the
partnership itself.
What is a partner’s interest in the assets of the partnership?

A partner’s interest in the partnership is his share in the profits and surplus.The
partner’s interest in the partnership is his personal property. (Art. 1812)
What is a partner’s interest in the assets of the partnership?

A partner has no individual property in any specific assets of the firm, but each
partner’s interest in the partnership property is his share in the surplus after
partnership debts are paid and partnership accounts have been settled. The interest of
one partner in the assets of a partnership does not entitle him to any particular portion
of such assets, but merely confers upon him a right to an accounting with other
members of the partnership, and when affairs of the partnership are settled, such
partner shall receive the share to which he is entitled.
A partner, however, subject to agreement between the partners, has an equal right
with his partners to possess specific partnership property for partnership purposes, but
has no right to possess such property for his personal or other purposes without the
other partner’s consent. One partner has no right to the exclusive possession and
control of specific partnership property as against the other partner, until a balance of
accounts is struck between him and his co-partner and the amount of his interest is
ascertained.
What constitutes a partner’s interest in the partnership?

The interest of a partner in partnership property and business is the net balance found
to be due him after payment of partnership debts and adjustment of partnership
accounts between himself and his co-partner. Such interest is “property” and is
susceptible of being seized under legal process, or of being sold and conveyed, as well
as of being made liable for his separate debts.

Is a partner’s interest in the partnership subject to attachment or execution for his
personal debts?
Yes, being his personal property, his interest in the partnership on due application to a
competent court by any judgment creditor may be charged for the payment of the
unsatisfied amount of the judgment debt with interest thereon. The court which issued
the charging order may even:
a. appoint a receiver of the debtor partner’s share of the profits, and any other
money due or to fall due to him in respect of the partnership;
b. make all other orders, directions, accounts and inquiries which the debtor
partner might have made, or which the circumstances of the case may
require. (Art. 1814)
May the interest so charged be redeemed and with what property shall it be
redeemed?
a. The interest charged may be redeemed at any time before foreclosure; or
b. In case of sale directed by the court may be purchased without causing a
dissolution.
1. With separate property, by any one or more of the partners; or

2. With partnership property, by any one or more of the partners with the consent
of all the partners whose interests are not so charged or sold. (Art. 1814)
What other right may a partner whose interest has been so charged avail of?
With respect to his interest in the partnership, he may avail himself of the exemption
laws, after partnership debts have been paid. (Art. 1814)
Can a partner assign his whole interest in the partnership to another without the
consent of the other partners?
Yes, because his interest in the partnership is his personal property. (Art. 1813)
Will the assignee become a partner?

No, unless consented to by the other partners. (Art. 1813) The assignor is still the
partner, with a right to demand accounting and settlement.
What are the effects of conveyance by a partner of his interest in the partnership?
If a partner conveys his whole interest in the partnership, either of two things may
happen:
1) The partnership may still remain; or

2) The partnership may be dissolved.
But such mere conveyance does not itself dissolve the firm; therefore, in general the
partnership remains.

In the absence of an agreement to that effect, the conveyance by a partner of his
whole interest in the partnership does not dissolve the partnership. (Art. 1813)
OBLIGATIONS OF PARTNERS TO THE PARTNERSHIP:
What are the specifics obligations of a partner?

a. Duty to contribute
b. Duty to credit the firm
c. Duty to pay damages caused by his fault
d. Obligation to account for and hold as trustee unauthorized profits
e. Obligation not to engage in another business
What are the rules of the partners regarding the duty to contribute ?
a. The contribution must be made at the time the partnership is entered into
unless a different period is stipulated.
b. No demand is needed to put the partner in default
c. The partner must exercise due diligence in preserving the property to be
contributed before he actually contributes the same.
d. A partner who promises to contribute to the partnership becomes a
debtor of the partnership.
What are the rules on the duty to deliver the fruits?

a. If property has been promised, the fruits thereof should also be given.
b. The fruits referred to are those arising from the time they should have been
delivered, without a need of any demand.
c. If a partner is in bad faith, he is liable not only for the fruits actually produced, but
also for those that could have been produced.
d. If money has been promised, interest and damages from the time he should have
complied with his obligation should be given.
e. No demand is needed to put the partner in default
f. It is delivery, actual or constructive that transfers ownership
What are the rules on the duty to warrant?

a. The warranty in case of eviction refers to specific and determinate things already
communicated.
b. There is eviction whenever by final judgment based on a right prior to the sale or an
act imputable to the partner, the partnership is deprived of the whole or a part of the
thing purchased.
When is a partner considered a debtor of the partnership?

A partner is considered a debtor of the partnership for whatever he may have promised
to contribute thereto. (Art. 1786)

What is the remedy against a partner who fails to contribute?
Action is one for collection because the defaulting partner is a debtor.
What are the obligations of a partner with respect to his promise to contribute
property?
They are:
a. To contribute the property at the beginning of the partnership or at the time

stipulated.
b. To answer for the warranty in case of eviction in the same cases and in the same
manner as the vendor is bound with respect to the vendee;
c. To be liable for the fruits thereof from the time the property should have been
delivered without the need of any demand. (Art. 1786)
How is appraisal made if the contribution is a property?

Firstly, as prescribed in the contract and in the absence thereof, by experts chosen by
partners and at the current price.
If the capital or part thereof which a partner is bound to contribute consists of goods,
how shall said goods be appraised?
The appraisal must be made in the manner prescribed in the contract of partnership. In
the absence of stipulation, it shall be made by experts chosen by the partners and
according to current prices. Any subsequent change thereof shall be for the account of
the partnership. (Art. 1787)
After the goods have been contributed by the partner, will the risk of subsequent
change in their value still be burdened by the latter?
No, it is shifted to the partnership.
What are the liabilities of the partner who has undertaken to contribute a sum of
money and fails to do so?
The partner becomes a debtor for the interest and damages from the time he should
have complied with his obligation, without necessity of demand. (Art. 1788)
What rule shall apply in the event a partner converts partnership money to his
personal use?
The partner shall be liable for the amount he may have taken from the partnership
coffers with interest and damages from the time he converted the amount to his own
use. (Art. 1788)
What are the consequences if an industrial partner, without consent of the other
partners, engages in another business? Or, May an industrial partner engage in
business for himself?
a. He can be excluded in the firm.

b. The remaining partners can avail of the benefits said industrial partner earned plus
damages.
*The capitalist partners have the right to exclude him from the firm with damages; or
*The capitalist partners can avail themselves of the benefits which the industrial
partner may have obtained with a right to damages (Art. 1789)
An industrial partner cannot engage in business for himself, unless the partnership
expressly permits him to do so. (Art. 1789)
What if there is no competition between the business of the partnership and the
industrial partner? or, Does this prohibition apply to a business the same as the
business of the partnership?
Still the industrial partner is liable because all his industry must be devoted to the
partnership. The prohibition extends to any kind of business be it the same or different
from the business of the partnership.
How much is to be contributed in the partnership?

The partners shall contribute equal shares to the capital of the partnership if there is no
stipulation to the contrary.
In case of imminent loss of the business of the partnership which partners are
required to contribute additional capital to save the business of the partnership?
The capitalist partners are under obligation to contribute additional capital to save the
venture unless there is an agreement to the contrary (Art. 1791)
What is the remedy in case a capitalist partner refuses to contribute additional fund
when he is bound to do so?
The capitalist partner who refuses to contribute additional capital to save the venture
shall be obliged to sell his interest to the other partners. (Art. 1791)
If a partner fails to contribute within a stipulated time what was promised, may
partnership contract be rescinded?
General rule, No, rescission is not the proper remedy; the remedy should collect what is
owing. However if the defaulting partner is already dead, rescission is proper.
Which partner is not bound to contribute additional fund despite imminent loss of
the business of the partnership?
The industrial partner is not bound to contribute additional fund because having
contributed his entire industry he has nothing more to contribute. But if he is partly
industrial and capitalist partner, as a capitalist partner he is bound to contribute
additional fund unless there is an agreement to the contrary. (Art. 1791)
What are the rules when there exists a credit to the firm and payment is made to a
partner who is also a creditor of the same debtor?

a. If the managing partner gives receipt to the firm, it is the firm’s credit that is
extinguished.
b. If managing partners gives receipt for his debt, amount collection shall be applied in
proportion.
c. By way of exception, of the creditor applies by way of application provided the debt
to the partner is more onerous to the debtor.
What are the requisites if a debt is collected where the debtor owes both a partner in
his personal capacity and the partnership?
a. Two debts from the same debtor
b. Both debts are due and demandable
c. Collecting partner is a managing partner, if not there is a basis for suspicion that the
partner is acting for his own benefit. Also, he is in a position to give preference to his
credit.
What is the obligation of a partner who has received in whole or in part, his share of a
partnership credit when the other partners have not collected their share and the
partnership debtor thereafter becomes insolvent?
The partner who has collected his share must bring to the partnership capital what he
received even though he may have given a receipt for his share only. This rule applies
whether the partner who receives his share is authorized to manage or not. (Art. 1793)
If the partnership suffers loss or damage due to the fault or negligence of a partner,
who shall be responsible?
It is the very partner who by his fault or negligence caused loss or damage to the
partnership. (Art. 1794)
Can the partner who is responsible for the damage compensate them with the profits
and benefits which he may have earned from the partnership by his industry?
No. But the courts may equitably reduce his responsibility if through his extraordinary
efforts in other activities of the partnership, profits may have been realized. (Art. 1794)
Why are damages not offset by benefits?

a. Partner has a duty to secure benefits, duty also not to be at fault.
b. Since it is a duty, compensation takes place presuppose 2 persons who are
reciprocally liable of each other.
III. OBLIGATIONS OF PARTNERSHIP/PARTNERS TO THIRD PERSONS
What is the rule regarding the liability of the partners for the contractual obligations
incurred by the partnership? Or, How are partners including industrial ones liable for
contractual obligations of the partnership?
All the partners, including the industrial partners, are liable to creditors of the
partnership for the obligations contracted in the name and for the account of the

partnership. The debts and obligations of the partnership are, in substance, also the
debts and obligations of each individual member of the firm. The liability to debtor
(partners) is pro rata and subsidiary with all their property for contractual obligations of
the partnership. (Art. 1816)
What is meant by the term “pro rata” in the distribution of the partnership liability
among the partners?
Pro rata, as used in the law, must be understood to mean equally or jointly and not
proportionately which is its literal meaning because pro-rating is based on the numbers
of partners and not on the amount of their contributions to the common fund, subject
to adjustment among the partners.
The fact that a partner has left the country and the payment of his share of the liability
cannot be enforced (Co-Pitco v. Yulo, 8 Phil 544.); or his liability was condoned by the
creditor (Island Sales, Inc. v. United Pioneers Gen. Construction Co., 65 SCRA 554.)
cannot increase the liability of the other partners.Pro-rata liability here, does not mean
proportionate to the partner’s contribution but is understood to mean equally divided
among the partners.
What is meant by the subsidiary liability of the partners with regards to the
partnership debts and obligations to third persons?
The liability of the partners to the creditors of the partnership is subsidiary because
they become liable only after all the partnership assets have been exhausted, unless a
particular partner assumes a separate obligation to perform a partnership contract or
make himself solidary liable on a partnership contract. It means that partnership assts
first be exhausted for the payment of partnership obligations, before the partners shall
become liable with their personal property.
How do you reconcile the exception of an industrial partner from loss and his pro-rate
liability for partnership contractual obligations?
The exception of an industrial partner from loss is applicable only among the partners
themselves, but the industrial partner is not exempt from partnership liability to third
party creditors. The industrial partner is liable for his pro-rate share to the extent of his
personal property after partnership assts have been exhausted. But the industrial
partner can seek reimbursement for what he has paid from the other partners, for
among themselves he shall be exempted from loss.
When is a partnership contractual obligation incurred?

A partnership contractual obligation arises from a contract which is entered into in the
name and for the account of the partnership, for apparently carrying on the ordinary
business of the partnership, by a partner authorized by the partnership. (Art. 1818)
What is the effect of a stipulation among the partners contrary to the pro-rata and
subsidiary liability of the partners?

Such stipulation is valid and enforceable among the partners, but void and of no effect
in so far as it affects the rights of third party creditors.
Is an industrial partner exempted from liability to third persons for the debts of the
partnership?
No. The exemption of the industrial partner to pay losses relates exclusively to the
settlement of the partnership affairs among the partners themselves and has nothing to
do with the liabilities of the partners to third persons. An industrial partner therefore is
not exempted from liability to third persons for the debts of the partnership. Neither on
principle nor on authority can the industrial partner be relieved from liability to third
persons for the debts of the partnership (Compania Maritima v. Munoz, 9 Phil. 326)
In the absence of any agreement to the contrary, who shall act as agent of the
partnership?
Every partner is an agent of the partnership for the purpose of its business. (Art.1818)
What is the mutual agency rule?

Art 1818 provides for the mutual agency rule which states that, “every partner is an
agent of the partnership for the purpose of its business, and the act of every partner,
including the execution in the partnership name of any instrument, for apparently
carrying on in the usual way the business of the partnership of which he is a member
binds the partnership, unless the partner so acting has in fact no authority to act for the
partnership in the particular matter, and the person with whom he is dealing has
knowledge of the fact that he has no such authority.”
Should a third person inquire on the restrictions imposed by the partnership upon a
partner before dealing with the partnership through the said partner?
No. Third persons are not bound to inquire into the existence of the restriction but may
rely on the presumption that a partner may bind the partnership (Litton v. Hill & Coron,
67 Phil 509). However, no act of partner in contravention of a restriction or authority
shall bind the partnership to persons having knowledge of the restriction (Art 1818, last
par.)
When can a partner bind the partnership? A partner binds the partnership when the
following requisites are present:
(a) When he is expressly authorized or impliedly authorized;

(b) When he acts in behalf and in the name of the partnership.
What are the instances of implied authorization of a partner to bind the partnership?
The following:
(a) When the other partners do not object, although they have knowledge of the act;

(b) When the act is for “apparently carrying on in the usual way the business of the
partnership.” (This is binding on the binding on the firm even if the partner was not
authorized, provided that the third party is in good faith)
When will the act of the partner not bind the partnership?
a) When, although for “apparently carrying the usual way the business of the
partnership,” still the partner has in fact no authority and the 3 rd persons know that the
partner has no authority.
b) When the act is not for apparently carrying on in the usual way of the
partnership and the partner has no authority.
How is partnership tort committed?

A partnership tort is committed in any of the following ways:
a. Where, by any wrongful act or omission of any partner acting in the ordinary course of
the business of the partnership or with authority of his co-partners, loss or injury is
caused to any person, not being a partner in the partnership;
b. Where one partner acting within the scope of his apparent authority receives money or
property of a third person and misapplies it; or
c. Where the partnership in the course of its business receives money or property of a
third person and the money or property so received is misapplied by any partner while
it is in the custody of the partnership. (Art. 1822; Art. 1823)
Where, by any wrongful act or omission of any partner acting in the ordinary course of
the business of the partnership or with the authority of his co-partners, loss or injury is
caused to any person, not being a partner in the partnership, or any penalty incurred,
the partnership is liable therefor to the same extent as the partner so acting or omitting
to act. (Art 1822 NCC)
Who shall be charged liable for partnership tort?

All partners are liable solidarily with the partnership for any penalty or damage arising
from a partnership tort. (Art. 1824)
Can the partnership be held liable for the wrongful act or omission of a partner even
though the other partners did not participate in such act or omission?
The law expressly provides that the partnership is liable for the wrongful act or
omission of any partner acting in the ordinary course of the business of the partnership
if loss or injury results thereby. This rule remains true even though the other partners
did not participate in or ratify, or had no knowledge of the act or omission.
What are the requisites for liability under Article 1822?

The following are the requisites for liability under Article 1822:
1) The partner must be guilty of a wrongful act or omission; and

2) He must be acting in the ordinary course of business or with the authority of his co-
partners even if the act is not connected with the business.
What are the requisites prescribe by law in order that a partnership may be held
liable to a third person for the act of one of the partners?
It must be observed that the act of one of the partners for which a partnership may be
held liable, may constitute either a contractual obligation (Art 1816, NCC) or an
obligation arising from a criminal offense or a quasi-delict. (Arts 1822, 1823, 1824,
NCC.)
In the case of a contractual obligation, the following requisites must concur:
1) the contract must be entered into in the name and for the account of the
partnership and under its signature;
2) the partner must be authorized to act for the partnership. (Art 1816, NCC)
In the case of an obligation arising from a criminal offense or a quasi-delict, the only
requisite prescribed by the law is that the act must be performed b y a partner inn the
ordinary course of the business of the partnership with the authority of his co-partners.
(Art 1822, NCC)
When can the firm and the other partners not be held liable?
a) If the wrongful act or omission was not done within the scope of the partnership
business and for its benefit or with the authority of the co-partners.
b) If the act or omission was not wrongful
c) If the act or omission, although wrongful, did not make the partner concerned liable
himself.
d) If the wrongful act or omission was committed after the firm had been dissolved and
same was not in connection with the process of winding up.
Based on the principle of mutual agency, is the partnership liable for torts committed
by a partner?
Based in the said principle, the partnership or every member of a partnership is liable
for torts committed by one of the members acting in the scope of the firm business,
although they do not participate in, ratify or have knowledge of such torts. Such liability
is not dependent on the personal wrong of the individual member of the partnership
against which the liability is asserted.
What is the test to determine whether or not the other members of a partnership are
liable as a joint tort-feasors together with the guilty partner?
The test of the liability is based on a determination of the question whether the wrong
was committed in behalf of and within the reasonable scope of business of the
partnership. If it was so committed, the partners are liable as joint tort-feasor.

Can the partnership be still held liable for the wrongful act of one of its partner even
if the latter acted outside the agency or common business of the partnership?
If the injury results from a wanton or willful act of one of the parties committed outside
the agency or common business, then the person doing the act and causing the injury is
alone responsible, unless the act which constituted the tort was authorized by the
members of the partnership or subsequently ratified by them, the ac t itself having
been done in their behalf and interest. (See 40 Am. Jur 261-262; Iron v. Sauve, 27 Wash
(2nd) 562)
Art 1823 provides that the partnership is bound to make good the loss:
1) Where one of the partner acting within the scope of his apparent authority receives
money or property of a third person and misapplies it;
2) Where the partnership in the course of its business receives money or property of a
third person and the money or property so received is misapplied by any partner while
it is in the custody of the partnership.
Why does the law provide for solidary liability in cases falling under Art 1822 and
1823?
The obligation of partners to third persons is solidary because the law protects the
latter, who in good faith relied upon the authority of a partner, whether such authority
is real or apparent. (Munasque v CA 139 SCRA 533)
IV. DISSOLUTION – Art. 1830
What are the three final stages of a partnership?

The three final stages of a partnership are:
(1) dissolution;
(2) winding up; and
(3) termination.
The dissolution of a partnership is the change in the relation of the partners caused by
any partner ceasing to be associated in the carrying on of the business. (Art 1828, NCC)
The winding up refers to the process of liquidating partnership affairs. Termination, in
point of time, refers to that moment when partnership affairs are wound up. The
partnership, although dissolved continue to exist and its legal personality is retained at
which time it completes the winding-up of its affairs, including the partitioning and
distribution of the net partnership assets to the partners.
Define dissolution of partnership.

Dissolution of a partnership is the change in the relation of the partners caused by any
partner ceasing to be associated in the carrying on the business of the partnership (Art.
1828)

Dissolution is the change in the relation of the partners caused by any partners ceasing
to be associated in the carrying on of the business. (Art 1828) It is that point in time
when the partners cease to carry on the business together. It represents the demise of
a partnership. (68 CJS 842)
What is winding up?

Winding up is the process of settling the business or partnership affairs after
dissolution.
What is termination?
Termination is that point in time when all partnership affairs are completely wound up
and finally settled. It signifies the end of the partnership life.
What is the principal significance of dissolution?

The principal significance of dissolution is that, thereafter, no new partnership business
should be undertaken, but affairs should be liquidated and distribution made to those
entitled to the partners’ interest. (Testate Estate of Mota v. Serra, 47 Phil 464)
Is the partnership terminated upon dissolution? Or, Does dissolution terminate the
partnership?
The dissolution of a partnership must not be understood to mean its extinguishment.
The partnership continues until the winding up is completed. Thus dissolution refers to
the change in partnership relation and not the actual cessation of the partnership
business.
No. On dissolution, the partnership is note terminated. The partnership continues to

exist for the purpose of winding up of partnership affairs. (Art. 1829)
What are the causes of dissolution of a partnership?

Dissolution is caused:
1) Without violation of the agreement between the partners:

(a) By the termination of the definite term or particular undertaking specified in the
agreement;
(b) By the express will of any partner, who must act in good faith, when no definite
term or particular undertaking is specified;
(c) By the express will of all the partner who have not assigned their interests or
suffered them to be charged for their separate debts either before or after the
termination of any specified term or particular undertaking;
(d) By the expulsion of any partner from the business bona fide in accordance with
such a power conferred by the agreement between the partners.

2) In contravention of the agreement between the partners where the circumstances do
not permit dissolution under any other provision of this article, by the express will of
any partner at any time.
3) By any event which makes it unlawful for the business of the partnership to be carried
on or for the members to carry it on in partnership.
4) When a specific thing, which a partner had promised to contribute to the partnership,
perishes before the delivery, in any case by the loss of the thing, when the partner who
contributed it having reserved the ownership thereof, has only transferred to the
partnership the use or enjoyment of the same; but the partnership shall not be
dissolved by the loss of the thing when it occurs after the partnership has acquired the
ownership thereof:
5) By the death of any partner;
6) By the insolvency of any partner or of the partnership;
7) By civil interdiction of any partner;
8) By the decree of court under the following article (Art. 1830)
Do the rights and powers of the partners and the existence of the partnership
terminate upon dissolution?
The term “dissolution” is thus descriptive of that change in the partnership relation
which ultimately culminates in its termination. Dissolution is not in itself a termination
of the partnership or of the rights and powers of the partners, for many of these persist
during the winding up process which follows dissolution. (40 Am Jur. 291.)
What is the effect of dissolution of the partnership?

The dissolution of the partnership affects only future obligations of the business, and as
to past transactions the partnership continues until it satisfies all its pre-existing
obligations. Dissolution of partnership does not abrogate its contracts, which continue
until performed or otherwise become operative. Dissolution has no effect on debts due
from the partnership to third parties except that partners may not act for each other
any further than may joint debtors.
LIMITED PARTNERSHIP
A. DEFINITION
1. Define a Limited partnership?

A limited partnership is one formed by at least one general partner and one limited
partner, but the limited partner as such shall not be bound by the obligations of the
partnership beyond his capital contribution. (Art. 1843)
2. What are the characteristic features of a limited partnership?
They are the following:

1. A limited partnership is formed by compliance with the statutory requirements;

2. There should be one or more general partners who manage the business and are liable
after partnership assets have been exhausted to the extent of their personal property
for obligations of the partnership;
3. There should be one or more limited partners who contribute to its capital, share in the
profits, but do not take part in management and are not liable for the obligations of the
partnership to the extent of their personal property.
4. The partnership debts are satisfied first form the partnership assets and subsidiarily
from the personal property of the general partners.
B. HOW LIMITED PARTNERSHIP IS FORMED/AMENDED

What are the requirements to form a limited partnership?
They are as follows:
1. The partners must sign and swear to a certificate which shall state:
a. The name of the partnership, adding thereto the word “Limited”;
b. The character of the business;
c. The location of the principal place of business;
d. The name and place of residence of each member; general and limited partners being
respectively designated;
e. the term for which the partnership is to exist
f. The amount of cash and a description of and the agreed value of the other property
contributed by each limited partner;
g. The additional contributions, if any, to be made by each limited partner and the times
at which or events on the happening of which they shall be made;
h. The time, if agreed upon, when the contribution of each limited partner is to be
returned.
i. the share of the profits or the other compensation by way of income which each of the
limited partner shall receive by reason of his compensation;
j. the right, if given, of a limited partner to substitute an assignee as contributor in his
place, and the terms and conditions of the substitution.
k. The right, if given, of the partners to admit additional limited partner;
l. the right, if given, of one or more of the limited partners, as to contributions or as
compensation by way of income, and the nature of such priority;
m. The right, if given, of the remaining general partner or partners to continue the
business on the death, civil interdiction, insanity or insolvency of a general partner; and
n. The right, if given, of a limited partner to demand and receive property other than cash
in return for his contribution.
2. Filing for record the certificate in the office of the Securities and Exchange Commission.
(Art. 1844)
Must the certificate of limited partnership contain all the requisites enumerated
above?

Not necessarily. What is required is substantial compliance in good faith with the above
requirements. (Art. 1844)
What is the effect of non-compliance with the statutory provisions governing the
formation of a limited partnership?
The partnership formed is not a limited partnership but shall be considered a general
partnership where all the partners are personally liable.
When shall the certificate be amended?

Any change in the partnership which does not bring about a dissolution will cause the
amendment of the certificate as in the following cases:
1. The name of the partnership is changed;

2. A change in the amount or character of the contribution of any limited partner;
3. A persons is substituted as a limited partner;
4. An additional limited partner is admitted;
5. A new general partner is admitted;
6. A general partner retires, dies, becomes insolvent or insane, or is sentenced to a civil
interdiction and the business is continued under an agreement to that effect stated in
the certificate, or with the consent of all the partners;
7. The character of the business is changed;
8. There is a false or erroneous statement in the certificate;
9. The time stated in the certificate for the dissolution of the partnership or for the return
of the contribution have been changed;
10. A time is fixed for the dissolution or for the return of a contribution, where originally no
time has been specified in the certificate. (Art. 1864)
What are the requisites for the amendment of the certificate?

They are:
1. The amended certificate must contain the provisions required of any certificate of
limited partnership.
2. The amended certificate must set forth clearly the change or changes made.
3. The amended certificate must be signed and sworn to by all the partners including the
substituted limited partner or the new limited partner or the new general partner as
the case may be.
4. The amended certificate must be filed with the Securities and Exchange commission.
(Art. 1865)
In case of cancellation of the certificate who shall sign such?

The writing to cancel the certificate must be signed by all the partners. (Art. 1865).
Who shall execute the writing to either amend or cancel the certificate?
It shall be the partner designated in the certificate. (Art. 1865)

What is the procedure to be taken by a partner who desires the cancellation or
amendment of a certificate in the event the partner designated in the partnership to
execute the writing refuse to do so?
The person desiring the cancellation or the amendment of the certificate may petition
the court to order such cancellation or amendment thereof. The Court then finding
that the petitioner has the right to do so, shall order the Securities and Exchange
Commission to record the cancellation or amendment of the certificate and in the latter
case will order to be filed with the Securities and Exchange Commission a certified copy
of the decree setting for the amendment. (Art. 1865)
When shall the certificate be considered amended or cancelled?

The certificate is considered amended or cancelled upon filing for record with the
Securities and Exchange Commission the following:
1. The writing either to amend or cancel the certificate signed by all the partners.
2. A certified copy of the order of the court in case the amendment was ordered by the
court. (Art. 1865)
C. RIGHTS AND OBLIGATIONS OF A LIMITED PARTNER
What are the rights of a purely limited partner in a limited partnership?

A limited partner has the same rights as a general partner to:
1. Have the partnership books kept at the principal place of business of the partnership;
2. Have the right to inspect and copy any of them at a reasonable hour on a business day;
3. Have on demand true and full information of all things affecting the partnership;
4. have a formal accounting of partnership affairs whenever circumstances render it just
and reasonable;
5. Have dissolution and winding up by decree of court;
6. And as a limited partner, he shall have the right to receive s share in the profits or other
compensation by way of income stipulated for in the certificate provided, that after
such payment is made whether from the property of the partnership or that of a
general partner, the partnership assets are in excess of all liabilities of the partnership,
except liabilities to limited partners on account of their contributions and to general
partners;
7. To the return of his contribution as stipulated in the certificate; (Art. 1851)
What are the similar rights of a limited partner to that of a general partner?
These are:
1. Right to have partnership books kept at principal place of business

2. Right to inspect/copy books at reasonable hour
3. Right to have on demand true and full info of all things affecting partnership

4. Right to have formal account of partnership affairs whenever circumstances render it just
and reasonable
5. Right to ask for dissolution and winding up by decree of court
6. Right to receive share of profits/other compensation by way of income
7. Right to receive return of contributions provided the partnership assets are in excess of
all its liabilities
What are other rights available to a limited partner?He has also the right to have
dissolution and winding up by decree of the court.
When shall a limited partner be held liable as a general partner?

If the limited partner, in addition to the existence of his rights and powers as a limited
partner, takes part in the control of the business, meaning takes part in management,
he shall be liable as a general partner (Art. 1848)
What are the rights and liabilities of a person who is both a general and limited
partner in the same partnership?
He has the same rights and powers and subject to the same restrictions of a general
partner, as though the partnership is not a limited partnership, hence, he is liable with
his separate property for the obligations of the partnership. His only right as a limited
partner is as regards his contribution. As regards his contribution he is entitled to the
same right like the other limited partners to have a return of his contribution as though
he was purely limited partner. (Art. 1853)
What are the liabilities of a limited partner to the partnership?

A limited partner is:
1. Liable for the difference between what he has actually contributed and what he is
supposed to contribute as stated in the certificate;
2. Liable for any unpaid contribution which he agreed in the certificate to make at a future
time; (Art. 1858)
AGENCY:
By the contract of agency a person binds himself to render some service or to do something in
representation or on behalf of another, with the consent or authority of the latter. (Art. 1868)
What are the characteristics of the contract of agency?

They are:
1. Consensual – because the contract is perfect by mere consent.
2. Principal – because it can stand alone, it does not need another contract for it to
exist.
3. Nominate – because it has a specific name under the Civil Code

4. Unilateral (it is without compensation) – because it creates obligations only on
one party – the agent.
5. Bilateral (if it is with compensation) – because it creates a reciprocal rights and
obligations.
6. Preparatory – because it is a means for entering into further contracts.
Distinguish Agency from Partnership.

An agent does not act for himself but for his principal, while a partner acts for himself and for
the other partners and for the partnership.
Distinguish Agency from Loan

An agent may be given funds by the principal to advance the latter’s business, while a borrower
is given money for purposes of his own, and he must generally return it, whether or not his own
business is successful. A lot however depends on the intent of the parties.
Distinguish Agency from Negotiorum Gestio.

In both there is representation. But in Agency the representation is conferred while in
Negotioum Gestio the Negotiorum Gestor acts not only without the authority of the owner but
also without his knowledge. The agent acts according to the express will of the principal, while
the gestor acts according to the presumed will of the owner. Agency is a contract while
Negotiorum Gestio is a quasi-contract.
Distinguish Agency from Lease of Service.

The agent represents the principal, the lessor of service does not represent his employer. The
agent exercises discretionary powers, the employee or lessor of service exercises ministerial
powers.
Distinguish Agency to Sell from Sale.

In agency to sell ownership to the goods is not transferred to the agent, while in sale ownership
is transferred to the buyer. The agent accounts for the price to the principal, while the buyer is
directly responsible for the price.
How is agency created?

Agency may be:
1. Express – the agent is given actual authority by the principal either orally or in
writing.
2. Implied:
a. from the acts of the principal; or
b. from his silence or lack of action; or
c. his failure to repudiate the agency knowing that another person is acting
on his behalf without authority. (Art. 1869)
In what form shall the contract of agency be entered into?

As a general rule, agency may be oral, unless the law requires a specific form. (Art. 1869)

In what form shall the agent accept the agency?
Acceptance by the agent may be:
1. Express; or
2. Implied from:
a. his acts which carry out the agency; or
b. his silence or inaction according to the circumstances. (Art. 1870)
What are the way whereby the principal may announce the appointment of an agent?
The announcement may be either:
1. By special information – that is the principal especially informs another that he
has given a power of attorney to a third person, the latter thereby becomes a duly authorized
agent with respect to the person who received the special information; or
2. By public advertisement – in which case the agent is considered as such with
regards to any person. (Art. 1873)
In what form shall a contract of agency be entered into?

s a general rule agency can be oral or written, but where the agency is for the sale of a piece of
land or any interest therein, the authority of the agent should be in writing otherwise the sale is
void. (Art. 1874)
As to scope of business how is agency classified?

Agency is classified into:
1. General agency; and
2. Special agency. (Art. 1876)
What is general agency?

The agency is general when it comprises all the business of the principal.
When is agency special?

Agency is special when it covers only one or more specific transactions. (Art. 1876).
As to the extent of the power conferred how is agency classified?

It is classified into:
1. Agency couched in general terms; and
2. Agency couched in specific terms.
What acts may the agent perform if his agency is couched in general terms?
An agency couched in general terms comprise only acts of administration, even if the principal
should state that he withholds no power of that the agent may execute such acts as he may
consider appropriate, or even though the agency should authorized a general and unlimited
management. (Art. 1877).
State the acts for which a special power of attorney is needed.

Special powers of attorney are needed in the following cases:

1. To make such payments as are not usually considered as acts of administration;
2. To effect novations which put an end to obligations already in existence at the
time the agency was constituted;
3. To compromise, to submit questions to arbitration, to renounce the right to
appeal from a judgment, to waive objections to the venue of an action or
to abandon a prescription already acquired.
4. To waive any obligation gratuitously.
5. To enter into any contract by which ownership of an immovable is transmitted or
acquired either gratuitously or for a valuable consideration;
6. To make gifts, except customary ones for charity or those made to employees in
the business managed by the agent;
7. To loan or borrow money, unless the latter act be urgent and indispensable for
the preservation of the things which are under administration.
8. To lease any real property to another person for more than one year.
9. To bind the principal to render some service without compensation;
10. To bind the principal in a contract of partnership;
11. To obligate the principal as a guarantor or surety;
12. To create or convey real rights over immovable property;
13. To accept ore repudiate an inheritance;
14. To ratify or recognize obligations contracted before the agency;
15. Any other act of strict dominion (Art. 1878)
If an agent is given a special power to sell the property belonging to his principal has he also
the same power to mortgage the same?
No. A special power to sell excludes the power to mortgage; and a special power to mortgage
does not include the power to sell. (Art. 1879)
Does a special power to compromise imply the power to submit to arbitration?

No. A special power to compromise does not authorize submission to arbitration. (Art. 1880)
In compromise it is the agent who agrees to some concessions but in arbitration it is a third
person who acts as arbitrator. While it is true that the principal may have trust in the agent’s
judgment in the compromise, he may have not trust in third person who the agent may have
trusted.
What are the requisites to be followed so that the principal will be bound to third persons
with whom the agent has contracted?
They are:
1. The agent must act within the scope of his authority
2. The agent must act in the name or on behalf of the principal.
What are the effects if the agent acts in his name?

1. The principal has no right of action against the persons with whom the agent has
contracted;
2. The third persons likewise have no right of action against the principal;

3. The agent is the only one directly bound in favor of the third persons with whom
he has contracted, as if the transaction were his own, except when the
contract involves things belonging to the principal. (Art. 1893)
4. The principal has a right to demand from the agent damages for his failure to
comply with the agency. (Art. 1884)
What are the obligations of the agent?

They are the following:
1. To carry out the agency;
2. To answer for the damages which through his nonperformance the principal may
suffer;
3. To finish the business already begun on the death of the principal, should delay
entail any danger. (Art. 1884)
4. To advance the necessary funds should there be a stipulation to do so; (Art.
1886)
5. To act in accordance with the instructions of the principal . (Art. 1887)
6. Not to carry out the agency if its execution would manifestly result in loss or
damage to the principal (Art. 1888)
7. To answer for damages to the principal should he prefer in case of conflict, his
own interests to those of the principal (Art. 1889)
8. To render an account of his transactions and to deliver to the principal whatever
he may have received by virtue of the agency. (Art. 1891)
9. To pay interest on funds he has applied to his own use. (Art. 1896)
10. To answer for his fraud or negligence. (Art. 1909)
Is the principal bound by the acts of the agent which are within the scope of his authority but
in violation of the instructions of the principal?
The principal is bound so long as the agent’s acts are within the scope of his authority, because
a third persons dealing with the agent is only bound to investigate the authority of the agent
but is not duty bound to investigate the instructions of the principal.. The instructions concern
only the agent and the principal, hence if the agent violates said instructions he will be liable to
the principal for any loss or damage resulting therefrom. (Art. 1887)
In case an agent has been empowered to borrow money, can he himself be the lender?
Yes, he can be the lender but at the current rate of interest. There is no prejudice in this case
upon the principal since the same rate of interest is to be paid whoever is the lender, be the
agent or any other person (Art. 1890)
If the agent has been authorized to lend money at interest, can the agent himself be the
borrower?
No, unless there is consent from the principal on the ground that while the agent maybe a good
lender he may not be a good borrower. (Art. 1890)
When does an agent who acts as such incur personal liability?

The agent who acts as such incurs personal liability:
1. When the agent expressly binds himself; and
2. When the agent exceeds his authority. (Art. 1897)
Who shall be bound by the contract entered into by an agent who acts in the name of the
principal and within the scope of his authority?
It is the principal. The agent has no liability.
In case the agent acts in the name of the principal but in excess of his authority and the
principal does not ratify the contract, can the third party hold the agent personally liable?
The third party can hold the agent personally liable, but if the third party is aware of the limits
of the powers of the agent, the contract shall be void. As a rule the agent is not bound unless
the agent undertakes to secure the principal’s ratification. (Art. 1898)
As to third persons when is an act of an agent deemed to be within the scope of his
authority?
So far as third persons are concerned, an act is deemed to have been performed within the
scope of the agent’s authority, if such act is within the power of attorney, as written, even if the
agent has in fact exceeded the limits of his authority according to an understanding between
the principal and the agent. (Art. 1900)
Who is a commission agent?

A commission agent is one who is authorized to buy or sell for the principal personal property
and for which purpose said personal property is placed in his possession.
What is the obligation of the commission agent who handles goods of the same kind and
mark belonging to different owners?
The commission agent shall distinguish them by countermarks and designate the merchandise
respectively belonging to each principal. (Art. 1904)
Can the commission agent sell on credit?

The commission agent cannot sell on credit without the express or implied consent of the
principal (Art. 1905)
What is the liability of the commission agent who sells on credit without the express or
implied consent of the principal?
1. He is liable to the principal for the cash price of the goods’
2. But the commission agent shall be entitled to the interest or benefit, which may
result from the credit sale. (Art. 1905)
What is the obligation of the commission agent who is authorized by the principal to sell on
credit?

The commission agent must furnish the principal with a statement of the names of the buyers.
If he fails to do so the sale shall be considered to have been on cash basis insofar as the
principal is concerned. (Art. 1906)
Who is a Guarantee Commission agent or a “del credere” agent?

A guarantee commission is one who receives on a sale, in addition to the ordinary commission,
another called a guarantee commission, in which case he shall bear the risk of collection and
shall pay the principal the proceeds of the sale on the same terms agreed upon with the
purchaser. (Art. 1907)
Enumerate the obligations of the principal.

They are:
1. To comply with all the obligations which the agent may have contracted within
the scope of his authority. (Art. 1910)
2. To advance to the agent, should the latter so request, the sums necessary for the
execution of the agency. Should the agent have advanced them, he must reimburse the agent,
even if the business or undertaking was not successful, provided if the agent is free from all
fault. The reimbursement shall include interest on the sums advanced, from the day on which
the advance was made. (Art. 1912)
3. To indemnify the agent for all damages which the execution of the agency may
have caused the latter, without fault or negligence on his part. (Art. 1913).
Is the principal bound by the obligations incurred by the agent in excess of his authority?
The principal shall not be bound unless he ratifies it expressly or impliedly. (Art. 1910)
What is the remedy of the agent I the case where the principal does not reimburse the agent
for the funds advanced by him and for the damages the agent has suffered in the execution of
the agency?
The agent may retain I pledge the things which are the object of the agency until the principal
effects the reimbursement. (Art. 1914)
When shall the principal be held solidarily liable with the agent?
Even when the agent has exceeded his authority, the principal is solidairly liable with the agent
if the former allowed the latter to act as though he had full powers. (Art. 1911).
Under what circumstances shall two or more principals be held solidarily liable to the agent?
Under the following circumstances:
1. There are two or more principals;
2. The two or more principals have appoint the agent for a common transaction.
(Art. 1915)
Under what cases shall the principal be not liable for the expenses incurred by the agent?
Under the following:

1. If the agent acted in contravention of the principal’s instructions, unless the
latter should wish to avail himself of the benefits derived from the
contract;
2. What the expenses were due to the fault of the agent.
3. When the agent incurred them with knowledge that an unfavorable result would
ensue, if the principal was not aware thereof.
4. When it was stipulated that the expenses would be borne by the agent, or that
the later would be allowed only a certain sum. (Art. 1918)
How is agency extinguished?

Agency is extinguished:
1. By its revocation;
2. By the withdrawal of the agent;
3. By the death, civil interdiction, insanity or insolvency of the principal or of the
agent;
4. By the dissolution of the firm or corporation which entrusted or accepted the
agency;
5. By the accomplishment of the object or purpose of the agency;
6. By the expiration of the period for which the agency was constituted. (Art. 1919)
Is agency generally revocable?

Yes. The principal may revoke the agency at will, and compel the agent to return the document
evidencing the agency. (Art. 1920)
When shall the revocation of the agency not prejudice third persons?
1. If the agency has been entrusted for the purpose of contracting with specified
persons, its revocation shall not prejudice the latter if they were not given notice thereof. (Art.
1921)
2. If the agent had general powers, revocation of the agency does not prejudice
third persons who acted in good faith and without knowledge of the revocation, though notice
of the revocation in a newspaper of general circulation is a sufficient warning to third persons.
(Art. 1922)
Give instances of implied revocation of the agency.

1. The appointment of a new agent for the same business or transaction revokes
the previous agency from the day on which notice thereof was given to the former agent. (Art.
1923)
2. The agency is revoked if the principal directly manages the business entrusted to
the agent, dealing directly with third persons. (Art. 1924)
When is agency irrevocable?

1. If a bilateral contract depends upon the agency;

2. Where the agency is a means of fulfilling an obligation already contracted;
3. Where a partner is appointed manager of a partnership in the contract of
partnership and his removal from management is unjustifiable. (Art. 1927)
What is meant by an agency coupled with an interest?

An agency is coupled with an interest if:
1. the agency is created not only for the interest of the principal but also for the
interest of a third person; or
2. the agency is created for the mutual interest of both the principal and the agent.
An agency coupled with an interest cannot be revoked by the sole will of the principal.
Can the agent withdraw from the agency at any time?

Like the principal who can generally revoke the agency at will, the agent likewise may withdraw
from the agency at any time, by giving due notice to the principal. However, if the principal
should suffer any damage by reason of the withdrawal, the agent must indemnify him, unless
the withdrawal of the agent is based upon the impossibility of continuing the performance of
the agency without grave detriment to himself. (Art. 1928)
What is the obligation of the agent after his withdrawal from the agency?
The agent, even if he should withdraw from the agency for a valid reason, must continue to act
until the principal has had the opportunity to take the necessary steps to meet the situation.
(art. 1929)
When does death of the principal not revoke the agency?

The agency shall remain in full force and effect even after the death of the principal if:
1. the agency was constituted in the common interest of the principal and the
agent; or
2. the agency was constituted in the interest of a third person who has accepted
the stipulation in his favor. (Art. 1930)
How does death of the principal affect the validity of the acts of the agent who was not aware
of the death of the principal?
Anything done by the agent, without knowledge of the death of the principal or of any other
cause which extinguishes the agency, is valid and shall be fully effective with respect to third
persons who may have contracted with him in good faith. (Art. 1931)
Does death of the agent extinguishes agency?

Yes, but his heirs must notify the principal thereof, and in the meantime adopt such measure as
the circumstances may demand in the interest of the principal. (Art. 1932)
vii. sales

 CONTRACT OF SALE FROM CONTRACT TO SELL:
1. In a contract of sale, title passes to the vendee upon the delivery of the thing
sold, while in Contract to sell, by agreement, ownership is reserved in the vendor
and is not to pass until full payment of the price;
2. In contract of sale, nonpayment is a negative resolutory condition; while in
contract to sell, full payment is a positive suspensive condition;
3. In contract of sale, the vendor has lost and cannot recover ownership until and
unless the contract is resolved or rescinded; while in contract to sell, title
remains in the vendor, and when he seeks to eject the vendee because of
noncompliance by such vendee with the suspensive condition stipulated, he is
enforcing the contract and not resolving it.
 EMPTIO SPERATAE AND EMPTIO SPEI:
1. emptio res speratae is the sale of a thing having a potential existence; while
emptio spei is the sale of a hope or expectancy;
2. in ERS, the uncertainty is with regard to the quantity and quality but not with
regard to the existence of the thing; in ES, the uncertainty is with regard to the
existence of the thing;
3. In ERS, the contract deals with a future thing; in ES, the contract deals with a
present thing which is the hope or expectancy;
4. In ERS, the sale is subject to the condition that the thing should exist, so that if it
does not, there is no contract for lack of an essential requisite; in ES, the sale
produces effects even though the thing itself does not come into existence, since
the subject matter is the hope itself.
 BARTER – “if the consideration of the contract consists partly in money, and partly in
another thing, the transaction shall be characterized by the manifest intention of the
parties. Is such intention does not clearly appear, it shall be considered a barter if the
value of the thing given as part of the consideration exceeds the amount of the money
or its equivalent; otherwise, it is a sale.” Such that, if the cash added to the thing traded
is more than the value of such thing, the contract is a sale; if less, the contract is a barter.
 A promise to buy and sell a determinate thing for a price certain is reciprocally
demandable. An accepted unilateral promise to buy or to sell a determinate thing for a
price certain is binding upon the promissory of the promise is supported by a
consideration distinct from the price.
 Who between the vendor and the vendee must bear the risk of loss after the contract of
sale has been perfected, but before the thing sold has been delivered?

If the object of a contract is lost before delivery, it is the vendor who is still the owner
and must bear the loss and not the vendee. This is in conformity with the principle of
res perit domini. The owner of the thing must bear the risk of loss.
 EARNEST MONEY’ “Whenever earnest money is given in a contract of sale, it shall be
considered as part of the price and as proof of the perfection of the contract.” Earnest
money is part of the purchase price advanced by the vendee to the vendor as a token of
the perfection of the contract.
 SALE OF PERSONAL PROPERTY BY INSTALLMENT, remedies of the vendor
1. exact fulfillment of the obligation should the vendee fail to pay;

2. cancel the sale, should the vendee’s failure to pay cover two or more
installments;
3. Foreclose the chattel mortgage on the thing sold, if one has been constituted,
should the vendee’s failure to pay cover two or more installments. In the last
case, he shall have no further action against the purchaser to recover any unpaid
balance of the price. Any agreement to the contrary shall be void. (Art. 1474)
A stipulation that the installments or rents paid shall not be returned to the vendee
or lessee shall be valid insofar as the same may not be unconscionable under the
circumstances (Art. 1486)
 A contract executed by an agent without authority to sell is not void but simply
unenforceable.
 The acceptance and encashment by the owner of a check representing the purchase
price of his property sold through his agent constitute ratification of the contract of sale
and produces the effects of an express power of agency.
 In a contract of sale, the vendor loses ownership over the property and cannot recover it
until and unless the contract is resolved or rescinded.
 An option to buy or a promise to sell is different and distinct from the right to
repurchase that must be reserved by means of stipulations to that effect in the contract
of sale.
 A contract of sale is consensual in nature and is perfected upon the mere meeting of the
minds. When there is merely an offer by one party without acceptance by the other,
there is no contract.
 Possession along with ownership is transferred to the vendee by virtue of the notarized
deed of conveyance.

 If the deed of sale is void, then the action for the declaration of the contract’s nullity is
imprescriptible. An action for reconveyance of the property on a void contract does not
prescribe.
 Under a pacto de retro sale, title to and ownership of property are immediately vested in
the vendee a retro, subject only to the resolutory condition that the vendor repurchases
it within the stipulated period.
 An equitable mortgage has been defined “as one which although lacking in some
formality, or form or words, or other requisites demanded by a statue, nevertheless
reveals the intention of the parties to charge real property as security for a debt, and
contains nothing impossible or contrary to law.”
 R.A. No. 6552 otherwise known as the “Realty Installment Buyer Protection Act”
recognizes in conditional sales of all kinds of real estate (industrial, commercial,
residential) the right of the seller to cancel the contract upon nonpayment of an
installment by the buyer, which cancellation may be done outside the court particularly
when the buyer agrees to such cancellation provided that such cancellation by the seller
must be in accordance with Sec. 3(b) of R.A. No. 6552, which requires a notarial act of
rescission and the refund to the buyer of the full payment of the cash surrender value of
the payments on the property. . A demand letter is not the same as the notice of
cancellation or demand for rescission by a notarial act required under said law.
 Between two transactions concerning the same parcel of land, the registered transaction
prevails over the earlier unregistered right. Knowledge gained by the first buyer of the
second sale cannot defeat the first buyer’s rights, except where the second buyer
registers in good faith the second sale ahead of the first.
 A contract of sale may either be absolute or conditional – one form of conditional sale is
what is now popularly termed as a “Contract to Sell” where ownership or title is retained
until the fulfillment of a positive suspensive condition normally the payment of the
purchase price in the manner agreed upon.
EFFECT OF SALE ON THE SELLER

I. GENERAL OBLIGATIONS:
A. To preserve the thing with the proper diligence of a good father of a family (Art.
1163).
a. Deterioration, loss or improvement (Theory of Risks)
1. If the title has passed, the risk is upon the buyer, whether there
has been actual delivery or not.
B. To deliver the thing sold with its accessions and accessories (Art. 1537)
a. FORM (MANNER OF DELIVERY)
1. Physical or Real (Art. 1497)
2. Constructive
i. Real Property: by public instrument.
aa. Provided no actual impediment to physical delivery
(e.g. when a third party is in lawful possession) or contrary
stipulation exists.
bb. Except: registered property (Act 496). Registration

is the operative act of transfer (but the contract is
binding between the parties).
ii. Personal Property

aa. Delivery of the keys (Art. 1498, par. 2)
bb. Common agreement (Art. 1499)
cc. By negotiable document of title (Arts. 1513, 1514).
iii. Incorporeal property (Art. 1501) : By execution of a public

instrument, delivery of title, or the exercise by the
vendee of his rights with the vendor’s consent.
(Quasi-tradition).
3. De Consituto (constitutum possessorium):

By retention of the thing by seller under another right (Art. 1500)
subordinate to the right of the buyer.
C. Transfer of Ownership to the Buyer

a. Generally ownership is transferred upon delivery to (Art. 1477, 1496) and
acceptance by the buyer (Art. 1585) express or implied.
1. Where the buyer refuses to accept without justification (Art.
1588) title passes when the goods are placed at the
disposal of the buyer.
2. Delivery to the carrier is delivery to the buyer unless title is
reserved (Art. 1523, par.1)
3. In sales ‘F.A.S.”
4. In sales “C.I.F.” or ‘F.O.B.”
b. When delivery does not transfer title:

1. In “delivery on approval, trial or satisfaction” (Art. 1502, par. 2-5),
title passes –
i. Upon the buyer’s signifying approval or acceptance;
ii. Upon the buyer’s doing an act signifying adoption of the
contract;
iii. Upon the retention by the buyer beyond the time fixed (or
reasonable time) without notice of rejection.
2. In case of Express reservation of title in the seller, made so that
title does not pass-

i. Until payment (Art. 1478)
ii. Until fulfillment of the condition (1503, par.1)
notwithstanding delivery
3. Implied reservation of title arises when-
i. Goods are deliverable to the order of the shipper or agent
(Art. 1503, par. 2)
aa. But where goods are deliverable to the order of the
buyer or his agent and the seller retains the bill of
lading (Art. 1503, par. 3) title passes subject to the
lien of the seller for security purposes.
ii. If a bill of lading is transmitted with a draft attached (1503,
par.4), in which case title passes upon acceptance; if the
draft is dishonored, the buyer should return the bill
of lading
iii. But if the bill provides that the goods are deliverable to
the buyer, or the order of the buyer, of it is
indorsed in blank, the bill transfers title to the buyer for
value and without notice that the draft was not
honored.
4. Sale to two different persons by the same seller
5. When the seller is not the owner (Art. 1505): The buyer has no
better title, except in cases of:
i. Estoppel of the owner to deny the seller’s title (Art. 1438)

ii. Recording laws;
iii. Statutory power to sell or order of the court to the officer
(to sell)
iv. Sales in merchat’s stores, fairs, or markets
aa. Compare this with the rule that possession of
movables in good faith is equivalent to title.
Art. 559
bb. When the seller has a voidable title (Art. 1506), the
sale is good if bough for value and without
notice before the seller’s title is avoided.
DOCUMENTS OF TITLE TO GOODS DEFINED (Art. 1636, No.1): “…any document used in the
ordinary course of business in the sale or transfer of goods, as proof of the possession or control
of the goods, or authorizing… the possessor of the document to transfer or receive, either by
indorsement or delivery, goods represented by such document.”
TIME AND PLACE OF DELIVERY:

a. TIME-
i. As stipulated.
ii. If there is no stipulation, at a reasonable time and hour (which is a
question of fact) (Art. 1521)
b. PLACE –
i. As stipulated or established by usage (Art. 1521)
ii. In the absence of stipulation or usage:
1. At the place of business or residence of the seller
2. If the thing (specific) was elsewhere, and the parties knew it,
where the thing was at the time of sale (applying the rule of Art.
1251).
a. The possessor (if a third person) must acknowledge
holding the goods for the buyer.
3. If it is stipulated that the seller will send the goods to the buyer
(Art. 1523);
a. The seller must arrange the transportation, on reasonable
terms, to the place of business or residence of the buyer
(par.2)
b. The seller must insure the goods if stipulated or required
by usage;
c. Otherwise, the seller must give notice so that the buyer
may insure. If no notice is given, the goods travel at the
seller’s risk (par.3)
II. Delivery to the carrier is deemed as delivery to the buyer (but carrier must acknowledge
holding the goods for the buyer) (Art. 1523)
A. Unless the contrary intent appears, or title is reserved, expressly of impliedly, or

stoppage in transit is exercised.
B. Subject to the seller’s duty to notify the buyer under Art. 1523 for insurance
purposes.
III. Expenses of delivery are borne by the seller (Art. 1247) (Art. 1521, last par.)
A. In sales, “C.I.F”, the price includes insurance and freight to the place of
destination but goods travel at the risk of the buyer
B. In sales “F.O.B.” (free on board) or “F.A.S” (free alongside ship) the goods are
delivered at the specified place at no expense to the buyer, and title to the goods is presumed
to pass at that place.
RIGHTS OF THE UNPAID SELLER OF GOODS
I. Definition of “unpaid seller” (Art. 1525, par.1)

A. An unpaid seller is one-
a. To whom the whole price has not been paid or tendered; or
b. Who has been conditionally paid by a negotiable instrument which has
been dishonored. (Art. 1525)
B. An unpaid seller may be one-

a. Whose goods are in his possession and property in the goods has not
passed to the buyer; or
b. Whose goods are in his possession but property in the goods has passed
to the buyer; or
c. Whose goods has not passed to the buyer but property in the goods has
not passed to the buyer; or
d. Whose goods are not in his possession and property in the goods has
passed to the buyer.
II. Rights of an unpaid seller (Art. 1526)

A. A Lien on the goods or right to retain them (Art. 1526, par.1)
a. When the lien exists:
1. Cases (Art. 1527) when it arises –
i. Where the sale is without stipulation as to credit;
ii. Where the sale is on credit, but the term credit has
expired.
iii. When the buyer becomes insolvent
2. It may be exercised notwithstanding the seller’s possession as
agent or bailee for the buyer (Art. 1527, par.2)
3. Effect on the right if there has been partial delivery:
i. The lien may be exercised on the remainder (Art. 1528)
aa. Exception:
aaa. When by such partial delivery, the intention
was to waive the lien or right of retention (Art. 1528)
b. When the lien is lost.

1. Instances (Art. 1529)
i. When the seller delivers the goods to the carrier or other
bailee for transmission to the buyer without
reserving the ownership in the goods.
ii. When the buyer or his agent lawfully obtains possession of
the goods;
iii. By waiver thereof.
2. Effect of a judgement for the price of goods obtained by the seller

i. The lien is not lost (Art. 1529, par. 2)

B. Right to stop in transit (Art. 1626 No.2) (Stoppage in transit).
a. Requisites for the exercise.

1. The buyer is or becomes insolvent (Art. 1526, No. 2 and Art.
1530).
i. When the buyer is said to be insolvent: See Art. 1636,
No.2 (does not require judicial proceedings).
2. The goods are in transit (Art. 1530)
i. When goods are deemed to be in transit –
aa. From the time they are delivered to the carrier or
bailee for transmission to the buyer until the buyer
takes delivery
bb. If the buyer rejects them and the carrier continues
in possession.
ii. When goods are no longer in transit (See Art.
1531, par.4)
aa. If the buyer or his agent obtains deliver;

bb. If at destination the carrier or bailee acknowledges
holding them for the buyer;
cc. If the carrier or bailee wrongfully withholds
possession from the buyer.
b. How stoppage in transit is exercised (Art. 1532):

1. By obtaining actual possession of the goods (Art. 1532, par.1);
2. By giving notice of the claim (Art. 1532, par.1).
i. To whom must notice be given –
aa. To the person in actual possession of the goods;
bb. To his principal.
ii. Obligation of the carrier or bailee in possession of the

goods.
aa. To re-deliver the goods to the seller.
aaa. If the goods are covered by negotiable
document of title –
aa. The document must be surrendered (Art. 1532,
par.2).
iii. Obligation of the seller.
aa. To pay the expenses of deliver
(art. 1532, par.2)
CONDITIONS AND WARRANTIES
I. Conditions (precedent)
A. Upon failure of the conditions (Art. 1545): the party whose obligation is
dependent upon it need not perform.

II. Warranties (stipulations promissory): Kinds –
A. Express (Art. 1546): affirmation of fact inducing the buyer to purchase in reliance
thereon.
B. Implies (Arts. 1547 and 1562): that the seller has a right to sell; that there are no
hidden defects or encumbrances; that the goods are of merchantable quality and fit for a
known purpose.
a. A statement of the seller’s opinions is not warranty, unless he is an expert and
was relied upon. (Art. 1546)
III. Warranty Against Eviction.

A. Requisites –
a. Eviction (dispossession) of the buyer (Art. 1548) (this is applicable to a
judgment debtor in judicial sales unless the judgment provides otherwise, Art. 1552).
1. The vendee is deprived of the whole or a material part of the
thing purchased.
2. By a final judgment (Art. 1557) (the buyer need not appeal, Art.
1549)
3. Based on a right anterior to the sale, including –
i. Adverse possession completed before the sale (Art. 1550)
ii. Sale for tax delinquency not notified to the buyer (Art.
1551).
b. There has been no express waiver by the buyer with knowledge of

the risk (Art. 1554).
c. The seller (vendor) is duly summoned in the suit against the buyer
(Art. 1558) and made a co-defendant (Art. 1559). (See Rule 9, sec. 1, Rules of Court).
B. Effect of the warranty (Art. 1555)

a. The seller in good faith must –
1. Return the value (not the price) at the time of eviction;
2. Return the income or fruits that the buyer had to surrender; plus
3. Costs of the suit; and
4. Expenses of the contract.
b. The seller in bad faith is subject to the liabilities of the seller in good faith
under –
1. The rules of the preceding paragraph ( par.a);
2. Plus payment of damages, interest and ornamental expenses
(useful expenses are to be recovered from the party causing the eviction, not from the seller).

c. Loss of an important part (Art. 1556) (partial Eviction). The remedies are
–
1. Indemnity OR rescission, at the buyers’ option.
C. Waiver of warranty against eviction by the buyer (vendee):
Warranty against Redhibitory (Hidden, Physical) Vices (of movables).

A. Requisites – The vices must be –
a. Not visible or could not be known to the buyer, even if an expert (Art.
1561);
b. They must be serious (as to render the thing unfit) (Art. 1561) because of
the implied warranty of quality (Art. 1562) or of fitness for a purpose known to the seller;
Except: Sales under a patent or trade name (Art. 1563) where no implied
warranty exists.
c. There were not known to the buyer;

d. They existed prior to the sale;
e. They must be notified to the seller within a reasonable time from
discovery (Art. 1586)
f. Action must be within 6 months (Art. 1571) or 40 days (from delivery) in
case of animals (Art. 1577) prescription).
g. No stipulation against the warranty has been agreed
B. The vice need not be known to the vendor (Art. 1566).
C. Effects of warranty against defects or vices:

a. The vendee may elect between (Art. 1567) –
1. Withdrawal from the contract; or
2. Reduction of the price (with damages in case of bad faith)
b. If the thing is lost due to hidden vice (Art. 1568)

1. If the Vendor is aware of the vice: He must –
i. Return the price (not the value); and
ii. Refund the expenses of the contract; and
iii. Pay damages.
2. If the Vendor is not aware of the vice: He must –
i. Return the price with interest; and
ii. Refund expenses.
c. If the thing is lost by fortuitous event or by the fault of the buyer –

1. If the vendor is in good faith: He must return the price less the
value when lost.
2. If the vendor is in bad faith: He must –
i. Return the price less the value; and

ii. Pay damages.
OBLIGATIONS OF THE BUYER

I. To Accept Delivery:
A. If there was no previous examination, the buyer must have a reasonable
opportunity to examine (Art. 1584, par. 1 & 2).
a. The seller must allow the buyer to examine, if the buyer so demands.
b. Except in case of a stipulation that the goods are not to be delivered by
the carrier unless paid for (C.O.D.) (the buyer is not entitled to an examination unless the
contract or usage to the contrary permits examination) (Art. 1584, par. 3).
B. Unjustified refusal of the buyer to accept does not bar transfer of title (and risk)
(Art. 1588).
2. But the seller may make consignation (Art. 1256).
C. The buyer justifiably refusing to accept need not return the thing (Art. 1587) but
only has to notify the seller.
II. Payment of Price and Interest:

A. time and Place (Art. 1528):
a. According to stipulation (unless the buyer loses the benefit of the period).
b. At the time and place of delivery, if there is no contrary stipulation,
B. Suspension of payment by the buyer (Art. 1590) after delivery.

a. Grounds –
1. Actual disturbance of possession or ownership; or
2. Reasonable ground to fear a disturbance caused by –
i. Vindicatory action;
ii. Foreclosure of mortgage (which grounds are exclusive)
b. There is no right to suspend payment if:
1. The stipulation provides for payment despite risk of disturbance;

or
2. The vendor cause the disturbance to cease; or
3. The Vendor gives security for the return of the price; or
4. The disturbance is by mere act of trespass.
C. Payment of Interest on the Price: )Art. 1598). This duty arises –

a. Even before default, if –
1. The stipulation so provides; or
2. The thing produces fruits which pertain to the buyer under
Article 1164.

b. After default (moratory interest) from the time of the seller’s
tender or performance (art. 1169, last par. on reciprocal obligations).
D. Legal Guaranties for Payment of the Price:

a. Suspension of delivery (retention) by the seller –
1. In cash sales, if the payment is not tendered (art. 1524);
2. In sales on credit, if the buyer loses the benefit of the term
under Art. 1198 (art. 1536) or the buyer is insolvent (Art. 1527).
c. Seller’s lien on the goods in his possession (Art. 1526).

d. Stoppage in transit, if the buyer is insolvent and the price is
unpaid (Art. 1530).
1. When goods are in transit (Art. 1531): the goods must be
in the possession of the carrier as such, not as bailee for
the buyer.
2. How stoppage is made (Art. 1532)

i. Resuming actual possession,
ii. Giving opportune notice to the carrier or bailee.
3. Effect of notice on the carrier or bailee Art. 1532, par. 2)
i. The carrier or bailee must redeliver, unless the

negotiable receipt issued is not surrendered to the
carrier or bailee.
e. Resale of goods (Art. 1533) (without bringing an action).

1. The remedy is applicable in case of
i. Perishable goods; or
ii. Express reservation in the event of default; or
iii. Default for an unreasonable time on the part of the
buyer, Provided: the seller has a lien or made
stoppage in transit.
2. Procedure in Resale (See p. 54).

i. Resale may be public or private.
ii. Notice to the buyer is not essential.
III. The seller is to exercise reasonable care and
judgment
iv. The seller cannot buy directly or indirectly.
3. The buyer at resale acquires good title against the original

buyer, but not against the holder in due course of a
negotiable document of title (Art. 1535).

4. Effect on the seller:
i. He is not accountable for the profit.
ii. He may sue for damages due to the breach.
f. Rescission of Transfer of Title

1. In case of goods (corporeal movables) –
i. Extrajudicial rescission (Art. 1534), if –
aa. Expressly reserve, or
bb. The buyer is in default for an un

reasonable time in paying the price.
Aaa. Notice ( or some other overt act) is required (otherwise transfer of title is not rescinded)
but need not be communicated to the buyer;
Bbb. Failure to give notice is relevant on the question of default for an unreasonable time;
and
cc. The seller has a lien or made stoppage in transit (Art. 1534)
ii. Judicial (Art. 1191), if –
aa. The buyer fails to accept at the stipulated time, without just reasons.
bb. The buyer fails to tender the price upon receipt, if no period was stipulated (Art. 1593).
No notice or demand is required (Art. 1534) unless the goods have not been delivered. (See
Art. 1597)
2. In case of real property (Art. 1592). The buyer may pay until given judicial or notarial
demand for rescission, despite a stipulation to the contrary (pacto comisorio).
Exceptions:
i. The rule does not apply where title was reserved by the seller
ii. In case of danger of loss of the thing and price, after delivery (Art. 1591), the
seller may sue immediately for rescission even if he price is not yet due.
iii. Neither does the rule apply to a mere contract to sell
3. Action for the Price and Damages
I. Action for the price (of personal property) (art. 1595).

A. Grounds –
a. After ownership has passed, and price is not paid, if no period for
payment was given.
b. Failure to pay, where it is stipulated to be payable irrespective of

delivery or transfer of title, although title has not passed.
1. Defense of the buyer:

i. That the seller at any time before judgment, manifested either –
aa. Inability to perform; or

bb. Intention not to perform.
c. Refusal of the buyer to accept delivery of the goods, if:
1. The goods were offered and refused; and

2. The goods cannot readily be resold; and
3. The buyer did not notify repudiation before the goods were
placed in a fully deliverable state ; and
4. The seller notifies the buyer that he holds the goods as bailee for
the buyer. Then the seller may treat the goods as the
buyer’s and sue for the price.
II. Action for damages for non-acceptance (Art. 1596) of the goods
A. Grounds –
a. The buyer’s wrongful failure to accept and pay (the goods
maybe resold)
b. The buyer’s repudiation or countermand before the goods

are placed in a deliverable state.
B. Measure of damages
a. Generally –
1. The loss naturally and directly resulting (in the
ordinary course) from the breach.
b. When there is an available market –
1. The difference between the contract price and the

market price at the time when acceptance
should be made.

i. If no time was fixed for acceptance, then
the market price at the time of
refusal.
c. When repudiation is made or notified before the seller

complete preparations for fulfillment –
1. The liability is for expenses incurred, and

2. The profit the seller would have obtained under
the contract.
III. Action for Total Rescission (Art. 1597 ) by the seller (against the buyer)
A. Requisites:
a. The goods were not delivered.
b. The buyer either –
1. Repudiates; or
2. Manifests inability to perform; or
3. Commits breach of contract;
c. The seller gives notice of his election to rescind.
IV. Buyer’s Action for Seller’s Specific Performance (Art. 1598).
A. The seller has no option to retain the goods by paying damages.

B. The judgment may be absolute or conditional as the court deems
fit.
V. Buyer’s Action for Breach of Warranty (Art. 1599). (express or implied)

A. Buyer’s choices:
a. To accept or keep the goods and set off damages against the
price;
b. To accept the goods and sue for damages;
c. To refuse or return the goods and sue for damages;
d. To rescind the contract, refuse or return the goods and recover
the price
B. The options are alternative, but the buyer may ask for rescission after
asking for specific performance, if the latter is impossible (Art.
1191, par.2)
C. The buyer cannot rescind, if –

a. He knew of the breach of warranty when he accepted the goods;
or

b. He fails to notify the seller in due time of the election to rescind;
or
c. He fails to return the goods in substantially the same condition,
1. Unless the deterioration was due to the breach of

warranty.
D. Effects of Buyer’s Election to Rescind (Art. 1599, par.4)

a. The buyer ceases to be liable for the price upon tender or return
of the goods.
b. He may recover the price paid –
1. Concurrently with the return, or

2. Immediately after the tender.
c. If the seller refuses to accept the return; the buyer holds the
goods as bailee. In which case, the buyer –
1. Has a lien on the goods to secure repayment of the price;

and
2. Has a right of stoppage in transit and resale, as the seller
has under Article 1526.
E. Loss in Case of Breach of Warranty of Quality (Art. 1599, par.5)
a. The liability consists in the difference in value at the time of

delivery and the value if the warranty were not broken.
1. Unless special circumstances show greater damage.
I. Causes of Extinguishment –
A. General causes (Art. 1231) –
a. Payment or performance
b. Loss of the thing due
c. Condonation or remission
d. Confusion or merger
e. Compensation
f. Novation
g. Annulment
h. Rescission
i. Fulfillment of the resolutory condition
j. Prescription
B. Special Causes –
a. Redemption.

1. Conventional
2. Legal
II. Article 1600 applies to perfected as well as consummated sales.
I. Concept.
A. Defined:
Conventional redemption shall take place when the vendor reserves the right to repurchase the
thing sold, with the obligation to comply with the provisions of Article 1616 and other
stipulations which may have been agreed upon
B. Nature: Conventional redemption is –

a. An accidental element (must be stipulated);
b. An express condition;
c. A potestative resolutory condition
d. A real right and enforced against a third person climing under the purchaser
II. Conventional redemption includes transactions presumed to be equitable mortgages.
A. Equitable mortgage defined – one in which although it lacks some formality, form of
words or other requisites, prescribed by a statute, show the intention of the parties to charge a
real property as security for a debt and contains nothing impossible or contrary to law.
B. The following are presumed to be equitable mortgages –
a. Contracts of sale with right to repurchase in the following cases – (Art. 1602)
(1) When the price of a sale with right to repurchase is unusually

inadequate;
(2) When the vendor remains in possession as lessee or otherwise;
(3) When upon or after the expiration of the right to repurchase

another instrument extending the period of redemption or
granting a new period is executed;
(4) When the purchaser retains for himself a part of the purchase
price;
(5) When the vendor binds himself to pay the taxes on the thing sold;

(6) In any other case where it may be fairly inferred that the real
intention of the parties is that the transaction shall secure the
payment of a debt or the performance of any other obligation.
b. Contracts of absolute sale in the cases mentioned in Art. 1602 (Art. 1604)
c. When a transaction purporting to be a contract of sale with right to repurchase is of

doubtful interpretation (Art. 1603)
1. A stipulation that in case of failure of the vendor-a-retro as lessee to pay rentals, the
lease shall automatically terminate and the right of ownership of the vendee shall become
absolute – is valid, not contrary to law nor oppressive. It is a clause common to “pacto de retro”
and has received court sanction
2. Although “pactum commissorium” ( a stipulation for automatic vesting of title over the
security in the creditor in case of the debtor’s default) is void, such a clause in a contract is
conclusive proof that it is a mortgage and not a sale with pacto de retro
C. Effect when the transaction is deemed an equitable mortgage.
a. Fruits, money or other benefit received as rents by the vendee are considered as interest
which shall be subject to the usury laws. (Art. 1602, last par)
b. the apparent vendor may ask for the reformation of the instrument.
III. Period of Repurchase or Redemption.
A. Where no period is agreed upon –

a. Four years from the date of the contract (Art. 1606, par.1)
B. When a period is agreed upon – (which includes a stipulation of redemption “at any
time”)
a. Within the period stipulated, which cannot exceed 10 years (Art. 1606, par.2)
C. The period may be extended to 30 days after final judgment was rendered in a civil case
claiming that the contract was a true sale with right to repurchase (Art. 1606, par.3)
a. Pendency of litigation suspends the period of redemption
b. The thirty day extension is applicable even should the case be filed after the expiration
of the redemption period, if the parties dispute its nature as a pacto-de-retro sale with the
allegation that it does not express their true agreement.
D. The period during which vendor cannot redeem when added to the period of permitted
redemption, must not total more than 10 years. (Rosales vs. Ryes, 25 Phil 495)
E. Redemption period was not extended by the enemy occupation (Rivero vs. Rivero, 80
Phil 802)

F. Rulings on the period within which to make a repurchase –
a. The legal period of 4 years may be extended by stipulation, provided that the new
period stipulated does not exceed 10 years.
b. A stipulation that the vendor cannot redeem the property until after 3 years should be
construed to allow redemption within 4 years, after the lapse of the 3 years, counted from such
lapse.
c. An agreement granting the vendor the right to repurchase when he “ has established a
certain business” is not a period. In such a case the vendor may redeem within 4 years.
d. Where there is an agreed period, the period in excess of 10 years is void
e. A stipulation granting the vendors the right to redeem “at any time the vendors have the
money” should be construed to allow redemption within 10 years
f. The stipulation period of redemption is suspended by the filing of an action brought in
good faith relating to the validity of a sale with pacto-de-retro (it being claimed to be an
equitable mortgage) and again commences to run only after decision declaring it to be a sale
has become final
g. Where the courts are functioning regularly, the redemption term is not suspended or
extended by war.
IV. Who may redeem or exercise the right of redemption –
A. The vendor in whose favor the right is reserved.

The following are included –
a. When the vendors are co-owners selling jointly and in the same contract an undivided
immovable.
1. Right of each co-owner.
i. To redeem only his share (Art. 1612, par.1)
2. Right of the vendee.
i. He may compel all the co-owners to redeem the whole (Art. 1613). Also when the
whole property is adjudicated to the vendee in partition (Art. 1611)
b. When a co-owner sells his share of an undivided immovable separately (Art. 1614).
1. Right of the vendor-co-owner
i. He may only redeem his share (Art. 1614)
ii. He cannot be compelled to redeem the whole (Art. 1614)
B. Heirs of the vendor (Art. 1612, par.2)

a. Right of each heir.
1. Each can redeem only the part which he may have acquired.
b. Right of the vendee

1. He may compel all the heirs to redeem the whole (Art. 1613)

NOTE: The rule of the Code ins one sale, one redemption; except in case of death of the buyer a
retro.
C. Creditors of the vendor (Art. 1610)

a. Requisite –
1. The creditors must have already exhausted the properties of the vendor (Art. 1610)
V. From whom or against whom may redemption be made –

A. The vendee
B. The heir or heirs of the vendee –

a. If there is more than one heir (Art. 1615);
1. Against each of the heirs for his respective share.
i. Exception:
a. When the thing sold is awarded to only one heir
C. Every possessor whose right is derived from the vendee (Art. 1608)
a. Without prejudice to the provisions of the Mortgage Law and Act No. 496 (Land
Registration Act)
VI. Obligations of the vendor-a-retro

A. The vendor’s obligations are (Art. 1616):
a. To return the price of the sale
b. To return the expenses of the contract and y other legitimate payments made by reason
of the sale
c. To reimburse the necessary and useful expenses made on the thing sold, after their
amount is determined.
B. Effect of the vendor’s failure to comply with his obligation –

a. General rule:
Ownership consolidates in the vendee
b. Exception:
1. When the subject matter consists of real property (Art. 1608)
i. Requisites –
aa. Consolidation of ownership must be by virtue of a judicial order, after hearing the
vendor.
VII. Obligations of the vendee-a-retro

A. To return the thing sold free from all charges and mortgages constituted by the vendee
(Art. 1618)
1. Exception:
i. Lease contracts in good faith and according to custom, which must be respected.

VIII. Rights of the vendee-a-retro
A. To compel the vendor or a part of an undivided immovable to redeem the whole
property upon the vendee acquiring the entire immovable (Art. 1611) in partition proceedings.
B. To be subrogated to the vendor’s rights and actions (Art. 1609)
IX Rules on pro-rating of fruits existing at the time of redemption.

A. If there are visible fruits at the time of the execution of the sale –
a. No reimbursement or pro-rating (Art. 1617, par. 1) is required. –
i. If indemnity for fruits was paid by the vendee when the sale was executed (Art. 1617,
par.1)
B. If no visible fruits at the time of the sale existed –

a. Fruits must be pro-rated (Art. 1617, par.2).
1. Share of the vendee:
i. That portion corresponding to the time he possessed the land in the last year, counted
from the anniversary of the date of the sale.
I. LEGAL REDEMPTION Concept.

A. Defined. (See Art. 1619)
B. Alienation must be by –
a. Sale
b. Dation in payment
c. Other transactions whereby ownership is transferred by onerous title (Art. 1619)
C. Distinguished from Pre-emption

a. Legal Redemption
1. The right is born after the sale
2. It rescinds the contract and leaves without effect a sale that has been perfected and
consummated
3. The action is directed against the purchaser.
b. Pre-Emption
1. The right is born before the sale.
2. The contract of sale does not yet exist
3. The action is directed against the prospective vendor
D. The rules are applicable to both movables and immovables
II. Instances by Co-owners

A. Redemption by Co-owners
a. Purpose – to end indivision or at least reduce the number of co-owners, keeping
strangers out of the co-ownership

b. Requisites
1. Co-ownership must exist
2. There must be alienation of the shares of all other co-owners or any of them
3. Alienation must be to a stranger, not a co-owner
4. Alienation to said stranger must be before partition
c. Who may exercise redemption –
1. A co-owner (Art. 1620)
i. Effect if two or more co-owners desire to redeem:
aa. They may only do so in proportion to the share they may respectively have in the thing
owned in common (Art. 1620, par.2)
d. Obligation of the redemptioner –
1. To pay the price of the sale (Art. 1620, par.1).
i. Exception:
aa. When the price is grossly excessive –
aaa. To pay only a reasonable price (Art. 1620, par.1)
e. Legal Redemption by Co-heirs (Art. 1088) is a variety of this by Co-owners
B. Redemption by Adjoining Owners.

a. Instances –
1. Rural lands.
i. Purpose: To favor the development of rural property in the interest of agriculture
ii. Requisites:
aa. Both adjoining tenements are rural
bb. There must be alienation
cc. Area of the land alienated does not exceed one hectare
dd. Tenements must be adjacent without solution of surface of continuity.
Aaa. Tenements separated by brooks, ravines, roads, etc. are not included (Art. 1621,
par.2)
ee. The vendee must own some other rural land
iii. Who may exercise the right –

aa. Order of preference
aaa. Co-owners (Art. 1623, par.2)
bbb. Adjoining owners (Art. 1621, par.3)
I. Preference (secondary order)
A. The owner of the adjoining land of smaller area
B. If the areas are the same, the first to request redemption
2. Urban lands (Art. 1622)

i. Requisites
aa. Both adjoining tenements are urban
bb. The tenement being redeemed was bough merely for speculation

cc. The major portion of the tenement is so situated that it can not be used for any practical
purpose within a reasonable time.
dd. There is alienation
ee. The tenements are adjacent
ii. Who may exercise the right –

aa. Order of preference
aaa. Co-owners (Art. 1623, par.2)
bbb. Adjoining owners (Art. 1622, par.1)
I. Effect if two or more adjoining owners desire to exercise the right:
A. Preference is given to the adjacent owner whose intended use of the land in
question appears best justified (Art. 1622, par.3)
iii. Other rights available to the adjoining owner

aa. Pre-emption (Art. 1623) –exercised within 30 days from notice in writing by the
prospective vendor
b. Obligation of the Redemptioner

1. To pay a reasonable price.
2. To notify the prospective vendor and vendee of his desire to redeem
III. Procedure in Redemption

A. When to exercise the redemption –
a. Within 30 days from the notice in writing by the vendor
B. Requisite for the Registration of the Sale in the Registry of Property
a. It must be accompanied by an affidavit of the vendor that he has given written notice to
all possible redemptioners.
C. Special Rules:
a. Legal Redemption requires no previous notice of intention to redeem
b. Tender of the price is not a condition precedent to redemption
IV. Other cases of legal redemption –
a. Redemption by the debtor in the sale of a credit in litigation (Art. 1634)

b. Redemption by co-heirs in case of a sale by an heir of his hereditary rights to a stranger
before partition
c. Redemption by the application, his widow, and legal heirs within five (5) years from the
conveyance of lands under a homestead or free patent
d. Redemption within one year by a judgment debtor or redemptioner of real property sold
under execution
e. Redemption by the owner of the property sold for delinquent realty taxes
f. Redemption within one (1) year by the mortgagor in sales under –
1. Extra-judicial foreclosure
2. Judicial foreclosures by –

i. The Rehabilitation Finance Corporation
ii. The Philippine National Bank
iii. Banks within the purview of the General Banking Act.
ASSIGNMENT OF CREDITS AND OTHER INCORPOREAL RIGHTS
I. Concept: “A contract, unilateral or bilateral, onerous or lucrative, commutative or

aleatory, whereby a person transmits to another his right or rights against a third party, whether
or not an equivalent for the transmission is received from the transferee.”
A. While the Code treats of assignment of credits as a variety of sales the fact is that
the assignment may be effected in a variety of ways; by sale, by barter, by donation or even by
testament. The assignment is a transfer entirely different from the transaction originating it.
II. Essential requisites and formalities.

A. These depend in each case upon the contract of act giving rise to the assignment.
a. Assignment of real rights upon immovable property, done by way of donation, requires a
public instrument
b. Assignment by way of legacy requires a probated will
c. Assignment of choses in action by sale or onerous contract, if involving P500 or more, is
unenforceable inter partes, and comes under the Statute of Frauds (a written memorandum is
required)
d. Assignment of a negotiable instrument requires indorsement or delivery.
B. As against third persons (but not the debtor of the credit assigned) an assignment of a
credit, right or action shall produce no effect unless it appears in a public instrument, or the
instrument is recorded in the registry of property, in case the assignment involves real property
(Art. 1625)
a. The consent of the debtor of the assigned credit is not required for the validity of the
assignment: but the assignment is not fully effective against the debtor until he is notified
thereof or has actual knowledge of the assignment; i.e., the debtor until then is not bound to
pay the assignee.
III. Effect of a valid assignment.
A. It transfers title to the assigned credit to the assignee, even if the debtor is unaware
thereof.
a. The assignment includes all accessory rights, such as guaranty, pledge, mortgage or
preference (Art. 1672)
B. The assignee takes the credit subject to all defenses acquired by the debtor before
notice or knowledge of the assignment

a. Hence, the debtor who, before having knowledge of the assignment, pays his creditor
shall be released from the obligation
b. The debtor may set up compensation of credits acquired after assignment but before
notice thereof (Art. 1198) unless the debtor agreed to the assignment (when he cannot
compensate)
c. Any compromise or release of the assigned claim made by the assignor before notice,
will be valid against the assignee and discharge the debtor.
1. Is recording sufficient notice? Yes, provided the recording is requires (not merely
permitted) by law.
C. Warranty by the Assignor

a. The assignor in good faith shall be responsible for the existence and legality of the credit
at the time of sale, unless it should have been sold as doubtful.
1. Doubtfulness of the credit assigned must expressly appear; it is not presumed
b. The assignor in good faith, does not answer for the solvency of the debtor unless-
1. Expressly stipulated
2. The insolvency of the debtor was known to him personally or
3. The insolvency of the debtor was prior to the sale and of common knowledge (Art. 1628)
c. Where the solvency of the debtor is warranted by the assignor, his liability lasts only –
1. One year after the assignment, if the debt was already matured
2. One year after maturity, if the debt matures after assignment (Art. 1629)
- Compare this with partition between co-heirs (liability for solvency lasts 5 years (Art.
1095)
d. Recovery on the warranty

1. The assignor in good faith must return the price received plus expenses of the contract
and payments on account thereof. (Art. 1628)
2. The assignor in bad faith: all of the above plus damages (Art. 1628)
VI. Special assignments.

A. Sale of Inheritance (Estate)
a. If without enumeration of the items composing it, the vendor only answers for his
character as heir (Art. 1630)
b. The vendor shall reimburse the vendee for the fruits obtained or anything received from
the inheritance sold (Art. 1632) if the contrary is not stipulated
c. The vendee shall reimburse the vendor for –
1. All that vendor paid on account of the estate debts;
2. Credits that the vendor had against the estate (Art. 1633)
B. Sale of rights, rents or products for a lump sum

a. The vendor answers for the legitimacy of the whole in general

b. There is no warranty of individual items, unless there is eviction of the whole or of the
part of greater value (Art. 1931)
C. Sale and Redemption of litigious credits

a. Concept of litigious credit – A credit is considered in litigation from the time the
complaint concerning the same is answered. (Art. 1634, par.2)
b. Effect of sale –
1. Legal redemption by the debtor – Requisites:
i. The debtor must reimburse the assignee for –
aa. The price the assignee paid
bb. Judicial costs incurred by him
cc. Interest on the price from the day it was paid
ii. The right must be exercised within thirty days from the date the assignee demands
payment from him
2. Excepted from the rule are sales (or assignments) made to:
i. A co-heir or co-owner of the right assigned
ii. A creditor in payment of the credit
iii. The possessor of a tenement or piece of land which is subject to the right in litigation
assigned. (Art. 1635)
I. Nature and characteristics

A. Defined (See Art. 1638)
B. Characteristics – of barter:
a. Consensual –perfected by consent
b. Bilateral – involving reciprocal prestations
c. Onerous – consisting in an exchange of equivalent values
d. Nominate – having a special designation
e. Principal – capable of existing alone
f. Commutative – fulfillment being determined in advance
C. Requisite –
a. The things must belong to the respective parties.
Hence –
1. If one of the parties should prove that the other did not own the thing promised and
given, he cannot be compelled to deliver what he offered, but shall be entitled to damages (Art.
1639)
2. In case of eviction, the injured party may ask for-

i. Recovery – provided:
aa. The thing remains in the possession of the other party, and
bb. Without prejudice to third persons who acquired rights in good faith

ii. Or only indemnity for damages (Art. 1640)
D. The provisions on sale are suppletory (Art. 1641)

a. But barter is not subject to ceiling price laws.
ix. quasi-contracts
LOAN:
 Loan is a real contract because the delivery of the thing loaned is necessary for the
perfection of the contract. There are two kinds: Commodatum (hiram) and Mutuum
(utang)
 Characteristics:
1. It is gratuitous if a consideration is paid then it is a lease;
2. Its purpose is the temporary use of the thing loaned
3. In the use of the thing, the bailee it does not include the fruits unless there is a
stipulation to the contrary
4. Bailee need not be the owner of the subject matter but he must have possessory
interest over the thing
5. The death of the bailor or the bailee extinguishes the contract of loan. It is thus
personal in character
 The bailee is liable for ordinary expenses for the use and the preservation of the thing
loaned.
 A bailee is not liable for loss pr damage of the thing loaned due to fortuitous event.
Exceptions:
1. When the bailee devotes the thing to a different purpose;

2. When the bailee keeps it longer than the period stipulated or after the
accomplishment of the use for which the commodatum was constituted;
3. If the thing loaned was delivered with an appraisal of its value unless there is an
express stipulation to the contrary
4. If the bailee lends the thing loaned to a third person who is not a member of his
household
5. If the bailee, being able to save the thing loaned or his own property of similar
nature, chose to save the latter
 the bailor has the obligation to allow the bailee to use the thing loaned for the duration
or the period stipulated or until the accomplishment of the purpose for which the
commodatum was constituted. The bailor can demand the thing loaned when:

1. his has an urgent need of the thing loaned, during which time the commodatum
shall be suspended;
2. in cases of precarium – there is precarium when:
a. if the duration of the contract has not been stipulated;

b. if the use or the purpose of the contract has not been stipulated;
c. if the use of the thing is merely tolerated by the bailor
 the bailor may also demand the return of the thing loaned when the bailee has
committed any act of ingratitude
 MUTUUM - is a contract whereby one of the parties delivers to another money or

other consumable thing with the understanding that the same amount of the same kind
and quality shall be paid.
 In mutuum, ownership is transferred to the borrower

 It may be gratuitous or onerous it is a loan for consumption
 The legal rate of interest has been raised to 12% and this rate applies only to loans
or forbearance of money, goods or credit and court judgments thereon. Court
judgments for damages arising from injury to persons and loss of property which
does not involve a loan is at the rate of 6% per annum.
 Where the interest rate is not expressly stipulated, the loan shall earn 12% per
annum.
 DEPOSIT
 A deposit is constituted from the moment a person receives a thing belonging to
another, with the obligation of safely keeping it and returning the same.
 It is a real contract because the contract is not perfected unless there is the
delivery of the subject matter.
 Distinctions between Extrajudicial and Judicial deposit:
1. E. is constituted by the will of the contracting parties while J deposit is

constituted by court order e.g. attachment of the property
2. E. deposit refers to movable property while J deposit refers to either to
movable or immovable property;
3. The purpose of E. deposit is the safekeeping of the thing deposited while
in J deposit, it is to secure or protect the owner’s right;
4. E. deposit is generally gratuitous while J. deposit is always onerous;

5. In E. deposit the depositary is obligated to return the thing deposited
upon demand by the depositor, while in J. deposit, the thing shall be
delivered only upon order of the court.
 GUARANTY
 Is a contract whereby a person binds himself to the creditor to fulfill the
obligation of the principal debtor in case the latter should fail to do so.
 Characteristics:
1. It is an accessory contract
2. It is subsidiary and conditional
3. Unilateral
4. The guarantor must be a person distinct from the principal debtor
 Guaranty and Suretyship
1. G. is only secondarily liable; while a S. is primarily liable and is not

entitled to the benefit of excussion or exhaustion of the properties of the
principal debtor
2. Liability of the Guarantor depends upon an independent agreement to
pay the obligation if the primary party fails to do so. The Surety is a
regular party to the undertaking;
3. The guarantor binds himself to pay only when the principal debtor
cannot pay; the surety assumes liability as a regular party to the
undertaking and thus undertakes to pay if the principal debtor does not
pay.
4. The Guarantor is an insurer of the debtor’s solvency. The S. is an insurer
of the debt
 The guarantor’s liability cannot exceed the principal obligation;

 A guaranty is generally gratuitous unless there is a stipulation to the contrary
 BENEFIT OF EXCUSSION – the guarantor has the right to the benefit of excussion
before he can be compelled to pay. Exceptions:
1. If the guarantor has expressly renounced the excussion

2. If the guarantor has bound himself solidarily with the debtor. This would be a
case of suretyship
3. In case of the debtor’s insolvency
4. When the guarantor has absconded or cannot be sued within the Philippines
unless he left a manager or representative

5. If it may be presumed that an execution on the debtor’s property will not
satisfy the obligation
6. If the guarantor does not set up the benefit of exhaustion and fails to point
out to the creditor available property of the debtor within the Philippines
7. If he is a judicial bondsman and sub-surety
8. Where a pledge or mortgage has been given by the guarantor as a special
security
9. If the guarantor fails to interpose it as a defense before judgment is rendered
against him
 BENEFIT OF DIVISION – guarantor is likewise entitled to the benefit of division.

Where there are several guarantors of only one debtor for the same debt. The
guarantor’s liability, in this case, is merely joint and they are not liable beyond
the shares which they respectively bound themselves to pay.
 PLEDGE
 Is a contract by virtue of which the debtor delivers to the creditor or to a third
person a movable or document evidencing incorporeal rights for the purpose of
securing the fulfillment of a principal obligation with the understanding that
when the obligation is fulfilled, the thing delivered shall be returned with all its
fruits and accessions.
1. Real contract- perfected by the delivery of the thing pledged by the

debtor (pledgor) to the creditor (pledge) or to a third person by
agreement;
2. Accessory contract
3. Unilateral contract which creates an obligation only on the part of the
creditor to return the thing pledged upon the fulfillment of the principal
obligation
4. Subsidiary contract – the obligation incurred does not arise until the
fulfillment of the principal obligation to which it secures
 Essential requirements:
1. The pledge is constituted to secure the fulfillment of a principal obligation

2. The pledgor or mortgagor must be the absolute owner of the thing
pledged or mortgaged
3. The person(s) constituting the pledge or mortgage have the free disposal
of their property or that they are legally authorized for the purpose

 The pledge has not right to use the thing pledged or to appropriate the fruits
thereof without the authority of the owner. But the pledge can apply the fruits ,
income, dividends or interest, if owing and thereafter to the principal of his
credit (Art. 2132) unless there is a stipulation to the contrary.
 Pledgor cannot ask for the return of the thing pledged until the principal
obligation is fully paid including interest due thereon and expenses incurred for
its preservation. But the pledgor is allowed to substitute the thing pledged which
is in danger of destruction or impairment with another thing of the same kind
and quality.
 The sale of the thing pledged extinguishes the principal obligation whether the
price is more or less than the amount due.
 If the price of the sale is more than the amount due the creditor, the
debtor is not entitled to the excess unless there is a contrary stipulation;
 If the price of the sale is less than the principal amount due, the creditor
is NOT entitled to recover the deficiency. A contrary stipulation is void.
(Art. 2115)
 A pledge renouncing a pledge, in a statement in writing, extinguishes the pledge and the
pledgee becomes a depositary. Neither the acceptance by the pledgor or the owner, nor
the return of the thing pledged is necessary for the pledge to renounce or abandon the
pledge.
 REAL MORTGAGE
1. REALTY AS SUBJECT MATTER – only real property or alienable rights and

interest therein may be the subject matter of real estate mortgage. Even
the rights of a mortgage or other encumbrances may be the object of
another mortgage. (Art. 2124)
2. REAL RIGHT – a mortgage lien is a real right and as such it is good and
binding against the whole world and may be enforced by real action
against all persons who may have existing rights or interest in the same
property, it registered prior to the mortgage.
3. ACCESSORY OBLIGATION – the consideration of the mortgage is the same

as that of the principal obligation it secures.

4. INDIVISIBILITY – even though the debt secured may be divided among the
debtors, or creditors or their successors-in-interest, the mortgage shall
remain as one and indivisible, unless there have been several things given
in mortgage and each of them guarantees only a determinate portion of
the obligation. In the latter case, the creditor may claim from the third
person in possession of the mortgaged property, the payment of the aprt
of the credit secured by the property which said third person possess.
5. INSEPARABILITY – the mortgage lien and the property affected are

inseparable so that whoever may subsequently acquire title to the
mortgaged property is bound by the terms of the mortgage, whether the
transfer be with or without the consent of the mortgagee. The mortgage
directly and immediately subjects the property upon which it is imposed,
whoever the possessor may be, to the fulfillment of the obligation for
whose security it was constituted.
6. RETENTION OF POSSESION – the mortgagor retains possession of the

mortgaged property inasmuch as a mortgage is a mere lien and title to
the property does not pass to the mortgagee.
 MORTGAGE DISTINGUISHED FROM ANTICHRESIS:
1. AS TO POSSESSION – if the property given in security, the debtor retains it

in case of mortgage; the creditor takes over it in case of Antichresis; A mortgage
coupled with the delivery of the land to the creditor becomes an antichresis
2. WITH RESPECT TO FRUITS – in A M., the creditor does not gather or

receive them; in a., the creditor generally receives them with the obligation to apply
them to the payment of interest due and, if any still remain, to the principal
obligation;
3. In A. the creditor is obliged to pay for the taxes and charges upon the
estate; in M. it is the debtor who pays
 REAL ESTATE MORTGAGE DISTINGUISHED FROM CHATTEL MORTGAGE- aside

from the subject matter, another difference is in the formality required for their
constitution. REM is required to be constituted by means of a public instrument,
CM may be constituted in a private document only provided the latter is
accompanied with an Affidavit of Good Faith.
 A stipulation forbidding the owner from alienating the immovable mortgaged

shall be void (Art. 2130)

 The mortgagee has the right to alienate or assign to a third person, in whole or in
part, his mortgage credit. The transfer of the mortgage credit does not affect the
debtor unless he is notified of it. If the debtor pays to the original mortgagee in
ignorance of the assignment, he will be released from debt.
 REDEMPTION BY MORTGAGOR:
1. the EQUITY OF REDEMPTION is the right of the mortgagor after the

judgment in foreclosure proceedings, within a period of not less than 90 days
before the sale or confirmation of the sale, to pay into the court the amount of
the judgment debt.
2. RIGHT OF REDEMPTION – is the right of the mortgagor, after the sale of the
mortgage property, to redeem the property by paying to the purchaser in the
sale or to the sheriff who made the sale, the amount paid by him, with interest,
within one year from the sale.
There is no right of redemption, only equity of redemption, in judicial foreclosure

under the Rules of Court. The right of redemption is provided in (1) foreclosure
by banks or banking institutions as provided in their charters or in the General
Banking Act; and (2) extrajudicial foreclosures under Act No. 3135, as amended.
 CLAIM FOR DEFICIENCY – the mortgagee has the right to claim for deficiency
resulting from the price obtained in the sale of the property at public auction and
the outstanding obligation at the time of the foreclosure proceedings. The right
to claim payment of deficiency after foreclosure of real mortgage prescribes in
ten (10) years.
CHATTEL MORTGAGE:
 SUBJECT MATTER- only personal property including equity in shares of stock;

growing crops even if they ate ‘ungathered products” they are considered
personal property that may be the subject matter of a chattel mortgage; vessels
 SALE OF CHATTEL MORTGAGE without consent of the mortgagee – Article 319,

par. 2 of the Revised Penal Code provides – any mortgagor who shall sell or
pledge personal property already pledged or mortgaged under the Chattel
Mortgage Law without the consent of the mortgagee written on the back of the
mortgage and noted on the record thereof in the Office of the Register of Deeds
of the province or city where such property is located incurs criminal liability.
 AFFIDAVIT OF GOOD FAITH – “We severally swear that the foregoing mortgage is
made for the purpose of securing the obligations specified in the condition
thereof, and for no other purpose, and that the same is a just and valid
obligation, and one not entered into for the purpose of fraud.”
- the Affidavit of Good faith is required to be appended to such mortgage and

recorded therewith
- The absence of such affidavit vitiates a mortgage as against creditors and subsequent
encumbrances; unenforceable as against third persons. The chattel mortgage may,
however, be valid as between the parties even in the absence of the affidavit of
good faith.
 REAL MORTGAGE AND CHATTEL MORTGAGE REGISTRATION
– A deed of mortgage covering registered land is considered registered from the time
the same is recorded in the entry book; in case of a Chattel mortgage, however, the
document must be recorded in the chattel mortgage register. In the firt, entry in the
Day Book is sufficient; while in chattel mortgage, there must be entry, not only in the
Day Book but also in the Chattel Mortgage Register.
 FORECLOSURE OF CHATTEL MORTGAGE- it is a condition precedent that before

foreclosure may be resorted to, it is necessary that there be a violation of the
condition of the chattel mortgage and that at least 30 days shall have elapsed
since then. (Sec. 14, CML)
 EFFECT OF FORECLOSURE – when the foreclosure is validly confirmed by the

court, title in the property rests upon the purchaser and the confirmation
retroacts to the date of the sale. All rights of the mortgagor in the property
terminates and is vested in the purchaser.
 DEFICIENCY- Chattel mortgage creditor may maintain an action for deficiency.
ANTICHRESIS:
 “By the contract of antichresis the creditor acquires the right to receive the fruits
of an immovable of his debtor, with the obligation to apply them to the payment
of the interest, if owing and thereafter to the principal of his credit.” Art. 2132.
 COMPARED WITH PLEDGE AND MORTGAGE – like pledge and mortgage,

antichresis is a real right and an accessory contract, which cannot exist without a
valid principal obligation. It is not essential in antichresis that the property pass
to the possession of the creditor or a third person. But it differs from pledge in
that it refers to immovable property , and from mortgage in that the creditor has
the right to receive the fruits of the thing, although their application is
determined by law.

 Antichresis compared with pledge –
1. Antichresis is a consensual contract in the sense that it can be perfected

without delivery of the thing pledged.
2. As to subject matter, only real property or immovable may be the object
of A; in pledge, it is movable or personal property’
3. to constitute a valid pledge, it is indispensable that the possession of the
property be held and retained by the creditor or someone else
designated by common consent; in Antichresis, the contract may still
subsist even if the possession of the thing given in security is returned to
the debtor, as when the creditor desires to be exempt from the obligation
to pay its taxes and other expenses necessary for its preservation.
 RIGHTS OF THE CREDITOR IN ANTICHRESIS:
1. the right to the fruits and income of the thing;

2. the right to retain the thing until the debt is paid;
3. the right to have the thing sold upon non-payment at maturity;
4. the right of preference to the proceeds of the sale of the thing
 When a contract of loan with security does not stipulate the payment of interest
but provides for the delivery to the creditor by the debtor of the real property
constituted as security for the payment thereof, in order that the creditor may
administer the same and avail himself of the fruits, without stating that said
fruits are to be applied to the payment of interest, if any, and afterwards to that
of the principal of the credit, the contract shall be considered to be one of
mortgage and not antichresis.
 Payment of interest shall be specified in writing which is essential for the validity
of the contract of Antichresis.
 The creditor, unless there is a stipulation to the contrary, is obliged to pay the
taxes and charges upon the estate. He is also bound to pay the expenses
necessary for its presevation and repair. The sum spent for these purposes shall
be deducted from the fruits. If the fruits are not sufficient to cover the taxes and
charges, the deficiency shall be borne by the creditor, unless otherwise
stipulated.
 EFFECT OF NON-PAYMENT OF DEBT – the creditor in antichresis cannot by mere

possession of the real property which he received by virtue of an antichresis
acquire ownership over the same for failure of the debtor to pay the debt within
the stipulated time, any agreement to the contrary being void. The debtor
cannot recover the enjoyment and use of the real property given in antichresis
thereon, the creditor being entitled to ask the courts that the said real property
be sold to satisfy his credit.
ix. quasi-delicts
A. ELEMENTS OF QUASI DELICT/TORTS
1. Act or omission
2. Damage or injury is caused to another
3. Fault or negligence is present
4. There no pre-existing contractual relation between the parties
5. Causal connection between damage done and act/omission
B. DISTINGUISHED FROM OTHER SOURCES OF OBLIGATION:

CONTRACT QUASI DELICIT DELICIT
Vinculum Juris Contract Negligent Act or omission
act/omission (culpa, committed by
imprudence) means of dolo
(deliberate,
malicious, in bad
faith)
Proof needed Preponderance of Preponderance of Proof beyond
evidence evidence reasonable doubt
Defense Exercise of Exercise of diligence
available extraordinary of good father of a
diligence (in contract family in the selection
of carriage), force and supervision of
Majeure employees
Pre-existing There is pre-existing No pre-existing No pre-existing
contract contract contract contract
Burden of a Contractual party. Victim. Prove the ff.: Prosecution.
proof Prove the ff.: 1. damage Accused is
1. Existence of a 2. negligence presumed
contract 3. casual innocent until the
2. breach connection contrary is
between proved.
negligence
and damage
done
C. CIVIL LIABILITY IN QUASI-DELICIT vs. DELICIT

Difference Quasi- delict Delict
Liability of employer Solidary Subsidiary
Reservation requirement Civil aspect of the quasi Civil aspect is impliedly
delict is impliedly instituted instituted with criminal

with criminal action, but action
under 2000 Crimpro Rules it
is independent and
separate
Effect of judgement of Not a bar to recover civil Not a bar to recover civil
acquittal in a criminal case damages EXCEPT when damages
involving same act/omision judgement pronounces that
the negligence from which
damage arise is non-
existence
D. WHAT MUST BE PROVED
1. Negligence- in action for quasi-delict, plaintiff must prove negligence of defendant

Exception:
a. In cases where negligence is presumed or imputed by law- this is only
rebuttable/presumption juris tantum.
b. Principle of res ipsa loquitur (the thing speaks for itself)- grounded on the
difficulty in proving through competent evidence, public policy considerations
2. Damage/ injury
3. Causal connection between negligence and damage (to be actionable)- Defendant’s
negligence must be the proximate cause of injury sustained by the plaintiff to enable
plaintiff to recover. Thus, if plaintiff’s own conduct is the cause of the injury there can
be no recovery.
If plaintiff’s negligence is only contributory- he is considered partly responsible only,

may still recover from defendant but must be reduced by the courts in proportion to
his own negligence.
Concept of proximate cause- the adequate and efficient cause which in the natural
order of events and under the particular circumstances surrounding the case, would
naturally produce the event.
E. DEFENSES:
1. Contributory negligence- the theory here is that the plaintiff was also negligent
together with the defendant; to constitute a defense, proximate cause of injury or
damage must be the negligence of defendant.
2. Concurrent negligence- the theory here is that both parties are equally negligent; the
courts will leave them as they are; there can be no recovery

3. Doctrine of last clear chance- even though a person’s own acts may have placed him
in a position of peril and an injury results, the injured is entitled to recover if the
defendant through the exercise of reasonable care and prudence might have avoided
injurious consequences to the plaintiff. This defense is available only in an action by
the driver or owner of the other vehicle involved.
Elements:
a. A plaintiff was in a position of danger by his own negligence
b. Defendant knew of such position of the plaintiff
c. Defendant had the least clear chance to avoid the accident by exercise of
ordinary care but failed to exercise such last clear chance and
d. Accident occurred as proximate cause of such failure
Who may invoke: plaintiff
Inapplicable to:
1. Joint tortfeasors
2. Defendants concurrently negligent
3. As against 3rd persons
4. EMERGENCY RULE- a person is not expected to exercise the same degree of care when
he is compelled to act instinctively under a sudden peril because a person confronted
with a sudden emergency may be left with no time for thought and must make a speedy
decision upon impulse or instinct
* applicable only to situations that are sudden and unexpected such as to
deprive actor of all opportunity for deliberation
* but action must still be judged by the standard of the ordinary prudent
man
* absence of foreseeability
5. DOCTRINE OF ASSUMPTION OF RISK- Volenti non fit injuria

* Intentional exposure to a known danger
* One who voluntarily assumed the risk of an injury from a known danger cannot
recover in an action for negligence or an injury is incurred
* plaintiff’s acceptance of risk (by law/contract/nature of obligation) has erased
defendant’s duty so that his negligence is not a legal wrong
*Applies to all known danger
6. DUE DILIGENCE- diligence is required by law/contract/ depends on circumstances

of persons, places, things.

7. FORTUITOUS EVENT- no person shall be responsible for those events which
cannot be foreseen, or which through foreseen were inevitable
Exception: assumption of risk
8. DAMNUM ABSQUE INJURIA- a principle that involves damage without injury,

therefore no liability is incurred; there is no legal injury
9. LAW- specific provision of law.
10. EXERCISE OF DILIGENCE OF GOOD FATHER OF FAMILY IN SELECTION AND

SUPERCVISION OF EMPLOYEES
11. PRESCRIPTION
Injury to right of plaintiff/quasi delict – 4 years

Defamation - 1 year
When no specific provision, must be counted from the day they may be
brought
12. PROSCRIPTION AGAINST DOUBLE RECOVERY- Responsibility for fault or

negligence under quasi delict is entirely separate and distinct from civil action arising
from the RPC but plaintiff cannot recover damages 2x for same act or omission of the
defendant.
13. ACT OR OMISSION IS NOT THE PROXIMATE CAUSE OF THE DAMAGE
14. OTHER GROUNDS- MOTION TO DISMISS
a. Lack of jurisdiction over person of defendant

b. Lack of jurisdiction over subject matter
c. Venue improperly laid
d. Plaintiff has no legal capacity to sue
e. There is another action pending between same parties for same cause
f. Cause of action is barred by prior judgment /statute of limitations
g. Pleading asserting claim states no cause of action
h. Claim set forth in pleading has been paid, waived, abandoned,
extinguished
i. Claim is unenforceable under the provision of statute of fraud
j. Condition precedent for filling claim has not been complied with
F. PERSONAL LIABLE QUASI-DELICT

1. TORTFEASOR- whoever by act or omission causes damage to another, there being no
fault or negligence is obliged to pay for the damage done (art 2176)
2. PERSONS VICARIOUSLY LIABLE- the obligation imposed in 2176 is demandable not
only for one’s own act or omission but also for those persons for whom one is
responsible (art 2180)
VICARIOUS LIABILITY- law on imputed negligence; a person who himself is

not guilty of negligence is made liable for conduct of another
Reason:
1. Public policy- deeper pocket/capacity to pay
2. Violation of duty on account of relationship- he is negligent
a.) PARENTS- the father, and incase of his death or incapacity the mother are
responsible for the damage caused by:
i. Minor children
ii. Who live in their company
Note: Father and mother shall jointly exercise parental authority over common children.
In case of disagreement, father’s decision shall prevail (art 211).
b.) GUARDIANS- guardians are liable for damages caused by the minor or
incapacitated persons who are
i. Under their authority and
ii. Live in their company
c.) OWNERS AND MANAGER OF ESTABLISHEMENT/ENTERPRISE- owners and
managers of establishment or enterprise are responsible for damages caused by their
employees
i. In the service of the branches in which he latter are employed

OR
ii. in occasion of their function
d.) EMPLOYERS- employers shall be liable for damages caused by their employees
and household helpers
i. Acting w/in the scope of their assigned task
ii. even though the former are not engaged in any business or industry
(unlike in RPC- subsidiary liability of employer attaches in case of insolvency of
employer for as long as the employer is engaged in business/industry)
Defenses available to employers:
i. Exercise of due diligence in election and supervision of employees
ii. act/omission was made outside working hours and in violation of company’s rules and
regulations

e.) STATE- the state is responsible when it acts through a special agent, but not when
the same is caused by an official to whom task doe properly pertains in which case art
2176 is applicable
f.) SCHOOLS, ADMINISTRATOR, TEACHER- teachers or heads of establishments of

arts and trades shall be liable for damages caused by their:
i. Pupils, students and apprentices
ii. as long as they remain in their custody

Note:
Family code, art 218- The school, its administration and teachers or the individual, entity
or institution engaged in child care shall have special parental authority and
responsibility over the minor child under their supervision, instruction or
custody( authority and responsibility shall apply to all authorized activities whether
inside or outside the premises or the school, entity, or institution).
Family code, art 219- those given the authority and responsibility shall be solidarily and
principally liable for damages caused by act/omission of the unemancipated minor;
parents, judicial guardian or person exercising substitute parental authority over said
minor shall be subsidiarily liable.
DIFFERENCE BETWEEN ARTICLES 218 AND 2180

ART 218 ART 2180
School, admin, teachers engaged in child care Teachers, head of establishment in Arts and
are made expressly liable Trades are made expressly liable
Liability of school, admin, teachers is solidary No such express solidary nor subsidiary liability
and parents are made subsidiary liable is stated
Students involved must be minor Students involved not necessarily minor
Issues:
1. Whether or not schools are liable?-
Gen rule: schools are not liable as partly defendants exception:
a.) FC 218- schools are expressly made liable
b.) St. Francis case rule- school’s liability as employer
c.) PSBA case ruling- school has liability based on contract
So that-
a.) If culprit is a teacher, follow St. Francis ruling (sue school as employer)
b.) If culprit is a stranger, follow PSBA ruling (sue school based on contract)
c.) If culprit is a student- apply 2180
2. Does 2180 apply to school of Arts and Trades only? No. applies to all including
academic institution per weight of jurisprudence based on obiter of Justice JBL Reyes
in the Exconde case

3. Base of liability of teacher- principle of loco parentis (stand in place of parents)
4. So long as they remain in their custody
 Not literal anymore; before: boarding and living with teacher due to peculiar
characteristic of trade and arts school
 As long as they are in the protective supervisory capacity of teacher- special
parental authority
3. PERSONS EXPRESSLY MADE LIABLE BY LAW (even without fault)

a. PROSSESSOR OF AN ANIMAL OR WHOEVER MAKES USE OF THEM EVEN IF THE
ANIMAL IS LOST OR ESCAPED
Except:
1. Force majeure
2. Fault of the injured or damaged person
b. OWNER OF MOTOR VEHICLE- in motor vehicle mishap, the owner is solidarily

liable with the driver if:
1. He was in the vehicle and
2. Could have through due diligence prevented the misfortune
c. MANUFACTURERS & PROCESSORS OF FOODSTUFFS, DRINK, TOILET ARTICLES &

SIMILAR GOODS- they are liable for death and injuries caused by any noxious or
harmful substances used although no contractual relations exists between them and
the consumers
d. DEFENDANT IN POSSESSION OF DANGEROUS WEAPONS OR SUBSTANCES SUCH

AS FIREARMS AND POISON- there is a prima facie presumption of negligence on the
part of defendant if death or injury results from such possession
Exception: The possession or use thereof is indispensable in his occupation or

business
e. PROVINCES, CITIES AND MUNICIPALITIES- shall be liable for damages for the
death or injuries suffered by any person by reason of the defective condition of
roads, streets, bridges, public buildings and other public works under their control
or supervision
f. PROPRIETOR OF BUILDING OR STRUCTURE- responsible for the damages

resulting from any of the ff:
i. Total or partial collapse of building or structure if due to lack of necessary
repairs

ii. Explosion of machinery which has not been taken cared of with due
diligence, and the inflammation of explosive substances which have not
been kept in a safe and adequate place
iii. By excessive smoke, which may be harmful to persons or property
iv. By falling of trees situated at or near highways or lanes, if not caused by
force majeure
v. By emanations from tubes, canals, sewers or deposits of infectious matter
constructed without precautions suitable to the place
g. ENGINEER, ARCHITECT OR CONTRACTOR- if damage of building or structure is

caused by defect in construction which happens within 15 years from construction;
action must be brought within 10 years of collapse
h. HEAD OF FAMILY THAT LIVES IN A BUILDING OR PART THEREOF- liable for

damages caused by things thrown or falling from the same
G. SPECIAL TORTS
1. Art 19, 20, 21 (catch-all provision)
a. ABUSE OF RIGHTS (Art 19)
ELEMENTS:
i. There is a legal right or duty
ii. Which is exercised in bad faith
For the sole intent of prejudicing or injuring another
b. GENERAL SANCTION (Art. 20)

- For all other provisions of law which do not especially provide
their own sanction
ELEMENTS:
i. In the exercise of his legal right or duty
ii. Willfully or negligently causes damage to another

c. CONTRA BONUS MORES (Art 21)
ELEMENTS:
i. There is an act which is legal
ii. But which is contrary to morals, good custom, public order or
public policy
iii. And it is done with intent to injure
2. UNJUST ENRICHMENT- Arts. 22, 23, 2142 & 2143

3. OSTENTATIOUS DISPLAY OF WEALTH- Art. 25; thoughtless extravagance for
pleasure or display during a period of public want or emergency
4. VIOLATION OF RIGHT OF PRIVACY AND FAMILY RELATIONS
Art. 26- every person shall respect the dignity, personality, privacy and peace of mind of
his neighbors and other persons. The ff. acts though they may not constitute a criminal
offense, shall produce a cause of action for damages, prevention and other relief:
i. prying into the privacy of another’s residence
ii. meddling with or disturbing the private life or family relations of another
iii. intriguing to cause another to be alienated from his friends
iv. vexing or humiliating another on account of his religious beliefs, lowly station
in life, place of birth, physical defect, or other personal condition
5. DERELICTION OF OFFICIAL DUTY OF PUBLIC OFFICERS
May be brought by any person suffering from material or moral loss because a public
servant refuses of neglects, without just cause to perform his official duty (art 27).
REQUISITES:
a. Defendant is a public officer charged with the performance of a duty
in favor of the plaintiff
b. He refused or neglected without just cause to perform such duty
(ministerial)
c. Plaintiff sustained material or moral loss as consequence of such non-
performance
d. The amount of such damages, if material
6. UNFAIR COMPETITION- unfair competition in agricultural, commercial, or industrial

enterprises or in labor through the use of force, intimidation, deceit. Machination , or other
unjust, oppressive or high-handed method (Art 28)
7. MALICIOUS PROSECUTION
ELEMENTS:
a. That the defendant was himself the prosecutor/ he instignated his
commencement
b. That it finally terminates in his acquittal
c. That in bringing it the prosecutor acted without probable cause and
d. That he was actuated by legal malice , that is, by improper and sinister motive
8. VIOLATION OF RIGHTS AND LIBERTIES OF ANOTHER PERSON
9. NUISANCE

a.DEFINITION- any act of , omission, establishment, condition of property, or anything else
which:
i.injures or endangers the health or safety to others, or

ii.annoys or offends the senses, or
iii.shock, defies, or disregards decency or morality, or
iv. obstructs or interferes with the free passage of any public highway or streets, or any
body of water
v. hinders or impairs use of property
b. KINDS:
NUISANCE PER SE- denounced as nuisance by common law or by statute
NUISANCE PER ACCIDENS- those which are in their nature not nuisances, but
may become so by reason of their locality, surroundings, or the manner in which
they may be conducted, managed, etc.
PUBLIC- affects a community or neighborhood or any considerable number of

persons
REMEDIES AGAINST PUBLIC NUISANCES:

1. Prosecution under the RPC or any local ordinance
2. Civil action
3. Abatement, without judicial proceeding
WHO MAY AVAIL OF REMEDIES:

1. Public officers
2. Private persons- if nuisance is specially injurious to himself, the ff.
steps must be made:
i. demand be first made upon owner or possessor of the

property to abate the nuisance
ii. that such demand has been rejected
iii. that the abatement be approved by the district health
officer and executed with the assistance of local police
iv. that the value of destruction does not exceed P3,000
PRIVATE- one that is not included in the foregoing definition; affect an individual
or a limited number of individuals only
REMEDIES AGAINST PRIVATE NUISANCES:
(1) Civil action
(2) Abatement, without judicial proceedings

WHO MAY AVAIL OF REMEDIES:
(1) Public officers
(2) Private persons- if nuisance is specially injurious to himself; the ff.
steps must be made:
i. demand be first made upon owner or possessor of the
property to abate the nuisance
ii. That such demand has been rejected
iii. that the abatement be approved by the district health
officer and executed with the assistance of local police
iv. that the value of destruction does not exceed P3,000
c. DOCTRINE OF ATTRACTIVE NUISANCE- a class of cases within the general rule

that one is liable for the injury resulting to another from failure to exercise the
degree of care commiserate with the circumstances
o The attractiveness of the premises or of the dangerous instrumentality to

children of tender years is to be considered as an implied invitation,
which takes the children who accepted it out of the category of a
trespasser and put them in the category of invitees towards whom the
owner of the premises or instrumentality owes the duty of ordinary care
x. DAMAGES
Kinds of Damages: (MENTAL)

MORAL
EXEMPLARY
NOMINAL
TEMPERATE
ACTUAL
LIQUIDATED
1. ACTUAL/COMPENSATORY- adequate compensation for

a) The value of loss suffered
b) Profits which oblige failed to obtain
Exception:
a. provided by law
b. by stipulation

WHAT MUST BE DONE TO COLLECT ACTUAL DAMAGES:
1.) Plead or allege the loss
GENERAL DAMAGE- natural, necessary and logical consequences of a particular wrongful

act which result in injury; need not be specifically pleaded because the law itself implies
or presumes that they resulted from the wrongful act
SPECIAL DAMAGES- damages which are the natural, but not the necessary and inevitable
result of the wrongful act; need to be pleaded
2.) Pray for the relief that claim for loss be granted
3.) Prove the loss
WHEN LOSS NEED NOT BE PROVED:

1.) Liquidated damages previously agreed upon, liquidated damages take the
place of actual damages except when additional damages incurred
2.) If damages other than actual are sought
3.) Loss is presumed (ex: loss of a child or spouse)
4.) Forfeiture of bonds in favor of the government for the purpose of promoting
public interest or policy (ex: bond for temporary stay of alien)
CONTRACTS AND QUASI CONTRACTS

1. Damages in case of good faith-
a. Natural and probable consequence of breach of obligation and
b. Parties have foreseen or could have reasonably foreseen at time obligation was
constituted
2. Damages in case of bad faith
a. It is sufficient that damages may be reasonably attributed to the non-performance of
the obligation
CRIMES AND QUASI CRIMES

 Defendant is liable for all damages that are natural and probable consequence of the
act/omission complained of
 Not necessary that damages have been foreseen or could have been reasonably foreseen
a) VALUE OF LOSS SUFFERED- destruction of things, fines or penalties, medical and

hospital bills, attorney’s fees, interests, cost of ligation
Damages recoverable:
1.) Medical and hospital bills
2.) Loss or impairment of earning capacity (in case of physical disability)

3.) Damages for death
a) Minimum amount: P50,000
b) Loss of earning capacity unless deceased had permanent physical disability
not caused by defendant so that deceased had no earning capacity at time of
death
c) Support, if deceased was obliged to give support (for period not more than 5
years)
d) Moral damages
4.) Attorney’s fees- as a general rule, attorney’s fees (other than judicial costs) are
not recoverable, except:
a) Stipulation between parties

b) When exemplary damages are awarded
c) When defendant’s act/omission compelled plaintiff to litigate with 3 rd
persons or incur expenses to protect his interest
d) Malicious prosecution
e) Clearly unfounded civil action or proceeding against plaintiff
f) Defendant acted in gross and evident bad faith in refusing to satisfy
plaintiff’s just and demandable claim
g) Legal support actions
h) Recovery of wages of household helpers, laborers and skilled workers
i) Actions for indemnity under workmen’s compensation and employer
liability laws
j) Separate civil action to recover civil liability arising from crime
k) When double judicial costs are awarded
5.) Judicial costs

6.) Interest- discretionary on part of the court
WHEN DAMAGES MITIGATED:

1.) Contributory negligence
2.) In contracts, quasi-contracts and quasi-delict-
a. Plaintiff has contravened the terms of contract
b. Plaintiff derived some benefit as result of contract
c. In case where exemplary damages are to be awarded, that the defendant
acted upon the advice of counsel
d. That the loss would have resulted in any event
e. That since the filing of action, the defendant has done his best to lessen the
plaintiff’s loss or injury

3. MORAL DAMAGES-(PBMF-MWSS) ]
a. Physical suffering
b. Besmirched reputation
c. Mental anguish
d. Fright
e. Moral shock
f. Wounded feelings
g. Social humiliation
h. Serious anxiety
Notes:
 Sentimental value of real or personal property may be considered in
adjudicating moral damages
 The social and economic/financial standing of the offender and the
offended party should be taken into consideration in the computation of moral
damages
 Moral damages is awarded only to enable the injured party to obtain
means, diversions or amusements that will serve to alleviate the moral suffering
he has undergone, by reason of defendant’s culpable action and not intended to
enrich a complainant at the expense of defendant
IN WHAT CASES MAY MORAL DAMAGES BE RECOVERED (enumeration not exclusive):

a. Criminal offense resulting in physical injuries
b. Quasi-delicts causing physical injuries
c. Seduction, abduction, rape or other acts of lasciviousness
d. Adultery and concubinage
e. Illegal or arbitrary detention or arrest
f. Illegal search
g. Libel, slander or other form of defamation
h. Malicious prosecution
i. Acts mentioned in art 309 of the RPC relating to disrespect of the dead and
interference with the funeral
j. Acts and actions referred to in arts 21,26, 27, 28, 29, 30, 32, 34, and 35
k. The parents of the female seduced , abducted, raped or abused
l. Spouse, descendants, ascendants and brother and sisters for acts mentioned in
art 309
m. Art 2220- in cases of willful injury to property or breaches of contract where
defendant acted fraudulently or in bad faith

3. NOMINAL DAMAGES- adjudicated in order that a right of the plaintiff, which has been
violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose
of indemnifying the plaintiff for any loss suffered by him
ELEMENTS:
a. Plaintiff has a right
b. Right of plaintiff is violated
c. Purpose is not to identify but vindicate or recognize right violated
4. TEMPERATE OR MODERATE DAMAGES-more than nominal but less than compensatory

where some pecuniary loss has been suffered but its amount can’t be proved with certainty due
to the nature of the case
REQUISITES:
a. Some pecuniary loss
b. Loss is incapable of pecuniary estimation
c. Must be reasonable
5. LIQUIDATED DAMAGES- those agreed upon by the parties to a contract, to be paid in

case of breach thereof
WHEN LIQUIDATED DAMAGES MAY BE EQUITABLY REDUCED:
a. Iniquitous or unconscionable
b. Partial or irregular performance
6. EXEMPLARY OR CORRECTIVE DAMAGE- imposed by way example or correction for the

public good, in addition to the moral, temperate, liquidated to compensatory damages.

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CIVIL LAW

2. Territoriality Principle – Operation of law is co-extensive with territorial sovereignty

Territoriality and Generality Principle -

There are 2 principles involved here: Territoriality and Generality. Territoriality

Civil Law Bar Review Notes Page 1

UNIVERSALITY AND TERRITORIALITY PRINCIPLE:

NOTE: Consuls do not have immunities

Civil Law Bar Review Notes Page 2

3. Lex Rei Sitae

EXCEPTIONS TO LEX REI SITAE:

Civil Law Bar Review Notes Page 3

ii. FAMILY CODE

VALIDITY OF MARRIAGE – in determining the validity of marriage, it is to be tested by

1. REQUISITES FOR VALIDITY OF MARRIAGE:

 “to grant the changes in name and sex sought by petitioner

ii. Consent freely given in the presence of the solemnizing officer

Civil Law Bar Review Notes Page 4

1. Authority of the solemnizing officer

The authority of the officer or clergyman shown to have performed a marriage

Authorized solemnizing officers are:

1.1. incumbent member of the judiciary within the

Absence of authority of the solemnizing officer- the marriage is void,

2. A valid marriage license except where no marriage license is

3. A marriage ceremony which takes place with the appearance

Civil Law Bar Review Notes Page 5

Effect of absence or defect in any of the requisites:

a. The absence of any of the essential for formal requisites

b. A defect in any of the essential requisites shall render the

c. An irregularity in the formal requisites shall not affect the

1.1. those contracted by any party below 18 years of age

Article 41 refers to a valid bigamous marriage

1.5. Those contracted through mistake of one contracting party as to the

2. Psychological Incapacity of one or both of the contracting parties to perform his

Civil Law Bar Review Notes Page 6

3.1 Between ascendants and descendants of any degree; and

4. Marriages declared void by reason of public policy (Art. 38)

4.1. Between collateral blood relatives, whether legitimate or illegitimate, up

5. Marriages under Art. 40

6. Marriages under Art. 44

“The judgment of annulment or of absolute nullity of the marriage, the partition

VOIDABLE MARRIAGES (Art. 45)

Civil Law Bar Review Notes Page 7

No other misrepresentation or deceit as to character, health, rank,

4. Consent was obtained by force, intimidation, or undue influence

MARRIAGE UNDER ARTICLE 26

7. those contracted by any party below 18 years of age

Art. 26, 2nd par.:

DONATIONS BY REASON OF MARRIAGE – those made before the celebration of the

Civil Law Bar Review Notes Page 8

REVOCATION OF DONATION BY REASON OF MARRIAGE: (Art. 86) DPN may be revoke

MARRIAGE SETTLEMENT ; Form and Modification (Art. 76 and 77)

ABSOLUTE COMMUNITY OF PROPERTY

*What constitutes Community Property

Civil Law Bar Review Notes Page 9

Presumption of property acquired during the marriage, is that it belongs to the

*Excluded from ACP

CONJUGAL PARTNERSHIP OF GAINS

- What forms Part of CPG –

1. those acquired by onerous titled during the

2. Those obtained from the labor, industry,

Civil Law Bar Review Notes Page 10

4. The share of either spouse in the hidden

6. Livestock existing upon the dissolution of

7. Those which are acquired by chance, such