SYLLABUS FOR THE 2023 BAR EXAMINATIONS

CIVIL LAW (20%)

NOTE: All Bar candidates should be guided that only laws, rules, issuances, and
jurisprudence pertinent to the topics in this syllabus as of June 30, 2022 are examinable
materials within the coverage of the 2023 Bar Examinations.

PERSONS AND FAMILY RELATIONS

I. Persons
A. When Law Takes Effect Doctrine

Article 2. Laws shall take effect after fifteen (15) days following the completion of their
publication either in the Official Gazette, or in a newspaper of general circulation in the
Philippines, unless it is otherwise provided.

• When Law Becomes Effective

o If the law does not provide for its own effectivity – it shall take effect after
fifteen (15) days following the completion of its publication in the Official
Gazette, or in a newspaper of general circulation. Note that the effectivity
is on the sixteenth (16th) day.
o If the law provides for its own effectivity date – then it takes effect on the
said date subject to the requirement of publication.
o If the law provides that it shall become effective immediately upon approval
▪ Fariñas v. The Executive Secretary – deems such clause as defective,
but it does not render the entire law invalid.
▪ La Bugal-B’laan Tribal Association, Inc. v. Ramos – renders the law to
be effective immediately upon its publication.

• Requirement of Publication
o Tañada v. Tuvera
▪ The clause "unless it is otherwise provided" in Art. 2 of the NCC refers
to the effectivity of laws and not to the requirement of publication.
▪ The prior publication of laws before they become effective cannot be
dispensed with.
▪ For purposes of the prior publication requirement for effectivity, the
term "laws" refer not only to those of general application, but also to
laws of local application, private laws; administrative rules enforcing a
statute; city charters. Central Bank circulars to "fill-in the details of
the Central Bank Act; but not mere interpretative rules regulating and
providing guidelines for purposes of internal operations only.
▪ Internal instructions issued by an administrative agency are not
covered by the rule on prior publication. Also not covered are
municipal ordinances which are governed by the LGC.
o Exceptions
▪ Internal Rules and Regulations
▪ Interpretative Laws
▪ Letters of Instruction
▪ Municipal Ordinances

B. Ignorance of the Law

Article 3. Ignorance of the law excuses no one from compliance therewith.

• Ignorantia legis non excusat – ignorance of the law excuses no one.

 • Presumption of Knowledge of Laws
o Rule
▪ Everyone is conclusively presumed to know the law.
o Consequence – ignorance of the law is not a defense except when there is:
▪ Mistake upon a doubtful or difficult question of law
▪ Mutual error as to the legal effect of an agreement when the real
purpose of the parties is frustrated
▪ Payment by reason of a mistake in the construction or application of a
doubtful or difficult question of law – gives rise to solutio indebiti
(where a payment is made when there exists no binding relation
between the payor, who has no duty to pay, and the person who
received the payment, and the payment is made through mistake,
and not through liberality or some other cause)
o Presupposes Publication
▪ Without such notice and publication, there would be no basis for the
application of the maxim ignorantia legis non excusat.
o Rule on Knowledge of Foreign Laws
▪ There is no conclusive presumption of knowledge of foreign laws.
▪ Foreign laws must be specially alleged and proved and our courts
cannot take judicial notice of them.
▪ Doctrine of Processual Presumption/Presumed Identity
Approach – if the foreign law involved is not properly pleaded and
proved, our courts will presume that the foreign law is the same as
our local or domestic or internal law.

C. Retroactivity of Laws

Article 4. Laws shall have no retroactive effect unless the contrary is provided.

• General Rule – laws are to be construed as having only prospective operation. Lex
prospicit, non respicit (the law looks forward, not backward).

• Exceptions
o When the law itself provides for its retroactivity.
▪ However, the retroactive application of the statute must not make it
an ex post facto law, or it will result in the impairment of obligation of
contracts.
o When a penal law is favorable to the accused.
▪ The accused must not be a habitual delinquent.
o When the law is remedial or procedural in nature.
o When the law is curative in character.
o When the law creates a new substantive right.
▪ It should not prejudice another acquired right of the same origin.

D. Mandatory or Prohibitory Laws

Article 5. Acts executed against the provisions of mandatory or prohibitory laws shall be
void, except when the law itself authorizes their validity.

• General Rule – acts executed against the provisions of mandatory or prohibitory

laws shall be void.

• Exceptions
o When the law itself authorizes the validity of the act.
o When the law makes the act valid but punishes the violator.
 o When the law makes the act voidable, that is, valid, unless ratified.
o When the law declared the act void but recognizes the legal effects arising
from it.

E. Waiver of Rights

Article 6. Rights may be waived, unless the waiver is contrary to law, public order, public
policy, morals, or good customs, or prejudicial to a third person with a right recognized
by law.

• Waiver – a voluntary and intentional relinquishment of a known existing legal right,

advantage, benefit, claim, or privilege, which except for such waiver the party
would have enjoyed.

• Requisites of a Valid Waiver

o That the person making the waiver possesses the right
o That he has the capacity and power to dispose of the right
o That the waiver must be made in a clear and unequivocal manner, although
it may be made expressly or impliedly
o That the waiver is not contrary to law, public order, public policy, morals, or
good customs, or prejudicial to a third person with a right recognized by law.

• What Rights May be Waived.

o A person may waive any matter which affects his property, and any
alienable right or privilege of which he is the owner, or which belongs to him
or to which he is legally entitled.

F. Presumption and Applicability of Custom

Article 11. Customs which are contrary to law, public order, or public policy shall not be
countenanced.

Article 12. A custom must be proved as a fact, according to the rules of evidence.

• Custom – a rule of conduct formed by the repetition of acts, uniformly observed as

a social rule, which are legally binding and obligatory.
• General Rule – juridical customs are legally binding and obligatory.
• Requisites Before a Custom May Acquire the Force of Suppletory Rule
o Plurality of acts or various resolutions of a juridical question raised
repeatedly in life
o Uniformity, or identity of acts or various solutions to the juridical question
o General practice by the great mass of the social group
o Continued performance of these acts for a long period of time
o General conviction that the practice corresponds to a juridical necessity or
that it is obligatory
o The practice must not he contrary to law, morals or public order
• Customs are not subject to judicial notice. The law requires that they must be
proved as a fact.

G. Legal Periods

Article 13. When the laws speak of years, months, days or nights, it shall be understood
that years are of three hundred sixty-five days each; months, of thirty days; days, of
twenty-four hours; and nights from sunset to sunrise.
If months are designated by their name, they shall be computed by the number of days
which they respectively have.
In computing a period, the first day shall be excluded, and the last day included

• The Court declared the implied repeal of Article 13 as far as the definition of a
“year” is concerned. Thus, under existing laws (Chapter 8, Book I of the 1987
Administrative Code) and jurisprudence, a “year” shall now be understood to be
“twelve calendar months”.

• In counting periods, the first day shall be excluded and the last day included.

H. Territoriality Principle

Generality Theory - any person, citizens or aliens, residents or non-residents, male or

female, come under our territorial jurisdiction. This is because aliens owe some sort of
allegiance even if it be temporary.

• General Rule – Philippine penal laws and those of public security and safety are
obligatory upon all who live or sojourn in Philippine territory.

• Exceptions
o Treaty stipulations
o Principles of public international law
o Laws of preferential application

I. Conflict of Laws

Subject Matter Governing Law

Family right and duties, status, and National law of the person concerned.
condition of persons.
Legal capacity of persons. National law of the person concerned.

Except:
a. Capacity to succeed from National law of the decedent.
decedent.
b. Capacity of making a deed relating Lex rei sitae.
to immovable property
Real and personal property. Lex rei sitae.

Except: in succession National law of the person whose

a. Order of succession; succession is under consideration.
b. Amount of successional rights;
c. Intrinsic validity of testamentary
provisions; and
d. Capacity to succeed from the
decedent.
Forms and solemnities of contracts, wills, Lex loci celebrationis.
and other public instruments
Intrinsic validity of contracts. Law voluntarily agreed upon or intended by
the parties.

1. Lex Nationalii

Article 15. Laws relating to family rights and duties, or to the status, condition and legal
capacity of persons are binding upon citizens of the Philippines, even though living
abroad.

• Nationality Rule – Philippine laws relating to family rights and duties, or to the
 status, condition and legal capacity of persons are binding upon citizens of the
Philippines, although living abroad.
• Absolute Divorces Involving Filipinos
o If both parties are Filipinos – cannot be granted by the courts because
Philippine law doe does not provide for absolute divorce.
o Rule in mixed marriages - 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 have capacity to remarry under Philippine law (Paragraph 2,
Article 26 of the Family Code).
• Absolute Divorces Obtained by Aliens
o Aliens may obtain divorces which may be recognized in the Philippines,
provided they are valid according to their national law.
• Reckoning Point in Determining Citizenship
o The reckoning point is not the citizenship of the divorcing parties at birth or
at the time of marriage, but their citizenship at the time a valid divorce is
obtained abroad.

2. Lex Rei Sitae

Article 16. Real property as well as personal property is subject to the law of the country
where it is stipulated.
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.

• General Rule – with respect to property, be it personal or real, the rule is that it is
subject to the law of the country where it is situated.
• Exceptions – The national law of the decedent and not the law of the country
where the property is situated will govern:
o order of succession
o amount of successional rights
o intrinsic validity of testamentary provisions
o capacity of the heirs to succeed from the decedent.

3. Lex Loci Celebrationis

Article 17. The forms and solemnities of contracts, wills, and other public instruments
shall be governed by the laws of the country in which they are executed.
When the acts referred to are executed before the diplomatic or consular officials of the
Republic of the Philippines in a foreign country, the solemnities established by Philippine
laws shall be observed in their execution.
Prohibitive laws concerning persons, their acts or property, and those which have, for
their object, public order, public policy and good customs shall not be rendered
ineffective by laws or judgments promulgated, or by determinations or conventions
agreed upon in a foreign country.

• General Rule on Extrinsic Validity – the forms and solemnities of contracts, wills,
and other public instruments shall be governed by the laws of the country in which
they are executed.
• Exception to Lex Loci Celebrationis in Execution of Wills
o Joint wills executed by Filipinos in a foreign country shall not be valid, even
though authorized by the laws of the country where they may have been
executed.
 • When the acts referred to are executed before the diplomatic or consular officials
of the Republic of the Philippines in a foreign country, the solemnities established
by Philippine laws shall be observed in their execution.
• General Rule on Intrinsic Validity – with respect to the nature, construction, and
validity of contracts, what applies is the doctrine of lex loci contractus, and it may
pertain to the law voluntarily agreed upon by the parties (lex loci voluntatis) or the
law intended by them either expressly or implicitly (lex loci intentionis).

4. Doctrine of Renvoi

Renvoi Doctrine is a judicial precept whereby the Conflict of Laws Rule in the place
of the forum refer a matter to the Conflict of Laws Rule in another, and the latter refers
the matter back to the forum (remission) or to a third state (transmission). Thus, owing
to its French translation: “to send back” or “to refer back unopened”.

• When Applied
o The Doctrine of Renvoi is a legal doctrine which applies when a court is faced
with a conflict of law and must consider the law of another state, referred to
as private international law ("PIL") rules. This can apply when considering
foreign issues arising in succession planning and in administering estates.

J. Human Relations in Relation to Persons

Article 19. Every person must, in the exercise of his rights and in the performance of his
duties, act with justice, give everyone his due, and observe honesty and good faith.

▪ Norm of Human Conduct

o Sanctions: the remedy for violation of the rule of conduct is an action for
damages:
▪ Art. 20: Anyone who, contrary to law, willfully or negligently causes
damage to another shall indemnify the latter for damages.
▪ Art. 21: Anyone who willfully causes loss or injury to another in a
manner contrary to morals, good customs or public policy shall
compensate the latter for the damage.
o Principle of Damnum Absque Injuria
▪ Concept: The proper exercise of a lawful right cannot constitute a
legal wrong for which an action will lie, although the act may result in
damage to another, for no legal right has been invaded.
o Principle of Abuse of Rights
▪ Rule: If the right is exercised in bad faith and for the sole intent of
prejudicing or injuring another, there is liability under the principle of
abuse of right, for the exercise of a right ends when the right
disappears, and it disappears when it abused especially to the
prejudice of others.
▪ Elements:
• there is a legal right or duty
• it is exercised in bad faith
• for the sole intent of prejudicing or injuring another.

▪ Breach of Promise to Marry

o Rule: breach of promise to marry per se is not an actionable wrong.
o When there is Seduction: Art. 21 may be applied where the woman was a
victim of moral seduction (sufficient promise or inducement and the woman
must yield because of the promise or inducement).
 o Other Cases Which are Not Mere Breach of Promise to Marry:
▪ Where the bride and the groom went through all the wedding
preparations but 2 days prior to the wedding, the groom walked out of
the wedding (contrary to good customs).
▪ Where the plaintiff has actually incurred expenses for the wedding and
the necessary incidents thereof.

▪ Accion In Rem Verso

o Concept: an action for recovery of what has been paid or delivered without
just cause or legal ground.
o Requisites:
▪ Defendant has been enriched;
▪ Plaintiff has suffered a loss;
▪ Enrichment of the defendant is without just or legal ground; and
▪ Plaintiff has no other action based on contract, quasi-contract, crime
or quasi-delict.
o Distinguished from Solutio Indebiti: An accion in rem verso is considered
merely an auxiliary action, available only when there is no other remedy. If
there is, that action must be resorted to. Hence, if the delivery is by reason
of mistake, the action must be based on the quasi-contract of solutio
indebiti. In solutio indebiti, mistake is an essential element; but in the accion
in rem verso, it is not.

▪ Liability for Damages Under Article 27, CC

Article 27. Any person suffering material or moral loss because a public servant or
employee refuses or neglects, without just cause, to perform his official duty may file an
action for damages and other relief against he latter, without prejudice to any disciplinary
administrative action that may be taken.

o Requisites:
▪ The defendant is a public official charged with the performance of
official duties;
▪ Violation of an official duty in favor of an individual;
▪ Willfulness or negligence in the violation of such official duty; and
▪ An injury to the individual.
o Malice or Inexcusable Negligence: Art. 27 presupposes that the refusal or
omission of a public official is attributable to malice or inexcusable
negligence.

▪ Unfair Competition Under Article 28, CC

Article 28. Unfair competition in agricultural, commercial, or industrial enterprises or in

labor through the use of force, intimidation, deceit, machination or any other unjust,
oppressive, or highhanded method shall give rise to a right of action by the person who
thereby suffers damage.

o Concept: It covers cases of discovery of trade secrets of a competitor,

bribery of his employees, misrepresentation, interference with the fulfillment
of a competitor’s contracts, or malicious interference with the latter’s
business.
NB: What is being sought to be prevented is not competition per se but
the use of unjust, oppressive or high-handed methods which may
deprive others of a fair chance to engage in business or to earn a living.
o Requisites:
▪ Injury to a competitor or trade rival; and
 ▪ Unlawful acts.

▪ Civil Liability Arising from Crime (Delict)

o Basis of Civil Liability Ex Delicto: Every person criminally liable for a felony is
also civilly liable. But criminal liability will give rise to civil liability (ex
delicto) only if the same felonious act or omission results in damage or
injury to another and is the direct and proximate cause thereof.
o Effect of Acquittal Upon the Civil Liability Ex Delicto:
▪ Accused, not Author of the Act or Omission: there is no civil liability
ex delicto. The civil action based on delict may be deemed
extinguished if there is a finding in a final judgment in the criminal
action that the act or omission from which the civil liability may arise
did not exist.
NB: said rule applies only to a civil action arising from crime or
ex delicto and not to a civil action arising from quasi-delict or
culpa aquiliana.
o Acquittal Based on Reasonable Doubt: not exempt from civil liability ex
delicto which may be proved by preponderance of evidence only.

▪ Civil Actions Which May Proceed Independently of the Criminal Action

o Rule on Implied Institution: When a criminal action is instituted, the civil
action for the recovery of civil liability arising from the offense charged is
deemed instituted with the criminal action unless the offended party:
▪ waives the civil action;
▪ reserves the right to institute it separately; or
▪ institutes the civil action prior to the criminal action.
o Independent Civil Actions: Arts. 32, 33, 34, and 2176, CC. In these cases,
even if the act or omission complained of may constitute a felony, the civil
action may proceed independently of the criminal action.
o Personal Liability of Public Officers under Art. 32, CC: An individual can hold
a public officer personally liable for damages on account of an act or
omission that violates a constitutional right only if it results in a particular
wrong or injury to the former.
o Art. 33: The terms “defamation” and “fraud” are used in their ordinary
sense. The term “physical injuries” is understood to mean bodily injury, not
the specific crime of physical injuries.

▪ Prejudicial Question
o Concept: That which arises in a case, the resolution of which is a logical
antecedent of the issue involved therein, and the cognizance of which,
pertains to another tribunal.
o Elements:
▪ The previously instituted civil action involves an issue similar or
intimately related to the issue raised in the subsequent criminal
action; and
▪ The resolution of such issue determines whether or not the criminal
action may proceed.
o The pending actions must be civil and criminal.
▪ The issue in the civil action is prejudicial to the continuation of the
criminal Action

Is it an absolute requirement? What if parehong civil? Or one is

administrative and the other is Civil? Yes. This is not an iron clad rule.
▪ Alsons Devt Case; Abacan Case
▪ Alsons – both civil cases
▪ SC has now relaxed the requisites on prejudicial question such that
 the principle will apply even if both are civil questions because the
purpose of the principle is to avoid conflicting decisions.

▪ Prejudicial Question; Art. 40, FC and bigamy:

o FIRST marriage is alleged to be void: If the subsequent marriage was
entered into after the effectivity of the FC but without securing first a judicial
declaration of nullity of the previous marriage, the crime of bigamy is
committed even if the former marriage be void ab initio. Hence, even if a
petition for declaration of nullity of the previous marriage was filed ahead of
the criminal action for bigamy, the former will not be a prejudicial question
to the latter because any decision in the civil action will not erase the fact
that the accused in the bigamy case had entered into a second marriage
during the subsistence of the first marriage.

NB: This rule applies only where a marriage HAD TAKEN PLACE although
later declared void ab initio. But IF NO MARRIAGE CEREMONY at all was
performed by a duly authorized solemnizing officer; there is no marriage
that took place. Hence, there is no need to comply with the requirements of
Art. 40, FC.

NB: (Morigo v. People) If what transpired was a MERE SIGNING of the

marriage contract by the parties, without the presence of the solemnizing
officer there is no marriage to speak of. Here, the prior institution of a civil
action for declaration of nullity of the previous marriage will constitute a
prejudicial question to the criminal action for bigamy.

NB: (Republic v. Olaybar) A case of identity theft, the Court allowed the
correction of an entry in the civil registry by cancelling the wife portion in
the subject marriage contract without need of a judicial declaration of nullity
of the marriage, on the ground that there was no marriage to speak of.

o SECOND marriage is alleged to be void: For the accused to be convicted of

bigamy, the subsequent marriage must have ALL THE ESSENTIAL
REQUISITES for validity except for the existence of a prior marriage. Thus, if
the subsequent marriage is void not because of the existence of the first
marriage but for other causes, the crime of bigamy is not committed. In
such a situation, the prior institution of a civil action for declaration of nullity
of the subsequent marriage will constitute a prejudicial question to the
criminal action for bigamy.

NB: BUT if the reason for the absence of a marriage license during the
celebration of the marriage was because the parties falsified the Affidavit of
Cohabitation to make it appear that the marriage is exempt from the
license, the parties to the subsequent marriage are liable for bigamy and the
absence of the marriage license in this situation is not considered a defense.

NB: If the second marriage is alleged to be void on the ground of

psychological incapacity, the pendency of a previously instituted civil action
for declaration of nullity of the said marriage does not constitute a
prejudicial question to the criminal action for bigamy.

NB: (Tenebro v. CA) In psychological incapacity as ground for the nullity of a

marriage, there is recognition written into the law itself that such a
marriage, although void ab initio, may still produce legal consequences and
among these legal consequences is incurring criminal liability for bigamy.
 o Requisites of the crime of bigamy:
▪ That the offender has been legally married;
▪ That the first marriage has not been legally dissolved, or in case
his/her spouse is absent, the absent spouse could not yet be judicially
declared presumptively dead;
▪ That the offender contracts a second or subsequent marriage; and
▪ The second or subsequent marriage has all the essential requisites for
validity.

K. Capacity to Act

Article 37. Juridical capacity, which is the fitness to be the subject of legal relations, is
inherent in every natural person and is lost only through death. Capacity to act, which is
the power to do acts with legal effect, is acquired and may be lost.

• Juridical Capacity vs. Capacity to Act

Juridical Capacity Capacity to Act

Aptitude to be the subject of Power to give life to juridical acts
Definition rights and obligations. or to execute acts with legal
effect.
Inherent in every natural Not inherent; it is acquired.
How acquired
person; it is not acquired.
Lost only through death (in May be lost through other means
How lost
natural persons). or circumstances.
Cannot be limited or restricted. Can be limited or restricted by
Limitations
certain circumstances.

1. Restrictions on Capacity to Act

Article 38. Minority, insanity or imbecility, the state of being a deaf-mute, prodigality and
civil interdiction are mere restrictions on capacity to act, and do not exempt the
incapacitated person from certain obligations, as when the latter arise from his acts or
from property relations, such as easements.

Article 39. The following circumstances, among others, modify or limit capacity to act:
age, insanity, imbecility, the state of being a deaf-mute, penalty, prodigality, family
relations, alienage, absence, insolvency, and trusteeship. The consequences of these
circumstances are governed in this Code, other codes, the Rules of Court, and in special
laws. Capacity to act is not limited on account of religious belief or political opinion.
A married woman, twenty-one years of age or over, is qualified for all acts of civil life,
except in cases specified by law.

• Restrictions on Capacity to Act

o Examples: minority, insanity, being deaf-mute, prodigality, and civil
interdiction.
o Effect: They do not exempt the incapacitated person from certain obligations
when the latter arise from his acts or from property relations.
• Modifications or Limitations on Capacity to Act
o Examples: age, insanity, imbecility, being a deaf-mute, penalty, prodigality,
family relations, alienage, absence, insolvency, and trusteeship.
o Effect of Age

Age Limitations and Effects

15 years or under Exempt from criminal liability, but not from civil liability.
Above 15 but below Exempt from criminal liability unless he acted with discernment.
18 He is not, however, exempt from civil liability.
Below 18 (minor) i. He cannot contract marriage. If he does, it is void.
ii. He cannot give valid consent to a contract. If he/she
does, it is is voidable.
iii. Parents parental authority shall be civilly liable for
injuries and damages caused by the acts or omissions
of minor children living in their company and under
their parental authority. But if the act or omission is
committed while the child is under the special parental
authority of the school, its administrators and teachers
or individual, entity or institution engaged in child
care, they are primarily liable for such damages while
the parents are subsidiarily liable.
18 and above He is already qualified for all acts of civil life, except:
i. In contract of marriage, parental consent is still
necessary if he/she is below 21; otherwise, it is
voidable;
ii. If a party to a marriage is below 21 but at least 18,
the person whose consent is required for the marriage
to be perfectly valid is required to be a party to the
marriage settlement; otherwise, it is not valid.
iii. For quasi-delict committed by persons below 21 but at
least 18, the father or, in case of his death, the
mother, is liable for damages caused by said person
living in their company.

• Civil Interdiction and its Effects

o It is an accessory penalty imposed upon an accused who is sentenced to a
principal penalty not lower than reclusion temporal. It produces the following
effects during the time of the sentence: deprivation of:
▪ rights of parental authority or guardianship
▪ marital authority
▪ right to manage his property
▪ right to dispose of his property by any act or conveyance inter vivos

2. Birth and Death of Natural Persons

Article 40. Birth determines personality; but the conceived child shall be considered born
for all purposes that are favorable to it, provided it be born later with the conditions
specified in the following article.

Article 41. For civil purposes, the fetus is considered born if it is alive at the time it is
completely delivered from the mother's womb. However, if the fetus had an intra-uterine
life of less than seven months, it is not deemed born if it dies within twenty-four hours
after its complete delivery from the maternal womb.

Article 42. Civil personality is extinguished by death.

The effect of death upon the rights and obligations of the deceased is determined by law,
by contract and by will.

• Civil Personality of Persons

o Two Kinds of Persons
▪ Natural Persons: human beings and have physical existence.
▪ Juridical Persons: artificial persons and product of legal fiction
o Civil Personality
▪ Concept: It is simply the aptitude of being the subject of rights and
 obligations.
▪ When Civil Personality Begins in Natural Persons: It is birth that
determines personality in case of natural persons. And a person is
considered born "for all purposes" IF after complete delivery from the
mother's womb:
• the child is alive even only for a few hours, if it had an intra-
uterine life of AT LEAST 7 months;
• the child is alive for at least 24 hours if it had an intra-uterine
life of LESS THAN 7 months.
▪ Provisional Personality of Conceived Child: A conceived child, although
as yet unborn, has a limited and provisional personality, i.e., it is only
for purposes favorable to the child.

▪ Consequences of Provisional Personality of Conceived Child:

• right to be a donee of simple donations
• right to receive support from his progenitors
• he may not be ignored by his parents in their testament.
▪ Application: There is no need to establish the civil personality of the
unborn child if his juridical capacity and capacity to act as a person
are not in issue, and the case is not whether the unborn child has
acquired any rights or incurred any obligations prior to his death that
were passed on to or assumed by the child's parents.

• Effect of Death: The civil personality of a natural person is extinguished by death.

While the Civil Code expressly provides that civil personality may be extinguished
by death, it does not explicitly state that only those who have acquired juridical
personality could die. Death has been defined as the cessation of life. Life is not
synonymous with civil personality. One need not acquire civil personality first
before he could die.

3. Presumption of Survivorship

Article 43. If there is a doubt, as between two or more persons who are called to succeed
each other, as to which of them died first, whoever alleges the death of one prior to the
other, shall prove the same; in the absence of proof, it is presumed that they died at the
same time and there shall be no transmission of rights from one to the other.

▪ Article 43, CC vs. Rule 131. Sec. 3(jj)

Article 43, CC Rule 131. Sec. 3(jj)

When question of survivorship When there is no question of
involves persons who are called succession or when the persons
Applicability upon to succeed each other and involved are not called to succeed
when there is question of each other.
succession.
a. There is no proof as to a. There is no proof as to
which of two persons died which of two persons died
Requisites first; and first; and
b. They are called to succeed b. They perish in the same
each other. calamity.
a. Whoever alleges the death a. Both under 15, older
of one prior to the other, deemed the survivor;
shall prove the same; b. Both above 60, younger
Rules
b. In the absence of proof, deemed the survivor;
they shall be presumed to c. One is under 15 and the
have died at the same time other is above 60, former
 and there is no deemed the survivor;
transmission of rights from d. Both over 15 but under 60
one to the other. and sex is different, male
deemed the survivor; and
e. One is under 15 or over 60
and the other between
those ages, latter deemed
the survivor.

▪ Illustration:
o Father and son died in a plane crash. There were no survivors. Can widow of
the son inherit from her father-in-law?
▪ No. In the absence of proof, they shall be presumed to have died at
the same time and there is no transmission of rights from one to the
other. – Son did not inherit from his father; therefore, widow cannot
inherit from her deceased spouse.
o Father 65, son is 30. Assume that before father and son boarded the plane,
the father procured an insurance policy, proclaiming his son to be the
beneficiary. Can the widow of the son be entitled to the proceeds of the
insurance?
▪ Is it relevant to know who died first? Assuming the beneficiary died first, will he be
entitled to the proceeds of the insurance? No. he can no longer be a beneficiary if
he predeceased the insured. Death extinguishes Civil Personality – Article 42.
▪ If insured dies before beneficiary, can the latter claim? Yes.
▪ How can the widow claim if there is no witness as to who died first?
▪ Two important ages under Rule 131
o 15 and 60

L. Surnames

Article 364. Legitimate and legitimated children shall principally use the surname of the
father.

NB: The High Court argued that the word “principally” in the provision does not mean
“exclusively.”

Article 174 (FC). Legitimate children shall have the right to bear the surnames of the
father and the mother, in conformity with the provisions of the Civil Code on surnames.

• Grounds for changing names in the PH (Republic v. Hernandez

o When the name is ridiculous, tainted with dishonor, or is extremely difficult
to write or pronounce
o When the request for change is a consequence of a change of status, such
as when a natural child is acknowledged or legitimated
o When the change is necessary to avoid confusion
o When one has continuously used and been known since childhood by a
Filipino name and was unaware of alien parentage
o When the change is based on a sincere desire to adopt a Filipino name to
erase signs of former alienage, all in good faith and without prejudice to
anybody
o When the surname causes embarrassment and there is no showing that the
desired change of name was for a fraudulent purpose or that the change of
name would prejudice public interest.

M. Rules Governing Persons Who are Absent

Article 43. If there is a doubt, as between two or more persons who are called to succeed
each other, as to which of them died first, whoever alleges the death of one prior to the
other, shall prove the same; in the absence of proof, it is presumed that they died at the
same time and there shall be no transmission of rights from one to the other.

• Presumptions of Survivorship

Article 43, NCC Rule 131, Sec. 3(jj)

Applicability When a question of survivorship There is no question of succession.
involves persons who are called
upon to succeed each other and
there is a question of succession.
Requisites Requisites: Requisites:
1. No proof as to who died first; 1. No proof as to who died first;
and and
2. They are called to succeed each 2. They perish in the same
other. calamity.
Rules In the absence of proof, they shall Rules of Court govern.
be presumed to have died at the
same time and there is no
transmission of rights from one
person to another.

II. Marriage

Nota Bene: The Family Code took effect on August 03, 1988.

Article 1 (FC). Marriage is a special contract of permanent union between a man and a
woman entered into in accordance with law for the establishment of conjugal and family
life. It is the foundation of the family and an inviolable social institution whose nature,
consequences, and incidents are governed by law and not subject to stipulation, except
that marriage settlements may fix the property relations during the marriage within the
limits provided by this Code.

• Dual Concept
o As a contract
▪ It is a special contract of permanent union between a man and a
woman entered into in accordance with law for the establishment of
conjugal and family life.
o As a social institution
▪ Our Constitution (Section 12, Article II. The State recognizes the
sanctity of family life and shall protect and strengthen the family as a
basic autonomous social institution). gives value to the sanctity of
marriage. Marriage is not only a civil contract, but it is a new relation,
an institution the maintenance of which the public is deeply
interested.

• Constitutional Provisions Protecting Marriage and Family

o Section 12, Article II. The State recognizes the sanctity of family life and
shall protect and strengthen the family as a basic autonomous social
institution. It shall equally protect the life of the mother and the life of the
unborn from conception. The natural and primary right and duty of parents
in the rearing of the youth for civic efficiency and the development of moral
character shall receive the support of the Government.
o Section 1, Article XV. The State recognizes the Filipino family as the
foundation of the nation. Accordingly, it shall strengthen its solidarity and
 actively promote its total development.
o Section 2, Article XV. Marriage, as an inviolable social institution, is the
foundation of the family and shall be protected by the State.

• Marriage Governed by Law

o Our family law is based on the policy that marriage is not a mere contract
but also a social institution in which the State is vitally interested. Hence, its
terms and conditions are mot merely subject to the stipulations of the
contracting parties but are governed by law.
o In Tilar v. Tilar, the Court emphasized that the Principle of Separation of
Church and State finds no application because while the marriage of
Jerrysus and Elizabeth Tilar was celebrated by the Catholic Church under
Canon Law, it still has civil and legal consequences which are governed by
the Family Code. Hence, the proceedings for church annulment under Canon
Law is not binding upon the State.

• Marriage Distinguished from Ordinary Contracts

Marriage Contract Ordinary Contract
Only two persons of opposite sec may May be entered into by any number of
enter into a contract of marriage, and only persons, whether of the same or different
one such contract may exist at the same sexes.
time.
The nature, consequences and incidents of The parties are free to establish such
marriage are governed by law and not stipulations, clauses, terms, and
subject to agreement. conditions as they may deem convenient,
provided they are not contrary to law,
Exception: With respect to property morals, good customs, public order, or
relations, the parties may fix the same public policy.
within the limits provided under the Family
Code.
Cannot be revoked, dissolved, or The parties may, by mutual agreement,
otherwise terminated by the parties, but terminate an ordinary contract.
only by the sovereign power of the State.
It is not a mere contract, but also a social
institution.

• Presumptions Favoring Marriage

o If a man and a woman deport themselves as husband and wife, they are
presumed, in the absence of counter presumption or evidence special to the
case to be in fact married. In other words, the law favors the validity of
marriage and the burden of proof to show the nullity of the marriage rests
upon the party seeking its nullity.

A. General Principles

Absence, Defect, or Irregularity Effect

Absence of any of the Essential Requisites Void
Absence of any of the Formal Requisites Void

Exception: In case of authority of

solemnizing officer, if either or both of
the parties believed in good faith that the
solemnizing officer had legal authority.
Defect in Consent Voidable
Irregularity in any of the Formal Requisites Does not affect the validity of the
marriage but the party may be
 responsible civilly, criminally and
administratively.

1. Essential Requisites

Article 2 (FC). No marriage shall be valid, unless these essential requisites are present:
(1) legal capacity of the contracting parties who must be a male and a female; and (2)
consent freely given in the presence of the solemnizing officer.

• Legal Capacity
o To be capacitate to contract marriage, the parties must be:
▪ A male and female
• Same-sex marriage is not recognized as valid in the Philippines
(Falcis, III v. Civil Registrar General).
• In determining the sex of a person, he/she is governed by
his/her national law because the matter of status, condition,
and legal capacity of a person, as well as his family rights and
duties, shall be governed by the national law of the person
concerned (lex nationalii).
o As decided in Silverio v. Republic, there is no Philippine
law legally recognizing sex reassignment and its effects.
However, this ruling will not apply if the person who
underwent sex reassignment surgery is a foreigner.
• In Republic v. Cagandahan, the SC allowed the correction of
entries in the birth certificate of respondent to change her sex
or gender from female to male on the ground of her medical
condition known as Congenital Adrenal Hyperplasia (CAH).
▪ At least eighteen (18) years of age
• If any party is below eighteen (18) years of age, the marriage is
void even if the same is with the consent of the parents and
even if it is solemnized outside the Philippines and valid there
as such.
• Age should be reckoned from the date of marriage, and not
from the filing of application for issuance of marriage license.
▪ Must not be suffering from any legal impediments mentioned
in Articles 37 and 38 of the Family Code
• Article 37 (FC). Marriages between the following are incestuous
and void from the beginning, whether relationship between the
parties be legitimate or illegitimate: (1) between ascendants
and descendants of any degree; and (2) between brothers and
sisters, whether of the full or half blood.
• Article 38 (FC). The following marriages shall be void from the
beginning for reasons of public policy: (1) between collateral
blood relatives whether legitimate or illegitimate, up to the
fourth civil degree; (2) between step-parents and -children; (3)
between parents- and children-in-law; (4) between the
adopting parent and the adopted child; (5) between the
surviving spouse of the adopting parent and the adopted child;
(6) between the surviving spouse of the adopted child and the
adopter; (7) between an adopted child and a legitimate child of
the adopter; (8) between adopted children of the same
adopter; and (9) between parties where one, with the intention
to marry the other, killed that other person's spouse, or his or
her own spouse.

• Consent
 o Definition
▪ Consent in marriage is simply the personal declaration made by the
groom and the bride during the marriage ceremony that they are
taking each other as husband and wife.
o If no consent is given, there is in fact no marriage.
o The absence of love does not affect the validity of the marriage, nor does
the fact that the marriage was entered into for other purposes other than
what the law or the Constitution declares.
▪ In Republic v. Albios, the Court reversed the decision of the lower
court in declaring void the marriage of a Filipino and an American
solely for the purpose of acquiring American citizenship.
o If consent was given, but the one who contracted the marriage committed a
mistake with respect to the actual physical identity of the other, there is a
marriage but the same is void (Article 35(5), FC).
o If consent was given by a party who is at least eighteen (18) but below
twenty-one (21) but without parental consent, such consent is defective and
renders the marriage voidable (Article 45(1), FC).
o If consent was given by a party who was of unsound mind at the time of the
celebration of the marriage, the same is defective and renders the marriage
voidable (Article 45(2), FC).
o If consent was given but it was vitiated by fraud, force, intimidation, or
undue influence, the marriage is voidable because the consent is defective
(Article 45(3), FC).

2. Formal Requisites

Article 3 (FC). The formal requisites of marriage are: (1) authority of the solemnizing
officer; (2) a valid marriage license except in the cases provided for in Chapter 2 of this
Title; and (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 witnesses of
legal age.

• Authority of Solemnizing Officer

o Persons Authorized to Solemnize Marriages

▪ Members of judiciary
• They must be incumbent members.
o Justices of the SC
o Justices of the CA
o Justices of Sandiganbayan
o Judges of the RTCs
o Judges of the CTAs
o Judges of the MTCs
• The marriage must be solemnized within the court’s jurisdiction.
o Where a judge solemnized a marriage outside his court’s
jurisdiction, this is a mere irregularity in the formal
requisite which while it may not affect the validity of the
marriage, may subject the officiating official to
administrative liability.
▪ Priest, rabbi, imam, and other religious ministers
• The officer must be duly authorized by his respective church or
sect in writing;
• His written authority must be duly registered with the Civil
Registrar General;
• He must act within the limits of such written authority; and
 • At least one of the parties must belong to his church or sect.
▪ Ship captain or airplane chief
• The marriage must be in articulo mortis, and
• The marriage must be between passengers and/or crew
members.
▪ Military commanders of a unit
• The commander must be a commissioned officer, or an officer in
the armed forces holding rank by virtue of a commission from
the President;
• Assigned chaplain to his unit must be absent;
• Marriage must be in articulo mortis; and
• Marriage must be solemnized within the zone of military
operations.
▪ Consul-general, consul, or vice-consul
• The marriage must be celebrated abroad in the country where
the consul holds office; and
• Marriage must be between Filipino citizens.
▪ Mayors
• Marriages solemnized by a mayor outside his territorial
jurisdiction remain valid because this is a mere irregularity in a
formal requisite.
• Marriages solemnized by mayors between the period of August
03, 1988 up to December 31, 1991 are void.

• Valid Marriage License

o General Rules
▪ If the marriage was celebrated without a marriage license, the same
is void.
▪ If the marriage license was spurious or fake, the marriage is also void.
▪ If there is a mere irregularity in the issuance of the marriage license,
the validity of the marriage shall not be affected but the party or
parties responsible for the irregularity shall be civilly, criminally, and
administratively liable.
▪ The solemnizing officer does not have to investigate whether or not
the license has been properly issued by the local civil registrar, all he
needs to know is that the license has been issued by the competent
official.

o Rules with Respect to Issuance of Marriage License and Effects of Non-

Compliance

Subject Matter Rule Effect of Non-Compliance

Place of If local, in the local civil If obtained elsewhere, the
Issuance registrar of the city or marriage is still valid because this
municipality where either is a mere irregularity in a formal
contracting party habitually requisite. A marriage license shall
resides. be valid in any part of the
Philippines.

If abroad, in the office of the In case of non-compliance, the

consular officials. marriage is still valid in the
Philippines if valid in the place
where it was solemnized.
Period of Valid only for a period of 120 A marriage celebrated after the
Effectivity days from date of issue and is expiry date of the license is void.
 deemed automatically
cancelled at the expiration of
said period.
Requirement of In case either or both of the The marriage becomes voidable
Parental Consent contracting parties are below because of the lack of parental
21, they shall exhibit parental consent.
consent to the local civil
registrar.
Requirement of If any party is between 21 and The marriage license shall be
Parental Advice 25, parental advice is issued only after three months
required. following the completion of the
publication of the application.
Requirement of Certificate of marriage The issuance of the license shall be
Certificate of counseling is required. suspended for three months from
Marriage the completion of the publication of
Counseling the application.
Publication of Must be published for ten (10) If the license is issued prior to the
Application for consecutive days and the completion of the period of
Issuance of license shall be issued only publication, the marriage is still
License after the completion of the valid because this is a mere
period of publication. irregularity in a formal requisite
which does not affect the validity
of marriage.
Requirement of Must be submitted if either or The absence of such certificate is a
Certificate of both parties are citizens of a mere irregularity in complying with
Legal Capacity to foreign country. the formal requirement of
Contract procuring a marriage license which
Marriage will not affect the validity of
marriage.
Requirement of No marriage license shall be The absence of such certificate is a
Certificate of issued unless the applicants mere irregularity in complying with
Compliance in present a Certificate of the formal requirement of
Attending Family Compliance issued for free by procuring a marriage license which
Planning the local Family Planning will not affect the validity of
Seminar Office. marriage.

o The local civil registrar is required to issue the marriage license after the
completion of the 10-day period of publication, even if any impediment is
known to him, unless the court orders otherwise at the instance of the local
civil registrar or that of any interested party.
o Marriages Which are Exempt from License Requirement
▪ Marriages in articulo mortis
• The marriage remains valid even if the ailing party subsequently
survives.
• The solemnizer must execute an affidavit stating that:
o He performed the marriage in articulo mortis; and
o He took steps to ascertain the ages, relationship, and
absence of legal impediments of the parties.
▪ Marriages in remote places
• The residence of either party must be so located that there is no
means of transportation to enable such party to appear
personally before the local civil registrar.
• The solemnizer must execute an affidavit stating that:
o The residence of either party is so located that there is
no means of transportation to enable such party to
appear personally before the local civil registrar; and
 o He took steps to ascertain the ages, relationship, and
absence of legal impediments of the parties.
▪ Marriages among Muslims and ethnic cultural communities
• Requisites
o The marriage must be among Muslims or among
members of ethnical cultural communities; and
o The marriage must be solemnized in accordance with
their customs, rites, or practices.
• In case of a marriage between a Muslim and non-Muslim, P.D.
No. 1083 shall apply if it was solemnized in accordance with
Muslim law.
▪ Legal ratification of marital cohabitation
• Requisites
o A man and a woman must have been living together as
husband and wife for at least five years before the
marriage; and
o The parties must have no legal impediment to marry
each other during the five-year period of cohabitation.
• Procedural Requirements
o The parties must execute an affidavit stating that they
have lived together for at least five (5) years without
legal impediment to marry each other; and
o The solemnizing officer must execute a sworn statement
that he had ascertained the qualification of the parties.
• The person who notarizes the contracting parties’ affidavit of
cohabitation cannot be the judge who will solemnize the parties’
marriage.
• The five-year period of cohabitation should be computed on the
basis of cohabitation as “husband and wife”. It should also be
exclusive, meaning no third party was involved.

• Marriage Ceremony
o No prescribed form or religious rite for the solemnization of marriage is
required. However, the minimum requisites are:
▪ The personal appearance of the contracting parties before a
solemnizing officer; and
• A marriage celebrated through video conferencing is invalid,
unless celebrated abroad.
▪ Their personal declaration in the presence of a solemnizing officer that
they take each other a husband and wife.
• Marriage by proxy is not valid, unless celebrated abroad.
• There is no marriage ceremony if what transpired was a mere
private act of signing a marriage contract by the contracting
parties without the presence of the solemnizing officer.

• Marriage Contract
o Importance
▪ It is the best documentary evidence of a marriage.
o Effect of Absence of Marriage Contract
▪ Its absence is not proof that no marriage took place because other
evidence may be presented to prove the fact of the marriage.
o Other Proof
▪ Testimony of a witness to the matrimony
▪ The couple’s public and open cohabitation as husband and wife
▪ The birth and baptismal certificated of children born during such union
▪ Mention of such nuptials in subsequent documents
 B. Mixed Marriages and Foreign Divorce

• Mixed Marriage
Article 26 (FC). All marriages solemnized outside the Philippines, in accordance with the
laws in force in the country where they were solemnized, and valid there as such, shall
also be valid in this country, except those prohibited under Articles 35 (1), (4), (5) and
(6), 3637 and 38.

o General Rule: For marriages involving Filipino citizens celebrated abroad, the
rule is that such marriages are valid in the Philippines if they are valid in the
place where they are celebrated.
o Exceptions
▪ Those contracted by any party below eighteen years of age even with
the consent of parents or guardians;
▪ Those bigamous or polygamous marriages not failing under Article 41;
▪ Those contracted through mistake of one contracting party as to the
identity of the other;
▪ Those subsequent marriages that are void under Article 53;
▪ A marriage contracted by any party who, at the time of the
celebration, was psychologically incapacitated to comply with the
essential marital obligations of marriage;
▪ If the marriage is incestuous;
▪ If the marriage is void by reason of public policy as enumerated in
Article 38 of the FC; and
▪ Same-sex marriage.

• Foreign Divorce
Article 26 (FC). 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 have capacity to remarry
under Philippine law.

o Philippine law does not provide for absolute divorce; hence, our courts
cannot grant it.
o When Divorce May Be Valid
▪ IF MIXED MARRIAGE - obtained by the alien spouse provided that the
divorce decree is valid according to the national law of the said
foreigner.
o The divorce decree obtained must capacitate the alien to remarry.
o If divorce decree was a limited divorce or mensa et thoro or if the foreigner
is not allowed to remarry - Filipino is also not allowed to remarry.
o Divorce decree must be proven as a fact and there shall be judicial
recognition.
▪ Registration to civil registrar without judicial recognition is patent
nullity.
• REASON: To avoid the absurd situation where in the Filipino
spouse remains married to the alien spouse who is no longer
married to the Filipino spouse.
o Divorce decree may also be obtained if foreigner obtains a foreign judgment
nullifying the marriage on the ground of bigamy.
o Reckoning Point in Determining Citizenship
▪ It is not the citizenship of the parties at the time of the celebration of
the marriage, but their citizenship at the time a valid divorce is
obtained abroad by the alien spouse capacitating the latter to
remarry.
 C. Void Marriages (See Tan-Andal v. Andal, G.R. No. 196359, May 11, 2021)

• Concept and Characteristics of Void Marriages

o Nature
▪ Rule
• It is inexistent from the very beginning. Hence, as a rule, if the
marriage is void ab initio, it is ipso facto void without need of
any judicial declaration of nullity.
▪ Exception
• For purposes of remarriage, even if the prior marriage is void
ab initio a judicial declaration of its nullity is required before a
subsequent marriage can be contracted; otherwise, the
subsequent marriage is in itself void ab initio and the second
marriage is contracted during the existence of the first
marriage resulting in the crime of bigamy.
o Can be attacked collaterally
▪ A void marriage can be attacked collaterally.
▪ For other purposes, such as, but not limited to the determination of
heirship, legitimacy, or illegitimacy of a child, settlement of estate,
dissolution of property regime, or a criminal case for that matter, the
court may pass upon the validity of marriage even in a suit not
directly instituted to question the same so long as it is essential to the
determination of the case.
▪ The clause “on the basis of a final judgment declaring such previous
marriage void" in Article 40 of the Family Code connotes that such
final judgment need not be obtained only for purpose of remarriage.
Hence:
• In De Castro v. Assidao-De Castro, it was held that the trial
court had jurisdiction to determine the validity of the marriage
in an action for support.
• In Carino v. Carino, the Court ruled that it is clothed with
sufficient authority to pass upon the validity of two marriages
despite the main case being a claim for death benefits.
• In Garcia-Quiason v. Belen, the Court allowed a marriage to be
declared void ab initio for being bigamous in a Petition for
Letters of Administration filed by a compulsory heir.
o HOWEVER, the Court ruled in Braza v. The City Civil
Registrar of Himamaylan City, Negros Occidental that the
trial court has no jurisdiction to nullify marriages in a
special proceeding for cancellation or correction of entry
under Rule 108 of the Rules of Court. Since the cause of
action is actually to seek the declaration of the second
marriage as void for being bigamous and impugn the
child’s legitimacy, which causes of action are governed
not by Rule 108 but by A.M. No. 02-11-10-SC which took
effect on March 15, 2003, and Art. 17 of the Family
Code, respectively, it was held that the proper remedy is
a petition for declaration of absolute nullity of the
marriage before the Family Court.
o [NOTE: In Braza, the marriage is void. Hence, the proper
remedy is petition for declaration of absolute nullity of
the void marriage. In Olaybar, however, there is no
marriage to speak of. Hence, the proper remedy is a
petition for cancellation of entry in the civil registry under
Rule 108.]
 o Can be Questioned Even after Death
▪ A void marriage can be questioned even after the death of either
party. If the void marriage was celebrated during the effectivity of the
FC, therefore covered by A.M. No. 02-11-10- SC, a petition for
declaration of absolute nullity can only be filed during the lifetime of
the spouses. After the death of one of the spouses, the validity of the
marriage may still be questioned by way of a collateral attack in the
proceeding for the settlement of the estate of the deceased spouse. If
the void marriage was celebrated before the effectivity of the Family
Code, it can be questioned even after the death of one of the spouses
either by way of a direct action or a collateral attack in the proceeding
for the settlement of the estate of the deceased spouse.
o Imprescriptible
▪ The action or defense for the declaration of absolute nullity of a
marriage is imprescriptible.
▪ Qualification
• A petition for declaration of nullity of the marriage can only be
filed during the lifetime of the parties, if the marriage is
covered by A.M. No. 02-11-10-SC (or celebrated during the
effectivity of the Family Code).
o Who can Question
▪ By direct action (or filing a petition for declaration of absolute nullity)
• Only the husband or the wife can file the petition if the
marriage was celebrated during the effectivity of the Family
Code. However, if the ground is bigamy, even the aggrieved
spouse in the prior marriage has the personality to file the
petition. On the other hand, if the marriage was celebrated
prior to the effectivity of the Family Code, any real party in
interest may file the petition.
▪ By way of collateral attack
• Any proper interested party may attack a void marriage.266
Such interest refers to successional rights. Hence, only the
compulsory or intestate heirs of the spouses may attack the
validity of the marriage, for the purpose of protecting their
successional rights, upon the death of a spouse in a proceeding
for the settlement of the estate of the deceased spouse, for
marriages covered by A.M. No. 02-11-10,267 or by way of a
petition for declaration of nullity of the marriage, for marriages
celebrated under the Civil Code.
o If Child is Born Within the Void Marriage
▪ Illegitimate, except if the ground is psychological incapacity.

• Enumeration of Void Marriages Under Family Code

o Void Marriages under Article 35

Article 35 (FC). The following marriages shall be void from the beginning:
(1) Those contracted by any party below eighteen years of age even with the
consent of parents or guardians;
(2) Those solemnized by any person not legally authorized to perform marriages
unless such marriages were contracted with either or both parties believing in good
faith that the solemnizing officer had the legal authority to do so;
(3) Those solemnized without license, except those covered the preceding Chapter;
(4) Those bigamous or polygamous marriages not failing under Article 41;
(5) Those contracted through mistake of one contracting party as to the identity of
the other; and
(6) Those subsequent marriages that are void under Article 53.
 ▪ Below 18
• Where any party is below 18 years of age.
• There is absence of legal capacity.
▪ Absence of Authority of Solemnizing Officer
• Where the marriage is solemnized by any person not legally
authorized to perform marriages.
• Exception
o The marriage is valid if either or both parties believed in
good faith that the solemnizing officer had the legal
authority to do so. But the good faith must be based on
mistake of fact and not mistake of law.
▪ Absence of Marriage License
• Where the marriage is celebrated without a marriage license,
and it is not exempt from the requirement of marriage license.
▪ Bigamous or Polygamous Marriages
• A bigamous marriage is a marriage contracted during the
subsistence of a previous marriage. In Article 35(4), the
previous marriage must be either perfectly valid or voidable, to
distinguish it from the bigamous marriage in Article 40 where
the previous marriage must be truly void ab initio but a
subsequent marriage is contracted in the absence of a judicial
declaration of the nullity of the previous void marriage.
• Exception
o The subsequent marriage in Article 41 is perfectly valid
when all three requisites mentioned therein were present
before the celebration of the subsequent marriage, as
follows:
▪ The prior spouse had been absent for four
consecutive years or two years where there is
danger of death under the circumstances stated in
Article 391 of the Civil Code;
▪ The spouse present had a well-founded belief that
the absent spouse was already dead; and
▪ The spouse present obtained a judicial declaration
of presumptive death. However, if the parties to
the subsequent marriage in Article 41 acted in bad
faith, said marriage shall be void ab initio for being
a bigamous marriage under Article 35(4).
▪ Void Marriage in Article 35
• Where one contracted the marriage through mistake as to the
actual physical identity of the other.
▪ Void Marriage under Article 53
• Where a voidable marriage under Article 45 was already
annulled by a final judgment, or a void marriage under Article
40 was already declared a nullity in a final judgment, but:
o There was no liquidation, partition, and distribution of
the properties of the spouses or delivery of the
presumptive legitimes of the common children; and
o There was no recording of 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 in the
appropriate civil registry and registries of property.

o Void Marriage under Article 36 (Psychological Incapacity)

Article 36 (FC). A marriage contracted by any party who, at the time of the celebration,
was psychologically incapacitated to comply with the essential marital obligations of
marriage, shall likewise be void even if such incapacity becomes manifest only after its
solemnization.

▪ Concept
• “Psychological incapacity” as a ground to nullify marriage under
Article 36 of the Family Code should refer to the most serious
cases of personality disorders clearly demonstrative of an utter
insensitivity or inability to give meaning and significance to the
marriage.
• It must be a malady that is so grave and permanent as to
deprive one of awareness of the duties and responsibilities of
the matrimonial bond one is about to assume.
• It contemplates incapacity or inability to take cognizance of and
to assume basic marital obligations and not merely difficulty,
refusal, or neglect in the performance of marital obligations or
ill will.
▪ Characteristics
• Gravity
o The incapacity must be grave or serious such that the
party would be incapable of carrying out the ordinary
duties required in a marriage. It is essential that the
concerned party was incapable of doing so, due to some
psychological illness existing at the time of the
celebration of the marriage. In other words, there must
be proof of a natal or supervening disabling factor in the
person—an adverse integral element in the personality
structure that effectively incapacitates the person from
really accepting and thereby complying with the
obligations essential to marriage—which must be linked
with the manifestations of the psychological incapacity.
• Juridical Antecedence
o It must be rooted in the history of the party antedating
the marriage, although the overt manifestations may
emerge only after the marriage.
o In other words, a person’s psychological incapacity to
comply with his or her essential obligations, as the case
may be, in marriage must be rooted in a medically or
clinically identifiable grave illness that is incurable and
shown to have existed at the time of marriage, although
the manifestations thereof may only be evident after
marriage.
• Incurability
o It must be incurable, or even if it were otherwise, the
cure would be beyond the means of the party involved. It
must be shown to be medically, or clinically permanent
or incurable and such incurability may be absolute or
even relative only in regard to the other spouse, not
necessarily absolutely against every one of the same sex.
▪ No Need for Personal Examination of Respondent
• In Marcos v. Marcos, the Supreme Court clarified that there is
no requirement that the defendant/ respondent spouse should
be personally examined by a physician or psychologist as a
condition sine qua non for the declaration of nullity of marriage
 based on psychological incapacity. What is important, however,
as stated in Marcos is the presence of evidence that can
adequately establish the party’s psychological condition. If the
totality of evidence presented is enough to sustain a finding of
psychological incapacity, then actual medical examination of
the person concerned need not be resorted to. However, the
totality of evidence must still prove the gravity, juridical
antecedence, and incurability of the alleged psychological
incapacity.
▪ Illustrative Cases of Psychological Incapacity
• In Republic v. Mola Cruz, where the respondent spouse was
guilty of sexual infidelity and abandonment, allowed her
Japanese boyfriend to stay in the marital abode, shared the
marital bed with her Japanese boyfriend and introduced her
husband as her elder brother, all done under the threat of
desertion, it was held that her blatant insensitivity and lack of
regard for the sanctity of the marital bond and home is
psychological incapacity.
• In Tani-Dela Fuente v. Dela Fuente, Jr., respondent’s repeated
psychological abuse by intimidating, stalking, and isolating his
wife from her family and friends, as well as his increasing acts
of physical violence, were declared proof of his paranoid
personality disorder which incapacitated him to fully
comprehend and assume the essential obligations of marriage.
• In Antonio v. Reyes, the respondent was a pathological liar and
her lies were held to be indicative of her failure to distinguish
truth from fiction, or at least abide by the truth. In declaring
her psychologically incapacitated, the Supreme Court held that
a person unable to distinguish between fantasy and reality
would similarly be unable to comprehend the legal nature of the
marital bond, much less its psychic meaning, and the
corresponding obligations attached to marriage.
• In Chi Ming Tsoi v. CA, the husband was declared
psychologically incapacitated because of his continuous and
unexplainable refusal to have sexual intercourse with the wife
for an unreasonable length of time. In declaring him
psychologically incapacitated, the Supreme Court held that the
senseless refusal of one of the parties to engage in sexual
intercourse for purposes of procreation is equivalent to
psychological incapacity.

o Void Marriages under Article 37 (Incestuous Marriages)

Article 37 (FC). Marriages between the following are incestuous and void from the
beginning, whether relationship between the parties be legitimate or illegitimate:
(1) Between ascendants and descendants of any degree; and
(2) Between brothers and sisters, whether of the full or half blood.

▪ Between Ascendants and Descendants

• Marriages between ascendants and descendants of any degree,
whether the relationship be legitimate or illegitimate, are
incestuous, hence, void.
▪ Between brothers and sisters
• Marriages between brothers and sisters, whether of the full or
half blood, whether the relationship be legitimate or
illegitimate, are incestuous, hence, void. The prohibition applies
 to those who are related by blood.
• Marriages between stepbrothers and stepsisters are no longer
prohibited under the Family Code, although prohibited under
the New Civil Code. Following the rule that the validity of a
marriage is tested according to the law in force at the time the
marriage is contracted, the intervening effectivity of the Family
Code does not affect the void nature of a marriage between a
stepbrother and a stepsister solemnized under the regime of
the Civil Code.

o Void Marriages under Article 38 (Prohibited by Reasons of Public Policy)

Article 38 (FC). The following marriages shall be void from the beginning for reasons of
public policy:
(1) Between collateral blood relatives whether legitimate or illegitimate, up to the
fourth civil degree;
(2) Between stepparents and stepchildren;
(3) Between parents-in-law and children-in-law;
(4) Between the adopting parent and the adopted child;
(5) Between the surviving spouse of the adopting parent and the adopted child;
(6) Between the surviving spouse of the adopted child and the adopter;
(7) Between an adopted child and a legitimate child of the adopter;
(8) Between adopted children of the same adopter; and
(9) Between parties where one, with the intention to marry the other, killed that
other person's spouse, or his or her own spouse.

▪ Between collateral blood relatives

• Marriages between collateral blood relatives up to the 4th civil
degree.
▪ Between stepparents and stepchildren
• Marriages between former stepparents and stepchildren.
▪ Between parents-in-law and children-in-law
• Marriages between former parents-in-law and children-in-law.
▪ Prohibited marriages by reason of adoption
• The adopter cannot marry:
o The adopted; or
o The surviving spouse of the adopted.
• The adopted, on the other hand, cannot marry:
o The adopter;
o The surviving spouse of the adopter;
o The legitimate child of the adopter; or
o Another adopted child of the same adopter.
• Any such marriage shall be void. The law does not, however,
prohibit a marriage between the adopted and an illegitimate
child of the adopter.
▪ Intentional Killing of Another’s Spouse
• If the spouse of another is intentionally killed for the purpose of
marrying the surviving spouse, the marriage is void. The
marriage is void even if the surviving spouse does not conspire
in the killing of his or her spouse, provided that the killing must
be animated primarily by the intention or desire to do away
with the victim for the purpose of marrying the surviving
spouse.
• The law does not also require a prior criminal conviction to
render the marriage void because the guilt can be proven in the
civil action for declaration of the nullity of the marriage.
 o Void Marriages Not Enumerated Under the Family Code
▪ Same-Sex Marriage
▪ Marriage without Marriage Ceremony
▪ Mere signing of marriage contract without the presence of a
solemnizing officer

Tan-Andal v. Andal
G.R. No. 196359 | May 11, 2021

FACTS:

In 1995, Rosanna Tan and Mario Victor Andal married each other. They were blessed with
one child. However, even before their marriage, Rosanna already observed Mario to be
extremely irritable and moody. Earlier in their marriage, Rosanna also observed Mario to
be emotionally immature, irresponsible, irritable, and psychologically imbalanced.
Rosanna later learned that Mario was a drug addict. Due to his erratic behavior, Rosanna
caused Mario to be confined in a drug rehab center twice. Mario’s irresponsibility even
caused the closure of their family business. Mario also exposed their daughter to his drug
use. In December 2000, fed up with Mario, Rosanna chose to live separately from him. In
August 2003, Rosanna filed a petition to have her marriage with Mario be declared void
on the ground that Mario was psychologically incapacitated to perform the essential
marital obligations.

To prove her case, she presented a psychologist (Dr. Fonso Garcia) who, after
interviewing Rosanna, Rosanna’s daughter, and Rosanna’s sister, concluded that Mario
was psychologically incapacitated to perform essential marital obligations. Dr. Garcia did
not interview Mario as the latter, despite invitation, refused an interview. In her
assessment, Dr. Garcia found Mario to be suffering from Narcissistic Antisocial Personality
Disorder.

In May 2007, the trial court voided the marriage between Rosanna and Mario as it ruled
that Rosanna was able to prove her case. The Court of Appeals however reversed the trial
court on the ground that the findings of Dr. Garcia was unscientific and unreliable
because she diagnosed Mario without interviewing him.

On appeal, the Supreme Court took the opportunity to revisit the Molina Guidelines and
the other nullity cases decided by the Supreme Court after Molina.

ISSUE:

Whether or not the marriage between Rosanna and Mario is void.

HELD:

Yes. Dr. Garcia’s expert testimony is given due weight. HOWEVER, the Supreme Court
declared, among others, that in psychological incapacity cases, expert testimony is NOT a
requirement.

Below is the Supreme Court’s new set of guidelines in determining the existence of
psychological incapacity:

1. The burden of proof in proving psychological incapacity is still on the plaintiff. The
Supreme Court however clarified that the quantum of proof required in nullity cases is
clear and convincing evidence which is more than preponderant evidence (ordinary
civil cases) but less than proof beyond reasonable doubt (criminal cases). This is because
marriage is presumed valid and, in this jurisdiction, a presumption can only be rebutted
with clear and convincing evidence.

2. Psychological incapacity is neither a mental incapacity nor a personality

disorder that must be proven through expert testimony. There must be proof,
however, of the durable or enduring aspects of a person’s personality, called “personality
structure,” which manifests itself through clear acts of dysfunctionality that undermines
the family. The spouse’s personality structure must make it impossible for him or her to
understand and, more important, to comply with his or her essential marital obligations.
Proof of these aspects of personality need not be given by an expert. Ordinary witnesses
who have been present in the life of the spouses before the latter contracted marriage
may testify on behaviors that they have consistently observed from the supposedly
incapacitated spouse.

3. Incurable, not in the medical, but in the legal sense; incurable as to the partner.
Psychological incapacity is so enduring and persistent with respect to a specific partner,
and contemplates a situation where the couple’s respective personality structures are so
incompatible and antagonistic that the only result of the union would be the inevitable
and irreparable breakdown of the marriage.

4. As to gravity, it must be shown that the incapacity is caused by a genuinely

serious psychic cause. It is not necessary that it must be shown that the psychological
incapacity is a serious or dangerous illness BUT that “mild characterological peculiarities,
mood changes, occasional emotional outbursts” are excluded. The psychological
incapacity cannot be mere “refusal, neglect, or difficulty, much less ill will.”

5. Juridical antecedence. The incapacity must be proven to be existing at the time of

the celebration of the marriage even if such incapacity becomes manifest only after its
solemnization.

6. Essential marital obligations are not limited to those between spouses. Hence, those
covered by Articles 68 up to 71 of the Family Code as regards the husband and wife as
well as Articles 220, 221 and 225 of the same Code in regard to parents and their
children.

7. The decisions of the National Appellate Matrimonial Tribunal of the Catholic Church of
the Philippines has persuasive effect on nullity cases pending before secular courts.
Canonical decisions are, to reiterate, merely persuasive and not binding on secular
courts. Canonical decisions are to only serve as evidence of the nullity of the secular
marriage, but ultimately, the elements of declaration of nullity under Article 36 must still
be weighed by the judge.

SUMMARY: Psychological incapacity consists of clear acts of dysfunctionality that show a

lack of understanding and concomitant compliance with one’s essential marital obligations
due to psychic causes. It is not a medical illness that has to be medically or clinically
identified; hence, expert opinion is not required. As an explicit requirement of the law,
the psychological incapacity must be shown to have been existing at the time of the
celebration of the marriage and is caused by a durable aspect of one’s personality
structure, one that was formed before the parties married. Furthermore, it must be
shown caused by a genuinely serious psychic cause. To prove psychological incapacity, a
party must present clear and convincing evidence of its existence. The Supreme Court
also emphasized that in voiding ill-equipped marriages, courts are not really violating the
inviolability of marriage as a social institution which is enshrined in no less than the
Constitution. In declaring ill-equipped marriages as void ab initio, the courts really
assiduously defend the sanctity of marriage as an inviolable social institution.
 D. Voidable Marriages

• Definition
o A marriage is voidable if there is a defect in any of its essential requisites
(legal capacity and consent). It is considered valid and produces all its civil
effects until it is set aside by final judgment of a competent court in an
action for annulment.

• Nature of Voidable Marriage

o It is considered valid and produces all its civil effects, until it is set aside by
final judgment of a competent court in an action for annulment.
o Without a judgment of annulment, the marriage is regarded as valid.

• Distinguished from Void Marriages

Voidable Void
As to Nature
The marriage is invalidated only by a Invalid from the very beginning and the
judgment of annulment. judgment of the court is simply
confirmatory of its status.
As to Susceptibility for Convalidation
Can be generally ratified by free Can never be convalidated or ratified.
cohabitation (except for grounds mentioned
in paragraphs [5] and [6] of Article 45).
As to Impugnation
Can be assailed only in a direct proceeding Can be attacked collaterally.
for that purpose (a petition for annulment)
and not collaterally.
As to Impugnation After Death of Either Party
Can be assailed only during the lifetime of Can be questioned even after the death of
the parties and not after death of either; in either party.
which case, the parties and their offspring
will be left as if the marriage had been
perfectly valid.
As to Prescription
The action prescribes. The action or defense for nullity is
imprescriptible.
As to Who May Assail Them
Only the parties can assail it. Any proper interested party may attack.
As to Decree Issued
Decree of Annulment Decree of Nullity

• Ratification or Confirmation
o Definition
▪ The act by which a person, entitled to bring an action for annulment,
with knowledge of the cause of annulment and after it has ceased to
exist, validates the contract either expressly or impliedly.
o Requisites of Ratification or Confirmation (VPKD)
▪ The contract should be tainted with a Vice which is susceptible of
being cured;
▪ The confirmation or ratification should be effected by the Person who
is entitled to do so under the law;
▪ It should be effected with the Knowledge of the vice or defect of the
contract; and
▪ The cause of the nullity or defect should have already Disappeared.
• Grounds for Annulment
o Lack of Parental Consent
▪ When required?
• Only when a party is at least 18 years of age but below 21.
▪ Whose consent is required?
• If the party below 21 is legitimate, the consent of the father,
mother, surviving parent or guardian, or persons having legal
charge of them, in the order mentioned.
• If the party below 21 is illegitimate, only the consent of the
mother is required.
▪ Who can file the petition for annulment?
• If the party is still below 21, only the parent whose consent is
required can file the petition; but once the party reaches the
age of 21, only the party himself can file the petition.
▪ What is the prescriptive period?
• Five years from attainment of the age of 21.
▪ How is the defect ratified?
• Only the party himself may ratify the defect upon reaching the
age of 21 by choosing to freely cohabit with the other party.
o Unsoundness of Mind at Time of Marriage
▪ Who can file the petition for annulment?
• The same spouse, but only if he or she had no knowledge of
the other’s insanity; or by any relative, guardian, or person
having legal charge of the insane spouse; or by the insane
spouse during a lucid interval or after regaining sanity.
▪ What is the prescriptive period?
• During the lifetime of the spouses.
▪ How is the defect ratified?
• Only the insane spouse has the right to ratify upon coming to
reason by choosing to freely cohabit with the sane spouse.

o Fraud
▪ What constitutes fraud?
• Only the following:
o Non-disclosure of a previous conviction by final judgment
of the other party of a crime involving moral turpitude;
o Concealment by the wife of the fact that at the time of
the marriage, she was pregnant by a man other than her
husband;
o Concealment of a sexually transmissible disease,
regardless of its nature, existing at the time of the
marriage; or
o Concealment of drug addiction, habitual alcoholism or
homosexuality or lesbianism existing at the time of the
marriage.
• No other misrepresentation or deceit other than the foregoing
shall constitute such fraud as will give grounds for action for
the annulment of marriage.
▪ Who can file the petition for annulment and what is the prescriptive
period?
• Only the injured party may file the petition, within five years
after the discovery of the fraud.
▪ How is the defect ratified?
• Only the injured party has the right to ratify the defect by
freely cohabiting with the other as husband and wife, with full
 knowledge of the facts and constituting the fraud.
o Vitiation of Consent
▪ Who can file the petition for annulment and what is the prescriptive
period?
• Only the injured party, within five years from the time the
force, intimidation, or undue influence disappeared or ceased.
▪ How is the defect ratified?
• Only the injured party has the right to ratify the defect by
freely cohabiting with the other as husband and wife after the
force, intimidation, or undue influence has disappeared or
ceased.
o Impotency
▪ What is the ground for annulment?
• If one party was physically incapable of consummating the
marriage with the other, or impotency, if such incapacity
continues and appears to be incurable.
• Only impotency is a ground for annulment, not sterility.
▪ Who can file the petition for annulment and what is the prescriptive
period?
• Only the injured party may file the petition, or the other spouse
who had no knowledge of the other’s impotency at the time of
the marriage, within five years after the marriage.
▪ The defect of the marriage is not subject to ratification,
o Serious and Incurable Sexually Transmitted Disease (STD)
▪ What is the ground?
• Existence of STD at the time of the marriage, which is found to
be serious and appears to be incurable.
▪ Who can file the petition for annulment and what is the prescriptive
period?
• Only the injured party, or the other spouse who had no
knowledge of the other’s STD at the time of the marriage,
within five years after the marriage.
▪ The defect of the marriage is not subject to ratification.

• Effects of Annulment
o Right to Remarry
▪ After annulment, the former spouses may validly contract another
marriage, but only upon compliance with the requirements of
liquidation of the absolute community of property or conjugal
partnership of gains, partition, and distribution of properties of the
erstwhile spouse, the delivery of presumptive legitimes, and
compliance with the requirements of Article 52 of the FC; otherwise,
the subsequent marriage is void.
o Effect on Surname of Former Wife
▪ In case of annulment of marriage, and the wife is the guilty party, she
shall resume her maiden name and surname. If she is the innocent
spouse, she may resume her maiden name and surname. However,
she may choose to continue employing her former husband’s
surname, unless:
• The court decrees otherwise, or
• She or the former husband is married again to another person.
o Status of Children
▪ Children conceived or born before the judgment of annulment has
become final and executory shall be considered legitimate.
o Effect on Property Relations
▪ The property regime of a voidable marriage prior to its annulment is
 either absolute community of property, conjugal partnership of gains,
or complete separation. If the property regime is either absolute
community or conjugal partnership, the same is automatically
terminated upon the finality of the judgment of annulment and should
be subjected to liquidation.
o Effect on Donation Propter Nuptias
▪ When the marriage is annulled, the donation proper nuptias remains
valid. However, if the donee acted in bad faith, the donor may revoke
the same.

E. Effect of Defective Marriages

Article 64 (FC). After the finality of the decree of legal separation, the innocent spouse
may revoke the donations made by him or by her in favor of the offending spouse, as
well as the designation of the latter as beneficiary in any insurance policy, even if such
designation be stipulated as irrevocable. The revocation of the donations shall be
recorded in the registries of property in the places where the properties are located.
Alienations, liens, and encumbrances registered in good faith before the recording of the
complaint for revocation in the registries of property shall be respected. The revocation of
or change in the designation of the insurance beneficiary shall take effect upon written
notification thereof to the insured.

The action to revoke the donation under this Article must be brought within five years
from the time the decree of legal separation become final.

F. Foreign Marriages

Article 26 (FC). All marriages solemnized outside the Philippines, in accordance with the
laws in force in the country where they were solemnized, and valid there as such, shall
also be valid in this country, except those prohibited under Articles 35 (1), (4), (5) and
(6), 36, 37, and 38.

• Legal Capacity of Foreigners To Contract Marriage

o Governed by their national law. Hence, they must submit a certificate of
legal capacity to contract marriage issued by their respective diplomatic or
consular officials.

• In mixed marriages involving a Filipino and a foreigner, the former is allowed to

contract a subsequent marriage in case the absolute divorce is validly obtained
abroad by the alien spouse capacitating him or her to remarry.

• In Republic v. Albios, where a citizen of the Philippines got married to an American

citizen solely for the purpose of acquiring American citizenship in consideration of a
sum of money, the Court ruled that that there is no law that declares a marriage
void if it is entered into for purposes other than what the Constitution or law
declares, such as the acquisition of foreign citizenship.

• Rules in Mixed Marriages

o Requisites
▪ In a mixed marriage involving a Filipino citizen and a foreigner, the
Family Code allows the former to remarry in case the divorce is
"validly obtained abroad by the alien spouse capacitating him or her
to remarry”. The following elements must concur in order for said law
to apply, namely:
• That there is a valid marriage celebrated between a Filipino
citizen and a foreigner; and
 • That a valid divorce is obtained abroad, regardless of who
between the spouses initiated the divorce proceedings.
▪ Thus, pursuant to Republic v. Manalo, foreign divorce decrees
obtained to nullify marriages between a Filipino and an alien citizen
may already be recognized in this jurisdiction, regardless of who
between the spouses initiated the divorce; provided, of course, that
the party petitioning for the recognition of such foreign divorce
decree—presumably the Filipino citizen—must prove the divorce as a
fact and demonstrate its conformity to the foreign law allowing it.
o Reckoning point in determining citizenship
▪ In determining whether it is a case of a mixed marriage, the Court
ruled in Republic v. Orbecido III that the reckoning point is not the
citizenship of the parties at the time of the celebration of the
marriage, but their citizenship at the time a valid divorce is obtained
abroad by the alien spouse capacitating the latter to remarry.
▪ Once it is proven that a party was no longer a Filipino citizen when he
obtained the divorce from his Filipino spouse, the rule in Article 26(2)
of the Family Code would be applicable. In other words, the validity of
the divorce will be determined based on the law of the country of
which he is a citizen at the time the valid divorce is obtained.
o Article 26(2) Applicable Only to Filipino Spouse
▪ Only the Filipino spouse can invoke the second paragraph of Article 26
of the Family Code, while the alien spouse can claim no right under
said provision. The legislative intent is for the benefit of the Filipino
spouse, by clarifying his or her marital status, settling the doubts
created by the divorce decree.
▪ Thus, if the Filipino spouse invokes the second paragraph of Article 26
of the Family Code, the action is not limited to the recognition of the
foreign divorce decree. If the court finds that the decree capacitated
the alien spouse to remarry, the courts can declare that the Filipino
spouse is likewise capacitated to contract another marriage.
o When Filipino Spouse Regains Capacity to Remarry
▪ In Republic v. Cote, the Court made a pronouncement, by way of
obiter dictum, that the Filipino spouse who likewise benefits from the
effects of the divorce (obtained in a mixed marriage) cannot
automatically remarry; before the divorced Filipino spouse can
remarry, he or she must file a petition for judicial recognition of the
foreign divorce.
▪ In Sarto v. People, however, the Court ruled that the "[r]ecognition of
the divorce decree, however, need not be obtained in a separate
petition filed solely for that purpose. Philippine courts may recognize
the foreign divorce decree when such was invoked by a party as an
integral aspect of his claim or defense.
▪ The author believes that Sarto is the better rule. In other words, once
it has been proven that the divorce obtained abroad is valid, and that
it capacitated the foreign spouse to remarry, the Filipino spouse also
regains his or her capacity to remarry at the same time that the
foreign spouse reacquires his or her capacity to remarry. Thus, even if
the Filipino spouse immediately contracted a subsequent marriage
after the divorce and prior to its judicial recognition, he or she is not
automatically liable for bigamy.
o Principle Applied to Foreign Judgment Involving Bigamy
▪ The principle in Article 26 of the Family Code is also applicable to a
marriage between a Filipino and a foreign citizen who obtains a
foreign judgment nullifying the marriage on the ground of bigamy.
▪ The Court explained that the principle in the second paragraph of
 Article 26 of the Family Code applies because the foreign spouse, after
the foreign judgment nullifying the marriage, is capacitated to
remarry under the laws of his or her country. If the foreign judgment
is not recognized in the Philippines, the Filipino spouse will be
discriminated—the foreign spouse can remarry while the Filipino
spouse cannot remarry.241
o Retroactive Application of Rule
▪ In San Luis v. San Luis, the Court held that there is no need to
retroactively apply the provisions of the second paragraph of Article
26 of the Family Code because there is sufficient jurisprudential basis
to apply the rule embodied in said law to absolute divorces obtained
by the foreign spouse prior to the effectivity of the Family Code, as
exemplified by the cases of Van Doni v. Romillo, Jr., Pilapil v. lbay-
Somera, and Quito v. Court of Appeals.

G. Legal Separation

• Effects of Decree of Legal Separation

o Right to Live Separately
▪ A decree of legal separation does not result in the severance of the
marital bond but will only entitle the spouses to live separately. As a
consequence, the husband no longer has the right of consortium1.
o Effect on Property Relations
▪ If the property regime of the spouses is either absolute community or
conjugal partnership of gains, the same is automatically terminated
and shall be subjected to liquidation.
▪ Upon the liquidation of the absolute community or conjugal
partnership, the share of the offending spouse in the “net profits”
shall be forfeited in favor of:
• Common children;
• In default thereof, children of the guilty spouse by a previous
marriage; or
• In default thereof, the innocent spouse. But what is forfeited is
only the net profits, not the net assets.
▪ Simultaneous with the termination of the absolute community or
conjugal partnership of gains, the property relations of the spouses
shall thereafter be governed by a regime of complete separation.
o Effect on Right to Inherit
▪ The right of the innocent spouse to inherit from the offending spouse
is not affected. On the part of the offending spouse, he or she shall be
disqualified to inherit from the innocent spouse.
▪ As to testamentary succession, testamentary dispositions in favor of
the offending spouse existing at the time of the finality of the decree
of legal separation shall be revoked by operation of law. But he or she
is not disqualified from being made a voluntary heir, devisee, or
legatee in the will of the innocent spouse executed after the issuance
of the decree of legal separation.
o Effect on Custody of Minor Children
▪ As a rule, the custody of minor children shall be awarded to the
innocent spouse.
▪ However, children below seven years old should not be separated
from the mother unless the court finds compelling reasons to order
otherwise.
• R.A. No. 9262 (Anti-Violence Against Women and Their Children

1
The right of one spouse to the society or services of the other spouse.
 Act of 2004) prohibits the awarding of custody of minor children
to the perpetrator of a woman who is suffering from battered
woman syndrome. In addition, the same law provides that the
victim who is suffering from battered woman syndrome shall
not be disqualified from having custody of her children.
o Effect on Right to Support
▪ The rule is that after the finality of the decree of legal separation, the
obligation of mutual support between the spouses ceases.
▪ By way of exception, the court may, however, order the guilty spouse
to give support to the innocent spouse.
o Effect on Donation Propter Nuptias
▪ The donation propter nuptias remains valid.
▪ However, if the donee is the offending spouse, the innocent spouse
may revoke the donation within five years from the finality of the
decree of legal separation.
▪ If the donor is a third person, the donor may also revoke the donation
pursuant to Article 86(4) of the FC.
o Effect on Designation as Beneficiary in Insurance
▪ If the offending spouse is designated as beneficiary in any insurance
policy of the innocent spouse, such designation may be revoked even
if such designation be stipulated as irrevocable.

• Grounds For Legal Separation

Article 55 (FC). A petition for legal separation may be filed on any of the following
grounds:
(1) Repeated physical violence or grossly abusive conduct directed against the
petitioner, a common child, or a child of the petitioner;
(2) Physical violence or moral pressure to compel the petitioner to change religious
or political affiliation;
(3) Attempt of respondent to corrupt or induce the petitioner, a common child, or a
child of the petitioner, to engage in prostitution, or connivance in such corruption
or inducement;
(4) Final judgment sentencing the respondent to imprisonment of more than six
years, even if pardoned;
(5) Drug addiction or habitual alcoholism of the respondent;
(6) Lesbianism or homosexuality of the respondent;
(7) Contracting by the respondent of a subsequent bigamous marriage, whether in
the Philippines or abroad;
(8) Sexual infidelity or perversion;
(9) Attempt by the respondent against the life of the petitioner; or
(10) Abandonment of petitioner by respondent without justifiable cause for more
than one year.
For purposes of this Article, the term "child" shall include a child by nature or by
adoption.

o Physical Violence
▪ As a rule, to be a ground for legal separation, there must be repetitive
acts of physical violence directed against the petitioner, a common
child, or a child of the petitioner.
▪ However, a single act of physical violence directed against the
petitioner is a sufficient ground for legal separation if the same
amounts to an attempt against the life of the petitioner, or for the
purpose of compelling the petitioner to change religious or political
affiliation.
o Other Forms of Abuse
 ▪ Other forms of abuse (aside from physical abuse) may also be a
ground for legal separation if:
• The same is gross; and
• It becomes a conduct of the respondent.
▪ However, a single exertion of moral pressure by the respondent upon
the petitioner is a sufficient ground for legal separation if it is for the
purpose of compelling the petitioner to change religious or political
affiliation.
▪ Likewise, a single act of sexual abuse is a sufficient ground for legal
separation if it is in the form of an attempt of respondent to corrupt or
induce the petitioner, a common child, or a child of the petitioner, to
engage in prostitution, or connivance in such corruption or
inducement.
o Conviction of a Crime
▪ Requisites
• There is final judgment; and
• The sentence imposed is imprisonment of more than six years,
even if pardoned.
o Drug Addiction, Habitual Alcoholism, Lesbianism, or Homosexuality
o Contracting of Bigamous Marriage
▪ The mere contracting by the respondent of a subsequent bigamous
marriage, whether in the Philippines or abroad, is a sufficient ground
for legal separation.
▪ The intention is that even if the respondent cannot be prosecuted
criminally for bigamy (because he/she committed the crime outside
the Philippines), the contracting of a subsequent bigamous marriage
is a ground for legal separation. By analogy, even if the respondent is
not criminally liable because the subsequent marriage was contracted
without a marriage license, there is still a ground for legal separation.
o Sexual Infidelity or Perversion
▪ The infidelity need not be committed in relation to the opposite sex.
So long as the sexual act is committed with someone other than the
spouse, whether of the opposite sex or with same sex, there is a
sufficient ground for legal separation,
o Abandonment
▪ Requisites
• Abandonment is without justifiable cause; and
• For more than one year.

• Cooling-Off Period

Article 58 (FC). An action for legal separation shall in no case be tried before six months
shall have elapsed since the filing of the petition.

o General Rule
▪ The case shall not be tried (on the merits) within six months from the
filing of the petition.
▪ The cooling-off period does not prevent the court from hearing a
motion for preliminary injunction to prevent the respondent from
managing the exclusive property of the petitioner. What is prohibited
is trial on the merits of the petition,
o Exception
▪ If the ground for the petition constitutes “violence” as defined in R.A.
No. 9262, no cooling-off period shall apply. Instead, the court is
mandated to immediately hear the case.
o Duty of the Court
 ▪ Courts must take steps toward the reconciliation of the spouses and
may only issue the decree of legal separation after it has been
satisfied that, despite such efforts, reconciliation is highly improbable.

• Defenses in Legal Separation

o Condonation and Consent
▪ In both, the act is unilateral on the part of the innocent spouse.
▪ In condonation, the pardon is granted after the commission of the
offense; in consent, the approval is given prior to the commission of
the offense.
o Connivance and Collusion
▪ In both, the spouses both participated.
▪ In connivance, the ground is really committed; in collusion, the
ground may not have been really committed but the spouses made it
appear as though it was committed for the purpose of obtaining a
decree of legal separation.
o Mutual Guilt or Recrimination
▪ Both parties have given ground for legal separation.
o Prescription
▪ Five years from occurrence of the cause.
o Effect of Death
▪ If a party dies prior to the entry of judgment, the case shall be
terminated. However, if a party dies after the entry of judgment,
the judgment shall bind the parties and their successors-in-interest.

• Effect of Reconciliation
o If De Facto Reconciliation
▪ In the absence of a “decree of reconciliation,” the decree of legal
separation is not set aside.
o If there is Decree of Reconciliation
▪ The decree of legal separation is set aside, but the separation of
property and any forfeiture of net profits shall subsist.
▪ As a consequence:
• The right of the guilty spouse to inherit from the innocent
spouse in intestate succession shall be automatically reinstated;
• The testamentary dispositions in the will of the innocent spouse
favorable to the guilty spouse which have been revoked by
operation of law shall be automatically revived;
• If the donation propter nuptias made by the innocent spouse in
favor of the guilty spouse has not yet been revoked, the
former loses the right to revoke the donation;
• However, if the revocation of the donation propter nuptias has
been decreed by the court and the judgment is already final,
said judgment is already res judicata, and
• If the innocent spouse has not yet revoked the designation of
the guilty spouse as beneficiary in any insurance policy, the
former loses the right to revoke the same.
o Revival of Previous Property Regime
▪ Agreement for Revival of Previous Property Regime
• Upon reconciliation and issuance of a decree of reconciliation,
the previous property regime of the spouses is not
automatically revived.
• If they want to revive their previous property regime, they
must comply with the following procedures:
o They must execute an agreement of revival under oath;
o The agreement must specify the properties to be
 contributed anew to the restored regime and those to be
retained as separate properties;
o The names of creditors, their addresses and amounts
owing to each must likewise be specified; and
o The agreement must be submitted in court for approval
by way of a verified motion for its approval.
▪ Adoption of New Property Regime
• The FC does not allow adoption of a new property regime upon
reconciliation.

H. Property Relations Between Spouses

Article 74 (FC). The property relationship between husband and wife shall be governed in
the following order:
(1) By marriage settlements executed before the marriage;
(2) By the provisions of this Code; and
(3) By the local custom.

Article 75 (FC). The future spouses may, in the marriage settlements, agree upon the
regime of absolute community, conjugal partnership of gains, complete separation of
property, or any other regime. In the absence of a marriage settlement, or when the
regime agreed upon is void, the system of absolute community of property as
established in this Code shall govern.

1. Donation Propter Nuptias

• Concept
o Requisites
▪ Made before the celebration of the marriage;
▪ Made in consideration of the marriage; and
▪ The donation is in favor of one or both of the future spouses.
o What Can Be Donated
▪ Whether the donor is one of the future spouses or a third person, both
may donate present property. However, if the donation involves
future property, the same is allowed only when it is a donation
between the future spouses.
▪ If made by a third person, the donation is void.
• Formalities Required
o If the donation involves present property, it is in the nature of a donation
inter vivos. As to formalities, the same must comply with the formalities
required in ordinary donations. Hence, if the donation involves personal
property the value of which exceeds ₱5,000, both the donation and the
acceptance must be in writing; otherwise the donation is void.
o If the donation involves real property, both the donation and the acceptance
must be in a public instrument; otherwise, the donation is also void.
o If the donation involves future property, the same is in the nature of a
testamentary disposition which must be embodied in the form of a last will
and testament.
• Limitations in Donation of Present Property Between Future Spouses
o If the regime agreed upon is absolute community, there is no limitation on
the extent of the donation by the future spouses to each other.
o If the regime agreed upon is other than absolute community, they cannot
donate to each other more than one-fifth (1/5) of their present property. But
only the excess shall be void.
• Grounds for Revocation of Donation Propter Nuptias
o Non-Celebration of Marriage
 ▪ If the marriage is not celebrated, the donation merely becomes
revocable, except if the donation is made in the marriage settlement,
in which case, the donation becomes void.
o Marriage is Judicially Declared Void
▪ If the marriage is judicially declared void, the donation becomes
revocable.
▪ Exceptions:
• If the marriage is judicially declared void under Article 40 and
the donee contracted the marriage in bad faith, the donation is
revoked by operation of law; and
• If the subsequent marriage referred to in Article 41 is void
because both parties thereto acted in bad faith, all donations
propter nuptias made by one in favor of the other are revoked
by operation of law.
o Marriage is Annulled
▪ If the marriage is annulled and the donee acted in bad faith, the
donation becomes revocable.
▪ If the ground is lack of parental consent, the donation becomes
revocable even if the marriage is not yet annulled.
o Issuance of Decree of Legal Separation
▪ Upon issuance of the decree of legal separation, the donation
becomes revocable if the donee is the guilty spouse.
o Other Grounds
▪ When the donation is subject to a resolutory condition, and the
condition is complied with; and
▪ When the donee has committed an act of ingratitude as specified in
Article 765 of the Civil Code.

2. Void Donations by the Spouses

• Donations Between Spouses During Marriage

o General Rule
▪ Every donation between the spouses during the marriage, whether
made directly or indirectly, shall be void regardless of the property
regime. The prohibition also applies to persons merely living together
as husband and wife without a valid marriage.
o Exception
▪ Moderate gifts on the occasion of any family rejoicing are valid.

3. Absolute Community of Property Regime

Article 88 (FC). The absolute community of property between spouses shall commence at
the precise moment that the marriage is celebrated. Any stipulation, express or implied,
for the commencement of the community regime at any other time shall be void.

• Basic Concepts
o Concept
▪ Absolute Community of Property (ACPI) is a special kind of co-
ownership. The husband and the wife become joint owners of all the
properties of the marriage. Hence, the provisions on co-ownership
shall apply suppletorily.
o Commencement
▪ The regimes of absolute community and conjugal partnership can only
commence at the precise moment that the marriage is celebrated.
Any stipulation to the contrary shall be void.
o Prohibition Against Waiver
 ▪ Prior to the liquidation of the absolute community or conjugal
partnership, the law prohibits the waiver of rights, interests, shares,
and effects of the property regime.
▪ Reason: Prior to liquidation, the interest of each spouse in the
conjugal assets or community property is inchoate and does not ripen
into title until there are assets left as a result of the liquidation.

• Properties Included in ACP and Exclusive Properties

o Community Property
▪ Generally, the community property shall consist of all the property
owned by the spouses at the time of the celebration of the marriage
or acquired thereafter.
o Exclusive Property
▪ Those excluded from the community property in the marriage
settlements;
▪ Those acquired before the marriage by either spouse who has
legitimate descendants by a former marriage, as well as the fruits and
income thereof;
▪ Those acquired during the marriage by gratuitous title by either
spouse, including the fruits and income thereof, unless the grantor
expressly declares that they shall form part of the community
property; and
▪ Those which are for personal and exclusive use of either spouse; but
jewelry shall form part of the community property.

• Obligations of the Absolute Community

o Support
▪ The absolute community shall be liable for the support of
• (1) the spouses;
• (2) their common children; and
• (3) legitimate children of either spouse.
o For the support of illegitimate children of either spouse,
legitimate ascendants, descendants, whether legitimate
or illegitimate (excluding common children and legitimate
children of either spouse), and siblings, whether
legitimately or illegitimately related, only the separate
property of the person obliged to give support shall be
answerable. However, if the obligor has no separate
property, the absolute community, if financially capable,
shall advance the support, which shall be deducted from
the share of the spouse obliged upon the liquidation of
the absolute community.
o Antenuptial Debts (Debts Contracted Before Marriage)
▪ It shall be the obligation of the absolute community only if they have
redounded to the benefit of the family. Antenuptial debts of either
spouse which did not redound to the benefit of the family shall be paid
by the separate property of the debtor-spouse. However, in case of
absence or insufficiency of the exclusive property of the debtor-
spouse, the absolute community shall advance its payment to be
deducted from the share of the debtor-spouse upon liquidation of the
absolute community.
o Debts Contracted During Marriage
▪ Shall be the obligation of the absolute community when:
• Contracted by both spouses;
• Contracted by one spouse with the consent of the other;
• Contracted by the administrator-spouse for the benefit of the
 community or of the conjugal partnership; or
• Contracted by either spouse without the consent of the other to
the extent that the family may have been benefited.
▪ If the debt was contracted by one spouse without the consent of the
other and it did not redound to the benefit of the family, the debt shall
be paid by the separate property of the debtor-spouse and the
absolute community or the conjugal partnership cannot be compelled
to advance its payment, even if the debtor-spouse has no separate
property.
▪ Ordinarily, the burden of proof that the debt was contracted for the
benefit of the absolute community lies with the creditor-party litigant
claiming as such.
▪ However, where the husband contracts the obligation on behalf of the
family business and he himself is the principal obligor in the contract
and directly received the money and services to be used in the said
business, the law presumes that such obligation will redound to the
benefit of the absolute community. On other hand, no such
presumption can be made if the money or services are given to
another person or entity, and the husband acted only as a surety or
guarantor.
o Taxes and Expenses for Repair
▪ All taxes, liens, charges, and expenses, including major or minor
repairs, upon the community property shall be the obligation of the
absolute community or conjugal partnership.
▪ As to taxes upon the separate property of either spouse, the same will
be the obligation of the property regime only when the said separate
property is used by the family.
▪ As to expenses for the preservation of the separate property of either
spouse, the same will be the obligation of the property regime only
when the said separate property is used by the family.
o Civil Liability for Delict or Quasi-Delict
▪ The liabilities incurred by either spouse by reason of a crime or a
quasi-delict shall be paid by the separate property of the debtor-
spouse.
▪ However, in case of absence or insufficiency of the exclusive properly
of the debtor-spouse, the absolute community shall advance its
payment to be deducted from the share of the debtor-spouse upon
liquidation of the absolute community.
o Other Obligations of Absolute Community or Conjugal Partnership
▪ Expenses to enable either spouse to commence or complete a
professional or vocational course, or other activity for self-
improvement;
▪ Value of what is donated or promised by both spouses in favor of their
common legitimate children for the exclusive purposes of commencing
or completing a professional or vocational course, or other activity for
self-improvement; and
▪ Expenses of litigation between the spouses unless the suit is found to
be groundless.

• Administration and Management of Community Property

o Rule
▪ The administration of community property belongs to both spouses
jointly.
o In Case of Disagreement
▪ If they cannot agree on matters of administration of community or
conjugal property, the husband’s decision shall prevail, and he can
 validly enter into contracts (involving administration) without the
consent of the wife.
▪ However, if such contract causes economic injury to the family, the
wife may seek the rescission of such contract and other proper
remedy within five years from the date of the contract implementing
the husband’s decision.
o When Sole Administration Allowed
▪ In the event that one spouse is incapacitated or otherwise unable to
participate in the administration of the community properties, the
other spouse may assume sole powers of administration. These
powers do not, however, include disposition or encumbrance without
the authority of the court or the written consent of the other spouse.

• Disposition or Encumbrance of Community or Conjugal Property

o Rule
▪ Under the regime of absolute community of property, alienation, or
encumbrance of community or conjugal property must have the
written consent of the other spouse or the authority of the court,
without which the disposition or encumbrance is void. Neither spouse
may likewise donate any community property without the consent of
the other except moderate donations for charity or on occasions of
family rejoicing or family distress.
▪ However, either spouse may dispose by will of his or her share in the
community property.
o Void Contract as Continuing Offer
▪ Even if the disposition or encumbrance is void. the transaction shall
be construed as a continuing offer on the part of the consenting
spouse and the third person, and max be perfected as a binding
contract upon the acceptance by die other spouse or authorization by
the court before the offer is withdrawn by either or both of the
offerors.
▪ The transaction executed sans the written consent of the other spouse
or the proper court order is void; hence, ratification does not occur,
for a void contract could not be ratified. When such consent or
authorization is eventually given, there will be a meeting of the offer
and acceptance since the void transaction is nevertheless considered
as a continuing offer on the part of the consenting spouse and the
third person, thereby resulting in the perfection of the contract.
o Contract Void in its Entirety
▪ If the alienation or encumbrance of community property is without the
written consent of the other spouse or the authority of the court, the
entire transaction is void. It cannot be treated as a valid transaction
with respect to the alleged share of the consenting spouse in the
specific property because such alleged share does not exist as yet.
o Buyer in Good Faith
▪ If the transaction is void because it was made without the written
consent of the other spouse or the authority of the court, the buyer
may nonetheless invoke the principle of buyer in good faith if he will
be able to prove that he had observed two kinds of requisite diligence,
namely:
• The diligence in verifying the validity of the title covering the
property; and
• The diligence in inquiring into the authority of the transacting
spouse to sell community property in behalf of the other
spouse.
• Dissolution/Termination of Absolute Community or Conjugal Partnership
o Death
▪ Rules under the Family Code
• There is a mandatory obligation on the part of the surviving
spouse to liquidate the community partnership property, either
judicially or extrajudicially, within one year from the death of
the deceased spouse; otherwise:
o The subsequent marriage of the surviving spouse shall be
governed by a mandatory regime of complete separation
of property; and
o Any disposition or encumbrance involving the community
property of the terminated marriage shall be void.
• In Uy v. Estate of Vda. Fernandez, however, it was ruled that
the sale made by the surviving spouse notwithstanding the
absence of liquidation of the absolute community properties (or
conjugal partnership properties) is not necessarily void.
Applying Article 493 of the Civil Code, the sale made by the
surviving spouse of his one-half (½) undivided share in the
subject property is not necessarily void, for his right as a co-
owner thereof was effectively transferred, making the buyer a
co-owner of the subject property.
o Decree off Legal Separation
▪ Effects if there is a decree of legal separation
• Upon the issuance of the decree of legal separation, the
absolute community is automatically terminated.
• However, upon liquidation of the absolute community, the
share of the offending spouse in the “net profits” shall be
forfeited in favor of:
o Common children;
o In default thereof, children of the guilty spouse by a
previous marriage; or
o In default thereof, the innocent spouse. But what is
forfeited is only net profits, not the net assets.
• Simultaneous with the termination of the absolute community,
the property relations of the spouses shall thereafter be
governed by a regime of complete separation.
▪ Effects of Mere Separation De Facto
• The separation in fact (or separation without a decree of legal
separation) between husband and wife does not affect the
regime of absolute community.
• However, such separation de facto shall produce the following
effects:
o The spouse who leaves the conjugal home or refuses to
live therein, without just cause, shall have no right to be
supported;
o When the consent ozone spouse to any transaction of the
other is required by law, judicial authorization shall be
obtained in a summary proceeding;
o If the community property is not sufficient, the separate
property of both spouses shall be solidarily liable for the
support of the family and the spouse present shall, upon
proper petition in a summary proceeding, be given
judicial authority to administer or encumber any specific
property of the other spouse and use the fruits or
proceeds thereof to satisfy the latter’s share; and
o If a spouse without just cause abandons the other or fails
 to comply with his or her obligations to the family, the
aggrieved spouse may petition for receivership, judicial
separation of property, or for authority to be the sole
administrator of the absolute community.
• A spouse is deemed to have abandoned the other when he or
she has left the conjugal dwelling without any intention of
reluming. The spouse who has left the conjugal dwelling for a
period of three months or has failed within the same period to
give any information as to his or her whereabouts shall be
prima facie presumed to have no intention of returning to the
conjugal dwelling.
o Finality of Judgment of Annulment or Declaration of Nullity
▪ The property regime of a voidable marriage is either absolute
community of property, conjugal partnership of gains, or complete
separation. If the property regime of the voidable marriage is either
absolute community of property or conjugal partnership of gains, the
said property regime is terminated upon the finality of a judgment of
annulment.
▪ On the other hand, if the marriage is void, regardless of the cause
thereof, the property relations of the parties during the period of
cohabitation, are governed by Article 147 or 148, as the case may be.
▪ Ordinarily, therefore, there is no absolute community of property in a
void marriage. The only exception is when the marriage is void by
reason of Article 40 of the Family Code.
▪ The property regime of a void marriage under Article 40 of the FC,
prior to judicial declaration of its absolute nullity, is either absolute
community of property, conjugal partnership of gains, or complete
separation. Hence, upon the finality of the judgment declaring the
marriage void on the ground of Article 40 of the FC, the absolute
community is terminated.
o Judicial Separation of Property
▪ Upon the judicial separation of property during the marriage, either
voluntarily or for cause, the absolute community is terminated.
However, an extrajudicial dissolution of the absolute community
without judicial approval is void.
o Procedures for Liquidation of Absolute Community or Conjugal Partnership
▪ Inventory, listing separately the exclusive properties and the
properties of the absolute community.
▪ Amounts advanced by the absolute community in payment of personal
debts and obligations of either spouse shall be credited to the
absolute community or conjugal partnership as an asset thereof.
▪ Payment of debts and obligations of the absolute community or out of
its assets. In case of insufficiency of said assets, the spouses shall be
solidarily liable for the unpaid balance with their separate properties.
▪ Whatever remains of the exclusive properties of the spouses shall
thereafter be delivered to each of them.
▪ The net remainder of the properties of the absolute community shall
constitute its “net assets”, which shall be divided equally between the
spouses, unless a different proportion or division was agreed upon in
the marriage settlements, or unless there has been a voluntary waiver
of such share.
▪ The “net assets” is different from “net profits.” It is the latter which is
subject to forfeiture under Articles 43(2) and 63(2) of the FC.
▪ The “net profits” refer to the increase in value between the market
value of the community property at the time of the celebration of the
marriage and the market value at the time of its dissolution.
 ▪ In the regime of absolute community of property, “net profits” is
computed based on the following procedure:
• Get the market value of the absolute community properties at
the time of the community’s dissolution;
• From the totality of the market value of all the properties,
subtract the debts and obligations of the absolute community;
• The result of the foregoing procedure shall be “net assets” or
net remainder of the properties of the absolute community;
• Deduct the market value of the properties at the time of
marriage. The result is the “net profits.
• Delivery of presumptive legitimes of the common children.
• The conjugal dwelling, including the lot shall be adjudicated to
the spouse with whom the majority of the common children
choose to remain unless otherwise agreed upon by the parties.
In case there is no majority, the court shall decide.

4. Conjugal Partnership of Gains Regime

• Basic Concepts
o Concept
▪ Conjugal partnership of Gains (CPG) is a special type of partnership.
The husband and the 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.
Hence, the provisions on partnership shall apply suppletorily.
o Commencement
▪ The regimes of absolute community and conjugal partnership can only
commence at the precise moment that the marriage is celebrated.
Any stipulation to the contrary shall be void.
o Prohibition Against Waiver
▪ Prior to the liquidation of the absolute community or conjugal
partnership, the law prohibits the waiver of rights, interests, shares,
and effects of the property regime.
▪ Reason: Prior to liquidation, the interest of each spouse in the
conjugal assets or community property is inchoate and does not ripen
into title until there are assets left as a result of the liquidation.

• Properties Included in CPG and Exclusive Properties

o Conjugal Property and Exclusive
▪ Those brought to the marriage as his or her own shall remain
exclusive property.
▪ For properties acquired during the marriage, all those properties are
presumed to be conjugal unless it is proven that:
• It is acquired by gratuitous title;
• It is acquired by right of redemption, by barter, or by exchange
with property belonging to only one of the spouses; or
• It is purchased with exclusive money of the wife or of the
husband.
▪ The presumption in favor of conjugal partnership applies “even if the
acquisition appears to have been made, contracted, or registered in
the name of one or both spouses. Hence, the registration of a
property alone in the name of one spouse does not destroy its
conjugal nature and it is not conclusive evidence of the exclusive
ownership of the husband or the wife.
▪ However, the presumption applies only when there is proof that the
property was acquired during the marriage. It does not operate when
 there is no showing as to when property alleged to be conjugal was
acquired.
o Special Rule in Conjugal Partnership – Article 120
▪ Requisites for Applicability
• A property is exclusively owned by one of the spouses;
• It is subjected to improvements during the marriage; and
• The improvements were made at the expense of the conjugal
partnership or through the acts or efforts of either or both
spouses.
▪ Rules for Determination of Ownership
• If the cost of improvement and any resulting increase in the
value of the property by reason of the improvement are more
than the value of the property prior to the introduction of the
improvement, the entire property shall become conjugal
partnership property; otherwise, the entire property shall
become the exclusive property of the owner spouse. In either
case, there shall be corresponding reimbursements at the time
of liquidation of the conjugal partnership.
o Special Rule in Conjugal Partnership – Property Purchased on Installments
(Article 118)
▪ Requisites for applicability
• Property is bought by one of the spouses before the marriage;
• It is payable on installments; and
• Partly paid from exclusive funds of the buyer and partly paid
from conjugal funds.
▪ Rules for Determination of Ownership
• The time when full ownership was vested. If vested before the
marriage, it becomes exclusive property of the buyer. If vested
during the marriage, it becomes conjugal property. In either
case, there shall be corresponding reimbursements at the time
of liquidation of the conjugal partnership.
o Special Rule in Conjugal Partnership – Credit Payable on Installments
(Article 119)
▪ Requisites for Applicability
• The credit belongs to one of the spouses;
• It is payable on installments; and
• Sums are collected during the marriage.
▪ Rules for Determination of Ownership
• Payments on the principal shall be exclusive property of
creditor spouse; and
• Payments of interests falling due during the marriage shall
belong to the conjugal partnership.
o Special Rule in Conjugal Partnership – Livestock
▪ For example, the groom brought into the marriage five cows; while
the bride brought seven cows. After two years, a decree of legal
separation was issued and the conjugal partnership was liquidated. At
the time of the liquidation, there were 20 cows. Some are offspring
and some are the parent animals brought into the marriage. Here,
only the excess of the number brought into the marriage by either
spouse shall be considered conjugal property. Hence, five shall be
returned to the husband as his exclusive property; while seven shall
be returned to the wife as her exclusive property. The excess, or eight
cows, shall be considered conjugal property.

• Obligations of the Conjugal Partnership

o Support
 ▪ The conjugal partnership shall be liable for the support of:
• (1) the spouses;
• (2) their common children; and
• (3) legitimate children of either spouse.
o In case the obligor has no separate property, such
obligation may be enforced against the partnership
assets, if financially capable, but only after the
obligations of the conjugal partnership enumerated in
Article 121 of the FC have been covered; but at the time
of the liquidation of the partnership, such spouse shall be
charged for what has been paid for said purpose.
o Antenuptial Debts (Debts Contracted Before Marriage)
▪ It shall be the obligation of the conjugal partnership only if they have
redounded to the benefit of the family. Antenuptial debts of either
spouse which did not redound to the benefit of the family shall be paid
by the separate property of the debtor-spouse.
▪ In case the obligor has no separate property, such obligation may be
enforced against the partnership assets but only after the obligations
of the conjugal partnership enumerated in Article 121 of the FC have
been covered; but at the time of the liquidation of the partnership,
such spouse shall be charged for what has been paid for said purpose.
o Debts Contracted During Marriage
▪ Shall be the obligation of the conjugal partnership when:
• Contracted by both spouses;
• Contracted by one spouse with the consent of the other;
• Contracted by the administrator-spouse for the benefit of the
community or of the conjugal partnership; or
• Contracted by either spouse without the consent of the other to
the extent that the family may have been benefited.
▪ If the debt was contracted by one spouse without the consent of the
other and it did not redound to the benefit of the family, the debt shall
be paid by the separate property of the debtor-spouse and the
absolute community or the conjugal partnership cannot be compelled
to advance its payment, even if the debtor-spouse has no separate
property.
▪ Ordinarily, the burden of proof that the debt was contracted for the
benefit of the conjugal partnership lies with the creditor-party litigant
claiming as such.
▪ However, where the husband contracts the obligation on behalf of the
family business and he himself is the principal obligor in the contract
and directly received the money and services to be used in the said
business, the law presumes that such obligation will redound to the
benefit of the conjugal partnership. On other hand, no such
presumption can be made if the money or services are given to
another person or entity, and the husband acted only as a surety or
guarantor.
o Taxes and Expenses for Repair
▪ All taxes, liens, charges, and expenses, including major or minor
repairs, upon the conjugal partnership property shall be the obligation
of the conjugal partnership.
▪ As to taxes upon the separate property of either spouse, the same will
be the obligation of the property regime only when the said separate
property is used by the family.
▪ As to expenses for the preservation of the separate property of either
spouse, the same will be the obligation of the property regime only
when the said separate property is used by the family.
 o Civil Liability for Delict or Quasi-Delict
▪ The liabilities incurred by either spouse by reason of a crime or a
quasi-delict shall be paid by the separate property of the debtor-
spouse.
▪ In case the obligor has no separate property, such obligation may be
enforced against the partnership assets but only after the obligations
of the conjugal partnership enumerated in Article 121 of the FC have
been covered; but at the time of the liquidation of the partnership,
such spouse shall be charged for what has been paid for said purpose.
o Other Obligations of Absolute Community or Conjugal Partnership
▪ Expenses to enable either spouse to commence or complete a
professional or vocational course, or other activity for self-
improvement;
▪ Value of what is donated or promised by both spouses in favor of their
common legitimate children for the exclusive purposes of commencing
or completing a professional or vocational course, or other activity for
self-improvement; and
▪ Expenses of litigation between the spouses unless the suit is found to
be groundless.

• Administration and Management of Conjugal Property

o Rule
▪ The administration of conjugal property belongs to both spouses
jointly.
o In Case of Disagreement
▪ If they cannot agree on matters of administration of conjugal
property, the husband’s decision shall prevail, and he can validly enter
into contracts (involving administration) without the consent of the
wife.
▪ However, if such contract causes economic injury to the family, the
wife may seek the rescission of such contract and other proper
remedy within five years from the date of the contract implementing
the husband’s decision.
o When Sole Administration Allowed
▪ In the event that one spouse is incapacitated or otherwise unable to
participate in the administration of the conjugal properties, the other
spouse may assume sole powers of administration. These powers do
not, however, include disposition or encumbrance without the
authority of the court or the written consent of the other spouse.

• Disposition or Encumbrance of Community or Conjugal Property

o Rule
▪ Under the regime of absolute community of property or conjugal
partnership of gains, alienation, or encumbrance of conjugal property
must have the written consent of the other spouse or the authority of
the court, without which the disposition or encumbrance is void.
Neither spouse may likewise donate any conjugal partnership property
without the consent of the other except moderate donations for
charity or on occasions of family rejoicing or family distress.
▪ However, either spouse may dispose by will of his or her share in the
conjugal property.
o Rule under Civil Code in Conjugal Partnership
▪ Under the Civil Code, the disposition of real property of the conjugal
partnership by the husband without the wife’s consent is not void but
merely voidable and the wife could, during the marriage and within 10
years from the questioned transaction, seek its annulment.
 ▪ In Felipe v. Aldon, the Court applied this law in a case where the wife
sold some parcels of land belonging to the conjugal partnership
without the consent of the husband. Thus, if the sale of conjugal
partnership property without the consent of one of the spouses took
place before the effectivity of the Family Code, the sale is merely
voidable and not void ab initio.
▪ In Ko v. Arambum, the husband sold a conjugal property in 1974
without the consent of the wife. However, the wife filed the action for
annulment only in 1993. Hence, the Court declared the action to have
been filed outside of the 10-year prescriptive period,
o Void Contract as Continuing Offer
▪ Even if the disposition or encumbrance is void, the transaction shall
be construed as a continuing offer on the part of the consenting
spouse and the third person, and max be perfected as a binding
contract upon the acceptance by die other spouse or authorization by
the court before the offer is withdrawn by either or both of the
offerors.
▪ The transaction executed sans the written consent of the other spouse
or the proper court order is void; hence, ratification does not occur,
for a void contract could not be ratified. When such consent or
authorization is eventually given, there will be a meeting of the offer
and acceptance since the void transaction is nevertheless considered
as a continuing offer on the part of the consenting spouse and the
third person, thereby resulting in the perfection of the contract.
o Contract Void in its Entirety
▪ If the alienation or encumbrance of conjugal property is without the
written consent of the other spouse or the authority of the court, the
entire transaction is void. It cannot be treated as a valid transaction
with respect to the alleged share of the consenting spouse in the
specific property because such alleged share does not exist as yet.
▪ In Abalos v. Macatangay, Jr., it was held that in case of sale of
conjugal property without the consent of the other spouse, the sale is
still void even on the supposition that the spouses only disposed of
their respective shares in the property because the right of the
husband or the wife to one-half of the conjugal assets do not vest
until the liquidation of the conjugal partnership. Nemo dat qui non
habet. No one can give what he has not.
▪ Exceptional Scenario
• In Carlos v. Tolentino the Court did not annul the entire
disposition of a conjugal partnership property despite the
absence of consent of one of the spouses thereto because of
the subsequent death of the transacting spouse. In upholding
the validity of the donation, the Court, applying justice and
equity, ruled that since the conjugal partnership was already
terminated upon the death of the transacting spouse, there is
no need to invalidate the disposition of her one-half (½) portion
of the conjugal property that will eventually be her share after
the termination of the conjugal partnership,
o Buyer in Good Faith
▪ If the transaction is void because it was made without the written
consent of the other spouse or the authority of the court, the buyer
may nonetheless invoke the principle of buyer in good faith if he will
be able to prove that he had observed two kinds of requisite diligence,
namely:
• The diligence in verifying the validity of the title covering the
property; and
 • The diligence in inquiring into the authority of the transacting
spouse to sell conjugal property in behalf of the other spouse.

• Dissolution/Termination of Conjugal Partnership

o Death
▪ Rules under the Family Code
• There is a mandatory obligation on the part of the surviving
spouse to liquidate the conjugal partnership property, either
judicially or extrajudicially, within one year from the death of
the deceased spouse; otherwise:
o The subsequent marriage of the surviving spouse shall be
governed by a mandatory regime of complete separation
of property; and
o Any disposition or encumbrance involving the community
or conjugal partnership property of the terminated
marriage shall be void.
• In Uy v. Estate of Vda. Fernandez, however, it was ruled that
the sale made by the surviving spouse notwithstanding the
absence of liquidation of the absolute community properties (or
conjugal partnership properties) is not necessarily void.
Applying Article 493 of the Civil Code, the sale made by the
surviving spouse of his one-half (½) undivided share in the
subject property is not necessarily void, for his right as a co-
owner thereof was effectively transferred, making the buyer a
co-owner of the subject property.
▪ If conjugal partnership was established in the Civil Code
• If the conjugal partnership is established before the effectivity
of the Family Code and one of the spouses died also before the
effectivity of the Family Code, the foregoing mandatory
obligation to liquidate and the effects of failure to do so do not
apply because the Civil Code does not mandatorily require the
surviving spouse to liquidate the conjugal partnership.
• As a consequence:
o If the surviving spouse contracts another marriage, even
during the effectivity of the Family Code, the said
marriage shall not be governed mandatorily by the
regime of complete separation; and
o Any disposition or encumbrance of the conjugal property
shall not be void. Instead, follow the rules on co-
ownership.
o Decree off Legal Separation
▪ Effects if there is a decree of legal separation
• Upon the issuance of the decree of legal separation, the
conjugal partnership is automatically terminated.
• However, upon liquidation of the conjugal partnership, the
share of the offending spouse in the “net profits” shall be
forfeited in favor of:
o Common children;
o In default thereof, children of the guilty spouse by a
previous marriage; or
o In default thereof, the innocent spouse. But what is
forfeited is only net profits, not the net assets.
• Simultaneous with the termination of the conjugal partnership
of gains, the property relations of the spouses shall thereafter
be governed by a regime of complete separation.
▪ Effects of Mere Separation De Facto
 • The separation in fact (or separation without a decree of legal
separation) between husband and wife does not affect the
regime of conjugal partnership.
• However, such separation de facto shall produce the following
effects:
o The spouse who leaves the conjugal home or refuses to
live therein, without just cause, shall have no right to be
supported;
o When the consent ozone spouse to any transaction of the
other is required by law, judicial authorization shall be
obtained in a summary proceeding;
o If the conjugal partnership property is not sufficient, the
separate property of both spouses shall be solidarily
liable for the support of the family and the spouse
present shall, upon proper petition in a summary
proceeding, be given judicial authority to administer or
encumber any specific property of the other spouse and
use the fruits or proceeds thereof to satisfy the latter’s
share; and
o If a spouse without just cause abandons the other or fails
to comply with his or her obligations to the family, the
aggrieved spouse may petition for receivership, judicial
separation of property, or for authority to be the sole
administrator of the absolute community or conjugal
partnership.
• A spouse is deemed to have abandoned the other when he or
she has left the conjugal dwelling without any intention of
returning. The spouse who has left the conjugal dwelling for a
period of three months or has failed within the same period to
give any information as to his or her whereabouts shall be
prima facie presumed to have no intention of returning to the
conjugal dwelling.
o Finality of Judgment of Annulment or Declaration of Nullity
▪ The property regime of a voidable marriage is either absolute
community of property, conjugal partnership of gains, or complete
separation. If the property regime of the voidable marriage is either
absolute community of property or conjugal partnership of gains, the
said property regime is terminated upon the finality of a judgment of
annulment.
▪ On the other hand, if the marriage is void, regardless of the cause
thereof, the property relations of the parties during the period of
cohabitation, are governed by Article 147 or 148, as the case may be.
▪ Ordinarily, therefore, there is no conjugal partnership of gains in a
void marriage. The only exception is when the marriage is void by
reason of Article 40 of the Family Code.
▪ The property regime of a void marriage under Article 40 of the FC,
prior to judicial declaration of its absolute nullity, is either absolute
community of property, conjugal partnership of gains, or complete
separation. Hence, upon the finality of the judgment declaring the
marriage void on the ground of Article 40 of the FC, the conjugal
partnership of gains is terminated.
o Judicial Separation of Property
▪ Upon the judicial separation of property during the marriage, either
voluntarily or for cause, the conjugal partnership of gains is
terminated. However, an extrajudicial dissolution of the conjugal
partnership without judicial approval is void.
 o Procedures for Liquidation of Conjugal Partnership
▪ Amounts advanced by the conjugal partnership in payment of
personal debts and obligations of either spouse shall be credited to
the conjugal partnership as an asset thereof. Each spouse shall be
reimbursed for the use of his or her exclusive funds in the acquisition
of property or for the value of his or her exclusive property, the
ownership of which has been vested by law in conjugal partnership.
▪ Payment of debts and obligations of the conjugal partnership out of its
assets. In case of insufficiency of said assets, the spouses shall be
solidarily liable for the unpaid balance with their separate properties.
▪ Whatever remains of the exclusive properties of the spouses shall
thereafter be delivered to each of them.
▪ The net remainder of the conjugal partnership properties shall
constitute its “net profits”, which shall be divided equally between the
spouses, unless a different proportion or division was agreed upon in
the marriage settlements, or unless there has been a voluntary waiver
of such share.
▪ The “net assets” is different from “net profits.” It is the latter which is
subject to forfeiture under Articles 43(2) and 63(2) of the FC.
▪ The “net profits” refer to the increase in value between the market
value of the community property at the time of the celebration of the
marriage and the market value at the time of its dissolution.

5. Separation of Property Regime

Article 134 (FC). In the absence of an express declaration in the marriage settlements,
the separation of property between spouses during the marriage shall not take place
except by judicial order. Such judicial separation of property may either be voluntary or
for sufficient cause.

• In General
o Concept
▪ In the regime of complete separation of property, each spouse shall
own, dispose of, possess, administer, and enjoy his or her own
separate estate, without need of the consent of the other. To each
spouse shall belong all earnings from his or her profession, business,
or industry and all fruits, natural, industrial, or civil, due or received
during the marriage from his or her separate property.
▪ As to expenses, both spouses shall bear the family expenses in
proportion to their income, or, in case of insufficiency or default
thereof, to the current market value of their separate properties. The
liability of the spouses to creditors for family expenses shall, however,
be solidary.
o Effect on SALN requirement
▪ In Abid-Babano v. Executive Secretary, it was ruled that the
requirement under Republic Act No. 6713 and similar laws that the
sworn statement of assets, liabilities, and net worth (SALN) to be filed
by every government official must include assets, liabilities, and net
worth of the spouse of the filer is construed NOT TO INLCUDE the
assets, liabilities, and net worth of spouses whose property regime
during the marriage is by law or by agreement prior to the marriage
one of complete separation of property.

• When Complete Separation Governing

o If provided in Marriage Settlements
▪ Complete separation will govern if it is the property regime provided
 for in the marriage settlements. If separation of property is agreed
upon in the marriage settlements, the spouses may no longer adopt
absolute community or conjugal partnership during the marriage
because these two regimes can only commence at the precise
moment of the celebration of the marriage.
▪ The separation may refer to present or future property or both.
▪ The separation may be total or partial. In case of partial separation,
properties not agreed upon as separate shall pertain to the absolute
community.
o Failure to Liquidate
▪ If the absolute community or conjugal partnership of the previous
marriage was terminated by reason of death and the surviving
spouse, who failed to liquidate the absolute community or conjugal
partnership within one year from the death of the deceased spouse,
contracted another marriage, the subsequent marriage shall be
governed by a mandatory regime of complete separation.

• Revival of Previous Property Regime

o Grounds for Revival
▪ In case of voluntary judicial separation of property, the parties may
file a motion in the same proceeding for the revival of the previous
property regime even in the absence of a reason/ground. However, no
voluntary separation may thereafter be granted.
▪ If the judicial separation is for sufficient cause, the parties may file a
motion in the same proceeding for the revival of the previous property
regime upon cessation of the ground which was the basis of the
judicial order for separation. If judicial separation is for a sufficient
cause, the spouses can again petition for judicial separation so long as
there is a new cause/ground.
o Procedure for Revival
▪ The same procedure for the revival of the previous property regime
upon reconciliation of the spouses after the issuance of the decree of
legal separation shall be followed.

• Transfer of Administration of Exclusive Property to Other Spouse

o By Agreement
▪ It may be done by means of a public instrument, which shall be
recorded in the registry of property of the place where the property is
located.
o Upon Order of Court
▪ Based on the Grounds
• Other spouse becomes the guardian of the other;
• Other spouse is judicially declared an absentee;
• Other spouse is sentenced to a penalty which carries with it civil
interdiction; or
Other spouse becomes fugitive from justice or hiding as an
accused in a criminal case.
o Automatic Termination of Administration
▪ The alienation of any exclusive property’ of a spouse administered by
the other automatically terminates the administration over such
property and the proceeds of the alienation shall be turned over to the
owner-spouse.

6. Property Regime of Unions Without Marriage

• Applicability
 o In Union of Parties Without the Benefit of Marriage
▪ If the man and woman simply lived together as husband and wife
without the benefit of marriage, they are governed by the property
regime provided for in Article 147 or Article 148. These property
regimes do not apply, however, to same-sex cohabitation. The latter
is governed by the law on property.

• When Governed by Article 147 or Article 148

o In Union of Parties Without the Benefit of Marriage
▪ The governing property regime is Article 147 if two requisites are
satisfied:
• The parties are capacitated to marry each other; and
• They live exclusively with each other as husband and wife.
▪ If both requisites are not satisfied, the governing property regime is
Article 148.
▪ As such, Article 147 does not apply to cases of multiple alliances,
even if in relation to each union the parties are capacitated to marry
each other. In the same way, even if it is a case of exclusive
cohabitation but the parties are not capacitated to marry each other,
Article 147 does not apply.
▪ In both situations, the property regime of the parties shall be that
which is provided in Article 148 of the Family Code. Although the
adulterous cohabitation of the parties commenced before the
effectivity of the Family Code on August 3, 1988, Article 148 thereof
applies because this provision was intended precisely to fill up the
hiatus in Article 144 of the Civil Code. Hence, even if the cohabitation
or the acquisition of the property occurred before the Family Code
took effect, Article 148 governs.

• Applicable Rules Under Article 147

o On Salary and Wages
▪ Wages and salaries earned by either party during the cohabitation
shall be owned by the parties in equal shares and will be divided
equally between them, even if only one party earned the wages and
the other did not contribute thereto.
o On Property Acquired during Cohabitation
▪ Under this property regime, properties acquired by both parties during
their union through their work and industry shall be governed by the
rules on equal co-ownership and are prima facie presumed to have
been obtained through their joint efforts.
▪ Article 147 creates a presumption that properties acquired during the
cohabitation of the parties have been acquired through their joint
efforts, work, or industry, and shall be owned by them in equal
shares.606 Stated otherwise, properties acquired during the
cohabitation are presumed co-owned by the parties. It further
provides that a party who did not participate in the acquisition by the
other party of any property shall be deemed to have contributed
jointly to the acquisition thereof if the former’s efforts consisted in the
care and maintenance of the family and of the household.
▪ Efforts in the care and maintenance of the family and household are
regarded as contributions to the acquisition of common property by
one who has no salary, income, work, or industry
▪ Unlike the conjugal partnership of gains, the fruits of the couple’s
separate property are not, however, included in the co-ownership.
o Prohibition against Alienation of Ideal Share in Co-Ownership
▪ During the cohabitation, the parties are prohibited from disposing by
 acts inter vivos or encumbering their respective shares in the co-
owned property without the consent of the other.
▪ Such disposition or encumbrance is void. In other words, Article 493
of the NCC does not apply. But after the cohabitation, Article 493 of
the NCC will already be applicable,
o Effect of Bad Faith
▪ If the cohabitation is by reason of a void marriage and only one of the
parties acted in bad faith, the share of the latter in the co-ownership
shall be forfeited in favor of the following, which forfeiture shall take
place upon the termination of the cohabitation:
• The common children, if any;
• In default of common children, the surviving descendants of the
party who acted in bad faith; or
• In the absence of descendants, the innocent party.

• Applicable Rules Under Article 148

o On Salary and Wages
▪ Wages and salaries earned by each party belong to him or her
exclusively.
o On Property Acquired during Cohabitation
▪ Under this regime, only the properties acquired by both of the parties
through their “actual joint contribution of money, property and
industry” shall be owned by them in common in proportion to their
respective contributions. Hence, mere cohabitation without proof of
contribution will not result in a co-ownership.
▪ Such contributions and corresponding shares were prima facie
presumed to be equal. However, for this presumption to arise, proof
of actual contribution is required. Stated otherwise, co-ownership will
only be up to the extent of the proven actual contribution of money,
property, or industry.
▪ If the actual contribution of the party is not proved, there will be no
co-ownership and no presumption of equal shares. The fact that the
controverted property was titled in the name of the parties to an
adulterous relationship is not sufficient proof of co-ownership absent
evidence of actual contribution in the acquisition of the property.
Registration under the Torrens title system merely confirms and does
not vest title. The words “married to” preceding the name of a spouse
are merely descriptive of the civil status of the registered owner and
such words do not prove co-ownership under Article 148.
o No Prohibition Against Alienation of Ideal Share
▪ Unlike in the co-ownership existing in Article 147, the law does not
prohibit one of the co-owners in Article 148 from disposing or
encumbering, during the cohabitation, his or her share in the co-
ownership without the consent of the other co-owner. In other words,
the rule in Article 493 of the NCC applies in the co-ownership existing
under Article 148.
o If one has a valid marriage
▪ If one of the parties in the cohabitation is validly married to another,
his or her share in the co-ownership shall accrue to the absolute
community or conjugal partnership existing in such valid marriage.
▪ If there is no such valid marriage, the share of the party who acted in
bad faith (whether either or both acted in bad faith) shall be forfeited,
which forfeiture shall take place upon the termination of the
cohabitation, in favor of:
• The common children, if any;
• In default of common children, the surviving descendants of the
 party who acted in bad faith; or
• In the absence of descendants, the innocent party.

7. Judicial Separation of Property

• Pursuant to Judicial Order

o Upon issuance of a decree of legal separation;
o Upon a joint petition of the spouses for voluntary separation (or without
need for a cause); and
o Upon petition for judicial separation due to a sufficient cause.
▪ The following are considered sufficient causes for judicial separation of
property:
• Other spouse is sentenced to a penalty which carries civil
interdiction;
• Other spouse is judicially declared an absentee;
• Other spouse is judicially decreed to have lost parental
authority;
• Other spouse abandoned the other or failed to comply with his
or her obligations to the family as provided in Article 101 of the
Code;
• Other spouse who has been granted powers of administration in
the marriage settlements abused that power; and
• Spouses have been separated in fact for at least one year and
reconciliation is highly improbable.
▪ In (i) to (iii), the presentation of the final judgment against the guilty
or absent spouse shall be enough basis for the grant of the decree of
judicial separation of property.

• Transfer of Administration of Exclusive Property to Other Spouse

o Upon Order of Court
▪ Based on the Grounds
• Other spouse becomes the guardian of the other;
• Other spouse is judicially declared an absentee;
• Other spouse is sentenced to a penalty which carries with it civil
interdiction; or
Other spouse becomes fugitive from justice or hiding as an
accused in a criminal case.

I. The Family

1. General Principles

Article 149 (FC). The family, being the foundation of the nation, is a basic social
institution which public policy cherishes and protects. Consequently, family relations are
governed by law and no custom, practice, or agreement destructive of the family shall be
recognized or given effect.

Article 150 (FC). Family relations include those: (1) between husband and wife; (2)
between parents and children; and (3) among brothers and sisters, whether of the full or
half-blood. (217a)

• Extent of Family Relations

o Under Article 150:
▪ Between husband and wife;
▪ Between parents and children;
▪ Among other ascendants and descendants; and
 ▪ Among brothers and sisters, whether of the full or half-blood.
o The enumeration is exclusive. Other collateral blood relatives and relatives
by affinity (e.g., in-laws) are considered as strangers.

Article 151. No suit between members of the same family shall prosper unless it should
appear from the verified complaint or petition that earnest efforts toward a compromise
have been made, but that the same have failed. If it is shown that no such efforts were in
fact made, the same case must be dismissed. This rules shall not apply to cases which
may not be the subject of compromise under the Civil Code. (222a)

• General Rule
o Earnest Efforts Toward Compromise – if a suit is between members of the
same family, there must be prior earnest efforts towards a compromise;
otherwise, the case must be dismissed.
o However, the failure of a party to comply with this condition is not a
jurisdictional defect and must be raised by the opposing party.
o For this rule to be applied, the suit must be exclusive among members of
the same family.
o Cases Not Subject to Compromise – the rule does not apply to cases which
may not be the subject of compromise under the Civil Code like:
▪ Civil status
▪ Validity of marriage or a legal separation
▪ Any ground for legal separation
▪ Future support
▪ Jurisdiction of courts
▪ Future legitime

J. The Family Home

1. General Principles

Article 152 (FC). The family home, constituted jointly by the husband and the wife or by
an unmarried head of a family, is the dwelling house where they and their family reside,
and the land on which it is situated.

• Concept
o The family home is a real right which is gratuitous, inalienable, and free
from attachment, constituted over the dwelling place and the land on which
it is situated. It confers upon a particular family the right to enjoy such
properties. It cannot be seized by creditors except in certain special cases.

• Benefits
o It is exempt from execution, forced sale, or attachment.
o Conditions:
▪ Manner of constitution
• If constructed before effectivity of FC, it must be judicially or
extrajudicially constituted;
• If constructed before effectivity of FC and was not judicially or
extrajudicially constituted under the Civil Code, it automatically
became the family home but only from 3 August 1988; and
• A family home is deemed constituted on a house and lot from
the time it is actually occupied as a family residence. The actual
occupancy must be by any beneficiary; hence, actual
occupancy by maids and overseers is not sufficient.
▪ Who must constitute
• There must be proof that the alleged family home was
constituted jointly by the husband and wife or by an unmarried
 head of a family. For purposes of availing the benefits of a
family home, a person may constitute, however, only one
family home.
▪ Where constructed
• The family home must be part of the properties of the absolute
community or the conjugal partnership, or of the exclusive
properties of either spouse with the latter’s consent, or on the
property of the unmarried head of the family. It cannot be
established on property held in co-ownership with third
persons.
▪ (4) Actual value: At the time of its constitution, the actual value of the
family home shall not exceed the amount of P300.000 in urban areas
and P200,000 in rural areas."
o Exception to Protection
▪ Even if duly constituted as a family home, it is not exempt from
execution, forced sale, or attachment for the following claims:
• Non-payment of taxes;
• Debts incurred prior to the constitution of family home;
• Debts secured by mortgages on the premises before or after
such constitution.
• Debts due to laborers, mechanics, architects, builders,
materialmen, and others who have rendered service or
furnished material for the construction of the building.
o How and Who May Invoke Protection
▪ How
• Such claim for exemption should be set up and proved to the
sheriff before the sale of the property at public auction.
▪ Personal Privilege
• The right to exemption or forced sale under Article 153 of the
FC is a personal privilege granted to the judgment debtor and
as such, it must be claimed not by the sheriff, but by the debtor
himself before the sale of the property at public auction.
• While the family home is a real right, which is gratuitous,
inalienable, and free from attachment, such right can be waived
or be barred by laches by the failure to set up and prove the
status of the property as a family home at the time of the levy
or a reasonable time thereafter.
o Duration of Protection
▪ The exemption provided as aforestated is effective from the time of
the constitution of the family home as such and lasts so long as any of
its beneficiaries actually resides therein.
o Effect of Increase in Actual Value of Family Home

Article 160 (FC). When a creditor whose claims is not among those mentioned in Article
155 obtains a judgment in his favor, and he has reasonable grounds to believe that the
family home is actually worth more than the maximum amount fixed in Article 157, he
may apply to the court which rendered the judgment for an order directing the sale of the
property under execution. The court shall so order if it finds that the actual value of the
family home exceeds the maximum amount allowed by law as of the time of its
constitution. If the increased actual value exceeds the maximum allowed in Article 157
and results from subsequent voluntary improvements introduced by the person or
persons constituting the family home, by the owner or owners of the property, or by any
of the beneficiaries, the same rule and procedure shall apply.

▪ If by involuntary improvement
• The one establishing the family home should not be punished
 by making his home liable to creditors. Hence, the family home
still enjoys protection from execution, forced sale, or
attachment.
▪ If by voluntary improvement
• If the value of the family home exceeds the maximum amount
allowed (P300,000 in urban areas or P200,000 in rural areas)
because of voluntary improvements by the one establishing the
family home, then Article 160 will apply.
• To warrant the execution sale of the family home under Article
160, the following facts are required to be established:
o There was an increase in its actual value;
o The increase resulted from voluntary improvements on
the property introduced by the persons constituting the
family home, its owners, or any of its beneficiaries; and
o The increased actual value exceeded the maximum
allowed under Article 157.
• Any subsequent improvement or enlargement of the family
home by the persons constituting it, its owners, or any of its
beneficiaries will still be exempt from execution, forced sale, or
attachment provided the following conditions obtain:
o The actual value of the property at the time of its
constitution has been determined to fall below the
statutory limit; and
o The improvement or enlargement does not result in an
increase in its value exceeding the statutory limit.
Otherwise, the family home can be the subject of a forced sale,
and any amount above the statutory limit is applicable to the
obligations under Article 160.

• Beneficiaries of the Family Home

o Two sets of beneficiaries
▪ The husband and wife, or an unmarried person who is the head of a
family, who constituted the family home; and
▪ Their parents, ascendants, descendants, brothers, and sisters,
whether legitimate or illegitimate, who are living in the family home
and who depend upon the head of the family for legal support.
o Requisites in order for the relatives of the person who constituted the family
home to be considered a beneficiary of the family home
▪ They must be among the relationships enumerated in Article 154 of
the Family Code;
▪ They actually live in the family home; and
▪ They are dependent for legal support upon the head of the family.
o Partition is prohibited as long as there is a minor beneficiary living therein.
▪ XPN: Patricio v. Dario: Grandson cannot demand support from his
paternal grandmother because the liability for his legal support falls
primarily on his parents. Thus, a grandson is not a minor beneficiary
of his grandmother if his father is alive.

• Effect of Death of Person Who Constituted the Family Home

o Continuance of Family Home
▪ If there are beneficiaries who survive and are living in the family
home, it will continue for 10 years, unless at the expiration of 10
years, there is still a minor beneficiary, in which case the family home
continues until that beneficiary becomes of age.
o Prohibition against Partition
▪ During the continuance of the family home, the heirs cannot partition
 the same unless the court finds compelling reasons therefor.

K. Paternity and Filiation

1. Concepts of Paternity, Filiation, and Legitimacy

• Paternity v. Filiation

Paternity Filiation
It is the civil status of a father in relation It is the civil status of a child in relation to
to the child. his or her parents.

• Kinds of Filiation
o Natural Filiation – by reason of blood relationship, which is either legitimate
or illegitimate filiation, and includes artificial insemination; or
o Artificial Filiation – by reason of adoption.

Article 164 (FC). Children conceived or born during the marriage of the parents are
legitimate. Children conceived as a result of artificial insemination of the wife with the
sperm of the husband or that of a donor or both are likewise legitimate children of the
husband and his wife, provided, that both of them authorized or ratified such
insemination in a written instrument executed and signed by them before the birth of the
child. The instrument shall be recorded in the civil registry together with the birth
certificate of the child.

Article 165 (FC). Children conceived and born outside a valid marriage are illegitimate,
unless otherwise provided in this Code.

• Status of Children
o The status of a marriage determines in large part the filiation of its resultant
issue. Thus, the following rules:
▪ Legitimate – if conceived OR born during a valid marriage.
▪ Illegitimate – if conceived AND born outside of a valid marriage.
Therefore, children of those who are not married to each other are
illegitimate. Likewise, children of void marriages are generally
illegitimate.
• Exceptions – children of void marriages by reason of Articles 36
and 53 are considered legitimate children.
o Legitimated
▪ It is not a separate status, for there are only two classes of children:
legitimate and illegitimate. Therefore, upon legitimation, the child’s
status becomes “legitimate.” Prior thereto, the child is illegitimate.
o Artificial Insemination
▪ In artificial insemination, the egg of the wife is fertilized through
artificial means with the sperm of the husband or a donor. Whether
the sperm is that of the husband or that of a donor, the child is
legitimate if:
• Both the husband and the wife authorized or ratified such
insemination in a written instrument;
• Such written instrument is executed and signed by them before
the birth of the child; and
• It is the wife who bore in her womb and delivered the child. The
Family Code provision on artificial insemination does not
authorize the use of a surrogate mother.
o Surrogate Mother
▪ Our law does not recognize the validity of a surrogate mother
contract, which is defined as any agreement in which a woman agrees
 to conceive or carry a child for another individual or a couple, either
free of charge or for a consideration. In this jurisdiction, such
agreement is contrary to law, morals, and public policy. A child born
by the surrogate mother is considered an illegitimate child of the
surrogate mother, if the latter is not married.

• Presumption of Legitimacy
o Statement of Presumption
▪ Under Article 164 of the FC, a child conceived or born by the wife
during a valid marriage is presumed to be legitimate, meaning,
presumed a child also of the husband. Hence, if the spouses are
merely separated in fact, the child of the wife with the paramour is
presumed to be a legitimate child of the husband and the wife (Liyao,
Jr. v. Tanhoti-Liyao). If the wife contracted a bigamous marriage and
had a child in the subsequent bigamous marriage, said child is
presumed to be a legitimate child of the valid prior marriage
(Concepcion v. CA).
o Requisites
▪ The presumption may be availed of only upon convincing proof of the
actual basis therefor.
o Mother cannot declare against child’s legitimacy
▪ The presumption of legitimacy will not be affected even if the mother
may have declared against the child’s legitimacy or may have been
sentenced as an adulteress.
▪ XPN: When the surviving wife is not the child’s mother, as the child is
a product of the husband’s prior marriage, then the surviving wife can
also impugn their child’s legitimacy.

2. Legitimate Children
a) Who are Legitimate Children

Article 225. Children born after one hundred and eighty days following the celebration of
the marriage, and before three hundred days following its dissolution or the separation of
the spouses shall be presumed to be legitimate.

• Legitimate Children
o Legitimate Children (MA2VS2)
▪ Conceived or born of Mothers who might have declared against its
legitimacy or was sentenced as an adulteress (FAMILY CODE, Art.
167);
▪ Those conceived or born before the judgment of Annulment or
absolute nullity of marriage if the ground is psychological incapacity
(FAMILY CODE, Art. 54);
▪ Product of Artificial insemination provided both spouses authorized or
ratified such procedure in a written instrument, executed and signed
before birth of child and recorded in the civil registry together with the
birth certificate of the child (FAMILY CODE, Art. 164);
▪ Those conceived or born during a Valid marriage (FAMILY CODE, Art.
164);
▪ Those born in a Subsequent void marriage due to failure to comply
with Art. 52 and 53 (FAMILY CODE, Art. 54); and
▪ Those born in a Subsequent void marriage due to failure to comply
with Arts. 52 and 54 (ibid.).

b) Proof of Filiation of Legitimate Children

• General Rule
o Filiation of legitimate (or illegitimate) children is established by any of the
following:
▪ The Record of birth appearing in the civil registry or a final judgment;
and
▪ 2. An Admission of legitimate (or illegitimate) filiation in a public
document or a private handwritten instrument and signed by the
parent concerned.
o Exceptions
▪ In the absence of any of the foregoing evidence, such legitimate or
illegitimate filiation shall be proved by:
• Open and continuous possession of the status of a legitimate or
illegitimate child;

"Continuous" does not mean that the possession of status shall

continue forever, but only that it shall not be of an intermittent
character while it is continuous. The possession of such status
means that the father has treated the child as his own, directly,
and not through others, spontaneously, and without
concealment, though without publicity. There must be a
showing of permanent intention of the supposed father to
consider the child as his own by continuous and clear
manifestation of paternal affection and care (Mendoza v. CA,
G.R. No. 86302, September 24, 1991).
• Any other means allowed by the Rules of Court and special laws
(FAMILY CODE, Art. 172):
o An act or declaration concerning pedigree;
o Family reputation or tradition concerning pedigree;
o Common reputation respecting pedigree;
o Judicial admission;
o Admission of a party; and
o Admission by silence.

• Other Evidence of Filiation

o Baptismal certificate, judicial admission, family bible, evidence of pedigree,
admission by silence, testimonies of witnesses and other pieces of evidence
under Rule 130 of the Rules of Court may be proofs of filiation (Cruz v.
Cristobal).
▪ Handwritten Autobiography
• In Dela Cruz v. Gracia (G.R. No. 177728, July 31, 2009), a
handwritten autobiography of the father was recognized as
evidence of filiation although not signed. The Court ruled that
"where the private handwritten instrument is accompanied by
other relevant and competent evidence, it suffices that the
claim of filiation therein be shown to have been made and
handwritten by the acknowledging parent as it is merely
corroborative of such other evidence."
▪ Baptismal Certificate
• However, in the subsequent case of Makati ShangriLa & Resort,
Inc. v. Harper, (G.R. No. 189998, August 29, 2012), the Court
held that, as a rule, baptismal certificate, being a hearsay, is
not conclusive proof of filiation.
• While a baptismal certificate may be considered a public
document, it can only serve as evidence of the administration
of the sacrament on the date specified but not the veracity of
the entries with respect to the child's paternity; and that
 baptismal certificates were "per se inadmissible in evidence as
proof of filiation," and thus "cannot be admitted indirectly as
circumstantial evidence to prove filiation (Cabatania v. CA, G.R.
No. 124814, October 21, 2004).

• Who May Claim

o Child - exclusive and personal right of child which may be brought anytime
during his lifetime, regardless of the proof presented to support his claim.
o Guardian - if the child is a minor, or incapacitated, or insane.
o Transmitted to heirs of the child within a period of five (5) years in case:
▪ Child dies during minority;
▪ Child dies in a state of insanity, and
▪ Child dies after action has already been instituted.

• Action to Prove Filiation

o Not subject to agreement
▪ Public policy demands that there be no compromise on the status and
filiation of a child. Paternity or filiation is a relationship that must be
judicially established. It cannot be left to the will or agreement of the
parties.
o Prohibited Compromise
▪ Article 2035(1) of the NCC prohibits a compromise agreement upon
the civil status of persons.

• Action to Claim Legitimate Filiation

o It is an action filed by a child to prove that he or she is a legitimate child of
a certain couple who are validly married. An example is the case of Aguilar
v. Siasat, where the child was able to prove his legitimate filiation with a
certain couple using a public document – the SSS Form E-l of his father
acknowledging his filiation with the child.

c) Rights of Legitimate Children

Legitimate children shall have the right :

• To bear the surnames of the father and the mother;
• To receive support from them, from their ascendants, and in a proper case, from
their brothers and sisters, in conformity with Article 291; and
• To the legitimate and other successional rights which this Code recognized in their
favor. (Article 263, Civil Code of the Philippines)

d) Grounds to Impugn Legitimacy

Article 166 (FC). 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; or (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 paragraph of
Article 164; or
(3) That in case of children conceived through artificial insemination, the written
authorization or ratification of either parent was obtained through mistake, fraud,
violence, intimidation, or undue influence. (255a)
• Who Can Impugn
o Impugning the legitimacy of the child is a strictly personal right of the
husband, or in exceptional cases, his heirs for the simple reason that he is
the one directly confronted with the scandal and ridicule which the infidelity
of his wife produces, and he should be the one to decide whether to conceal
or expose it.
▪ As a consequence of this rule, the child cannot choose his own
filiation.
▪ On the other hand, if the presumption of legitimacy is overthrown, the
child cannot elect the paternity of the husband who successfully
defeated the presumption.
o When heirs can file action to impugn (exceptional cases)
▪ If the husband dies before the expiration of the prescriptive period;
▪ If husband dies after the filing of the action without desisting
therefrom; and
▪ If child was born after the death of the husband.

• Prescriptive Period of Action to Impugn Legitimacy

o Period
▪ One year from the knowledge of the birth or its recording in the civil
register, if the husband or, in a proper case, any of his heirs, should
reside in the city or municipality where the birth took place or was
recorded;
▪ Two years, if the husband or, in his default, all of his heirs do not
reside at the place of birth as defined in the first paragraph or where
it was recorded if they should reside in the Philippines; or
▪ Three years, if husband, or in his default, all of his heirs reside
abroad.
o Applicability
▪ Applicable only if the action is to impugn legitimacy.
o Effect of Expiration of Periods
▪ The action to impugn the legitimacy will no longer be legally feasible
and the status conferred by the presumption becomes fixed and
unassailable.

• Grounds to Impugn Legitimacy

o Physical impossibility of sexual intercourse
▪ The physical impossibility for the husband to have sexual intercourse
with the wife must have happened during the period of the child’s
conception— which is the first 120 days of the 300 days immediately
preceding the birth of the child—due to the following reasons:
• Physical incapacity to have sexual intercourse with the wife, or
impotency (but not sterility);
• They were living separately, and sexual intercourse was
impossible; or
• Serious illness of husband which absolutely prevented sexual
intercourse.
o Biological or scientific reasons
▪ Showing that the husband is not the father, including:
• Result of blood testing, which is conclusive on nonpaternity;
and
• Result of DNA test, which may now be used to establish
paternity or non-paternity.
o Ground in artificial insemination
▪ That written authorization or ratification of either parent was obtained
 thru mistake, fraud, violence, intimidation, or undue influence.

• Legitimacy Not Subject to Collateral Attack

o The issue of legitimacy cannot be attacked collaterally. The legitimacy of the
child can be impugned only in a direct action brought for that purpose, by
the proper parties, and within the period limited by law. Hence:
▪ The issue of legitimacy cannot be properly controverted in an action
for reconveyance;
▪ Nor in an action for partition with inventory and accounting;
▪ Nor in a Petition for Correction of Entries under Rule 108.

• Effect of Termination of Marriage and Remarriage of mother on Child’s Status

o If the previous marriage is terminated and the mother contracted another
marriage within 300 days after the termination of the marriage, and a child
is born within 300 days after the termination of the previous marriage, the
following are the rules in determining the father of the child:
▪ The first husband is considered the father if the child is born before
180 days after the solemnization of the second marriage and within
300 days after the termination of previous marriage; or
▪ The second husband is considered the father if the child is born after
180 days following the celebration of the second marriage, even if
born within the 300 days after the termination of former marriage.

• Effect if Child Born After 300 Days

o If a child is born after 300 days following the termination of the marriage,
his legitimacy or illegitimacy shall be proved by whoever alleges such
legitimacy or illegitimacy.

3. Illegitimate Children
a) Who are Illegitimate Children

Article 165 (FC). Children conceived and born outside a valid marriage are illegitimate,
unless otherwise provided in this Code. (n)

b) Proof of Filiation of Illegitimate Children

• Same manner of proving

o Illegitimate children may establish their illegitimate filiation in the same way
and on the same evidence as legitimate children.

• Action to Claim Illegitimate Filiation

o It is an action by a child to prove that he or she is a biological child of the
alleged parent, although conceived and born outside of wedlock. Ordinarily,
the action is to prove paternity, but it may also be an action to prove
maternity. An example is the case of Ara v. Pizarro, where two children
claimed to be illegitimate children of a certain Josefa A. Ara. However, the
Court ruled that since Josefa Ara had already died, both were proscribed
from proving their filiation under the second paragraph of Article 172 of the
Family Code.

c) Rights of Illegitimate Children

Article 176 (FC). Illegitimate children shall use the surname and shall be under the
parental authority of their mother and shall be entitled to support in conformity with this
Code. The legitime of each illegitimate child shall consist of one-half of the legitime of a
legitimate child. Except for this modification, all other provisions in the Civil Code
governing successional rights shall remain in force.

• Rights of Illegitimate Children

o To bear the surname of the mother regardless of whether or not the father
admits paternity;
o To have an option to use his/her father‘s surname if: his/her filiation is
expressly recognized by the father though the record of birth; or when
admission of paternity is written by the father in a public or private
instrument;
o To receive support from the mother and the exclusive or separate property
of the father; and
o To be entitled to the legitime (1/2 of each legitimate child) and other
successional rights granted to them by the Civil Code.

d) Grounds to Impugn Filiation

Article 171 (FC). The heirs of the husband may impugn the filiation of the child within the
period prescribed in the preceding article only in the following cases:
(1) If the husband should die before the expiration of the period fixed for bringing
his action;
(2) If he should die after the filing of the complaint without having desisted
therefrom; or
(3) If the child was born after the death of the husband.

• Grounds to Impugn Filiation

o If the husband should die before the expiration of the period fixed for
bringing his action;
o If he should die after the filing of the complaint without having desisted
therefrom; or
o If the child was born after the death of the husband.

• Who May Impugn Filiation

o The heirs of the husband.

4. Legitimated Children

“Legitimated” is not a separate status, for there are only two classes of children:
legitimate and illegitimate. Therefore, upon legitimation, the child’s status becomes
“legitimate.” Prior thereto, the child is illegitimate.

a) Who May be Legitimated

Article 177 (FC). 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 eighteen (18) years of age, may be legitimated.

b) How Legitimation Takes Place

Legitimation shall take place by a subsequent valid marriage between parents. The
annulment of a voidable marriage shall not affect the legitimation (Article 178, FC).

Q: Gianna was born to Andy and Aimee, who at the time Gianna's birth were not married
to each other. While Andy was single at the time, Aimee was still in the process of
securing a judicial declaration of nullity on her marriage to her ex-husband. Gianna's
birth certificate, which was signed by both Andy and Aimee, registered the status of
Gianna as "legitimate", her surname carrying that of Andy's and that her parents were
married to each other. Assuming that Aimee is successful in declaring her former
marriage void, and Andy and Aimee subsequently married each other, would Gianna be
legitimated? (2008 Bar)

A: No, Gianna will not be legitimated. While the court may have declared the marriage
void ab initio and therefore, no marriage took place in the eyes of the law, Gianna will
still not be legitimated. This is because at the time she was conceived and born her
biological parents could not have validly married each other. For their marriage to be
valid, the court must first declare the first marriage null and void. In the problem, Gianna
was conceived and born before the court has decreed the nullity.

c) Grounds to Impugn Legitimacy

• Grounds to Impugn Legitimacy

o Physical Impossibility of Sexual Intercourse
▪ The physical impossibility for the husband to have sexual intercourse
with the wife must have happened during the period of the child’s
conception— which is the first 120 days of the 300 days immediately
preceding the birth of the child—due to the following reasons:
• Physical incapacity to have sexual intercourse with the wife, or
impotency (but not sterility);
• They were living separately, and sexual intercourse was
impossible; or
• Serious illness of husband which absolutely prevented sexual
intercourse.
o Biological or Scientific Seasons
▪ Showing that the husband is not the father, including:
• Result of blood testing, which is conclusive on non-paternity;
and
• Result of DNA test, which may now be used to establish
paternity or non-paternity.
o Grounds in Artificial Insemination
▪ That written authorization or ratification of either parent was obtained
thru mistake, fraud, violence, intimidation, or undue influence.

5. Adopted Children

• Concept
o Adoption is defined as the process of making a child, whether related or not
to the adopter, possess in general, the rights accorded to a legitimate child.
Ordinarily, it is a juridical act, a proceeding in rem, which creates between
two persons a relationship similar to that which results from legitimate
paternity and filiation. By way of exception and pursuant to R.A. No. 11222,
or the Simulated Birth Rectification Act, the law now allows the filing of an
administrative adoption upon compliance with certain requirements.

• Simulated Birth Rectification Act (R.A. No. 11222)

o Benefit of Law
▪ Exemption from Liability
• It exempts from criminal, civil, and administrative liability those
who simulated the birth record of a child prior to the effectivity
of R.A. No. 11222 and those who cooperated in the execution
of such simulation.
▪ Conditions for Exemption
• The simulation of birth was made for the best interest of the
 child and that the child has been consistently considered and
treated by such person or persons as her, his, or their own
daughter or son; and
• That a petition for adoption with an application for the
rectification of the simulated birth record is filed within 10 years
from the effectivity of R.A. No. 11222.
o Administrative Adoption
▪ Requisites for Administrative Adoption
• The simulation of birth was made for the best interest of the
child;
• The child has been consistently considered and treated by the
person/s who simulated the birth of such child as her, his, or
their own daughter or son;
• Such person/s has or have filed a petition for adoption with an
application for the rectification of the simulated birth record
within 10 years from the effectivity of R.A. No. 11222;
• A certificate declaring the child legally available for adoption
(CDCLAA) is issued by the DSWD in favor of such child [Note:
The CDCLAA is no longer required if the adoptee is already an
adult or a relative of the adopter within the fourth degree of
consanguinity or affinity]; and
• The child has been living with such person/s for at least three
years before the effectivity of R.A. No. 11222.
o If the last condition number is not met, the adoption
must be done judicially.
▪ Order of Adoption
• The petition for administrative adoption is filed before the
DSWD and the "Order of Adoption” is issued by the DSWD.

a) Domestic Administrative Adoption and Alternative Child

Care Act (R.A. No. 11642)

R.A. No. 11642, or the Domestic Administrative Adoption and Alternative Child Care Act,
took effect on January 28, 2022, with the goal of making domestic adoption proceedings
simpler and less costly. The law also seeks to streamline alternative childcare services.

b) Who May Adopt

Section 21 (R.A. No. 11642). Who May Adopt. – The following may adopt:
a) Any Filipino citizen at least twenty-five (25) years of age, who is in possession of
full civil capacity and legal rights; has not been convicted of any crime involving
moral turpitude; is of good moral character and can model the same; is
emotionally and psychologically capable of caring for children; at least sixteen (16)
years older than the adoptee; and who is in a position to support and care for
adopted children in keeping with the means of the family: Provided, That the
requirement of sixteen (16)-years difference between the age of the adopter and
the adoptee may be waived when the adopter is the biological parent of the
adoptee, or is the spouse of the adoptee’s parent;
b) The legal guardian with respect to the ward after the termination of the
guardianship and clearance of financial accountabilities;
c) The legal guardians with respect to the foster child;
d) Philippine government officials and employees deployed or stationed
abroad: Provided, That they are able to bring the child with them; and
e) Foreign nationals who are permanent or habitual residents of the Philippines for at
least five (5) years possessing the same qualifications as above stated for Filipino
nationals prior to filing of the petition: Provided, That they come from a country
 with diplomatic relations with the Republic of the Philippines and that the laws of
the adopter’s country will acknowledge the Certificate of Adoption as valid,
acknowledge the child as a legal child of the adopters, and allow entry of the child
into such country as an adoptee: Provided, further, That requirements of residency
may be waived for the following:
1) A former Filipino citizen, habitually residing in the Philippines, who seeks to
adopt a relative within fourth (4th) civil degree of consanguinity or affinity;
or
2) One who seeks to adopt the legitimate child of the Filipino spouse; or
3) One who is married to a Filipino citizen and seeks to adopt jointly with the
spouse a relative within the fourth (4th) degree of consanguinity or affinity
of the Filipino spouse.
Spouses shall jointly adopt, except in the following cases:
a) If one spouse seeks to adopt the legitimate child of the other; or
b) If one spouse seeks to adopt own illegitimate child: Provided, That
the other spouse has signified consent thereto; or
c) If the spouses are legally separated from each other.

c) Who May be Adopted

Section 22 (R.A. No. 11642). Who May Be Adopted. – The following may be adopted:
a) Any child who has been issued a CDCLAA;
b) The legitimate child of one spouse by the other spouse;
c) An illegitimate child by a qualified adopter to improve status of legitimacy;
d) A Filipino of legal age if, prior to the adoption, said person has been consistently
considered and treated by the adopters as their own child for a period of at least
three (3) years;
e) A foster child;
f) A child whose adoption has been previously rescinded;
g) A child whose biological or adoptive parents have died: Provided, That no
proceedings shall be initiated within six (6) months from the time of death of said
parents; or
h) A relative of the adopter.

d) Effects of a Decree of Adoption (See Article Nos. 189-190 of

the Family Code)

Article 189 (FC). Adoption shall have the following effects:

1) For civil purposes, the adopted shall be deemed to be a legitimate child of the
adopters and both shall acquire the reciprocal rights and obligations arising from
the relationship of parent and child, including the right of the adopted to use the
surname of the adopters;
2) The parental authority of the parents by nature over the adopted shall terminate
and be vested in the adopters, except that if the adopter is the spouse of the
parent by nature of the adopted, parental authority over the adopted shall be
exercised jointly by both spouses; and
3) The adopted shall remain an intestate heir of his parents and other blood relatives.

Article 190 (FC). Legal or intestate succession to the estate of the adopted shall be
governed by the following rules:
1) Legitimate and illegitimate children and descendants and the surviving spouse of
the adopted shall inherit from the adopted, in accordance with the ordinary rules of
legal or intestate succession;
2) When the parents, legitimate or illegitimate, or the legitimate ascendants of the
adopted concur with the adopter, they shall divide the entire estate, one-half to be
inherited by the parents or ascendants and the other half, by the adopters;
 3) When the surviving spouse or the illegitimate children of the adopted concur with
the adopters, they shall divide the entire estate in equal shares, one-half to be
inherited by the spouse or the illegitimate children of the adopted and the other
half, by the adopters.
4) When the adopters concur with the illegitimate children and the surviving spouse of
the adopted, they shall divide the entire estate in equal shares, one-third to be
inherited by the illegitimate children, one-third by the surviving spouse, and one-
third by the adopters;
5) When only the adopters survive, they shall inherit the entire estate; and
6) When only collateral blood relatives of the adopted survive, then the ordinary rules
of legal or intestate succession shall apply.

Q: May an illegitimate child, upon adoption by her natural father, use the surname of her
natural mother as the middle name? (2006 Bar)

A: Yes, an illegitimate child, upon adoption by her natural father, can use the surname of
her natural mother as her middle name. The Court has ruled that there is no law
prohibiting an illegitimate child adopted by her natural father to use, as middle name, her
mother's surname.

L. Support

1. What Comprises Support

Legal support, also known as family support, is that which is provided by law, comprising
everything indispensable for sustenance, dwelling, clothing, medical attendance,
education, and transportation, in keeping with the financial capacity of the family. The
education of the person entitled to be supported shall include his schooling or training for
some profession, trade, or vocation, even beyond the age of majority, while
transportation shall include expenses in going to and from school, or to and from place of
work.

2. Who are Obliged to Give Support

• Spouses
o To be entitled to support, the spouse must be the legitimate spouse.
o If the marriage is void, the parties are not actually spouses. Hence, there is
no obligation to support each other and the absolute nullity of the marriage
can be raised and resolved by the court in the action for support filed by one
against the other. Adultery of the wife is a valid defense in an action for
support.
o If adultery is proved and sustained, it will defeat the action for support.878
But if both are equally at fault the principle of in pari delicto applies, in which
case, the husband cannot avail of the defense of adultery.
o After final judgment granting the petition (in legal separation or annulment
of marriage or declaration of nullity of marriage), the obligation of mutual
support ceases. However, the court may order the guilty spouse to give
support to the innocent one.
• Legitimate Ascendants and Descendants
• Parents and their Children (whether legitimate or illegitimate) and the latter’s
children (whether legitimate or illegitimate)
o Note that the prohibition under the barrier rule in succession by operation of
law embodied in Article 992 of the Civil Code does not apply to legal
support. However, the illegitimate filiation must be duly established.
• Legitimate Brothers and Sisters (whether of full or half-blood)
• Brothers and Sisters, not legitimately related
 o However, the right to support of an illegitimate sibling ceases when the need
for support of an illegitimate brother or sister, who is of legal age, is due to
a cause imputable to his/ her fault or negligence.

3. Source of Support

The support of the spouses, their common children, and legitimate children of either
spouse is chargeable to the absolute community of property or the conjugal partnership
of gains. If the community property or the conjugal partnership is insufficient to cover
this liability, the spouses shall be solidarily for the unpaid balance with their separate
properties.

4. Order of Support

• Whenever two or more persons are obliged to give support, the liability shall
devolve upon the following persons in the order mentioned, as follows:
o The spouse;
o The descendants in the nearest degree;
o The ascendants in the nearest degree; and
o The brothers and sisters.

• However, when the obligation to give support falls upon two or more persons, the
payment of the same shall be divided between them in proportion to the resources
of each.

• However, in case of urgent need and by special circumstances, the judge may
order only one of them to furnish the support provisionally, without prejudice to his
right to claim from the other obligors the share due from them.

• When two or more recipients at the same time claim support from one and the
same person legally obliged to give it, should the latter not have sufficient means
to satisfy all claims, the order established above shall be followed, unless the
concurrent obligees should be the spouse and a child subject to parental authority,
in which case the child shall be preferred.

M. Parental Authority

1. Concept of Parental Authority

Parental authority or patria potestas in Roman Law is the juridical institution whereby
parents rightfully assume control and protection of their unemancipated children to the
extent required by the latter’s needs. It is a mass of rights and obligations which the law
grants to parents for the purpose of the children’s physical preservation and
development, as well as the cultivation of their intellect and the education of their heart
and senses. The rights of the parents are but ancillary to the proper discharge of parental
duties to their children under parental authority.

2. Substitute Parental Authority

• Concept
o It is the parental authority which the persons designated by law may
exercise over the persons and property of unemancipated children in case of
death, absence, or unsuitability of both parents, or in default of a judicially
appointed guardian.

• Who May exercise substitute parental authority

 o The following, in the order indicated:
▪ The surviving grandparent and, in case several survive, the one
designated by the court, considering all relevant considerations,
especially the choice of the child over seven years of age;
▪ The oldest brother or sister, over 21 years of age, unless unfit or
disqualified;
▪ The child’s actual custodian, over 21 years of age, unless unfit or
disqualified; and
▪ In case of foundlings, abandoned, neglected, or abused children, and
other children similarly situated, parental authority shall be entrusted
in summary judicial proceedings to heads of children’s homes,
orphanages and similar institutions duly accredited by the proper
government agency.
• Under the Foster Care Act of 2012 (R.A. No. 10165), the
designated foster parents shall have the rights, duties, and
liabilities of persons exercising substitute parental authority, as
may be provided under the Family Code over the children under
their foster care. However, they only have the rights of a
person with special parental authority to discipline the foster
children as defined under Family Code, insofar as it prohibits
the infliction of corporal punishment upon the child.
• The infliction of corporal punishment by the foster parents shall
be ground for revocation of the Foster Family Care License and
termination of Foster Placement Authority.
• In view of the foregoing, even if the illegitimate father is not
granted parental authority, in the absence of the child’s mother
and maternal grandparents, the child’s father may be entitled
to custody if he is the actual custodian.

3. Special Parental Authority

• Concept
o It is the parental authority granted by law to certain persons, entities, or
institutions in view of their special relation to children under their
“supervision, instruction or custody.”

• Scope of Special Parental Authority

o This special parental authority and responsibility applies to all authorized
activities, whether inside or outside the premises of the school, entity, or
institution. Thus, such authority and responsibility apply to field trips,
excursions, and other affairs of the pupils and students outside the school
premises whenever authorized by the school or its teachers.

• Who May Exercise Special Parental Authority

o The school;
o School administrators;
o Schoolteachers; or
o Individual, entity, or institution engaged in childcare.

• Civil Liability for Quasi-Delict

o If a minor causes damage to another while he/she is under special parental
authority, the liability shall be borne by the following:
▪ The persons given special parental authority shall be "principally and
solidarily liable" for such damages; and
▪ The parents, judicial guardians, or persons exercising substitute
parental authority over said minor shall be subsidiarily liable.
 o Whether principally or subsidiarily liable, they are not liable if it is proved
that they exercised the proper diligence required under the particular
circumstances.

4. Effects of Parental Authority

• Principle of Parental Liability

o Parents and other persons exercising parental authority shall be civilly liable
for the injuries and damages caused by the acts or omissions of their
unemancipated children living in their company and under their parental
authority subject to the appropriate defenses provided by law.

• Effect of Parental Authority Upon the Property of the Children in Legal Guardianship
o The father and the mother shall jointly exercise legal guardianship over the
property of the unemancipated common child without the necessity of a
court appointment. In case of disagreement, the father‘s decision shall
prevail, unless there is a judicial order to the contrary (Art. 225, FC).

o Income of the Child

▪ The property of the unemancipated child earned or acquired with his
work or industry or by onerous or gratuitous title shall belong to the
child in ownership. The child‘s property shall be devoted exclusively to
the latter‘s support and education unless the title or transfer provides
otherwise.
▪ Right of the parents over the fruits and income of the child‘s property
shall be limited to those:
• Primarily for the child‘s support; and
• Secondary to the collective daily needs of the family

PROPERTY, OWNERSHIP, AND ITS MODIFICATIONS

I. Classification of Property

Article 414. All things which are or may be the object of appropriation are considered either: (1)
immovable or real property; or (2) movable or personal property.

• Property
o Definition
▪ Properties are things which are capable of satisfying human wants and are
susceptible of appropriation.
o Things v. Property
▪ The term thing is broader in scope than property. All kinds of property are
things but not all things are property
▪ Things refer to all objects that exist including those which could not be
appropriated by man. Property refers to objects already possessed by man or
are in their possession; and
▪ Things involve only corporeal objects. Property may refer to intangible matters.
o Requisites
▪ Utility – the capacity to satisfy human wants
▪ Individuality and substance – having a separate and autonomous existence
▪ Susceptibility of being appropriated
o Things that are Not Considered Properties because of Impossibility or Difficulty of
Appropriation
▪ Things which are incapable of human control because of their distance, depth,
or immensity (e.g., sun, stars, ocean, etc.)
▪ Forces of nature, except when brought under human control
 ▪ Those that are not susceptible due to legal impossibility
o Importance of Classifying Properties as Movable or Immovable
▪ In acquisitive prescription

Movable Property Immovable Property

Acquired through four or eight years of Acquired through ten or thirty years of
prescription. prescription.
As object of accessory contract
In pledge and chattel mortgage, the subject In real estate mortgage, the subject matter is a
matter is a personal property. real property.
As to formal requirements in donation
If what is donated is a personal property the If what is donated is a real property, the
value of which exceeds ₱5,000, the donation donation and the acceptance must be embodied
and the acceptance must be in writing, in a public instrument, otherwise, the donation is
otherwise, the donation is void. void.
In extrajudicial deposit
The object must be personal property. Immovable property may not be the object of a
deposit.
In criminal law
Only a personal property can be the object of The object of the crime of usurpation of real
the crimes of theft and robbery. property is a real property.
In procedural law
The venue of the action is either the residence of If the action affects title to or possession of a
the plaintiff or defendant, at the option of the real property or any interest therein (referred to
former. as “real action”), its venue is in the place where
the property is situated.

A. Immovables

Article 415. The following are immovable property:

(1) Land, buildings, roads, and constructions of all kinds adhered to the soil;
(2) Trees, plants, and growing fruits, while they are attached to the land or form
an integral part of an immovable;
(3) Everything attached to an immovable in a fixed manner, in such a way that it
cannot be separated therefrom without breaking the material or deterioration of
the object;
(4) Statues, reliefs, paintings or other objects for use or ornamentation, placed in
buildings or on lands by the owner of the immovable in such a manner that it
reveals the intention to attach them permanently to the tenements;
(5) Machinery, receptacles, instruments or implements intended by the owner of
the tenement for an industry or works which may be carried on in a building or on
a piece of land, and which tend directly to meet the needs of the said industry or
works;
(6) Animal houses, pigeon-houses, beehives, fishponds or breeding places of
similar nature, in case their owner has placed them or preserves them with the
intention to have them permanently attached to the land, and forming a
permanent part of it; the animals in these places are included;
(7) Fertilizer actually used on a piece of land;
(8) Mines, quarries, and slag dumps, while the matter thereof forms part of the
bed, and waters either running or stagnant;
(9) Docks and structures which, though floating, are intended by their nature and
object to remain at a fixed place on a river, lake, or coast;
(10) Contracts for public works, and servitudes and other real rights over
immovable property.

• Real Property, In General

 o Kinds of Immovable Property
▪ Immovable by Nature – those which by their essence and nature are
immovable or cannot be moved from one place to another (e.g.,
lands, roads, mines, quarries, and slag dumps).
▪ Immovable by Incorporation – those which become immovable by
reason of their attachment or incorporation to an immovable in such
manner as to be an integral part thereof (e.g., buildings and
constructions of all kinds adhered to the soil; trees, plants, and
growing fruits attached to the land or forming an integral part of an
immovable; and those that are attached to an immovable in the
manner provided for in paragraph 3 of Article 415).
▪ Immovable by Destination – those which are essentially movable, but
by the purpose for which they have been placed in an immovable,
partake of the nature of the latter because of the added utility derived
therefrom (e.g., those mentioned in pars. 4, 5, 6, 7, and 9 of Article
415).
▪ Immovable by Analogy – those that are mentioned in par. 10 of
Article 415.

• Paragraph 1

Article 415(1). The following are immovable property: land, buildings, roads, and
constructions of all kinds adhered to the soil.

o Lands and Roads

▪ They are always immovable.
o Buildings
▪ A building is always immovable
• A building, if permanently attached to the land, is always
immovable.
• Those merely superimposed on the soil or sold for immediate
demolition are considered movable property.
• A building by itself is a real or immovable property, hence, it
may be mortgaged apart from the land on which it has been
built.
▪ It is an immovable by incorporation
• A building is immovable by incorporation, hence, once the
house is demolished, it ceases to exist as such and hence its
character as an immovable likewise ceases.
• Once a building is permanently attached to the land, it is
immovable property, irrespective of whether or not said
structure and the land on which it is adhered to belong to the
same owner, or whether the building is erected by the owner of
the land, or by a usufructuary or lessee.
▪ Principle of Estoppel applies
• If the parties will treat a building as a movable, as between
them, they are estopped from alleging the contrary.
• The foregoing principle or view is not applicable to strangers to
said contract. As far as third persons, who are not parties to
the contract, the house (or building) is considered an
immovable property.
• Even if the parties treated a building as personal property, the
Register of Deeds (RD) may not refuse the registration of the
chattel mortgage because the duties of the RD are purely
ministerial in character.
o Construction Adhered to the Soil
 ▪ To be immovable, the construction must be attached permanently to
the land, and it must not be of provisional or temporary character but
fixed or integral.

• Paragraph 2

Article 415(2). The following are immovable property: trees, plants, and growing fruits,
while they are attached to the land or form an integral part of an immovable.

o Trees and Plants

▪ Generally immovable if incorporated to the soil. Hence, if cut or
uprooted, they become movable property unless they form an integral
part of the land (as in the case of timber which constitutes the natural
product of the tenement.
o Growing Fruits
▪ They are considered as real property so long as they are still attached
to the soil.
▪ For certain purposes, they may be regarded as personal property
pursuant to Article 416(2). Thus, for purposes of sale, attachment and
execution, and mortgage, they are regarded as personal property,

• Paragraphs 3 and 4

Article 415(3). The following are immovable property: everything attached to an

immovable in a fixed manner, in such a way that it cannot be separated therefrom
without breaking the material or deterioration of the object.

Article 415(4). The following are immovable property: statues, reliefs, paintings or other
objects for use or ornamentation, placed in buildings or on lands by the owner of the
immovable in such a manner that it reveals the intention to attach them permanently to
the tenements.

o Paragraph 3
▪ It refers to permanent fixtures, or everything attached to an
immovable in a fixed manner, in such a way that it cannot be
separated therefrom without breaking the material or deterioration of
the object.
o Paragraph 4
▪ It refers to ornaments or statues, reliefs, paintings, or other objects
for use or ornamentation, placed in buildings or on lands by the owner
of the immovable in such a manner that it reveals the intention to
attach them permanently to the tenements.
o Paragraphs 3 and 4, Distinguished
▪ Paragraph 3 is immovable by incorporation while paragraph 4 is
immovable by destination.
▪ In paragraph 3, separation from the immovable is not possible
without injury; while in paragraph 4, it is possible.
▪ In paragraph 3, it is not important who caused the attachment; while
in paragraph 4, it is necessary that it should be the owner of the
immovable who must place the ornament unto the immovable.

• Paragraph 5

Article 415(5). The following are immovable property: machinery, receptacles,

instruments or implements intended by the owner of the tenement for an industry or
works which may be carried on in a building or on a piece of land, and which tend directly
to meet the needs of the said industry or works.

o Requisites for Immovability

▪ Must be destined for use in the industry or work in the tenement and
must be essential and principal elements of the industry or works;
▪ Industry or work must be carried on in a building or on a piece of
land, or even on waters. Thus, submarine, or underwater
communications cables may be classified under the term “machinery”
as real property under Article 415(5); and
▪ They must be placed by the owner of the tenement unless the tenant
acts as an agent of the owner.
o Application of Principle of Estoppel
▪ Although the machineries are essential and principal elements of the
industry, they can be proper subjects of a writ of replevin2 if the
parties have treated the same as personal property.

• Paragraph 6

Article 415(6). The following are immovable property: animal houses, pigeon-houses,
beehives, fishponds, or breeding places of similar nature, in case their owner has placed
them or preserves them with the intention to have them permanently attached to the
land and forming a permanent part of it; the animals in these places are included.

o Requisites for Immovability

▪ They must be permanently placed or attached to the land; and
▪ Must be placed by the owner of the land.
o They must not be permanently attached to the soil; otherwise, it will become
an immovable by incorporation under paragraph (construction adhering to
the soil) or under paragraph 3.

• Paragraph 7

Article 415(7). The following are immovable property: fertilizer actually used on a piece
of land.

• Paragraph 8

Article 415(8). The following are immovable property: mines, quarries, and slag dumps,
while the matter thereof forms part of the bed, and waters either running or stagnant.

o The paragraph refers to mines, quarries, and slag dumps, while the matter
thereof forms part of the bed, and waters either running or stagnant.

• Paragraph 9

Article 415(9). The following are immovable property: docks and structures which,
though floating, are intended by their nature and object to remain at a fixed place on a
river, lake, or coast.

o Paragraph 9 refers to docks and structures which, though floating, are

intended by their nature and object to remain at a fixed place on a river,
lake, or coast.
o They are immovables by destination.

2
The term replevin is popularly understood as "the return to or recovery by a person of goods or chattels claimed to be
wrongfully taken or detained upon the person's giving security to try the matter in court and return the goods if defeated in
the action;"
 o A classic example is a boathouse which, by its nature, is a vessel and,
therefore, a personal property but, if it is tied to the shore and used as a
residence, and since it floats on waters which is immovable, is considered
real property.

• Paragraph 10

Article 415(10). The following are immovable property: contracts for public works, and
servitudes and other real rights over immovable property.

o Paragraph 10 refers to contracts for public works, and servitudes and other
real rights over immovable property.
o They are immovables by analogy.
o If the real right is exercised over an immovable property, like a registered
real estate mortgage, it is a real property. If exercised over a movable
property, it is a personal property. However, if it is a personal right, it is
always a personal property, whether exercised over a personal property or
over a real property, except contracts for public works.

• Real Property for Taxation Purposes

o Local Government Code Prevails
▪ As between the Civil Code, a general law governing property and
property relations, and the Local Government Code, a special law
granting local government units (LGUs) the power to impose real
property tax, the latter prevails for the purpose of determining which
property is subject to real property tax.
o Illustrative Cases
▪ In Manila Electric Company v. City Assessor, it was ruled that the
transformers, electric posts, transmission lines, insulators, and
electric meters of MERALCO may qualify as “machinery” under the
Local Government Code subject to real property tax.
▪ In Capitol Wireless, Inc. v. Provincial Treasurer ofBatangas, the Court
likewise ruled that submarine or undersea communications cables
entering the territorial jurisdiction of the Philippines are akin to
electric transmission lines and may qualify as “machinery” subject to
real property tax under the Local Government Code.

B. Movables

Article 416. The following things are deemed to be personal property:

(1) Those movables susceptible of appropriation which are not included in the
preceding article;
(2) Real property which by any special provision of law is considered as personal
property;
(3) Forces of nature which are brought under control by science; and
(4) In general, all things which can be transported from place to place without
impairment of the real property to which they are fixed.

Article 417. The following are also considered as personal property:

(1) Obligations and actions which have for their object movables or demandable
sums; and
(2) Shares of stock of agricultural, commercial, and industrial entities, although
they may have real estate.

Article 418. Movable property is either consumable or nonconsumable. To the first class
belong those movables which cannot be used in a manner appropriate to their nature
without their being consumed; to the second class belong all the others.

• Movable Property, In General

o In general, all things susceptible of appropriation which can be transported
from place to place without impairment of the real property to which they
are fixed and are not included in the enumeration in Article 415 are
classified as personal or movable property.

• Movable Property Under Article 416

o Paragraph 1

Article 416(1). The following things are deemed to be personal property: those movables
susceptible of appropriation which are not included in the preceding article.

▪ This paragraph talks about movables susceptible of appropriation and

not included in Article 415. This means that interest in business, as
well as the business itself, is personal property under this provision.

o Paragraph 2

Article 416(2). The following things are deemed to be personal property: real property
which by any special provision of law is considered as personal property.

▪ This paragraph contemplates real property which by any special

provision of law is considered as personalty, such as growing fruits
although attached to the land for purposes of the sale of the whole
crops, for purposes of the Chattel Mortgage Law, or for purposes of
attachment or execution.

o Paragraph 3

Article 416(3). The following things are deemed to be personal property: forces of nature
which are brought under control by science.

▪ This paragraph contemplated forces of nature which are brought

under control by science, such as gas and electricity.

o Paragraph 4

Article 416(4). The following things are deemed to be personal property: in general, all
things which can be transported from place to place without impairment of the real
property to which they are fixed.

▪ In general, all things which can be transported from place to place

without impairment of the real property to which they are fixed are
considered as personal property, such as vessels.

• Movable Property Under Article 417

o Paragraph 1

Article 417(1). The following are also considered as personal property: obligations and
actions which have for their object movables or demandable sums.

▪ Obligations and actions which have for their object movables or

demandable sums are considered personal properties. However, a
mortgage loan is considered as real property because it is a real right
 over an immovable property and, therefore, considered real by
analogy.

o Paragraph 2

Article 417(2). The following are also considered as personal property: shares of stock of
agricultural, commercial, and industrial entities, although they may have real estate.

▪ This paragraph contemplates shares of stock of agricultural,

commercial, and industrial entities, although they may have real
estate.
▪ Membership shares in golf clubs are considered as movable or
personal property. Such share is a property right which a person
cannot be deprived of without affording him the benefit of due
process.

• Classification of Movable Property

o Consumable or Nonconsumable
▪ In classifying movables into consumable or non-consumable, the basis
of the classification is the very nature of the corporeal object itself.
The classification applies to movables and to corporeal objects only.
▪ A consumable is a movable which cannot be used in a manner
appropriate to its nature without itself being consumed.
▪ A nonconsumable is a movable which can be used in a manner
appropriate to its nature without itself being consumed.
o Fungible and Non-fungible
▪ The basis of the classification of movables into fungible or non-
fungible is simply the intention of the parties.
▪ A movable is classified as fungible if, by the intention of the parties, it
can be replaced by another of the same kind; otherwise, it is a non-
fungible.

II. Bundle of Rights

A. Ownership

Article 427. Ownership may be exercised over things or rights. (n)

• Ownership, In General
o Definition
▪ Ownership is an independent right of exclusive enjoyment and control
of the thing for the purpose of deriving therefrom all advantages
required by the reasonable needs of the owner (holder of the right)
and the promotion of the general welfare but subject to the
restrictions imposed by law and the right of others.
o Object
▪ The subject matter of ownership may be either things or rights.
• Rights Included
o Right to Enjoy
▪ Basic Limitations
• An owner must not abuse his right. He cannot make use thereof
in such manner as to injure the rights of a third person.
• If the exercise of the right is done in food faith, there is no
liability for damages under the principle of damnum absque
injuria3.

3
Damnum absque injuria is the principle of tort law in which some person causes damage or loss to another but does not
 ▪ Includes
• Right over the fruits (jus fruendi)
• Right to possess (jus possidendi)
• Right to use (jus utendi) – to use a thing consists in employing
it for the purpose for which it is fit, without destroying it, and
which employment can therefore be repeated.
• Right to consume or abuse (jus abutendi) – involves
consumption of the thing by its use
o Right to dispose
o Right to recover (Read Section C)
o Right to exclude others from the property
▪ Right to Fence
• A property owner may enclose or fence his property subject
only to the limitations and restrictions provided by law.
▪ Doctrine of Self-Help
• An owner or lawful possessor may use reasonable force to repel
or prevent an actual or threatened unlawful physical invasion or
usurpation of his property, which can only be exercised at the
time of actual or threatened dispossession and not when
possession has already been lost. In the latter, the owner must
resort to judicial process for the recovery of the property.
▪ Doctrine of State of Necessity
• The owner cannot, however, prohibit interference by another if
the same is necessary to avert an imminent danger and the
threatened damage, compared to the damage arising to the
owner from the interference, is much greater.'06 The owner
may, however, demand from the person benefited indemnity
for the damage to him.
• Requisites
o There is a situation of grave peril, an actual or imminent
danger, either upon the person of the actor or a third
person or their property;
o Interference is necessary to avert such danger;
o Threatened damage, compared to the damage arising to
the owner from the interference, is much greater; and
o State of necessity is not brought about by the intentional
provocation of the party invoking the same.
o Right to enclose or fence his property
▪ Right to Fence
• A property owner may enclose or fence his property subject
only to the limitations and restrictions provided by law.
o Right to compensation in case of eminent domain
▪ The property involved is wholesome and intended for a public use,
which is why the taking of such requires the payment of just
compensation to the owner.
▪ The exercise of the power of eminent domain is constrained by two
constitutional provisions:
• That private property shall not be taken for public use without
just compensation under Article III (Bill of Rights), Section 9;
and
• That no person shall be deprived of his/her life, liberty, or
property without due process of law under Article III, Section 1.

o Right to the surface, the sub-surface, and the space above the land

injure them.
 ▪ General Rule
• The owner of a piece of land has rights not only to its surface
but also to everything underneath and the airspace above it up
to a reasonable height.
▪ Limitations
• servitudes or easements
• special laws
• ordinances
• reasonable requirements of aerial navigation
• rights of third persons
• contracts.
▪ Right to Sub-surface
• Rights over lands are indivisible and, consequently, requires a
definitive and categorical classification. Land cannot, therefore,
be classified as half-agricultural and half-mineral. In the
context of expropriation proceedings, the soil has no value
separate from that of the expropriated land. When a landowner
cannot dig upon his property motorized deep wells and was
prevented from doing so by the authorities, he is entitled to
recover the full compensation for the land because the nature
of the easement deprives the owner of its normal beneficial
use.
▪ Right to Airspace
• If the landowner is to have full enjoy of the land, he must have
exclusive control of the “Immediate reaches of the enveloping
atmosphere”. Thus, in the case of United States v. Causby, it
was held that repeated flights at low levels directly over private
land may amount to a taking for which just compensation must
be paid to the landowner.
• Limitations
o He is bound by the height restrictions annotated on the
certificate of title if he acquired the property subject to
suck restrictions following the principle that “contractual
obligations between parties have the force of law
between them”.
o For properties situated near the airport, their owners
cannot complain of the reasonable requirements of aerial
navigation.
o Right to hidden treasure
▪ Concept
• A hidden treasure is:
o Any deposit of money, jewelry, or other precious objects,
which must be hidden or unknown; and
o The lawful ownership of which must not appear.
▪ Rule in Hidden Treasure
• If the finding of the treasure is by chance:
o If the finder is the owner of the property on which the
treasure is found, the treasure is all his.
o If the finder is a trespasser, the treasure solely belongs
to the owner of the property on which the treasure is
found.
o If the finder is a third person who is not a trespasser, the
finder is entitled to one-half (½) of the treasure and the
other half goes to the owner of the property.
▪ Rule in Treasure Hunting
• If the search for the hidden treasure is deliberate, “treasure
 hunting” permit must be obtained from the National Heritage
Commission if the activity is for the purpose of recovering
treasures which are of cultural and historical values. Otherwise,
the permit must be obtained from the Department of
Environment and Natural Resources.
• Distribution of Net Proceeds
o For treasure hunting within public lands
▪ 75% to the Government and 25% to the permit
holder
o For treasure hunting within private lands
▪ 30% to the Government and 70% to be shared by
the permit holder and the landowner
o For shipwreck/sunken vessel recovery
▪ 50% to the Government and 50% to the permit
holder
o Right of accession (Read Section B)

• Limitations on Right of Ownership

o General Limitations Pursuant to the Exercise of the Inherent Powers of the
State
▪ Police Power
• It is usually exercised in the form of mere regulation or
restriction in the use of liberty or property for the promotion of
the general welfare.
• The property condemned is noxious or intended for a noxious
purpose, which is why the taking of such is not compensable.
▪ Power of Eminent Domain
• The exercise of the power of eminent domain is constrained by
two constitutional provisions:
o That private property shall not be taken for public use
without just compensation under Article III (Bill of
Rights), Section 9; and
o That no person shall be deprived of his/her life, liberty,
or property without due process of law under Article III,
Section 1.
• The property involved is wholesome and intended for a public
use, which is why the taking of such requires the payment of
just compensation to the owner.
▪ Taxation Power
o Specific Limitations
▪ Legal easements which can be enforced by law and, therefore, may be
established even against the will of the owner of the servient estate.
▪ During a period of public want or emergency, thoughtless
extravagance in expense for pleasure or display may be stopped by
order of the court at the instance of any government or private,
charitable institution.
▪ Lands acquired under free patent or homestead cannot be subject to
encumbrance or alienation within five (5) years from the issuance of
the patent.
o Inherent Limitations
▪ It is a well-settled principle, growing out of the nature of well-ordered
civil society, that every holder of property holds it under the implied
liability that his use of it shall not be injurious to the equal enjoyment
of others having an equal right to the enjoyment of their property, nor
injurious to the rights of the community.
o Limitations Imposed by the Owner Himself
 ▪ A testator may prohibit alienation of the property given by will, but
such prohibition cannot exceed twenty (20) years.

B. Rights of Accession
1. General Principles

• Definition
o Accession is the right of the owner of a thing to become the owner of
everything that is produced thereby, or which may be inseparably attached
or incorporated thereto, either naturally or artificially.

• Kinds
o Accession Discreta – is the right of the owner of a property to whatever is
produced thereby or to the fruits of the same
▪ Basic Rule
• Accession is the right of the owner of a thing to become the
owner of everything that is produced thereby, or which may be
inseparably attached or incorporated thereto, either naturally or
artificially. To the owner belongs the natural fruits, industrial
fruits, and civil fruits.
▪ Exceptions
• In usufruct, the usufructuary shall be entitled to all the natural,
industrial, and civil fruits of the property in usufruct.
• In lease of rural land, the lessee is entitled to the natural and
industrial fruits of the thing leased while the lessor is entitled to
civil fruits in the form of the rent paid by the lessee.
• In 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.
• A possessor in good faith is entitled to the fruits received by
him before his possession is legally interrupted.
• Fruits naturally falling upon adjacent land belong to the owner
of the said land and not to the owner of the tree.
▪ Kinds of Fruits
• Natural Fruits
o The spontaneous products of the soil, or those that
appear without the intervention of human labor, such as
the wild fruits in the forest, herbs, and common grass,
and the young and other products of animals, such as
milk, hair, wool, horn, hide, eggs, and animals’ dung or
manure. If the young or offspring is a product of animals
belonging to different owners, "the young belongs to the
owner of the female parent”, in the absence of
agreement to the contrary, based on the maxim partus
sequitur ventrem—the offspring follows the condition of
the mother.
• Industrial Fruits
o Those produced by lands of any kind through cultivation
or labor.
• Civil Fruits
o The rents of buildings, the price of leases of lands and
other property and the amount of perpetual or life
annuity or other similar income.
o Rent is a civil fruit that belongs to the owner of the
property producing it by right of accession. Hence, in
 case of dispute over its ownership the rightful recipient of
the disputed rent should be the owner of the subject lot
at the time the rent accrued.
o Bank interests also partake of the nature of civil fruits
under Article 442 of the Civil Code. Since these are
considered fruits, ownership thereof should be due to the
owner of the principal.
▪ Expenses for Production, Gathering, and Preservation of Fruits
• Where the recipient of the fruits was not the same person who
incurred the expenses in connection with its production,
gathering, and preservation, the former has the obligation to
pay the expenses made by the latter in the production,
gathering and preservation of the fruits, whether the latter
acted in good faith or in bad faith. However, this rule applies
only when the fruits are already harvested and gathered since
Article 443 refers to the person "who receives the fruits."

o Accession Continua – is the right to acquire whatever is attached or

incorporated naturally or artificially to our things.
▪ Accession continua in movable property
• Adjunction or conjunction – may take place by inclusion or
engraftment, soldadura or attachment, tejido or weaving,
pintura or painting, or escritura or writing.
o Concept
▪ It takes place when two movables belonging to
different owners are so inseparable that their
separation would impair their nature, making up
thereafter a single object, but each preserving its
own nature.
o If effected in good faith
▪ The owner of the principal thing acquires the
accessory by indemnifying the former of the value
of the accessory. However, if the accessory is
much more precious than the principal, its owner
may demand its separation, even though the thing
to which it has been incorporated may suffersome
injury.
o If effected in bad faith:
▪ By the owner of the accessory, he shall lose his
thing and he shall be liable for damages; or
▪ By the owner of the principal, the owner of the
accessory has the option of:
• Demanding payment for the value of the
accessory, plus damages; or
• Demanding separation, even if the same will
result in injury to the principal thing, plus
damages.
o The second option, however, does not
apply if the same is not practicable as
in the case of paintings (which cannot
be separated from the canvass) or
writings (which cannot be separated
from the paper). In such a situation,
the owner of the accessory is limited
only to the first option of demanding
payment for the value of the
 accessory.
• Commixtion or confusion
o Concept
▪ Commixtion or confusion is the mixture of things
solid or liquid pertaining to different owners. If the
things mixed are solid, it is called commixtion; if
the things are liquid, it is called confusion.
o When co-ownership arises
▪ If the mixture was caused by:
• Chance or fortuitous event;
• By the will of both owners; and
• By the will of only one owner acting in good
faith.
▪ In all these cases, each owner shall acquire a right
proportional to the part belonging to him, bearing
in mind the value of the things mixed or confused.
o When caused in bad faith
▪ If the commixtion or confusion was caused by only
one owner acting in bad faith, he loses the thing
belonging to him thus mixed or confused, besides
being obliged to pay indemnity for the damages
caused to the owner of the thing with which his
own was mixed or confused.
• Specification
o Concept
▪ Specification is the imparting of a new form to the
material of another.
o If worker acted in good faith
▪ He shall appropriate the thing thus transformed as
his own, indemnifying the owner of the material for
its value.
▪ The exception to this rule is when the material is
more precious than the transformed thing or more
valuable, in which case, its owner may, at his
option:
• Appropriate the new thing to himself after
paying indemnity for the value of the work;
or
• Demand indemnity for the material.
o If worker acted in bad faith
▪ The owner of the material has two options:
• To appropriate the work for himself without
paying anything to the maker; or
• To demand of the latter that he indemnify
him for the value of the material and the
damages he may have suffered.
▪ The exception is in case the value of the work, for
artistic or scientific reasons, is considerably more
than that of the material, the owner of the material
cannot appropriate the work.

▪ Accession continua in immovable property

• Accession Industrial – it may take the form of building,
planting, or sowing.
• Accession Natural – it may either be alluvion, avulsion, change
of course of river, or formation of islands.
 2. Accession Industrial

• Forms of Industrial Accession

o Building
o Planting
o Sowing

• Scenarios in Industrial Accession

o Landowner (LO) Builds, Plants, or Sows on His Land With Materials
Belonging to Owner of Materials (OM)

Article 447. The owner of the land who makes thereon, personally or through another,
plantings, constructions or works with the materials of another, shall pay their value;
and, if he acted in bad faith, he shall also be obliged to the reparation of damages. The
owner of the materials shall have the right to remove them only in case he can do so
without injury to the work constructed, or without the plantings, constructions or works
being destroyed. However, if the landowner acted in bad faith, the owner of the materials
may remove them in any event, with a right to be indemnified for damages. (360a)

▪ It applies when Landowner (LO) builds, plants, or sows on his land

with materials belonging to Owner of Materials (OM).
▪ Possible Situations
• When both acted in good faith or in bad faith, LO must
appropriate materials but must pay for its value.
• When LO acted in good faith and OM acted in bad faith, the
latter will lose his materials without the right to be indemnified,
and he will be liable to pay damages.
• When LO acted in bad faith and OM acted in good faith, the
latter has the option of demanding the value of his materials
plus damages or demanding the return of his accessory thing in
any event, i.e., even if injury is caused thereby to the land, at
the expense of LO, plus damages.

o Builder, Planter, or Sower (BPS) Builds, Plants, or Sows on the Land

of Another (LO) With His Own Materials and Both Acted in Good
Faith

Article 448. The owner of the land on which anything has been built, sown or planted in
good faith, shall have the right to appropriate as his own the works, sowing or planting,
after payment of the indemnity provided for in Articles 546 and 548, or to oblige the one
who built or planted to pay the price of the land, and the one who sowed, the proper
rent. However, the builder or planter cannot be obliged to buy the land if its value is
considerably more than that of the building or trees. In such case, he shall pay
reasonable rent, if the owner of the land does not choose to appropriate the building or
trees after proper indemnity. The parties shall agree upon the terms of the lease and in
case of disagreement, the court shall fix the terms thereof. (361a)

▪ Applies when Builder, Planter, or Sower (BPS) builds, plants, or sows

on the land of another (LO) with his own materials and both acted in
good faith
▪ Concept of BPS in good faith
• Limited Definition
o The builder believes that he is the owner of the land or
that by some title he has the right to build thereon, or
that, at least, he has a claim of title thereto, such as
 when the builders constructed their house on the
adjacent lot because the geodetic engineer erroneously
pointed to said lot as the one purchased by the builders.
• Expanded Definition
o Where the builders knew that they were not the owners
of the land, but they constructed improvements on the
land of another with the consent of the owner, such as
when the landowner allowed his or her children to
construct their house on the land he or she owns. The
foregoing rule does not apply when the one who gave
consent to the construction was a complete stranger to
the builders.
• Involving right of repurchase
o Article 448 is inapplicable in cases involving contracts of
sale with right of repurchase. When the vendee a retro
introduced improvements on the subject property prior
to repurchase, Articles 1606 and 1616 require the vendor
a retro to also pay the necessary and useful expenses
made on the thing sold.
• Involving contract of lease
o When the lessee introduced an improvement on the
leased promises, the applicable law is Article 1678 and
not Article 448. Under Article 1678, the lessor has the
option of appropriating the useful improvements by
paying one-half (½) of their value at that time or to allow
the lessee to remove the improvements. In the removal
of the useful improvements, the lessee can cause
damage to the leased premises so long as the injury is
related to the removal. In case of ornamental
improvement, the lessor has the option of appropriating
the ornaments by paying their full value at that time or
to allow the lessee to remove the ornamental objects, if
the removal can be done without damaging the leased
premises.
• Involving usufruct
o When a usufructuary introduced useful improvements or
ornaments on the property subject matter of the
usufruct, the applicable laws are Articles 579 and 580,
not Article 448. Under these provisions, the usufructuary
may remove the improvements if it will not injure the
principal thing, or he may offset such improvements
against any damage he may have caused to the
property.
• Involving Condominium Act
o When a condominium unit owner introduced an
improvement on his unit, Article 448 does not apply but
the Condominium Act and the Master Deed and the By-
Laws of the condominium corporation.'"
• When ownership of land is lost
o Article 448 is applicable when the landowner loses
ownership of his land because of nonpayment of real
estate taxes to settle the controversy with respect to the
improvement on the land.
• When builder is co-owner
o Ordinarily, Article 448 does not apply because he is a
builder-owner. By way of exception, the provision applies
 to one whose house, despite having been built at the
time he was still co-owner, overlapped with the land of
another.
• Successor-in-interest
o Article 448 can be invoked by the successor-in-interest of
the builder in good faith.
▪ Two options of landowner
• To appropriate as his own the works, sowing, or planting after
payment to the builder, planter, or sower the necessary and
useful expenses, and in proper cases, expenses for pure luxury
or mere pleasure, incurred by the latter; or
• To oblige the one who built or planted to pay the price of the
land, if the value of the land is not considerably more than that
of the building or trees, and the one who sowed, the proper
rent. Options belong to landowner because his right is older,
and such rule is in accord with the principle of accession, i.e.,
that the accessory follows the principal and not the other way
around. But the option is preclusive. He cannot for instance,
compel the owner of the building to remove the building from
the land without first exercising either option. It is only when
the owner chooses to sell his land, and the builder or planter
fails to purchase it (and its value is not more than the value of
the improvements), that the owner may remove the
improvements from the land.
▪ Option of appropriation
• Landowner must pay the necessary and useful expenses, and in
the proper case, expenses for pure luxury or mere pleasure.
The basis of indemnity is the current market value of the
improvements at the time of the election of the option. Pending
payment of the indemnity, the builder is entitled to a right of
retention of the property. Accordingly, the builder cannot be
compelled to pay rentals during the period of retention nor be
disturbed in his possession by ordering him to vacate.
▪ Option of selling land
• Can only be exercised against the builder or planter and only
when the value of the land is not considerably more than that
the building or planting; otherwise, the builder or planter can
only be compelled to pay proper rent. In determining the price
of the land, the price must be fixed at the “prevailing market
value” at the time of the election of the option.”
• In the event the builder or the planter refuses to pay the price
of the land, the landowner does not automatically become the
owner of the improvements without paying any indemnity.” The
options available to him are the following:
o To choose option of appropriation
o To enter into a voluntary lease contract with builder or
planter
o The landowner may demand for the demolition of what
has been built or planted
o To apply for an order from the court for the sale of the
land and improvement in a public auction applying the
proceeds thereof first to the payment of the value of the
land and the excess, if any, to be delivered to the owner
of the house in payment thereof.

o Builder, Planter, or Sower (BPS) Builds, Plants, or Sows on the Land

 of Another (LO) With His Own Materials and He Acted in Bad Faith
While the LO Acted in Good Faith

Article 449. He who builds, plants or sows in bad faith on the land of another, loses what
is built, planted, or sown without right to indemnity. (362)

Article 450. The owner of the land on which anything has been built, planted, or sown in
bad faith may demand the demolition of the work, or that the planting or sowing be
removed, in order to replace things in their former condition at the expense of the person
who built, planted, or sowed; or he may compel the builder or planter to pay the price of
the land, and the sower the proper rent. (363a)

Article 451. In the cases of the two preceding articles, the landowner is entitled to
damages from the builder, planter, or sower. (n)

Article 452. The builder, planter or sower in bad faith is entitled to reimbursement for the
necessary expenses of preservation of the land. (n)

▪ Applies when the Builder, Planter, or Sower (BPS) builds, plants, or

sows on the land of another (LO) with his own materials and he acted
in bad faith while the LO acted in good faith.
▪ Concept of builder in bad faith
• If BPS knew that he was not the owner of the land at the time
of the building, planting, and sowing and the landowner had no
knowledge of what he did at that time, such as when the
buyers of a parcel of land constructed a house thereon even if
they were not innocent purchasers for value, or the builder’s
occupation of the subject property was by mere tolerance.
▪ Three options of landowner
• The right to appropriate whatever has been built, planted, or
sown in bad faith without need of paying indemnity, plus
damages, and that the builder in bad faith has no right to a
refund of any improvement built therein. If there are pending
fruits, the landowner will likewise be entitled to appropriate
them without need of paying any indemnity.
• The right to demand the demolition of whatever has been built,
planted, or sown in bad faith in any event—even if damages will
be caused by the separation—plus damages.
• The right to compel the builder or planter in bad faith to pay
the price of the land, even if the price of the land is
considerably more than the building or trees, plus damages.
▪ Only right of BPS in bad faith
• Reimbursement of necessary expenses of preservation of the
land. However, being a builder in bad faith, he does not have
the right of retention over the premises.
o Builder, Planter, or Sower (BPS) Builds, Plants, or Sows on the Land
of Another(LO) With His Own Materials and Both Acted in Bad Faith

Article 453. If there was bad faith, not only on the part of the person who built, planted,
or sowed on the land of another, but also on the part of the owner of such land, the
rights of one and the other shall be the same as though both had acted in good faith. It is
understood that there is bad faith on the part of the landowner whenever the act was
done with his knowledge and without opposition on his part. (354a)

▪ The bad faith of each other is cancelled out. Hence, the rights of one
and the other shall be the same as though both had acted in good
 faith. As a consequence, the rules in Article 448 will be applicable.

o Builder, Planter, or Sower (BPS) Builds, Plants, or Sows on the Land

of Another (LO) With His Own Materials and He Acted in Good Faith
While the LO Acted in Bad Faith

Article 454. When the landowner acted in bad faith and the builder, planter or sower
proceeded in good faith, the provisions of article 447 shall apply. (n)

Article 447. The owner of the land who makes thereon, personally or through another,
plantings, constructions or works with the materials of another, shall pay their value;
and, if he acted in bad faith, he shall also be obliged to the reparation of damages. The
owner of the materials shall have the right to remove them only in case he can do so
without injury to the work constructed, or without the plantings, constructions or works
being destroyed. However, if the landowner acted in bad faith, the owner of the materials
may remove them in any event, with a right to be indemnified for damages. (360a)

▪ The provisions of Article 447 of the NCC shall apply. As a

consequence, BPS has two options:
• To demand the value of his materials and reasonable
compensation for his labor, plus damages; or
• To demand the return of his materials in any event, plus
damages. Bad faith may only be attributed to a landowner
when the act of building, planting, or sowing was done with his
knowledge and without opposition on his part.

o Builder, Planter, or Sower (BPS) Builds, Plants, or Sows on the Land

of Another (LO) Using Materials Belonging to Another Person (OM)

Article 455. If the materials, plants, or seeds belong to a third person who has not acted
in bad faith, the owner of the land shall answer subsidiarily for their value and only in the
event that the one who made use of them has no property with which to pay. This
provision shall not apply if the owner makes use of the right granted by Article 450. If the
owner of the materials, plants or seeds has been paid by the builder, planter or sower,
the latter may demand from the landowner the value of the materials and labor. (365a)

▪ There are two scenarios:

• If OM acted in bad faith, he loses his materials in favor of LO
without any right whatsoever and he is liable for damages. If
BPS acted in good faith, he may claim from LO a reasonable
compensation for his labor; otherwise, he is not entitled to such
compensation.
• If OM acted in good faith, he must be paid the value of his
materials.196 BPS is primarily liable to make such payment,
while LO is subsidiarily liable. This subsidiary liability of LO will
attach only if the following conditions are met:
o BPS is insolvent; and
o LO chooses to appropriate the building, planting, or
sowing. If BPS pays the materials, the rights and
obligations of BPS and LO to each other shall be
determined by applying Articles 448-454. If LO pays the
materials, he will have to pay BPS for the latter’s labor
depending on his good faith or bad faith.

3. Accession Natural
 • Alluvion

Article 457. To the owners of lands adjoining the banks of rivers belong the accretion
which they gradually receive from the effects of the current of the waters. (336)

Article 458. The owners of estates adjoining ponds or lagoons do not acquire the land left
dry by the natural decrease of the waters or lose that inundated by them in extraordinary
floods. (367)

o Distinguished from accretion

▪ Alluvium is the soil deposited on the estate fronting the riverbank;
while accretion is the process whereby the soil is deposited along the
banks of rivers.
▪ If the process is gradual and imperceptible, it is alluvium; when the
process is sudden and abrupt, it is a case of avulsion.
o Rule on Alluvium
▪ The additional soil deposit becomes private property and shall belong
to the owner of the land contiguous to the river, creek, stream, or
lake.
o Requisites
▪ The following requisites must concur:
• That the accumulation of soil or sediment be gradual and
imperceptible;
• That it be the exclusive result of the action of the waters; and
• That the land where the accretion takes place is adjacent to the
bank of the river, creek, stream, or lake shore.
▪ The drying up of the river is not accretion. The process of drying up of
a river to form dry land involved the recession of the water level from
the riverbanks.
▪ In accretion, the water level did not recede and was more or less
maintained.
▪ Alluvion must be the exclusive work of nature. Where the land was
formed with the help of human intervention, it becomes part of the
public domain.
o Ownership is acquired ipso jure4
▪ The right of the owners of the land adjacent to rivers, creeks,
streams, or lakes to the accretion which they receive by virtue of the
action of the waters of the river is ipso jure. However, the accretion to
registered land does not preclude acquisition of the additional area by
another person through prescription.

• Avulsion

Article 459. Whenever the current of a river, creek, or torrent segregates from an estate
on its bank a known portion of land and transfers it to another estate, the owner of the
land to which the segregated portion belonged retains the ownership of it, provided that
he removes the same within two years. (368a)

Article 460. Trees uprooted and carried away by the current of the waters belong to the
owner of the land upon which they may be cast if the owners do not claim them within
six months. If such owners claim them, they shall pay the expenses incurred in gathering
them or putting them in a safe place. (369a)

o Definition

4
By operation of law
 ▪ It is the accretion which takes place when the current of a river,
creek, or torrent segregates a known portion of land from an estate
on its banks and transfers it to another estate. In the absence of
evidence that the change in the course of river was sudden or that it
occurred through avulsion, the presumption is that the change was
gradual and caused by accretion and erosion.
o Rule on Avulsion
▪ The owner of the land from where the portion is detached retains the
ownership thereof, but he is required to physically remove the same
within two years.
▪ In case of uprooted trees, a mere claim by the owner within six
months is sufficient to retain ownership of the tree.
o Requisites
▪ It takes place only along the banks of rivers, creeks, streams, and
lakes;
▪ It is caused only by the force of the current of the water
independently of the act of man;
▪ The deposit of soil is sudden and abrupt; and
▪ The detached portion can be identified.

• Change of Course of Rivers

Article 461. Riverbeds which are abandoned through the natural change in the course of
the waters ipso facto belong to the owners whose lands are occupied by the new course
in proportion to the area lost. However, the owners of the lands adjoining the old bed
shall have the right to acquire the same by paying the value thereof, which value shall
not exceed the value of the area occupied by the new bed. (370a)

o Rule
▪ Rivers and their natural beds are property of public dominion of the
State.
o Exception
▪ Riser beds which are abandoned through the natural change in the
course of the waters ipso facto belong to the owners whose lands are
occupied by the new course in proportion to the area lost.
▪ However, the owners of the lands adjoining the old bed shall have the
right to acquire the same by paying the value thereof, which value
shall not exceed the value of the area occupied by the new bed.
o Requisites:
▪ The claimant must prove three key elements by clear and convincing
evidence:
• The old course of the river or creek;
• The new course of the river or creek; and
• The change of course of the river or creek from the old location
to the new location by natural occurrence.
▪ Article 461 will still apply even if the change in the course of the river
was the result of a deliberate act on the part of the government.
▪ However, the provision does not apply when the drying up of the river
was without the intervention of the government but was actually
caused by the dumping of garbage therein by the people of the
surrounding neighborhood.
o When river simply dries up
▪ If the river simply dries up and did not change its course or without
opening a new bed, Article 461 will not apply. Instead, the dried-up
riverbed continues to belong to the State, whether the drying-up of a
river is by reason of nature or a result of the active intervention of
 man.

• Formation of Islands

Article 463. Whenever the current of a river divides itself into branches, leaving a piece of
land or part thereof isolated, the owner of the land retains his ownership. He also retains
it if a portion of land is separated from the estate by the current. (374)

Article 464. Islands which may be formed on the seas within the jurisdiction of the
Philippines, on lakes, and on navigable or floatable rivers belong to the State. (371a)

Article 465. Islands which through successive accumulation of alluvial deposits are
formed in non-navigable and non-floatable rivers, belong to the owners of the margins or
banks nearest to each of them, or to the owners of both margins if the island is in the
middle of the river, in which case it shall be divided longitudinally in halves. If a single
island thus formed be more distant from one margin than from the other, the owner of
the nearer margin shall be the sole owner thereof. (373a)

o Article 463
▪ When the current of a river divides itself into branches, leaving a
piece of land or part thereof isolated, thus forming an island, the
owner of the land retains his ownership over the island.
o Article 464
▪ Islands formed on the seas within the jurisdiction of the Philippines,
on lakes and on navigable or floatable rivers, shall belong to the
State, as patrimonial property.
o Article 465
▪ An island formed through in non-navigable or non-floatable rivers
shall become private property, as follows:
• The island so formed belongs to the owners of the margins or
banks nearest to the island;
• If the island is in the middle of the river, it shall belong to the
owners of both margins, in which case it shall be divided
longitudinally in halves;
• If, however, a single island thus formed be more distant from
one margin than from the other, the owner of the nearer
margin shall be the sole owner.

C. Actions to Recover Ownership and Possession of Property

• Basic Rule
o In no case may possession be acquired through force or intimidation as long
as there is a possessor who objects thereto. He who believes that he has an
action or a right to deprive another of the holding of a thing must invoke the
aid of the competent court if the holder should refuse to deliver the thing.

1. Accion Reinvindicatoria

• Definition
o It is a suit which has for its object the recovery of possession over the real
property as owner. It involves recovery of ownership and possession based
on the said ownership.

• Requisites
o The claimant must prove two things:
▪ The identity of the land claimed
 •
The person who claims that he has a better right to the
property must first fix the identity of the land he is claiming by
describing the location, area, and boundaries thereof.
▪ The claimant’s title thereto.
• The plaintiff must rely on the strength of his title, not on the
weakness of the defendant’s title.

• Jurisdiction
o It is action involving title to or possession of real property. The MTC has
jurisdiction if the assessed value of the property does not exceed P20,000,
or P50.000, for actions filed in Metro Manila; otherwise, jurisdiction is with
the RTC.

• Imprescriptible
o An action by the registered owner to recover a real property registered
under the Torrens System does not prescribe.

• Not Collateral Attack

o The court where the reinvindicatory or reconveyance suit is filed has the
requisite jurisdiction to rule definitively or with finality on the issue of
ownership—it can pass upon the validity of the plaintiff’s certificate of title.
Hence, there is no collateral attack.

2. Accion Publiciana

• Definition
o An accion publiciana, or an action plenaria de posesion, is a plenary action to
recover the right of possession, and the issue is which party has the better
right of possession (possession de jure)." The issue in an accion publiciana is
the “better right of possession” of real property independent of title. It is
also used to refer to an ejectment suit where the cause of dispossession is
not among the grounds for forcible entry and unlawful detainer, or when
possession has been lost for more than one year and the action can no
longer be maintained under Rule 70 of the Rules of Court. The objective of
the plaintiffs in accion publiciana is to recover possession only, not
ownership.

• Jurisdiction
o It is an action involving title to or possession of real property. The MTC has
jurisdiction if the assessed value of the property does not exceed P20,000,
or P50,000, for actions filed in Metro Manila;" otherwise, jurisdiction is with
the RTC.

• Imprescriptible
o An action by the registered owner to recover a real property registered
under the Torrens System does not prescribe.

• Not Collateral Attack

o In an action for forcible entry or unlawful detainer and action publiciana, the
objective of the plaintiff is to recover possession only, not ownership. The
adjudication, in short, is not conclusive on the issue of ownership. Hence, in
an action publiciana, the defense of ownership (i.e., that the defendant, and
not the plaintiff, is the rightful owner) will not trigger a collateral attack on
the plaintiff’s Torrens or certificate of title because the resolution of the issue
of ownership is done only to determine the issue of possession.
 3. Accion Interdictal

• Definition
o It is limited to right to physical possession or possession de facto,
independently of any claim of ownership. The action is either forcible entry
(FE) or unlawful detainer (UD).

• Distinctions
o In FE, plaintiff must prove that he was in prior physical possession of the
premises; in UD, plaintiff need not have been in prior physical possession.
o In FE, possession of land by defendant is unlawful from the beginning; in
UD, possession of defendant is inceptively lawful, but it becomes illegal by
reason of termination of his right to the possession of the property under his
contract.
o In FE, no need for previous demand to vacate the premises; in UD, such
demand is jurisdictional in nature. Hence, in UD the one-year prescriptive
period is counted from the date of the last demand.

Forcible Entry Unlawful Detainer

As to When Possession Became Unlawful
Possession of the defendant is unlawful Possession is inceptively lawful but
from the beginning as he acquires becomes unlawful from the time defendant
possession by Force, Intimidation, unlawfully withholds possession, after the
Strategy, Threat, or Stealth (FISTS). expiration or termination of his right
thereto.
As to the Necessity of Demand
Previous demand is not necessary. Demand is jurisdictional if the ground is
non-payment of rentals or failure to
comply with the lease contract.
As to Necessity of Proof of Prior Physical Possession
Plaintiff must prove that he was in prior Plaintiff need not have been in prior
physical possession of the premises until physical possession.
he was deprived thereof by the defendant.
As to When the One (1) Year Period is Counted From
Generally counted from the date of actual Counted from the date of last demand or
entry on the land. last letter of demand.

• Jurisdiction
o Jurisdiction is always with the MTC.

• Not Collateral Attack

o The judgment rendered in an action for FE or UD is conclusive with respect
to the possession only, will not bind the title or affect the ownership of the
land or building, and will not bar an action between the same parties
respecting title to the land or building.

4. Quieting of Title

• Definition
o It is a common-law remedy for the removal of any cloud or doubt or
uncertainty on the title to real property by reason of any instrument, record,
claim, encumbrance, or proceeding that is apparently valid or effective, but
is, in truth and in fact, invalid, ineffective, voidable, or unenforceable, and
may be prejudicial to said title.

• Nature of Action
 o An action to quiet title is characterized as a proceeding quasi in rem. Actions
quasi in rem deal with the status, ownership, or liability of a particular
property but which are intended to operate on these questions only as
between the particular parties to the proceedings. Hence, the judgment
therein is binding only upon the parties who joined in the action.

• Jurisdiction
o An action for the quieting of title is in the nature of a real action—that is, an
action that involves the issue of ownership or possession of real property, or
any interest in real property. As such, jurisdiction is dependent on the
assessed value of the property in dispute.

• Requisites
o For an action to quiet title to prosper, two indispensable requisites must
concur:
▪ The plaintiff or complainant has a legal or equitable title or interest in
the real property subject of the action; and
▪ The deed, claim, encumbrance, or proceeding claimed to be casting a
cloud on his title must be shown to be in fact invalid or inoperative
despite its prima facie appearance of validity or legal efficacy.
o Legal title denotes registered ownership, while equitable title means
beneficial ownership. Thus, if the plaintiffs claim the property as their own
as a result of acquisitive prescription, the same would give them the
requisite equitable title.

• Cloud on Title
o A cloud on a title exists when:
▪ There is an instrument, record, claim, encumbrance, or proceeding;
▪ Which is apparently valid or effective;
▪ But is in truth and in fact invalid, ineffective, voidable, or
unenforceable; and
▪ May be prejudicial to the title sought to be quieted.
o Generally, such cloud is not created by mere verbal assertion of ownership.
However, where there is factual basis, such as a claim of right based on
acquisitive prescription, has been held to constitute a removable cloud on
title.

• Not Collateral Attack on Title

o Raising the invalidity of a certificate of title in an action for quieting of title is
NOT a collateral attack because it is central, imperative, and essential in
such an action that the complainant shows the invalidity of the deed which
casts cloud on his title.

• Prescriptive Period
o If plaintiff not in possession
▪ In an action to quiet title, the plaintiff need not be in possession of the
property.
▪ If plaintiff is not in possession, the action is indubitably a real action
and shall prescribe after 30 years.
o If plaintiff is in possession
▪ The filing of an action to quiet title is imprescriptible if the disputed
real property is in the possession of the plaintiff because he may wait
until his possession is disturbed or his title is attacked before taking
steps to vindicate his right.

D. Co-Ownership
• Definition
o Co-ownership is defined as the right of common dominion which two or more
persons have in a spiritual part of a thing, not materially or physically
divided.
• Requisites
o Plurality of subjects, who are the co-owners;
o Unity of, or material indivision, which means that there is a single object
which is not materially divided, and which is the element that binds the
subjects; and
o Recognition of ideal shares, which determines the rights and obligations of
the co-owners.
• Consequences
o Rule
▪ As a consequence, a co-owner of an undivided parcel of land is an
“owner of the whole, and over the whole he exercises the right of
dominion, but he is at the same time the owner of a portion which is
truly abstract.
▪ The underlying rationale is that until a division is actually made, the
respective share of each cannot be determined, and every co-owner
exercises, together with his co-participants, joint ownership of the pro
indiviso property, in addition to his use and enjoyment of it.
o Right to use entire thing
▪ A co-owner is entitled to possess and enjoy the entire property.
Hence, he cannot be ejected from the property.
o Limitations
▪ It is used for the purpose intended;
▪ It must be used in such a way as not to injure the interest of the
other co-owners; and
▪ Such use does not prevent the other co-owners from making use
thereof according to their own right. Hence, if there is an agreement
to lease the house, the co-owners can demand rent from the co-
owner who dwells in the house, but the latter cannot be ejected from
the property.
• Cannot claim definite portion
o Rule
▪ By the nature of a co-ownership, a co-owner cannot point to specific
portion of the property owned in common as his own because his
share therein remains intangible.
o Exception
▪ Where the transferees of an undivided portion of the land allowed a
co-owner of the property to occupy a definite portion thereof, such
undisturbed possession had the effect of a partial partition of the co-
owned property which entitles the possessor to the definite portion
which he occupies.
o Effect of Sale of Concrete Portion
▪ Whether the disposition involves an abstract or concrete portion of the
co-owned property, the sale remains validly executed. What will be
affected on the sale is only his proportionate share, subject to the
results of the partition. The co-owners who did not give their consent
to the sale stand to be unaffected by the alienation.
• Sources of Co-ownership
o The sources are:
▪ Law;
▪ Contract;
▪ Succession – 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; and
▪ Occupation – such as when two or more persons catch a wild pig or
get forest products or when a hidden treasure is accidentally
discovered by a stranger, who is not a trespasser, on the land of
another.
o If the source of co-ownership is contract, the law does not make a
distinction as to how the co-owner derived his/her title, may it be through
gratuity or through onerous consideration. In other words, a person who
derived his title and was granted co-ownership rights through gratuity may
compel partition.
o However, mere construction of a house on another’s land, in the absence of
agreement, does not create a co-ownership, regardless of the value of the
house. Instead, the situation will be governed by Articles 448-454 of the
Civil Code.
• Consent Requirement
o Action in ejectment
▪ Rule
• Any one of the co-owners may bring an action in ejectment.
• A co-owner may thus bring an ejectment action without joining
the other co-owners, the suit being deemed instituted for the
benefit of all.
▪ Must benefit all
• The foregoing rule applies so long as the suit is instituted for
the benefit of all. If the action is for the benefit of the plaintiff
alone who claims to be the sole owner, the other co-owners are
indispensable parties who must be impleaded.
▪ Meaning of “ejectment’’
• The term "action in ejectment" includes all kinds of actions for
the recovery of possession, including an accion publiciana and a
reinvindicatory action. It will also include an action for revival of
judgment if it results into the recovery of property.
▪ Effect of judgment
• While a co-owner may bring an action in ejectment without the
others, any adverse judgment cannot prejudice the rights of
the unimpleaded co-owners but any judgment of the court in
favor of the co-owner will benefit the others.
o Repair for Preservation and Taxes
▪ Rule
• Any repair for the preservation of the property owned in
common may be made at will by one of the co-owners and he
has the right to demand contribution from the others for the
expenses of preservation and to the taxes.
▪ Option of co-owner obliged to contribute
• Instead of contributing to such expenses, a co-owner may
renounce so much of his interest in the co-ownership as may be
equivalent to his share of expenses and taxes, unless such
waiver is prejudicial to the co-ownership.
▪ Illustration
• A co-owner who redeems the property in its entirety during the
redemption period does not make him the owner of all of it. The
property remains in a condition of co-ownership as the
redemption does not provide for a mode of terminating a co-
ownership. But the one who redeemed has the right to be
reimbursed for the redemption price and until reimbursed,
holds a lien upon the subject property for the amount due.
 Such advance payments are in the nature of necessary
expenses for the preservation of the co-ownership.
o Expenses for Improvement or Embellishment
▪ Must be decided by the majority.
▪ The term "majority of co-owners" means the vote of the co-owners
representing the controlling interest in the object of co-ownership.
o Acts of Alteration
▪ Concept
• An act of alteration is one that affects the substance of the
thing286 and changes its essence and nature. Alterations
include any act of strict dominion or ownership, and any
encumbrance or disposition has been held implicitly to be an
actofalteration.
▪ Unanimous consent required
• Consent of all co-owners is required to the making of an
alteration on the thing owned in common, even though benefits
for all would result from such act. However, the other co-
owners may go to court for appropriate relief should any of the
co-owners unreasonably withhold his consent and the same is
clearly prejudicial to the common interest.
▪ Effect of unauthorized alteration
• The act is illegal and invalid, and the other co-owners can
compel the erring co-owner to undo what has been done, at the
latter’s expense, in addition to recovery of damages.
o Acts of Administration
▪ Concept
• Those acts which do not affect the essence, form, and
substance, such as modifications and changes required by the
nature of the thing for its exploitation and enjoyment.
▪ Requires Majority Vote
• With respect to acts of administration and better enjoyment of
the thing owned in common, the resolution of the majority of
the co-owners shall be sufficient.

1. Distinctions Between Right to Property Owned in Common and

Full Ownership Over the Ideal Share

• Use of the Property Owned in Common

o Right to Use
▪ A co-owner may make use of the thing owned in common, even
without the consent of the other co-owners, so long as the use is in
accordance with the purpose for which it is intended and, in a
manner, not injurious to the interest of the other co-owners.
▪ Since a co-owner is entitled to possess and enjoy the entire property,
he cannot be ejected from the property.
▪ Every co-owner exercises, together with his co-participants, joint
ownership of the pro indiviso 5property, in addition to his use and
enjoyment of it
o Limitations
▪ It is used for the purpose intended;
▪ It must be used in such a way as not to injure the interest of the
other co-owners; and
▪ Such use does not prevent the other co-owners from making use
thereof according to their own right.

5
Common or undivided property ownership
 o Consequences
▪ A co-owner cannot devote common property to his exclusive use to
the prejudice of the co-ownership.
• Thus, if there is an agreement to lease the house, the co-
owners can demand rent from the co-owner who dwells in the
house. Otherwise, in the absence of an agreement, a co-owner
cannot require another co-owner to pay rent if he remained
silent during the latter’s lone occupation of the property.
▪ A co-owner cannot give valid consent to another to build a house on
the co-owned property, which is an act tantamount to devoting the
property to his or her exclusive use.
• Rights of Each Co-Owner Over His Ideal Share
o Nature of Right
▪ A co-owner has absolute ownership of his undivided and pro-indiviso
share in the co-owned property. As such, he has the right to alienate,
assign, or mortgage it, and even to substitute another person in its
enjoyment, except when personal rights are involved.
▪ In the same way, he cannot also be forced to sell his ideal share in
the co-ownership by invoking Article 491 of the Civil Code. Insofar as
the sale of co-owned properties is concerned, there is no common
interest that may be prejudiced should one or more of the co-owners
refuse to sell his or her ideal share.
o Effect of Sale of Entire property or Sale of Concrete Portion
▪ As a mere part-owner, a co-owner cannot alienate the shares of the
other co-owners. The prohibition is premised on the elementary rule
that “no one can give what he does not have” — nemo dat quod non
habet. Likewise, a co-owner has no right to sell or alienate a concrete,
specific or determinate part of the thing owned in common, because
his right over the thing is represented by a quota or ideal portion
without any physical adjudication.
▪ However, a sale of the entire property by one co-owner without the
consent of the other co-owners or a sale of a concrete portion of the
co-owned property without the consent of the others, is not null and
void for it is well-established that the binding force of a contract must
be recognized as far as it is legally possible to do so. Quando res non
valet ut ago, valeat quantum valere potest6. But the sale will affect
only his own share but not those of the other co-owners who did not
consent to the sale. Stated otherwise, what the vendee obtains by
virtue of such a sale are the same rights as the vendor had as co-
owner, and the vendee merely steps into the shoes of the vendor as
co-owner and acquires a proportionate abstract share in the property
held in common.
▪ Consequently, whether the disposition involves an abstract or
concrete portion of the co-owned property or the sale of the entire
property, the sale remains validly executed. However, what will be
affected on the sale is only his proportionate share, subject to the
results of the partition. The co-owners who did not give their consent
to the sale stand to be unaffected by the alienation.
o Right of Legal Redemption
▪ When available
• The law grants a co-owner the exercise of the said right of
redemption when the shares of the other owners are sold to “a
third person.” A third person, within the meaning of Article
1620 of the NCC, is anyone who is not a co-owner or a stranger

6
When the thing is not valid as I do it let it have as much validity as it can have.
 to the co-ownership.
▪ Requisites
• For this right to be exercised, co-ownership must exist at the
time the conveyance is made by a co-owner and the
redemption is demanded by the other co-owner or co-owners.
• The following requisites must be met:
o There must be a co-ownership;
o One of the co-owners sold his right to a stranger;
o The sale was made before the partition of the co-owned
property;
o The right of redemption must be exercised by one or
more co-owners within a period of 30 days to be counted
from the time that he or they were notified in writing by
the vendee or by the co-owner vendor; and
o The vendee must be reimbursed for the price of the sale.
▪ Requirement of Written Notice
• A co-owner desirous of exercising his right of legal redemption
is given a period of 30 days from the notice in writing by the
prospective vendor, or by the vendor, as the case may be.
• The requirement of written notice is mandatory, but there is no
required form. So long, therefore, as the latter is informed in
writing of the sale and the particulars thereof, the 30 days for
redemption start running, and the redemptioner has no real
cause to complain.”
• It can be in the form of a copy of deed of sale, a copy of the
summons, or a copy of the Sheriff’s Certificate of Sale.
▪ Notice Must Come From Vendor
• The notice in writing must come from the vendor, and that
notice given by the vendee (buyer) should not be considered.
o No Pre-emptive Right
▪ What the law grants to a co-owner is a right of redemption and not
pre-emption.
▪ By the very nature of the right of “legal redemption,” a co-owner’s
right to redeem is invoked only after the shares of the other co-
owners are sold to a third party or stranger to the co-ownership.

2. Contributions for Expenses

Article 488. Each co-owner shall have a right to compel the other co-owners to contribute
to the expenses of preservation of the thing or right owned in common and to the taxes.
Any one of the latter may exempt himself from this obligation by renouncing so much of
his undivided interest as may be equivalent to his share of the expenses and taxes. No
such waiver shall be made if it is prejudicial to the co-ownership. (395a)

Article 489. Repairs for preservation may be made at the will of one of the co-owners, but
he must, if practicable, first notify his co-owners of the necessity for such repairs.
Expenses to improve or embellish the thing shall be decided upon by a majority as
determined in Article 492. (n)

Article 490. Whenever the different stories of a house belong to different owners, if the
titles of ownership do not specify the terms under which they should contribute to the
necessary expenses and there exists no agreement on the subject, the following rules
shall be observed:
(1) The main and party walls, the roof and the other things used in common,
shall be preserved at the expense of all the owners in proportion to the
value of the story belonging to each;
 (2) Each owner shall bear the cost of maintaining the floor of his story; the
floor of the entrance, front door, common yard, and sanitary works common
to all, shall be maintained at the expense of all the owners pro rata;
(3) The stairs from the entrance to the first story shall be maintained at the
expense of all the owners pro rata, with the exception of the owner of the
ground floor; the stairs from the first to the second story shall be preserved
at the expense of all, except the owner of the ground floor and the owner of
the first story; and so on successively. (396)

• Share in Benefits and Charges

o The share of the co-owner in the thing owned in common is determined by
their agreement and, in default thereof, such share shall be presumed to be
equal. As to share in benefits and charges, the same should be in proportion
to his interest in the co-ownership. Any stipulation to the contrary is void.

• Right to Demand Contribution

o A co-owner has the right to compel the other co-owners to contribute to the
expenses of preservation of the property owned in common and to the
taxes.
o If a co-owner does not want to contribute, he may renounce so much of his
undivided interest as may be equivalent to his share of the expenses and
taxes. Such waiver is not allowed if the same is prejudicial to the co-
ownership.
o A co-owner who redeems the property in its entirety does not make him the
owner of all of it. The property remains in a condition of co-ownership, but
the one who redeemed has the right to be reimbursed for the redemption
price and until reimbursed, holds a lien upon the subject property for the
amount due.

• Repairs for Preservation

o Any repair for preservation of the co-owned property may be made at will by
one of the co-owners. Hence, consent by the other co-owners is not
required.
o Expenses for improvement or embellishment must be decided, however, by
the majority.

3. Redemption

• General Rule
o A co-owner of a thing may exercise the right of redemption in case the
shares of all the other-co-owners or of any of them, are sold to a third
person. If the price of the alienation is grossly excessive, the redemptioner
shall pay only a reasonable one.

• Requisites for the Exercise of Legal Redemption

o There must be a co-ownership;
o One of the co-owners sold his right to a stranger;
o The sale was made before the partition of the co-owned property;
o The right of redemption must be exercised by one or more co-owners within
a period of thirty days to be counted from the time that he or they were
notified in writing by the vendee or by the co-owner vendor; and
o The vendee must be reimbursed for the price of the sale.

4. Partition

• Extinguishment of Co-ownership
 o Causes
▪ Merger – when one person acquires all the interest of the co-
ownership.
▪ Prescription – when the thing or a right in favor of third persons or a
co-owner prescribes
▪ Destruction of thing or loss of right
▪ Partition
o Redemption by a co-owner of the property in its totality during the period of
redemption does not vest in him ownership over it since redemption is not a
mode of terminating a co-ownership. Such redemption will simply entitle him
to collect reimbursement from the remaining co-owners pursuant to the
provisions of Article 488 of the NCC, considering that redemption entails a
necessary expense; and until reimbursed, he holds a lien upon the subject
property for the amount due.
o However, when the redemption is made after the period of redemption, it is
actually a repurchase. Hence, the erstwhile co-owner who purchased the
property will become exclusive owner thereof.
o Prescription
▪ Rule
• A co-owner cannot acquire by prescription the share of the
other co-owners absent a clear repudiation of co-ownership
duly communicated to the other co-owners. The reason is that
the possession of a co-owner is like that of a trustee and shall
not be regarded as adverse to the other co-owners but in fact
as beneficial to all of them.
▪ When Prescription Lies
• If the co-owner actually holding the property asserts exclusive
dominion over it against the other co-owners, the corollary of
the rule is that he can acquire sole title to it after tire lapse of
the prescribed prescriptive period. Thus, prescription, as a
mode of terminating a relation of co-ownership, must have
been preceded by repudiation of the co-ownership; and absent
a clear repudiation of the co-ownership, a co-owner cannot
acquire by prescription the share of the other co-owners.
▪ Requisites of Effective Repudiation
• The co-owner has performed unequivocal acts of repudiation
amounting to an ouster of the cestui que7 trust or the other co-
owners;
• Such positive acts of repudiation have been made known to the
cestui que trust or the other co-owners;
• The evidence thereon must be clear and convincing; and
• He has been in possession through open, continuous, exclusive,
and notorious possession of the property for the period required
by law.
▪ Filing by a trustee of an action in court against the trustor to quiet
title to property, or for recovery of ownership thereof, held in
possession by the former, may constitute an act of repudiation of the
trust reposed on him by the latter. Likewise, the issuance of the
certificate of title solely in the name of the co-owner possessor would
constitute an open and clear repudiation of the co-ownership, unless
he allowed the other co-owner to build her house on the subject
property without any opposition from him. Such act constitutes an
implied recognition of the co-ownership, which in turn negates the
presence of a clear notice of repudiation to the ousted co-owner.

7
The person for whose benefit (use) the trust is created.
 ▪ However, the sole fact of a co-owner declaring the land in question in
his name for taxation purposes and paying the land taxes did not
constitute an unequivocal act of repudiation amounting to an ouster of
the other co-owner and could not constitute adverse possession as
basis for title by prescription.
o Partition
▪ Concept
• Partition is the separation, division, or assignment of a thing
held in common among those to whom it may belong.
• Every act which is intended to put an end to indivision among
co-heirs and legatees or devisees is deemed to be a partition,
although it should purport to be a sale, an exchange, a
compromise, or any other transaction.
▪ Rule
• A co-owner may demand at any time the partition of the thing
owned in common, insofar as his share is concerned. As a
consequence, an action to demand partition is imprescriptible
or cannot be barred by laches.
• In the event that there is a conflict between dismissal with
prejudice under Rule 17, Section 3 of the Rules of Court and
the right granted to co-owners to demand partition at any time
under Article 494 of the Civil Code, the latter must prevail. To
construe otherwise would diminish the substantive right of a
co-owner through the promulgation of procedural rules.
▪ When action no longer for partition
• As long as the co-ownership is recognized, an action to compel
partition will not prescribe and may be filed at any time against
the actual possessor by any of the other co-owners.
• From the moment one of the co-owners claims that he is the
absolute and exclusive owner of the properties and denies the
others any share therein, the question involved is no longer one
of partition, but of ownership. In such case, the
imprescriptibility of the action for partition can no longer be
invoked or applied when one of the co-owners has adversely
possessed the property as exclusive owner for a period
sufficient to vest ownership by prescription.
▪ Prescriptive period
• If by acquisitive prescription, a co-owner acquires ownership of
real property after 30 years; or
• If by extinctive prescription (statute of limitations), it has been
held that the action for reconveyance by a co-owner of his
share prescribes in ten (10) years, the action being based on
an implied or constructive trust, counted from the date of the
issuance of the title in the name of the co-owner possessor.
o When partition not allowed
▪ By agreement
• An agreement among the owners to keep the thing undivided is
valid. However, such agreement must not exceed 10 years;
otherwise, the agreement shall be void but only as to the
period beyond such maximum. However, the period of 10 years
may be extended by a new agreement.
▪ By will of grantor
• A donor or testator may prohibit partition for a period not
exceeding 20 years.
▪ By law
• An example of such is a partition of a family home unless there
 is a compelling reason to do so.
▪ When partition would render the thing unserviceable for the use for
which it is intended.
▪ Whenever the thing is essentially indivisible and the co-owners cannot
agree that it be allotted to one of them who shall indemnify the
others, it shall be sold, and its proceeds distributed. This is resorted
to when:
• The right to partition the property is invoked by any of the co-
owners, but because of the nature of the property it cannot be
subdivided, or its subdivision would prejudice the interests of
the co-owners, and
• The co-owners are not in agreement as to who among them
shall be allotted or assigned the entire property upon proper
reimbursement of the co-owners.

E. Possession

Article 523. Possession is the holding of a thing or the enjoyment of a right.(430a)

• General Concepts
o Definition
▪ Possession is the holding of a thing or the enjoyment of a right.
o Object
▪ Only things and rights which are susceptible of being appropriated
may be the object of possession.
o Requisites
▪ In order that there be possession, two things are paramount:
• There must be occupancy, apprehension, or taking; and
• There must be intent to possess (animus possidendi).

• Possession in One’s Own Name or In That of Another

o It is not necessary that the owner or holder of the thing exercises personally
the rights of possession. Rights of possession may be exercised through
agents. Hence, possession may be exercised in one’s own name or in that of
another.
o Possession in another’s name is possession by a person without any right
of his own and one which is strictly of an agent; while possession in one’s
own name embraces all kinds of possession anchored on a juridical title or
right, e.g., possession by the owner himself, possession by a lessee, or a
mere usufructuary.

• Acquisition and Loss of Possession

o Modes of Acquisition
▪ (1) By material occupation – is applicable only to corporeal objects,
including traditio brevi manu8 and traditio constitutum possessorium9;
▪ By exercise of right – it is applicable to acquisition of possession over
rights.
▪ By subjecting the thing or right to the action of our will – it does not
involve material apprehension, but connotes a degree of control
sufficient to subject the thing to the action of one’s will, including
traditio simbolica10 and traditio longa manu11; and

8
Traditio brevi manu or “delivery with the shorthand” refers to the act of a person, to whom an item is transferred, who is
already in possession of the item but not as the owner of the item.
9
It is the change in intention of one having legal possession of real or personal property whereby the original possessor of
the property remains in control but transfers the legal possession to another.
10
Traditio symbolica is by delivery of a symbol representing the thing which is delivered, such as the key to a warehouse.
 ▪ By proper acts and legal formalities – any juridical act by which
possession is acquired or to which the law gives the force of acts of
possession, such as donations, succession, execution, and registration
of public instruments, inscription of possessory information titles, and
the like.
o Doctrine of Constructive Possession
▪ Concept
• The possession and cultivation of a portion of a tract under
claim of ownership of all is a constructive possession of all if the
remainder is not in the adverse possession of another.
▪ Requisites for Application
• The alleged possessor must be in actual possession of a portion
or part of the property;
• He is claiming ownership of the whole area;
• The remainder of the area must not be in the adverse
possession of another person; and
• The area claimed must be reasonable.
o When possession not acquired
▪ If acquired through force or intimidation, as long as there is a
possessor who objects thereto;
▪ Acts which are merely tolerated; and
▪ Acts which are executed clandestinely and without the knowledge of
the possessor of a thing.
o Conflict in possession de facto
▪ Present possessor shall be preferred;
▪ If there are two possessors, the one longer in possession is preferred;
▪ If the dates of possession are the same, the one who presents a title;
and
▪ If all the foregoing conditions are equal, the thing shall be placed in
judicial deposit pending determination of its possession or ownership
through proper proceedings.
o Modes of losing possession
▪ By abandonment, which requires two requisites:
• The spes recuperandi (hope of recovery or recapture) must be
gone; and
• The animus revertendi (intent to recover) must be finally given
up;
▪ By assignment;
▪ By destruction or loss of the thing; and
▪ By possession of another – if the possession of another lasts for more
than one year, only possession de facto is lost but not the real right of
possession (possession de jure), which is not lost until after the lapse
of 10 years.

1. Possession in the Concept of a Holder

Article 525. The possession of things or rights may be had in one of two concepts: either
in the concept of owner, or in that of the holder of the thing or right to keep or enjoy it,
the ownership pertaining to another person. (432)

• Concept
o A possessor in the concept of holder acknowledges in another a superior
right which he believes to be ownership, whether his belief be right or

11
Traditio longa manu or “delivery with the longhand” refers to a species of delivery which takes place where
the transferor places the article in the hands of the transferee, or, on his order, delivers it at his house, such as personally
giving an umbrella to your buyer.
 wrong.

2. Possession in the Concept of an Owner

Article 525. The possession of things or rights may be had in one of two concepts: either
in the concept of owner, or in that of the holder of the thing or right to keep or enjoy it,
the ownership pertaining to another person. (432)

Article 541. A possessor in the concept of owner has in his favor the legal presumption
that he possesses with a just title and he cannot be obliged to show or prove it. (448a)

• Concept
o A possessor in the concept of an owner may be the owner himself or one
who claims to be so, provided he does not acknowledge in another a
superior right.
• Effects of possessor in concept of owner
o It raises a disputable presumption of ownership;
o It creates a disputable presumption that the possessor has just title, which
he cannot be obliged to show; and
o It may ripen into ownership thru acquisitive prescription upon compliance
with the other requisites mentioned in Article 1118 of the NCC.

3. Relevance of Good Faith and Bad Faith

• Concept
o A possessor is considered in good faith if he is not aware that there exists in
his title or mode of acquisition any flaw which invalidates it.
o On the other hand, a possessor in bad faith is one in possession of property
knowing that his title thereto is defective.
o Thus, a possessor by mere tolerance is not a possessor in good faith. One
whose interest is merely that of a holder, such as a mere tenant, agent, or
usufructuary, is not qualified to become a possessor in good faith.
• Presumption of Good Faith
o Good faith is always presumed and continues to subsist until facts exist
which show that the possessor is already aware that he wrongfully or
improperly possesses the thing.
o Whatever may be the cause or the fact from which it can be deduced that
the possessor has knowledge of the defects of his title or mode of
acquisition, it must be considered sufficient to show bad faith.
• Effects upon fruits already received by possessor
o A possessor in good faith is entitled to the fruits received by him before his
possession is legally interrupted; while a possessor in bad faith has the
obligation to reimburse the legitimate possessor for everything that he may
have received and those which the legitimate possessor could have received.
o Whether the possessor is in good faith or in bad faith, he is entitled to
recover from the legitimate possessor the expenses he incurred in the
production, gathering, and preservation of the fruits upon return of the
same.
• Effects upon fruits still pending
o If the possessor was in good faith, the possessor and the owner shall have a
right to a part of the net harvest and each shall divide the expenses of
cultivation, both in proportion to the time of their respective possessions.
o If the owner does not want to pay his share of the expenses, he may, at his
option, allow the possessor to finish the cultivation and gathering of the
growing fruits (in lieu of his part of such expenses), in which case, the
owner will not have any share in the harvest.
 o If the owner chooses this option and the possessor refuses to accept the
concession "for any reason whatever," the latter shall lose the right to be
indemnified in any other manner.
o If he was a possessor in bad faith, he will lose the fruits in favor of the
legitimate possessor without the right to be indemnified. However, he is still
entitled to recover the necessary expenses he incurred or the preservation
of the land.
• Effects upon necessary expenses
o Necessary expenses are those incurred not for improvement but for the
preservation of the thing and are intended not to increase the value thereof
but to prevent it from becoming useless.
o Whether in good faith or in bad faith, a possessor is entitled to the refund of
necessary expenses incurred by him. The only difference is that only a
possessor in good faith is entitled to retain the thing until he has been
reimbursed therefor.
• Effects upon useful expenses
o Useful expenses are those incurred to give greater utility or productivity to
the property. These expenses increase the value of the thing and results in
improvements, called useful improvements.
o Only the possessor in good faith is entitled to the refund of useful expenses.
In making the refund, the owner (or the person who has defeated the
possessor in good faith in the possession) has the option:
▪ To refund the amount of the expenses; or
▪ To pay the increase in value which the thing may have acquired by
reason of the useful expenses.
o The possessor in good faith may, in lieu of reimbursement for the useful
expenses, remove the useful improvements but subject to compliance with
the following requisites:
▪ The removal can be done without damage to the principal thing; and
▪ The owner does not choose to appropriate the improvements by
refunding to the possessor in good faith the useful expenses in the
manner discussed above.
o A possessor in bad faith, on the other hand, has no right in relation to the
useful expenses that he incurred. He is not entitled to its refund, and he has
no right to remove the useful improvements.
• Effects upon expenses for pure luxury
o Whether in good faith or in bad faith, a possessor is not entitled to a refund
of the expenses incurred by him for pure luxury or mere pleasure, called
“ornamental expenses”.
o Both kinds of possessors are entitled, however, to a right of removal of the
ornaments with which they embellished the principal thing, provided that
such principal will suffer no injury.
o If the owner, however, exercises his option to retain possession of the
ornaments by reimbursing the value thereof to the possessor, the latter’s
right of removal may not be exercised.
o If the possessor is in good faith, the extent of the refund shall be the actual
amount expended.
o If the possessor is in bad faith, on the other hand, the extent of the refund
shall be limited to the value of the ornament at the time the owner enters
into the possession of the property, irrespective of the amount actually
spent by the possessor in bad faith.

4. Rules for Movables

• Doctrine of Irrevindicability of Movables

o Possession of movables acquired in good faith does not only create a
 presumption of ownership, but it is already equivalent to title.
o For possession of movables to be considered equivalent to title, the following
requisites must be present:
▪ The movable property must be acquired in good faith; and
▪ The possession must be in the concept of owner. As a consequence,
possession of the movable cannot anymore be recovered from the
present possessor.
• Exceptions to Irrevindicability
o The exceptions are:
▪ When the owner has lost the thing, or
▪ When he has been unlawfully deprived thereof.
o If the owner has lost a movable, or if he has been unlawfully deprived
thereof, he has a right to recover it, not only from the finder, thief, or
robber, but also from third persons who may have acquired it in good faith
from such finder, thief, or robber, without need of reimbursing the price paid
therefor. However, if the third person acquired it in good faith at a public
sale, the owner cannot obtain its return without reimbursing the price paid
therefor.
o The term “unlawful deprivation” in Article 559 is not limited to cases of theft
or robbery (or unlawful taking) but includes cases where there has been
abuse of confidence. But the term “unlawful deprivation” may not be unduly
stretched to cover situations where there is a contract of purchase and sale
between two persons and the buyer therein fails to pay the purchase price
but nonetheless alienates the thing sold in favor of the present possessor
who acted in good faith.
• Possession over Animals
o Kinds of Animals
▪ Wild Animals — those which are found in their natural freedom, such
as wild boars and horses roaming the forest.
▪ Domesticated or Tamed Animals – those which were formerly wild,
but which have been subdued and retained the habit of returning to
the premises of the possessor or owner.
▪ Domestic animals – those which are born or reared under the control
and care of man.
o When possession over animals is lost
▪ As to wild animals – they are considered possessed only while they
are under one’s control, and once they recover their natural freedom,
they cease to be under one’s possession.
▪ As to domesticated or tamed animals – they will be regarded as such
so long as they retain the habit of returning to the premises of the
possessor and possession thereof is not immediately lost by the
simple fact that the animals are no longer under the control of the
possessor. Under the law, the possessor or owner of domesticated
animals has a period of 20 days counted from the occupation by
another person within which to reclaim them. After the expiration of
this period, the animals can no longer be recovered from its present
possessor.
▪ As to domestic animals – they are considered personal property and
the rules on personal property will apply.

F. Usufruct

Article 562. 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.
 • Definition
o It is the right to enjoy the property of another temporarily, including both
the jus utendi and the jus fruendi, with the owner retaining the jus
disponendi or the power to alienate the same.

• Object of Usufruct
o It may be constituted over a corporeal object or rights. With respect to
rights, it may be the object of usufruct provided that:
▪ It is not strictly personal;
▪ It is not intransmissible; and
▪ It has its own independent existence.
o A servitude cannot be the object of usufruct because it has no existence
independent of the tenements.

• Characteristics
o It entitles the holder of the usufruct (called the “usufructuary”) to exercise
the rights to enjoy the property (jus utendi) and to receive the fruits thereof
(jus fruendi);
o It is a right enjoyed over another’s property, a jus in re aliena;
o It is a real right, which may be exercised over a real or personal property;
o It is of a temporary character since as a rule, the right is extinguished upon
the expiration of the period for which it was constituted or upon the death of
the usufructuary; and
o It ordinarily obliges the usufructuary to preserve the form and substance of
the thing subject to usufruct, except in the following instances where there
is no such obligation:
▪ When the law or the title creating the usufruct provides that the
usufructuary is not so obliged;
▪ When the usufruct includes things which, without being consumed,
gradually deteriorate through wear and tear; and
▪ When the usufruct includes things which cannot be used without being
consumed.

Q: What is easement? Distinguish easement from usufruct. (1995 Bar)

A: An easement or servitude is an encumbrance imposed upon an immovable for the

benefit of another immovable belonging to a different owner (Art. 613, NCC). 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
NCC). An easement or servitude is an encumbrance imposed upon an immovable for the
benefit of another immovable belonging to a different owner (Art. 613, NCC).

Q: Can there be:

a) An easement over a usufruct?
b) A usufruct over an easement?
c) An easement over another easement? Explain. (1995 Bar)

A:

a) There can be no easement over a usufruct. Since an easement may be constituted

only on a corporeal immovable property, no easement may be constituted on a usufruct
which is not a corporeal right.
b) There can be no usufruct over an easement. While a usufruct may be created over a
right, such right must have an existence of its own independent of the property. A
servitude cannot be the object of a usufruct because it has no existence independent of
the property to which it attaches.
c) There can be no easement over another easement for the same reason as in (a). An
easement, although it is a real right over an immovable, is not a corporeal right. There is
a Roman maxim which says that: There can be no servitude over another servitude.

1. Rights and Obligations of Usufructuary

• Rights of Usufructuary
o Rights Included
▪ Usufruct includes the right to enjoy the property of another
temporarily, including both the jus utendi and the jus fruendi. Hence,
he may lease the object held in usufruct which the owner must
respect so long as the usufruct exists.
▪ However, the owner of the property retains the jus disponendi or the
power to alienate, encumber, transform, and even destroy the same.
Hence, the owner may:
• Validly mortgage the property in favor of a third person;
• May impose, without the consent of the usufructuary, a
voluntary easement upon the tenement or piece of land held in
usufruct; and
• May construct any works and make any improvements of which
the immovable in usufruct is susceptible or make new plantings
thereof if it be rural. He may not, however, exercise such right
in a manner that will have an adverse effect upon the
usufructuary.

o Extent of Usufructuary Rights

Article 571. The usufructuary shall have the right to enjoy any increase which the thing in
usufruct may acquire through accession, the servitudes established in its favor, and, in
general, all the benefits inherent therein.

▪ The right of enjoyment of the usufructuary extends to all the

accessions which the property held in usufruct may acquire, to the
servitudes or easements established in favor of such property, as well
as to all benefits inherent in the property.
▪ If the usufruct is over a woodland, the usufructuary may cut trees on
the land as the owner was in the habit of doing or in accordance with
the custom of the place, as to the manner, amount, and season.
▪ In case of usufruct over fruit-bearing trees and shrubs, the
usufructuary has the full and unfettered right to gather the fruits from
the tree but he does not have the right to cut trees. However, he may
make use of the dead trunks, as well as those uprooted by accident,
but with the corresponding obligation to replace them with new
plants.
▪ If the usufruct is over an action to recover property, be it real or
personal, the usufructuary has the right to bring the action, and to
oblige the owner thereof to give him the authority for such purpose
and to furnish him whatever proof the owner may have.
▪ As to the fruits, the usufructuary is entitled to all the natural,
industrial, and civil fruits of the property in usufruct. Natural or
industrial fruits which are still pending or ungathered at the time that
the usufruct begins belongs to the usufructuary, and he has no
obligation to refund to the owner of any expenses incurred by the
latter in connection with the cultivation and production of such fruits.
▪ With respect to natural or industrial fruits which are still
 pending or ungathered at the time the usufruct terminates, the
same shall belong to the owner of the property but the latter shall be
obliged to reimburse the usufructuary the ordinary expenses of
cultivation, for seeds and other similar expenses incurred by the
usufructuary.

o Consequence of Usufructuary’s Right of Possession

▪ A usufructuary may lease the object held in usufruct. The owner of
the property must respect the lease entered into by the usufructuary
so long as the usufruct exists.
▪ However, such lease must be co-terminus with the life of the usufruct
and shall terminate upon the expiration of the same, the only
exception being the lease of rural lands which shall subsist during the
agricultural year despite the termination of the usufruct.
▪ The usufructuary is deemed a “lawful possessor” for purposes of
Article 429 of the NCC.

o Right to Improvements Introduced

▪ He has no right to reimbursement, for if the rule were otherwise, then
the usufructuary might improve the owner out of his property. He
may, however, at his option:
• Remove the improvements if such removal is possible without
damage to the property; or
• He may set-off the improvements against any damage he has
caused to the property held in usufruct.
▪ The right of the usufructuary to remove the improvements is
potestative with him. He cannot be prevented from choosing it or he
may not be compelled to do it.

o Right Over the Fruits

▪ The usufructuary is entitled to all natural, industrial, and civil.
▪ If there is a tendency to diminish its substance, such as minerals from
mines, they are not fruits but are CAPITAL. Hence, they do not pertain
to usufruct EXCEPT if devoted for exploitation even before constitution
of usufructuary.
▪ Rules
• Pending natural and industrial fruits at the time of
commencement belong to the usufructuary, and he has no
obligation to refund the owner any expenses incurred.
• Pending at the time of termination, they belong to the owner of
the property, but he shall reimburse the usufructuary the
ordinary expenses of cultivation.
• Civil Fruits
o They are deemed to accrue daily.
o They shall belong to the usufructuary in proportion to the
time the usufruct may last.
o With respect to periodic pensions or interest, they shall
be distributed as civil fruits.

o Right to Alienate Usufructuary Right

▪ Rule
• A usufructuary may alienate or encumber his right of usufruct
without the consent of the owner of the property whether by
onerous or gratuitous title. All such contracts, however, shall
terminate upon the expiration of the usufruct.
▪ Effect
 • The transfer or alienation of the right of usufruct does not
result in the termination of the relation between the
usufructuary and the naked owner. Hence, the former shall be
personally liable to the latter for any damage to the thing in
usufruct caused by the fault or negligence of the transferee or
lessee.

▪ Usufructuary rights which may not be alienated

• The legal usufruct of the parents over the fruits and income of
the property of unemancipated children pursuant to Article 226
of the Family Code, since the same is to be devoted primarily to
the child’s support and secondarily to the collective needs of
the family;
• The usufruct granted to a usufructuary in consideration of his
person to last during his lifetime, since the usufruct is a matter
of personal quality; and
• When the enjoyment of the property held in usufruct is
acquired through caucion juratoria12, inasmuch as the basis is
the need of the usufructuary.
o Right to Useful and Ornamental Improvements
▪ Usufructuary has the right to introduce improvements on the property
held in usufruct.
▪ The usufructuary does not have the right to reimburse for the
improvement. He has the option to:
• Remove the improvements if without damage; or
• Set-off improvements against any damage he has caused his to
usufruct.

Q: Bartolome constructed a chapel on the land of Eric. What are Batolome’s rights if he
were a usufructuary of the land? (1996 Bar)

A: Bartolome has the right to remove the improvement if it is possible to do so without

causing damage to the property (Art. 579, NCC). He may also set off the improvement
against any damages which the property held in usufruct suffered because of his act or
the acts of his assignee (Art. 580, NCC).

• Obligations of Usufructuary
o At Commencement of Usufruct
▪ Obligations
• To make an inventory of all the property covered by the right of
usufruct; and
• To give security or bond.
▪ Effect of Failure to Comply
• It will only prevent usufructuary from exercising his right of
usufruct, but it will not result in the termination of the usufruct.
The owner may, if he so desires, retain in his possession the
property in usufruct as its administrator.
• If the owner prefers not to retain possession of the property, he
may demand instead:
o That the immovables be placed under administration;
o That the movables be sold, and its proceeds be invested
in safe securities;

12
Caucion Juratoria – a promise under oath made in court by the UF who has not given security
for the purpose of acquiring the use of the following: (1) furniture necessary for his use; (2)
dwelling house; and (3) implements, tools, and other movable property necessary for industry.
 o That the public bonds, instruments of credit payable to
order or bearer be converted into registered certificates
or deposited in a bank or public institution; or
o That the capital or sums in cash be invested in safe
securities.
▪ Effect of Compliance
• After compliance with the foregoing obligations, the effects
thereof shall retroact, however, to the day of the constitution of
the usufruct.
▪ Exemption from Obligation to Give Security
• When the donor has reserved the usufruct of the property
donated; and
• In case of legal usufruct of the parents over the property of
their minor children living in their custody and under their
parental authority, except when:
o The parents contract a second marriage; or
o When the market value of the property or the annual
income of the child exceeds ₱50,000.
▪ When usufructuary may be relieved of obligation to give security:
• When no one will be injured thereby; and
• When the enjoyment of the property subject of the usufruct is
to be acquired through caution juratoria. In this kind of
usufruct, the usufructuary has no right to alienate his
usufructuary right or lease the same for that would mean that
he does not need the house or the furniture or the implements.
• Caution juratoria refers to the promise under oath made in
court by the usufructuary who has not given security for the
purpose of acquiring the use of the following:
o Furniture necessary for his use;
o Dwelling house; or
o Implements, tools, and other movable property
necessary for an industry or vocation in which he is
engaged.
o During Life of Usufruct
▪ In General
• The obligation to preserve its form and substance;
• In the performance of the foregoing obligation, he is required to
observe the diligence of a good father of a family; and
• To further carry out the foregoing obligation, the law
specifically tasks the usufructuary:
o To make ordinary repairs on the property held in
usufruct;
o To pay the annual charges and taxes which are imposed
on the fruits of the property held in usufruct;
o To notify the owner of the need of urgent extraordinary
repairs;
o To pay the expenses, costs, and liabilities for suits
involving the usufruct; and
o To notify the owner of any act of a third person that may
be prejudicial to the rights of the owner.
▪ Ordinary and Extraordinary Repairs
• It is the obligation of the usufructuary to make the ordinary
repairs needed by the thing given in usufruct; while
extraordinary repairs, on the other hand, shall be made at the
expense of the owner.
• Repair is “ordinary” if two requisites are satisfied:
 o It is required by the wear and tear due to the natural use
of the thing; and
o It is indispensable for the preservation of the thing.
• If both requisites are not satisfied, the repair is “extraordinary.”
• If the need for extraordinary repairs is urgent and
indispensable for the preservation of the thing, the law imposes
an obligation upon the usufructuary to notify the owner of the
need of such repairs.
• If after such notice, the owner still fails to make the
extraordinary repairs, the usufructuary is then authorized to
make them, in which case, he acquires the following rights in
connection therewith:
o The right to demand of the owner, at the termination of
the usufruct, the increase in value which the immovable
may have acquired by reason of the repair; and
o The right to retain the property held in usufruct pending
the reimbursement by the owner of such expenses.
▪ Payment of Annual Charges and Taxes
• The payment of annual charges and taxes and of those
considered as a lien on the fruits, shall be at the expense of the
usufructuary; while taxes imposed directly on the capital shall
be at the expense of the owner, such as real estate taxes.
• If the taxes directly imposed on the capital are advanced by the
usufructuary, he is entitled to recover the same from the owner
at the termination of the usufruct, with the right to retain the
property held in usufruct until he is reimbursed.
▪ Obligation to Notify Owner of Prejudicial Acts
• The usufructuary is obliged to notify the owner of any act of a
third person, of which he may have knowledge, which may be
prejudicial to the “rights of ownership”.
• If he fails in this obligation, he shall be liable to the owner for
damages, as if such act had been caused through his own fault.
o At Termination of Usufruct
▪ Return of Thing
• Upon the termination of the usufruct, he is obliged to deliver
the same to the owner unless the usufructuary is entitled to
exercise the right to retain the property.
▪ Right of Retention
• Upon the termination of the usufruct, the usufructuary is
entitled to a right of retention until payment of the following:
o Sums that may have been advanced by the usufructuary
for payment of taxes which are imposed directly on the
capital; and
o The increase in the value which the immovable acquired
by reason of the extraordinary repairs paid for by the
usufructuary.

2. Classes of Usufruct

Article 563. Usufruct is constituted by law, by the will of private persons expressed in
acts inter vivos or in a last will and testament, and by prescription.

• As to Manner of Creation
o Legal Usufruct – that which is constituted by law, such as those existing in
favor of parents over the property of their minor children living in their
custody and under their parental authority.
 o Voluntary Usufruct – that which is constituted by the will of private persons
expressed in acts inter vivos, such as contracts and donations, or expressed
in a last will and testament.
o Mixed Usufruct – that which is constituted by prescription.

• As to Subject Matter
o Proper or Normal Usufruct – when it is constituted over a non-consumable
thing.
o Improper or Abnormal Usufruct – when it is constituted over a consumable
thing, or over a non-consumable which gradually deteriorates.
▪ When constituted over a consumable
• There is no obligation to return the very same thing, hence,
there is no obligation to preserve the form and substance of the
thing.
• The obligation of the usufructuary is:
o To deliver, at the termination of the usufruct, the value
of the thing, if the value has been appraised, and, if
there has been no appraisal, then the value of the things
at the termination of the usufruct; or
o To return the same quantity and quality as the thing
given him or pay their current price at the termination of
the usufruct.
▪ When constituted over a non-consumable which gradually deteriorates
through wear and tear
• The usufructuary may return it, at the expiration of the
usufruct, in the condition which it may be found without any
obligation to reimburse the owner for the deterioration of the
object, hence, there is no obligation of preserving the form and
the substance.
• If the thing, however, suffers deterioration by reason of the
usufructuary’s fraud or negligence, he shall be liable to the
owner for damages.

• Other Classifications
o Total or Partial Usufruct – a usufruct may be constituted on the whole
(“total”) or part (“partial”) of a thing.
o Simple and Multiple
▪ A usufruct may be constituted in favor of one person, in which case, it
is called a “simple usufruct”; or
▪ It may be constituted in favor of two or more persons, in which case,
it is called a “multiple usufruct”. It may either be:
• Simultaneous – all the persons in whose favor the usufruct is
constituted are to enjoy the usufruct at the same time.
• Successive – all the persons in whose favor the usufruct is
constituted are to enjoy the usufruct one after another.
o Pure, with a Condition or with a Period – a usufruct may be constituted from
or to a certain day (with a period), purely or conditionally.

3. Extinguishment of the Usufruct

• Causes of Extinguishment
o By the death of the usufructuary, unless a contrary intention clearly appears
▪ A usufruct is meant only as a lifetime grant.
o By expiration of the period for which it was constituted, or by fulfillment of
any resolutory condition provided in the title creating the usufruct
▪ In cases where the usufruct is granted for the time that may elapse
 before a third person attains a certain age, the usufruct shall subsist
for the number of years specified, even if the third person should die
before the period expires.
▪ For example, if “O” creates a usufruct over his property in favor of “U”
to last until the child of “U” (“C”), who is five years old, reaches the
age of 18 years old, the usufruct will continue for another eight years
even if “C” dies at the age of ten.
• Exception: When such usufruct has been expressly granted only
in consideration of the existence of the third person, the
usufruct is extinguished upon the latter’s death.
• In the foregoing example, if the usufruct was constituted by “O”
to help “U” pay for the support of “C,” the usufruct is
extinguished upon the death of the latter. However, a usufruct
is not extinguished by bad use of the thing held in usufruct.
o By merger of the usufruct and ownership in the same person
o By renunciation of the usufructuary
o By total loss of the thing in usufruct
▪ General Rule: A usufruct is also terminated upon the loss of the thing
held in usufruct.
▪ Exceptions:
• Usufruct over building and the building is destroyed
o The usufruct is not extinguished and the usufructuary
has the right to make use of the land and the materials.
o If the owner wishes to construct another building, he has
the right to occupy the land and to make use of the
materials in which case he shall be obliged to pay the
usufructuary, during the continuance of the usufruct, the
interest upon the sum equivalent to the value of the land
and materials.
• If property is expropriated for public use
o The owner has option to:
▪ Replace with another of the same value
▪ Pay legal interest for the whole value
o By the termination of the right of the person constituting the usufruct
o By prescription

• Effect of Bad Use

o Not extinguished.
o The owner may demand that the thing be delivered to him and pay annually
to the usufructuary the net proceeds of the same after deducting the
expenses and compensation for administration.

Q: On 1 January 1980, Minerva, the owner of a building, granted Petronila a usufruct

over the property until 01 June 1998 when Manuel, a son of Petronila, would have
reached his 30th birthday. Manuel, however, died on 1 June 1990 when he was only 26
years old. Minerva notified Petronila that the usufruct had been extinguished by the death
of Manuel and demanded that the latter vacate the premises and deliver the same to the
former. Petronila refused to vacate the place on the ground that the usufruct in her favor
would expire only on 1 June 1998 when Manuel would have reached his 30th birthday
and that the death of Manuel before his 30th birthday did not extinguish the usufruct.
Whose contention should be accepted? (1997 Bar)

A: Petronila's contention is correct. Under Article 606 of the Civil Code, a usufruct granted
for the time that may elapse before a third person reaches a certain age shall subsist for
the number of years specified even if the third person should die unless there is an
express stipulation in the contract that states otherwise. In the case at bar, there is no
express stipulation that the consideration for the usufruct is the existence of Petronila's
son. Thus, the general rule and not the exception should apply in this case.

G. Easements

Article 613. An easement or servitude is an encumbrance imposed upon an immovable

for the benefit of another immovable belonging to a different owner. The immovable in
favor of which the easement is established is called the dominant estate; that which is
subject thereto, the servient estate.

• Definition
o Easement is a real right on another’s property, corporeal and immovable,
whereby the owner of the latter must refrain from doing or allowing
somebody else to do or something to be done on his property, for the
benefit of another person or tenement.
o Servitude, on the other hand, is defined as an encumbrance imposed upon
an immovable for the benefit of another immovable belonging to a different
owner or for the benefit of a community, or of one or more persons to whom
the encumbered estate does not belong.

Easement Servitude
Right enjoyed by one Burden imposed upon the other
Active aspect of being a right Passive aspect of being an encumbrance
An encumbrance imposed upon an
immovable for the benefit of another

1. Characteristics

• It is a real right that falls upon the property itself and inseparable from the estate
to which it actively or passively belongs; therefore, it cannot be alienated or
mortgaged separately from the estate to which it forms part;
• The right consists of a limited use and enjoyment of the thing without possession
and gives rise to an action in rem in favor of the owner of the tenement of the
easement and against any possessor of the servient estate;
• The right is always enjoyed over an immovable property—the term “immovable" in
Article 613 of the NCC should be understood in its ordinary or vulgar connotation,
i.e., referring to those which are, by their nature, cannot be moved from one place
to another such as lands, buildings, and roads;
• It is a right which is enjoyed over another’s property, or jura in re aliena, hence:
o It is impossible to have an easement over one’s own property;
o If there is a merger in the same person of the ownership of the dominant
and servient estates, the easement is extinguished; and
o An acknowledgment of the easement is an admission that the property
belongs to another; and
• It is indivisible, even if the servient and dominant estates are divided between two
or more persons, the easement or the servitude continues to attach to the estates
originally affected.

2. Kinds of Easements

• As to Recipient of Benefit
o Real or Praedial Easement – where the easement is for the benefit of
another immovable belonging to a different owner, the immovable in favor
of which the easement is established is called “dominant estate”; that which
is subjected thereto, the “servient estate”.
o Personal Easement – where the easement is for the benefit of a community,
 or of one or more persons to whom the encumbered estate does not belong,
or the easement pertains to persons without a dominant estate.

• As to Source
o Legal or Compulsory Easement – those constituted by law which has for its
object either public use or the interest of private persons (e.g., easement
relating to waters, easement of right of way, easement of party wall,
easement of light and view, easement of drainage of buildings, easement of
distances, easement of nuisance, etc.).
o Voluntary Easement – those constituted by will or agreement of the parties,
but it is only the owner who can create a servitude that will bind the servient
estate.

• As to Manner of Exercise
o Continuous or Discontinuous
▪ Continuous Easement – if its use is, or may be, incessant without the
intervention of any act of man, like the easement of drainage or
easement of light and view.
▪ Discontinuous Easement – if it is used at intervals and it depends on
the act of man, like the easement of right of way.
o Apparent or Non-Apparent
▪ Apparent Easement – those which are made known and are
continually kept in view by external signs that reveal the use and
enjoyment of the same, such as a road (which reveals a right of way)
and a window (which evidences a right to light and view).
▪ Non-apparent Easement – those which show no external indication of
their existence, such as an easement of not building beyond a certain
height.
o Positive or Negative
▪ Positive Easement – that which imposes upon the owner of the
servient estate the obligation of allowing something to be done on his
property (servitutes in patendo), such as an easement of right of way.
▪ Negative Easement – that which prohibits the owner of the servient
estate from doing something on his property which he could lawfully
do if the easement did not exist (servilities in non faciendo), such as
an easement not to build higher (altius non tollendi).

• Characteristics of an Easement
o Inherence or Intransmissibility
▪ An easement is a real right which falls over the property itself. Hence,
it is but an accessory to the tenement of which it forms part.
▪ It cannot be alienated or mortgaged separately from the estate to
which it forms part.
o Indivisibility
▪ Easements or servitudes are indivisible. This is but a necessary
consequence of the principle of inseparability of the easement or
servitude from the estates to which it relates.
▪ As a consequence, even if the servient and dominant estates are
divided between two or more persons, the easement or servitude
continues to attach to the estates originally affected.

3. Modes of Acquiring Easements

• Modes of Acquisition
o Either by title or by prescription.
▪ "Title” refers to a juridical justification for the acquisition of a right,
 such as law, a will, a donation, or a contract.
• All kinds of easements, whether continuous or discontinuous,
apparent or non-apparent, positive or negative, can be acquired
by title.
▪ As to prescription, only continuous and apparent easements may be
acquired by virtue thereof.
• In other words, the easement must be both continuous and
apparent. For example, an easement of right of way is not
acquirable by prescription because it is always a discontinuous
easement. However, an easement of light and view can be
acquired through prescription counting from the time when the
owner of the dominant estate formally prohibits the adjoining
lot owner from blocking the view of a window located within the
dominant estate.

• Through Prescription
o Period: 10 Years
o When easement is positive
▪ Period is counted from the day on which the owner of the dominant
estate commenced to exercise it upon the servient estate.
o When easement is negative
▪ Period is counted from the day on which the owner of the dominant
estate forbade, by an instrument acknowledged before a notary
public, the owner of the servient estate, from executing an act which
would be lawful without the easement.
o To illustrate, if easement of light and view is made upon one’s own wall, the
easement, being a negative one, is acquired by prescription only after the
lapse of 10 years counted from the day on which the owner of the dominant
estate forbade, by an instrument acknowledged before a notary public, the
owner of the servient estate, from executing an act which would be lawful
without the easement. If made on the wall of the neighbor, being a positive
easement, the 10-year prescriptive period commences from the time of the
opening of the window.

• Easement by apparent sign or legal presumption

o Situation applicable
▪ Article 624 applies in situations wherein two or more estates were
previously owned by a singular owner, or even a single estate but
with two or more portions being owned by a singular owner. At that
time, or prior to the division of ownership, there exists between the
two estates an apparent sign of easement. Originally, therefore, there
is no true easement that exists as there is only one owner. Hence, at
the outset, no other owner is imposed with a burden.
▪ Subsequently, one estate or a portion of the estate is alienated in
favor of another person, wherein, in that estate or portion of the
estate, an apparent visible sign of an easement exists.
o When easement exists
▪ According to Article 624, there arises a title to an easement of light
and view, even in the absence of any formal act undertaken by the
owner of the dominant estate, if this apparent visible sign, such as the
existence of a door and windows, continues to remain and subsist,
unless, at the time the ownership of the two estates is divided:
• The contrary should be provided in the title of conveyance of
either of them, or
• The sign aforesaid should be removed before the execution of
the deed.
 o Requisites for application of Article 624:
▪ There exists an apparent sign of servitude between two estates;
▪ At the time of the establishment of such sign, the ownership of the
two estates resides in one person;
▪ The sign of the easement is established by the owner of both estates,
because the article will not apply when the easement is established by
a person different from the owner;
▪ That the ownership over the two estates is later on divided, either by
alienation or partition; and
▪ That at the time of division of ownership, nothing is stated in the
document of alienation or partition contrary to the easement nor is
the sign of the easement removed before the execution of the
document. Under Article 624, the existence of the apparent sign has
for all legal purposes the same character and effect as a title of
acquisition of the easement.
o Exception to Rule on Negative Easement
▪ Jurisprudence has recognized that Article 624 is an exception carved
out by the Civil Code that must be taken out of the coverage of the
general rule that an easement of light and view in the case of
windows opened in one’s own wall is a negative easement that may
only be acquired by prescription, tacked from a formal prohibition
relayed to the owner of the servient estate.

• Proof of Easement
o The absence of a document or proof showing the origin of an easement
which cannot be acquired by prescription may be cured by a deed of
recognition by the owner of the servient estate or by a final judgment.

• Legal or Compulsory Easement:

o Easement of drainage of waters:
▪ When easement exists
• When, based on the physical condition of two estates, waters
descend naturally and without the intervention of man from a
higher estate (the dominant estate) to a lower estate (the
servient estate).
▪ Obligation of lower estate
• To receive the waters which naturally and without the
intervention of man flow from the higher estates, as well as the
stones or earth which they carry with them.
▪ Obligations of higher estate
• The owner of the higher estate may not construct works which
will increase the burden or increase the natural flow.
o Easement for public use
▪ The banks of rivers and streams and the shores of the seas and lakes
throughout their entire length and within a zone of three meters in
urban areas, 20 meters in agricultural areas and 40 meters in forest
areas, along their margins, are subject to the easement of public use
in the interest of recreation, navigation, floatage, fishing, and salvage.
But no person shall be allowed to stay in this zone longer than what is
necessary for recreation, navigation, floatage, fishing, or salvage or to
build structures of any kind.
o Easement of Aqueduct
▪ When easement exists
• If a person wishes to use upon his estate any water of which he
can dispose, he shall have the right to make it flow through
intervening estates.
 ▪ Requisites
• That he who wants to establish the easement of aqueduct must
be able to prove that he can dispose of the water;
• He must also prove that it is sufficient for the use for which it is
intended;
• The proposed right of way is the most convenient and the least
onerous to third persons affected; and
• He must indemnify the owners of the servient estates
(intervening estates), as well as the owners of the lower
estates upon which the waters may filter or descend.
▪ Nature of Easement
• The easement of aqueduct shall be considered as continuous
and apparent, even though the flow of the water may not be
continuous, or its use depends upon the needs of the dominant
estate, or upon a schedule of alternate days or hours.556
Hence, an easement of aqueduct may be acquired either by
title or by prescription.
o Compulsory Easement of Right of Way
▪ Requisites
• That the dominant estate is surrounded by other immovables
and has no adequate outlet to a public highway (Art. 649(1));
• There must be payment of proper indemnity (Art. 649(1));
• That the isolation was not due to acts of the proprietor of the
dominant estate (Art. 649(4)); and
• That the right of way claimed is at the point least prejudicial to
the servient estate; and insofar as consistent with this rule,
where the distance from the dominant estate to a public
highway may be the shortest (Art. 650).
• In AMA Land, Inc. v. Wack Wack Residents Association, Inc.,
the Court cited an additional requisite: that the right of way
must be absolutely necessary for the normal enjoyment of the
dominant estate by its owner. However, in Reyes v. Ramos,™
the Court explained that while the aspect of necessity may not
be specifically included in the requisites for the grant of
compulsory easement under the Civil Code, however, this goes
into the question of “least prejudice.”

Q: David is the owner of the subdivision in Sta. Rosa, Laguna, without an access to the
highway. When he applied for a license to establish the subdivision, David represented
that he will purchase a rice field located between his land and the highway, and develop it
into an access road. But when the license was already granted, he did not bother to buy
the rice field, which remains unutilized until the present. Instead, he chose to connect his
subdivision with the neighboring subdivision of Nestor, which has an access to the
highway. Nestor allowed him to do this, pending negotiations on the compensation to be
paid. When they failed to arrive at an agreement, Nestor built a wall across the road
connecting with David's subdivision. David filed a complaint in court, for the
establishment of an easement of right of way through the subdivision of Nestor which he
claims to be the most adequate and practical outlet to the highway.

1) What are the requisites for the establishment of a compulsory easement of a right of
way?
2) Is David entitled to a right of way in this case? Why or why not? (1996 Bar)

A:

1) Art. 649, NCC. The owner, or any person who by virtue of a real right may cultivate or
use any immovable which is surrounded by other immovables pertaining to other persons
and without adequate outlet to a public highway, is entitled to demand a right of way
through the neighboring estates, after payment of the property indemnity.

Should this easement be established in such a manner that its use may be continuous for
all the needs of the dominant estate, establishing a permanent passage the indemnity
shall consist of the value of the land occupied and the amount of the damage caused to
the servient estate.

In case the right of way is limited to the necessary passage for the cultivation of the
estate surrounded by others and for the gathering of its crops through the servient estate
without a permanent way, the indemnity shall consist in the payment of the damage
caused by such encumbrance.

This easement is not compulsory if the isolation of the immovable is due to the
proprietor’s own acts.

The easement of right of way shall be established at the point least prejudicial to the
servient estate, and insofar as consistent with this rule, where the distance from the
dominant estate to a public highway may be the shortest (Art. 650, NCC; Vda. de
Baltazar v. CA, 245 SCRA 333).

2) No, David is not entitled to the right of way being claimed. The isolation of his
subdivision was due to his own act or omission because he did not develop into an access
road the rice field which he was supposed to purchase according to his own
representation when he applied for a license to establish the subdivision. (Floro v.
Llenado, 244 SCRA 713).

▪ Requirement of isolation
• An owner cannot, by his own act, isolate his property from a
public highway and then claim an easement of way through an
adjacent estate. However, the mere fact that the purchaser of a
parcel of land knew that the property he was buying was
already surrounded by other immovables, leaving him no
adequate ingress or egress to a public highway, cannot prevent
him from demanding later on a compulsory right of way.
▪ Requirement of inadequacy of outlet to public highway
• The convenience of the dominant estate has never been the
gauge for the grant of compulsory right of way. The true
standard for the grant of the legal right is adequacy.
• Hence, when there is already an existing adequate outlet from
the dominant estate to a public highway, even if the said outlet,
for one reason or another, be inconvenient, the need to open
up another servitude is entirely unjustified.
▪ At point least prejudicial
• The least prejudice criterion must prevail over the shortest
distance criterion. Least prejudice is about the suffering of the
servient estate, not of the dominant estate.
▪ Who may claim right of way
• It is the owner, or any person who by virtue of a real right may
cultivate or use any immovable surrounded by other
immovables pertaining to other persons, who is entitled to
demand a right of way through the neighboring estates.
• While a usufructuary is entitled to demand a right of way
pursuant to Article 649, a mere lessee does not enjoy the same
right. With respect to the latter, his action is against the lessor
 who is bound to maintain him in the enjoyment of the property.
▪ Effect of opening adequate outlet
• The opening of an adequate outlet to a highway can extinguish
only legal or compulsory easements, not voluntary easements.

Q: In 2005, Andres built a residential house on a lot whose only access to the national
highway was a pathway crossing Brando's property. Andres and others have been using
this pathway (pathway A) since 1980. In 2006, Brando fenced off his property, thereby
blocking Andres' access to the national highway. Andres demanded that part of the fence
be removed to maintain his old access route to the highway (pathway A), but Brando
refused, claiming that there was another available pathway (pathway B) for ingress and
egress to the highway. Andres countered that pathway B has defects, is circuitous, and is
extremely inconvenient to use. To settle their dispute, Andres and Brando hired Damian,
a geodetic and civil engineer, to survey and examine the two pathways and the
surrounding areas, and to determine the shortest and the least prejudicial way through
the servient estates. After the survey, the engineer concluded that pathway B is the
longer route and will need improvements and repairs, but will not significantly affect the
use of Brando's property. On the other hand, pathway A that had long been in place, is
the shorter route but would significantly affect the use of Brando's property. In light of
the engineer's findings and the circumstances of the case, resolve the parties' right of
way dispute. (1996, 2013 Bar)

A: Andres is not entitled to the easement of right of way for Pathway A. Pathway B must
be used. The owner of a dominant estate may validly obtain a compulsory right of way
only after he has established the existence of four requisites, to wit:

1. The (dominant) estate is surrounded by other immovables and is without

adequate outlet to a public highway;
2. After payment of the proper indemnity;
3. The isolation was not due to the proprietor's own acts; and
4. The right of way claimed is at a point least prejudicial to the servient estate, and
insofar as consistent with this rule, where the distance from the dominant estate to
the public highway may be the shortest (Art. 650).

However, the Supreme Court has consistently ruled that in case both criteria cannot be
complied with, the right of way shall be established at the point least prejudicial to the
servient estate.

The first and fourth requisites are not complied with. First, there is another available
outlet to the national highway (Pathway B). Second, the right of way obtained (Pathway
A) is not the least prejudicial to Brando's property as evidenced by the reports of the
geodetic and civil engineer.

When there is already an existing adequate outlet from the dominant estate to a public
highway, even if the said outlet, for one reason or another, be inconvenient, the need to
open up another servitude is entirely unjustified (Costabella Corp. v. CA, G.R. No. 80511,
January 25, 1991). The rule that the easement of right of way shall be established at the
point least prejudicial to the servient estate is controlling (Quimen v. CA, G.R. No.
112331, May 29, 1996).

Q: Emma bought a parcel of land from Equitable-PCI Bank, which acquired the same
from Felisa, the original owner. Thereafter, Emma discovered that Felisa had granted a
right of way over the land in favor of the land of Georgina, which had no outlet to a public
highway, but the easement was not annotated when the servient estate was registered
under the Torrens system. Emma then filed a complaint for cancellation of the right of
way, on the ground that it had been extinguished by such failure to annotate. How would
you decide the controversy? (2001 Bar)

A: The complaint for cancellation of easement of right of way must fail. The failure to
annotate the easement upon the title of the servient estate is not among the grounds for
extinguishing an easement under Article 631 of the NCC. Under Article 617, easements
are inseparable from the estate to which they actively or passively belong. Once it
attaches, it can only be extinguished under Article 631, and they exist even if they are
not stated or annotated as an encumbrance on the Torrens title of the servient estate (II
Tolentino 326, 1987 ed.).

Q: Franz was the owner of Lot E which was surrounded by four (4) lots one of which – Lot
C – he also owned. He promised Ava that if she bought Lot E, he would give her a right of
way in Lot C. Convinced, Ava bought Lot E and, as promised, Franz gave her a right of
way in Lot C. Ava cultivated Lot E and used the right of way granted by Franz. Ava later
found gainful employment abroad. On her return after more than 10 years, the right of
way was no longer available to her because Franz had in the meantime sold Lot C to Julia
who had it fenced.

A. Does Ava have a right to demand from Julia the activation of her right of way? Explain.
B. Assuming Ava opts to demand a right of way from any of the owners of Lots A, B, and
D, can she do that? Explain. (2010 Bar)

A:

A. Yes. Ava has the right to demand from Julia the activation of the right of way, for the
following reasons:

1. The easement of the right of way is a real right which attaches to, and is inseparable
from, the estate to which it belongs.
2. The sale of the property includes the easement or servitude, even if the deed of sale is
silent on the matter.
3. The vendee of the property in which a servitude or easement exists cannot close or put
obstructions thereon to prevent the dominant estate from using it.
4. Ava’s working abroad for more than ten (10) years should not be construed as non-
user, because it cannot be implied from the fact that she or those she left behind to
cultivate the lot no longer use the right of way.
5. Renunciation or waiver of an easement must be specific, clear, express and made in a
public instrument in accordance of Art. 1358 of the NCC.

B. Yes. Ava has the option to demand a right of way on any of the remaining lots of Franz
more so after Franz sold lot C to Julia. The essential elements of a legal right of way
under Art. 649 and 650 of the NCC are complied with.

Q: Don was the owner of an agricultural land with no access to a public road. He had
been passing through the land of Ernie with the latter's acquiescence for over 20 years.
Subsequently, Don subdivided his property into 20 residential lots and sold them to
different persons. Ernie blocked the pathway and refused to let the buyers pass through
his land.

a) Did Don acquire an easement of right of way? Explain.

b) What are the rights of the lot buyers, if any? Explain. (2005 Bar)

A:

a) Don did not acquire an easement of right of way. His passage through Ernie’s land was
by mere acquiescence or tolerance. He cannot claim to have acquired the easement of
right of way by prescription, because this easement is discontinuous although apparent.
Only continuous and apparent easements can be acquired by prescription of 10 years of
uninterrupted use and enjoyment.

b) Prior to the grant of an easement, the buyers of the dominant estate have no other
right than to compel grant of easement of right of way. Since the properties of the buyers
are surrounded by other immovable and has no adequate outlet to a public highway and
the isolation is not due to their acts, buyers may demand an easement of a right of way
provided proper indemnity is paid and the right of way demanded is the shortest and
least prejudicial to Ernie.

o Easement of Light and View

▪ Concept
• It is an easement whereby the dominant estate enjoys the right
to have free access to light, a little air, and a view overlooking
the adjoining estate, i.e., the servient estate.
• It has two components.
o The easement of light or jus luminum has the purpose of
admitting light and a little air, as in the case of small
windows, not more than 30 square centimeters, at the
height of the ceiling joists or immediately under the
ceiling.
o On the other hand, the easement of view or servid
timbre prospectus has the principal purpose of affording
view, as in the case of full or regular windows
overlooking the adjoining estate.
• As held by jurisprudence, the easement of light and view is
intrinsically intertwined with the easement of the servient
estate not to build higher or altius non tollendi. These two
necessarily go together “because an easement of light and view
requires that the owner of the servient estate shall not build to
a height that will obstruct the window.
▪ Kinds of Windows
• Regular or Full or Direct View Windows — those openings which
are made on a wall parallel or almost parallel to the line that
divides the estates, in such a way that the neighboring
tenement can be seen without putting out or turning the head.
• Restricted, or Oblique or Side View Windows – those openings
in a wall which form an angle to the boundary line, and
therefore of necessity requires in order to see the neighboring
tenement to thrust the head out of the opening and look to the
right or left.
▪ Observation of certain distances in direct views
• General Rule
o When a window or any similar opening affords a direct
view of an adjoining land, the distance between the wall
in which such opening is made and the border of the
adjoining land should be at least two meters.
• Exception
o In a situation wherein an easement is established or
recognized by title or prescription, affording the
dominant estate the right to have a direct view
overlooking the adjoining property, i.e., the servient
estate, as in the case of Article 624, the owner of the
servient estate cannot build thereon at less than a
distance of three meters, not two meters, from the
 property line.
▪ Distance Requirement in Oblique Views
• With respect to the side or oblique views upon or towards such
conterminous property, the law requires that the distance be 60
centimeters.
o Easement of Drainage of Buildings
▪ Concept
• The easement of drainage of buildings is the right to divert or
empty the rainwaters from one’s own roof or shed to the
neighbor’s estate, either drop by drop or through conduits.
▪ Requisites
• An easement of drainage may be demanded subject to
compliance with the following requisites:
o The yard or court of a house must be surrounded by
other houses (“the dominant estate”) and it is not
possible to give an outlet through the house itself to the
rain collected therefrom;
o The outlet to the water must be at the point of the
contiguous lands or tenements (“the servient estate”)
where its egress may be easiest;
o The conduit for the drainage must be established in such
manner as to cause the least damage to the servient
estate; and
o Proper indemnity must be paid to the owner of the
servient estate
o Intermediate Distances for Planting
▪ Required Distances
• That required by local ordinances;
• In default thereof, two meters from the dividing line of the
estate in case of tall trees and at least 50 centimeters in case of
shrubs or small trees.
▪ Right to Cut Branches
• If the branches of any tree should extend over a neighboring
estate, the owner of the latter does not have the right to cut
the branches extending on his property. Instead, he may
demand that the protruding branches be cut off by its owner.
• If his demand is not acted upon, he has to go to court to seek
authority for the cutting of the protruding branches.
▪ Right to Cut Roots
• With respect to the roots of a neighboring tree which
penetrated into the land of another, the owner of the latter may
himself cut off the roots found within his property.
o Easement of Lateral Subjacent Support
▪ Concept
• The right of lateral and subjacent support is the right to have
land supported by the adjoining land or the soil beneath.585
Support is lateral when the supported and the supporting lands
are divided by a vertical plane.
• Support is subjacent when the supported land is above, and the
supporting land is beneath it.
▪ Obligation of Servient Estate
• The law prohibits any excavation upon one’s land if the same
will deprive any adjacent land or building of sufficient lateral or
subjacent support.
• In addition, the law prohibits any stipulation or testamentary
provision allowing such kind of excavation. Any such stipulation
 or testamentary provision is expressly declared to be void.
▪ Annotation not Necessary
• An annotation of the existence of the subjacent and lateral
support is no longer necessary. It exists whether or not it is
annotated or registered in the registry of property. A judicial
recognition of the same already binds the property and the
owner of the same, including her successors-in-interest.
Otherwise, every adjoining landowner would come to court or
have the easement of subjacent and lateral support registered
in order for it to be recognized and respected.

• Voluntary Easement
o Concept
▪ A voluntary easement may only be constituted upon the will of the
owner of the servient estate.
o If Property Held in Usufruct
▪ The naked owner may impose any servitude on his property even
without the consent of the usufructuary.
o If Co-owned Property
▪ Unanimous consent of all co-owners is required in order to constitute
a voluntary easement upon the same.

4. Effects of Easement

• Rights and Obligations

o Effect on owner of servient estate
▪ An easement gives the holder of the easement an incorporeal interest
on the property but grants no title thereto.535 Hence, the owner of
the servient estate retains the ownership of the portion on which the
easement is established and may use the same in such a manner as
not to affect the exercise of the easement.
▪ However, he may not exercise some of his property rights for the
benefit of the person who was granted the easement of right of way;
hence, he may not enclose his property, nor obstruct or hinder the
free passage over the servient estate.
o Rights of owner of dominant estate
▪ Upon the establishment of an easement, all the rights necessary for
its use are considered granted.
▪ The owner of the dominant estate shall have the right to make any
works on the servient estate if the same be necessary for the use and
preservation of the servitude, subject to the following limitations:
• The work must be necessary for the use and preservation of the
servitude;
• The work is done at the expense of the owner of the dominant
estate;
• The work can be done without altering the servitude or
rendering it more burdensome;
• The owner of the servient estate is first notified of the intended
work; and
• The time and manner of making the work should be the most
convenient to the owner of the servient estate or it is done in
such a manner that it causes the least inconvenience to the
owner of the servient estate.
o Limitations upon rights of owner of dominant estate
▪ It can only exercise rights necessary for the use of the easement;
▪ It cannot use the easement except for the benefit of the immovable
 originally contemplated;
▪ It cannot exercise the easement in any other manner than that
previously established;
▪ It cannot construct anything on it which is not necessary for the use
and preservation of the easement;
▪ It cannot alter or make the easement more burdensome;
▪ It must notify the servient estate owner of its intention to make
necessary works on the servient estate; and
▪ It should choose the most convenient time and manner to build said
works so as to cause the least inconvenience to the owner of the
servient estate. Any violation of the above constitutes impairment of
the easement.

5. Extinguishment of Easements

• Modes of Extinguishment of Easement

o Merger – because easement is a right enjoyed over another’s property;
hence, if there is a merger in the same person of the ownership of the
dominant and servient estates, the easement is extinguished.
o Non-use – for easement to be extinguished under this mode:
▪ It is necessary that the non-use must have lasted for a period of 10
years;
▪ If the easement is discontinuous, the 10-year period is computed
from the day on which the easement was not used, and
▪ If the easement is continuous, in which case the use of the easement
does not depend upon the acts of man, the 10-year period is counted
from the day on which an act contrary to the easement took place.
o Impossibility of use – if there are circumstances which render impossible the
use of easement, the same is merely suspended until subsequent conditions
shall again permit the use of the easement. However, in the following
situations, the easement is not merely suspended but absolutely
extinguished:
▪ If the circumstances which cause the impossibility shall be
irreparable; or
▪ If the circumstances which cause the impossibility are reparable, the
easement is likewise extinguished if the period of extinctive
prescription by non-user has already lapsed.
• However, the circumstance must not be in the nature of a
fortuitous event.
o Expiration of term
o Fulfillment of condition
o Renunciation – it must be specific, clear, and express.
o Redemption – it is the release of the servient estate from the servitude upon
agreement of the owners of both and upon payment by the owner of the
servient estate of the corresponding consideration to the owner of the
dominant estate.
o Annulment or rescission of title constituting the easement
o Termination of the right of the grantor
o Abandonment of the servient estate
o Eminent domain

III. Different Modes of Acquiring Ownership

Article 712. Ownership is acquired by occupation and by intellectual creation. Ownership and
other real rights over property are acquired and transmitted by law, by donation, by estate and
intestate succession, and in consequence of certain contracts, by tradition. They may also be
acquired by means of prescription.

• Modes of Acquisition of Ownership

o Seven Modes
▪ Occupation
▪ Law13
▪ Donation
▪ Tradition
▪ Intellectual Creation
▪ Prescription
▪ Succession

o Original and Derivative Mode

▪ Original Mode
• When they result in the independent creation of a new right of
ownership, independent of the ownership of a definite third
person such as occupation, acquisitive prescription, law, and
intellectual creation.
▪ Derivative Mode
• Those which depend on the existence of the right of another
person, such as succession, donation, and tradition.
o Modes of Acquiring Real Rights
▪ Five Modes
• Law
• Donation
• Tradition
• Prescription (merely for acquisition of real rights)
• Succession
o Sale is not a mode but merely a title. Sale by itself does not transfer or
affect ownership. The most that it can do is to create the obligation to
transfer ownership.

Mode Title
Legal means by which dominion or Only the legal basis by which dominion or
ownership is created, transferred, or ownership is affected.
destroyed.
Actual process of acquisition or transfer of Juridical justification
ownership of a thing.
Cause Means

o Modes of Losing Ownership

▪ Voluntary
• Those which depend upon the will of the owner.
• The voluntary modes are abandonment and alienation.
▪ Involuntary
• Those which are independent of the will of the owner.
• The involuntary modes are:
o The destruction of the things, which may either be
physical or juridical, as when the thing goes out of
commerce;
o Revocatory act, which may include the nullity, rescission,
revocation, or resolution of that which gave rise to the
acquisition;

13
Highlighted in yellow are those modes which are both for acquisition and transmission of ownership and
real rights.
 o Extinguishment by legal precept and in virtue of certain
acts, by the owner or third persons (e.g., accession and
acquisitive prescription);
o Extinguishment by judicial decree, such as confirmation
of a judicial sale as a result of levy on execution; and
o Extinguishment by act of State, such as confiscation of
the effect and instruments of a crime and expropriation
for public use.

• Law as a Mode of Acquisition of Ownership

o Concept
▪ Those special legal provisions which directly vest ownership or real
rights in favor of certain persons, independently of the other modes of
acquiring and transmitting ownership or other real rights,
o Examples
▪ Fruits naturally falling upon adjacent land belong to the; and
▪ When a person who is not the owner of a thing sells or alienates and
delivers it, and later the seller or grantor acquires title thereto, such
title passes by operation of law to the buyer or grantee.

• Intellectual Creation
o Concept
▪ Intellectual property refers to creations of the mind: inventions,
literary and artistic works, and symbols, names, images, and designs
used in commerce.
▪ Section 4.1 of R.A. No. 8293, otherwise known as the Intellectual
Property Code of the Philippines, defines the scope of the term
“intellectual rights” as follows:
• Copyright and related rights;
• Trademarks and service marks;
• Geographic indications;
• Industrial designs;
• Patents;
• Lay-out designs of integrated circuits; and
• Protection of undisclosed information.
o Time of Acquisition of Ownership
▪ The author, the composer, the painter, the sculptor, or other artists,
the scientists, and the inventors acquire ownership over their works
from the moment of their creation even before the same are
published, copyrighted, or patented.
▪ Being the owner thereof, the creator has absolute control over his
work, and he may do anything with it as he pleases, including the
right to share it with others.
▪ He also enjoys the exclusive right to its publication—but this exclusive
right is limited only to the first publication. Unless placed under the
protection of the Intellectual Property Law, once published, the work
is dedicated to the public, and the author loses the exclusive right to
control subsequent publications by others.
o Ownership Over Letters
▪ Ownership over Material or Physical Object (the letter itself)
• It is owned by the person to whom it is addressed and
delivered.
▪ Ideas or Contents
• It is owned by the author or writer (the sender).
• As a consequence, while the recipient may have the control and
possession of the physical letter itself by virtue of his ownership
 of the same, the author’s consent is required in case of
publication or dissemination of the letter. In addition, the
copyright also belongs to the author or writer (the sender).

Q: Dr. ALX is a scientist honored for work related to the human genome project. Among
his pioneering efforts concern stem cell research for the cure of Alzheimer’s disease.
Under corporate sponsorship, he helped develop a microbe that ate and digested oil spills
in the sea. Now he leads a college team for cancer research in MSS State. The team has
experimented on a mouse whose body cells replicate and bear cancerous tumor. Called
―oncomouse, it is a life-form useful for medical research and it is a novel creation. Its
body cells do not naturally occur in nature but are the product of man’s intellect,
industry, and ingenuity. However, there is a doubt whether local property laws and ethics
would allow rights of exclusive ownership on any life-form. Dr. ALX needs your advice:

(1) whether the reciprocity principle in private international law could be applied in our
jurisdiction; and
(2) whether there are legal and ethical reasons that could frustrate his claim of exclusive
ownership over the life-form him? (5%)

A:

(1) The reciprocity principle in private international law may be applied in our jurisdiction.
Section 3 of R.A. 8293, the Intellectual Property Code, provides for reciprocity, as
follows: "Any person who is a national, or who is domiciled, or has a real and effective
industrial establishment in a country which is a party to any convention, treaty or
agreement relating to intellectual property rights or the repression of unfair competition,
to which the Philippines is also a party, or extends reciprocal rights to nationals of the
Philippines by law, shall be entitled to benefits to the extent necessary to give
effect to any provision of such convention, treaty or reciprocal law, in addition
to the rights to which any owner of an intellectual property right is otherwise
entitled by this Act”.

(2) There is no legal reason why "oncomouse" cannot be protected under the law. Among
those excluded from patent protection are "plant varieties or animal breeds, or essentially
biological process for the production of plants and animals" (Section 22.4 Intellectual
Property Code, R.A. No. 8293).

The "oncomouse" in the problem is not an essentially biological process for the production
of animals. It is a real invention because its body cells do not naturally occur in nature
but are the product of man's ingenuity, intellect, and industry. The breeding of
oncomouse has novelty, inventive step, and industrial application. These are the three
requisites of patentability. (Sec. 29, IPC) There are no ethical reasons why Dr. ADX and
his college team cannot be given exclusive ownership over their invention. The use of
such genetically modified mouse, useful for cancer research, outweighs considerations for
animal rights. Animals are property capable of being appropriated and owned'. In fact,
one can own pet animals. If wild animals are capable of being owned, with more reason
animals technologically enhanced or corrupted by man's invention or industry.

A. Occupation

Article 713. Things appropriable by nature which are without an owner, such as animals
that are the object of hunting and fishing, hidden treasure, and abandoned movables, are
acquired by occupation.

• Concept and Requisites

o Concept
 ▪ It is a mode of acquiring ownership by the seizure or apprehension of
things corporeal which have no owner with the intention of acquiring
them and according to the rules laid down by law.
o Requisites
▪ The thing must be res nullius — that is, a thing which either never
had an owner, or which, by virtue of a previous abandonment
(dereliction), has not an owner at the time of its occupation;
▪ It must be appropriable by nature or one that can be seized or
apprehended (or it must be corporeal);
▪ It must be brought into the actual possession or control of the one
professing to acquire it; and
▪ The person must acquire it with the intention of acquiring ownership.
He must therefore have the necessary capacity to consent.

Article 715. The right to hunt and to fish is regulated by special laws.

• Hunting or Fishing
o The right to hunt and to fish is regulated by special laws.
o This mode does not apply to animals classified as rare, threatened, or
endangered species.

Article 716. The owner of a swarm of bees shall have a right to pursue them to another's
land, indemnifying the possessor of the latter for the damage. If the owner has not
pursued the swarm, or ceases to do so within two consecutive days, the possessor of the
land may occupy or retain the same. The owner of domesticated animals may also claim
them within twenty days to be counted from their occupation by another person. This
period having expired, they shall pertain to him who has caught and kept them.

• Swarm of Bees
o The owner of a swarm of bees has a right to pursue them to another’s land,
with the obligation of indemnifying the possessor of the latter for the
damage.
o In case the owner of the swarm of bees fails to pursue the swarm, or if he
initially makes a pursuit but he ceases to do so within two consecutive days,
the law considers him as to have abandoned ownership of the swarm of
bees; in which case, the swarm becomes res nullius and ownership thereof
may now be acquired by the owner of the estate by way of occupation.

• Wild and Domesticated or Tamed Animals

o Rule as to Wild Animals
▪ Wild animals are those which are found in their state of natural
freedom. They are without an owner or res nullius. Hence, ownership
thereof may be acquired by occupation.
▪ However, once they recover their natural freedom, they cease to be
under one’s possession and will again become res nullius.
o Rule as to Domesticated or Tamed Animals
▪ Domesticated or tamed animals are those which were formerly wild
but have been subdued and retained the habit of returning to the
premises of the possessor.
▪ So long as they retain the habit of returning to the premises of the
possessor, the ownership over these animals is not affected by the
fact that they are no longer under the control of the present
possessor-owner. However, if they lose said habit, then they will
revert back to their original status of being wild and they will re-
acquire their original status of being res nullius.
▪ The possessor-owner of domesticated animals has a period of 20 days
 from the occupation by another person within which to reclaim them.
If after the expiration of this period, the possessor-owner fails to
reclaim them, the ownership over these animals is considered to have
been abandoned and the animals become res nullius.
o Domestic or Tame Animals
▪ The rule on domesticated animals does not apply to domestic animals,
or those which are born and reared under the care of man.
▪ In the case of domestic animals, they are considered as movable
property. If they are lost, the owner can recover them from the
present possessor without need of indemnifying the latter unless they
are acquired in good faith at a public sale.
▪ The ownership of domestic animals may not be acquired by
occupation unless they are abandoned by the owner. They may be
acquired, however, through acquisitive prescription (four years if the
possessor is in good faith or eight years, in any event).

• Hidden Treasure
o A hidden treasure is any hidden and unknown deposit of money, jewelry, or
other precious objects, the lawful ownership of which does not appear.
o It is considered, in law, as res nullius and may thus be acquired by
occupation. The treasure belongs wholly to the finder if found upon one
own’s ground; but if found or discovered by chance in another’s property
and the finder is not a trespasser, the treasure is equally divided between
the finder and the owner of the ground.

Q: A congregation for religious women, by way of commodatum, is using the real

property owned and registered in the name of the Spouses Manuel as a retreat house.
Maria, a helper of the congregation discovered a chest in the backyard. When she opened
the chest, it contained several pieces of jewelry and money. (4%)
(A) Can the chest containing the pieces of jewelry and money be considered as hidden
treasure?
(B) Who has the right to claim ownership of it?

A:

(A) Yes, the chest containing the pieces of jewelry and money may be considered as a
hidden treasure as long as they are hidden and unknown and the lawful ownership of it
does not appear as provided in Article 439 of the Civil Code.

(B) Under Article 438 of the Civil Code, when the discovery of the hidden treasure is
made on the property of another, one-half thereof shall be allowed to the finder provided
the finder is not a trespasser. In this case, the owner of the land are the Spouses Manuel.
Spouses Manuel owns one-half of the hidden treasure since ownership is not transferred
to the borrower but is retained by the lender in a contract of commodatum. The other
half shall belong to Maria as the finder.

• Abandoned and Lost Movable

o Abandoned Movable
▪ It is the opposite of occupation. It takes place when the owner
abandons the possession of a thing with the intention of renouncing
his ownership thereof.
▪ The property is considered abandoned if the spes recuperandi (hope
of recovery or recapture) is gone and the animus revertendi (intent to
recover) is given up. It becomes res nullius and may be acquired by
occupation.
o Lost Movable
 ▪ It is where the property is not abandoned but it is now under the
control of another person.
▪ In order to acquire ownership through occupation, there are rules to
be followed. The finder, far from becoming owner of the thing found,
is bound to return it to its previous owner, if known, or to immediately
deposit the same with the mayor of the city or municipality where the
finding has taken place, if the owner is unknown.
▪ If the finder fails to comply with these procedural requirements and
appropriates for himself the movable property he found, he shall be
liable for the crime of theft.
▪ If the lost property is turned over to the mayor, the latter is then
required to make a public announcement of such finding for two
consecutive weeks in a manner he deems best. If after six months,
the owner does not appear, the thing found, or its value, shall be
awarded to the finder, with the obligation to reimburse the expenses
incurred in the publication.
▪ It is only after compliance with the foregoing rules that the finder
shall acquire ownership of the thing found by occupation. If the owner
appears on time, he shall be obliged to pay as a reward to the finder
one-tenth (1/10) of the sum or of the price of the thing found.

B. Tradition

• Mode Distinguished from Title

o Mode is the legal means by which dominion or ownership is created,
transferred, or destroyed, but title is only the legal basis by which to affect
dominion or ownership.
o Title is every juridical act, right, or condition which gives a means to the
acquisition of ownership and other real rights but which in itself is
insufficient to produce them.

Mode Title
Legal means by which dominion or Only the legal basis by which dominion or
ownership is created, transferred, or ownership is affected.
destroyed.
Actual process of acquisition or transfer of Juridical justification
ownership of a thing.
Cause Means

• Contracts Only Create Title

o Contracts, under our laws, only constitute titles or rights to the transfer or
acquisition of ownership, while delivery or tradition is the mode of
accomplishing the same. It is tradition or delivery, as a consequence of
contracts, that actually transfers ownership.

• Concept
o Definition
▪ Tradition (traditio) or delivery, as a mode of acquiring and
transmitting ownership and other real rights, refers to the transfer of
possession accompanied by an intention to transfer ownership or
other real rights.
o Requisites:
▪ Pre-existence of the right to be transmitted in the estate of the
grantor, the same being a derivative mode of acquiring ownership;
▪ Just cause or title (causa traditionis) for the transmission, such as
sale;
 ▪ Intention on the part of the grantor to grant and on the part of the
grantee to acquire;
▪ Capacity to transmit (on the part of the grantor) and capacity to
acquire (on the part of the grantee); and
▪ An act which gives it outward form, physically, symbolically, or
legally.
o Importance of Intention to Deliver
▪ In all forms of delivery, it is necessary that the act of delivery,
whether constructive or actual, should be coupled with the intention of
delivering the thing. The act, without the intention, is insufficient.
▪ The critical factor in the different modes of effecting delivery, which
gives legal effect to the act, is the actual intention of the vendor to
deliver, and its acceptance by the vendee. Without that intention,
there is no tradition.

• Kinds of Tradition (Delivery)

o Real Tradition (Physical or Actual Delivery)
▪ It takes place when the thing is placed in the control and possession
of the grantee, which, if it is movable, is when the thing is transferred
from hand to hand and, if immovable, by certain material and
possessory acts by the grantee in the presence and with the consent
of the grantor, such as gathering fruits or entering upon the property
which are generally called taking possession.
o Constructive (Feigned) Tradition
▪ Delivery may likewise exist even when the change of possession is not
actual or material but represented by other signs or acts indicative
thereof, in which case the tradition is classified as a constructive one.
▪ Forms
• Traditio Simbolica
o The transfer of ownership is effected by the delivery of
symbols or things which represent those to be delivered.
Thus, in the second paragraph of Article 1498 of the
NCC, it is provided that "with regard to movable
property, its delivery may also be made by the delivery
of the keys of the place or depository where it is stored
or kept."
o In case of immovable property, symbolic delivery is
effected by the execution of a public instrument. The
execution of a public instrument is recognized by law as
equivalent to the delivery of the thing which is the object
of the contract.
o Exception: There is no delivery notwithstanding the
execution of a public instrument when:
▪ The instrument itself expresses or implies that
delivery was not intended; or
▪ By other means it is shown that such delivery was
not effected because a third person was actually in
possession of the thing, in which case fiction yields
to reality—the delivery has not been effected.
• Traditio Longa Manu
o The transfer of ownership is effected by the grantor by
simply pointing out to the grantee the things which are
being transferred and which at the time must be within
their sight.
• Traditio Brevi Manu
o Where the grantee has already acquired actual control or
 possession of the thing, as when the thing is leased to
him; in which case, a mere declaration on the part of the
grantor that the grantee shall now hold the thing which is
already in his control and possession, as owner, operates
as a form of delivery.
• Traditio Constitutum Possessorium
o Where delivery is effected by a mere declaration on the
part of the transferor that he will hold the thing for the
transferee, and this may take place when the owner of
the thing alienates it but continues possessing it under
another contract or capacity, such as a lessee for
example.
• Tradition by Public Instrument
o Where the execution is equivalent to the delivery of the
thing or object of the contract.
o Quasi-tradition
▪ It is used to indicate the transfer of rights or incorporeal things
through the exercise of the rights by the grantee with the
acquiescence or consent of the grantor.
o Tradicion por Ministerio de la Ley
▪ It is delivery by operation of law.

C. Donation

Article 725. Donation is an act of liberality whereby a person disposes gratuitously of a

thing or right in favor of another, who accepts it. (618a)

• Definition
o It is an act of liberality whereby a person disposes gratuitously of a thing or
right in favor of another, who accepts it.
o It may also be defined as “a gratuitous contract whereby the donor divests
himself, at present and irrevocably, of the thing given in favor of the donee”.

• Requisites
o Essential reduction of the patrimony of the donor;
o Increase in the patrimony of the donee; and
o Intent to do an act of liberality or animus donandi.
▪ Donative intent is presumed present when one gives a part of one’s
patrimony to another without consideration, and it is not negated
when the person donating has other intentions, motives, or purposes
which do not contradict donative intent. For a donation to exist,
however, the intent to donate must be effectively carried out. Hence,
a mere declaration of an intention or desire to donate is not a
donation.

• Donation as a Mode of Acquisition

o Our Civil Code treats donation as a contract that transfers ownership. As
explained by the Court in Liguez v. Lopez, donation does not need to be
completed by tradition since Article 712 prescribes that ownership and rights
therein are acquired and transmitted by donation, succession—and in
consequence of certain contracts—by tradition, thereby implying that
donation is not one of the contracts requiring tradition.

1. Features

• Essential Features/Elements of a True Donation (Inter Vivos)

 o Alienation of property by the donor during his lifetime, which is accepted;
o Irrevocability (except for legal causes);
o Animus Donandi (intent to do an act of liberality); and
o Resultant decrease in the assets or patrimony of the donor.

2. Classifications

• As to time of effectivity
o Donation inter vivos
▪ When the donation takes effect during the donor’s lifetime or
independently of the donor’s death, or when the full or naked
ownership (nuda proprietas) of the donated properties passes to the
donee during the donor’s lifetime not by reason of his death, but
because of the deed of donation.
o Donation mortis causa
▪ When the donation takes effect only upon the donor’s death, or when
the full or naked ownership of the donated properties will pass to the
donee only because of the donor’s death.
o Donation propter nuptias
▪ When made by reason of marriage and before its celebration, in
consideration of the same and in favor or one or both of the future
spouses.

• As to perfection/extinguishment
o Pure – where the underlying cause is plain gratuity or pure liberality (no
strings attached);
o Conditional – imposes upon the donee a burden which is less than the value
of the thing donated; or
o With a term.

• As to consideration
o Simple
▪ The cause of which is the pure liberality of the donor in consideration
of the donee’s merits.
o Remuneratory or Compensatory
▪ That which is given out of gratitude on account of the services
rendered by the donee to the donor, provided that they do not
constitute a demandable debt.
o Modal or Conditional
▪ Imposes upon the donee a burden which is less than the value of the
thing donated.
▪ The law on contracts governs up to the extent of the burden, while
the law on donations governs on the portion that exceeds the value of
the burden.
o Onerous
▪ Imposes upon the donee reciprocal obligation or, to be more precise,
this is the kind of donation made for valuable consideration, the cost
of which is equal to, or more than the thing donated.
▪ They are governed by the rules on contracts.

Simple/Remuneratory Onerous
As to Governing Law
Primarily, the law on donations governs; The law on contracts governs.
while the law on contracts applies
suppletorily.
As to Legal Formalities
Articles 748 and 749 must be complied. Articles 748 and 749 are not applicable.
As to Effect of Illegal or Impossible Conditions
The illegal or impossible conditions are The obligation with illegal or impossible
considered as not imposed but the donation conditions shall be annulled under Article
remains valid. 1183.

• Donation Mortis Causa

o Concept
▪ It is in reality a devise, if it involves real property; or a legacy, if it
involves personal property.
o Formalities
▪ It partakes of the nature of a testamentary provision. As such, the
same must be executed in accordance with the requisites on
solemnities of wills and testaments under Articles 805 and 806 of the
New Civil Code; otherwise, the donation is void and would produce no
effect.
▪ Unless and until the donation is probated, i.e., proved and allowed in
the proper court, no right to the subject property has been
transmitted to the donee.
o Characteristics
▪ It conveys no title or ownership to the transferee before the death of
the transferor, or what amounts to the same thing, that the transferor
should retain the ownership (full or naked) and control of the property
while alive;
▪ Before his death, the transfer should also be revocable by the
transferor at will, ad mutuum; but revocability may be provided for
indirectly by means of a reserved power in the donor to dispose of the
properties conveyed; and
▪ The transfer is void if the transferor should survive the transferee.
o Determination of nature of donation
▪ Crucial in determining whether the donation is inter vivos or mortis
causa is the determination of whether the donor intended to transfer
ownership over the properties upon the execution of the deed.
▪ If the donor intends to transfer the ownership of the property donated
upon the execution of the donation, as reflected from the provisions
contained in the donation, then it is inter vivos; otherwise, it is merely
mortis causa, or made to take effect after death.

• Classification of Donation Inter Vivos

o Pure or Simple Donation
▪ Where the underlying cause is plain gratuity or pure liberality (no
strings attached).
o Remuneratory or Compensatory Donation
▪ Made for the purpose of rewarding the donee for past services, which
services do not amount to a demandable debt.
o Conditional or Modal Donation
▪ Where the donation is made in consideration of future services or
where the donor imposes certain conditions, limitations, or charges
upon the donee, the value of which is inferior to that of the donation
given; and
o Onerous Donation
▪ That which imposes upon the donee a reciprocal obligation or, to be
more precise, this is the kind of donation made for a valuable
consideration, the cost of which is equal to, or more than the thing
donated.
▪ Of all the foregoing classifications, donations of the onerous type are
 the most distinct. This is because, unlike the other forms of donation,
the validity of and the rights and obligations of the parties involved in
an onerous donation is completely governed not by the law on
donations, but by the law on contracts.

3. Distinctions Between Mortis Causa and Inter Vivos Donations

Donations mortis causa and donations inter vivos may be distinguished as follows:

Donations Inter Vivos Donations Mortis Causa

As to the Time of Taking Effect
Takes effect independently of the donor’s Takes effect only upon the death of the
death donor
As to the Intention of Making Donation
Made out of donor’s pure generosity Made in contemplation of his death without
the intention to lose the thing or its free
disposal in case of survival
As to the Time the Title is Conveyed
Title conveyed to the donee before donor’s Title conveyed upon donor’s death
death
As to it Validity
Valid if donor survives donee Void if donor survives donee
As to its Revocability
Generally irrevocable during donor’s lifetime Always revocable at any time and for any
except for grounds provided by law reason before the donor’s death
As to its Legal Formalities
Must comply with the formalities required by Must comply with the formalities required by
Articles 748 and 749 of the Code law for the execution of a will
As to the Date of its Acceptance
Must be accepted by the donee during his Can only be accepted after the donor’s
lifetime death
As to its Tax Implication
Subject to donor’s tax Subject to estate tax

Q: Josefa executed a deed of donation covering a one-hectare rice land in favor of her
daughter, Jennifer. The deed specifically provides that:

"For and in consideration of the love and service Jennifer has shown and given to me, I
hereby freely, voluntarily and irrevocably donate to her my one-hectare rice land covered
by TCT No. 11550, located in San Fernando, Pampanga. This donation shall take effect
upon my death."

The deed also contained Jennifer's signed acceptance, and an attached notarized
declaration by Josefa and Jennifer that the land will remain in Josefa's possession and
cannot be alienated, encumbered, sold or disposed of while Josefa is still alive. Advise
Jennifer on whether the deed is a donation inter vivos or mortis causa and explain the
reasons supporting your advice. (2013 Bar)

A: The donation is a donation inter vivos.

When the donor intends that the donation shall take effect during the lifetime of the
donor, though the property shall not be delivered till after the donor’s death, this shall be
a donation inter vivos (Art. 729).

The Civil Code prefers inter vivos transmissions. Moreover, mortis causa donations should
follow the formalities of a will (Art. 728). Here there is no showing that such formalities
were followed. Thus, it is favorable to Jennifer that the deed is a donation inter vivos.

Furthermore, what is most significant in determining the type of donation is the absence
of stipulation that the donor could revoke the donation; on the contrary, the deeds
expressly declare them to be “irrevocable,” a quality absolutely incompatible with the
idea of conveyances mortis causa where revocability is the essence of the act, to the
extent that a testator cannot lawfully waive or restrict his right of revocation. The
provisions of the deed of donation which state that the same will only take effect upon
the death of the donor and that there is a prohibition to alienate, encumber, dispose, or
sell the same should be harmonized with its express irrevocability (Austria-Magat v. CA,
G.R. No. 106755, February 1, 2002).

Q: B donated to M a parcel of land in 1980. B made the deed of donation, entitled

“Donation Inter Vivos”, in a public instrument and M accepted the donation in the land
same document. It was provided in the deed that the land donated shall be immediately
delivered to M and that M shall have the right to enjoy the fruits fully. The deed also
provided that B was reserving the right to dispose of the land during his (B’s) lifetime,
and that M shall not register the deed of donation until after B’s death. Upon B’s death,
W, B’s widow, and sole heir, filed an action for the recovery of the donated land,
contending that the donation made by B is a donation mortis causa and not a donation
inter vivos. Will said action prosper? Explain your answer. (1990 Bar)

A:Yes the action will prosper. The donation is a donation mortis causa because the
reservation is to dispose of all the property donated and, therefore, the donation is
revocable at will. Accordingly, the donation requires the execution of a valid will, whether
notarial or holographic (Arts. 755, 728, Civil Code).

4. Form

• Effects of Perfection
o The donee becomes the absolute owner of the property donated; and
o It is generally considered irrevocable.

• When Acceptance Must Be Made

o The acceptance must be made during the lifetime of the donor. Upon the
death of either the donor or the donee prior to the perfection of the
donation, the offer of donation becomes ineffective.

• Capacity of Donor
o Requisites
▪ He must be in possession of the capacity to contract;
▪ He must have the capacity to dispose of his property; and
▪ He must not be specifically prohibited to donate.
o Cannot donate future property
▪ Donations cannot comprehend future property. The law requires that
the donor be the owner of the property donated at the time of the
donation; otherwise, such donation is void, even if accepted, following
the rule that “no one can give what he does not have”—nemo dat
quod non habet.
o Reckoning period of donor’s capacity
▪ The donor’s capacity shall be determined as of the time of the making
of the donation.
o Double Donation
▪ Not legally possible in this jurisdiction because donation is a mode of
acquiring ownership.
 • Capacity of Donee
o Mere juridical capacity is sufficient.
o Prohibited Donations
▪ Donations between those who were guilty of adultery or concubinage
at the time of the donation;
▪ Donations between those who were found guilty of the same criminal
offense, if the donation is made in consideration thereof;
▪ Those made to public officers or their spouses, descendants, and
ascendants, if the donation is made by reason of their office;
▪ Donations made to those who are incapacitated to succeed by will;
▪ Donations between the spouses during the marriage, whether the
donation be made directly or indirectly, except moderate ones given
on the occasion of any family rejoicing; and
▪ Donations between those who are living together as husband and wife
without a valid marriage, whether the donation be made directly or
indirectly.
o In the first prohibited donation, no previous criminal conviction is necessary
since the guilt of the donor and the donee may be proved by preponderance
of evidence in a civil action for declaration of nullity of the donation; while in
the second, a previous criminal conviction is necessary,

• Formalities in Donations of Personal Property

o If the value of the donated property does not exceed ₱5,000, there is no
required form.
o If the donation is made orally, there must be simultaneous delivery of the
thing or of the document representing the right donated; otherwise, the
donation is void.
o If the value of the donated property exceeds ₱5,000, both the donation and
the acceptance must be in writing; otherwise, the donation shall be void.

Q: On July 27, 1997, Pedro mailed in Manila a letter to his brother Jose, a resident of
Iloilo City, offering to donate a vintage sports car which the latter had long been wanting
to buy from the former. On August 5, 1997, Jose called Pedro by cellular phone to thank
him for his generosity and to inform him that he was sending by mail for his letter of
acceptance. Pedro never received that letter because it was never mailed. On August 14,
1997, Pedro received a telegram from Iloilo informing him that Jose had been killed in a
road accident the day before (August 13, 1997)

1. Is there a perfected donation?

2. Will your answer be the same if Jose did mail his acceptance letter but it was received
by Pedro in Manila days after Jose’s death? (1998 Bar)

A:

1. None. There is no perfected donation. Under Art. 748 of the Civil Code, the donation of
a movable may be made orally or in writing. If the value of the personal property donated
exceeds five thousand pesos, teh donation and the acceptance shall be made in writing.
Assuming that the value of the thing donated, a vintage sports car, exceeds P5,000.00,
then the donation and the acceptance must be in writing. In this instance, the acceptance
of Jose was not in writing, therefore, the donation is void. Upon the other hand, assuming
that the sports car costs less than P5,000.00, the donation may be oral, but still, the
simultaneous delivery of the car is needed and there being none, the donation was never
perfected.

2. Yes, the answer is the same. If Jose’s mail containing his acceptance of the donation
was received by Pedro after the former’s death, then the donation is still void because
under Art. 734 of the Civil Code, the donation is perfected the moment the donor knows
of the acceptance by the done. The death of Jose before Pedro could receive the
acceptance indicates that the donation was never perfected. Under Art. 746, acceptance
must be made during the lifetime of both the donor and the done.

• Formalities in Donations of Real Property

o Regardless of its value, the donation and the acceptance of the same should
be in a public instrument; otherwise, the donation is void.
o The acceptance may be made in the same deed of donation or in a separate
instrument. If the acceptance is in a separate public instrument, the donor
shall be notified in writing of such fact. Both instruments must state the fact
of such notification.
o There are, therefore, three requisites for the validity of a simple donation of
a real property, to wit:
▪ It must be made in a public instrument;
▪ It must be accepted, which acceptance may be made either in the
same Deed of Donation or in a separate public instrument; and
▪ If the acceptance is made in a separate instrument, the donor must
be notified in an authentic form, and the same must be noted in both
instruments.
o The purpose of the formal requirement for acceptance of a donation is to
ensure that such acceptance is duly communicated to the donor. Hence,
even if the requirements of notification and notation are not complied with in
cases where the acceptance is made on a separate instrument, the donation
remains valid if the donor is nonetheless aware of the acceptance or the
donor had actual knowledge of the same.
o On the other hand, in the absence of evidence whatsoever that the claimed
donation had been accepted, the requirements of notice and notation should
be strictly applied. It is enough, between the parties to a donation of an
immovable property, that the donation be made in a public instrument but,
in order to bind third persons, the donation must be registered in the
Registry of Property. However, such registration in the Office of the Register
of Deeds or in the Assessor’s Office is not necessary for the donation to be
considered valid and official.

Q: The Roman Catholic Church accepted a donation of a real property located in Lipa
City. A deed of donation was executed, signed by the donor, Don Mariano, and the
donee, the Church, as represented by Fr. Damian. Before the deed could be notarized,
Don Mariano died. Is the donation valid? (2014 Bar)

A: The donation is void. The donation of an immovable property must be in a public

instrument in order for it to be valid. In this case, the donor died even before the
notarization of the deed of donation. Hence, it does not satisfy the requirement of being
in a public instrument for the donation to be valid.

Q: On January 21, 1986, A executed a deed of donation inter vivos of a parcel of land to
Dr. B who had earlier constructed thereon a building in which research on the dreaded
disease AIDS were being conducted. The deed, acknowledged before a notary public, was
handed over by A to Dr. B who received it. A few days after, A flew to Davao City.
Unfortunately, the airplane he was riding crashed on landing killing him. Two days after
the unfortunate accident. Dr. B, upon advice of a lawyer, executed a deed acknowledged
before a notary public accepting the donation. Is the donation effective? Explain your
answer. (1993, 1998 Bar)

A: No, the donation is not effective. The law requires that the separate acceptance of the
donee of an immovable must be done in a public document during the lifetime of the
donor (Art. 746 & 749, Civil Code). In this case, B executed the deed of acceptance
before a notary public after the donor had already died.

Q: Anastacia purchased a house and lot on installments at a housing project in Quezon

City. Subsequently, she was employed in California and a year later, she executed a deed
of donation, duly authenticated by the Philippine Consulate in Los Angeles, California,
donating the house and lot to her friend Amanda. The latter brought the deed of donation
to the owner of the project and discovered that Anastacia left unpaid installments and
real estate taxes. Amanda paid these so that the donation in her favor can be registered
in the project owner's office. Two months later, Anastacia died, leaving her mother Rosa
as her sole heir. Rosa filed an action to annul the donation on the ground that Amanda
did not give her consent in the deed of donation or in a separate public instrument.
Amanda replied that the donation was an onerous one because she had to pay unpaid
installments and taxes; hence her acceptance may be implied. Who is correct? (2000
Bar)

A: Rosa is correct because the donation is void. The property donated was an immovable.
For such donation to be valid, Article 749 of the New Civil Code requires both the
donation and the acceptance to be in a public instrument. There being no showing that
Amanda's acceptance was made in a public instrument, the donation is void. The
contention, that the donation is onerous and therefore, need not comply with Article 749
for validity is without merit. The donation is not onerous because it did not impose on
Amanda the obligation to pay the balance on the purchase price or the arrears in real
estate taxes. Amanda took it upon herself to pay those amounts voluntarily. For a
donation to be onerous, the burden must be imposed by the donor on the donee. In the
problem, there is no such burden imposed by the donor on the donee. The donation not
being onerous, it must comply with the formalities of Article 749.

5. Limitations

• Limitations on Donation of Property

o Donation may comprehend all the present property of the donor, provided
that:
▪ If the donor has forced heirs: he cannot give or receive by donation
more than what he can give or receive by will (CIVIL CODE, Art. 752);
and
▪ If the donor has no forced heirs: donation may include all present
property provided he reserves in full ownership or in usufruct:
• The amount sufficient to support him and those relatives
entitled to support from him (CIVIL CODE, Art. 750); or
• Property sufficient to pay the donor's debt contracted prior to
the donation.
▪ Note: Without such reservation, the donation shall be reduced on
petition of any persons affected. Donation is still valid. The limitation
applies only to simple, remunerative, and modal donations, BUT not
to onerous ones, which are governed by the law on contracts.
▪ Donations propter nuptias cannot exceed more than 1/5 of the
present property of the future spouses, under a regime other than the
absolute community of property.
o Donations cannot comprehend future property
▪ Future property includes anything which the donor cannot dispose of
at the time of the donation.
▪ Note: Upon the death of his predecessor, the share in an existing
inheritance is present property although the heir has not yet entered
into possession of the same. This is based on the principle of law that
 nobody can dispose of that which does not belong to him.
o Donation should not prejudice creditors.
o Donee must reserve sufficient means for his support and for his relatives
who are entitled to be supported by him.

6. Reduction and Revocation

• Generally Rule
o As a rule, once the donation is accepted (or perfected), it is generally
considered irrevocable.
o Exceptions: A donation inter vivos may be revoked only on grounds allowed
by law, as follows:
▪ Subsequent appearance of a child;
▪ Non-fulfillment of charges imposed in the donation;
▪ Ingratitude of the donee; and
▪ The fact that the donation is inofficious.

• Subsequent Appearance of a Child

o Requisites
▪ When the donor made the donation, he had no child; and
▪ After the donation, he had a child, whether legitimate, illegitimate, or
adopted, or the child whom he believed to be dead turned out to be
alive.
o Extent of Reduction or Revocation
▪ The provisional legitime of the child should be computed at the time
of the child’s appearance and the donation should be correspondingly
reduced or revoked to the extent that the provisional legitime of the
child, at that time, has been impaired.
o Prescriptive Period
▪ The action for reduction or revocation is subject to a four-year
prescriptive period from the time of the appearance of the child.

• Acts of Ingratitude
o Instances of Acts of Ingratitude
▪ If the donee should commit some offense against the person, the
honor, or the property of the donor, or of his wife or children under
his parental authority;
▪ If the donee imputes to the donor any criminal offense, or any act
involving moral turpitude, even though he should prove it, unless the
crime or the act has been committed against the donee himself, his
wife, or children under his authority; or
▪ If the donee unduly refuses to give support to the donor when the
former is legally or morally bound to give support to the latter.
o Prescriptive Period
▪ One year, counted from the time the donor had knowledge of the fact
and it was possible for him to bring the action.

• Inofficious Donations
o Concept
▪ A donation is inofficious if it exceeds what the donor may give by will,
or when it prejudices the legitimes of the donor’s compulsory heirs.
o Extent of Reduction or Revocation
▪ In determining whether the donation is inofficious or not, recourse
must be had to the rules established by the Civil Code for the
determination of the legitime and, by extension, of the disposable
portion, taking into consideration the estimated net value of the
 donor’s property at the time of his death.’22
o Who May Revoke
▪ 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.
o Prescriptive Period
▪ The action for reduction or revocation of an inofficious donation
prescribes in ten (10) years following Article 1144 of the New Civil
Code.

• Failure to Comply with Conditions

o Meaning of Condition
▪ According to the Court, the condition referred to in Article 764 refers
to obligations or charges imposed by the donor on the donee, making
the donation onerous.
o Prescriptive Period
▪ 10 years counted from the time within which the donee must comply
with the conditions/obligations of the donation.
o When to Count 10-Year Period
▪ The accrual of the cause of action is from the expiration of the time
within which the donee must comply with the conditions or obligations
of the donation.
▪ Where the donee is burdened with the obligation to utilize the land
donated for school purposes, the Court ruled that from the nature and
circumstances of the condition of the subject donation, a period is
contemplated by the donors, except that if no period was fixed in the
donation, resort to Article 1197 of the New Civil Code is necessary.
▪ However, resort to Article 1197 will no longer be applicable if more
than a reasonable period has already been allowed to the donee to
avail of the opportunity to comply with the condition, even if it be
burdensome, to make the donation in its favor forever valid, but the
donee still failed to do so.
o When donation provides for automatic revocation
▪ A donation that provides for automatic revocation in case of failure to
comply with the condition imposed is valid.
▪ A judicial finding that the revocation is proper is only necessary when
the other party actually goes to court for the specific purpose of
challenging the propriety of the revocation.

D. Prescription

• Concept and Requisites

o Prescription is a mode of acquiring ownership and other real rights through
the lapse of time in the manner and under conditions laid down by law,
namely, that the possession should be in the concept of an owner, public,
peaceful, uninterrupted, and adverse.
o Possession is open when it is patent, visible, apparent, notorious, and not
clandestine. It is continuous when uninterrupted, unbroken, and not
intermittent or occasional; exclusive when the adverse possessor can show
exclusive dominion over the land and an appropriation of it to his own use
and benefit; and notorious when it is so conspicuous that it is generally
known and talked of by the public or the people in the neighborhood.

• Two Kinds of Acquisitive Prescription

o Ordinary
▪ Requires possession of things in good faith and with just title for the
 time fixed by law. For purposes of prescription, the law requires that
just title must be proved; it is never presumed.
o Extraordinary
▪ It does not require just title and good faith.

• Period of Prescription
o Movable - four years if ordinary; eight years if extraordinary.
o Immovable - 10 years if ordinary; 30 years if extraordinary.

• When Prescription Does Not Lie

o In case of Registered Land
▪ Prescription does not run against registered land. Thus, under Sec. 47
of P.D: No. 1529, otherwise known as the Property Registration
Decree, it is specifically provided that "no title to registered land in
derogation of that of the registered owner shall be acquired by
prescription or adverse possession.
▪ However, in Heirs of Anacleto B. Nieto v. Municipality of Meycattayan,
Bulacan, the Court recognized the jurisprudential thread that while it
is true that a Torrens title is indefeasible and imprescriptible, the
registered landowner may lose his right to recover possession of his
registered property by reason of laches.
o In case of Property of Public Dominion
▪ It is clear that property of public dominion, which generally includes
property belonging to the State, cannot be the object of prescription
or, indeed, be subject of the commerce of man. However, where lands
of the public domain are patrimonial in character, they are susceptible
to acquisitive prescription, pursuant to Article 1113 of the NCC.
o In Case of Trust
▪ A trustee cannot acquire by prescription the ownership of property
entrusted to him. That rule applies squarely to express trusts.
▪ The basis of the rule is that the possession of a trustee is not adverse.
Not being adverse, he does not acquire by prescription the property
held in trust. The rule of imprescriptibility of the action to recover
property held in trust may possibly apply to resulting trusts as long as
the trustee has not repudiated the trust.
▪ Exception: Acquisitive prescription may bar the action of the
beneficiary against the trustee in an express trust for the recovery of
the property held in trust where
• The trustee has performed unequivocal acts of repudiation
amounting to an ouster of the cestui que trust;
• Such positive acts of repudiation have been made known to the
cestui que trust; and
• The evidence thereon is clear and conclusive.
o In case of the Following Relationships
▪ 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 of the
latter, and between guardian and ward during the continuance of the
guardianship.

1. Distinctions Between Acquisitive and Extinctive Prescription

Acquisitive Prescription Extinctive Prescription

As to the Operative Act
Relationship between the occupant and the One does not look to the act of the
land in terms of possession is capable of possessor but to the neglect of the owner.
producing legal consequences; it is the
possessor who is the actor.
As to Requisites
Requires possession by a claimant who is Requires inaction of the owner or neglect of
not the owner. one with a right to bring action.
As to its Applicability
Applicable to ownership and other real Applies to all kinds of rights, whether real
rights. or personal.
As to its Legal Effect
Vests ownership or other real rights in the Produces the extinction of rights or bars a
occupant. right of action.

Results in the acquisition of ownership or Results in the loss of a real or personal

other real rights in a person as well as the right and bars the cause of action to
loss of said ownership or real rights in enforce said right.
another.
As a Defense
Can be proven under the general issue Should be affirmative, pleaded, and proved
without its being affirmatively pleaded. to bar the action or claim of the adverse
party

2. Distinctions Between Extinctive Prescription and Laches

Prescription Laches
As to What is Considered
Concerned with the fact of delay Concerned with the effect of delay
As to Question Raised
A question or matter of time A question of inequity of permitting a claim
to be enforced
As to Source
Statutory Not statutory
As to Applicability
Applies at law Applies in equity
As to Availability
Cannot be availed of unless it is specially Need not be specifically pleaded; court may
pleaded as an affirmative allegation consider it in its own initiative to prevent
inequity.
As to Basis
Based on a fixed time Not based on a fixed time

IV. Land Titles and Deeds

A. Torrens System

The Torrens system is a system of registration of transaction with interest in land whose
declared object is, under government authority, to establish and certify to the ownership
of an absolute and indefeasible title to realty, and to simplify its transfer. In this system,
title by registration takes the place of “title by deeds” of the system under the “general”
law. A sale of land, for example, is effected by a registered transfer upon which a
certificate of title is issued.

1. General Principles

• History and Introduction

 o It was devised and first introduced in South Australia by Sir Robert Richard
Torrens in 1857. It was introduced in the Philippines by Act No. 496, which
took effect on January 01, 1903. It was later amended and superseded by
P.D. 1529, which took effect on June 11, 1978, otherwise known as the
Property Registration Decree. Its object is to do away with the delay,
uncertainty, and expense of the old conveyancing system. It updated the
Land Registration Act and codified the various laws relative to registration.

• Nature

Section 2 (P.D. No. 1529). Nature of registration proceedings; jurisdiction of

courts. Judicial proceedings for the registration of lands throughout the Philippines shall
be in rem and shall be based on the generally accepted principles underlying the Torrens
system.

o It is judicial in nature.
o Registration under the Torrens System a Proceeding In Rem
▪ A proceeding in rem is when the object of the action is to bar
indifferently all who might be minded making an objection of any sort
against the right sought to be established, and if anyone in the world
has a right to be heard on the strength of alleging facts which if true,
shows an inconsistent interest.
▪ A land registration is a proceeding in rem, and jurisdiction in rem
cannot be acquired unless there be constructive seizure of the land
through publication and service of notice.
▪ Registration under the Torrens System constitutes, at the very least,
constructive notice to any boundary owner of who is his neighbor.

• Effects of Issuance of Title (TRI-IC)

o The land is placed under the operation of Torrens System;
o Land is Relieved from all claims except those noted thereon and provided by
law;
o Title to the land becomes Imprescriptible;
o The land becomes Incontrovertible and indefeasible; and
o The certificate of title is not subject to Collateral attack.

• Registration under Act No. 3344 Ineffective Against Third Persons

o Section 194 of the Revised Administrative Code, as amended by Act No.
3344, provides for the registration of deeds or instruments relating to lands
not registered under the Torrens system. If a parcel of land covered by
Torrens title is sold, but the sale is registered under Act No. 3344 and not
under the Land Registration Act, the sale is not considered registered, and
the registration of the deed does not operate as constructive notice to the
whole world.

• Torrens Title
o Definition
▪ A Torrens title is the certificate of ownership issued under the Torrens
system of registration by the government, through the Register of
Deeds, naming and declaring the owner in fee simple of the real
property described therein, free from all liens and encumbrances
except as may be expressly noted thereon or otherwise reserved by
law.
▪ Legally defined, a certificate of title is the transcript of decree of
registration made by the Register of Deeds
o Probative Value
 Torrens Title may be received in evidence in all courts of the
▪
Philippines and shall be conclusive as evidence with respect to the
ownership of the land described therein and other matters which can
be litigated and decided in land registration proceedings.
o Two Types of Torrens Certificate of Title
▪ Original Certificate of Title (OCT)
• The first title issued in the name of the registered owner by the
Register of Deeds covering a parcel of land, which had been
registered under the Torrens System by virtue of a judicial or
administrative proceeding. It consists of one original copy filed
in the Register of Deeds, and the owner's duplicate certificate
delivered to the owner.
▪ Transfer Certificate of Title (TCT)
• The title issued by the Register of Deeds in favor of a transferee
to whom the ownership of a registered land has been
transferred by any legal mode of conveyance (e.g., sale,
donation). It also consists of an original and an owner's
duplicate certificate.

B. Regalian Doctrine

• Definition
o Under the Regalian Doctrine, all lands not otherwise appearing to be clearly
within private ownership are presumed to belong to the State. Hence, a
positive act of the government is needed to declassify a forest land into
alienable or disposable land for agricultural or other purposes. In other
words, the Regalian Doctrine dictates that all lands of the public domain
belong to the State, that the State is the source of any asserted right to
ownership of land and charged with the conservation of such patrimony.
o All lands not otherwise appearing to be clearly within private ownership are
presumed to belong to the State. Thus, all lands that have not been
acquired from the government, either by purchase or by grant, belong to the
State as part of the inalienable public domain.
o Necessarily, it is up to the State to determine if lands of the public domain
will be disposed of for private ownership. The government is possessed of
the plenary power to determine who shall be the favored recipients of public
lands, as well as under what terms they may be granted such privilege.

• Regalian Doctrine under the Constitution

o The Regalian Doctrine is enshrined in the 1987 Philippine Constitution and
the country’s earlier Constitutions. In the 1987 Constitution, Section 2 of
Article XII (National Economy and Patrimony) provides the following:
▪ Section 2. All lands of the public domain, waters, minerals, coal, petroleum,
and other mineral oils, all forces of potential energy, fisheries, forests or
timber, wildlife, flora and fauna, and other natural resources are owned by
the State. With the exception of agricultural lands, all other natural resources
shall not be alienated. The exploration, development, and utilization of
natural resources shall be under the full control and supervision of the State.
The State may directly undertake such activities, or it may enter into co-
production, joint venture, or production-sharing agreements with Filipino
citizens, or corporations or associations at least sixty per centum of whose
capital is owned by such citizens. Such agreements may be for a period not
exceeding twenty-five years, renewable for not more than twenty-five years,
and under such terms and conditions as may be provided by law. In cases of
water rights for irrigation, water supply fisheries, or industrial uses other
than the development of waterpower, beneficial use may be the measure and
limit of the grant.
 o The abovementioned provision provides that except for agricultural lands for
public domain which alone may be alienated, forest or timber, and mineral
lands, as well as all other natural resources must remain with the State, the
exploration, development and utilization of which shall be subject to its full
control and supervision albeit allowing it to enter into coproduction, joint
venture or production-sharing agreements, or into agreements with foreign-
owned corporations involving technical or financial assistance for large-scale
exploration, development, and utilization.

C. Nationality Restrictions on Land Ownership

• Natural Persons
o General Rule
▪ Only Filipino Citizens can acquire private or public agricultural lands.
o Exceptions
▪ In case of hereditary succession, aliens may be a transferee of private
lands (CONST., Art XII, Sec. 7); and
▪ A natural-born citizen of the Philippines, who has lost his Philippine
citizenship may be a transferee of private lands, subject to limitations
provided by law (CONS., Art XII, Sec. 8).
o Limitations14
▪ Any natural-born citizen of the Philippines who has lost his
Philippine citizenship and who has the legal capacity to enter into a
contract under Philippine laws may be a transferee of a private land
up to a maximum area of 1,000 sq.m., in the case of urban land, or 1
ha in the case of rural land, to be used by him as his residence;
▪ In the case of married couples, one of them may avail of the
privilege granted above; provided, That if both shall avail of the same,
the total area acquired shall not exceed the maximum authorized;
▪ In case the transferee already owns urban or rural lands for
residential purposes, he shall still be entitled to be a transferee of
additional urban or rural lands for residential purposes which, when
added to those already owned by him, shall not exceed the maximum
areas herein authorized;
▪ A natural-born who has lost his Philippine citizenship and who
has the legal capacity to enter into a contract under Philippine laws
may be a transferee of a private land up to a maximum area of 5,000
square meters in the case of urban land or 3 hectares in the case of
rural land to be used by him for business or other purposes; and
▪ In case the transferee already owns urban or rural land for
business or other purposes, he shall still be entitled to be a
transferee of additional urban or rural land. which when added to
those already owned by him, shall not exceed the maximum areas
authorized.
o Aliens May Lease Private Lands
▪ While aliens are disqualified from acquiring lands of public domain,
they may however lease private lands. (Id. at 191).
▪ Citizens of the Philippines may lease not more than five hundred
(500) hectares or acquire not more than twelve (12) hectares thereof,
by purchase, homestead, or grant (CONST., Art. XII, Sec. 3).
▪ A lease to an alien for a reasonable period is valid. So is an option
giving an alien the right to buy real property on condition that he is
granted Philippine citizenship.
▪ Aliens are not completely excluded by the Constitution from use of

14
The acquisition by aliens of private lands in case of hereditary succession is not subject to limitations.
 lands for residential purposes. Since their residence in the Philippines
is temporary, they may be granted temporary rights such as a lease
contract which is not forbidden by the Constitution. Should they desire
to remain here forever and share our fortune and misfortune, Filipino
citizenship is not impossible to acquire.
▪ The only instance where a contract of lease may be considered invalid
is, if there are circumstances attendant to its execution, which are
used as a scheme to circumvent the constitutional prohibition.
o Filipino Vendor Cannot Recover Land Sold to an Alien (In Pari Delicto)
▪ The question was answered in the negative in the early case of
Rellosa v. Gaw Chee Hun because the Filipino vendor was in pari
delicto with the alien vendee.
o Effect of Subsequent Naturalization of the Transferee
▪ If land is invalidly transferred to an alien who subsequently becomes a
Filipino citizen or transfers it to a Filipino, the flaw in the original
transaction is considered cured and title of the transferee is rendered
valid.
▪ Rationale: The ban on aliens is intended to preserve the nation's land
for future generations of Filipinos.
o Alienation in Favor of Foreign Government to be Used as Chancery or
Residence of Diplomatic Representatives
▪ The prohibition against alienation of lands in favor of aliens does not
those in favor of foreign governments to be used as a residence of its
diplomatic representatives.
▪ As part of its treaty obligation under International Law, the State shall
either facilitate the acquisition on its territory, the premises necessary
for the mission by a sending state or assist the latter in obtaining
accommodations in the country.
▪ The State shall also, when necessary, assist missions in obtaining
accommodations for its members.
o Foreigners are Allowed to Purchase Condominium Units
▪ Aliens may acquire condominium units and shares in condominium
corporations up to no more than 40% of the total and outstanding
capital stock of a Filipino-owned or controlled corporation.
▪ Under this setup, the ownership of the land is legally separated from
the unit itself, therefore the constitutional proscription against aliens
owning real property does not apply.

• Corporations
o General Rule
▪ Private corporations or associations are not legally qualified to own
alienable lands of public domain except through lease.
• However, Filipino corporations and associations may acquire
private land.
o Exceptions
▪ By lease, for a period not exceeding twenty-five (25) years,
renewable for not more than twenty-five (25) years, and not to
exceed one thousand (1,000) hectares in area.
• XPNs to XPN
o Possessory claims to the property acquired before the
1935 Constitution prohibited the alienation of all lands of
the public domain, except agricultural lands, subject to
vested rights existing at the time of its adoption (Atok
Big Wedge Mining Co. V. CA and Consi).
o If the predecessors-in-interest of the corporation have
been in possession of the land in question since June 12,
 1945, or earlier, then it may rightfully apply confirmation
of title to the land.
o Limitations
▪ Private Lands
• At least 60% of whose capital is owned by Filipino citizens to
acquire private land;
o NOTE: The purpose of the sixty per centum (60%)
requirement is to ensure that corporations or
associations allowed to acquire agricultural land or to
exploit natural resources shall be controlled by Filipinos;
and the spirit of the Constitution demands that in the
absence of capital stock, the controlling membership
should be composed of Filipino citizens.
• Restricted as to the extent reasonably necessary to enable it to
carry out purpose which it was created;
• If engaged in agricultural - restricted to 1,024 hectares, and
• Applicable to Filipino corporations only (Art. XII (2), Consti).
▪ Patrimonial Property of State
• Lease for 25 years renewable;
• Limited to 1,000 hectares, and
• Applicable to both Filipino and foreign companies (Art. XII (3)).
o Foreign Corporation
▪ It is disqualified to own lands in the Philippines. It is also disqualified
to own rights to ownership to such lands.
o Religious Association Controlled by Non-Filipinos
▪ The Constitution makes no exception in favor of religious associations.
o Corporation Sole
▪ It may acquire and register private agricultural land. It has “no
nationality”, thus the constitutional proscription against private
corporations acquiring agricultural lands will not apply.

D. Original Registration (Chapter III, Property Registration Decree (P.D. No.

1529))

1. Who May Apply

Section 14 (P.D. No. 1529). Who may apply. The following persons may file in the proper
Court of First Instance an application for registration of title to land, whether personally
or through their duly authorized representatives:
(1) Those who by themselves or through their predecessors-in-interest have been
in open, continuous, exclusive and notorious possession and occupation of
alienable and disposable lands of the public domain under a bona fide claim of
ownership since June 12, 1945, or earlier.
(2) Those who have acquired ownership of private lands by prescription under the
provision of existing laws.
(3) Those who have acquired ownership of private lands or abandoned river beds
by right of accession or accretion under the existing laws.
(4) Those who have acquired ownership of land in any other manner provided for
by law.
Where the land is owned in common, all the co-owners shall file the application
jointly.

Where the land has been sold under pacto de retro, the vendor a retro may file an
application for the original registration of the land, provided, however, that should the
period for redemption expire during the pendency of the registration proceedings and
ownership to the property consolidated in the vendee a retro, the latter shall be
substituted for the applicant and may continue the proceedings.

A trustee on behalf of his principal may apply for original registration of any land held in
trust by him, unless prohibited by the instrument creating the trust.

2. Decree of Registration

Section 31 (P.D. No. 1529). Decree of registration. Every decree of registration issued by
the Commissioner shall bear the date, hour and minute of its entry, and shall be signed
by him. It shall state whether the owner is married or unmarried, and if married, the
name of the husband or wife: Provided, however, that if the land adjudicated by the court
is conjugal property, the decree shall be issued in the name of both spouses. If the owner
is under disability, it shall state the nature of disability, and if a minor, his age. It shall
contain a description of the land as finally determined by the court, and shall set forth the
estate of the owner, and also, in such manner as to show their relative priorities, all
particular estates, mortgages, easements, liens, attachments, and other encumbrances,
including rights of tenant-farmers, if any, to which the land or owner's estate is subject,
as well as any other matters properly to be determined in pursuance of this Decree.

The decree of registration shall bind the land and quiet title thereto, subject only to such
exceptions or liens as may be provided by law. It shall be conclusive upon and against all
persons, including the National Government and all branches thereof, whether mentioned
by name in the application or notice, the same being included in the general description
"To all whom it may concern".

3. Review of Decree of Registration; Innocent Purchaser for Value

(IPV); Rights of IPV

Section 31 (P.D. No. 1529). Review of decree of registration; Innocent purchaser for
value. The decree of registration shall not be reopened or revised by reason of absence,
minority, or other disability of any person adversely affected thereby, nor by any
proceeding in any court for reversing judgments, subject, however, to the right of any
person, including the government and the branches
thereof, deprived of land or of any estate or interest therein
by such adjudication or confirmation of title obtained by
actual fraud, to file in the proper Court of First Instance a
petition for reopening and review of the decree of
registration not later than one year from and after the date
of the entry of such decree of registration, but in no case
shall such petition be entertained by the court where an
innocent purchaser for value has acquired the land or
an interest therein, whose rights may be prejudiced.
Whenever the phrase "innocent purchaser for value" or an
equivalent phrase occurs in this Decree, it shall be deemed
to include an innocent lessee, mortgagee, or other
encumbrancer for value.

Upon the expiration of said period of one year, the decree

of registration and the certificate of title issued shall
become incontrovertible. Any person aggrieved by such
decree of registration in any case may pursue his remedy
by action for damages against the applicant or any
other persons responsible for the fraud.

• Review of Decree of Registration

o A decree of registration is an order issued
 under the signature of the LRA Administrator stating that the land is
registered in the name of the applicant (or oppositors or claimant, as the
case may be). It shall bear the date, hour and minute of its entry. A certified
copy of the decree is sent to the RD for transcription in the Registration
Book.
o In Eland Philippines v. Garcia, the Court, citing Agcaoili, held Courts may
reopen the proceedings where a petition for review is filed within one year
from the issuance of the decree of registration, based on actual or extrinsic
fraud, and the property has not yet passed to an innocent purchaser for
value.
o Requisites
▪ Petitioner must have an interest in land;
▪ Petition is based on actual or extrinsic fraud;
▪ Petition is filed within one year from the issuance of the decree of
registration; and
▪ Property has not yet passed to innocent purchaser for value.
o Jurisdiction
▪ The CFI (now RTC) shall have exclusive jurisdiction over all
applications for original registration of title to lands.
▪ XPN: Delegated jurisdiction to the MeTCs, MTCs, MTCCs, and MCTCs
by the SC in cadastral and land registration if:
• There is no controversy or opposition over the land; or
• When the lot is contested but the value thereof does not exceed
₱100,000.00.

• Innocent Purchaser for Value

o An innocent purchaser for value refers to someone who “buys the property
of another without notice that some other person has a right to or interest in
it, and who pays a full and fair price at the time of the purchase or before
receiving any notice of another person’s claim.” One claiming to be an
innocent purchaser for value has the burden of proving such status.
o It includes an innocent lessee, mortgagee, or other encumbrancer for value.

• Rights of Innocent Purchaser for Value

o A defective title – or one the procurement of which is tainted with fraud and
misrepresentation – may be the source of a completely legal and valid title,
provided that the buyer is an innocent third person who, in good faith, relied
on the correctness of the certificate of title, or an innocent purchaser for
value.
o Mirror Doctrine
▪ Every person dealing with registered land may safely rely on the
correctness of the certificate of title issued therefor and is in no way
obliged to go beyond the certificate to determine the condition of the
property.
o In no case shall a petition for reopening and review of the decree of
registration be entertained by the court where an innocent purchaser for
value has acquired the land or an interest therein, whose rights may be
prejudiced.

E. An Act Improving the Confirmation Process for Imperfect Land Titles (RA
11573), amending CA 141 and PD 1529 [See Republic v. Pasig Rizal Co.,
Inc., G.R. No. 213207, February 15, 2022]

• R.A. No. 11573

o It is a measure that simplifies the procedure and requirements in granting
land titles.
 o The deadline for agricultural free patent applications has been removed; and
the new law shortened the required period of possession for confirmation of
imperfect titles to 20 years.
o The Community or the Provincial Environment and Natural Resources
(CENRO/PENRO) is now directed to process the application for agricultural
free patents within 120 days.

SEC. 48. The following-described citizens of the Philippines, occupying lands of the public
domain or claiming to own any such lands or an interest therein, but whose titles have
perfected or completed, may file a petition at any time, whether personally or through
their duly authorized representatives, in the Regional Trial Court of the province where
the land is located, for confirmation of their claims and the issuance of a certificate of title
to land not exceeding twelve (12) hectares:
(a) Those who by themselves or through their predecessors-in-interest have been
in open, continuous, exclusive, and notorious possession and occupation of
alienable and disposable agricultural lands of the public domain, under a bona
fide claim of ownership, for at least twenty (20) years immediately preceding the
filing of the application for confirmation of title except when prevented by war
or force majeure. They shall be conclusively presumed to have performed all the
conditions essential to a Government grant and shall be entitled to a certificate of
title under the provisions of this Chapter.
(b) Those who have acquired ownership of private lands or abandoned riverbeds by
right of accession or accretion under the provision of existing laws; and
(c) Those who have acquired ownership of land in any other manner provided by
law.

REPUBLIC OF THE PHILIPPINES vs. PASIG RIZAL CO., INC.

G.R No. 213207

FACTS:

In 2010, Esperanza filed before the RTC an application for original registration of title
over the Subject Property which she inherited from her deceased husband, Manuel Dee
Han. Since no opposition was entered against application, the RTC decided to confirm the
PRCI’s title over the subject matter. In 2012, the Republic, through the OSG, assailed the
RTC Decision before the CA. The CA dismissed the appeal, stating that the evidence
presented by PRCI sufficiently establishes that the subject property is alienable and
disposable. On the other hand, the RTC held that PRCI was able to establish that it had
been in open, actual, continuous, adverse, and notorious possession of the Subject
Property in the concept of an owner for the period then required by law for the acquisition
of title.

ISSUE:

Whether or not the PRCI sufficiently proved that it is entitled to a decree of registration
over the subject property.

HELD:

The Court resolves to remand the petition to the CA. The Court discusses relevant
concepts relating to property, ownership and land classification.

How did the case modify the holding of the Supreme Court in Malabanan?

In Malabanan, the Court laid down the requirement for original registration. The second
Malabanan requirement, that is, the express government manifestation that the land
constitutes patrimonial property, was anchored on the premise that “all lands owned by
the State, although declared alienable or disposable, remain as property of public
dominion and ought to be used only by the Government. However the Court states that
this is not absolute. Once property of public dominion is classified by the State as
alienable and disposable land of the public domain, it immediately becomes open to
private acquisition

To emphasize, all lands not otherwise appearing to be clearly within private ownership
are generally presumed to be part of the public domain. Consequently, those who seek
registration on the basis of title over land forming part of the public domain must
overcome the presumption of State ownership. To do so, the applicant must establish
that the land subject of the application is alienable or disposable and thus susceptible
of acquisition and subsequent registration. However, once the presumption of State
ownership is discharged by the applicant, the burden to refute the applicant’s claim that
the land in question is patrimonial in nature necessarily falls on the State. In other words,
placing on the applicant the burden to prove the State’s lack of intent to retain the
property would be unreasonable and that the plaintiff should not be made to bear the
burden of proving it. The application of the second Malabanan requirement is thus
improper.

Thus, express government manifestation declaring that the land subject of

application is "no longer retained" for government use/purpose" is not anymore
required. At present, an applicant for original registration is only required to
present proof that the land is alienable and disposable, as provided by Section 7
of RA 11573. There is no need to present another proof that the land is no
longer retained by the State for its use/purpose.

How did the case clarify the classification of state-owned lands?

The Civil Code classifies the property of the State into two (2) categories:

Article 420. The following things are property of public dominion:

(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and
bridges constructed by the State, banks, shores, roadsteads, and others of similar
character; and
(2) Those which belong to the State, without being for public use, and are intended
for some public service or for the development of the national wealth.

Article 421. All other property of the State, which is not of the character stated in the
preceding article, is patrimonial property.

Article 422. Property of public dominion, when no longer intended for public use or for
public service, shall form part of the patrimonial property of the State.

With the passage of RA 11573, the requirements for confirmation of title have been
clarified. The Court further stresses that the issues involved in a land registration
proceeding rest heavily on factual considerations, as they require the determination of
land classification status and the nature of actual physical possession over the property
subject of the action. The petition is denied in part. The Court affirms that Pasig Rizal Co.,
Inc., has been in open, continuous, exclusive, and notorious possession and occupation of
the Subject Property since 1956. The case is remanded to the Court of Appeals for
reception of evidence on the Subject Property’s land classification status based on the
parameters set forth in Section 7 of Republic Act No. 11573.

F. Certificate of Title
• Definition
o It is the true copy of the decree of registration or the transcription thereof
and, similar to the decree, shall also be signed by the LRA Administrator
(Sec. 39, PD 1529).
o The certificate is an indefeasible evidence of ownership of the person whose
name appears therein.

• Contents
o Every certificate of title shall set forth the full names of the registered
owners and their status. If the property belongs to the conjugal partnership,
it shall be issued in the names of both spouses. All property of the marriage
is presumed to belong to the conjugal partnership, unless it be proved that it
pertains exclusively to the husband or to the wife (Art. 160, CC).

• Title Earlier in Date Prevails

o On the assumption that there was regularity in the registration leading to
the eventual issuance of subject transfer certificates of title, the better
approach is to trace the original certificates from which the certificates of
title in dispute were derived. Should there be only one common original
certificate of title, the transfer certificate issued on an earlier date along the
line must prevail, absent any irregularity tainting the process of registration.

• Splitting or Consolidation of Titles

o The former practice of securing the approval of the court before a registered
owner may split or consolidate his title has been done away with R.A. 440.
o Splitting of Titles
▪ Upon petition by a registered owner of two or more parcels of land
described in a certificate of title, the Register of Deeds may cancel the
certificate and issue in lieu thereof several new certificates each
covering one or such number of parcels as the owner may desire,
without the necessity of obtaining a prior authority of the court (R.A.
440, Sec. 1)
o Consolidation of Titles
▪ A registered owner of several distinct parcel of land described in
separate certificates of title may, if he desires, cause all his
certificates be cancelled and in lieu thereof a single certificate be
issued for the different portions thereof, by direct application to the
Register of Deeds (R.A. 440, Sec. 1).

• Attributes and Limitations on Certificates of Title and Registered Lands

o Free from Liens and Encumbrances (P.D. 1529, Sec. 44)
▪ General Rule
• Claims and liens of whatever fi character existing against the
land prior to the issuance of the certificate of title are cut off by
such certificate and the certificate so issued binds the whole
world, including the government.
▪ Exceptions (CeNTPD)
• Those noted on the Certificate;
• Liens claims or rights arising or existing under the laws and the
Constitution, which are Not by law, required to appear of record
in the Register of Deeds in order to be valid;
• Unpaid real estate Taxes levied and assessed within two (2)
years immediately preceding the acquisition of the right over
the land by an innocent purchaser for value;
• Any Public highway, or private way established or recognized
by law, or any government irrigation canal or lateral thereof, if
 the certificate of title does not state the boundaries of such
highway or irrigation canal, or lateral thereof have been
determined; and
• Any Disposition of the property or limitation on the use thereof
pursuant to P.D. 27 or any other law or regulations on agrarian
reform (P.D. 1529, Section 44).
o Incontrovertible and Indefeasible
▪ General Rule
• Upon the expiration of one (1) year from and after the entry of
the decree of registration in the LRA, the decree and the
corresponding certificate of title becomes incontrovertible and
indefeasible (P.D. 1529, Sec. 32).
▪ Exceptions (PNF)
• If Previous valid title of the same land exists;
• When the land covered is Not capable of registration; and
• When the acquisition of certificate is attended by Fraud.
o Registered Land Not Subject to Prescription
▪ No title to registered land in derogation of the title of the registered
owner shall be acquired by prescription or adverse possession (P.D.
1529, Sec. 47).
▪ Thus, even adverse, notorious and continuous possession under a
claim of ownership for the period fixed by law is ineffective against a
Torrens title.
▪ The fact that title to the land was lost does not mean that the land
ceased to be a registered land before the reconstitution of its title. It
cannot perforce be acquired by prescription.
▪ The defense of laches is an equitable one and does not concern itself
with the character of the defendant's title, but only with whether or
not by reason of the plaintiff's long inaction or inexcusable neglect he
should be barred from asserting his claim at all because to allow him
to do so would be inequitable and unjust to defendant.
o Certificate of Title Not Subject to Collateral Attack
▪ A certificate of title shall not be subject to collateral attack. It cannot
be altered, modified, or cancelled except in a direct proceeding in
accordance with law (P.D. 1529, Sec. 48).
▪ A certificate of title shall not be subject to a collateral attack and that
the issue of the validity of title can only be assailed in an action
expressly instituted for such purpose.
▪ Three (3) Actions Considered as Collateral Attack
• Defendants filed an answer to the complaint praying for
cancellation of the TCT of plaintiff and for the award of
damages by counterclaim. The prayer for cancellation is a
collateral attack and cannot be done.
• Attack on the title of land presented in the answer of
defendant.
• An action for reformation is considered a collateral attack on
Torrens Title when the land in controversy lies within the
boundaries determined by such title.
o Includes Improvements on Land
▪ General Rule
• Torrens certificate of title covers the lands described therein,
together with all the buildings and improvements existing
thereon.
▪ Exceptions (RePNa)
• An express Reservation shall have been annotated on the
certificate;
 • Public thoroughfares as were already in existence at the time
title was acquired;
• Navigable streams within the registered property unless the
boundaries or such stream had been expressly delimited in the
registration plan.

G. Subsequent Registration

• Definition
o Refers to any transaction affecting an originally registered land and which, if
in order, is registered in the Office of the Register of Deeds concerned.
o Where incidental matters after original registration may be brought before
the land registration court by way of a motion or petition filed by the
registered owner or a party in interest (ld. at 12).
o All transactions affecting an originally registered land, whether voluntary or
involuntary, shall be registered with the proper Register of Deeds. (P.D
1529, Sec. 10).

1. Voluntary Dealings

• Definition
o Any registered owner may convey, mortgage, lease or otherwise deal with
the land. (Sec. 51. PD No. 1529).

• Rules
 o Every conveyance or disposition of registered land, if registered, is
constructive notice to all persons from the time of registration, but
knowledge of an unregistered sale is equivalent to registration.
o Contracts are obligatory in whatever form provided the essential requisites
of consent, object and cause of the obligation is established.
▪ Donation of real property must be in a public instrument to be valid.
For a mortgage to be validly constituted, the document must be
recorded.
▪ Agreements mentioned in the Statute of Frauds, to be enforceable,
must be in writing and subscribed by the party charged.
▪ Sale of real estate is valid regardless of form but is effective against
third persons only from date of registration.

2. Involuntary Dealings

Involuntary Dealings Affecting Registered Land Which Must be Registered (ASAN)

• Attachments (P.D. 1529, Sec. 69);
o It is the legal process of seizing another's property in accordance with a writ
or judicial order for the purpose of securing satisfaction of a judgment yet to
be rendered (AGCAOILI, supra at 483).
o An attachment, or a copy of any writ, order or process issued by a court of
record, intended to create of preserve any lien, status, right, or attachment
upon registered land, shall be filed and serves a warning to third parties
dealing with said property that someone is claiming an interest on the same
or a better right than that of the registered owner thereof.
• Sale on execution or levy for taxes or for any assessment (P.D. 1529, Sec. 74)
o Whenever registered land is sold on execution, or taken or sold for taxes or
for any assessment or to enforce a lien of any character, or for any costs
and charges incident to such liens, any execution or copy of execution, any
officer's return, or any deed, demand, certificate, or affidavit, or other
instrument made in the course of the proceedings to enforce such liens and
required by law to be recorded, shall be filed with the Register of Deeds of
the province or city where the land lies and registered in the registration
book, and a memorandum made upon the proper certificate of title in each
case as lien or encumbrance (P.D. 1529, Sec. 74)
• Adverse claim (P.D. 1529, Sec. 70); and
• Notice of lis pendens (P.D. 1529, Sec. 76)

a) Adverse Claims

• Definition
o An adverse claim is a notice to third persons that someone is claiming an
interest on the property or has a better right than the registered owner
thereof, and that any transaction regarding the disputed land is subject to
the outcome of the dispute (Sajonas v. CA, G.R. No. 102377, July 5, 1996).

• Claim or interest is adverse when

o Claimant's right or interest in registered land is adverse to the registered
owner;
o Such right arose subsequent to the date of original registration; and
o No other provision is made in the Decree for the registration of such right or
claim (P.D. 1529, Sec. 7. par. 1).

b) Notice of Lis Pendens

• Definition
 o The notice of lis pendens is ordinarily recorded without the intervention of
the court where the action is pending. The notice is but an incident in an
action, an extrajudicial one, to be sure. It does not affect the merits thereof.
It is intended merely to constructively advise, or warn, all people who deal
with the property that they so deal with it at their own risk, and whatever
rights they may acquire in the property in any voluntary transaction are
subject to the results of the action and may well be inferior and subordinate
to those which may be finally determined and laid down therein.
o The title obtained by the transferee pendente lite affords him no special
protection; he cannot invoke the rights of a purchaser in good faith and
cannot acquire better rights than those of his predecessor-in-interest.

• Effects of Filing Lis Pendens

o It keeps the subject matter of litigation within the power of the court until
entry of the final judgment so as to prevent the defeat of the latter by
successive alienations.
o It binds a purchaser of the land subject of the litigation to the judgment or
decree that will be promulgated thereon whether such a purchaser is a bona
fide purchaser or not; but it does not create a non-existent right or claim.

H. Non-Registrable Properties

• Lands for public use or public service

o Types
▪ Those intended for public use, such as roads, canals, rivers, torrents,
ports and bridges, etc.;
▪ Those which, without being for public use, are intended for some
public service or for the development of the national wealth.
o Rules
▪ These properties are outside the commerce of men and therefore not
subject to private appropriation.
▪ Property of public dominion, when no longer needed for public use or
for public service, form part of the patrimonial (or private) property of
the State.
▪ Property devoted for public service cannot be sold until there is a
formal declaration by the government withdrawing it from being such.
▪ Patrimonial property may be acquired by private persons through
prescription.
▪ Property of public dominion, which generally includes property
belonging to the State, is beyond the commerce of man.
▪ The Iloilo fishing port which was constructed by the State for public
use and/or public service falls within the term "port" under Art. 420 of
the CC. As such, it cannot be subject to execution or foreclosure sale.
In like manner, the reclaimed land on which the IFPC is built cannot
be the object of a private or public sale without Congressional
authorization.

• Waters
o Rivers and their natural beds, lakes, all categories of surface waters,
atmospheric or subterranean ground waters, and seawater all belong to the
State. Waters found, or rainwater falling, on private lands also belong to the
State. (PD 1067, Water Code)
o PD 1067 (Water Code, 1976) repealed Arts. 502 to 518 of the Civil Code on
Waters. The following belong to the state: Rivers and their natural beds;
continuous or intermittent waters of springs and brooks; natural lakes and
lagoons, all categories of surface waters; atmospheric water; subterranean
 or ground waters; and sea water.
o The following waters found on private lands belong to the State: Continuous
or intermittent waters rising on such lands; lakes and lagoons naturally
occurring on such lands; rainwater falling on such lands; subterranean or
ground waters; and water in swamps and marshes.

• Forests
o A forest is a large tract of land covered with a natural growth of trees and
underbrush.
o The classification is descriptive of its legal nature or status and does not
have to be descriptive of what the land actually looks like.
o Unless and until the land classified as forest is released as A and D, the rules
on confirmation of title do not apply.
o Timber licenses, permits and license agreements are the principal
instruments by which the State regulates the utilization of forest resources.
o They merely evidence a privilege granted by the State to qualified entities
and do not vest in the latter a permanent or irrevocable right. They are not
deemed contracts within the purview of the due process clause.

• Watersheds
o Watershed is an area drained by a river and enclosed by a boundary which
separates it from adjacent watersheds.
o It is not susceptible of occupancy, disposition, or alienation.
o The protection of watershed ensures an adequate supply of water for future
generations and the control of flashfloods that not only damage property but
also cause loss of lives. (Tan v. Director of Forestry, 125 SCRA 302)

• Mangrove swamps
o Mangrove swamps or manglares are forest land not alienable agricultural
land. BFAR has no jurisdiction to dispose of swamplands or mangrove lands
while such lands are still classified as forest lands. Mangrove swamps form
part of the public forests and therefore not subject to disposition until they
are first classified as alienable agricultural land.

• Mineral Lands
o Mineral land means any area where mineral resources are found. Mineral
lands and resources are owned by the State and their exploration,
development and utilization is subject to the full control and supervision of
the State.
o Possession of mineral land, no matter how long, does not confer possessory
rights.

• National Parks
o Land reserved for a national park cannot be registered. Where a certificate
of title covers a portion of land within the area reserved for park purposes,
the title should be annulled with respect to that portion.
o For instance, any portion of the Tiwi Hot Spring National Park cannot be
disposed of under the Public Land Act or Property Registration Decree.

• Military or Naval Reservation

o Land inside a military (or naval) reservation, like the Fort Bonifacio Military
Reservation, cannot be the object of registration unless it had been
withdrawn from the reservation, reclassified and declared as disposable
public land. Its status as part of a military reservation remains, even if
incidentally it is devoted for a purpose other than as a military camp or for
defense. (Republic v. Southside, 502 SCRA 587)
 o Moreover, the 1987 Constitution forbids private corporations from acquiring
any kind of alienable land of the public domain, except through lease for a
limited period.

• Foreshore Lands
o Foreshore lands are inalienable unless declared to be A and D portions of the
public domain. A foreshore land is that ―strip of land that lies between the
high and low water marks and that is alternately wet and dry according to
the flow of the tide, ―or "that part of the land adjacent to the sea which is
alternately covered and left dry by the ordinary flow of the tides.
o But land invaded by the sea is a foreshore land and forms part of the public
domain. (Republic v. CA and Morato, 281 SCRA 639)

• Reclaimed Lands
o Submerged areas form part of the public domain; only when reclaimed from
the sea can these submerged areas be classified as agricultural lands. Once
reclaimed the government may then officially classify these lands as A and
D, and declare these lands no longer needed for public service. Only then
can these lands be considered as A and D lands and within the commerce of
men. (Chavez v. PEA, 384 SCRA 152)
o Absent two official acts – (a) a classification that submerged areas are A and
D, and (b) a declaration that they are not needed for public service -lands
reclaimed from the sea are inalienable.
o The Public Estates Authority (PEA), renamed as Philippine Reclamation
Authority (PRA), is the agency authorized to undertake reclamation projects.

• Lakes
o Lakes are neither agricultural nor disposable lands of the public domain;
hence, free patents and certificates of title covering portions of the lake are
a nullity. But areas beyond its natural bed, or the ground covered by the
waters at their highest ordinary depth during the dry season, may be
registered. (Republic v. CA and De Rio, 131 SCRA 532)
o The LLDA has exclusive authority to issue permits for the use of the waters
of the Laguna de Bay.

• Rivers and Creeks

o Rivers and creeks are parts of the public domain for public use and not
capable of appropriation or acquisition by prescription. The ownership of a
stream may not be acquired under a public land patent and the issuance of
the corresponding certificate of title does not change its public character.
o A dried-up creek is property of public dominion.

• Protected Areas
o RA No. 7586 provides for the establishment and management of a national
integrated protected areas system referred to as the ―National Integrated
Protected Areas System (NIPAS) Act of 1992‖. Protected areas are necessary
to maintain essential ecological processes and life-support systems, to
preserve genetic diversity, to ensure sustainable use of resources found
therein. A protected area, like the Bataan Natural Park, is inalienable.

• Reservations for public and semi-public purposes

o The President may designate by proclamation any tract of land of the public
domain for the use of the Republic or its branches, e.g., public or semi-
public uses like highways, hydroelectric sites, railroads, irrigation systems,
etc. which shall be inalienable. The reserved land shall thereafter remain
until otherwise provided by law or proclamation.
 I. Dealings With Unregistered Lands

• Recording of Instruments Relating of Unregistered Lands

o No deed, conveyance, mortgage, lease, or other voluntary instrument
affecting land not registered under the Torrens system shall be valid, except
as between the parties thereto, unless such instrument shall have been
recorded in the manner herein prescribed in the office of the Register of
Deeds for the province or city where the land lies (P.D. 1529, Sec. 113)
o The provision cannot be interpreted to include conveyances made by
ministerial officers, such as sheriff's deeds. It contemplates only such
instruments as may be created by agreement of the parties. The provisions
of Act No. 3344 do not apply to judicial sales (AGCAOILI, supra at 676).
o All instruments affecting lands originally registered under the Spanish
Mortgage Law may be recorded under Sec. 113 of the decree until the land
shall have been brought under the operation of the Torrens system (Id. at
675).
o Registration under Sec. 113 cannot defeat a person with a better right
▪ REASON: Registration under Sec. 113 of Act 3344 is not preceded by
any investigation, whether judicial or administrative, as to the validity
or the efficacy of the title sought to be recorded.

• Better Right
o Refers to a right which must have been acquired by a third party
independently of the unregistered deed, such, for instance, as title by
prescription, and that it has no reference to rights acquired under that
unregistered deed itself (PEÑA, supra at 600).
o A registration of a deed of mortgage in the unregistered land register is
without prejudice to third parties with a better right.

• Effects of Transactions Covering Unregistered Land

o Between the parties
▪ Even if the transaction is not registered, the contract is valid and
binding.
o As among third persons
▪ The law requires that in order for the transaction to be binding to
third persons, the same must be registered.

J. Assurance Fund

1. Nature of Assurance Fund

Presidential Decree No. 1529, or otherwise known as the Property Registration Decree
(“PD 1529”), provides for a protection to individuals who rely on a property’s certificate of
title as evidence of ownership. That is the Assurance Fund, which is part of our property
registration system.

The law allows a person to claim damages that may be incurred due to the unlawful or
erroneous issuance of a certificate of title against the Assurance Fund. However, a claim
from the fund must meet the strict requirements of Presidential Decree No. 1529, to wit:

“SEC. 95. Action for compensation from funds. — A person who, without negligence on
his part, sustains loss or damage, or is deprived of land or any estate or interest
therein in consequence of the bringing of the land under the operation of the
Torrens system of arising after original registration of land, through fraud or in
consequence of any error, omission, mistake or misdescription in any certificate
of title or in any entry or memorandum in the registration book, and who by the
provisions of this Decree is barred or otherwise precluded under the provision of
any law from bringing an action for the recovery of such land or the estate or
interest therein, may bring an action in any court of competent jurisdiction for the
recovery of damages to be paid out of the Assurance Fund.” (Emphasis and underscoring
supplied.)

In an action against the Assurance Fund, the plaintiff cannot recover as compensation
more than the fair market value of the land at the time he suffered the loss, damage, or
deprivation.

2. Conditions for Compensation from Assurance Fund

In the case of Register of Deeds of Negros Occidental and The National Treasurer of the
Republic of the Philippines v. Oscar Anglo, Sr., et al., G.R. No. 171804, 05 August 2015,
the Supreme Court emphasized that claims will not be allowed when the claimant is
negligent.

Also, under Section 101 of PD 1529, the Assurance Fund shall not be liable for any loss,
damage or deprivation caused or occasioned by a breach of trust, whether express,
implied or constructive or by any mistake in the resurveyed or subdivision of registered
land resulting in the expansion of area in the certificate of title.

3. Prescriptive Period

Any action for compensation against the Assurance Fund shall be instituted within a
period of six (6) years from the time the right to bring such action first occurred.

K. Reconstitution of Title

• Definition and Concepts

o The reconstitution of a certificate of title denotes restoration in the original
form and condition of a lost or destroyed instrument attesting the title of a
person to a piece of land.
o The purpose of the reconstitution of title is to have, after observing the
procedures prescribed by law, the title reproduced in exactly the same way
it has been when the loss or destruction occurred. RA 26 presupposes that
the property whose title is sought to be reconstituted has already been
brought under the provisions of the Torrens System. (Republic v.
Tuastumban, GR No. 173210, April 24, 2009)
o The lost or destroyed document referred to is the one that is in the custody
of the Register of Deeds. When reconstitution is ordered, this document is
replaced with a new one — the reconstituted title — that basically
reproduces the original. After the reconstitution, the owner is issued a
duplicate copy of the reconstituted title.

• Requisites
o That the certificate of title had been lost or destroyed;
o That the documents presented by petitioner are sufficient and proper to
warrant reconstitution of the lost or destroyed certificate of title;
o That the petitioner is the registered owner of the property or had an interest
therein;
o That the certificate of title was in force at the time it was lost and destroyed;
and
o That the description, area and boundaries of the property are substantially
the same as those contained in the lost or destroyed certificate of title.
 V. Wills and Succession

A. General Provisions

• Definition
o 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.

• Elements
o Causal element – which is the death of the decedent;
o Objective element – which is the inheritance;
o Subjective element – the decedent and those who are called to succeed him,
either by the decedent’s express will or by provision of law; and
o Acceptance of the inheritance by the person called to the succession.

• Causal Element – Death

o Importance of Death
▪ The rights to the succession are transmitted from the moment of the
death of the decedent.
▪ The moment of death is the determining point when an heir acquires
a definite right to the inheritance.
o Consequences
▪ The inheritance vests immediately upon the decedent’s death without
a moment’s interruption.
• Ownership over the inheritance passes to the heirs at the
precise moment of death—not at the time the heirs are
declared, nor at the time of the partition, nor at the distribution
of the properties. There is no interruption between the end of
the decedent’s ownership and the start of the heir/
legatee/devisee’s ownership.
▪ At that precise time, the heir is already legally deemed to have
acquired ownership of his/her share in the inheritance, and not at the
time of declaration of heirs, or partition, or distribution. Thus, there is
no legal bar to an heir disposing of his/her hereditary share
immediately after such death.
▪ The right of the State to collect the inheritance tax (or estate tax)
accrues at the moment of death, notwithstanding the postponement
of the actual possession and enjoyment of the estate by the heir, and
the tax is based on the value of the property at that time, regardless
of any subsequent appreciation or depreciation.
▪ The capacity of the heir is determined as of the time the decedent
died (Art. 1034); the legitime is to be computed as of the same
moment (Art. 908), and so is the inofficiousness of the donation inter
vivos (Art. 771). Similarly, the legacies of credit and remission are
valid only in the amount due and outstanding at the death of the
testator (Art. 935), and the fruits accruing after that instant are
deemed to pertain to the legatee (Art. 948).
o Interest before Death
▪ Prior to the death of the decedent, the right of the heirs to his
properties is but a mere expectancy, or merely inchoate.
▪ Article 1347, paragraph 2 of the Civil Code characterizes a contract
entered into upon future inheritance as void.
▪ A contract may be classified as a contract upon future inheritance,
 prohibited under the second paragraph of Article 1347, where the
following requisites concur:
• That the succession has not yet been opened;
• That the object of the contract forms part of the inheritance;
and
• That the promisor has, with respect to the object, an
expectancy of a right which is purely hereditary in nature.
o Kind of Death Contemplated
▪ For purposes of opening one’s succession, the death may either be
natural (physical) demise or presumptive death. In case of
presumptive death for purposes of opening the succession, a judicial
declaration is not required, and courts are without authority to issue
the same.
▪ For purposes of opening one’s succession, death may be presumed in
the following situations:
• Ordinary Absence
o If a person has been absent, it being unknown whether
or not he still lives, he shall be presumed dead after an
absence of 10 years.
o If he disappeared after the age of years, an absence of
five years shall be sufficient.
o Death is presumed to have taken place on the last day of
the period of absence required by law.
• Qualified Absence
o A person is presumed dead for all purposes, including the
division of the estate among the heirs under the
following situations:
▪ A person onboard a vessel lost during a sea
voyage, or an airplane which is missing, who has
not been heard of for four years since the loss of
the vessel or airplane;
▪ A person in the armed forces who has taken part
in war, and has been missing for four years; and
▪ A person who has been in danger of death under
other circumstances and his existence has not
been known for four years.
o In these cases, the presumptive death is fixed on the
very day of the occurrence of the event from which death
is presumed; and if such date cannot be fixed, the court
determines the middle of the period in which the event
could have happened.

• Objective element – Inheritance

o Concept
▪ The inheritance includes all the property, rights, and obligations of a
person which are not extinguished by his death.
▪ Succession is the mode of transmitting the inheritance by reason of
death; while inheritance is what is transmitted upon death.
o As to Properties
▪ Only those still existing and owned by the decedent shall be included
in the inheritance.
o Rights and Obligations
▪ Purely personal rights are not transmissible to the heirs, hence, not
part of the inheritance;
▪ Patrimonial rights are generally included, except as otherwise
provided by law or by the will of the testator, such as usufruct and
 personal servitudes; and
▪ Rights and obligations arising from contracts are generally
transmissible to the heirs unless they are not transmissible by reason
of their nature, by express agreement of the parties, or by express
provision of law.
o Monetary Obligations
▪ It is the estate, or the mass of property, rights and assets left by the
decedent, instead of the heirs directly, that becomes vested and
charged with the payment of the money debts of the decedent.
▪ It is only what is left of the estate after the payment of debts that are
transmitted to the heirs. Hence, monetary obligations of the decedent
are not included in the inheritance.

• Subjective Element
o Decedent/Testator
▪ The person whose property is transmitted through succession is called
“decedent.” whether or not he left a will. If he left a will, he is also
called the “testator.”
o Successors
▪ The successors of the decedent in succession are called heirs,
devisees, or legatees.
o Heirs and Kinds
▪ Those who are called upon to succeed by universal title on the whole
estate or to an aliquot portion thereof, either by will or by operation of
law, are called “heirs.” In turn, there are three kinds of heirs:
• Voluntary heirs
o Those called upon to succeed only by express will of the
testator to the portion of the estate which the testator
can freely dispose of;
• Compulsory heirs
o Those called upon to succeed by operation of law to a
portion of the estate known as the “legitime,” of which
they cannot be deprived by the testator except by way of
a valid disinheritance; and
• Legal or Intestate heirs
o Those called upon to succeed by operation of law in case
the decedent dies without a valid will, or to some portion
of the estate not disposed of by will.
o Devisees and Legatees
▪ A devisee is a person to whom a gift of particular real property is
given by virtue of a will.
▪ On the other hand, a “legatee” is a person to whom a gift of particular
personal property is given by virtue of a will.
o Distinctions between voluntary heir and devisee/legatee
▪ A voluntary heir (VH) succeeds to the whole estate or to an aliquot
portion thereof; while a devisee/legatee (D/L) is given individualized
items of property;
▪ At the precise moment of death, VH become absolute owners of their
undivided aliquot share; but with respect to the individual properties
of the estate, they become co-owners and do not know which
properties will be adjudicated to them yet until partition and
distribution; while D/L bequeathed specific properties do not require
court adjudication to identify which particular properties become
theirs and title over these particular properties vests on the legatee or
devisee from the very moment of the testator’s death; and
▪ In case of preterition of a compulsory heir in the direct line, the
 institution of VH shall be annulled in its entirety, but the devises and
legacies shall remain valid insofar as the legitimes are not impaired.

• Kinds of Succession
o Testamentary Succession
▪ That which results from the designation of an heir, made in a will
executed in the form prescribed by law.
o Legal or Intestate Succession
▪ That which takes place if a person dies without a will, or with a void
will, or one which has subsequently lost its validity.
o Mixed Succession
▪ That effected partly by will and partly by operation of law, and it may
take place in the following scenarios:
• If the testator did not dispose of the entire estate, that part
which is not disposed of in the will shall be distributed following
the rules of intestate succession;
• In case there is preterition where the institution of heirs is
annulled in its entirety but there are devises and legacies, the
portion of the estate that would have been given to the
instituted heirs shall be distributed instead in accordance with
the rules of intestate succession; and
• In case a portion of the estate becomes vacant, and
substitution, accretion, or representation cannot take place.
o Compulsory Succession
▪ That which takes place compulsorily by operation of law with respect
to the legitime in favor of compulsory heirs.

B. Testamentary Succession

Testamentary succession is that which results from the designation of an heir, made in
a will executed in the form prescribed by law.

1. General Provisions

• Definition
o A will is an act whereby a person is permitted, with the formalities
prescribed, to control to a certain degree the disposition of this estate, to
take effect mortis causa. A will is also defined as a personal, solemn,
revocable, and free act by which a capacitated person disposes of his
property and rights and declares or complies with duties to take effect
mortis causa.

• Kinds
o Ordinary or Attested/Notarial Will
▪ The first kind is the “ordinary or attested will,” the execution of which
is governed by Articles 804 to 809 of the Civil Code.84 The ordinary
will must be acknowledged before a notary public by a testator and
the attesting witnesses.
o Holographic Will
▪ The other kind of will is the “holographic will” which Article 810 of the
Civil Code defines as one that is entirely written, dated, and signed by
the testator himself. This kind of will, unlike the ordinary type,
requires no attestation by witnesses.
▪ Hence, if the will is not entirely written in the testator’s own
handwriting the same must comply with the formalities required of an
ordinary will to be valid.
 • Requirement of Disposition of Estate
o If the will disposes of the estate, the conduct of probate becomes mandatory
because Article 838 of the Civil Code provides that "no will shall pass either
real or personal property unless it is proved and allowed in accordance with
the Rules of Court. Hence, a will which does not contain any
disposition of property does not have to be probated.
o In Seangio v. Reyes, it was ruled that an instrument which only provides for
the disinheritance of a compulsory heir should be probated because the
disinheritance is an act of disposition in itself since it results in the
disposition of the testator’s property in favor of those who would succeed in
the absence of the disinherited heir.

2. Characteristics of a Will

By law, the characteristics of a will are as follows:

a) It is a strictly personal act, which means that it cannot be delegated;
b) It is a formal and solemn act, which means that it must be executed in accordance
with the formalities required by law;
c) It is a free and voluntary act, which means that it must have been executed freely,
knowingly, or ambulatory;
d) It is a disposition of property, which can either be done directly or indirectly;
e) It is ambulatory and revocable during the testator’s lifetime, which means that the
testator can alter, revise, or revoke it at any time before his death;
f) It is a unilateral and individual act, which means that no acceptance by the
transferee is needed while the testator is still alive; and
g) It is an act mortis causa, which means that it takes effect only after the death of
the testator.

3. Non-Delegability of a Testamentary Power

Under the law, testamentary powers are strictly personal, and they cannot be left in
whole or in part to the discretion of a third person or accomplished through the
instrumentality of an agent or attorney. The exception to this rule is when the testator
left a specific property to a specified class or cause.

4. Applicable Law as to Form and Substance of a Will

As provided by law with regards to time, the applicable law that shall govern as to the
extrinsic validity of a will shall depend upon the law in force at the time it is made while
the testator’s nationality at the time of his death shall govern over its intrinsic validity.

On the other hand, as to place, the formal validity of a will shall be governed by the law
of the country in which it was executed.

5. Testamentary Capacity

The law provides that the testamentary capacity of a person refers to his ability and
power to make a will. To be considered capable of making a will, a person must:
a) Not be expressly prohibited by law to make a will;
b) Be at least eighteen (18) years of age; and
c) Be of sound mind.

6. Form of Notarial and Holographic Wills

By law, both notarial and holographic wills are required to be: (1) in writing, except that
a holographic will is required to be written entirely in the testator’s own handwriting; and
(2) executed in a language or dialect known to the testator.

In addition to these, notarial wills also require that:

a. It must be subscribed at the end thereof, by the testator himself or by the
testator’s name written by some other person in his presence and by his
express direction;
b. It must be attested and subscribed by at least three credible witnesses in
the presence of the testator and of one another;
c. The testator or the person requested by him to write his name must also
sign every page, except the last, on the left margin in the presence of the
witnesses;
d. The witnesses must sign every page on the left margin in the presence of
the testator and of one another;
e. All pages must be numbered correlatively in letters on the upper part of
each page;
f. It must contain an attestation clause; and
g. It must be acknowledged before a notary public by the testator and the
witnesses.

7. Witnesses to a Notarial Will (Qualification and Disqualifications)

Under the law, a witness to a notarial will must be: (a) of sound mind; (b) at the age of
eighteen (18) years or more; (c) not blind, deaf, or dumb; (d) able to read and write, (e)
domiciled in the Philippines; and (f) has not been convicted by final judgment of
falsification of a document, perjury, or false testimony.

8. Conflict Rules

Under the law, the national law of the decedent shall govern over the intrinsic validity of
a will. However, if the conflict rules under the national law of the deceased refer the
matter to the law of the domicile and the foreigner was domiciled in the Philippines at the
moment of death, our courts will have to apply the Philippine internal law on succession.

9. Modes of Revocation of Wills and Testamentary Dispositions

Under the law, the three modes of revocation of wills and testamentary dispositions are:
(1) by implication of law, where certain acts done after a will has been made render the
will void or useless; (2) by a subsequent instrument; and (3) by the destruction of the
will.

a) Effect on the Recognition of a Non-Marital Child

The law provides that the recognition of an illegitimate child does not lose its legal effect
even though the will wherein it was made should be revoked. The reason behind this is
because while a will is essentially revocable, recognition is not (unless there be vitiated
consent).

b) Theory of Dependent Relative Revocation

As held by the Court, the Theory of Dependent Relative Revocation provides that if a
testator revokes a will with a present intention of making a new one immediately and as
a substitute, and the new will is not made, or if made, fails to take effect for any reason,
it will be presumed that the testator preferred the old will than intestacy, and the old one
will be admitted to probate in the absence of evidence overcoming the presumption,
provided its contents can be ascertained.
 c) Revocation Based on a False Cause

A revocation of a will based on a false cause is null and void. However, where the facts
alleged by the testator were peculiarly within his knowledge, or the testator must have
known the truth of the facts alleged by him, it does not matter whether they are true or
not; the revocation is absolute.

10. Heirs

By law, the people who will inherit from the testator are called the “heirs”. These heirs,
their qualifications, disqualifications, and the amount they inherit are determined by
Philippine laws.

a) Compulsory Heirs

The compulsory heirs are the legal heirs of the testator as enumerated under the law.
In intestate succession where the decedent left no will, the compulsory heirs will
automatically inherit the estate of the decedent at the time of death. The estate includes
both real estate and personal properties owned by the decedent. Simplistically, the
compulsory heirs are the legitimate children, the spouse, the illegitimate children,
and the parents of the deceased.

b) Institution of Heirs

Article 840. 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.

(1) Limitations on the Institution of Heirs

Limitations
• Institution, being a voluntary act, cannot be allowed to affect the legitime.
• There can be an instituted heir only in testamentary succession (for the heir in
intestate succession is called legal or intestate heir).
• A conceived child may be instituted if the conditions in Arts. 40 and 41 are
present..

(2) Collective Institution

When the testator institutes some heirs individually and others collectively, those
collectively designated shall be considered as individually instituted unless it clearly
appears that the intention of the testator was otherwise. This rule applies only to the
disposable free portion. Hence, if some of the voluntary heirs are also compulsory heirs,
their legitimes must first be satisfied and only the disposable free portion shall be
distributed in the manner provided in Article 847.

(3) Proscription Against Successive Institution

Article 849. When the testator calls to the succession a person and his children they are
all deemed to have been instituted simultaneously and not successively.

• When the testator calls to the succession a person and the latter’s children, they
are all deemed to have been instituted simultaneously and not successively, unless
the contrary intention appears. As a consequence, they shall inherit in equal parts.
For example, the testator instituted as sole heirs his brother, B, and the latter’s
 children, and B has four children, all five of them shall succeed in equal parts.

(4) Institution Based on a False Cause

• General Rule
o The institution is still valid, and the false cause is considered as not written.
• Exception
o The institution shall be annulled if it appears from the will that the testator
would not have made such institution if he had known the falsity of such
cause.
• Requisites for Exception to Apply
o Cause for the institution of heirs must be stated in the will;
o Cause must be shown to be false; and
o It must appear from the face of the will that the testator would not have
made such institution if he had known the falsity of the cause.

c) Substitution of Heirs

Substitution is the designation by the testator of a person to take the place of the heir
first instituted. It is the appointment by the testator of another heir so that he may
inherit the property or right in case the first heir refused to or cannot inherit.

There are two kinds of substitution: simple and fideicommissary.

• Simple substitution is the appointment of another heir so that he may enter into
the inheritance in default of the heir originally instituted.
• In a fideicommissary substitution (FS), the first heir is strictly mandated to
preserve the property and to transmit the same later to the second heir.

(1) Causes of Substitution

Article 859. The testator may designate one or more persons to substitute the heir or
heirs instituted in case such heir or heirs should die before him, or should not wish, or
should be incapacitated to accept the inheritance.

(2) Fideicommissary Substitution (Compared with

Testamentary Trusts)

• Concept
o In a fideicommissary substitution (FS), the first heir is strictly mandated to
preserve the property and to transmit the same later to the second heir.
• Requisites for Substitution to Become Fideicommissary
o A first heir (known as the “fiduciary heir”) called primarily to the enjoyment
of the estate;
o A second heir (called the “fideicommissary heir”) to whom the property is
transmitted by the first heir; and
o An obligation clearly imposed upon the first heir to preserve and transmit to
the second heir the whole or part of the estate.
• Requisites for Validity of FS
o It must be expressly made
▪ Either by giving it such name, or by imposing upon the first heir
(fiduciary) the absolute obligation to deliver the inheritance to a
second heir (fideicommissary);
o The substitution must not go beyond one degree from the fiduciary
▪ The second heir must be related to and be one generation from the
first heir; hence, the fideicommissary heir can only be either a parent
or a child of the fiduciary heir for they are the only relatives who are
 one generation or degree from the fiduciary.
o The fiduciary and the fideicommissary heirs must be living at the time of the
death of the testator; and
o The substitution must not burden the legitime.
• Effects of Invalid FS
o The fideicommissary substitution clause is considered as not written or not
imposed but the validity of the institution of the first heir (the fiduciary) is
not affected.
• Effects of Valid FS
o Upon the death of the testator, the first heir (fiduciary) acquires only the
right of usufruct while the second heir(fideicommissary) acquires the naked
ownership. Thus, the fiduciary is obliged to preserve and to transmit the
property to the fideicommissary.
o The fideicommissary heir does not succeed the fiduciary for he acquires his
right directly from the testator upon the latter’s death. Thus, even if he
should die before the fiduciary, his right simply passes to his heirs
o Since the fideicommissary is already the naked owner of the property upon
the death of the testator, he can validly dispose of the property even during
the lifetime of the fiduciary provided that the disposition should not impair
the usufructuary right of the fiduciary.
• Prohibition against Alienation
o The law allows the testator to prohibit the alienation of the inheritance
(pertaining to the disposable free portion) for a period not exceeding 20
years. If the prohibition exceeds 20 years, it will be considered valid only for
20 years but invalid as to the excess.
o The same prohibition cannot be imposed upon the legitime.

11. Legitime

Legitime is that part of a person’s property or rights (estate) which he cannot sell,
donate, or transfer in any manner. The ownership over that certain part of a person’s
estate cannot be transferred to a stranger. Bear in mind that when we say stranger, we
mean those who are not part of the family.

• Extent of Power to Dispose of Estate

o Not an Absolute Right
▪ The right of a person to dispose of his property by will is not natural
but statutory. Hence, Congress may provide for limitations.
▪ The basic limitation on the testator’s power to dispose of his estate is
the concept of legitime, which refers to that part of the testator’s
hereditary estate which he cannot dispose of because the law has
already reserved it in favor of the testator’s compulsory heirs.
▪ The testator cannot deprive his compulsory heirs of their legitime,
except by way of a valid disinheritance.
o Extent of Testator’s Right to Dispose of His Estate
▪ If the testator has no compulsory heirs, he may dispose by will of all
his estate or any part thereof in any manner that he pleases and in
favor of any person having capacity to succeed, in which case the
entire estate is the disposable free portion.
▪ On the other hand, if the testator has compulsory heirs, he may
dispose of his estate provided he does not deprive his compulsory
heirs of their legitime. He can only dispose of the remaining portion of
the estate after satisfying the legitime of all compulsory heirs, which
remaining portion is known as the disposable free portion.
o Testator Cannot Deprive Compulsory Heirs of Their Legitime
▪ The testator cannot deprive his compulsory heirs of their legitime,
 except by way of a valid disinheritance.
▪ Testamentary dispositions that impair or diminish the legitime of the
compulsory heirs shall be inofficious or excessive and may be
reduced upon the petition of the compulsory heir concerned.
▪ What may be given in favor of a voluntary heir, devisee, or legatee is
only the disposable free portion. Hence, the concepts of institution of
heirs, legacies and devises, substitution, conditions, and terms are
applicable only to the disposable free portion,
o Testator Cannot Affect Legitime
▪ The testator cannot impose any charge, burden, encumbrance,
condition, or substitution of any kind whatsoever upon the legitimes.
Should he do so, the same shall be considered as not imposed.
▪ The foregoing can only be validly imposed upon the disposable free
portion.
• Exception: The only encumbrance that the testator may validly
impose upon the legitime is the prohibition against partition for
a period not exceeding 20 years.
o Future Legitime Cannot be Renounced or Compromised
▪ 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.

a) Collation in Connection with the Computation of Legitime

• Definition
o Collation is the process by which the inheritance of certain descendants
(heirs)of the deceased is adjusted to consider any substantial benefits
received from the testator during his lifetime. Collation is achieved by adding
to the inheritance the amount due by each heir.

• Computation of Legitime
o Procedures
▪ The value of the property which remains at the time of the decedent’s
death shall be determined. If the decedent was married, his property
shall consist of his exclusive property and his share in the net assets
of the absolute community and conjugal property after liquidation;
▪ All debts and charges which are not imposed in the will shall be
deducted, and if the debt or charge arises for the first time from the
will itself as a unilateral act of the testator, it is non-deductible. The
difference between the assets and the liabilities shall then constitute
the net hereditary estate;
▪ To the net value of the hereditary estate shall be added the value of
all donations by the testator that are subject to collation, at the time
he made them, whether in favor of a compulsory heir or strangers,
the value of which is determined at the time when the donations were
made. The total value obtained after adding the value of all donations
to the net hereditary estate is the distributable estate, which is the
basis for computing the free portion and the legitime;
▪ After the amount of the distributable estate has been determined, and
the legitime and the free portion ascertained, donations which had
been brought to collation should next be imputed and charged
against the corresponding portion of the estate.
o Rules in Imputation of Donations
▪ Donations given to compulsory heirs should be charged to their
legitime. Those donations made to strangers shall be charged to that
part of the estate which the testator could have disposed by his last
 will, the latter shall be reduced insofar as they are inofficious;
▪ Donations shall be respected as long as the legitime can be covered,
reducing, or annulling, if necessary, the devises or legacies made in
the will;
▪ The reduction of the devises and legacies shall be pro rata, without
any distinction whatever except when the testator has directed that a
certain devise or legacy be paid in preference to others; it shall not
suffer any reduction until after all others devises and legacies have
been applied in full to the payment of the legitime;
▪ If, after annulling the legacies and devises, the legitimes cannot yet
be fully paid, then the donations must be reduced or annulled, as the
case may be, annulling or reducing the more recent ones.
• In case of concurrence of legitimes, donations inter vivos and
devises and legacies, the rule in Article 911 applies, in which
case, the devises and legacies shall be reduced pro rata,
without any distinction whatever.
• However, when the question of preference is exclusively among
the legatees and devises themselves, either because there is no
compulsory heir or the testator has already provided in his will
sufficient property to cover the legitime, the rule in Article 950
of the NCC applies. There is an order of preference to be
followed under Article 950 if the question of preference is
exclusively among the legacies and devises.

b) Table of Legitime
 c) Impairment of the Legitime

• Remedy of Compulsory Heir in Case of Impairment of Legitime

o If the impairment is total, then there may be preterition if the compulsory
heir preterited is either an ascendant or descendant. Article 854 would
come into play (annulment of institution of heir & reduction of devises and
legacies).
o If the impairment is partial, then the compulsory heirs is entitled to
completion of legitime under Article 906.
o If the impairment is thru donation, then the remedy is collation.

d) Presumptive Legitime

• The term “presumptive legitime” is a presumption. The basis of the presumption is

that the pieces of property of the persons involved at the time this particular
situation arises would be the same as when he dies which is not a fact. It is
assumed that if the parent died at this moment, the legitime of the children, which
is called as presumptive legitime, is excluded from the ACP.

12. Preterition

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

a) Requisites

• Requisites (CTS)
o The heir omitted must be a Compulsory heir in the direct line, such as:
▪ Legitimate children and descendants respect to their legitimate
parents and ascendants (LPA);
▪ LPA, with respect to their LCD;
▪ Illegitimate children (IC);
▪ Father and mother of IC; and
▪ Adopted child (AC).
o The omission must be complete and Total in character (that the omitted heir
does not and has not received anything at all from the testator by any title
whatsoever); and
o The compulsory heir omitted must Survive the testator.
 • NOTE: The grandson born one year after the decedent's death has no capacity to
succeed, because, at the time of the latter's death, the grandson was not yet born,
nor was he even conceived (CIVIL CODE, Arts. 40 and 41).

• The law considers as preterition the omission of a compulsory heir in the direct
line, whether living at the time of the execution of the will or born after the death
of the testator or those born after the execution of the will and before the death of
the testator so long as they are alive at the time of the death of the testator (DE
LEON, Succession, supra at 251).

b) Governing Law

Article 854. The 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; but the devises and legacies shall be
valid insofar as they are not inofficious.

If the omitted compulsory heirs should die before the testator, the institution shall be
effectual, without prejudice to the right of representation.

• Effects of Preterition
o Preterition annuls the institution of heirs;
o Devices and legacies are valid insofar as they are not inofficious; and
o If the omitted compulsory heir dies before the testator, the institution shall
be effectual, without prejudice to the right of representation

13. Conditional Dispositions and Dispositions with a Term

• Condition is a future or uncertain event or a past event unknown to the parties,

upon which the performance of an obligation depends.

Kinds of Condition
Resolutory Condition Suspensive Condition
The disposition becomes effective upon the The effectivity of the disposition is
death of the testator but is extinguished suspended until the fulfillment of the
upon the happening of the condition. condition.

• Effect of a Suspensive Condition

o Heir, devisee, or legatee acquires no rights until the condition is fulfilled.
o If he dies before the condition is fulfilled, he transmits no rights to his heirs,
even though he survived the testator.
o Once the condition is fulfilled, its effects retroact to the moment of the death
of the testator. If the suspensive condition is not fulfilled, the estate will be
placed under administration until:
▪ The condition is fulfilled, in which case the estate should be given to
the instituted heir; and
▪ It becomes obvious that it cannot be fulfilled, in which case, the
estate should be given to the intestate heirs.

• Dispositions with a Term

o A term is any future and certain event upon the arrival of which the validity
or efficacy of a testamentary disposition subject to it depends.
o A disposition with a suspensive term does not prevent the instituted heir
from acquiring his rights and transmitting them to his heirs even before the
arrival of the term.
Q: When the disposition is subject to a term, what should be done by the instituted heirs
or legal heirs so that they can enjoy possession of the property?

A: If the disposition is subject to a:

1. Suspensive term - The legal heirs can enjoy possession of the property until the
expiration of the period, but they must put up a bond (caucion muciana15) in order to
protect the right of the instituted heir.

2. Resolutory term - The legal heirs can enjoy possession of the property but when the
term arrives, he must give it to the legal heirs. The instituted heir does not have to file a
bond.

a) Condition Not to Marry

• General Rule: An absolute condition not to contract a first or subsequent marriage

is not a valid condition and shall be considered as not written. (Art. 874, NCC).
However, the validity of the disposition itself shall not be affected.
o XPN: If such condition was imposed on the widow or widower by the
deceased spouse or by the latter’s ascendants or descendants, in which
case, the condition is valid. (Art. 874, NCC) If the prohibition is relative with
respect to persons, time or place, such conditions is valid and must be
complied with unless the testator renders it impossible for the heir to marry
at all.

• If the prohibition is relative with respect to persons, time or place, such conditions
is valid and must be complied with unless the testator renders it impossible for the
heir to marry at all.

b) Disposicion Captatoria

• Disposition captatoria 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 shall
be void. (Art. 875, NCC) Here, both the condition and the disposition are void but
the validity of the other provisions, including the will itself, shall not be affected.

• Reason for the prohibition: Disposition captatoria is incompatible with good faith
and with the nature of testaments; it is immoral and contrary to the freedom to
make wills.

c) Modal Institution

A mode is an obligation imposed upon the heir to do or to give something. Modal

institution – statement of: (1) object of the institution; (2) application of the property left
by the testator, and (3) charge imposed by him.

• Definition of Modal Institution

o A “mode” imposes an obligation upon the heir, devisee, or legatee, but it
does not affect the efficacy of his rights to the succession. The mode
obligates but does not suspend.

• Mode Distinguished from Condition

15
A “caucion muciana” is a security or bond required from the conditional heir in order to secure the rights of those who
would succeed to the property upon violation of the condition.
 Mode Condition
Imposes an obligation upon the heir, The condition must happen or be fulfilled in
devisee, or legatee, but it does not affect order for the heir to be entitled to succeed
the efficacy of his rights to the succession. the testator.
Obligates but does not suspend. Suspends but does not obligate.
In case of doubt, the institution should be considered as modal, not conditional.

• Doctrine of Constructive Fulfillment

o When without the fault of the heir, an institucion sub modo cannot take
effect in the exact manner stated by the testator; it shall be complied with in
a manner most analogous to and in conformity with his wishes.
o If the condition is casual, the doctrine is not applicable since the fulfillment
of the event which constitutes the condition is independent of the will of the
heir, devisee/legatee. If the condition is potestative or mixed, the doctrine is
applicable.

Q: X makes a legacy of P1,000,000 to Y who was instructed to build a house and to

deliver the same to Z. Is there a modal institution?

A: Yes, there is a modal institution. There is a direction to build a house. The answer
would be different however if Y was instructed to use the money to buy a particular thing
as the statement turns into a condition.

Q: The testatrix devised a parcel of land to Dr. Rabadilla. It was provided that Dr.
Rabadilla will acquire the property subject to the obligation, until he dies, to give Maria
100 piculs of sugar, and in the event of non-fulfillment, the property will pass to the
nearest descendants of the testatrix. When Dr. Rabadilla died, Maria filed a complaint to
reconvey the land alleging that the heirs of Dr. Rabadilla violated the condition. Is the
institution of Dr. Rabadilla, a modal institution?

A: YES. It imposes a charge upon the instituted heir without, however, affecting the
efficacy of such institution.

In a modal institution, the testator states the object of the institution, the purpose or
application of the property left by the testator, or the charge imposed by the testator
upon the heir. A mode imposes an obligation upon the heir or legatee, but it does not
affect the efficacy of his rights to the succession. The condition suspends but does not
obligate; and the mode obligates but does not suspend. (Rabadilla v. CA, G.R. No.
113725, 29 June 2000)

14. Void Testamentary Dispositions

• Different dispositions related or analogous to fideicommissary substitutions which

the law considers as void (Art. 867, NCC)
o Fideicommissary substitutions which are not made in an express manner,
either by giving them this name, or imposing upon the fiduciary the absolute
obligation to deliver the property to a second heir;
o Provisions which contain a perpetual prohibition to alienate and even a
temporary one, beyond the limit fixed in Art. 863 of the NCC (20 years);
(Art. 870, NCC)
o Those which impose upon the heir the charge of paying to various persons
successively, beyond the limit prescribed in Art. 863 of the NCC, a certain
income or pension; and
o Those which leave to a person the whole or part of the hereditary property
in order that he may apply or invest the same according to secret
instructions communicated to him by the testator.
 • Others
o Article 870 deems void the dispositions of the testator declaring all or part of
the estate inalienable for more than twenty years.
o In a holographic will, the dispositions of the testator written below his
signature must be dated and signed by him in order to make them valid as
testamentary dispositions.
o Every disposition in favor of an unknown person shall be void.
o Revocation based on a false or illegal cause is null and void.

• 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.

Q: Raymond, single, named his sister Ruffa in his will as a devisee of a parcel of land
which he owned. The will imposed upon Ruffa the obligation of preserving the land
and transferring it, upon her death, to her illegitimate daughter Scarlet who was then
only one year old. Raymond later died, leaving behind his widowed mother, Ruffa and
Scarlet.
a. Is the condition imposed upon Ruffa to preserve the property and to transmitit
upon her death to Scarlet, valid?
b. If Scarlet predeceases Ruffa, who inherits the property?
c. If Ruffa predeceases Raymond, can Scarlet inherit the property directly from
Raymond? (2008 BAR)

A:

a. When an obligation to preserve and transmit the property to Scarlet was imposed
on Ruffa, the testator Raymond intended to create a fideicommissary substitution
where Ruffa is the fiduciary and Scarlet is the fideicommissary. Having complied with
the requirements of Art. 863 and 869 of the NCC, the fideicommissary substitution is
valid.

b. If Scarlet predeceases Ruffa, the latter, as the former’s heir, will be entitled to the
property. But since it is also Ruffa’s death which will trigger the fideicommissary
substitution, the practical effect of her death would be to allow her (Ruffa’s) mother to
inherit the property as Ruffa’s heir. The transfer of the property from Scarlet to Ruffa
(as Scarlet’s heir) is what allows Ruffa’s mother to inherit the property, which she
would otherwise be disqualified to inherit under Art. 992 of the NCC.

c. One requirement of a valid fideicommissary substitution is that both heirs should be

alive at the time of the testator’s death. Ruffa predeceasing Raymond means that the
fideicommissary substitution is no longer valid. In this regard, the only way by which
Scarlet can inherit the property directly from Raymond is by legal succession. Her
right to do so, however, is negated by (1) the presence of Raymond and Ruffa’s
mother, who necessarily excludes her; and (2) the provisions of Art. 992 of the NCC.

15. Disinheritance

Disinheritance is the process or act, thru a testamentary disposition of depriving a

compulsory heir of his legitime for causes expressly stated by law. (Art. 915, NCC)

The only way in which a compulsory heir can be deprived of his legitime is through valid
disinheritance. It can be effected only through a will wherein the legal cause therefor
shall be specified. (Art. 916, NCC)
 a) Grounds for Disinheritance

• The following enumeration are exclusive. Only the grounds enumerated can serve
as grounds for disinheritance. (Arts. 919 - 921, NCC)
o Common Causes for Disinheritance of Children or Descendants, Parents or
Ascendants, and Spouse
▪ When the heir has been found guilty of an attempt against the life of
the testator, his/her descendants or ascendants, and spouse, in case
of children or parents;
▪ When the heir by fraud, violence, intimidation, or undue influence
causes the testator to make a will or to change one already made;
▪ When the heir has accused the testator of a crime for which the law
prescribes imprisonment of six years or more, if the accusation has
been found groundless;
▪ Refusal without justifiable cause to support the testator who
disinherits such heir;
▪ Maltreatment of the testator by word or deed, by the child or the
descendant;
▪ When a child or descendant leads a dishonorable or disgraceful life;
▪ Conviction of a crime which carries with it the penalty of civil
interdiction; or
▪ When a child or descendant has been convicted of adultery or
concubinage with the spouse of the testator.
o Peculiar Causes for Disinheritance
▪ a. Children and Descendants
• Conviction of a crime which carries with it a penalty of civil
interdiction;
• Maltreatment of the testator by word or deed by the children or
descendant;
• When the children or descendant has been convicted of
adultery or concubinage with the spouse of the testator; or
• When the children or descendant leads a dishonorable or
disgraceful life.
▪ Parents or Ascendants
• When the parent or ascendant has been convicted of adultery
or concubinage with the spouse of the testator;
• When the parents have abandoned their children or induced
their daughters to live a corrupt or immoral life, or attempted
against their virtue;
• Loss of parental authority for causes specified in the Code;
• Attempt by one of the parents against the life of the other,
unless there has been reconciliation between them;
• When the parent or ascendant has accused the testator of a
crime for which the law prescribes imprisonment for six (6)
years or more;
• 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; or
• The refusal to support the children or descendants without
justifiable cause.
▪ Spouse
• When the spouse has given cause for legal separation; or
• When the spouse has given grounds for the loss of parental
authority.
 b) Requisites for the Various Grounds for Disinheritance

• Requisites of a Valid Disinheritance

o It must be made in a valid will; (Art. 915, NCC)
o It must be for a cause specified by law;(Art. 916, NCC)
o The will must specify the cause; (Art. 916 and 918, NCC)
o It must be unconditional;
o It must be total; (Balane, 2010)
o The cause must be true; and (Art. 918, NCC)
o If the truth is denied, it must be proved by the proponent. (Art. 917, NCC)

c) Effects of Reconciliation

• Definition
o Reconciliation exists when two persons who are at odds decide to set aside
their differences and to resume their relations. They need not go back to
their old relation. In order to be effective, the testator must pardon the
disinherited heir. The pardon whether express or tacit, must refer specifically
to the heir disinherited and to the acts he has committed, and must be
accepted by such heir. In disinheritance, reconciliation need not be in
writing.

• Effects of Reconciliation
o If it occurs before disinheritance is made, the right to disinherit is
extinguished; and
o If it occurs after the disinheritance is made, the disinheritance is set aside.

16. Legacies and Devises

Article 924. All things and rights which are within the commerce of man be bequeathed or
devised.

Article 925. A testator may charge with legacies and devises not only his compulsory
heirs but also the legatees and devisees. The latter shall be liable for the charge only to
the extent of the value of the legacy or the devise received by them. The compulsory
heirs shall not be liable for the charge beyond the amount of the free portion given them.

Devises are gifts of real property given by virtue of a will. On the other hand, legacies
are gifts of personal property given by will. In legacies and devises, specific properties
are given by will and not an aliquot part of the estate.

a) Requisites for Validity

Article 794. Every devise or legacy shall cover all the interest which the testator could
device or bequeath in the property disposed of, unless it clearly appears from the will
that he intended to convey a less interest. (n)

b) Property Not Owned by the Testator

• The testator can bequeath or devise a thing or property belonging to someone else
It occurs when:
o The testator thought that he owned it.
▪ General Rule
• The legacy or device of a thing belonging to another person is
void, if the testator erroneously believed that the thing
pertained to him. (Art. 930, NCC)
 o Reason: Nemo dat quod non habet. You cannot give
what you don’t have.
▪ Exceptions
• If subsequent to the making of the disposition, the thing is
acquired by the testator onerously or gratuitously, such
disposition is validated. (Balane, 2010)
• If the thing bequeathed, though not belonging to the testator
when he made the will, afterwards becomes his, by whatever
title, the disposition shall take effect. (Art. 930, NCC)
o The testator knows that he does not own it but ordered its acquisition.
▪ If the thing given as devise or legacy is not owned by the testator at
the time he made the will but he orders his estate to acquire it, it is a
valid legacy or devise. (Art. 931, NCC)
▪ General Rule
• If the thing already belonged to the legatee/devisee at the time
of the execution of the will, the legacy/devise is void. It is not
validated by an alienation by the legatee/devisee subsequent to
the making of the will.
▪ Exception
• Unless the acquirer is the testator himself.

c) Ineffective Legacies/Devises

• Ineffective Legacies/Devices
o The legacy or devise of a thing which at the time of the execution of the will
already belonged to the legatee or devisee.
▪ The legacy or devise of a thing which at the time of the execution of
the will already belonged to the legatee or devisee shall be ineffective,
even though another person may have some interest therein.
▪ If the testator expressly orders that the thing be freed from such
interest or encumbrance, the legacy or devise shall be valid to that
extent.
o If the thing bequeathed belonged to the legatee or devisee at the time of the
execution of the will.
▪ If the thing bequeathed belonged to the legatee or devisee at the time
of the execution of the will, the legacy or devise shall be without
effect, even though it may have subsequently alienated by him.
▪ If the legatee or devisee acquires it gratuitously after such time, he
can claim nothing by virtue of the legacy or devise; but if it has been
acquired by onerous title, he can demand reimbursement from the
heir or the estate.

• Effect of Acquisition by Legatee

o If the thing belonged to a third person at the time of the execution of the
will;
▪ If the testator erroneously believed that it was his: the legacy
or devise shall be void and the subsequent acquisition shall have no
effect.
▪ If the testator had knowledge that it was not his: the second
paragraph of Art. 933 is applicable.
• If the legatee or devisee acquires it gratuitously, he can claim
nothing by virtue of the legacy or devise.
• If the legatee or devisee acquires it by onerous title, he can
demand reimbursement.
o If the thing belonged to the testator at the time of the execution of the will;
and
 ▪If thing is alienated in favor of a third person: legacy or devise is
revoked by Art. 957 and the subsequent acquisition cannot revive the
legacy or devise.
▪ If the thing is alienated in favor of the devisee or legatee: there
is no revocation.
o If the thing belonged to the beneficiary at the time of the execution of the
will: the legacy or devise shall be without effect, even though it may have
been subsequently alienated by him (CIVIL CODE, Art. 933, par. 1).
▪ If the legatee or devisee acquires it gratuitously after the execution of
the will, he can claim nothing by virtue of the legacy or devise;
▪ If it has been acquired by onerous title after the execution of the will,
he can demand reimbursement from the heir or the estate (CIVIL
CODE, Art. 933, par. 2).

C. Intestate Succession

Legal or intestate succession is that which is effected by operation of law in default of

a valid will. It is legal because it takes place by operation of law; it is intestate because it
takes place in the absence or in default of a last will of the decedent. (Jurado, 2009)

1. Relationship

• Ruleson Relationship
o Number of generations determines proximity
o Each generation forms a degree;
o A series of degrees forms a line;
o A line may be direct or collateral;
▪ Direct Line
• Constituted by the series of degrees among ascendants and
descendants (ascending and descending).
▪ Collateral Line
• Constituted by the series of degrees among persons who are
not ascendants or descendants, but who come from a common
ancestor.
o Full blood (same father and mother) and half- blood (only one of either
parent is the same); and
o In legal and intestate succession, the adopter(s) and the adoptee shall have
reciprocal rights of succession without distinction from legitimate filiation.
However, if the adoptee and his/her biological parent(s) had left a will, the
law on testamentary succession shall govern (R.A. 8552, Sec. 18).

• Rules on Exclusion and Concurrence in Intestate Succession (Balane, 2016)

o Legitimate children
▪ Exclude parents, collaterals, and the State;
▪ Concur with surviving spouse and illegitimate children;
▪ Excluded by no one.
o Illegitimate children
▪ Exclude illegitimate parents, collaterals, and the State;
▪ Concur with surviving spouse, legitimate children, and legitimate
parents;
▪ Excluded by no one.
o Legitimate parents
▪ Exclude collaterals and the State;
▪ Concur with illegitimate children and surviving spouse;
▪ Excluded by legitimate children.
o Illegitimate parents
 ▪ Exclude collaterals and the State;
▪ Concur with surviving spouse;
▪ Excluded by legitimate children and illegitimate children.
o Surviving spouse
▪ Excludes collaterals other than brothers, sister, nephews and nieces,
and the State;
▪ Concurs with legitimate children, illegitimate children, legitimate
parents, illegitimate parents, brothers, sisters, nephews, and nieces;
▪ Excluded by no one.
o Brothers and Sister, nephews, and nieces
▪ Exclude all other collaterals and the State;
▪ Concur with surviving spouse;
▪ Excluded by legitimate children, illegitimate children, legitimate
parents, and illegitimate parents.
o Other collaterals
▪ Exclude collaterals in remoter degrees and the State;
▪ Concur with collaterals in the same degree;
▪ Excluded by legitimate children, illegitimate children, legitimate
parents, illegitimate parents, surviving spouse, brothers and sisters,
and nephews and nieces.
o State
▪ Excludes no one;
▪ Concurs with no one;
▪ Excluded by everyone.

Q: Alex was an Air Afrique pilot. On January 30, 2000, as a non-paying passenger, he
boarded Kenya Air flight 431 bound for Nairobi, Kenya. The plane departed from Abidjan,
Ivory Coast. While in transit over the Ivory Coast, the plane exploded mid-air, killing
everyone on board. Esther is Alex's surviving widow. Esther executed an Affidavit of Self-
Adjudication as Alex's sole heir, adjudicating to herself two parcels of land and two motor
vehicles. Esther sought appointment as the legal representative of Efren's estate, which
the Regional Trial Court granted. She then filed a claim for damages with Kenya Air for
"indemnity and compensation for the loss of her husband," which Kenya Air amicably
settled with her. She received an award of US$430,000.00. Thereafter, Felicidad and
Cecilio, representing their siblings and their nephews and nieces (Alex's collateral
relatives), filed a Complaint for Partition of Estate and Declaration of Nullity of Affidavit of
Self-adjudication and Damages. They argued that they have a rightful share in Efren's
estate as his collateral relatives. On the other hand, Esther alleged that her husband died
as a result of a quasi-delict, considering he had no ticket when he rode the airplane.
Thus, it is the Fatal Accidents Act of Kenya which is applicable, and it clearly defined who
the dependents are: the spouse, descendants, and ascendants. Esther was able to
properly plead the Kenyan Law. Do the Filipino decedent's collateral relatives be
indemnified along with the surviving widow?

A: NO. Courts do not take judicial notice of foreign law. However, Esther properly pleaded
and proved the applicable Kenyan law. The Kenyan Law provides that the action for
damages shall be for the family of the deceased — wife, husband, parent, or child —
which makes no mention of collateral relatives. Thus, it is clear that the Fatal Accidents
Act of Kenya applies. Accordingly, petitioner, as the wife, is entitled to the totality of the
US$430,000.00 indemnity that Kenya Air paid her as settlement.

Invoking the Civil Code, the collateral relatives of Alex seek a share of the settlement
proceeds and pray for its division among them. However, as found that Kenyan law
properly applies here, there is no basis to apply Philippine law on the matter. As far as
the Fatal Accidents Act of Kenya is concerned, a decedent's heirs are only the surviving
spouse, ascendants, and descendants. Nowhere does it mention the collateral relatives of
a deceased person. (Vda. De Alcañeses v. Alcañeses, G.R. No. 187847, 30 June 2021)

2. Causes of Intestacy

• Causes of Intestacy
o Non-fulfillment of Suspensive attached to the institution of heir; condition
o If a person dies without a Will, or with a void will, or one which has
subsequently lost its validity:
o Incapacity of instituted heir;
o Predecease of the instituted heir;
o Expiration of term or period of institution;
o Repudiation by the instituted heir;
o Partial institution of heir, in which case, intestacy takes place as to the
undisposed portion (mixed succession);
o Preterition, in which case intestacy may be total or partial depending on
whether or not there are legacies/devises;
o Absence of an instituted of heir;
o Non-compliance or Impossibility of compliance with the will; and
o Fulfillment of Resolutory condition.

3. Order of Intestate Succession

• Order of Preference Between Lines

o First, succession takes place in the direct descending line; (Art. 978, NCC)
o Second, in the direct ascending line; (Art. 985, NCC) and
o Finally, in the collateral line. (Art. 1003, NCC)

• Order of Intestate Succession to a Legitimate Child

o In general, and without prejudice to the concurrent right of other heirs in
proper cases, the order of intestate succession to a legitimate child is as
follows:
▪ Legitimate children and descendants;
▪ Legitimate parents and ascendants;
▪ Illegitimate children;
▪ Illegitimate parents;
▪ The surviving spouse;
▪ Brothers, sisters, nephews, nieces;
▪ Other collaterals up to the fifth degree; and
▪ State. (Rabuya, 2009; Balane, 2016)

• Order of Intestate Succession to an Illegitimate Child

o The legitimate children and descendants of a person who is an illegitimate
child are preferred over other intestate heirs, without prejudice to the right
of concurrence of illegitimate children and the surviving spouse;
o In the absence of legitimate children and descendants, the illegitimate
children (of the illegitimate child) and their descendants succeed to the
entire estate, without prejudice to the concurrent right of the surviving
spouse;
o In the absence of children and descendants, whether legitimate or
illegitimate, the third in the order of succession to the estate of the
illegitimate child is his illegitimate parents. If both parents survive and are
entitled to succeed, they divide the estate share and share alike. Although
the law is silent, if the surviving spouse of the illegitimate child concurs with
the illegitimate parents, the surviving spouse shall be entitled to one-half of
the estate while the illegitimate parents get the other half;
▪ NOTE: In the ascending line, only the illegitimate parents are entitled
 to inherit from the illegitimate child; the other illegitimate
descendants are not so entitled.
o In default of children or descendants, legitimate or illegitimate, and
illegitimate parents, the surviving spouse shall inherit the entire estate. But
if the surviving spouse should survive with brothers and sisters, nephews
and nieces, the surviving spouse shall inherit one-half of the estate, and the
latter the other half. The brothers and sisters must be by illegitimate
filiation; otherwise, the Iron Curtain Rule shall apply;
o Although the law is silent, illegitimate brothers and sisters who survive alone
shall get the entire inheritance. The legitimate children of the illegitimate
parents are not entitled to inherit from the illegitimate child by virtue of Art.
992 of the NCC;
o The State (Manuel v. Ferrer, G.R. No. 117246, 21 Aug. 1995)

4. Rule of Proximity and Rule of Equality

a) Exceptions to the Rule of Proximity and Rule of Equality

• Rule of Proximity
o The relative nearest in degree excludes the more distant ones, saving the
right of representation when it properly takes place (CIVIL CODE, Art. 962,
par. 1).
o This rule presupposes that all of the relatives. belong to the same line. It is
subordinated to the rule of preference between lines (e.g., although the son
and the father of the decedent are both one (1) degree removed from the
latter, the son shall exclude the father).

• Rule of Equality
o Relatives in the same degree shall inherit in equal shares (CIVIL CODE, Art.
962).
o Exceptions
▪ Division in the ascending line (between paternal and maternal
grandparents);
▪ Division among brothers and sisters, some of whom are of the full and
others of half- blood;
▪ Division in cases where the right of representation takes place; and
▪ Division between legitimate and illegitimate. Children
o NOTE: This rule is subject to the rule of preference between lines.

5. Determination of Heirs

• Jurisprudence dictates that the determination of who are the legal heirs of the
deceased must be made in the proper special proceedings in court, and not in an
ordinary suit for recovery of ownership and possession of property. This must take
precedence over the action for recovery of possession and ownership. The Court
has consistently ruled that the trial court cannot make a declaration of heirship in
the civil action for the reason that such a declaration can only be made in a special
proceeding.

6. Successional Barrier (the “Iron Curtain Rule”) (See Aquino v.

Aquino, G.R. Nos. 208912 and 209018, December 7, 2021)

• Art. 992 of the NCC provides a barrier or iron curtain in that it prohibits absolutely
a succession ab intestato between the illegitimate child and the legitimate children
and relatives of the father or mother of said illegitimate child. They may have a
natural tie of blood, but this is not recognized by law for the purpose of Art. 992.
Between the legitimate family and the illegitimate family there is presumed to be
 an intervening antagonism and incompatibility. (Diaz v. ICA, G.R. No. L-66574, 21
Feb. 1990)
• A child whose parents did not marry each other can inherit from their
grandparent by their right of representation, regardless of the
grandparents’ marital status at the birth of the child’s parent.

AQUINO v. AQUINO
(G.R. Nos. 208912 and 209018 • 07 December 2021)

SC Revisits ‘Iron Curtain Rule’ in Succession Law, Upholds Best Interest of the Child

Children, regardless of their parents’ marital status, can now inherit from their
grandparents and other direct ascendants by right of representation.

In a Decision penned by Associate Justice Marvic M.V.F. Leonen, the Court En Banc
reinterpreted Article 992 of the Civil Code, which prohibits nonmarital children from
inheriting from their siblings who are marital children, as well as “relatives of [their]
father or mother[.]” The Decision used the terms “marital” and “nonmarital” to replace
the terms “legitimate” and “illegitimate” when referring to the children, as the latter
terms are pejorative terms when used to describe children based on their parents’ marital
status.

This case involves a woman who claims to be the nonmarital child of a man who died
before she was born. After her alleged paternal grandfather died, she asserted her right
to represent her deceased father—a marital child—in inheriting from her grandfather’s
estate.

However, in previous cases, the Court had interpreted Article 992 as barring nonmarital
children from inheriting from their grandparents and other direct ascendants, as they are
covered by the term “relatives.” The Supreme Court had called this prohibition the “iron
curtain rule,” inferred from a perceived hostility between the marital and nonmarital sides
of a family.

Now, the Court reexamined the iron curtain rule, finding that Article 992
“should be construed to account for other circumstances of birth and family
dynamics. Peace within families cannot be encouraged by callously depriving
some of its members of their inheritance. Such deprivation may even be the
cause of antagonism and alienation that could have been otherwise avoided.”

The Court also recognized that nonmarital children primarily suffer the consequences
imposed by laws, despite the status being beyond their power to change. Some children
may be nonmarital because their parents choose not to marry; in 2016, the Philippine
Statistics Authority reported that, from 2007 to 2016, there was 14.4% decline in
registered marriages in the country. Other children may be nonmarital because one or
both of their parents are below marriageable age. In 2017 alone, 196,478 children were
born to mothers 19 years old and under, and 52,342 children were sired by fathers 19
years old and under. There are also children who are nonmarital when their mother was a
survivor of sexual assault who did not marry the perpetrator; or when one parent dies
before they can marry the other parent.

Departing from regressive conjectures about family life in favor of the best
interests of the child, the Court abandoned the presumption that “nonmarital
children are products of illicit relationships or that they are automatically placed
in a hostile environment perpetrated by the marital family.”

The Court ruled that grandparents and other direct ascendants are outside the scope of
“relatives” under Article 992. “Both marital and nonmarital children, whether born from a
marital or nonmarital child, are blood relatives of their parents and other ascendants.”
Thus, a nonmarital child’s right of representation should be governed by Article 982 of
the Civil Code, which does not differentiate based on the birth status of grandchildren and
other direct descendants.

The two amici curiae appointed by the Court, Dean Cynthia Del Castillo and Professor
Elizabeth Aguiling-Pangalangan, also contributed insights on the Civil Code, Family Code,
and jurisprudential treatment of nonmarital children.

However, because of factual issues with the nonmarital child’s claim of filiation, the Court
remanded the case to the Regional Trial Court and ordered it to receive further evidence,
including DNA evidence. It emphasized that DNA testing is a valid method of determining
filiation in all cases where this is an issue.

7. Successional Rights of Adopted Children

• An adopted child is counted as one of the legitimate children and he inherits in the
same manner as them.
• No Right of Representation
o However, they cannot represent because they are not capable of succeeding
the decedent. As to the adopted children, they are not related to the
decedent because the relationship created by the adoption is between only
the adopting parents and the adopted child and does not extend to the blood
relatives of either party.

8. Successional Rights of Adopting Parents

Article 984. In case of the death of an adopted child, leaving no children or descendants,
his parents and relatives by consanguinity and not by adoption, shall be his legal heirs.

• The adopter and the adoptee also have reciprocal rights of succession without
distinction from legitimate filiation.
• The adoption is between only the adopting parents and the adopted child and does
not extend to the blood relatives of either party. Hence, they are treated as the
legitimate parents of the adopted children.

9. Successional Rights of Marital and Non-Marital Children

Article 980. The children of the deceased shall always inherit from him in their own
right, dividing the inheritance in equal shares.

Art. 981. Should children of the deceased and descendants of other children who are
dead, survive, the former shall inherit in their own right, and the latter by right of
representation. (934a)

Article 983. If illegitimate children survive with legitimate children, the shares of
the former shall be in the proportions prescribed by Article 895.

Article 895. The legitime of each of the acknowledged natural children and each of
the natural children by legal fiction shall consist of one-half of the legitime of each
of the legitimate children or descendants

10. Successional Rights of the Surviving Spouse

Article 995. In the absence of legitimate descendants and ascendants, and

illegitimate children and their descendants, whether legitimate or illegitimate, the
surviving spouse shall inherit the entire estate, without prejudice to the rights of
brothers and sisters, nephews and nieces, should there be any, under article 1001.
(946a)

Article 996. If a widow or widower and legitimate children or descendants are left,
the surviving spouse has in the succession the same share as that of each of the
children. (834a)

Article 997. When the widow or widower survives with legitimate parents or
ascendants, the surviving spouse shall be entitled to one-half of the estate, and the
legitimate parents or ascendants to the other half. (836a)

Article 998. If a widow or widower survives with illegitimate children, such widow or
widower shall be entitled to one-half of the inheritance, and the illegitimate children or
their descendants, whether legitimate or illegitimate, to the other half. (n)

Article 999. When the widow or widower survives with legitimate children or their
descendants and illegitimate children or their descendants, whether legitimate or
illegitimate, such widow or widower shall be entitled to the same share as that of a
legitimate child. (n)

Article 1000. If legitimate ascendants, the surviving spouse, and illegitimate

children are left, the ascendants shall be entitled to one-half of the inheritance, and the
other half shall be divided between the surviving spouse and the illegitimate
children so that such widow or widower shall have one-fourth of the estate, and the
illegitimate children the other fourth. (841a)

Article 1001. Should brothers and sisters or their children survive with the widow or
widower, the latter shall be entitled to one-half of the inheritance and the brothers
and sisters or their children to the other half. (953, 837a)

Article 1002. In case of a legal separation, if the surviving spouse gave cause for
the separation, he or she shall not have any of the rights granted in the preceding
articles. (n)

11. Successional Rights of Collateral Relatives

Article 1003. If there are no descendants, ascendants, illegitimate children, or a

surviving spouse, the collateral relatives shall succeed to the entire estate of the
deceased in accordance with the following articles. (946a)

Article 1004. Should the only survivors be brothers and sisters of the full blood, they
shall inherit in equal shares. (947)

Article 1005. Should brothers and sisters survive together with nephews and
nieces, who are the children of the descendant's brothers and sisters of the full blood,
the former shall inherit per capita, and the latter per stirpes. (948)

Article 1006. Should brother and sisters of the full blood survive together with
brothers and sisters of the half blood, the former shall be entitled to a share
double that of the latter.

Article 1007. In case brothers and sisters of the half blood, some on the father's and
some on the mother's side, are the only survivors, all shall inherit in equal shares
without distinction as to the origin of the property. (950)
Article 1008. Children of brothers and sisters of the half blood shall succeed per
capita or per stirpes, in accordance with the rules laid down for the brothers and sisters
of the full blood. (915)

Article 1009. Should there be neither brothers nor sisters nor children of brothers
or sisters, the other collateral relatives shall succeed to the estate. The latter shall
succeed without distinction of lines or preference among them by reason of relationship
by the whole blood. (954a)

Article 1010. The right to inherit ab intestato shall not extend beyond the fifth
degree of relationship in the collateral line. (955a)

• Per stirpes means that the beneficiary's inheritance will be passed on to their
next-in-line heir, or heirs. Per capita means that the beneficiary's inheritance
would be divided evenly amongst any surviving beneficiaries.

D. Provisions Common to Testate and Intestate Succession

1. Capacity to Succeed

• General Provisions
o Determination of the Capacity to Succeed
▪ GR: In order to judge the capacity of the heir, devisee, or legatee, his
 qualification at the time of the death of the decedent shall be the
criterion.
▪ XPN: If the institution, devise or legacy should be conditional
(suspensive condition), the capacity is to be determined not only at
the time of the death of the decedent but also at the time of the
fulfillment of the condition.
o Persons not incapacitated by law may succeed by will or ab intestato. The
provisions relating to incapacity by will are equally applicable to intestate
succession. (Art. 1024, NCC)
o In order to be capacitated to inherit, the heir, devisee or legatee must be
living at the moment the succession opens, except in case of representation,
when it is proper.
o A child already conceived at the time of the death of the decedent is capable
of succeeding provided it be born later under the conditions prescribed in
Art. 41 of the NCC. (Art. 1025, NCC) (2007 BAR)

• Kinds of Incapacity to Succeed

o Absolute incapacity to succeed means that the person is incapacitated to
succeed in any form, whether by testate or intestate succession.
▪ Those not living at the time of death of the testator (Art. 1025, NCC)
▪ Those who cannot be identified (Art. 845, NCC)
▪ Individuals, associations, and corporations who are not permitted by
law to inherit (Art. 1027(6), NCC)
o Relative incapacity to succeed means the person is incapacitated to succeed
because of some special relation to the testator.
▪ Undue influence or interest; (Art. 1027, NCC)
▪ Morality or public policy; (Art. 739, NCC)
▪ Acts of unworthiness; (Art. 1032, NCC)
▪ By Operation of law. (Jurado, 2009)

a) Incapacity by Reason of Unworthiness and Effects of

Condonation

• The following are incapacitated to succeed by reason of Unworthiness (P-C-A-V-A-

F-P-F)
o Parents who have abandoned their children or induced their daughters to
lead a corrupt or immoral life, or attempted against their virtues;
o Persons Convicted of an attempt against the life of the testator, his or her
spouse, descendants, or ascendants;
o Persons who 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
groundless;
o 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.
o Person convicted of Adultery or concubinage with the spouse of the testator;
o Persons who by Fraud, violence, intimidation, or undue influence should
cause the testator to make a will or to change one already made;
o Persons who by the same means Prevent another from making a will, or
from revoking one already made, or who supplant, conceal, or alter the
latter's will; and
o Persons who Falsify or forge a supposed will of the decedent.

• NOTE: Grounds 1, 2, 3, 5 and 6 are the same grounds as in disinheritance.

 Numbers 6, 7 and 8 cover six (6) acts which relate to wills:
o Causing the testator to make a will;
o Causing the testator to change an existing will;
o Preventing the decedent from making a will;
o Preventing the testator from revoking his will;
o Supplanting, concealing, or altering the testator's will; and
o Falsifying or forging a supposed will of the decedent

• Effect of Condonation
o Condonation in writing sets aside the grounds for unworthiness.
▪ Article 1033 of the Civil Code enunciates that the cause of
unworthiness shall be without effect if the testator had knowledge
thereof at the time he made the will, or if, having known of them
subsequently, he should condone them in writing. The operative word
here is “writing”.
▪ Forgiveness or condonation must be in writing.
▪ As regards instituting the unworthy heir in a will despite knowledge of
the existence of the cause of unworthiness, the better opinion seems
to be that it is not enough; the will must also either institute the
unworthy heir or restore him to capacity.

UNWORTHINESS DISINHERITANCE
Effects on the Inheritance
Deprivation of a compulsory heir of his Exclusion from the entire inheritance.
legitime However, donations inter vivos are not
affected
Effects of Pardon or Reconciliation
Reconciliation between the offender and If the testator pardons the act of
the offended party deprives the latter of unworthiness, the cause of unworthiness
the right to disinherit and renders shall be without effect.
ineffectual any disinheritance that may
have been made.
Manner of Reconciliation
Express or implied. Written condonation or execution by the
offended party of a will with knowledge of
the cause of unworthiness. (Art. 1033,
NCC)

b) Incapacity by Reason of Morality

• The following are incapacitated to succeed based on morality or public policy (A-C-
O)
o Persons guilty of Adultery or concubinage with the testator at the time of
the making of the will;
o Persons guilty of the same Criminal offense, in consideration thereof; and
o A public officer or his wife, descendants, and ascendants, by reason of his
Office.

c) Incapacity by Reason of Possible Undue Influence

• Persons incapacitated to succeed based on Undue Influence or Interest (P-R-G-W-

P-I)
o The Priest who heard the confession of the testator during his last illness, or
the minister of the gospel who extended spiritual aid to him during the same
period;
▪ Requisites for a Priest or Minister to be Disqualified from Inheriting
 ▪ That the priest must have heard the confession of the testator or that
the minister must have extended spiritual aid to the testator during
the latter’s last illness; and
▪ That the testator must have executed the will during such last illness.
o The Relatives of such priest or minister of the gospel within the fourth
degree, the church, order, chapter, community, organization, or institution
to which such priest or minister may belong;
o A Guardian with respect to testamentary dispositions given by a ward in his
favor before the final accounts of the guardianship have been approved,
even if the testator should die after the approval thereof; nevertheless, any
provision made by the ward in favor of the guardian when the latter is his
ascendants, descendant, brother, sister, or spouse, shall be valid;
▪ GR: The disqualification applies when the will is made before the
approval of final accounts or lifting of guardianship.
▪ XPN: It does not apply even when the will is made after the
guardianship began or before it is terminated when the guardian is
an: (A-D-B-S2)
• Ascendant
• Descendant
• Brother
• Sister
• Spouse of the testator
o Any attesting Witness to the execution of a will, the spouse, parents, or
children, or anyone claiming under such witness, spouse, parents, or
children;
▪ NOTE: Numbers 1 to 4 do not apply to legitimes.
▪ Paragraph 4 nullifies not just legacies and devises, but all
testamentary dispositions made in the witness’ favor.
▪ The discrepancy between paragraph 4 and Article 832, which allows
for an exception; i.e., if there are three other competent witnesses.
That exception should be read into this paragraph.
o Any Physician, surgeon, nurse, health officer or druggist who took care of
the testator during his last illness; and
▪ NOTE: Number 5 is an absolute disqualification.
▪ Requisites for Disqualification of Physician
• The will was made during the last illness;
• The sick person must have been taken cared of during his last
illness;
• Medical attendance was made; and
• The will was executed during or after he was being cared of.
o Individuals, associations, and corporations not permitted by law to inherit.

2. Right of Representation in Testacy and Intestacy

• Definition
o Representation is a right created by fiction of law, by virtue of which the
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 could
have inherited. (Art. 970, NCC)
o In order that representation may take place, it is necessary that the
representative himself be capable of succeeding the decedent. (Art. 973,
NCC)

• Effect of Representation
o Whenever there is succession by representation, the division of the estate
shall be made per stirpes, in such manner that the representative or
 representatives shall not inherit more than what the person they represent
would inherit if he were living or could inherit. (Art. 974, NCC)

• Rule on Equal Division of Lines

o General Rule: Intestate heirs equal in degree inherit in equal shares.
o Exceptions:
▪ In the ascending line, the rule of division by line is ½ to the maternal
line and ½ to the paternal line, and within each line, the division is
per capita.
▪ In the collateral line, the full--‐blood brothers/sisters will get double
that of the half-blood.

a) Requisites and Limitations

• Right of Representation arises because of:

o Predecease;
o Incapacity or unworthiness; or
o Disinheritance. (Balane, 2010)

• Right of representation takes place only in favor of children of brothers or sisters,

whether full or half blood and only if they concur with at least one uncle or aunt.

• When Right of Representation NOT available:

o As to compulsory heirs: In case of repudiation, the one who repudiates his
inheritance cannot be represented. (Art. 977, NCC) Their own heirs inherit in
their own right;
o As to voluntary heirs: Voluntary heirs, legatees, and devisees who either
predecease the testator, or renounce the inheritance, cannot be represented
by their own heirs, with respect to their supposed inheritance.

3. Right of Accretion in Testamentary Succession and in Intestacy

• Definition
o 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-heir, co-devisees, or co-legatees.
(Art. 1015, NCC)

• Basis
o Accretion is a right based on the presumed will of the deceased that he
prefers to give certain properties to certain individuals rather than to his
legal heirs. Accretion is preferred over intestacy.

a) Requisites and Limitations

• Requisites of Accretion (Art. 1016, NCC)

o In order that the right of accretion may take place in a testamentary
succession, it shall be necessary:
▪ That two or more persons be called to the same inheritance, or to the
same portion thereof, pro indiviso; and
▪ That one of the persons thus called die before the testator, or
renounce the inheritance, or be incapacitated to receive it.

• In testamentary succession, accretion takes place in case of:

o Predecease;
 o Incapacity;
o Renunciation; (Art. 1015, NCC)
o Non-fulfillment of the suspensive condition imposed upon instituted heir;
and
o Ineffective testamentary disposition.

• In intestate succession, accretion takes place in case of:

o Predecease of legal heir;
o Incapacity or unworthiness of legal heir; and
o Repudiation or renunciation by legal heir.

• Limitations
o Accretion takes place only if there is no representation. In renunciation,
there is always accretion.
▪ Reason: No representation in renunciation
o In testamentary succession, accretion applies only to the disposable free
portion.
o In intestate succession, if all heirs of the same degree repudiate the
inheritance, then the right of accretion cannot take place.
▪ The relatives in the next degree shall inherit in their own right and
cannot represent the person or persons repudiating the inheritance.

4. Acceptance and Repudiation of Inheritance

• The acceptance or repudiation of the inheritance is a purely voluntary and free act.
(Art. 1041, NCC) Principal Characteristics of Acceptance and Repudiation 1. It is
voluntary and free; (Art. 1041, NCC) 2. It retroacts to the moment of the death of
the decedent (Art. 1042, NCC) 3. Once made, it is irrevocable. XPN: 1. When it
was made through any of the causes that vitiate consent, or 2. When an unknown
will appears. (Art. 1056, NCC)

• Inheritance is deemed accepted when:

o The heir sells, donates, or assigns his rights to a stranger, to his co-heirs, or
to any of them;
o The heir renounces it, even though gratuitously, for the benefit of one or
more heirs;
o Renunciation is in favor of all heirs indiscriminately for a consideration (Art.
1050, NCC); or
o Other tacit acts of acceptance:
▪ Heir demands partition of the inheritance;
▪ Heir alienates some objects of the inheritance;
▪ c. Acts of preservation or administration if, through such acts, the title
or capacity of the heir has been assumed; (Jurado, 2009)
▪ Failure to signify acceptance or repudiation within 30 days after an
order of distribution by the probate court. (Art. 1057, NCC)

a) Form of Repudiation

• Forms in which Repudiation is made

o By means of a public instrument;
o By means of an authentic instrument;
o By means of a petition presented to the court having jurisdiction over the
testamentary or intestate proceedings (filed in the settlement proceedings).

b) Effects of Repudiation Compared to Predecease and

Incapacity
 If an heir is both a testate and legal heir and he repudiated the inheritance as a
testate heir, he is understood to have repudiated in both capacities. However, should he
repudiate as a legal heir, without knowledge of being a testate heir, he may still accept
the inheritance as a testate heir. (Art. 1055, NCC)

OBLIGATIONS AND CONTRACTS

I. Obligations

A. General Provisions

1. Definition

Article 1156. An obligation is a juridical necessity to give, to do or not to do. (n)

• An obligation is a juridical necessity to give, to do, or not to do.1 It is also defined

as a juridical relation whereby a person (creditor) may demand from another
(debtor) the observance of a determinate conduct, and in case of breach, may
obtain satisfaction from the assets of the latter.

2. Essential Elements

• Juridical Tie or Vinculum Juris

o It is the efficient cause established by the various sources of obligations
(law, contracts, quasi-contracts, delicts, and quasi-delicts).
• Object
o It is the prestation or the particular conduct required to be observed by the
debtor (to give, to do, or not to do).
• Active Subject (called the Obligee or Creditor)
o It is the person who can demand the fulfillment of the obligation.
• Passive Subject (called the Obligor or Debtor)
o It is the person from whom the obligation is juridically demandable.

3. Sources of Obligation

Article 1157. Obligations arise from: (1) Law; (2) Contracts; (3) Quasi-contracts; (4) Acts
or omissions punished by law; and (5) Quasi-delicts.

• Law
o Must Be Expressly Provided
▪ Obligations derived from law are not presumed. Hence, only those
expressly determined in the Civil Code or in special laws are
demandable.
o When Source of Obligation
▪ Law is the source of obligation when it does not merely limit itself to
enforcing compliance with an obligation originating from the acts of
the parties, but by itself establishes the obligation, making the act of
the party or parties only a moment, or determining the occasion in
order that the obligation contained in the legal precept may begin to
be demandable.

• Contracts
o Definition
▪ A contract is defined as "a meeting of minds between two persons
whereby one binds himself, with respect to the other, to give
 something or to render some service.
▪ The definition lays stress on the meeting of the minds of the
contracting parties," for consent is the essence of a contract. It is the
element of consent which distinguishes contracts from the other
sources of obligations.
o Obligatory Force of Contracts
▪ Obligations arising from contracts have the force of law between the
contracting parties and should be complied with in good faith. In
contract law, this principle is known as the obligatory force of
contracts.

• Quasi-contracts
o Definition
▪ It is a juridical relation arising from certain lawful, voluntary, and
unilateral acts with the objective of preventing unjust enrichment
or benefit at the expense of another.
o Forms of Ouasi-contracts
▪ There are several forms of quasi-contracts enumerated in the Civil
Code, but the enumeration is not exclusive. In those instances where
there is no pre-existing contractual relation, and there being neither a
delict nor a quasi-delict, a juridical relation known as quasi-contract
may arise between the parties to avoid a case of unjust enrichment.
o Negotiorum Gestio
▪ Definition
• It is a juridical relation which arises when a person voluntarily
takes charge of the agency or management of another’s
abandoned or neglected business or property without the
owner’s authority.
▪ Requisites
• A person (called the officious manager or gestor) voluntarily
assumes the management or agency of the business or
property of another;
• The property must be neglected or abandoned; otherwise, what
results is a case of unauthorized/unenforceable contract and
not negotiorum gestio;
• There is no authorization from the owner, whether express or
implied; otherwise, what results is a contract of agency and not
negotiorum gestio; and
• The assumption of agency or management must be done in
good faith.
▪ Obligations of Officious Manager
• He is obliged to continue with the agency or management until
the termination of the affair and its incidents, and he can only
require the owner to substitute him if the latter is in a position
to do so;
• In the performance of his duties, he is obliged to observe the
diligence of a good father of a family—if the owner suffers
damage by reason of the fault or negligence of the officious
manager, the latter is liable to pay damages to the former;
• He is personally liable for contracts which he has entered into
with third persons, insofar as the latter shall be concerned,
even though he acted in the name of the owner. Hence, there
shall be no right of action between the owner and such third
persons, except
o If the owner has ratified the management, either
expressly or tacitly; or
 o When the contract refers to things pertaining to the
owner of the business;
• If he delegates to another person all or some of his duties, he is
liable for the acts of the delegate, without prejudice to the
direct obligation of the delegate to the owner;
• The obligation of two or more officious managers is solidary,
unless when the management was assumed to save the thing
or business from imminent danger, in which case, their
obligation is merely joint; and
• He is not, as a rule, liable for any loss or damage to the
property or business by reason of fortuitous event. But in the
following situations, he is liable for any fortuitous event if he:
o Undertakes risky operations which the owner was not
accustomed to embark upon;
o Prefers his own interest to that of the owner;
o Fails to return the property or business after demand by
the owner;
o Assumes the management in bad faith;
o Is manifestly unfit to carry on the management, except
when the same was assumed to save the property or
business from imminent danger; and
o Prevents, by his intervention, a more competent person
from taking up the management, except when the same
was assumed to save the property or business from
imminent danger.
▪ Obligations of Owner
• The owner is liable to the officious manager for the following:
o Obligations incurred in his interest;
o Necessary and useful expenses; and
o Damages suffered by the officious manager in the
performance of his duties, in the following situations:
▪ If the owner enjoys the advantages of the officious
management;
▪ If the management had for its purpose the
prevention of an imminent and manifest loss,
although no benefit may have been derived; or
▪ Even if he did not derive any benefit and there has
been no imminent and manifest danger to the
property and business provided that the officious
manager has acted in good faith and the property
or business is intact.
o Solutio Indebiti
▪ Definition
• It is a juridical relation which arises when something is received
when there is no right to demand it, and it was unduly
delivered thru mistake.
▪ Requisites
• Payment is made when there exists no binding relation between
the payor, who has no duty to pay, and the person who
received the payment; and
• Payment is made thru mistake, and not thru liberality or some
other cause.
▪ Similarities with Action In Rem Verso:
• The plaintiff suffers a loss;
• The defendant is correspondingly enriched;
• The enrichment of the defendant is unjustified because the
 delivery or payment to him is without legal or just cause;
• The defendant has the obligation to return what was unduly
delivered to him; and
• The objective is to prevent unjust enrichment.
▪ Distinctions between Solutio Indebiti and In Rem Verso
• The source of obligation in solutio indebiti is quasi-contract;
while in in rem verso, it is law;
• In solutio indebiti, the undue payment is by reason of mistake
of fact or mistake in a doubtful or difficult provision of law;
while in in rem verso, the undue payment need not be by
reason of mistake, or if there was mistake, it was a mistake of
law that is not doubtful nor difficult.
▪ Obligations in Solutio Indebiti
• The recipient has the obligation to return what has been unduly
delivered;
• If he acted in bad faith, he is also liable:
o To pay legal interest if a sum of money is involved;
o To return the fruits he received or those which should
have been received, if the thing produces fruits;
o To answer for any loss or impairment of the thing from
any cause, until it is recovered; and
o To pay damages to the person who delivered the thing,
until it is recovered.
• If there are two or more payees, their responsibility is solidary.
o Other Forms of Quasi-Contracts
▪ Support and Funeral Expenses
• If support was given by a stranger, without the knowledge of
the person obliged to give support, the former has the right to
claim reimbursement from the latter unless he gave it out of
piety and without intention of being repaid;
• When support is unjustly refused by the person obliged to give
it and a third person furnished the same when urgently needed,
the latter has the right to demand reimbursement from the
former unless the same was given without the intention of
being reimbursed—also applicable when the father or mother of
a minor unjustly refuses to support or fails to give support to
the child when urgently needed;
• When funeral expenses are borne by a third person, without the
knowledge of the relatives who were obliged to give support to
the deceased, the former may claim reimbursement from the
latter.
▪ Accident and Calamities
• When during a fire, flood, storm, or other calamity, property is
saved from destruction by another person without the
knowledge of the owner, the latter is bound to pay the former
just compensation;
• When through an accident or other cause a person is injured or
becomes seriously ill, and he is treated or helped while he is
not in a condition to give consent to a contract, he shall be
liable for the services of the physician or other person aiding
him, unless the service has been rendered out of pure
generosity;
• When in a small community a majority of the inhabitants of age
decide upon a measure for protection against lawlessness, fire,
flood, storm, or other calamity, anyone who objects to the plan
and refuses to contribute to the expenses but is benefited by
 the project as executed shall be liable to pay his share of said
expenses.
▪ Other Situations
• A third person who pays the debtor’s indebtedness without the
latter’s knowledge is entitled to demand reimbursement but
only up to the extent that the payment has benefited the
debtor;
• Any person who is constrained to pay the taxes of another shall
be entitled to reimbursement from the latter; and
• When the government, upon the failure of any person to
comply with health or safety regulations concerning property,
undertakes to do the necessary work, even over his objection,
he shall be liable to pay the expenses.

• Acts or Omissions Punished by Law (Delicts)

o Basis of Civil Liability Ex Delicto
▪ Criminal liability will give rise to civil liability only if the same felonious
act or omission results in damage or injury to another and is the
direct and proximate cause thereof. Damage or injury to another is
evidently the foundation of the civil action.
o Effect of Acquittal
▪ If accused is declared not author of act or omission complained of
• There is no civil liability ex delicto.
▪ If based on reasonable doubt
• He is not exempt from civil liability based on delict which may
be proved by preponderance of evidence only.
o Effect of Death Pending Appeal of Judgment of Conviction
▪ Both the criminal liability and the civil liability (arising from the crime)
are extinguished. However, the civil liability based on other sources of
obligations (other than the delict) is not extinguished but may be
recovered only by filing a separate civil action. The statute of
limitations on the civil liability (based on other sources than delict) is
deemed interrupted during the pendency of the criminal case.

• Quasi-Delicts
o Requisites for Recovery
▪ To sustain a claim based on quasi-delict, the following requisites must
concur:
• Damage suffered by the plaintiff;
• Fault or negligence of the defendant; and
• Connection of cause and effect between the fault or negligence
of defendant and the damage incurred by the plaintiff.
o Distinguished from Delict
▪ Crimes affect the public interest, while quasi-delicts are only of
private concern;
▪ The Penal Code punishes or corrects the criminal act, while the Civil
Code, by means of indemnification, merely repairs the damage; and
▪ Delicts are not as broad as quasi-delicts, because the former are
punished only if there is a penal law clearly covering them, while the
latter, quasi-delicts, include all acts in which any kind of fault or
negligence intervenes.
o Scope of Quasi-delicts
▪ Covers acts or omissions criminal in character
• Article 2176 of the Civil Code, where it refers to “fault or
negligence, ” covers not only acts “not punishable by law" but
also acts criminal in character, whether intentional and
 voluntary or negligent.
• Hence, the same intentional, voluntary, or negligent act causing
damages and punished by law may produce two kinds of civil
liability:
o Civil liability arising from the crime; or
o Civil liability arising from quasi-delict.
▪ But double recovery not allowed
• The Civil Code expressly prohibits the plaintiff from recovering
damages twice under delict and quasi-delict “for the same act
or omission” of the defendant.
▪ Effect of pre-existing contractual relations
• As a rule, the pre-existing contract between the parties may
bar the applicability of the law on quasi-delict. However, by way
of exception, the existence of a contract between the parties
does not bar the commission of a tort (quasi-delict) by one
against the other and the consequent recovery of damages
therefor, when the act that breaks the contract is also a tort.
▪ Culpa contractual distinguished from culpa extra contractual (culpa
aquiliana)
• In the first, the source of obligation is contract; while in the
second, the source of obligation is quasi-delict;
• In the first, the negligence is merely incidental to the
performance of an already existing obligation (arising from
contracts) and that the vinculum juris exists independently of
the negligence; while in the second, the negligence is
substantive and independent in that it is the negligence itself
which creates the vinculum; and
• In the first, proof of the contract and of its non-performance is
sufficient prima facie to warrant recovery, hence, it is not
necessary to prove the negligence; while in the second, the
burden of proof rests upon the plaintiff to prove the negligence
and failure to do so shall result in the dismissal of the action.

B. Nature and Effects of Obligations

Art. 1163. Every person obliged to give something is also obliged to take care of it with
the proper diligence of a good father of a family, unless the law or the stipulation of the
parties requires another standard of care. (1094a)

• Types of Real Obligations

o Determinate/specific
▪ It is particularly designated or physically segregated from all others of
the same class.
o Indeterminate/Generic
▪ It is designated merely by its class or genus.
o Delimited Generic
▪ Generic objects confined to a particular class (e.g., An obligation to
deliver one of my horses).

• Remedies of the Creditor in case of Failure to Deliver the Thing Due

Specific Generic
Specific performance Specific performance (delivery of anything
belonging to the same species)
Rescission (action to rescind under Art. Ask that the obligation be complied with at
1380, NCC) the debtor’s expense, with damages.
Resolution (action for cancellation under Resolution or specific performance, with
Art. 1191, NCC) damages in either case (Art. 1191, NCC)
Damages, in both cases (Art. 1170, NCC)

• Right of the Creditor to the Fruit

o The creditor has a right to the fruits of the thing from the time the obligation
to deliver it arises. However, he shall acquire no real right over it until the
same has been delivered to him.

1. Breaches of Obligations

• Degree of Diligence Required

o That agreed upon;
o In the absence of such, that which is required by the law:
▪ GR: In the absence of the foregoing, diligence of a good father of a
family.
▪ XPNs:
• Common carriers requiring extraordinary diligence.
• Banks require the highest degree of diligence, being imbued
with public interest.

• Diligence of a Good Father of a Family

o That reasonable diligence which an ordinary prudent person would have
done under the same circumstances.

Q: Great Harvest hired Tan to transport 430 bags of soya beans from Tacoma to Selecta
Feeds. At Selecta Feeds, however, the shipment was rejected. The truck and its shipment
never reached Great Harvest's warehouse. Great Harvest asked Tan about the missing
delivery but to no avail. Is Anita Tan liable for the lost bags of soya beans?

A: YES, Annie Tan should be liable. Common carriers are mandated to internalize or
shoulder the costs under the contracts of carriage because a contract of carriage is
structured so that passengers or shippers surrender total control over their persons or
goods to common carriers. Here, the petitioner is a common carrier obligated to exercise
extraordinary diligence over the goods entrusted to her. Her responsibility began from
the time she received the soya beans from the respondent's broker and would only cease
after she has delivered them to the consignee or any person with the right to receive
them. (Tan v. Great Harvest Enterprises, Inc., G.R. No. 220400, 20 Mar. 2019)

Q: Eliza, a condo unit owner, delivered thru FedEx a check to Sison, who will be paying in
behalf of Eliza, however, Sison did not receive the package. Later, it was found out that
the check was delivered to Sison’s neighbor, but there was no signed receipt. Hence,
Eliza sent a demand letter to FedEx, the delivery courier, for payment of damages since
the check was supposed to be used to pay the balance for the condo unit, which was
foreclosed since it was unpaid. FedEx refused, and thus Eliza filed a complaint for
damages with the Regional Trial Court. Is FedEx liable?

A: YES. The Civil Code mandates common carriers to observe extraordinary diligence in
caring for the goods they are transporting. Common carriers must ascertain the identity
of the recipient. Failing to deliver shipment to the designated recipient amounts to a
failure to deliver. The shipment shall then be considered lost, and liability for this loss
ensues. FedEx is unable to prove that it exercised extraordinary diligence in ensuring
delivery of the package to its designated consignee. It claimed to have made a delivery
but it even admits that it was not to the designated consignee.
• Forms of Breach of Obligations
o Voluntary (Liable for damages)
▪ Default (Mora)
• Definition
o Those obliged to deliver or to do something incur in delay
from the time the obligee (creditor) judicially or
extrajudicially demands from them the fulfillment of their
obligation.
o In reciprocal obligations, neither party incurs in delay if
the other does not comply or is not ready to comply in a
proper manner with what is incumbent upon him. From
the moment one of the parties fulfills his obligations,
delay by the other begins.
• Kinds of Delay
o Ordinary Delay
▪ This is the mere failure to perform an obligation at
the stipulated time.
o Extraordinary Delay or Legal Delay
▪ This delay already equates to non-fulfillment of the
obligation and arises after the extrajudicial or
judicial demand has been made upon the debtor.
• Kinds of Legal Delay or Default
o Mora solvendi – Default on the part of the debtor/obligor
▪ Ex re – Default in real obligations (to give);
▪ Ex personae – Default in personal obligations (to
do);
o Mora accipiendi – Default on the part of the
creditor/obligee;
o Compensatio morae – Default on the part of both the
debtor and creditor in reciprocal obligations.
• Causes of Cessation of the Effects of Mora
o Renunciation (express/implied); or
o Prescription.
▪ Fraud (Dolo) – it is an intentional evasion of the faithful performance
of the obligation.
▪ Negligence (Culpa) – the fault or negligence of the obligor consists
of the omission of that diligence which is required by the nature of the
obligation, and corresponds with the circumstances of the persons, of
the time and the place.
• Effect of Good Faith or Bad Faith of the Obligor
o If the obligor acted in good faith, he is responsible for
the natural and probable consequences of the breach of
contract and which the parties have reasonably foreseen
at the time of the constitution of the obligation.
o If the obligor is guilty of fraud, bad faith, malice or
wanton attitude, he shall be responsible for all damages
which may be reasonably attributed to the non-
performance of the obligation.
• Contributory Negligence of the Creditor
o GR: It reduces or mitigates the damages which he can
recover.
o XPN: If the negligent act or omission of the creditor is
the proximate cause of the event, which led to the
damage or injury complained of, he cannot recover.
▪ Breach through contravention of the tenor thereof.
 o Involuntary
▪ Debtor is unable to perform the obligation due to fortuitous event,
thus not liable for damages, as a rule.
• Definition
o A fortuitous event is an occurrence or happening which
could not be foreseen, or even if foreseen, is inevitable.
• Requisites (C-O-D-E)
o Cause of breach is independent of the will of the debtor;
o The Event is unforeseeable or unavoidable;
o Occurrence renders it absolutely impossible for the
debtor to fulfill his obligation in a normal manner -
impossibility must be absolute not partial, otherwise not
force majeure; and
o Debtor is free from any participation in the aggravation
of the injury to the creditor.
• Liability for Loss due to Fortuitous Event
o GR: There is no liability for loss in case of fortuitous
event.
o XPNs: (La-N-S-P-C-Ba-G)
▪ Law;
▪ Nature of the obligation requires the assumption
of risk;
▪ Stipulation;
▪ The debtor is guilty of dolo, malice or bad faith has
Promised the same thing to two or more persons,
who does not have the same interest;
▪ The debtor Contributed to the loss;
▪ The possessor is in Bad faith; or
▪ The obligor is Guilty of fraud, negligence or delay
or if he contravened the tenor of the obligation.
• Effects of Fortuitous Events
o On determinate obligation – The obligation is
extinguished.
o On generic obligation – The obligation is not extinguished
(genus nun quam peruit – genus never perishes).

• Effects of Breach of Obligation

o If a person obliged to do something fails to do it, the same shall be executed
at his cost.
o This same rule shall be observed if he does it in contravention of the tenor of
the obligation. Furthermore, it may be decreed that what has been poorly
done be undone.
o When the obligation consists in not doing, and the obligor does what has
been forbidden him, it shall also be undone at his expense.

• Instances where the Remedy under Art. 1168 is Not Available

o Where the effects of the act which is forbidden are definite in character
▪ Even if it is possible for the creditor to ask that the act be undone at
the expense of the debtor, consequences contrary to the object of the
obligation will have been produced which are permanent in character.
o Where it would be physically or legally impossible to undo what has been
undone –
▪ Because of:
• The very nature of the act itself;
• A provision of law; or
• Conflicting rights of third persons.
 o NOTE: In either case, the remedy is to seek recovery for damages.

2. Remedies for Breach of Obligation

• In case of breach of obligation, the following are the remedies available:

o Specific performance, or substituted performance by a third person in
case of an obligation to deliver a generic thing, and in obligations to do,
unless it is a purely personal act;
▪ Exhaustion of the properties of the debtor (not exempt from
attachment under the law);
▪ Accion subrogatoria (subrogatory action) – An indirect action brought
in the name of the debtor by the creditor to enforce the former’s
rights except:
• Personal rights of the debtor;
• Rights inherent in the person of the debtor;
• Properties exempt from execution. e.g., family home
▪ Accion pauliana (rescissory action) – An action to impugn or assail the
acts done or contracts entered into by the debtor in fraud of his
creditor.

Q: Sacramento Steel Corporation (SSC) executed five separate deeds of chattel mortgage
constituted over various equipment for International Exchange Bank (IEB) which
subsequently, SSC defaulted in the payment of its obligations. IEB’s demand for payment
went unheeded. Meanwhile, Metropolitan Bank and Trust Company (Metro Bank) filed a
motion for intervention as a creditor of SSC. Which it contends that the mortgage
contracts between IEB and SSC were entered into to defraud the latter’s creditors. Thus,
it prayed for the rescission of the chattel mortgaged executed by SSC in favor of IEB. Will
the action to rescind the mortgage prosper?

A: NO. Jurisprudence is clear that the following successive measures must be taken by a
creditor before he may bring an action for rescission of an allegedly fraudulent contract:

(1) exhaust the properties of the debtor through levying by attachment and execution
upon all the property of the debtor, except such as are exempt by law from execution;
(2) exercise all the rights and actions of the debtor, save those personal to him (acción
subrogatoria); and
(3) seek rescission of the contracts executed by the debtor in fraud of their rights (acción
pauliana).

It is thus, apparent that an action to rescind, or an acción pauliana, must be of last

resort, availed of only after the creditor has exhausted all the properties of the debtor not
exempted from execution or after all other legal remedies have been exhausted and have
been proven futile

o Rescission (or resolution in reciprocal obligations);

▪ It refers to the cancellation of the contract or reciprocal obligation in
case of breach on the part of one, which breach is violative of the
reciprocity between the parties. This is properly called resolution.
▪ The injured party can only choose either fulfillment or rescission of
the obligation, and not both.
• XPN: He may also seek rescission, even after he has chosen
fulfillment, if the latter should become impossible.

o Damages, in any case; or

▪ Those liable under Art. 1170 shall pay damages only if aside from the
breach of contract, prejudice or damage was caused.
 ▪ If action is brought for specific performance, damages sought must be
asked in the same action; otherwise, the damages are deemed
waived.
▪ Kinds of Damages (M-E-N-T-A-L)
• Moral;
• Exemplary;
• Nominal;
• Temperate;
• Actual;
• Liquidated
o Subsidiary remedies of creditors:
▪ Accion subrogatoria
• An action whereby the creditor, whose claim has not been fully
satisfied, may go after the defendant debtor’s debtor (third
person).
• Requisites (I-P-I-N)
o The debtor’s assets must be Insufficient to satisfy claims
against him;
o The creditor must have Pursued all properties of the
debtor subject to execution;
o The right of action must Not be purely personal; and
o The debtor whose right of action is exercised must be
Indebted to the creditor.
• Effects of Subrogatory Action
o The creditor may exercise the subrogatory action on
behalf of the debtor not only up to the amount of his
credit but in its totality.
▪ NOTE: The excess (if any) must be returned to the
debtor.
o The bringing of action does not entitle the creditor to
preference.
o The defendant (the debtor of the debtor) may avail
himself of all defenses available against the creditor.
▪ Accion pauliana
• An action where the creditor files in court for the rescission of
acts or contracts entered into by the debtor designed to
defraud the former.
• Requisites (P-A-P-I-L)
o Defendant must be Indebted to plaintiff;
o The fraudulent act performed by the debtor subsequent
to the contract gives Advantage to another;
o The creditor is Prejudiced by such act;
o The creditor must have Pursued all properties of the
debtor subject to execution; and
o The creditor has no other Legal remedy.
▪ Accion directa
• The right of a person to go directly against another person who
is not privy to the contract.
• Kinds
o Subsidiary liability of sublessee for the rent;
o Right of sellers a retro to redeem the property from
persons other than the buyer a retro;
o Subsidiary liability of owners to laborers; and
o The principal may sue the substitute of the agent with
respect to the obligations which the substitute has
contracted under the substitution.
 C. Different Kinds of Obligations

• Civil and Natural Obligations

o Classification of Obligations Based on Juridical Quality/ Efficaciousness
▪ Civil Obligation
• One which gives a right of action to compel its performance.62
In other words, a civil obligation is one which provides for a
legal sanction in case of its breach.
▪ Natural Obligation
• One which does not grant a right of action to enforce its
performance, but after voluntary fulfillment by the debtor, it
authorizes the retention of what has been delivered or rendered
by reason thereof.
• In other words, this kind of obligation does not provide for a
legal sanction in case of non-performance.
o Legal Consequences of Natural Obligations
▪ Effect of Voluntary Fulfillment
• While it does not grant a right of action to enforce its
performance, a natural obligation grants the creditor the right
to retain what has been delivered by reason thereof after the
same has been voluntarily fulfilled by the debtor.
▪ May Be Converted Into Civil Obligation
• A natural obligation may again be converted into a civil
obligation, either by reason of novation or when it has been
made the subject matter of a contract of guaranty, pledge, or
mortgage. In novation, its first requisite is that there must be a
valid previous obligation. The first requisite does not require
that the obligation be a civil one because even a natural
obligation can be novated. The Court held that a prescribed
debt is a natural obligation which can be the subject matter of
novation.
▪ Cannot Be Subject Matter of Legal Compensation
• Since legal compensation requires that both obligations be
demandable, a natural obligation cannot be the subject matter
of legal compensation because it is not legally demandable.
o Important Examples of Natural Obligations
▪ When Right to Sue Has Prescribed
• When the right to sue upon a civil obligation has lapsed by
extinctive prescription (or barred by statute of limitations), the
obligation is converted into a natural obligation.
• In relation thereto, when without the knowledge or against the
will of the debtor, a third person pays a debt which the obligor
is not legally bound to pay because the action thereon has
prescribed, the latter may not demand reimbursement from the
former because such payment has not been beneficial to the
debtor.
• The obligation of the debtor to the third-party payor is not civil,
but a natural one. Hence, if the debtor later voluntarily
reimburses the third person, he cannot recover what he has
paid.
▪ No Agreement in Writing for Payment of Monetary Interest
• The debtor may not be compelled to pay monetary interest on a
loan unless the same has been expressly stipulated in writing.
• However, if the borrower voluntarily pays the monetary interest
in the absence of stipulation therefor, he cannot recover the
 same because such voluntary payment is a case of natural
obligation. But if the payment of the interest was by reason of
mistake, the debtor may still recover it pursuant to solutio
indebiti.
▪ When Action Has Failed
• When, after an action to enforce a civil obligation has failed, the
defendant voluntarily performs the obligation, he cannot
demand the return of what he has delivered or the payment of
the value of the service he has rendered.
▪ When There is No Legal Obligation To Pay in Succession by Will
• The rule is that an heir is not liable beyond the value of the
property he received from the decedent. But when he
voluntarily pays a debt of the decedent exceeding the value of
the property which he received by will or by the law of intestacy
from the estate of the deceased, the payment is valid and
cannot be rescinded by the payor.
• In the same way, when a will is declared void because it has
not been executed in accordance with the formalities required
by law, the estate shall pass to the legal or intestate heirs by
the law of intestacy. But if one of the intestate heirs, after the
settlement of the debts of the deceased, pays a legacy in
compliance with a clause in the defective will, the payment is
effective and irrevocable.

• Real and Personal Obligations

o Classifications of Obligations Based on Prestation
▪ Kinds of Obligations
• Real Obligation – one which involves an obligation to give or to
deliver;
• Personal Obligation – one which involves an obligation to do or
not to do.
▪ Two Kinds of Real Obligations
• Determinate or Specific Obligation – one which involves an
obligation to deliver a determinate or specific thing;
• Indeterminate or Generic Obligation – one which involves the
obligation to deliver an indeterminate or generic thing. A thing
is considered determinate or specific when it has been
particularly designated or physically segregated from all others
of the same class or species. A thing is generic if it has been
designated merely by its class or genus.
▪ Two Kinds of Personal Obligations
• Positive Personal Obligation – one which involves an obligation
to do;
• Negative Personal Obligation – one which involves an obligation
not to do.
o Legal Consequences of Determinate Obligations
▪ As to Performance
• The debtor of a thing cannot compel the creditor to receive a
different one, although the latter may be of the same value as,
or more valuable than that which is due.
▪ Three Accessory Obligations
• In every determinate obligation, there are three accessory
obligations, in addition to the obligation to deliver the specific
thing due:
o to preserve the thing to be delivered with the proper
diligence of a good father of a family, unless the law or
 the stipulation of the parties requires another standard of
care;
o to deliver also all the accessions and accessories, even
though they may not have been mentioned; and
o to also deliver the fruits if the creditor is already entitled
to the same.
• The creditor acquires a right to demand for the delivery of the
fruits of the determinate thing due from the time the obligation
to deliver the determinate thing arises. In obligations to deliver
a determinate thing by reason of contract, the obligation to
deliver the principal thing arises at the time of perfection of the
contract, unless the obligation is subject to a suspensive
condition, in which case, the obligation arises only upon the
happening of the said condition.
▪ Remedies in Case of Breach
• The creditor can compel the debtor to deliver the determinate
thing due in an action for specific performance, with a right to
recover damages.
▪ Susceptibility to Extinguishment by Way of Loss
• A determinate obligation can be extinguished by reason of loss
if:
o the loss is without the debtor’s fault; and
o it was lost before he has incurred in delay.
o Legal Consequences of Generic Obligations
▪ As to Performance
• When the obligation consists in the delivery of an indeterminate
or generic thing, whose quality and circumstances have not
been stated, the creditor cannot demand a thing of superior
quality. Neither can the debtor deliver a thing of inferior
quality.
▪ Remedies in Case of Breach
• The creditor can either:
o ask another person to comply with the obligation at the
expense of the debtor; or
o compel the debtor himself to make the delivery, plus
damages in either case.
▪ Not Susceptible to Extinguishment by Way of Loss
• A generic obligation is not susceptible to extinguishment by
reason of loss84 because the genus of a thing never perishes
(genus nunquam perit).
o Legal Consequences of Positive and Negative Personal Obligations
▪ Remedies in Case of Breach of Obligation to Do
• When Considered Breach
o Not only in case of non-performance, but also when the
performance is either poor or in contravention of the
tenor of the obligation.
• Remedies
o In case of non-performance, the remedy is to ask
another person to execute the act at the cost of the
debtor, plus damages; however, if the obligation is
personal only to the debtor, the only remedy is to
recover damages.
o The debtor may not be compelled to execute the act
against his will because the same is tantamount to
involuntary servitude, which is prohibited by the
Constitution. If the obligation to do was done poorly or in
 contravention of the tenor of the obligation, there is an
additional remedy of demanding for the undoing of what
has been done at the expense of the debtor.
▪ Remedies in Case of Breach of Obligation Not To Do
• When Considered Breach
o If the obligor does what he is forbidden to do.
• Remedies
o To demand for the undoing of what has been done at the
expense of the obligor, in addition to the creditor’s right
to recover damages. If it becomes physically or legally
impossible to exercise the right to demand the undoing
of what has been done, the remedy of the creditor is
simply to recover damages from the debtor.

• Pure, Conditional, and With a Term

o Classification of Obligations Based on Absence/Presence of Condition or

Term
▪ Pure Obligation: Obligation is not subject to any condition or term
(period).
▪ Conditional Obligation: One which is subject to a condition.
▪ Obligation With a Term: An obligation whose effects are subjected in
one way or another to the expiration of a term.

o Conditional Obligations
▪ Definition
• It is an uncertain event which wields an influence on a legal
relation. It is also defined as every future and uncertain event
upon which an obligation or provision is made to depend.
▪ Kinds of Conditions
• Suspensive or Resolutory - effect is on the existence of the
obligation.
o Suspensive Condition
▪ Obligation arises only upon the fulfillment of the
condition. If the condition is not fulfilled, the
obligation does not arise. During the pendency of
the condition, however, the creditor has the right
to take necessary measures to preserve and
protect his inchoate interest.
o Effect of fulfillment of condition
▪ The effects in an obligation to give shall retroact to
the day of the constitution of the obligation.
However, when the obligation imposes reciprocal
prestations, the fruits and interests are deemed
mutually compensated. In obligations to do and
not to do, courts shall determine, in each case, the
retroactive effects.
o Effect of loss, deterioration, or improvement of
determinate thing prior to fulfillment of condition
▪ If lost without the fault of the debtor, the
obligation is extinguished.
▪ If lost through the fault of the debtor, the debtor’s
obligation is converted into payment of damages.
▪ If it deteriorates without the fault of the debtor,
the impairment is borne by the creditor.
▪ If it deteriorates through the fault of the debtor,
 the creditor may choose between the rescission of
the obligation and its fulfillment, with damages in
either case.
▪ If it is improved by its nature, or by time, the
improvement shall inure to the benefit of the
creditor.
▪ If it is improved at the expense of the debtor, the
debtor may remove the improvement if the
removal can be done without injuring the thing
due.
o Resolutory Condition
▪ Obligation already exists but the same is
extinguished upon the fulfillment of the condition.
Hence, it is immediately demandable. Upon
performance of the obligation by the debtor, the
condition becomes a suspensive condition as to
him.
o Effect of fulfillment of condition
▪ Obligation is extinguished. In obligations to give,
the parties shall return to each other what they
have received.
• Potestative, Casual, or Mixed - effect is on the validity of the
obligation.
o Potestative Condition
▪ When the fulfillment of the condition is exclusively
dependent upon the will of either the debtor or
creditor. If the condition is potestative on the part
of the debtor and it is at the same time
suspensive, the obligation becomes void; if it is at
the same time resolutory, the obligation is valid. If
the condition is potestative on the part of the
creditor the obligation is valid.
o Casual Condition
▪ When the fulfillment of the condition is entirely
dependent upon chance or upon the will of a third
person, in which case the obligation is valid and
will take effect in conformity with the Civil Code.
o Mixed Condition
▪ When the fulfillment of the condition is partly
dependent upon the will of either of the parties
and partly upon chance or the will of a third
person, in which case the obligation is valid.
o Doctrine of Constructive Fulfillment of Suspensive
Condition
▪ When the condition is mixed, suspensive, partly
dependent upon the will of the debtor, and the
latter intentionally prevents the fulfillment of the
condition dependent on him, the entire condition
isdeemed constructively fulfilled. This is the
doctrine of constructive fulfillment of a suspensive
condition, provided for in Article 1186 of the Civil
Code.
o Rule on Constructive Fulfillment of Mixed Conditional
Obligation
▪ When the condition is mixed, suspensive, partly
dependent upon the will of the debtor and partly
 dependent upon the will of a third person, and the
debtor did all in his power to comply but the
condition is not fulfilled because of the third
person over whom the debtor has no control, the
entire condition is deemed constructively fulfilled.
This is known as the rule on constructive
fulfillment of a mixed conditional obligation, which
is provided for by jurisprudence.
• Possible and Impossible - effect is on the validity of the
obligation.
o Possible Condition
▪ When the condition is not contrary to the law of
nature, or not contrary to good customs or public
policy, or not prohibited by law.
o Impossible Condition
▪ When the condition is contrary to the law of nature
(physical impossibility), or contrary to good
customs or public policy, or prohibited by law
(legal impossibility).
o Effect of Impossible Condition
▪ On obligation: The obligation becomes void.
▪ On simple and remuneratory donations: The
condition is considered not imposed. Hence, the
donation remains valid.
▪ On testamentary dispositions: The condition is
considered not imposed. Hence, the testamentary
disposition remains valid.
• Positive and Negative - effect is on the determination of the
effectivity of the obligation.
o Positive Condition: A condition that a certain event will
happen within a specific period has the effect of
extinguishing the obligation dependent upon such
condition from the moment:
▪ Said period lapses without the condition having
been fulfilled; or
▪ When it becomes certain that the event will not
take place, even before said period expires.
o Negative Condition: A condition that some event will not
happen at a determinate time has the effect of rendering
the obligation effective from the moment:
▪ The period indicated has elapsed; or
▪ If it has become evident that the event cannot
occur.

o Obligation with a Term

▪ Definition
• A term or period consists of a space of time which, having an
influence on obligations as a result of a juridical act, and either
suspends their demandability or produces their extinguishment.
It may also refer to a future event, the happening of which is
certain. If the happening of the future event is uncertain, it is a
condition; if the happening of the future event is certain, it is a
term.
▪ Instances When Court Authorized to Fix Period
• When obligation is intended to be with a period, but the period
has not been fixed.
 • When duration of the period is left to the exclusive will of the
debtor, such as when the debtor binds himself to pay when his
means permit him to do so.
• When the non-compliance by one of the parties in reciprocal
obligations is with respect to time, the court may fix or grant a
period if there exists a just cause therefor

• Alternative and Facultative Obligations

o Classifications Based on Number of Prestations

▪ Simple Obligation: When there is only one prestation agreed upon.
▪ Conjunctive Obligation: When there are several prestations which are
due, and the debtor is required to perform ail prestations in order for
the obligation to be extinguished.
▪ Alternative Obligation: When there are several prestations which are
due, but the debtor is required to perform only one prestation in order
for the obligation to be extinguished.
▪ Facultative Obligation: When there is only one prestation agreed
upon, but the debtor may render another in substitution.
o Alternative Obligation
▪ Right of Choice
• Rule: It belongs to the debtor, unless expressly granted to the
creditor.
• Limitation upon debtor's right of choice:
o The creditor cannot be compelled to receive part of one
and part of the other undertaking; and
o The debtor cannot choose prestations which are
impossible, unlawful, or which could not have been the
object of the obligation.
• When debtor's right of choice is lost: When only one prestation
is practicable.
▪ Effectivity of Choice
• When choice becomes effective: from the time it has been
communicated to the other or when the other gains knowledge
of such choice.
• Effect: Once choice is effective, it becomes irrevocable. Hence,
the obligation ceases to be alternative and becomes a simple
one of performing that which has been chosen.
▪ Effect of Loss of Prestation/s
• If all were lost
o By reason of fortuitous event or by reason of the
creditor’s fault, the obligation is extinguished;
o By reason of the debtor’s fault but the right of choice is
with him, he is bound to pay the value of the last
prestation which he lost, plus damages; and
o By reason of the debtor’s fault but the right of choice is
with the creditor, the latter can demand for the payment
of the price of any of the prestations, with indemnity for
damages.
• If not all were lost
o By reason of fortuitous event, the choice may still be
exercised from those remaining;
o By reason of the debtor’s fault but the right of choice is
with him, he can simply choose from the remaining
prestation/s;
o By reason of the debtor’s fault but the right of choice is
 with the creditor, the latter may claim any of those
subsisting (without right to damages), or the price of
that which has disappeared (with a right to damages);
o By reason of the creditor’s fault but the right of choice is
with him, he can simply choose from the remaining
prestation/s; and
o By reason of the creditor’s fault but the right of choice is
with the debtor, the latter may either rescind the
contract with damages because he cannot make a choice
according to the terms of the obligation, or he may
choose from the remaining without a right to damages.

o Facultative Obligation
▪ Concept
• Only one prestation has been agreed upon to be due (called
“original prestation”), but the debtor may instead perform in
substitution another prestation which has already been agreed
upon (called “substitute prestation”). The choice to substitute is
always with the debtor. The loss of the substitute prestation
does not produce any legal effect. However, the loss of the
original prestation by fortuitous event will result in the
extinguishment of the obligation.
▪ Requirement of Notice
• If the debtor will be performing the original prestation, there is
no need to notify the creditor because it is what is due.
However, if the debtor chooses to perform the other prestation,
there is a need to notify the creditor because it is not what is
due; otherwise, the loss of such prestation by reason of a cause
not attributable to him shall not result in the extinguishment of
the obligation. Once the debtor notifies the creditor that he will
be performing the other prestation, the obligation becomes a
simple one of performing the chosen prestation. The loss of the
chosen prestation by fortuitous event will result in the
extinguishment of the obligation.

• Joint and Solidary Obligations

o Joint Obligation
▪ Division of Joint Debts or Credits
• The division of joint credits or debts may be established in the
obligation itself, as when the debtors specified their respective
liabilities or when the creditors specified the sums for which
each of them is entitled. However, if the obligation itself is
silent as to how the debt or credit shall be divided among the
joint debtors or joint creditors, then such debt or credit shall be
presumed to be divided into as many equal parts as there are
creditors or debtors.
▪ Each Share Distinct From Others
• The most essential and characteristic effect of a joint obligation
is that the share of each of the joint creditors or debtors in the
credit or debt is considered distinct from one another. As a
consequence:
o Extinction: The extinction of the debt of one of the
various debtors does not necessarily affect the debts of
the others.
o Delay: The delay on the part of only one of the joint
 debtors does not produce effects with respect to the
others, and if the delay is produced through the acts of
only one of the joint creditors, the others cannot take
advantage thereof.
o Interruption of prescription: The interruption of
prescription by the judicial demand of one creditor upon
a debtor does not benefit the other creditors nor
interrupt the prescription as to other debtors. In the
same way, a partial payment or acknowledgment made
by one of several joint debtors does not stop the running
of the statute of limitations as to the others.
o Vices of each obligation: The vices of each obligation
arising from a personal defect of a particular debtor or
creditor, do not affect the validity of the other credits or
debts.
▪ Correlation of Debts and Credits
• Since each debt and credit is considered distinct and separate
from the others, the problem of correlation of debts and credits
shall be governed by the following rules:
o When the number of creditors and debtors are the same,
and the division of the joint credit among the joint
creditors and the division among the joint debtors are
unequal, and the debts and credits, as thus divided, can
be matched with each other, they shall be the debtor and
creditor of each other; and
o Where the number of creditors and debtors are unequal,
or when although there is an equal number of creditors
and debtors, the credits to which each joint creditor is
entitled and the share of the joint debt for which each
joint debtor is answerable are unequal and do not match,
each creditor may ask or each debtor may pay all in
proportion to the respective credits and debts, in order
that such credits or debts may be subject to equal
contingencies.

o Solidary Obligation
▪ Kinds of Solidarity
• Active Solidarity - It is the solidarity existing among the
creditors of the same obligation, by virtue of which, each of
them, as regards his co-creditors, is a creditor only as to his
share in the obligation and, in regard to the common debtor, he
represents all of them.
• Passive Solidarity - It is the solidarity existing among the
debtors of the same obligation, by virtue of which they are
bound to the payment of the whole credit.
• Mixed Solidarity - It is the solidarity existing on the part of both
creditors and debtors.
▪ Solidarity Among Creditors
• Mutual agency: In regard to their common debtor or debtors,
each one of the creditors can represent all of them. Hence,
insofar as the common debtors are concerned, each one of the
creditors is a representative of the others.
• Effect of demand: Because of mutual agency, the debtor may
pay any one of the solidary creditors; but if any demand has
been made by one of the solidary creditors, payment must be
made only to such creditor. Payment to another is a case of
 payment made to a wrong person which will not extinguish the
debtor’s obligation,
• Extinguishment of obligation: Because of mutual agency, any
one of the solidary creditors may extinguish the debtor's
obligation even without the consent of the others. Insofar as
the debtor is concerned, the act is valid and will result in the
extinguishment of the debtor’s obligation. But the creditor who
executed such act shall be liable to the others for the share in
the obligation corresponding to them.
• Assignment of creditor’s rights: A solidary creditor cannot
assign his rights to a stranger without the consent of the
others. Such unauthorized assignment is invalid. Hence, if the
debtor pays the assignee the payment is not valid.
▪ Solidarity Among Debtors
• Mutual guaranty: The creditor may proceed against any one of
the solidary debtors or some or all of them simultaneously.™ In
short, each one of the solidary debtors is liable for the entire
obligation,
• Who may pay: Any one of the solidary debtors may extinguish
the entire obligation. However, if two or more solidary debtors
offer to pay, the creditor may choose which offer to accept.
• Right of solidary debtor who paid entire obligation: He may
demand reimbursement from his co-debtors only the share
which corresponds to each, with interest for the payment
already made. When one of the solidary debtors cannot,
because of his insolvency, reimburse his share to the debtor
paying the obligation, such shall be borne by all his co-debtors,
in proportion to the debt of each.
• Solidarity not affected by varied terms and conditions:
Solidarity may exist although the creditors and debtors may not
be bound in the same manner and by the same periods and
conditions.
• Defenses available to solidary debtor:
o Those derived from the nature of the obligation, such as
when the obligation is void or unenforceable, in which
case, the debtor invoking it is not liable for the entire
obligation;
o Those defenses which are personal to the debtor sued,
such as minority or insanity, in which case, the debtor
invoking it is not liable for the entire obligation; orthose
defenses which pertain only to his share, such as when
his share is subject to a suspensive condition which is
not yet fulfilled, in which case, the debtor invoking it may
not be compelled to pay his share but only the shares
pertaining to the others; and
o Those defenses which personally belong to the others, in
which case, the debtor invoking it may not be compelled
to pay the share pertaining to such other debtor or
debtors.
▪ Effect of Remission in Mixed Solidarity
• If the remission is effected by one of the solidary creditors in
favor of one of the solidary debtors and without the consent of
the other creditors:
o Remission of entire obligation: It shall extinguish the
obligation; but the creditor who effected the remission
shall be liable to the others for the share in the obligation
 corresponding to them. But the remission of the whole
obligation obtained by one of the solidary debtors does
not entitle him to reimbursement from his co-debtors.
o Remission of entire share of solidary debtor: It releases
such debtor from the obligation, with respect to the
payment of the balance. But in case of insolvency of
another solidary debtor, his share shall be borne by all
his co-debtors, including the debtor whose entire share
had already been condoned.
o Partial remission of share of solidary debtor: If the
remission in favor of a solidary debtor is partial, his
character as solidary debtor continues with respect to the
creditors and his co-debtors. Hence, he can be made to
pay the balance of the obligation.

o Joint and Indivisible Obligation

▪ Concept
• As to the object of the obligation (prestation), the same is
indivisible. As to the subjects, in case of plurality, the same is a
joint obligation. Hence, the obligation is a joint obligation and,
at the same time, indivisible. This is because the indivisibility of
the obligation does not necessarily give rise to solidarity.
Hence, even if the obligation is indivisible, it is presumed to be
merely joint in case of plurality of subjects.
▪ Consequences of Joint and Indivisible Obligation
• In case of plurality of debtors, each one of the debtors is liable
only for his part (not the entire obligation), but he cannot
separately perform his part because of the indivisibility of the
prestation. Here, the obligation can be enforced only by
proceeding against all the debtors, although each is liable only
for his respective share. Since they are merely joint debtors,
the others shall not be liable in case of insolvency of one of
them.
• In case of breach of the obligation because any one of the joint
debtors does not comply with his undertaking, the obligation
may be converted into payment of damages. But only the
erring debtor is liable for the payment of punitive damages,
while the others cannot be liable beyond their corresponding
portion of the price of the thing or of the value of the service in
which the obligation consists of.
• In case of plurality of creditors, each of the creditors is entitled
to collect only his part (not the entire obligation), but since the
obligation is indivisible, he cannot demand performance of such
part. The collection of the entire credit will require the collective
action of all creditors, although each is entitled only to his own
part.

• Divisible and Indivisible Obligations

o Rules in Determining Indivisibility

▪ Obligation To Give
• Obligations to deliver a definite thing, such as an animal or
vehicle, are indivisible. However, even though the object may
be physically divisible, an obligation is indivisible if so provided
by law or intended by the parties.
▪ Obligation To Do
 • Generally indivisible. Even though the service may be physically
divisible, an obligation is indivisible if so provided by law or
intended by the parties.
• These obligations are divisible, however, when:
o The obligation has for its object the execution of a
certain number of days of work;
o The obligation has for its object the accomplishment of
work by metrical units; or
o The obligation has for its object analogous things which
by their nature are susceptible of partial performance.

• Obligations with a Penal Clause

o Concept
▪ A penal clause is an accessory obligation which the parties attach to a
principal obligation for the purpose of insuring the performance
thereof by imposing on the debtor a special prestation (generally
consisting in the payment of a sum of money) in case the obligation is
not fulfilled or is irregularly or inadequately fulfilled.

D. Extinguishment of Obligations
1. Payment
a) Concept of Payment

• Concept
o Payment is the fulfillment of the obligation by the realization of the purposes
for which it was constituted.

• Characteristics of Payment
o Integrity – The payment of the obligation must be completely made.
▪ GR: Payment or performance must be complete. (Art. 1233, NCC)
▪ XPNs:
• Substantial performance performed in good faith;
• When the obligee accepts the performance, knowing its
incompleteness or irregularity and without expressing any
protest or objection; or
• Debt is partly liquidated and partly unliquidated, but the
liquidated part of the debt must be paid in full.
▪ Substantial Performance Doctrine
• It provides the rule that if a good faith attempts to perform
does not precisely meet the terms of an agreement or statutory
requirements, the performance will still be considered complete
if the essential purpose is accomplished.
o Identity – The payment of the obligation must consist in the performance of
the very thing due.
▪ GR: Thing paid must be the very thing due and cannot be another
thing even if of the same or more quality and value.
▪ XPNs:
• Dation in payment;
• Novation of the obligation; and
• Obligation is facultative.
o Indivisibility – The payment of the obligation must be in its entirety.
▪ GR: Debtor cannot be compelled by the creditor to perform obligation
in parts and neither can the debtor compel the creditor to accept
obligation in parts.
▪ XPNs:
 • Partial performance has been agreed upon;
• Part of the obligation is liquidated and part is unliquidated; or
• To require the debtor to perform in full is impractical.

• Special Forms of Payment

o Dation in Payment
▪ Alienation by the debtor of a particular property in favor of his
creditor, with the latter’s consent, for the satisfaction of the former’s
money obligation to the latter, with the effect of extinguishing the
said money obligation.
o Application of Payment
▪ Designation of the particular debt being paid by the debtor who has
two or more debts or obligations of the same kind in favor of the
same creditor to whom the payment is made.
o Payment by Cession
▪ Debtor cedes his property to his creditors so the latter may sell the
same and the proceeds realized applied to the debts of the debtor.
o Tender of Payment
▪ Voluntary act of the debtor whereby he offers to the creditor for
acceptance the immediate performance of the former’s obligation to
the latter.
o Consignation
▪ Act of depositing the object of the obligation with the court or
competent authority after the creditor has unjustifiably refused to
accept the same or is not in a position to accept it due to certain
reasons or circumstances.

• Requisites of a Valid Payment

o The person who pays the debt must be the debtor;
o The person to whom payment is made must be the creditor;
o The thing to be paid or to be delivered must be the precise thing or the thing
required to be delivered by the creditor;
o The manner (if expressly agreed upon), time, and place of payment, etc.;
and
o Acceptance by the creditor.

b) Payment by Cession vs. Dation in Payment

Payment by Cession Dation in Payment

Number of creditors
Maybe one creditor. Plurality of creditors.
Financial condition of the debtor
Not necessarily in state of financial Debtor must be partially or relatively
difficulty. insolvent.
Object
Thing delivered is considered as the Universality or property of debtor is what is
equivalent of performance. ceded
Extent of the Extinguishment
Payment extinguishes obligation to the Merely releases debtor for net proceeds of
extent of the value of the thing delivered as things ceded or assigned unless there is
agreed upon, proved, or implied from the contrary intention.
conduct of the creditor.
Ownership
Ownership is transferred to creditor upon Ownership is transferred to creditor upon
delivery. delivery.
 Novation
An act of novation. Not an act of novation.
Presumption of Insolvency
Does not presuppose insolvency. Presupposes insolvency.

c) Tender of Payment and Consignation

• Tender of Payment
o The definitive act of offering to the creditor what is due to him together with
the demand that the creditor accepts the same.
o Tender of payment which is the manifestation by the debtor to the creditor
of his desire to comply with his obligation, with the offer of immediate
performance.

• Consignation
o Definition
▪ Act of depositing the object of the obligation with the court or
competent authority after the creditor has unjustifiably refused to
accept the same or is not in a position to accept it due to certain
reasons or circumstances.
o Requisites
▪ There was a debt due;
▪ The consignation of due obligation was made because of some legal
cause provided under Art. 1256, NCC;
▪ The previous notice of the consignation had been given to the person
interested in the performance of the obligation;
▪ The amount or thing due was placed at the disposal of the court; and
▪ That after the consignation had been made, the persons interested
were notified thereof.

2. Loss of the Thing Due

a) Concept of Loss

• In Determinate Obligations
o It is understood that the thing is lost when:
▪ It perishes,
▪ Goes out of commerce, or
▪ Disappears in such a way that its existence is unknown, or it cannot
be recovered.
o Presumption that Loss is Due to Debtor’s Fault
▪ It is presumed that the loss was due to the fault of the debtor
whenever the thing is lost in his possession. However, the
presumption does not apply in case of earthquake, flood, storm, or
other natural calamity.

• In Generic Obligations
o The loss or destruction of a generic things does not extinguish the
obligation.
o The partial loss of a thing will only be extinguished if it the loss is so
important.

Article 1266. The debtor in obligations to do shall also be released when the prestation
becomes legally or physically impossible without the fault of the obligor.
 • In Obligations to Do
o An obligation to do is lost:
▪ Then the prestation becomes legally or physically impossible without
the fault of the debtor;
▪ When, by reason of an unforeseen event, the service has become so
difficult as to be manifestly beyond the contemplation of the parties.
o Article 1266 Applicable Only to Obligation To Do
▪ Article 1266 of the Civil Code is applicable only to obligations “to do,”
which include all kinds of work or service. The obligation to pay
rentals or deliver the thing in a contract of lease falls within the
prestation “to give”; hence, it is not covered within the scope of
Article 1266. In Article 1266, the performance of the obligation to do
must be possible at the time of the perfection of the contract;
otherwise, the contract is void because it contemplates of rendition of
an impossible service. The performance becomes impossible only
during the consummation stage.

b) Requisites

• Requisites for Loss of Specific Thing Due

o The loss occurs without the fault of the debtor;
o The loss occurs prior to the debtor incurring delay; and
o There is no law or stipulation holding the debtor liable even in case of
fortuitous event, or that the nature of the obligation does not require the
assumption of risk.
▪ Note: The debtor must not have obligated himself to deliver the same
thing to two or more persons who do not have the same interest;
otherwise, he shall be responsible for the loss of the thing by reason
of fortuitous event until he has effected the delivery.

c) Force Majeure

• When Law Provides for Liability Even for Fortuitous Event

o The obligor delays or has promised to deliver the same thing to two or more
persons who do not have the same interest.
o The possessor in bad faith in every case.
o If the common carrier negligently incurs in delay in transporting the goods, a
natural disaster shall not free such carrier from responsibility.
o The borrower who uses the thing for a purpose different from that intended,
delays its return, receives the thing under appraisal, lends it to a third
person, or saves his property instead of the thing borrowed.
o The depositary who uses the thing without the depositor’s permission,
delays its return, or allows others to use it.
o The negotiorum gestor or officious manager who undertakes risky
transactions, prefers his interest to that of the owner, fails to return the
property after demand by the owner, or assumes management in bad faith;
and
o When the obligation to deliver a determinate thing proceeds from a criminal
offense, unless prior to its loss the person who should receive it refused
acceptance without justification.

Article 1267. When the service has become so difficult as to be manifestly beyond the
contemplation of the parties, the obligor may also be released therefrom, in whole or in
part. (n)
 • Doctrine of Unforeseen Events
o Requisites for Application of Article 1267
▪ The event or change in circumstances could not have been foreseen
at the time of the execution of the contract;
▪ It makes the performance of the contract extremely difficult but not
impossible;
▪ It must not be due to the act of any of the parties; and
▪ The contract is for a future prestation.
• The difficulty of performance under Article 1267 of the Civil
Code should be such that one party would be placed at a
disadvantage by the unforeseen event. Mere inconvenience,
unexpected impediments, or increased expenses do not suffice
to relieve the debtor from a bad bargain.
o Applicability
▪ The doctrine of unforeseen events should apply only to risks that are
manifestly beyond the contemplation of the parties, or to those
absolutely exceptional changes of circumstances, where equity
demands assistance for the debtor.
▪ It does not apply to risks that are already known, or should have been
known, to the parties when they entered into their contractual
relations.

3. Condonation

Article 1270. Condonation or remission is essentially gratuitous and requires the

acceptance by the obligor. It may be made expressly or impliedly. One and the other kind
shall be subject to the rules which govern inofficious donations. Express condonation
shall, furthermore, comply with the forms of donation. (1187)

• Concept
o It is gratuitous on the part of the creditor, but it requires acceptance by the
debtor to be valid. It is either in the form of donation inter vivos or legacy,
depending on its effectivity. Whether donation or legacy, it must not be
inofficious.
▪ Donation Inter Vivos
• When the creditor intended the condonation to become
effective during his lifetime.
▪ Legacy of Condonation of Debt
• When the creditor intended the condonation to become
effective upon his death.

• When Condonation is Donation

o How Made
▪ Either expressly or impliedly. Acceptance by the debtor must be made
during the lifetime of the creditor; otherwise, the donation is not
perfected.
o If Made Expressly
▪ It must conform with the formalities of ordinary donation in Articles
748 and 749; otherwise, it is void.
o Presumption of Condonation
▪ When a private document evidencing a credit is found in the
possession of the creditor, it gives rise to a presumption that the
creditor voluntarily delivered the document to the debtor and such
voluntary delivery gives rise to a presumption of the condonation of
the indebtedness. The presumption can be rebutted by proving that
there was no voluntary delivery.
 • When Condonation is Legacy
o As to Form
▪ It must comply with the formalities of a last will and testament.
o Timing of Acceptance
▪ The acceptance by the debtor can only be made after the death of the
creditor.

4. Confusion

Article 1275. The obligation is extinguished from the time the characters of creditor and
debtor are merged in the same person. (1192a)

Article 1276. Merger which takes place in the person of the principal debtor or creditor
benefits the guarantors. Confusion which takes place in the person of any of the latter
does not extinguish the obligation. (1193)

Article 1277. Confusion does not extinguish a joint obligation except as regards the share
corresponding to the creditor or debtor in whom the two characters concur. (1194)

• Definition
o Confusion or merger is the meeting in one person of the qualities of creditor
and debtor with respect to the same obligation. It exists when the
characters of creditor and debtor are merged in the same person.

• Requisites:
o it must take place in the person of the principal creditor and principal
debtor; hence, if the merger involves the creditor and the guarantor, the
obligation is not extinguished; and
o It must be complete and definite because if it is not complete, the obligation
still subsists.

5. Compensation

• Definition
o It is a mode of extinguishing to the concurrent amounts the obligations of
persons who, in their own right and as principals, are reciprocally creditors
and debtors of each other.

• Kinds
o Legal – that which takes place ipso jure when all the requisites of law are
present.
o Voluntary – that which occurs when the parties agree to the mutual
extinguishment of their credits or to compensate their mutual obligations
even in the absence of some of the legal requisites.
o Judicial – that which takes place when the court allows the set off or
counterclaim of the defendant as against the claim of the plaintiff.
o Facultative – when it can be claimed by the party who can oppose it and
who is the only party prejudiced by the compensation, as happens when one
of the obligations has a period for the benefit of one party alone and the
latter renounces the period with the effect of making the obligation due and
therefore compensable.
▪ NOTE: In legal, voluntary, and judicial compensation, there must be
the confluence of the characters of the mutual debtors and creditors.
Without this, the contracting parties cannot stipulate, in case of
voluntary compensation, as to the compensation of their obligations,
 for then the legal tie that binds contracting parties to their obligations
would be absent. At least one party would be binding himself under
an authority he does not possess.

a) Requisites

• Requisites
o The parties must be creditors and debtors of each other in their own right
and as principals.
▪ Hence, taxes cannot be subject to compensation for the simple reason
that the government and the taxpayer are not creditors and debtors
of each other, for debts are due to the Government in its corporate
capacity, while taxes are due to the Government in its sovereign
capacity.
▪ There can be no valid compensation between the debt of corporation
X to the stockholders of corporation Y under a contract of loan and the
obligation of corporation Y to corporation X for the payment of the
purchase price in a contract of sale, for the reason that both
corporations are not mutually bound as creditors and debtors in their
own name because a corporation has a personality distinct and
separate from its stockholders.
▪ But a bank has the right to set off a deposit in its hands to extinguish
the indebtedness owed to it by the same depositor because as to
fixed, savings, and current deposits of money in banks and similar
institutions, the relationship between banks and depositors has been
held to be that of creditor and debtor.
o That both debts consist in a sum of money, or if the things due are
consumable, they be of the same kind, and also of the same quality if the
latter has been stated.
o That both debts be due.
▪ If one of the debts is payable on demand and there is no demand yet,
there can be no legal compensation because such debt is not yet due.
o That both debts be demandable and liquidated.
▪ Hence, if one of the debts is a natural obligation, there can be no legal
compensation because a natural obligation is not legally demandable;
and a debt is liquidated when its existence and amount are
determined,377 or when the amount is determinable by inspection of
the terms and conditions of relevant documents.
o That neither of the debts be subject to any lien, retention, or suit instituted
by third persons of which notice has been communicated in due time to the
debtor.
▪ By “in due time”, it should be meant that the period before legal
compensation was supposed to take place, considering that legal
compensation operates so long as the requisites concur, even without
any conscious intent on the part of the parties.
▪ A controversy that is communicated to the parties after that time may
no longer undo the compensation that had taken place by force of
law, lest the law concerning legal compensation be for naught.

• Effects of Legal Compensation

o When all the requisites above are present, compensation takes effect by
operation of law, and extinguishes both debts to the concurrent amount,
even though the creditors and debtors are not aware of the compensation.
o Legal compensation operates even against the will of the interested parties
and even without their consent. Since this compensation takes place ipso
jure, its effects arise on the very day on which all its requisites concur.
 When used as a defense, it retroacts to the date when its requisites are
fulfilled.

b) Compensation of Rescissible and Voidable Debts

Article 1284. When one or both debts are rescissible or voidable, they may be
compensated against each other before they are judicially rescinded or avoided. (n)

• Rescissible and voidable obligations are valid until they are judicially rescinded or
avoided. Prior to rescission or annulment, the debts may be compensated against
each other.

c) Non-Compensable Debts

• Debts Not Subject to Legal Compensation

o When one of the debts arises from a depositum;
o When one of the debts arises from the obligations of a depositary or of a
bailee in commodatum;
o When one of the debts arises from a claim for support due by gratuitous
title;
o When one of the debts consists in civil liability arising from a penal offense;
and
o When one of the debts consists in the claim of Government for payment of
taxes.

6. Novation
a) Concept of Novation

• Definition
o Novation is the extinguishment of an obligation by the substitution or
change of the obligation by a subsequent one which extinguishes or modifies
the first, either by changing the object or principal conditions, or by
substituting another in place of the debtor, or by subrogating a third person
in the rights of the creditor.

• Extinctive or Modificatory
o In its broadest concept, novation is either extinctive or modificatory. It is
extinctive, also called total novation, when an old obligation is terminated
by the creation of a new one that takes the place of the former. It is merely
modificatory, also called partial novation, when the old obligation
subsists to the extent that it remains compatible with the amendatory
agreement. Stated otherwise, there is partial novation when there is only a
modification or change in some principal conditions of the obligation. It is
total when the obligation is completely extinguished.

• Kinds of Novation
o As to Essence
▪ Objective Novation - also called real novation, occurs when there is a
change of the object, cause, or principal conditions ofan existing
obligation.
▪ Subjective Novation - also called personal novation, occurs when
there is a change of either the person of the debtor, or of the creditor
in an existing obligation;
▪ Mixed Novation - when the change of the object, cause, or principal
conditions of an obligation occurs at the same time with the change of
either in the person of the debtor or creditor.
 o As to Form or Constitution
▪ Express - when the new obligation declares in unequivocal terms that
the old obligation is extinguished.
▪ Implied - when the new obligation is incompatible with the old one on
every point.

b) Expressed and Implied Novation

• Kinds of Novation As to Form or Constitution

o Express - when the new obligation declares in unequivocal terms that the
old obligation is extinguished.
o Implied - when the new obligation is incompatible with the old one on every
point. The test of incompatibility is whether they can stand together, each
one having an independent existence; if they cannot and are irreconcilable,
the subsequent obligation would also extinguish the first.

(1) Requisites

• Valid Old obligation;

o XPNs:
▪ When the annulment may be claimed only by the debtor, and he
consented to the novation; and
▪ When ratification validates acts which are voidable.
• Intent to extinguish or to modify the old obligation;
• Capacity and consent of all the parties to the new obligation (except in case of
expromission where the old debtor does not participate);
• Substantial difference of the old and new obligation – on every point incompatible
with each other (implied novation); and
• Valid new obligation.

c) Expromision and Delegacion Distinguished

• Substitution of Debtor
o Release of Debtor
▪ In order to change the person of the debtor, the old one must be
expressly released from the obligation, and the third person or new
debtor must assume the former’s place in the relation.
▪ Without the express release of the debtor from the obligation, any
third party who may thereafter assume the obligation shall be
considered merely as co-debtor or surety.
▪ If there is no agreement as to solidarity, the first and the new debtor
are considered obligated jointly.
o Expromision or Delegacion
▪ Expromision
• When the initiative for the change does not emanate from the
old debtor and it may even be made without his knowledge or
consent, since it consists in a third person assuming his
obligation. As such, expromision absolutely requires the
consent of the third person (or new debtor) and the creditor.
The consent of the old debtor, however, is not indispensable
because it can be made even without his knowledge or consent.
▪ Delegacion
• When the debtor offers and the creditor accepts a third person
who consents to the substitution so that the intervention and
the consent of these three persons are necessary and they are
respectively known as delegante (original debtor), delegatario
 (creditor), and delegado (new debtor).
▪ Whether the substitution of debtor is by expromision or delegation,
the effect is the same, that is, the release of the original debtor from
the obligation.
• Exception: In delegation, if the new debtor fails to perform the
obligation by reason of his insolvency, the action can be revived
against the original debtor in two instances:
o When the insolvency of the new debtor was already
existing and of public knowledge at the time the old
debtor delegated his debt; or
o When such insolvency was already existing and known to
the old debtor at the time he delegated his debt.

EXPROMISION DELEGACION
Person who Initiated the Substitution
Old debtor Third person
Consent of the Creditor
It may be express or implied from his acts but not from his mere acceptance of payment
by a third party.
Consent of the Old Debtor
With the consent of the old debtor (since With or without the knowledge of the
he initiated the substitution). debtor or against the will of the old debtor.
Consent of Third Person
Consent is needed but it need not be given Consent is needed.
simultaneously.
Intention of Substitution
Released from the obligation with the consent of the creditor.
Rights of the New Debtor
With the debtor’s consent – right of With the debtor’s consent – right of
reimbursement and subrogation. reimbursement and subrogation.

Without the consent of the old debtor or

against his will – right to beneficial
reimbursement.
Insolvency or Nonfulfillment of the Obligation of the New Debtor
Shall not revive the action of the latter With the debtor’s consent - If the old
against the original obligor. debtor gave his consent and the new
debtor could not fulfill the obligation, the
Original debtor shall be held liable. old debtor should be liable for the payment
of his original obligation.
Insolvency of the new debtor was already
existing and of public knowledge or known Without the consent of the old debtor or
to the original debtor at the time of the against his will – the new debtor’s
delegation of the debt to the new debtor. insolvency or non-fulfillment of the
obligation shall not give rise to any liability
on the part of the original debtor.

(1) Consent Required

(Please check the table.)

(2) Effect of Insolvency of New Debtor

(Please check the table.)

 (3) Legal and Conventional Subrogation

• Definition
o Subrogation is defined as the transfer of all the rights of the creditor to a
third person, who substitutes him in all his rights.

• Kinds
o Legal Subrogation – that which takes place without agreement but by
operation of law because of certain acts; and
o Conventional Subrogation – that which takes place by agreement of parties.

• Instances of Legal Subrogation

o When a creditor pays another creditor who is preferred, even without the
debtor’s knowledge;
o When a third person, not interested in the obligation, pays with the express
or tacit approval of the debtor; or
o When, even without the knowledge of the debtor, a person interested in the
fulfillment of the obligation pays, without prejudice to the effects of
confusion as to the latter’s share.

• Conventional Subrogation
o Conventional subrogation of a third person requires the consent of the
original parties (the original creditor and debtor) and of the third person (the
new creditor). It is a new contractual relation based on the mutual
agreement among all the necessary parties.

• Distinctions Between Conventional Subrogation and Assignment of Credit

o In conventional subrogation, the debtor’s consent is necessary; in an
assignment of credit, the consent of the debtor is not necessary in order that
the assignment may fully produce the legal effect.
o Subrogation extinguishes an obligation and gives rise to a new one;
assignment refers to the same right which passes from one person to
another.
o The nullity of an old obligation may be cured by subrogation, such that the
new obligation will be perfectly valid; but the nullity of an obligation is not
remedied by the assignment of the creditor’s right to another. If the
intention of the parties is that the agreement would not become valid and
effective in the absence of the debtor’s consent, the transaction is one of
conventional subrogation and not an assignment of credit. Hence, if not
consented to by the debtor, there is no conventional subrogation, and it may
not be treated as an assignment of credit. If the creditor’s right is
transferred to a third person without requiring the debtor’s consent for its
validity, the transaction is merely an assignment of the credit.

II. Contracts
A. General Provisions
1. Definition of a Contract

• Definition
o A contract is a meeting of minds between two persons whereby one binds
himself, with respect to the other, to give something or to render some
service. It may also be defined as "a juridical convention manifested in legal
form, by virtue of which one or more persons bind themselves in favor of
another or others, or reciprocally, to the fulfillment of a prestation to give, to
do, or not to do.
• Important Classifications
o As to Perfection
▪ Consensual - that which is perfected by mere consent; and
▪ Real - that which is perfected not by mere consent but by the delivery
of the object of the contract.
o As to Its Name
▪ Nominate - that which is distinguished by a particular or special name
in the Civil Code, like sale, lease, and deposit; and
▪ Innominate - that which is recognized in the Civil Code, but not
specially named or classified therein. These contracts shall be
regulated by the stipulation of the parties, by the provisions of
Obligations and Contracts, by the rules governing the most analogous
nominate contracts, and by the customs of the place.
• There are four kinds of innominate contracts:
o Do ut des—I give that you give;
o Do ut facias—I give that you do;
o Facio ut des—I do that you give;
o Facio ut facias—I do that you do.
o As to Degree of Dependence
▪ Principal - that which can exist independently of other contracts, like a
contract of loan;
▪ Accessory - that which cannot exist without a valid principal contract,
like guaranty, pledge, mortgage, and antichresis; and
▪ Preparatory - that which is not an end by itself but only a means for
the execution of another contract, like agency and the contract of
option.
o As to Cause
▪ Onerous — that where the cause is understood to be, for each
contracting party, the prestation or promise ofa thing or service by
the other, like sale;
▪ Remuneratory – that where the cause is the service or benefit for
which the remuneration is given; and
▪ Gratuitous – that where the cause is the mere liberality of the
benefactor, like commodatum.
o According to Risk Involved
▪ Commutative - that in which each of the contracting parties gives and
receives an equivalent or there is a mutual exchange of relative
values, like sale; and
▪ Aleatory - that in which each of the parties or both reciprocally bind
themselves to give or to do something in consideration of what the
other shall give or do upon the happening of an event which is
uncertain, or which is to occur at an indeterminate time, like the
contract of insurance.

• Stages of Contracts
o Negotiation - or preparation begins when the prospective contracting parties
manifest their interest in the contract and ends at the moment of their
agreement.
o Perfection - or birth of the contract occurs when they agree upon the
essential elements thereof.
o Consummation - which is the last stage, occurs when the parties fulfill or
perform the terms agreed upon in the contract, culminating in the
extinguishment thereof.

• Perfection of Contracts
o The perfection of a contract takes place upon the concurrence of the
 essential elements thereof. A contract which is consensual as to perfection is
so established upon a mere meeting of minds, i.e., the concurrence of offer
and acceptance, on the object, and on the cause thereof.
o Stated otherwise, a consensual contract is perfected by mere consent. A
contract which requires, in addition to the above, the delivery of the object
of the agreement is commonly referred to as a real contract. There are only
four contracts classified as real contracts under the Civil Code, which
requires delivery of the object of the contract for its perfection, as follows:
(1) pledge, (2) commodatum, (3) mutuum, and (4) deposit. All other
contracts are consensual or perfected by mere consent.

2. Elements of a Contract
a) Essential Elements

• They are those necessary for the very existence of the contract itself and the
absence of any of the said elements will prevent the creation or existence of a
contract, such as the object, cause, consent, and delivery of the object. The
following are the essential requisites of contracts: consent, object, and
consideration.

b) Natural Elements

• Those which are derived from the very nature of the contract, and as a
consequence, ordinarily accompany the same.

B. Basic Principles of Contracts

1. Obligatory Force of a Contract

• It simply means that “obligations arising from contracts have the force of law
between the contracting parties and should be complied with in good faith.” To be
obligatory, the contract must be perfected, valid, and enforceable.

2. Freedom to Stipulate (Autonomy of the Will) and its Limitations

• It simply means that the contracting parties are accorded the liberality and
freedom to establish such stipulations, clauses, terms, and conditions as they may
deem convenient, provided the same are not contrary to law, morals, good
customs, public order, or public policy."’ Such freedom is protected by the
Constitution which commands:
o No person shall be deprived of life, liberty, or property without due process
of law; and
o No law shall be passed impairing obligation of contracts.

3. Binding Effect of a Contract

• Mutuality of Contracts
o It simply means that the “contract must bind both the contracting parties;
its validity or compliance cannot be left to the will of one of them.”
o The ultimate purpose is to render void a contract containing a condition
which makes its fulfillment dependent solely upon the uncontrolled will of
one of the contracting parties.
o However, contracts of adhesion—one in which one of the parties imposes a
ready-made form of contract, which the other party may accept or reject,
but which the latter cannot modify—have been declared as binding as
ordinary contracts, the reason being that the party who adheres to the
 contract is free to reject it entirely.

4. Privity of Contract (Relativity of Contracts)

a) Concept

• Concept
o The principle of relativity of contracts provides that contracts can only bind
the parties who entered into it, and it cannot favor or prejudice a third
person, even if he is aware of such contract and has acted with knowledge
thereof.
• But including heirs and assigns
o A contract also binds the heirs and assigns of the contracting parties. The
general rule is that heirs are bound by contracts entered into by their
predecessors-in-interest, except when the rights and obligations arising
therefrom are not transmissible by (1) their nature, (2) stipulation, or (3)
provision of law.
o As a rule, therefore, he who contracts does so for himself and his heirs. For
example, a contract of lease is generally transmissible to the heirs of the
lessor or lessee. Consequently, the successors-in-interest of the lessee are
entitled to the benefits, while that of the lessor are burdened with the duties
and obligations, which said covenants conferred and imposed on the original
parties.

b) Exceptions to the Rule on Privity of Contracts

• Stipulation Pour Autrui

o It is a stipulation in favor of a third person conferring a clear and deliberate
favor upon him, and which stipulation is merely a part of a contract entered
into by the parties, neither of whom acted as agent of the third person, and
such third person may demand its fulfillment provided that he communicates
his acceptance to the obligor before it is revoked.
o Its requisites are the following:
▪ There must be a stipulation in favor of a third person;
▪ The stipulation must be a part, not the whole of the contract;
▪ The contracting parties must have clearly and deliberately conferred a
favor upon a third person, not a mere incidental benefit or interest;
▪ The third person must have communicated his acceptance to the
obligor before its revocation; and
▪ Neither of the contracting parties bears the legal representation or
authorization of the third party.

• Third persons may be affected by contracts creating real rights when they come
into possession of the object of the contract, as for example, a recorded lease is
binding upon the purchaser who did not take any part in the execution of the lease
contract or a contract of mortgage duly registered is binding upon third persons.

• Creditors acquire the right to rescind the contract entered into by the debtor with a
third person if that contract is intended to defraud him.

• Tort Interference
o Any third person who induces another to violate his contract shall be liable
for damages to the other contracting party, if the following requisites are
present:
▪ The existence of a valid contract;
▪ Knowledge on the part of the third person of the existence of
contract; and
 ▪ Interference of the third person is without legal justification or excuse.

5. Consensuality of Contracts
a) Concept and Coverage

• Contracts are perfected by mere consent and from that moment, the parties are
bound not only to the fulfillment of what has been expressly stipulated but also to
all consequences which according to their nature may be keeping in good faith,
usage, and law.

b) Exceptions

• Real contracts, such as deposit, pledge and commodatum, are not perfected until
the delivery of the object of the obligation (Art. 1316, NCC). And solemn contracts,
which are perfected by compliance with the formalities required by law.

c) Reformation of Instruments

• In case of mutual error, the proper remedy is the reformation of the instrument.
For an action for reformation of instrument to prosper, the following requisites
must concur:
o There must have been no meeting of the minds of the parties to the
contract; and
▪ The act of making intelligible what was before not understood,
ambiguous, or not obvious
o Interpretation
▪ That remedy in equity by means a written instrument is made or
construed so as to express or conform to the real intention of the
parties.

C. Essential Requisites of a Contract

NOTE: These three requisites are the essential elements of a consensual contract. In real
contracts, however, in addition to the above, the delivery of the object of the contract is
required as a further requisite. Solemn or formal contracts require compliance with the
formalities provided by law.

1. Consent

• Definition
o Consent is manifested by the meeting of the offer and the acceptance upon
the thing and the cause which are to constitute the contract. The offer must
be certain and the acceptance absolute. A qualified acceptance constitutes a
counter-offer.
o Consent is essential to the existence of a contract; and where it is wanting,
the contract is non-existent.

• Requisites of Consent
o Legal capacity of the contracting parties;
▪ NOTE: The parties must have full civil capacity. Hence, if any one
party to a supposed contract was already dead at the time of its
execution, such contract is undoubtedly simulated and false and,
therefore, null and void by reason of its having been made after the
death of the party who appears as one of the contracting parties
therein. The death of a person terminates contractual capacity. (Vda.
De Cabalu. v. Sps. Tabu, G.R. No. 188417, 24 Sept. 2012)
 o Manifestation of the conformity of the contracting parties;
▪ NOTE: Manifestation may be in writing bearing the signature or marks
of the parties, or it may be implied from the conduct of the parties
like the acceptance of payment.
o Parties’ conformity to the object, cause, terms and condition of the contract
must be intelligent, spontaneous and free from all vices of consent; and
▪ NOTE: Intelligence in consent is vitiated by error; freedom by
violence, intimidation or undue influence; and spontaneity by fraud.
o The conformity must be real, not simulated or fictitious.

• Offer
o Definition
▪ An offer is defined as an expression of willingness to contract on
certain terms, made with the intention that it shall become binding as
soon as it is accepted by the person to whom it is addressed.
o Elements of a Valid Offer and Acceptance
▪ Definite – unequivocal;
▪ Intentional ; and
▪ Complete – unconditional.
o Requisites of an Effective Offer
▪ The one offering must have a serious intention to become bound by
his offer;
▪ The terms of the offer must be reasonably certain, definite and
complete, so that the parties and the court can ascertain the terms of
the offer; and
▪ The offer must be communicated by the offeror to the offeree,
resulting in the offeree’s knowledge of the offer.
o Rules on Advertisement as Offer
▪ Business advertisements – not a definite offer, but mere invitation to
make an offer, unless it appears otherwise. (Art. 1325, NCC)
▪ Advertisement for bidders – simply invitation to make proposals and
advertiser is not bound to accept the highest or lowest bidder unless
the contrary appears. (Art. 1326, NCC)
o Grounds Rendering the Offer Ineffective
▪ Death, civil interdiction, insanity or insolvency of either party before
acceptance is conveyed; (Art. 1323, NCC)
▪ Express or implied revocation of the offer by the offeree;
▪ Qualified or conditional acceptance of the offer, which becomes
counter-offer;
▪ Subject matter becomes illegal or impossible before acceptance is
communicated; and
▪ Period given to the offeree to signify his acceptance has already
lapsed.

• Acceptance
o Requisites of a Valid Acceptance
▪ Requisites of a Valid Acceptance 1. Must be absolute; a qualified
acceptance constitutes a counter-offer; (Art. 1319, NCC)
▪ No specified form but when the offeror specifies a particular form,
such must be complied with.
o Rules on Acceptance
▪ Offer or acceptance, or both, expressed in electronic form, is valid,
unless otherwise agreed by the parties (electronic contracts).
▪ Acceptance not made in a manner as directed by the offeror
constitutes a counter-proposal which extinguishes the offer and this
may not be accepted by the original offeror. (Pineda, 2009)
 ▪ A conditional acceptance is a counter-offer which extinguishes the
offer. If not accepted by the offeror, there is no contract.
▪ An acceptance may be express or implied. (Art. 1320, NCC)
▪ If there was an acceptance already, the offeror cannot just withdraw
his offer unilaterally. He will be liable for damages.
o Mirror Image Rule in Law on Contracts
▪ This is a common law concept which states that in order for there to
be an acceptance, the offeree must accept the terms as stated in the
offer. Our courts also adhere to the “mirror-image rule.” Thus, it has
been ruled that acceptance must be identical in all respects with that
of the offer so as to produce consent of meeting of the minds
o Period for Acceptance
▪ Stated fixed period in the offer
• Must be made within the period given by the offeror.
• As to withdrawal of the offer
o GR: It can be made by communicating such withdrawal
at any time before the acceptance is made
o XPN: When the option is founded upon a consideration
(something paid or promised, since partial payment of
the purchase price is considered as proof of the
perfection of the contract (Art 1324, NCC)
▪ No stated period
• Offer is made to a person present – acceptance must be made
immediately.
• Offer is made to a person absent – acceptance may be made
within such time that, under normal circumstances, an answer
can be expected from him.
o Option Contract
▪ It is a contract between the offeror and the offeree whereby the
former grants the latter, for a valuable consideration, the privilege to
buy or not to buy certain objects at any time within a specified period
and for a fixed price.
▪ NOTE: The privilege granted to the offeree must be supported by a
consideration, the option is just considered an “offer to sell” to the
offeree which is not binding until accepted. (Pineda, 2009)
o Earnest Money
▪ It is the payment made to a seller by the buyer to show his good
faith. It will constitute as part of the purchase price, if the sale is
finally consummated. If the sale is not concluded, the earnest money
shall be returned to the would-be-buyer unless there is a contrary
stipulation.

• Persons Incapacitated to Give Consent (D-I-M)

o Deaf-mutes who do not know how to read and write (illiterates);
o Insane or demented persons, unless the contract was entered into during a
lucid interval;
o Minors (Art. 1327, NCC) except:
▪ Contracts for necessaries ; (Art. 1489, NCC);
▪ Contracts by guardians or legal representatives and the court having
jurisdiction had approved the same;
▪ When there is active misrepresentation on the part of the minor
(minor is estopped);
▪ Contracts of deposit with the Postal Savings Bank provided that the
minor is over 7 years of age;
▪ Contract of an insurance for life, health and the accident on the
minor’s life;
 ▪ Upon reaching age of majority, they ratify the same.
• NOTE: Because the law incapacitates them to give their consent
to a contract, the only way by which any one of those
enumerated above can enter into a contract is to act through a
parent or guardian. If this requirement is not complied with, the
result is a defective contract. If only one of the contracting
parties is incapacitated to give his consent, the contract is
voidable. If both of them are incapacitated to give their
consent, the contract is unenforceable.

• Vices of Consent
o Mistake
▪ Concept
• GR: Mistake as a vice of consent refers to mistake of facts and
not of law, thus rendering the contract voidable. (Jurado, 2010)
• XPN: When mistake of law involves mutual error as to the legal
effect of an agreement when the real purpose of the parties is
frustrated. (Art. 1334, NCC)
▪ Mistake distinguished from Ignorance
• Mistake is a false impression on something, while Ignorance is
absence of any notion or impression about a particular thing.
▪ Requisites
• Mistake must be with respect to the legal effect of the
agreement;
• It must be mutual; and
• Real purpose of the parties must have been frustrated.
▪ Kinds of Mistakes of Fact which Vitiate Consent
• Mistake as to the nature of the contract;
• Mistake as to object of the contract;
• Mistake as to the quality or principal conditions of the thing;
• Mistake or error in quantity;
• Mistake as to identity of the person; and
• Mistake as to the identity or qualifications of one of the parties
will vitiate consent only when such identity or qualifications
have been the principal cause of the contract.
o For mistake (as to the qualification of one of the parties)
to vitiate consent, two requisites must concur:
▪ The mistake must be either regarding the identity
or with regard to the qualification of one of the
contracting parties; and
▪ The identity or qualification must have been the
principal consideration for the celebration of the
contract.
▪ Mutual Error
• Mutual error as to the legal effect of an agreement when the
real purpose of the parties is frustrated, may vitiate consent.
▪ Burden of Proof
• Burden rests upon the party who seeks to enforce the contract
to show that the other party fully understood the contents of
the document. If he fails to discharge this burden, the
presumption of mistake, if not, fraud, stands unrebutted and
controlling. (Mayor v. Belen, G.R. No. 151035, 03 June 2004)

o Intimidation
▪ Concept
• There is intimidation when one of the contracting parties is
 compelled by a reasonable and well-grounded fear of an
imminent and grave evil upon his person or property, or upon
the person or property of his spouse, descendants or
ascendants, to give his consent.
▪ Requisites of Intimidation (C-I-C-U)
• One of the parties is compelled to give his Consent by a
reasonable and well-grounded fear of an evil;
• The evil must be Imminent and grave;
• It must be Unjust; and
• The evil must be the determining Cause for the party upon
whom it is employed in entering into the contract.
o NOTE: To determine the degree of the intimidation, the
age, sex and condition of the person shall be borne in
mind. (Art. 1335, NCC)
o A threat to enforce one’s claim through competent
authority, if the claim is just or legal, does not vitiate
consent. (Sta. Maria, 2017)
▪ Validity of a Contract if Consent is Reluctant
• A contract is valid even though one of the parties entered into it
against his wishes and desires or even against his better
judgment. Contracts are also valid even though they are
entered into by one of the parties without hope of advantage or
profit.
o Violence
▪ Concept
• There is violence when in order to wrest consent, serious or
irresistible force is employed. (Art. 1335, NCC)
▪ Requisites of Violence
• Physical force employed must be serious or irresistible; and
• The determining cause for the party upon whom it is employed
in entering into the contract.
o A threat to enforce one’s claim through competent
authority, if the claim is just or legal, does not vitiate
consent.
o NOTE: Violence or intimidation shall annul the obligation,
although it may have been employed by a third person
who did not take part in the contract.
o The contracting party who is not the subject of the
violence or the intimidation may not even know that the
other party has been coerced.
o Undue Influence
▪ Concept
• There is undue influence when a person takes improper
advantage of his power over the will of another, depriving the
latter of a reasonable freedom of choice.
• It must in some measure destroy the free agency of a party
and interfere with the exercise of that independent discretion.
▪ Circumstances to be Considered for the Existence of Undue Influence
• Confidential, family, spiritual and other relations between the
parties;
• Mental weakness;
• Ignorance; and
• Financial distress.
o NOTE: The enumeration is NOT exclusive. Moral
dependence, indigence, mental weakness, tender age or
other handicap are also considered undue influence.
 ▪ Determination of Undue Influence
• The test to determine whether there is undue influence which
will invalidate a contract is to determine whether or not the
influence exerted has so overpowered and subjugated the mind
of the contracting party as to destroy his free agency, making
him express the will of another rather than his own.
▪ Due Influence does NOT Vitiate Consent
• When influence consists in persuasive arguments or in appeals
to the affections which are not prohibited by law or morals, the
consent is not vitiated at all. (Pineda, 2009)
• Influence obtained by persuasion or argument or by appeals to
the affections is not prohibited either by law or morals and is
not obnoxious even in courts of equity. Such may be termed
“due influence.”
▪ Reverential Fear
• The fear of displeasing persons to whom respect and obedience
are due does not vitiate consent.
o Fraud
▪ Concept
• There is fraud when through the insidious words or
machinations of one of the contracting parties, the other is
induced to enter a contract which, without them, he would not
have agreed to.
o The term “insidious words” refers to a deceitful scheme
or plot with an evil design, or a fraudulent purpose.
o Failure to disclose facts, when there is a duty to reveal
them, as when the parties are bound by confidential
relations, constitutes fraud. (Art. 1339, NCC)
▪ Special and Particular Circumstances
• When a legal or equitable duty is imposed upon the dominant
party to reveal certain facts material to the transaction; and
• When there is a confidential relationship between the parties.
▪ Requisites of Fraud to Vitiate Consent (in the sense of Dolo Causante)
• It was applied or utilized by one contracting party upon the
other;
• It must be serious deception;
• It must have induced the victim to enter the contract without
which he would not have agreed to;
• It must have induced the victim to enter the contract, which he
would not have agreed to, absent the employment of such
fraud; and
• It must have resulted in damage or injury.
▪ Kinds of Fraud
• Fraud in the perfection of the contract
o Causal fraud (dolo causante) – It is employed by one
party prior to or simultaneous with the creation or
perfection of the contract to secure the consent of the
other.
o Incidental fraud (dolo incidente) – It is the fraud
committed in the in the performance of an obligation,
and its existence merely results in breach of an already
existing contract, which entitles the injured party to
damages.
• Fraud in the performance of an obligation. (Art. 1170, NCC)
▪ Acts considered NOT Fraudulent
• Principle of Tolerated Fraud – the usual exaggerations in trade
 and when the other party had an opportunity to know the facts
are not in themselves fraudulent (Art. 1340, NCC);
• Expert Opinion – a mere expression of an opinion does not
signify fraud, unless made by an expert and the other party has
relied on the former’s special knowledge (Art. 1341, NCC);
• Misrepresentation by a third person does not vitiate consent,
unless such misrepresentation has created substantial mistake
and the same is mutual (Art. 1342, NCC);
• Misrepresentation made in good faith is not fraudulent but may
constitute error. (Art. 1343, NCC)
▪ Simulation of Contract
• Concept
o It is the declaration of a fictitious will, deliberately made
by agreement of the parties to produce, for the purpose
of deception, the appearance of a juridical act which does
not exist or is different from that which was executed.
• Kinds of Simulation of Contract
o Absolute (simulados)
▪ The contracting parties do not intend to be bound
by the contract at all, thus the contract is void
(Arts. 1345-1346, NCC).
▪ In absolute simulation, there is a colorable
contract but it has no substance as the parties
have no intention to be bound by it. The main
characteristic of an absolute simulation is that the
apparent contract is not desired or intended to
produce legal effect or in any way alter the
juridical situation of the parties. As a result, a
simulated or fictitious contract is void, and the
parties may recover from each other what they
may have given under the contract.
▪ NOTE: Absolutely simulated contracts lack the
element of true consent.
o Relative (disimulados)
▪ The contracting parties conceal their true
agreement (NCC, Art. 1345); (Art. 1345, NCC);
and the parties are bound by their real agreement
when it does not prejudice third persons or is not
intended for any purpose contrary to law, morals,
good customs, public order or public policy.
▪ If the concealed contract is lawful, it is absolutely
enforceable, provided it has all the essential
requisites: consent, object, and cause.
▪ As to third persons without notice, the apparent
contract is valid for purposes beneficial to them.
As to third persons with notice of the simulation,
they acquire no better right to the simulated
contract than the original parties to the same.
▪ The primary consideration in determining the true
nature of a contract is the intention of the parties.
Such intention is determined from the express
terms of their agreement as well as from their
contemporaneous and subsequent acts.

2. Object
• Concept
o It is the subject matter of the contract. It can be a thing, right or service
arising from a contract.
o NOTE: Only rights which are not intransmissible can be the object of the
contract. (Art. 1347, NCC)

• Requisites of an Object (D-E-Li-C-T-G)

o Determinate as to kind (even if not determinate, provided it is possible to
determine the same without the need of a new contract);
▪ NOTE: To qualify as an object for purposes of a contract to exist:
• The object must at least be Generic.
• Existing or has the potential to exist subsequent to the
contract;
• Must be Licit;
• Within the Commerce of man; and
• Transmissible.

• Object of Contracts
o GR: All things or services may be the object of contracts.
o XPNs:
▪ Things outside the commerce of men (Art. 1347, NCC);
▪ Intransmissible rights;
▪ Future inheritance, except in cases expressly authorized by law;
▪ Services which are contrary to law, morals, good customs, public
order or public policy;
▪ Impossible things or services; and
▪ Objects which are not possible of determination as to their kind.

• Fundamental Requisite
o The most evident and fundamental requisite in order that a thing, right or
service may be the object of a contract is that it should be in existence at
the moment of the celebration of the contract, or at least, it can exist
subsequently or in the future. (De Leon, 2010)

• Future Inheritance
o GR: Future inheritance cannot be the object of a contract because its extent,
amount and quantity cannot be determined. (Sta. Maria, 2017)
o XPNs
▪ Under Art. 130 of the FC, which allows the future spouses to give or
donate to each other in their marriage settlement their future
property to take effect upon the death of the donor and to the extent
laid down by the provisions of the NCC relating to testamentary
succession; and
▪ 2. Under Art. 1080 of the NCC, which allows a person to make a
partition of his estate among his heirs by an act inter vivos, provided
that the legitime of the compulsory heirs is not prejudiced.
• NOTE: Except in cases authorized by law, future inheritance
cannot be an object of contract because its extent, amount or
quantity is not determinable.

3. Cause or Consideration

• Concept
o Cause is the essential or more proximate purpose reason which moves the
contracting parties to enter into the contract. It is the immediate and direct
which justifies the creation of an obligation through the will of the
 contracting parties.

• Requisites of a Cause
o It must: (L-E-T)
▪ Exist;
▪ Be True; and
▪ Be Licit.
o NOTE: Although the cause is not stated in the contract, it is presumed that it
exists and is lawful unless the debtor proves the contrary.

• Kinds of Cause
o Cause of onerous contracts – the cause is understood to be for each
contracting party, the prestation or promise of a thing or service by the
other. E.g., Contract of Sale
o Cause of remuneratory contracts – the service or benefit remunerated. E.g.,
Donation in consideration of a past service which does not constitute a
demandable debt
o Cause of gratuitous contracts – the mere liberality of the donor or
benefactor; it does not involve any material thing but rather it involves only
the generosity of the benefactor.
o Accessory – identical with cause of principal contract, from which the
accessory derived its life and existence. E.g., mortgage or pledge

• Cause v. Motive

CAUSE MOTIVE
As to Proximate Reason
Direct and most proximate reason of a Indirect or remote reason
contract
As to the Kind of Reason
Objective and juridical reason of a contract Psychological or purely personal reason
As to the Legal Effect
Legality or illegality of cause affects the Legality or illegality of motive does not
existence or validity of the contract. affect the existence or validity of contract.
As to the Parties
Cause is always the same for each Motive differs for each contracting party.
contracting party.
As to its Knowability
Always known. May be known to the other.

• RulesRelating to Cause on Contracts

o Absence of cause – confers no right and produces no legal effect.
o Failure of cause – does not render the contract void.
o Illegality of cause – contract is null and void.
o Falsity of cause – contract is void; unless the parties show that there is
another cause which is true and lawful.
o Lesion or inadequacy of cause – does not invalidate the contract, unless:
▪ There is fraud, mistake, or undue influence;
▪ When the parties intended a donation or some other contract; or
▪ In cases specified by law e.g., contracts entered by guardian with
court approval, when the ward suffers lesion of more than 25%. If
there is no court approval, the contract is void regardless of the
amount of lesion.

Q: May a moral obligation constitute a sufficient cause to support an onerous contract?

A: Where the moral obligation arises wholly from ethical considerations, unconnected
with any civil obligation, and as such is demandable only in conscience, and not in law, it
cannot constitute a cause to support an onerous contract. Where such moral obligation,
however, is based upon a previous civil obligation which has already been barred by the
statute of limitations at the time when the contract is entered into, it constitutes a
sufficient cause or consideration to support said contract.

D. Defective Contracts

In the order of their defects, from least to most defective:

• Rescissible Contract - it is considered valid, binding, and effective until it is
rescinded and contains all the requisites of a valid contract and are considered
legally binding, but by reason of injury or damage (lesion) to either of the
contracting parties or to third persons, such as creditors, it is susceptible to
rescission at the instance of the party who may be prejudiced thereby.
• Voidable Contract - one in which the essential requisites for validity under Article
1318 are present but may be annulled because of want of capacity or the vitiated
consent of one of the parties; however, before such annulment, the contract is
existent, valid, and binding, hence, considered effective and obligatory between
parties, but it may be rendered perfectly valid by ratification, which can be express
or implied.
• Unenforceable Contract - that which cannot be enforced by a proper action in
court, unless it is ratified, because either it is entered into without or in excess of
authority or it does not comply with the Statute of Frauds or where both of the
contracting parties do not possess the required legal capacity; prior to ratification,
the contract is valid but it cannot be enforced by a proper action in court, but once
ratified, either expressly or impliedly, it is rendered perfectly valid and becomes
obligatory between the parties.
• Void or Inexistent Contract - one which has no force and effect from the very
beginning; hence, it is as if it has never been entered into and cannot be validated
either by the passage of time or by ratification.

1. Rescissible Contracts

• Distinctions Between Rescission in Articles 1191 and 1381

Rescission in Article 1191 Rescission in Article 1381

The rescission under Article 1191 is on The rescission under Article 1381 is by
account of breach of contract (more reason of lesion or economic prejudice.
properly called “resolution”).
The cause of action is subordinated to the
It is not predicated on injury to economic existence of lesion or economic prejudice
interests of the party plaintiff but on the because it is the raison d’etre as well as the
breach of faith by the defendant that measure of the right to rescind.
violates the reciprocity between the parties.
The contract is perfectly valid. The contract is defective.
It applies exclusively to reciprocal It applies to all kinds of obligations arising
obligations. from contracts, whether the same be
reciprocal in character or not.
It is a principal action which seeks the The rescission is only a subsidiary remedy,
resolution or cancellation of the contract. meaning, it cannot be instituted except
when the party suffering damage has no
It prescribes within 10 years from the time other legal means to obtain reparation for
the right of action accrues. the same.
 Consequently, the four-year prescriptive
period provided for in Article 1389 of the
Civil Code applies only to rescission as a
subsidiary remedy.
Only a contracting party can be injured and Even a third person can become an injured
can maintain an action for rescission. party in the rescission contemplated under
Article 1381, as in the case of contracts in
fraud of the creditor.
The court has discretionary power not to The court must order the rescission once
grant the rescission if there be just cause the ground is proven.
for the fixing of a period for the
performance of the obligation.

• Nature of Rescissible Contracts under Article 1381

o These contracts are valid and enforceable, therefore obligatory, until they
are rescinded by a competent court.
o While these contracts are valid and obligatory, they cause pecuniary lesion
or prejudice to one of the contracting parties or to a third person, for which
reason the law grants the remedy of rescission to protect the injured party
from all injury and damage that the contract may cause, or to protect some
incompatible and preferential right created by the contract.
o The defect of a rescissible contract under Article 1381 may not, however, be
cleansed by ratification although the right of action for rescission may be
lost by way of extinctive prescription.
o The defect of a rescissible contract cannot be attacked collaterally but must
be set up in an independent civil action and only after a full-blown trial.

• Requisites for Rescission to Prosper

o The action for rescission must originate from any of the causes specified in
Articles 1381 and 1382;
o The party suffering damage and who is asking for rescission has no other
legal means to obtain reparation for the damage suffered by him;
o The person demanding rescission must be able to return what he may be
obliged to restore if rescission is granted by the court628 —but this requisite
does not apply to a creditor suing for rescission under Article 1381,
paragraph 3, because he received nothing from the contract which he seeks
to rescind;
o The things which are the object of the contract must not be legally in the
possession of third persons who did not act in bad faith; and
o The action for rescission must be filed within four years from the accrual of
the right of action—the four-year prescriptive period commences to run:
▪ From the termination of the ward’s incapacity, for contracts entered
into by guardians on behalf of the ward;
▪ From the time that the domicile of the absentee is known, for
contracts entered into by the legal representative on behalf of the
absentee; and
▪ For contracts in fraud of creditors, only when the creditor discovers
that he has no other legal remedy for the satisfaction of his claim
against the debtor other than an action pauliana—in other words, an
action pauliana presupposes the following:
• A judgment against the debtor;
• The issuance by the trial court of a writ of execution for the
satisfaction of the judgment, and
• The failure of the sheriff to enforce and satisfy the judgment of
the court.
• Specific Contracts which are Rescissible
o Contracts entered into by guardians or legal representative where ward or
absentee suffers lesion:
▪ Contract is entered into by a guardian on behalf of the ward or by the
legal representative;
▪ The ward or the absentee suffers lesion by more than one-fourth
(1/4) of the value of the things which are the object thereof;
▪ The contract must not have been approved by the court; otherwise,
the contract is perfectly valid; and
▪ The contract must not involve disposition or encumbrance of the real
property of the ward or of the absentee; otherwise, the contract is not
merely rescissible but unenforceable under Article 1403(1) if entered
into without judicial approval, even if there is no lesion.
o Contracts in Fraud of Creditor
▪ Presupposes existence of valid contracts: Contracts which are
rescissible under Article 1381(3) are valid contracts, albeit undertaken
in fraud of creditors, and not absolutely simulated, because the latter
is not merely rescissible but inexistent, albeit undertaken as well in
fraud of creditors. They differ, as follows:
• Absolute simulation implies that there is no existing contract,
no real act executed; while fraudulent alienation means that
there is a true and existing transfer or contract;
• The former can be attacked by any creditor, including one
subsequent to the contract; while the latter can be assailed
only by the creditors before the alienation;
• In absolute simulation, the insolvency of the debtor making the
simulated transfer is not a prerequisite to the nullity of the
contract; while in fraudulent alienation, the action to rescind, or
action pauliana, requires that the creditor cannot recover in any
other manner what is due him; and
• An action to declare a contract absolutely simulated does not
prescribe (Articles 1409 and 1410); while an action pauliana to
rescind a fraudulent alienation prescribes in four years (Article
1389).
▪ Requisites of Action Pauliana
• The rescissory action to set aside contracts in fraud of creditors
is known as action pauliana. In order to prosper, it must satisfy
the following requisites:
o The plaintiff asking for rescission has a credit prior to the
alienation, although demandable later;
o The debtor has made a subsequent contract conveying a
patrimonial benefit to a third person;
o The creditor has no other legal remedy to satisfy his
claim;
o The act being impugned is fraudulent;
o The third person who received the property conveyed, if
it is by onerous title, has been an accomplice in the
fraud; and
o The conveyance must not be absolutely simulated.
▪ Contract in Violation of Right of First Refusal (RFR) is in Fraud of
Creditor
• A contract entered into in violation of a right of first refusal of
another person is rescissible and considered in fraud of the
creditor because the term creditors in Article 1381(3) of the
New Civil Code is broad enough to include the obligee under an
option contract as well as under a right of first refusal,
 sometimes known as a right of first priority.
▪ Presumption of Fraud
• Fraud is presumed in the following:
o There is alienation of property by gratuitous title by the
debtor who has not reserved sufficient property to pay
his debts contracted before such alienation; or
o There is alienation of property by onerous title made by a
debtor against whom some judgment has been rendered
in any instance or some writ of attachment has been
issued. The decision or attachment need not refer to the
property alienated and need not have been obtained by
the party seeking rescission.
▪ Badges of Fraud
• The fact that the consideration of the conveyance is fictitious or
is inadequate;
• A transfer made by a debtor after suit has begun and while it is
pending against him;
• A sale upon credit by an insolvent debtor;
• Evidence of large indebtedness or complete insolvency;
• The transfer of all or nearly all of his property by a debtor,
especially when he is insolvent or greatly embarrassed
financially;
• The fact that the transfer is made between father and son,
when there are present other of the above circumstances; and
• The failure of the vendee to take exclusive possession of all the
property.
o Contracts Over Things Under Litigation
▪ The defendant, during the pendency of the case, enters into a
contract which refers to the thing subject of litigation; and
▪ The said contract was entered into without the knowledge and
approval of the litigants or of a competent judicial authority.
o Payment Made Under State of Insolvency
▪ Any payment made by an insolvent debtor of an obligation the
fulfillment of which could not be compelled at the time of the payment
is considered fraudulent and is, therefore, rescissible.

• Right of First Refusal

o Concept
▪ A right of first refusal is a contractual grant, not of the sale of a
property, but of the first priority to buy the property in the event the
owner sells the same. Such grant may be embodied in a separate
contract, in which case it must be supported by its own consideration
distinct and separate from the consideration supporting the
contemplated contract, or it may only be a part of a certain contract,
such as when it is one of the provisions in a lease contract. In the
latter case, the right of first refusal is an integral and indivisible part
of the contract of lease making the consideration for the lease the
same as that for the right of first refusal.
o Distinguished from Option
▪ While both create an exclusive privilege to enter into a contract with
someone else, they differ as follows:

Right of First Refusal Option or Offer

While the object might be made It would require, among other things, a
determinate, the exercise of the right, clear certainty on both the object and the
however, would be dependent not only on cause or consideration of the envisioned
the grantor’s eventual intention to enter contract. In other words, there is a definite
into a binding juridical relation with another offer.
but also on terms, including the price, that
obviously are yet to be later firmed up.
The period for the exercise of the privilege The exercise of the privilege is always for a
may either be definite or indefinite. fixed period.
The grant may either be gratuitous or Being an onerous contract, the
onerous, except that a party to a contract consideration must be something of value,
cannot unilaterally withdraw a right of first although its kind may vary.
refusal that stands upon valuable
consideration.

o Effect of Violation of RFR

▪ If grantor entered into contract with third person
• The contract can be rescinded if the third person acted in bad
faith (or with knowledge of the existence of the RFR); however,
if the third person acted in good faith, the contract may not be
rescinded, and the remedy of the grantee is simply to recover
damages from the grantor.
▪ Upon rescission of contract
• The grantor may now be directed to comply with his obligation
to sell the property to the grantee under the same terms and
conditions that it had been sold to a third person. In other
words, there should be identity of terms and conditions to be
offered to the buyer holding the right of first refusal.

• Effects of Rescission
o It has the effect of unmaking a contract, or its undoing from the beginning,
and not merely its termination.
o Hence, the necessary consequence of rescission is mutual restitution, that is,
the parties to a rescinded contract must be brought back to their original
situation prior to the inception of the contract; hence, they must return what
they received pursuant to the contract.
o Mutual restitution is also required in cases involving rescission under Article
1191.

• Who May Bring Action and Against Whom

o The action for rescission may be brought by:
▪ The person who is injured by the rescissible contract, that is, the ward
or absentee, the creditors damaged or the plaintiff in case a thing in
litigation is alienated by defendant;
▪ The heirs of the above persons; and
▪ The creditors of the aforesaid persons by virtue of Article 1177 of the
Civil Code.
o On the other hand, the action may be brought against the following:
▪ The author of the injury and his successors in interest; and
▪ Third persons who have acquired in bad faith the property alienated in
fraud of creditors.

2. Voidable Contracts

• Concept, Characteristics, and Remedy

o Concept
▪ Voidable or annullable contracts are existent, valid, and binding,
although they can be annulled because of want of capacity or the
vitiated consent of one of the parties. However, before such
 annulment, they are considered effective and obligatory between
parties.
▪ Hence, it is valid until it is set aside, and its validity may be assailed
only in an action for that purpose. They can be confirmed or ratified.
o Characteristics
▪ It is existent, valid, and binding and produces all its civil effects, until
it is set aside by a final judgment of a competent court in an action for
annulment;
▪ However, it suffers from a defect in the form of vitiation of consent by
lack of legal capacity of one of the contracting parties, or by mistake,
violence, intimidation, undue influence, or fraud;
▪ It may be rendered perfectly valid by ratification, which can be
express or implied, such as by accepting and retaining the benefits of
a contract;
▪ It is also susceptible of validation by prescription since the action for
the annulment of contract prescribes in four years; and
▪ It cannot be attacked collaterally; its validity can only be assailed
directly either by an action for that purpose or by way of a
counterclaim.
o Remedy of Annulment
▪ To annul means to reduce to nothing; annihilate; obliterate; to make
void or of no effect; to nullify; to abolish; to do away with. Hence, a
contract that is annulled presupposes that it subsists but later ceases
to have legal effect when it is terminated through a court action.
▪ In annulment, it is the judgment of the court that produces the
invalidity of the contract. It is to be distinguished from declaration of
nullity of contracts.
▪ Null and void means that something does not exist from the
beginning. Thus, a void contract is invalid from the beginning and in
declaring its nullity the court simply declares a status or condition
which already exists from the very beginning.

• Two Kinds of Voidable Contracts

o Where one of the parties is incapable of giving consent to a contract—if both
parties are incapable of giving consent to a contract, the contract is not
merely voidable but unenforceable; and
o Where both parties are capable of giving consent to a contract, but the
consent of one is vitiated by mistake, violence, intimidation, undue
influence, or fraud.

• Personality to File Annulment and Prescriptive Period

o Who Can File for Annulment
▪ Before a party can have the necessary standing to institute an action
for annulment, he must either be:
• The party obliged principally or subsidiarily in the contract
which he seeks to annul—by way of exception, a person who is
not a party obliged principally or subsidiarily under a contract
may exercise an action for annulment of the said contract if:
o He is prejudiced in his rights with respect to one of the
contracting parties; and
o He can show detriment which would positively result to
him from the contract in which he has no intervention.
• He must be the party suffering from incapacity to give consent
or the victim of intimidation, violence, undue influence, fraud,
or mistake—persons who are capable cannot allege the
incapacity of those with whom they contracted; nor can those
 who exerted intimidation, violence, or undue influence, or
employed fraud, or caused mistake based their action upon
these flaws of the contract.
o Prescriptive Period
▪ The period of prescription is four years, and it commences to run, as
follows:
• From the time the defect ceases if the ground for annulment is
vitiation of consent by intimidation, violence, or undue influence
and it cannot be interrupted by an extrajudicial demand made
by the party whose consent was vitiated;
• From the time of the discovery if the ground for annulment is
vitiation of consent by mistake or fraud—if the fraudulent
conveyance is registered in the Register of Deeds, the discovery
of fraud is reckoned from the time the document was registered
in the Register of Deeds in view of the rule that registration is
notice to the whole world;
• From the time the minor reaches the age of majority or 18
years of age if the ground for annulment is want of capacity by
reason of minority; and
• From the time the guardianship ceases if the ground for
annulment is want of capacity other than minority.

• Ratification
o Concept
▪ Ratification or confirmation refers to the act of or means by virtue of
which efficacy is given to a contract which suffers from a vice of
curable nullity.
o How Made
▪ It may be effected expressly or tacitly. A tacit ratification is the
execution of an act which necessarily implies an intention to waive the
right to annul, such as by accepting and retaining the benefits of a
contract.
o Requisites
▪ The contract has all the essential requisites, but it is tainted with a
vice which is susceptible of being cured;
▪ It should be effected by the person who is entitled to do so under the
law—the right to ratify the defect of the contract belongs only to the
party who has the right to bring the action for annulment, although
such ratification may also be effected by the guardian of the
incapacitated person, and it does not require the conformity of the
contracting party who has no right to bring the action for annulment;
▪ It should be effected with the knowledge of the vice or defect—before
a contract can be ratified, knowledge of its existence must be brought
to the parties who have authority to ratify it or circumstances must be
shown from which such knowledge may be presumed; and
▪ The cause of the nullity or defect should have already disappeared.
o Effects of Ratification
▪ The effect of ratification is retroactive. It cleanses the contract from
all its defects from the moment it was constituted, thereby
extinguishing the action to annul a voidable contract.
▪ It results, therefore, that after a contract is validly ratified, no action
to annul the same can be maintained based upon defects relating to
its original validity.

• Effects of Annulment
o General Rule
 ▪ If a voidable contract is annulled by a final judgment of a competent
court, the contract is invalidated from the very beginning. Since the
contract is declared void at inception, the parties shall be restored to
their original status prior to the inception of the contract as if no
contract has been made, thus, upon annulment, the parties should be
restored to their original position by mutual restitution.
▪ As a consequence, as long as one of the contracting parties does not
restore what in virtue of the decree of annulment he is bound to
return, the other cannot be compelled to comply with what is
incumbent upon him.
o Exception
▪ When the defect of the contract consists in the incapacity of one of
the parties, the incapacitated person is not obliged to make any
restitution except insofar as he has been benefited by the thing or
price received by him.

3. Unenforceable Contracts

• Concept. Nature, and Characteristics

o Concept
▪ Those contracts which cannot be enforced by a proper action in court,
unless they are ratified, because either they are entered into without
or in excess of authority or they do not comply with the Statute of
Frauds, or both of the contracting parties do not possess the required
legal capacity.
o Nature and Characteristics
▪ It is a valid contract although it cannot be sued upon or be enforced
by a proper action in court because of its defect.
▪ The defect of the contract consists of either:
• It is entered into without or in excess of authority;
• It does not comply with the Statute of Frauds; or
• Both of the contracting parties are incapable of giving consent
to a contract.
▪ Since an unenforceable contract, though valid, is not enforceable by a
proper action in court, it is not binding or obligatory between the
parties, unless the contract is ratified. But unlike a void contract which
is not susceptible to ratification, an unenforceable contract can be
ratified.
▪ The defect is purely a matter of defense. There is no action that may
be filed to set aside the contract and the contract is not susceptible of
validation by prescription.
▪ The defense that the contract is unenforceable is available only to the
contracting parties. The contract cannot be assailed by third persons.

• Three Kinds of Unenforceable Contracts

o Unauthorized Contracts
▪ Rule
• Contracts entered into in the name of another person by one
who has been given no authority or legal representation or who
has acted beyond his powers are unenforceable, not void. If the
principal does not ratify the contract, it may not be enforced
against him. If he ratifies the contract, the ratification retroacts
to the day when the agent entered into such contract.
Contracts entered into by guardians on behalf of the ward or by
legal representatives on behalf of the absentee involving
disposition or encumbrance of real property of the ward or of
 the absentee without judicial approval are unenforceable.
▪ Exception
• An unauthorized contract involving the sale of a parcel of land
is not merely unenforceable but void ab initio because the law
requires the authority of the agent to be in writing, in case of
agency to sell a parcel of land or any interest therein;
otherwise, the sale is void. Thus, the sale of a parcel of land
made by the son on behalf of his father but without the latter’s
consent or authority is void because of failure to comply with
the requirement of Article 1874.
o Contracts Which Violate the Requirement of Statute of Frauds
▪ In the following cases an agreement hereafter made shall be
unenforceable by action, unless the same, or some note or
memorandum, thereof, be in writing, and subscribed by the party
charged, or by his agent; evidence, therefore, of the agreement
cannot be received without the writing, or a secondary evidence of its
contents:
• An agreement that by its terms is not to be performed within a
year from the making thereof;
• A special promise to answer for the debt, default, or
miscarriage of another;
• An agreement made in consideration of marriage, other than a
mutual promise to marry;
• An agreement for the sale of goods, chattels or things in action,
at a price not less than five hundred pesos, unless the buyer
accept and receive part of such goods and chattels, or the
evidences, or some of them, of such things in action or pay at
the time some part of the purchase money; but when a sale is
made by auction and entry is made by the auctioneer in his
sales book, at the time of the sale, of the amount and kind of
property sold, terms of sale, price, names of the purchasers
and person on whose account the sale is made, it is a sufficient
memorandum;
• An agreement of the leasing for a longer period than one year,
or for the sale of real property or of an interest therein;
• A representation as to the credit of a third person.
o Contract Where Both Parties are Incapacitated
▪ Where only one of the parties is incapable of giving consent to a
contract, the contract is merely voidable; but if both parties are
incapable of giving consent to a contract, the contract is not voidable
but unenforceable. In either case, however, the contract may be
ratified.
▪ In a contract which is unenforceable because both parties are
incapacitated, the ratification on the part of one of the contracting
parties shall give the same effect as if only one of them were
incapacitated, thereby making the contract merely voidable. If
ratification is made on the part of both parties, the contract shall be
validated from the inception.

4. Void Contracts

• Concept and Characteristics

o Concept
▪ A void or inexistent contract is one which has no force and effect from
the beginning, as if it has never been entered into, and which cannot
be validated either by time or ratification.
 ▪ A void contract produces no effect whatsoever either against or in
favor of anyone; it does not create, modify, or extinguish the juridical
relation to which it refers.
o Characteristics
▪ As a rule, they produce no legal effects whatsoever in accordance with
the principle "quod nullum est nullum producit effectum"; hence, it
does not create, modify, or extinguish the juridical relation to which it
refers.
• The exception to this rule is when the void contract has already
been performed and the Principle of In Pari Delicto is applied.
Under this principle, the guilty parties to an illegal contract
cannot recover from one another and are not entitled to
affirmative relief. Thus, the contract, though void, has produced
an effect.
▪ They are not susceptible of ratification and, as between the parties to
the contract, the validity cannot be given to it by estoppel; thus, it is
immaterial that the parties initially acted to implement the contract,
believing in good faith that the same was valid.
▪ The right to set up the defense of inexistence or absolute nullity
cannot be waived or renounced.
▪ The action or defense for the declaration of their inexistence or
absolute nullity is imprescriptible—however, the right to have a
contract declared void ab initio may be barred by laches although not
barred by prescription.
▪ The inexistence or absolute nullity of a contract cannot be invoked by
a person whose interests are not directly affected. Stated otherwise,
the right to set up the nullity of a void or non-existent contract is not
limited to the parties, as in the case of annullable or voidable
contracts; it is extended to third persons who are directly affected by
the contract.

• Contracts Which are Void or Inexistent

o Illegal Contracts
▪ Those whose cause, object, or purpose is contrary to law, morals,
good customs, public order, or public policy—cause is ordinarily
different from motive and, as a rule, the motive or particular purpose
of a party in entering into a contract does not affect the validity nor
existence of the contract.
• Cause Distinguished from Motive
o Cause is the essential reason which moves the
contracting parties to enter into it. In other words, the
cause is the immediate, direct, and proximate reason
which justifies the creation of an obligation through the
will of the contracting parties.
o On the other hand, motive is the particular reason of a
contracting party which does not affect the other party.
• When Motive becomes Cause
o The motive may be regarded as causa when "it
predetermines the purpose of the contract.
o In other words, when the realization of such motive or
particular purpose has been made a condition upon
which the contract is made to depend, then the motive
becomes the cause.
o When they blend to that degree, and the motive is
unlawful, then the contract entered into is null and void.
o Absolutely Simulated Contract
 ▪ Those which are absolutely simulated or fictitious.
• Concept
o In absolute simulation there appears to be a valid
contract but there is actually none because the element
of consent is lacking because the parties do not actually
intend to be bound by the terms of the contract.
o As a result, an absolutely simulated or fictitious contract
is void, and the parties may recover from each other
what they may have given under the contract.
o As a consequence, a contract of purchase and sale is null
and void and produces no effect whatsoever where it
appears that the same is without cause or consideration
which should have been the motive thereof, or the
purchase price which appears thereon as paid but which
in fact has never been paid by the purchaser to the
vendor.
o The most protuberant index of absolute simulation of
contract is the complete absence of an attempt in any
manner on the part of the ostensible buyer to assert
rights of ownership over the subject properties.
• Distinguished from Relative Simulation
o In relative simulation, however, the parties conceal their
true agreement. In this kind of simulation, the essential
requisites of a contract are present, and the simulation
refers only to the content or terms of the contract.
o There are two juridical acts involved in relative
simulation: the ostensible act and the hidden act. The
ostensible act is the contract that the parties pretend to
have executed while the hidden act is the true
agreement between the parties. A relative simulation
binds the parties to their real agreement “when it does
not prejudice a third person and is not intended for any
purpose contrary to law, morals, good customs, public
order, or public policy.”
o Contracts Whose Cause or Object Did Not Exist
▪ Those whose cause or object did not exist at the time of the
transaction. Thus, a contract entered into upon future inheritance is
void.
▪ The Court defined future inheritance as any property or right not in
existence or capable of determination at the time of the contract, that
a person may in the future acquire by succession. Likewise, in a
contract of lease, although the lessor need not be the owner of the
property being leased, he should have a right (e.g., either as a
usufructuary or a lessee) or at least an authority (e.g., as an agent of
the owner, usufructuary, or lessee) to lease it out; otherwise, the
contract is void because the cause or object did not exist at the time
of the transaction.
o Objects Outside Commerce of Men
▪ Those whose object is outside the commerce of men. Thus, the
following things may not be the object of a contract because they are
not susceptible of appropriation, therefore, outside the commerce of
men:
• Properties of public dominion are outside the commerce of men.
They cannot be subject to sale, disposition, or encumbrance;
any sale, disposition, or encumbrance of such property of the
public dominion is void for being contrary to law and public
 policy. They cannot likewise be leased or otherwise be the
subject matter of contracts. Hence, the right of the public to
use public property may not be bargained away through
contract.
o For example, public streets cannot be converted into flea
markets and leased to private individuals; the
submerged lands in the Manila Bay area, which are
declared to be part of the State’s inalienable natural
resources, cannot be alienated to a private entity; and
properties officially declared military reservations
become inalienable and outside the commerce of men
and may not be the subject of a contract or of a
compromise agreement.
• Sacred things, common things like the air and the sea, and res
nullius, as long as they have not been appropriated.
• Rights which are intransmissible may not also be the object of a
contract because they are also considered outside the
commerce of men, such as:
o Purely personal rights, i.e., patria potestas or marital
authority, the status and capacity of persons, and
honorary titles and distinctions; and
o Public offices, inherent attributes of the public authority,
and political rights of individuals, such as the right of
suffrage.
o Contracts Involving Impossible Service
▪ Impossible things or services cannot be the object of contracts. The
rule is based on the maxim impossibilium nulla obligatio est (there is
no obligation to do impossible things).
▪ An impossible service is that which is beyond the ordinary power of
man or that which is against the law, morals, good customs, public
order, or public policy. As to impossible services, the impossibility
may either be absolute, when nobody can perform it; or relative,
when it cannot be performed because of the special conditions or
qualifications of the obligor.
▪ The absolute impossibility nullifies the contract. As to relative
impossibility, the effects thereof shall depend on whether the same is
temporary or permanent. If temporary, it does not nullify the
contract, such as when a partner agrees to contribute to the
partnership a sum more than what his means allow; if permanent, it
nullifies the contract, such as blindness in a contract which requires
the use of eyesight.
o Intention Cannot Be Ascertained
▪ Those where the intention of the parties relative to the principal
object of the contract cannot be ascertained. The rule is echoed in
Article 1378, paragraph 2, which states: “if the doubts upon the
principal object of the contract in such a way that it cannot be known
what may have been the intention or will of the parties, the contract
shall be null and void."
o Expressly Prohibited or Declared Void By Law
▪ An example of a contract expressly prohibited by law is any stipulation
which contravenes the prohibition against pactum commissorium. On
the other hand, examples of contracts expressly declared void by law
are those contracts which failed to comply with the formalities
required by law for their validity, such as those mentioned in Articles
748, 749, 1773, 1744(1), 1874, 2134, and 2140 of the Civil Code and
Act No. 1147.
• Principle of In Pari Delicto
o Applicability
▪ The principle of in pari delicto applies only to contracts with an illegal
cause, subject matter, or purpose, whether the attendant facts
constitute an offense or misdemeanor or whether the consideration
involved is merely rendered illegal.
▪ It does not apply to inexistent contracts, or to fictitious or simulated
contracts.
o Statement of the Rule
▪ The principle of in pari delicto provides that when two parties are
equally at fault, the law leaves them as they are and denies recovery
by either one of them. No suit can be maintained for its specific
performance, or to recover the property agreed to be sold or
delivered, or the money agreed to be paid, or damages for its
violation, and no affirmative relief of any kind will be given to one
against the other. Each must bear the consequences of his own acts.
They will be left where they have placed themselves since they did
not come into court with clean hands.
o Exceptions
▪ The rule is subject to the following exceptions that permit the return
of that which may have been given under a void contract to:
• The innocent party (Arts. 1411-1412, Civil Code);
• The debtor who pays usurious interest (Art. 1413, Civil Code);
• The party repudiating the void contract before the illegal
purpose is accomplished or before damage is caused to a third
person and if public interest is subserved by allowing recovery
(Art. 1414, Civil Code);
• The incapacitated party if the interest of justice so demands
(Art. 1415, Civil Code);
• The party for whose protection the prohibition by law is
intended if the agreement is not illegal per se but merely
prohibited and if public policy would be enhanced by permitting
recovery (Art. 1416, Civil Code); and
• The party for whose benefit the law has been intended such as
in price ceiling laws (Art. 1417, Civil Code) and labor laws (Arts.
1418-1419, Civil Code).7"
▪ Another exception to the rule is where the application of the in pari
delicto rule would violate well-established public policy. In Gonzalo v.
Tarnate, Jr., the Court held that the principle of pari delicto cannot be
applied if it would contravene the public policy on prevention of unjust
enrichment. However, the recovery on the basis of unjust enrichment
cannot apply to a foreigner who acquired private lands in the
Philippines in violation of the Constitutional prohibition.

III. Natural Obligations

• Definition
o Natural obligations, not being based on positive law but on equity and
natural law, do not grant a right of action to enforce their performance, but
after voluntary fulfillment by the obligor, they authorize the retention of
what has been delivered or rendered by reason thereof.

• Rationale (1947 Code Commission)

o On the part of the payor – It gives rise to a moral, rather than a legal duty
to pay or perform, but the person performing feels that in good conscience
 he should comply with his undertaking, which is based on moral grounds.
o On the part of the payee – The payee is obliged to return the amount
received by him because the payor was not legally bound to make the
payment.
▪ NOTE: The foundations of natural law are equity, morality and natural
justice.

• Examples of Natural Obligations

o Paying despite extinctive prescription.
▪ When a right to sue upon a civil obligation has lapsed by extinctive
prescription, the obligor who voluntarily performs the contract cannot
recover what he has delivered or the value of the service he has
rendered. (Art. 1424, NCC) e.g., The prescriptive period to file a case
based on a written agreement is 10 years from the time the right of
the action accrues. If the creditor does not collect the amount of the
loan after 10 years from the time it should be paid, such creditor can
no longer collect from the debtor. If the debtor, despite the lapse of
the period and knowing that the debt has already prescribed, pays the
creditor, such debtor can no longer recover the payment.
o 3rd person paying against the will of the debtor.
▪ When without the knowledge or against the will of the debtor, a 3rd
person pays a debt which the obligor is not legally bound to pay
because the action thereon has prescribed, but the debtor later
voluntarily reimburses the 3rd person, such debtor can no longer
recover such payment. (Art. 1424, NCC)
o Contract made by a minor. (Arts. 1426 & 1427, NCC)
▪ An incapacitated person is not obliged to make any restitution except
insofar as he has been benefited by the thing or price received by
him.
▪ NOTE: A person who is between 18 and 21 years of age is NOT a
minor. In present time, the age of majority is 18 (R.A. No. 6809)
However, if the law is applicable, the minor who voluntarily makes
payment or restitution of what he has obtained by contract even
though he has no legal obligation to make any payment or restitution,
can no longer recover what he has returned.
o Performance by winning party.
▪ When, after an action to enforce a civil obligation has failed the
defendant voluntarily performs the obligation, he cannot demand
return of what he has delivered or the payment of the value of the
service he has rendered. (Art. 1428, NCC)
o Voluntary payment of an heir in excess of inherited property. (Art. 1429,
NCC)
▪ A is indebted to B for P10,000.00. A later dies, with C as his heir who
is entitled only to P5,000.00 from the estate of A. If C voluntarily pays
B P10,000.00, C can no longer recover such amount.
o Payment of a void legacy. (Art. 1430, NCC)
DISTINCTIONS BETWEEN RESCISSIBLE, VOIDABLE, UNENFORCEABLE, AND
VOID/INEXISTENT CONTRACTS
 SPECIAL CONTRACTS

I. Sales
A. Definition and Essential Requisites

• Basic Concepts
o Definition of Sales
▪ Sale is a contract where one party (seller or vendor) obligates himself
to transfer the ownership of and to deliver a determinate thing, while
the other party (buyer or vendee) obligates himself to pay for said
thing a price certain in money or its equivalent. (Art. 1458, NCC)
▪ The primary consideration in determining the true nature of a contract
is the intention of the parties. If the words of a contract appear to
contravene the evident intention of the parties, the latter shall prevail.
Such intention is determined not only from the express terms of their
agreement, but also from the contemporaneous and subsequent acts
of the parties.
o Nature and Characteristics
▪ It is a consensual contract
• From the point of view of perfection, the contract of sale is a
consensual contract—which means that the sale is perfected by
mere consent. The delivery of the thing bought, or payment of
the price is not necessary for the perfection of the contract.5
Instead, upon perfection of the contract it creates an obligation
to make the delivery of the thing bought.
▪ It is not a mode, but only creates title
• The contract of sale is not a mode of transmitting ownership.
Upon perfection, it does not transfer or affect ownership.
Instead, it only creates an obligation to transfer ownership, or it
only creates title. It is tradition or delivery, as a consequence of
sale, that actually transfers ownership.
▪ It creates reciprocal obligations
• A contract of sale creates reciprocal obligations, where the
seller obligates himself to transfer the ownership of and deliver
a determinate thing, and the buyer obligates himself to pay
therefor a price certain in money or its equivalent.
▪ It is ordinarily commutative and onerous
• Ordinarily, the contract of sale is commutative and onerous, in
that each one of the parties assume a correlative obligation—
the seller to deliver and transfer ownership of the thing sold
and the buyer to pay the price.
• However, the contract may also become aleatory when the sale
is subordinated to an uncertain event, as in the case of a sale
of hope or expectation, or emptio spei.
▪ It is also a nominate and a principal contract.

• Essential Requisites
o Consent
▪ Definition
• It is the meeting of the minds to transfer ownership in
exchange for the price.
• As to the buyer, the cause is the delivery of the thing sold;
whereas, as to the seller, it is the payment of the price in
money or its equivalent. In relation to price, the parties must
not only agree on the amount of the price but also on the
manner of payment of the price to give rise to a perfected
 contract of sale. An agreement as to the manner of payment
goes into the price, such that a disagreement on the manner of
payment is tantamount to a failure to agree on the price.
▪ Consensual Contract
• A contract of sale is a consensual contract, which means that
the sale is perfected by mere consent or is perfected at the
moment there is a meeting of minds upon the thing which is
the object of the contract and upon the price.
▪ Sale by Auction
• A sale by auction is perfected when the auctioneer announces
its perfection by the fall of the hammer, or in other customary
manner. Until such announcement is made, any bidder may
retract his bid; and the auctioneer may withdraw the goods
from the sale unless the auction has been announced to be
without reserve.
▪ Effect of 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.
• However, Article 1482 speaks of earnest money given in a
contract of sale. The earnest money forms part of the
consideration only if the sale is consummated upon full
payment of the purchase price. If the earnest money is given in
a contract to sell, Article 1482, which speaks of a contract of
sale, does not apply.
▪ Effect of Loss of Thing Prior to Perfection
• For things other than “goods,” the contract is without any
effect—it is a case of an inexistent contract;” and
• In case of specific goods, if they perished in part or have wholly
or in a material part so deteriorated in quality as to be
substantially changed in character without the knowledge of the
seller, the buyer may at his option treat the sale either as:
o Avoided; or
o Valid as to all of the existing goods or in so much thereof
as have not deteriorated, and as binding the buyer to
pay the agreed price for the goods in which the
ownership will pass, if the sale was divisible.

o Object or Determinate Subject Matter

▪ General Rule
• Anything that has a value that can be assessed in money,
whether immovable or movable, consumable or non-
consumable, corporeal or incorporeal, present or future, and
even a mere hope or expectancy, may be the object of sale.
▪ Requisites
• The thing must be licit;
• The thing may or may not be existing at the time of the
perfection of the contract, so long as it has the potential or
possibility of existence at some future time—the goods which
form the subject of a contract of sale may be either existing
goods, owned or possessed by the seller, or goods to be
manufactured, raised, or acquired by the seller after the
perfection of the contract of sale:
o Emptio reispe-ratae – it is a sale of future things in which
the amount and the quality of the thing is uncertain, and
the sale is subject to the condition that the thing should
 come into existence, such that if the condition is not
fulfilled or if the thing does not come into existence, the
contract becomes ineffective; or
o Emptio spei – it is the sale of hope or expectancy which
the law allows, but the sale of a vain hope or expectancy
is void;
• The thing must be determinate, that is, it is already particularly
designated or physically segregated from all others of the same
class; or at least determinable, that is, the thing is capable of
being made determinate without the necessity of a new or
further agreement between the parties.
▪ Contract of Sale Distinguished from Contract for Piece of Work
• Since the contract of sale does not require the thing to be
already in existence at the time its perfection, the contract may
either be sale or contract for piece of work if the subject matter
is a thing still to be made:
o Contract For Piece of Work
▪ By the contract for a piece of work, the contractor
binds himself to execute a piece of work for the
employer, in consideration of a certain price or
compensation. The contractor may either employ
only his labor or skill, or also furnish the material.
o Test in Determining Character of Contract
▪ If the parties intended that at some future date an
object has to be delivered, without considering the
work or labor of the party bound to deliver, the
contract is one of sale; but if one of the parties
accepts the undertaking on the basis of some plan,
considering the work he will employ personally or
through another, there is a contract for a piece of
work;
▪ If such intention is not clear but the one who
committed to deliver the thing is habitually
engaged in the business of manufacturing or
making such thing, the contract is one of sale;
however, if the one who committed to deliver the
thing is not habitually engaged in the business of
making such thing and the same would never have
existed except for the order of the person desiring
it, the contract is one for a piece of work, not a
sale.
o Importance of Distinctions
▪ In a contract of sale, the obligation created is an
obligation to give; while the obligation created in
contract for piece of work is an obligation to do;
▪ The contract of sale is covered by the Statute of
Frauds, while the contract for piece of work is not.
▪ Requirement of Ownership
• Ownership by the seller of the thing sold at the time of the
perfection of the contract of sale is not an element for its
perfection and a perfected contract of sale cannot be challenged
on the ground of non-ownership on the part of the seller at the
time of its perfection; hence, the sale is still valid.
• Instead, upon perfection of the contract, it will create an
obligation on the part of the seller to transfer ownership to the
buyer”—if the seller will not be able to do so, the same is
 merely a breach of the contract of sale.
• If the seller is not the owner but he was able to deliver the
thing sold to the buyer, the latter does not acquire ownership
because no one can give what one does not have—nemo dat
quod non habet.
o Exception: When the sale of a person with a void title is
to a third person who purchased it for value and in good
faith.

o Cause or Consideration
▪ Requisites
• The price must be real or true—if the price is simulated, the
contract is void, but the act may be shown to have been in
reality a donation, or some other act or contract.
o Thus, a deed of sale, in which the stated consideration
had not in fact been paid, is null and void. On the other
hand, if the price agreed upon is true, the failure to pay
the price does not affect the validity of the contract but
merely results in a right to demand the fulfillment or
cancellation of the obligation under an existing valid
contract;
• The consideration must be in money or its equivalent;
• The price must be certain:
o In order that the price may be considered certain, it shall
be sufficient that it be so with reference to another thing
certain, or that the determination thereof be left to the
judgment of a specified person or persons;
o If such person or persons be unable or unwilling to fix
the price, the contract shall be inefficacious, unless the
parties subsequently agree upon the price;
o If the third person or persons acted in bad faith or by
mistake, the courts may fix the price;
o Where such third person or persons are prevented from
fixing the price or terms by fault of the seller or buyer,
the party not in fault may have such remedies against
the party in fault as are allowed the seller or the buyer,
as the case may be;
o The fixing of the price can never be left to the discretion
of one of the contracting parties; however, if the price
fixed by one of the parties is accepted by the other, the
sale is perfected; and
o Where the price cannot be determined in any other
manner, the contract is inefficacious.
▪ Effect of Gross Inadequacy of Price
• It does not affect a contract of sale. However, it may indicate a
defect in the consent, or that the parties really intended a
donation or some other act or contract.

• Capacities of Parties
o General Requirement: Same as ordinary contracts.
o Prohibited Sales
▪ Between husband and wife, unless their property regime is complete
separation—but only the heirs and the creditors can question its
nullity and not the spouses themselves who executed the contract
with full knowledge of the prohibition;
▪ The same prohibition also applies to common-law relationships
 because of policy considerations and the dictates of morality;
otherwise, the condition of those who incurred guilt would turn out to
be better than those in legal union;
▪ The guardian cannot acquire by purchase, even at a public auction or
judicial auction, either in person or through the mediation of another,
the property of the ward under his guardianship,66 so long as the
guardianship still exists;
▪ The agent cannot acquire by purchase, even at a public auction or
judicial auction, either in person or through the mediation of another,
the property of the principal whose administration or sale may have
been entrusted to him, unless the principal consents to such sale;
▪ The executor or administrator cannot acquire by purchase, even at a
public auction or judicial auction, either in person or through the
mediation of another, the property of the estate under his
administration, so long as there is no final settlement yet of the
estate;
▪ Public officers and employees cannot acquire by purchase, even at a
public auction or judicial auction, either in person or through the
mediation of another, the property of the State or of any subdivision
thereof or of any government-owned or controlled corporation or
institution, the administration of which has been entrusted to them;
▪ Justices, judges, prosecuting attorneys, and clerks of superior and
inferior courts, and other officers and employees connected with the
administration of justice, including attorneys or lawyers, cannot
acquire by purchase, even at a public auction or judicial auction,
either in person or through the mediation of another, the property and
rights in litigation or levied upon an execution before the court within
whose jurisdiction or territory they exercise their respective
jurisdiction.
• In all the foregoing contracts, the sale is void.

• Formalities in Contracts of Sale

o Requirement as to Validity
▪ Whatever may be its subject matter, no particular form is required in
a contract of sale for its validity. The only exception is the sale of
large cattle which requires that the same be recorded with the city/
municipal treasurer and that a certificate of transfer be issued;
otherwise, the sale is not valid. Thus, an oral sale of a parcel of land is
a valid contract.
o Requirement As To Enforceability
▪ The sale of personal property at a price not less than P500 and the
sale of real property must be in writing under the Statute of Frauds;
otherwise, the contract is unenforceable.
o Sale of Land Need Not Be in Public Document and Be Recorded
▪ It is not a requirement for the validity of a contract of sale of a parcel
of land that this be embodied in a public instrument.
▪ Thus, the non-appearance of the parties before the notary public who
notarized the deed does not necessarily nullify nor render the parties’
transaction void ab initio.
▪ Likewise, the non-recording of the instrument in the registry of
property does not affect the validity of the contract.
o Remedy under Article 1357
▪ If the sale of a parcel of land is already enforceable under the Statute
of Frauds, either because the sale is in a private instrument” or there
has already been partial performance of the contract, and a public
document is necessary for the registration in the registry of deeds,
 the parties may avail themselves of the right granted under Article
1357 of the Civil Code.
o Requirement of Form in Agency to Sell Land
▪ When the sale of a piece of land or any interest thereon is through an
agent, the authority of the latter shall be in writing; otherwise, the
sale shall be void.

B. Contract of Sale

Two Kinds of Contracts of Sale

• Absolute Sale
o When the sale is devoid of any condition imposed on the passing of title of
the thing to be conveyed or on the obligation of a party thereto and, hence,
title to the property passes to the vendee upon delivery of the thing sold.
• Conditional Sale
o When the sale is subject to any condition imposed on the passing of title of
the thing to be conveyed or on the obligation of a party thereto.

Q: A contract of sale of a lot stipulates that the “payment of the full consideration based
on a survey shall be due and payable in 5 years from the execution of a formal deed of
sale.” Is this a conditional contract of sale?

A: NO, it is not. The stipulation is not a condition which affects the efficacy of the
contract of sale. It merely provides the manner by which the full consideration is to be
computed and the time within which the same is to be paid. But it does not affect in any
manner the effectivity of the contract.

Q: MTCL sent a letter-proposal for the delivery and sale of the machines to be installed at
various offices of ACE Company to which the latter agreed for a purchase price of
₱5,000,000. Thereafter, it delivered several machineries at ACE Company’s premises and
installed the same. MTCL Company demanded payment from ACE Company. However,
they have sent a letter to MTCL Company stating that they have been returning the
machines to them thru one of their sales representatives who has agreed to pull the
machines out but failed to do so. ACE Company filed a complaint against MTCL Company
praying that the latter pull out from its premises the subject machines. In its defense,
MTCL Company posits that ACE Company refused to pay the purchase price therefor
despite the latter’s use of the machines. As such, MTCL Company prays that ACE
Company be compelled to pay the purchase price. Should ACE Company pay MTCL for the
purchase price of the machines?

A: YES. Considering its consensual nature, a contract of sale had been perfected at the
precise moment ACE Company accepted the latter’s proposal to sell the machines in
consideration of the purchase price of ₱5,000,000. From that point in time, the reciprocal
obligations of the parties – i.e., on the one hand of MTCL to deliver the said machines to
ACE Company, and, on the other hand, of ACE Company to pay the purchase price
therefor after delivery – already arose and consequently may be demanded. From that
moment, the parties may reciprocally demand performance, subject to the provisions of
the law governing the form of contracts.

1. Contract to Sell

• Definition
o It is a bilateral contract whereby the prospective seller, while expressly
reserving the ownership of the subject property despite delivery thereof to
the prospective buyer, binds himself to sell the subject property exclusively
to the prospective buyer upon fulfillment of the condition agreed upon, such
 as the full payment of the purchase price.
o Elsewise stated, in a contract to sell, ownership is retained by the vendor
and is not to pass to the vendee until full payment of the purchase price.
o In a contract to sell, the payment of the purchase price is a positive
suspensive condition that gives rise to the prospective seller's obligation to
convey title. However, non-payment is not a breach of contract but “an
event that prevents the obligation of the vendor to convey title from
becoming effective.” The contract would be deemed terminated or cancelled,
and the parties stand “as if the conditional obligation had never existed.

• Distinguishing Characteristic of Contract to Sell

o The stipulation to execute a deed of absolute sale upon full payment of the
purchase price, is a unique and distinguishing characteristic of a contract to
sell. Hence, where the seller promises to execute a deed of absolute sale
upon completion by the buyer of the payment of the price, the contract is
only a contract to sell, even if their agreement is denominated as a Deed of
Conditional Sale.
o The agreement to execute a deed of sale upon full payment of the purchase
price shows that the vendors reserved title to the subject property until full
payment of the purchase price.
o Prior to the execution of the deed of absolute sale, the seller is not obligated
yet to transfer the ownership to the buyer, even if there is a contract to sell
between them.

• Contract of Sale v. Contract to Sell

Contract of Sale Contract to Sell

As regards transfer of ownership
Ownership is transferred to the buyer upon Ownership is transferred upon full payment
delivery of the object to him. of the purchase price.

NOTE: Vendor has lost and cannot recover NOTE: Prior to full payment, ownership is
ownership until and unless the contract is retained by the seller.
resolved or rescinded.
As to numbers of contracts involved
There is only one contract executed There are two contracts:
between the seller and the buyer. • The contract to sell, i.e., preparatory
sale; and
• The deed of absolute sale.

NOTE: The principal contract is executed

after full payment of the purchase price.
As to numbers of contracts involved
Non-payment of the purchase price is a Full payment of the purchase price is a
resolutory condition that entitles the seller positive suspensive condition that gives rise
to rescind the sale. to the prospective seller’s obligation to
convey title.

NOTE: Failure to fully pay the price is not a

breach but an event that prevents the
obligation of the vendor to convey title
from becoming effective.
Remedies available
• Specific Performance • Rescission; or
• Rescission; or • Damages
• Damages
Q: Dolores Ventura entered into a Contract to Sell with Spouses Eustacio and Trinidad
Endaya for the purchase of two parcels of land located in Marian Road II, Marian Park,
Parañaque City. The contract to sell provides that the purchase price of P347,760.00 shall
be paid by Dolores through: (a) down payment of P103,284.00 upon execution of the
contract; and (b) the balance of P244,476.00 within a 15-year period, plus 12% interest
per annum on the outstanding balance and 12% interest per annum on arrearages.

Dolores’ children, Frederick Ventura, Marites Ventura-Roxas, and Philip Ventura filed a
Complaint and, thereafter, an Amended Complaint for specific performance, seeking to
compel Sps. Endaya to execute a deed of sale over the subject properties. They argued
that their parents’ close friendship with Sps. Endaya, allowed widowed Dolores to pay the
down payment stated in the contract to sell and, instead, allowed her to pay amounts as
her means would permit.

The total payments made by Dolores and petitioners amounted to P952,152.00, more
than the agreed purchase price of P347,760.00, including the 12% interest p.a. thereon
computed on the outstanding balance.

When Dolores’ children demanded the execution of the corresponding deed of sale, Sps.
Endaya refused. Should Sps. Endaya execute a deed of sale over the subject properties in
favor of Dolores’ children?

A: NO. Spouses Endaya had no obligation to petitioners to execute a deed of sale over
the subject properties. A contract to sell is defined as a bilateral contract whereby the
prospective seller, while expressly reserving the ownership of the subject property
despite delivery thereof to the prospective buyer, binds himself to sell the said property
exclusively to the latter upon his fulfillment of the conditions agreed upon, i.e., the full
payment of the purchase price and/or compliance with the other obligations stated in the
contract to sell.

Q: Project Movers Realty and Development Corporation (PMRDC) was indebted to Keppel
Bank for P200M. To pay the debt, PMRDC conveyed to the bank 25 properties. Adao
occupies one of the properties conveyed. The bank demanded Adao to vacate the
property but he refused. Hence, an ejectment case was filed against him. In his defense,
Adao claimed that he entered into a Contract to Sell with PMRDC. To prove full payment
of the property, he presented an affidavit. Is Keppel bank bound by the contract to sell
between PMRDC and Adao?

A: NO. The contract to sell does not by itself give Adao the right to possess the property.
Unlike in a contract of sale, here in a contract to sell, there is yet no actual sale nor any
transfer of title, until and unless, full payment is made. The payment of the purchase
price is a positive suspensive condition. Adao’s lone affidavit is self-serving and cannot be
considered as substantial evidence to prove that there was full payment made.

Q: Spouses Roque and the original owners of an unregistered lot executed a 1997 Deed
of Conditional Sale over a portion of a lot for P30,775.00. After the deed’s execution,
Spouses Roque took possession and introduced improvements on the subject portion
which they utilized as a balut factory.

Sabug, Jr, appliedfor a free patent over the entire lot and was eventually issued an OCT
in his name. Sabug, Jr., through the 1999 Deed of Absolute Sale, sold the lot to Aguado
for P2,500,000.00, who, in turn, caused the cancellation of the OCT and the issuance of a
TCT. Aguado obtained an P8,000,000.00 loan from the Land Bank secured by a mortgage
over the lot. When she failed to pay her loan obligation, Land Bank commenced extra-
judicial foreclosure proceedings and eventually tendered the highest bid in the auction
sale. Upon Aguado’s failure to redeem the subject property, Land Bank consolidated its
ownership and a TCT was issued in its name. Spouses Roque then filed an action for
reconveyance before the RTC. Will the action for reconveyance prosper?

A: NO. This case involves a contract to sell. The Court held that where the seller
promises to execute a deed of absolute sale upon the completion by the buyer of the
payment of the purchase price, the contract is only a contract to sell even if their
agreement is denominated as a Deed of Conditional Sale, as in this case. In a contract to
sell, there being no previous sale of the property, a third person buying such property
despite the fulfillment of the suspensive condition such as the full payment of the
purchase price, for instance, cannot be deemed a buyer in bad faith and the prospective
buyer cannot seek the relief of reconveyance of the property. The action for
reconveyance shall fail.

2. Option Contract

• Definition
o An option contract is a continuing offer or contract by which the owner
stipulates with another that the latter shall have the right to buy the
property at a fixed price within a certain time, or under, or in compliance
with, certain terms and conditions, or which gives to the owner of the
property the right to sell or demand a sale.

• Distinguished from Contract of Sale

Contract of Sale Option Contract

Consideration
Must be a price certain in money May be anything of value
Bilateral/Unilateral
Bilateral Contract Unilateral Contract
Subject Matter
Subject matter if the contract of sale itself The “option to purchase” is the subject
matter.

• Nature
o An option contract is a separate and distinct contract from a contract of sale.
It is a preparatory contract in which one party grants to another, for a fixed
period and at a determined price, the privilege to buy or sell, or to decide
whether or not to enter into a principal contract.
o NOTE: If the option is perfected, it does not result in the perfection or
consummation of the sale. It is binding upon the promissor if the promise is
supported by a consideration distinct from the price.

• Period Within Which to Exercise the Option

o Within the term stipulated; and
o If there is no stipulation, the court may fix the term.

• Exercise of an Option
o In an option to buy, the party who has an option may validly and effectively
exercise his right by merely notifying the owner of the former’s decision to
buy and expressing his readiness to pay the stipulated price.
o A notice of acceptance must be communicated to offeror even without actual
payment as long as payment is delivered in the consummation stage
provided it still within the period provided.
• Effect of the Presence and Absence of a Separate Consideration in an Option
Contract
o With separate consideration
▪ Contract is valid;
▪ Offeror cannot withdraw offer until after expiration of the option; and
▪ Is subject to rescission and damages but not specific performance.
o Without separate consideration
▪ The option contract is not deemed perfected; and
▪ Offer may be withdrawn at any time prior to acceptance.

• Elements
o Consent;
o Subject Matter – An option right to an unaccepted unilateral offer to sell/
accepted unilateral promise to sell or an unaccepted unilateral offer to buy/
accepted unilateral promise to buy a determinate or determinable object for
a price certain including the manner of payment; and
o Prestation – A consideration separate and distinct from the purchase price
for the option given.

• Obligations of the Offeror

o Not to offer to any third party the sale of the object of the option during the
option period;
o Not to withdraw the offer or option during the option period; and
o To hold the subject matter for sale to the offeree in the event that the latter
exercises his option during the option period.

• Effect of Acceptance and Withdrawal of the Offer

o If the offer had already been accepted and such acceptance has been
communicated before the withdrawal is communicated, the acceptance
creates a perfected contract, even if no consideration was as yet paid for the
option. In which case, if the offeror does not perform his obligations under
the perfected contract, he shall be liable for all consequences arising from
the breach thereof based on any of the available remedies such as specific
performance, or rescission with damages in both cases.

3. Right of First Refusal

• Definition
o It is a contractual grant, not of the sale of a property, but of the first priority
to buy the property in the event the owner sells the same.
o NOTE: Where a time is stated in an offer for its acceptance, the offer is
terminated at the expiration of the time given for its acceptance.

• Basis
o It is based on the current offer to sell of the seller or offer to purchase of
any prospective buyer. Only after the optionee fails to exercise its right of
first priority under the same terms and within the period contemplated could
the owner validly offer to sell the property to a third person, again, under
the same terms as offered to the optionee.

• Effect of Sale of a Property in Violation of the Right of First Refusal

o The resulting contract is rescissible by the person in whose favor the right of
first refusal was given and even though no particular price is stated in the
covenant granting the right of first refusal, the same price by which the
third-party buyer bought the property shall be deemed to be the price by
which the right of first refusal shall therefore be exercisable.
Q: Dux leased his house to Iris for a period of 2 years, at the rate of P25,000.00
monthly, payable annually in advance. The contract stipulated that it may be renewed for
another 2- year period upon mutual agreement of the parties. The contract also granted
Iris the rightof first refusal to purchase the property at any time during the lease, if Dux
decides to sell the property at the same price that the property is offered for sale to a
third party. 23 months after execution of the lease contract, Dux sold the house. Dux
said there was no breach because the property was sold to his mother who is not a third
party. Iris filed an action to rescind the sale and to compel Dux to sell the property to her
at the same price. Alternatively, she asked the court to extend the lease for another 2
years on the same terms. Can Iris seek rescission of the sale of the property to Dux’s
mother? (2008 BAR)

A: YES. The right of first refusal is included in the contract signed by the parties. Only if
the lessee failed to exercise the right of first refusal could the lessor lawfully sell the
subject property to others, under no less than the same terms and conditions previously
offered to the lessee. Granting that the mother is not a third party, this would make her
privy to the agreement of Dux and Iris, aware of the right of first refusal. This makes the
mother a buyer in bad faith, hence giving more ground for rescission of the sale to her.

• Distinguished from Option Contract

Option Contract Right of First Refusal

Nature
Principal contract; stands on its own Accessory; cannot stand on its own
Consideration
Needs separate consideration Does not need separate consideration
Subject Matter and Price
Subject matter and price must be valid. There must be subject matter but price not
important.
Condition
Not conditional Conditional
Offer to Sell
There is no offer to sell, but only an There is an offer to sell.
opportunity for the buyer to enter into a
contract of sale.
Subjectivity to Specific Performance
Not subject to specific performance Subject to specific performance

• Right of First Refusal Must Be Contained in a Written Contract

o The right of first refusal be embodied in a written contract and the grant of
such right must be clear and express.
o NOTE: It is applicable only to executory contracts and not to contracts which
are totally or partially performed.

• Right of First Refusal may be Waived

o Like other rights, the right of first refusal may be waived. For a waiver of
right to exist, three elements are essential:
▪ Existence of a right;
▪ The knowledge of the evidence thereof; and
▪ An intention to relinquish such right.

• Availment of Sublessee of the Right of First Refusal of the Lessee

o GR: The sublessee is a stranger to the lessor who is bound to respect the
right of first refusal in favor of the lessee only.
 o XPN: When the contract of lease granted the lessee the right to assign the
lease, the assignee would be entitled to exercise such right as he steps into
the shoes of the original assignee.

Q: Tess leased her 1,500 sq. m. lot in Antipolo City to Ruth for a period of three (3) years
to February 2013. On March 19, 2011, Tess sent a letter to Ruth, part of which read as
follows: “I am offering you to buy the property you are presently leasing at P5,000.00
per sq. m. or for a total of P7,500,00.00. You can pay the contract price by installment
for two (2) years without interest. I will give you a period of one (1) year from the receipt
of this letter to decide whether you will buy the property.” After the expiration of the
lease contract, Tess sold the property to her niece for a total consideration of P4 Million.
Ruth filed a complaint for the annulment of the sale, reconveyance and damages against
Tess and her niece. Ruth alleged that the sale of the leased property violated her right to
buy under the principle of right of first refusal. Is the allegation of Ruth tenable? (2014
BAR)

A: NO, the allegation of Ruth is not tenable. The letter written by Tess did not grant a
right of first refusal to Ruth. At most, it is to be construed as an option contract whereby
Ruth was given the right to buy or not to buy the leased property. An option is itself not a
purchase, but it merely secures the privilege to buy. However, the option is not valid
because it was not supported by cause or consideration distinct from the price of the
property. (Art. 1479, NCC) Also, Ruth does not appear to have exercised her option
before the offer was withdrawn by the subsequent sale of the property to the niece of
Tess.

C. Earnest Money

• Definition
o This is the money given to the seller by the prospective buyer to show that
the latter is truly interested in buying the property, and its aim is to bind the
bargain (Pineda, 2010).
o It is actually a partial payment of the purchase price and is considered as
proof of the perfection of the contract.

• Significance
o It is considered as:
▪ Part of the purchase price – earnest money is deducted from the total
price; and
▪ Proof of perfection of the contract. (Art. 1482, NCC)

• Effect of Rescission on Earnest Money Received

o When the seller seeks to rescind the sale, he is obliged to return the thing
which was the object of the contract along with fruits and interest. (Art.
1385, NCC)

• Option Money v. Earnest Money

Option Money Earnest Money

As to Money Given
Money given as distinct consideration for an Forms part of the purchase price.
option contract.
As to Perfection
Applies to a sale not yet perfected. Given only when there is already a sale.
Obligation of the Buyer Upon Payment of Consideration
Prospective buyer is not required to buy. When given, the buyer is bound to pay the
balance.
 As to Recovery
If buyer does not decide to buy, it cannot If sale did not materialize, it must be
be recovered. returned.
As to Transfer of Ownership
Ownership is reserved to the seller and is Title passes to the buyer upon delivery of
not to pass until full payment. the thing sold.
Effect of Non-payment
Action for specific performance can be filed. Action for specific performance or
rescission can be filed.

• Remedy when Seller Refuses to Complete the Sale Transaction despite Down
Payment of the Buyer
o The action for specific performance will lie. There is a perfected contract of
sale because there was a binding agreement of sale, not just an option
contract. The sale was perfected upon acceptance by the seller of the down
payment from the buyer.

• Seller’s Refusal to Proceed with the Sale despite Down Payment of Buyer on the
Ground that the Transaction is Disadvantageous to Him (Seller)
o The seller cannot justify his refusal to proceed with the sale by the fact that
the deal is financially disadvantageous to him. Having made a bad bargain is
not a legal ground for pulling out of a binding contract of sale, in the
absence of some actionable wrong by the other party.

• Sale of a Thing by a Person NOT its Owner

o Ownership by the seller on the thing sold at the time of the perfection of the
contract of sale is not an element for its perfection. What the law requires is
that the seller has the right to transfer ownership at the time the thing sold
is delivered. A perfected contract of sale cannot be challenged on the ground
of non-ownership on the part of the seller at the time of its perfection.
Hence, the sale is still valid.

• Right to Transfer Ownership

o It is during the delivery that the law requires the seller to have the right to
transfer ownership of the thing sold. In general, a perfected contract of sale
cannot be challenged on the ground of the seller’s non-ownership of the
thing sold at the time of the perfection of the contract.
o This rule is in accord with a well-known principle of law that one cannot
transmit or dispose of that which he does not have—nemo dat quod non-
habet.

• Legal Effect of Sale by a Non-owner

o GR: The buyer acquires no better title to the goods than the seller had;
caveat emptor (buyer beware). (Art. 1505, NCC)
o XPNs:
▪ Estoppel or when the owner of the goods is by his conduct precluded
from denying the seller’s authority to sell (Art. 1505, NCC);
▪ When the contrary is provided for in recording laws (Art. 1505, NCC);
▪ When the sale is made under statutory power of sale or under the
order of a court of competent jurisdiction (Art. 1505, NCC);
▪ When the sale is made in a merchant’s store in accordance with the
Code of Commerce and special laws (Art. 1505, NCC);
▪ When a person who is not the owner sells and delivers a thing, and
subsequently acquired title thereto (Art. 1434, NCC);
▪ When the seller has a voidable title which has not been avoided at the
time of the sale (Art. 1505, NCC);
 ▪ Sale by co-owner of the whole property or a definite portion thereof
(Art. 493, NCC); or
▪ Special rights of unpaid seller. (Arts. 1526- 1533, NCC)

D. Double Sales

• Definition
o There is double sale when the same object of the sale is sold to different
vendees.

• Requisites of Double Sales (Art. 1544, NCC)

o Two (2) or more sales transactions must constitute valid sales transactions;
o Two (2) or more sales transactions must pertain to exactly the same subject
matter;
o Two (2) or more buyers at odds over the rightful ownership of the subject
matter must each represent conflicting interests; and
o Two (2) or more buyers at odds over the rightful ownership of the subject
matter must each have bought from the very same seller.

• Rules on Preference (Art. 1544, NCC)

o Movable / personal property – Owner who is first to possess in good faith;
o Immovable / real property –
▪ First to register in good faith.
▪ No registration – first to possess in good faith.
▪ No registration & no possession in good faith – person who presents
oldest title in good faith.
o NOTE: Art. 1544 of the Civil Code has no application to lands not registered
with the Torrens system. If the sale is not registered, it is binding only as
between the seller and the buyer; it does not affect innocent third persons.
(De Leon, 2011)
o Villanueva (2009) proffers that the rules on double sales for immovables
under Article Art, 1544 are applicable to unregistered land, but only insofar
as they do not undermine specific rules and legislations that have a higher
hierarchical enforcement value, such as the “without prejudice to a better
right” provision under Act No. 3344, now Sec. 113 of the Property
Registration Decree.

• Purchaser in Good Faith

o Buys the property without notice that some other person has a right to, or
interest in such property; and
o Pays a full and fair price for the same at the time of such purchase, or
before he has notice of the claim or interest of some other person in the
property. (Uy v. Fule, G.R. No. 164961, 30 June 2014)
▪ NOTE: Partial payment is not enough. Full payment is a requirement
for purposes of acquiring right over the rules of double sale.
o NOTE: This principle applies in a situation where not all the requisites are
present which would warrant the application of Art. 1544 of NCC. The only
requisite of this rule is priority in time. In other words, the only one who can
invoke this is the first vendee. Undisputedly, he is a purchaser in good faith
because at the time he brought the real property, there was still no sale to a
second vendee.

• Principle of prius tempore, potior jure – first in time, stronger in right

o Knowledge gained by the first buyer of the second sale cannot defeat the
first buyer’s rights except only as provided by the NCC and that is where the
second buyer first registers in good faith the second sale ahead of the first.
 o Conversely, knowledge gained by the second buyer of the first sale defeats
his rights even if he is first to register, since such knowledge taints his
registration with bad faith to merit the protection of Art. 1544 (2nd par.) of
NCC, the second realty buyer must act in good faith in registering his deed
of sale.
o NOTE: Where one sale is absolute and the other is a pacto de retro
transaction where the period to redeem has not yet expired, Art. 1544 of
NCC will not apply.

Q: Does prior registration by the second buyer of a property subject of a double sale
confer ownership or preferred right in his favor over that of the first buyer?

A: Principle of caveat emptor – buyer beware. It literally means, ‘Let the buyer beware’.
The rule requires the purchaser to be aware of the supposed title of the vendor and one
who buys without checking the vendor’s title takes all the risks and losses consequent to
such failure.

• Application of Caveat Emptor in particular Sale Transactions

o Sales of animals (Art. 1574, NCC);
o Double sales (Art. 1574, NCC);
o In sheriff’s sales; and
o Tax sales.

• Caveat Emptor NOT Applicable in Sales of Registered Land

o The purchaser of a registered land under the Torrens system is merely
charged with notice of the burdens and claims on the property which are
inscribed on the face of certificate of title.

• Application of Caveat Emptor in Judicial Sales

o Caveat emptor is applicable in judicial sales. The purchaser in a judicial sale
acquires no higher or better title or right than that of the judgment debtor.
If it happens that the judgment debtor has no right, interest, or lien on and
to the property sold, the purchaser acquires none. (Pineda, 2010)

• Effect of Subsequent Foreclosure to a Prior Purchaser in Good Faith (2008 BAR)

o The purchaser in good faith has better title to the property sold even if
subsequently foreclosed by a mortgagor.

E. Risk of Loss

• When a Thing is Considered Lost

o GR: It is understood that the thing is lost when it:
▪ Perishes;
▪ Goes out of commerce; or
▪ Disappears in such a way that its existence is unknown or cannot be
recovered.
o XPN: In an obligation to deliver a generic thing, the loss or destruction of
anything of the same kind does not extinguish the obligation.

• Effect When the Loss Occurred Before Perfection

o GR: The thing perishes with the owner – res perit domino.
o XPNs:
▪ Where the delivery has been made either to the buyer or to the bailee
for the buyer, but ownership in the goods has been retained by the
seller merely to secure performance by the buyer of his obligations
under the contract (Art. 1504(1), NCC);
 ▪ Where actual delivery has been delayed through the fault of either the
buyer or seller, the goods are at the risk of the party at fault (Art.
1504(2), NCC); and
▪ Where goods are sent by the seller to the buyer under circumstances
in which the seller knows or ought to know that it is usual to insure,
the seller must give such notice to the buyer as may enable him to
insure them during their transit, and, if the seller fails to do so, the
goods shall be deemed to be at his risk during such transit.

• Effect when the Loss occurred at the time of Perfection of the Contract of Sale
o GR: Contract is considered void or inexistent because the object did not
exist at the time of the transaction (Pineda, 2010). Res perit domino applies.
(Art. 1504, NCC)
o XPN: In case of partial loss, the buyer may choose between withdrawing
from the contract and demanding the remaining part. If he chooses the
latter, he shall pay the remaining part’s corresponding price in proportion to
the total sum agreed upon. (Art. 1493, NCC)

• Effect if the Buyer Chooses to Continue with the Sale of the Remaining Goods
o The remaining goods shall pass in ownership to the buyer but subject to
proportionate reduction of the price. But this is applicable only if the goods
are divisible or capable of being divided (Pineda, 2010). If indivisible, the
only option available is the avoidance of the sale.

• Effect When the Loss occurred After Perfection but Before Delivery
o GR: Who bears the risk of loss is governed by the stipulations in the
contract.
▪ XPN: In the absence of stipulation, there are two conflicting views:
o First view: Res perit creditori or buyer bears the risk of loss.
▪ Art. 1504 of the Civil Code which embodies res perit domino, only
covers goods. The obligation to pay on the part of the buyer is not
extinguished.
o Second view: Res perit domino or seller bears the risk of loss.
▪ In reciprocal obligations, the extinguishment of the obligation due to
loss of the thing affects both debtor and creditor; the entire juridical
relation is extinguished. Under this view, the rule on loss under Art.
1189 of the Civil Code would be different from the rule on
deterioration – the loss would be for the account of the seller, while
deterioration would be for the account of the buyer. (Tolentino, 2002)
▪ This view would make Arts. 1480 and 1538 of the Civil Code
consistent with the provisions of Arts. 1504 of the Civil Code.
(Villanueva, 2009)
▪ Ownership is transferred only after delivery, further, the contract is
reciprocal. If the vendee cannot have the thing, it is illogical and
unjust to make him pay the price.

• Effect when Loss occurred After Delivery

o GR: Res perit domino applies – the buyer is now the owner; hence, the
buyer bears the risk of loss. (Art. 1504, NCC)
o XPNs:
▪ Where the delivery has been made either to the buyer or to the bailee
for the buyer, but ownership in the goods has been retained by the
seller merely to secure performance by the buyer of his obligations
under the contract; and
▪ Where actual delivery has been delayed through the fault of either the
buyer or seller, the goods are at the risk of the party at fault.
 F. Breach of Contract of Sale

• Remedies of an Unpaid Seller

o Ordinary/General Remedies
▪ Action for Price (Art. 1595, NCC)
• Exercised when:
o Ownership has passed to buyer and he wrongfully
neglects or refuses to pay for the price;
o Price is payable on a day certain and the buyer
wrongfully neglects to pay such price, whether or not
ownership has passed; or
o Goods cannot readily be resold for reasonable price and
the buyer wrongfully refuses to accept the goods,
whether or not ownership has passed and Art. 1596 of
NCC is inapplicable.
▪ Action for Damages (Art. 1596, NCC) – In case of wrongful neglect or
refusal by the buyer to accept or pay for the thing sold.
• NOTE: The measure of damages is the estimated loss directly
and naturally resulting in the ordinary course of events from
the buyer’s breach of contract.
o Where there is an available market for the goods in
question, the measure of damages is, in the absence of
special circumstances showing proximate damage of a
 different amount, the difference between the contract
price and the market or current price at the time or times
when the goods ought to have been accepted, or, if no
time was fixed for acceptance, then at the time of the
refusal to accept.
o Where the labor or expense of material amount is
necessary on the part of the seller to fulfill his obligations
under the contract of sale and the buyer repudiates the
contract or notifies the seller to proceed no further
therewith – labor performed, or expenses made before
receiving notice of the buyer's repudiation or
countermand and unrealized profit.
o Special Remedies
▪ Possessory Lien (Art. 1527, NCC) – seller is not bound to deliver the
object of the contract of sale if buyer has not paid him the price.
• This remedy presupposes that the sale is on credit. It is
exercisable only in following circumstances:
o Where the goods have been sold without any stipulation
as to credit;
o Where the goods have been sold on credit, but term of
credit has expired; or
o Where the buyer becomes insolvent.
• NOTE: When part of goods delivered, may still exercise right on
goods undelivered.
• NOTE: GR: Where an unpaid seller has made part delivery of
the goods, he may exercise his right of lien on the remainder.
XPN: Unless such part delivery has been made under such
circumstances as to show an intent to waive the lien or right of
retention. (Art. 1528, NCC)
• Moreover, when title to the property has passed to the buyer,
but possession remains in the hands of the seller, the latter is
necessarily holding the goods for the buyer. For his protection,
the seller is entitled to possess the same until he has been fully
paid, or a tender of the price has been made. A lien based on a
writ of attachment is inferior to that of the unpaid seller’s right
of preference under Art. 2241 of the Civil Code.
▪ Loss of Lien (NCC, Art. 1529)
• When he delivers the goods to the carrier or other bailee for
purpose of transmission to the buyer without reserving the
ownership in the goods or the right to the possession thereof;
• When the buyer or his agent lawfully obtains possession of the
goods; or
• By waiver thereof.
▪ Right of Stoppage in Transitu (Art. 1530, NCC)
• Requisites: (I-S-E-N-T-U)
o Insolvent buyer; (Art. 1530, NCC)
o Seller must Surrender the negotiable document of title, if
any; (Art. 1532, NCC)
o Seller must bear the Expenses of delivery of the goods
after the exercise of the right; (Art. 1532, NCC)
o Seller must either actually take possession of the goods
sold or give Notice of his claim to the carrier or other
person in possession; (Art. 1532, NCC)
o Goods must be in Transit; (Art. 1531, NCC) and
o Unpaid seller. (Art. 1525, NCC)
▪ Special Right to Resell the Goods (Art. 1533, NCC)
 • Exercised when:
o Goods are perishable in nature,
o The seller has expressly reserved the right of resale in
case of default; or
o The buyer has been in default in payment for an
unreasonable time.
▪ Special Right to Rescind (Art. 1597, NCC)
• Requisites
o Goods have not been delivered to the buyer; and
o Buyer has repudiated the contract of sale; or
o Has manifested his inability to perform his obligations
thereunder; or
o Has committed a breach thereof, which must be
substantial.

• Remedies of the Buyer

o Immovables
▪ Suspension of payment – applicable in case of:
• If he is disturbed in the possession or ownership of the thing
acquired; or
• If he has reasonable grounds to fear such disturbance, by a
vindicatory action or a foreclosure of mortgage. (Art. 1590,
NCC)
o NOTE: In case of subdivision or condominium projects, if
real estate developer fails to comply with obligation
according to approved plan, the buyer may rescind or
suspend payment until the seller complies.
▪ In the sale of immovable property, even though it may have been
stipulated that upon failure to pay the price at the time agreed upon
the rescission of the contract shall of right take place, the vendee may
pay, even after the expiration of the period, as long as no demand for
rescission of the contract has been made upon him either judicially or
by a notarial act. (Art. 1592, NCC)
• NOTE: Art. 1592 of the Civil Code is not applicable to:
o Sale on installment of real estate in which the parties
have laid down the procedure to be followed in the event
the vendee failed to fulfill his obligation.
o Contract to sell/conditional sale of real estate where the
title remains with the vendor until fulfillment of a positive
condition, such as full payment of the price.
o Movables
▪ Failure of seller to deliver – Action for specific performance without
giving the seller the option of retaining the goods on payments of
damages. (Art. 1598, NCC)
▪ Breach of seller’s warranty – The buyer may, at his election, avail of
the following remedies:
• Recoupment – Accept goods & set up breach of warranty by
way of recoupment in diminution or extinction of the price;
• Accept goods & maintain action against seller for damages;
(Art. 1599(3), NCC)
• Action or counterclaim for damages – refuse to accept goods &
maintain action against seller for damages (Art. 1599(3), NCC);
or
• Rescission – rescind contract of sale & refuse to receive
goods/return them when already received and recover the price
or any part which has been paid. (Art. 1599(4), NCC)
 ▪ Disturbed in possession or with reasonable grounds to fear
disturbance (anticipatory breach) – Suspend payment until the seller
has caused the disturbance or danger to cease. (Art. 1590, NCC)

1. Recto Law

• Definition
o Installment Sales Law Act No. 4122 was passed by the Philippine Legislature
on Dec. 9, 1939, otherwise known as the “Installment Sales Law” or the
“Recto Law.” It is embodied in Art. 1484 of the NCC, which provides for the
remedies of a seller in the contracts of sale of personal property by
installments.

• Application
o This law covers contracts of sale of personal property by installment (Act No.
4122). It is also applied to contracts purporting to be leases of personal
property with option to buy when the lessor has deprived the lessee of the
possession or enjoyment of the thing.
o NOTE: Recto Law applies only to sale payable in installments and not to a
sale where there is an initial payment and the balance is payable in the
future, because such is a straight sale, not a sale by installments.

• Rationale of Recto Law

o To remedy the abuses committed in connection with the foreclosure of
chattel mortgages and to prevent mortgagees from seizing the mortgaged
property, buying it at foreclosure sale for a low price and then bringing suit
against the mortgagor for a deficiency judgment.

• Requisites of Recto Law

o Valid contract of sale;
o Subject matter is personal property;
o Payable in installments; and
o In the case of the second and third remedies, that there has been a failure
to pay two or more installments.

• Alternative Remedies in case of Sale of Personal Property in Installments

o Specific Performance: Exact fulfillment should the buyer fail to pay
▪ Rule
• GR: If availed of, the unpaid seller cannot anymore choose
other remedies.
• XPN: If after choosing specific performance, it has become
impossible to perform it, rescission may be pursued.
(Villanueva, 2016)
▪ NOTE: If vendor elected fulfillment or specific performance:
• The filing of collection suit barred the foreclosure of the
mortgage. A mortgagee who files a suit for collection abandons
the remedy of foreclosure of the chattel mortgage constituted
over the personal properties or security for the debt or value of
the promissory note which he seeks to recover in the said suit.
• Filing of B.P. Blg. 22 does not bar foreclosure of mortgage.
However, in Chieng v. Sps. Santos, it was held that the filing of
the B.P. Blg. 22 case is equivalent to the filing of a collection
suit for the recovery of the mortgage-loan. The Court explained
that the civil action for the recovery of the amount of the
dishonored checks is impliedly instituted in the criminal action.
Hence, the impliedly instituted civil action in the criminal case
 for violation of B.P. Blg. 22 is, in effect, a collection suit or suit
for recovery of mortgage debt.
• Action for recovery of possession with replevin as provisional
remedy preparatory to extrajudicial foreclosure is not an action
for collection much less for foreclosure. But if the action for
replevin culminated in the foreclosure of the chattel mortgage
and the sale of the personal property at the public auction, then
Art. 1484 now applies.
o Rescission: Cancel the sale if buyer fails to pay 2 or more installments.
Deemed chosen when:
▪ Notice of rescission is sent;
▪ Takes possession of subject matter of sale; and
▪ Files action for rescission.
• NOTE: The stipulation that the installments or rents already
paid shall not be returned to the vendee shall be valid insofar
as the same may not be unconscionable under the
circumstances.
o Foreclosure
▪ Foreclose on chattel mortgage if buyer fails to pay two (2) or more
installments. 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.
▪ NOTE: Of the three remedies, only this third remedy bars the
recovery of unpaid balance. Moreover, payment of damages and
attorney’s fees are also barred.
• GR: Actual foreclosure is necessary to bar recovery of balance.
• XPN: Mortgagor refuses to deliver property to effect
foreclosure; expenses incurred in attorney’s fees in obtaining
the property may be recovered by the vendor.

• The Remedies are Alternative, NOT Cumulative

o GR: The election of one remedy is a waiver of the right to resort to the other
remedies. If the creditor chooses one remedy, he cannot avail himself of the
other two.
o XPN: If the remedy first chosen was not completed or not fully exercised as
when there was voluntary desistance, the vendor may still avail himself of
another remedy.

• Recto Law does NOT cover a Contract to Sell of Movables

o There will be nothing to rescind if the suspensive condition (payment of full
purchase price) upon which the contract is based fails to materialize.

2. Maceda Law

• Definition
o Realty Installment Buyer Act Commonly known as the “Maceda Law,”
embodied in R.A. No. 6552. Sec. 2 of thereof declares as “public policy to
protect buyers of real estate on installment payments against onerous and
oppressive conditions.”

• Transactions/Sale covered by the Maceda Law

o The law involves the sale or financing of immovables (real estate) on
installment payments. (Sec. 3, R.A. No. 6552)
o Coverage: Residential Condominium Apartments
o Excluded:
▪ Industrial lots;
 ▪ Commercial buildings (and commercial lots by implication);
▪ Sale to tenants under agrarian laws; and
▪ Sale of lands payable in straight terms. (Sec. 3, R.A. No. 6552)

Q: What are the so-called “Maceda” and “Recto” laws in connection with sales on
installments? Give the most important features on each law. (1999 BAR)

A: The Maceda Law is applicable to sales of immovable property on installments. The

most important features are:

1. After having paid installments for at least two years, the buyer is entitled to a
mandatory grace period of one month for every year of installment payments made, to
pay the unpaid installments without interest. If the contract is cancelled, the seller shall
refund to the buyer the cash surrender value equivalent to fifty percent (50%) of the
total payments made, and after five years of installments, an additional five percent (5%)
every year but not to exceed ninety percent (90%) of the total payments made.

2. In case the installments paid were less than two (2) years, the seller shall give the
buyer a grace period of not less than 60 days. If the buyer fails to pay the installments
due at the expiration of the grace period, the seller may cancel the contract after 30 days
from receipt by the buyer of the notice of cancellation or demand for rescission by
notarial act.

3. NOTE: Essentially, the said provision provides for three (3) requisites before the seller
may actually cancel the subject contract: first, the seller shall give the buyer a 60-day
grace period to be reckoned from the date the installment became due; second, the seller
must give the buyer a notice of cancellation/demand for rescission by notarial act if the
buyer fails to pay the installments due at the expiration of the said grace period; and
third, the seller may actually cancel the contract only after thirty (30) days from the
buyer’s receipt of the said notice of cancellation/demand for rescission by notarial act.

• Rights of the Buyer

o If buyer has paid at least 2 years of installments
▪ The buyer is entitled to the following rights in case he defaults in the
payment of succeeding installments:
• To pay, without additional interest, the unpaid installments due
within the total grace period earned by him which is hereby
fixed at the rate of one (1) month grace period for every one
(1) year of installment payments made;
• If the contract is cancelled, the seller shall refund to the buyer
the cash surrender value of the payments on the property
equivalent to fifty percent (50%) of the total payments made,
and, after five (5) years of installments, an additional five
percent (5%) every year but not to exceed ninety percent
(90%) of the total payments made. (Sec. 3, R.A. No. 6552)
o If the buyer has paid less than two (2) years of installments:
▪ The seller shall give the buyer a grace period of not less than sixty
(60) days from the date the installment became due. If the buyer fails
to pay the installments due at the expiration of the grace period, the
seller may cancel the contract after thirty (3) days from receipt by the
buyer of the notice of cancellation or the demand for rescission of the
contract by a notarial act.

G. Extinguishment of the Sale

• A contract of sale is extinguished by:

 o Same causes as how an obligation is extinguished, namely: (Arts. 1231 &
1600, NCC)
▪ Payment or performance;
▪ Loss of the thing due;
▪ Condonation or remission of the debt;
▪ Confusion or merger of the rights of creditor and debtor;
▪ Compensation;
▪ Novation;
▪ Annulment;
▪ Rescission;
▪ Fulfillment of resolutory condition; or
▪ Prescription
o Conventional Redemption (Arts. 1601-1618, NCC); or
o Legal redemption. (Arts. 1619-1623, NCC)

• Redemption
o It is a mode of extinguishment wherein the seller has the right to redeem or
repurchase the thing sold upon return of the price paid.

1. Conventional Redemption

• Definition
o Seller reserves the right to repurchase thing sold coupled with the obligation
to return the purchase price of the sale, expenses incurred under the
contract, other legitimate payments made by reason of the sale as well as
the necessary & useful expenses made on the thing sold.

• How Conventional Redemption Takes Place

o It shall take place when the vendor reserves the right to repurchase the
thing sold, with the obligation to:
▪ Return the price of the sale;
▪ Shoulder the expenses of the contract and any other legitimate
payments made by the buyer by reason of the sale;
▪ Pay the value of the necessary and useful expenses made on the
thing; and
▪ Comply with other stipulations agreed upon.

• Other Person can Exercise the Right to Repurchase

o The right to repurchase may be exercised by any person to whom the right
of repurchase may be transferred, or in case of legal redemption, by the
person so entitled by law.

• Reservation of Right to Repurchase

o The right to repurchase is reserved by a stipulation to that effect in the
contract of sale. Because it is not a right granted to the vendor by the
vendee, but is a right reserved by the vendor.
o Reservation CANNOT be made in an instrument different from that of the
contract of sale. Once the instrument of absolute sale is executed, any right
thereafter granted the vendor in a separate instrument cannot be a right of
repurchase but some other right like the option to buy.

• Parole Evidence in Proving Right of Repurchase

o The right of repurchase may be proved by parol evidence when the contract
of sale has been reduced in writing, or when no objection to such parol
evidence was made during trial.
• Effect on the Reserved Right to Repurchase if the Principal Contract of Sale is Void
o Since the underlying contract of sale was inoperative and consequently void,
then the reserved right of repurchase would also be void.

2. Legal Redemption

• Definition
o It is the right to be subrogated upon the same terms and conditions
stipulated in the contract, in the place of one who acquires the thing by:
▪ Purchase; or
▪ Dacion en pago; or
▪ Other transaction whereby ownership is

• Instances of legal redemption

o Sale of a co-owner of his share to a stranger; (Art. 1620, NCC; 2000, 2002
BAR)
o When a credit or other incorporeal right in litigation is sold (Art. 1634, NCC)
o Sale of an heir of his hereditary rights to a stranger; (Art. 1088, NCC)
o Sale of adjacent rural lands not exceeding 1 hectare; (Art. 1621, NCC) and
o Sale of adjacent small urban lands bought merely for speculation.

• Right of Legal Redemption of Co-owner

o Requisites
▪ There must be co-ownership of a thing;
▪ There must be alienation of all or of any of the shares of the other co-
owners;
▪ The sale must be to a third person or stranger; and
▪ The sale must be before partition.

• Right of legal redemption of adjacent owners of rural lands

o Requisites
▪ Both the land of the one exercising the right of redemption and the
land sought to be redeemed must be rural;
▪ The lands must be adjacent;
▪ There must be an alienation
▪ The piece of rural land alienated must not exceed one (1) hectare;
▪ The grantee or vendee must already own any other rural land; and
▪ The rural land sold must not be separated by brooks, drains, ravines,
roads, and other apparent servitudes from the adjoining lands.
o NOTE: In case two or more adjacent owners desire to exercise the right of
redemption, the following rules on preference is applied:
▪ When the lands have different land area – the owner of the adjoining
land of smaller area.
▪ When the lands have similar land area – the owner who first
requested the redemption.

• Right of pre-emption and legal redemption of adjacent owners of urban lands

o Requisites
▪ The one exercising the right must be an adjacent owner;
▪ The piece of land sold must be so small and so situated that a major
portion thereof cannot be used for any practical purpose within a
reasonable time; and
▪ Such urban land was bought by its owner merely for speculation.

• Running of period of legal redemption

o The right of legal redemption shall not be exercised except within 30 days
 from the notice in writing by the prospective seller, or seller, as the case
may be. The deed of sale shall not be recorded in the Registry of Property
unless accompanied by an affidavit of the seller that he has given written
notice thereof to all possible redemptioners.

• Pre-emption
o Redemption presupposes that the property was already sold or transferred
to another. In preemption, the right is present before the sale; there is a
right to purchase ahead of or before it can be sold or transferred to other
persons.

H. Equitable Mortgage

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

• Essential Requisites
o Parties entered into a contract denominated as one of sale; and
o Their intention was to secure an existing debt by way of a mortgage.

• Presumption of an Equitable Mortgage

o A sale with conventional redemption is deemed to be an equitable mortgage
in any of the following cases. (Art. 1602, NCC) (A-I-R-S-T-A-R)
▪ Price of the sale with right to repurchase is unusually Inadequate;
▪ Seller Remains in possession as lessee or otherwise;
▪ Upon or after the expiration of the right to repurchase, Another
instrument extending the period of redemption or granting a new
period is executed;
▪ Purchaser Retains for himself a part of the purchase price;
▪ Seller binds himself to pay the Taxes on the thing sold;
▪ In any other case where the real intention of the parties is that the
transaction shall Secure the payment of a debt or the performance of
any other obligation; or
▪ Art. 1602 shall also apply to a contract purporting to be an Absolute
sale.

• Pactum Commissorium
o A stipulation for automatic vesting of title over the security in the creditor in
case of debtor’s default.

I. Pacto de Retro Sales

• Definition
o A sale with pacto de retro transfers the legal title to the vendee a retro. The
essence of a pacto de retro sale is that the title and ownership of the
property sold are immediately vested in the vendee a retro, subject to the
resolutory condition of repurchase by a vendor a retro within the stipulated
period.

II. Lease

The contract of lease may be of things, or of work and service. A lease of a thing is a
contract where one of the parties binds himself to give to another the enjoyment or use of
a thing for a certain price and for a period which may be definite or indefinite, but not
longer than 99 years.

It is a consensual, bilateral, onerous and commutative contract by which the owner

temporarily grants the use of his property or the rendering of some service to another who
undertakes to pay some rent, compensation or price.

A. Kinds of Lease

Kinds of Lease According to Subject Matter

• Lease of Things
o Whether real or personal, involving an obligation on the part of the lessor to
deliver the thing, which is the object thereof, and the correlative right of the
lessee to the peaceful and adequate enjoyment thereof for a price certain.
• Lease of Work
o Which refers to a contract for a piece of work, involving an obligation on the
part of the contractor (lessor) to execute a piece of work for the employer
(lessee) in consideration of a certain price or compensation. (Art. 1713,
NCC)
o NOTE: Duties of a contractor who furnishes work and materials:
▪ To deliver;
▪ To transfer ownership and warrant title; and
▪ To warrant against eviction and hidden defects.
• Lease of Service
o Involving an obligation on the part of the housekeeper, laborer or employee,
or common carrier to do or perform.

B. Rights and Obligations of Lessor

• Rights
o GR: The lessor of a business or industrial establishment may continue
engaging in the same business or industry to which the lessee devotes the
thing leased.
▪ XPN: Unless there is a stipulation to the contrary. (Art. 1656, NCC)
▪ NOTE: A contract of lease is no warranty by the lessor to the lessee
that the latter will realize profits in his business venture. Even if the
lessee should suffer losses he would still be bound to fulfill the terms
of the contract. (City of Naga v. CA, G.R. No. L-5944, 26 Nov. 1954)
o The sublessee is subsidiarily liable to the lessor for any rent due from the
lessee. However, the sublessee shall not be responsible beyond the amount
of rent due from him, in accordance with the terms of the sublease, at the
time of the extrajudicial demand by the lessor. (Art. 1652, NCC)
o If the lessor or lessee should not comply with the obligations set forth in
Arts. 1654 and 1657, the aggrieved party may ask for the recission of the
contract and indemnification for damages, or only the latter, allowing the
contract to remain in force. (Art. 1659, NCC)

• Obligations
o Delivery of the property (Art. 1654(1), NCC)
▪ The thing leased must be delivered, in such conditions as to render it
fit for in the use intended, in order that the lessee may enjoy or use
the same. (Art. 1654(1), NCC) Delivery may, of course, be actual or
constructive. (Art. 1496(1), NCC)
▪ The thing must be delivered, for without delivery, there could be no
lease because delivery goes to the essence of the contract. Delivery
cannot be waived. (De Leon, 2014)
 o Making of necessary repairs (Art. 1654(2), NCC)
▪ Includes all the repairs needed, whether the damage be caused by
nature, fortuitous event or lapse of time, but not those brought about
by the fault of the lessee himself or by his privies or his servants,
whether the defect was caused prior to or after the delivery of the
object. (Rabuya, 2017)
▪ Article 1654 of NCC speaks of necessary repairs to keep the thing
leased suitable for the use to which it has been devoted unless there
is a stipulation to the contrary. In default of a special stipulation, the
custom of the place shall be observed as to the kind of repairs on
urban property. (Art. 1686, NCC) In case, the lessor fails in the
performance of this duty, the lessee may suspend the payment of
rent (Art. 1658 NCC) or avail himself of the other remedies provided
in the law. The lessor is not liable for repairs for damages or
deterioration caused by the lessee himself.
• NOTE: The word “repairs” implies the putting back of something
in the condition in which it was originally, while an
“improvement’’ is the adding of something new thereto; hence,
the filling of a vacant lot is not a repair nor is the construction
of a house.
o Duty of the lessee to notify lessor (Art. 1663 NCC)
▪ Peaceful and adequate enjoyment refers to legal, not physical
possession. Hence, a lessor is not, for instance, liable for physical
disturbances in the neighborhood, but is liable if the lessee is evicted
due to non-payment of taxes by the lessor. (Paras, 2008)
▪ The lessor’s obligation to maintain the lessee arises when acts termed
“legal trespass” disturb, dispute, or place difficulties in the lessee’s
peaceful and adequate enjoyment of the leased premises that in some
manner or other cast doubt upon the right of the lessor to execute the
lease. The lessor must answer for such legal trespass.
▪ There is mere act of trespass when a third person claims no right
whatsoever. In trespass in law, the third person claims a legal right to
enjoy the premises. (Rabuya, 2017)
• NOTE: When it is merely trespass in fact, the lessor cannot be
faulted for any breach. The lessee can file a direct action
against the trespasser such as forcible entry or illegal detainer.
o Duty Not to Alter Form (Art. 1661, NCC)
▪ The lessor has also the duty not to alter the form of the thing leased
as to impair the use of the said thing to which it is devoted under the
terms of the lease.

C. Rights and Obligations of Lessee

• Rights
o When Lessee May Immediately Terminate the Lease (Art. 1660, NCC)
▪ By notice to the lessor in case the dwelling place or building is unfit
for human habitation and is dangerous to life or health.
▪ Even if at the time the contract was perfected, the lessee KNEW of the
dangerous condition or WAIVED the right to rescind.
▪ Reason: Public safety cannot be stipulated against.
o Right of lessee if new owner terminates the unrecorded lease
▪ The lessee may demand that he be allowed to gather the fruits of the
harvest which corresponds to the current agricultural year and that
the vendor indemnify him for damages suffered. [Art. 1676 (2), NCC]
o Rights of the lessee who introduced improvements (1990, 1996 BAR)
▪ Introduction of valuable improvement on the leased premises does
 not give the lessee the right of retention and reimbursement which
rightfully belongs to the builder in good faith. Otherwise, such a
situation would allow the lessee to easily “improve” the lessor out of
its property. (Rabuya, 2017)
▪ The lessor shall pay the lessee one-half of the value of the
improvements computed at the time of the termination of the lease if
the following conditions are fulfilled:
• That the lessee should have made the useful improvements in
good faith;
• The improvements are suitable to the purpose or use for which
the lease is intended; and
• That the form and substance of the thing leased are not altered
or modified. (Art. 1678, NCC)
o NOTE: These requisites will prevent the lessee from
making such valuable improvements that the lessor may
never recover the property leased. It is the lessor who
has the option to appropriate the useful improvements
and reimburse the lessee therefor. It is discretionary with
the lessor to retain the useful improvements by paying
one-half of their value. The lessee cannot compel the
lessor to appropriate and reimburse him for the
improvements.
o A lessee who builds on the property leased is not a
possessor in good faith, thus, he has no right of retention
until reimbursed for the value of the improvement.
o The lessor and lessee may stipulate that all
improvements introduced by the lessee shall pertain to
the lessor. However, if the value of the improvement is
considerably more than the value of the leased premises,
merely creating prejudice to the lessee instead of
enforcing the contract literally, Art. 1678 of the Civil
Code may be applied.

• Obligations
o Payment of agreed price of lease; (Art. 1657 NCC)
▪ The obligation of the lessee to pay the rent agreed upon arises only
when the thing leased has been delivered to the lessee for the
purposes stipulated in the contract.
o Proper use of the thing leased;(Art. 1657 NCC)
▪ The lessee must exercise the diligence of a good father of a family in
the use of the thing leased. He must devote the thing to the use
stipulated, and if none was stipulated, to that which may be inferred
from the nature of the thing leased, according to the custom of the
place.
▪ NOTE: The use of the thing for an illegal purpose entitles the lessor to
terminate the contract. The lessee is liable for any deterioration
caused by members of his household, guests and visitors. (Art. 1668,
NCC)
o Payment of expenses for deed of lease; (Art. 1657 NCC)
▪ In lease, the law imposes upon the lessee the obligation to pay the
expenses for the deed of lease. By agreement, the obligation may be
assumed by the lessor.
o To tolerate the urgent repairs upon the thing leased even if annoying to him,
and although during the same, he may be deprived of a part of the
premises; [Art. 1662(1), NCC]
o To notify the lessor of every usurpation by a third person or persons on the
 property and of the urgent repairs needed; (Art. 1663, NCC) and
▪ NOTE: If the lessee fails to comply, he would be liable for damages
which the lessor would suffer, and which could have been avoided by
lessee’s diligence.
o To return the property leased upon termination of the lease in the same
condition as he received it, save what has been lost or impaired by:
▪ Lapse of time
▪ Ordinary wear and tear; or
▪ Inevitable cause/fortuitous event. (Art. 1665, NCC)

III. Agency

• Nature of Contract
o Concept
▪ Definition
• By the contract of agency a person (called the “agent”) binds
himself to render some service or to do something in
representation or on behalf of another (called the “principal”),
with the consent or authority of the latter.
• The essence of agency is representation. For a contract of
agency to exist, it is essential that the principal consents that
the other party, the agent, shall act on its behalf, and the agent
consents so as to act.
• The most characteristic feature of an agency relationship is the
agent’s power to bring about business relations between his
principal and third persons.
▪ Elements
• Consent, express or implied, of the parties to establish the
relationship;
• Object is the execution of a juridical act in relation to a third
person;
• Agent acts as a representative and not for himself; and agent
acts within the scope of his authority.
▪ Distinguished from Other Relations
• From Assignment
o In agency, the agent acts not on his own behalf but on
behalf of his principal. While in assignment, there is total
transfer or relinquishment of right by the assignor to the
assignee. The assignee takes the place of the assignor
and is no longer bound to the latter.
• From Lease of Service
o In agency, the basis is representation; while in lease of
service, it is employment;
o In agency, the agent exercises discretionary powers,
while in lease of service, the lessee ordinarily performs
only ministerial functions; and
o In agency, three persons are involved: the principal, the
agent, and the third persons with whom the agent has
contracted; while in lease of service, only two persons
are involved: the lessor (master or employer) and the
lessee (servant or employee).
▪ Characteristics of Contract
• Agency is preparatory, consensual, nominate, bilateral, and
generally onerous.
o Object or Subject Matter
▪ Rule: The object of every contract of agency is the execution of a
 juridical act in relation to a third person. The rule is that what a man
may do in person he may do through another.
▪ Exceptions
• Peculiarly personal acts may not be delegated; and
• Illegal or unlawful acts may not be validly delegated.

• Creation and Existence of Agency

o Classification of Agency
▪ As to Manner of Creation
• Actual Agency - an agent-principal relationship actually exists,
and consent was given; or
• Apparent or Ostensible Agency (Agency By Estoppel) - where
the agency is not the result of consent but by the actions of a
principal or an employer in somehow misleading the public into
believing that the relationship or the authority exists.
▪ As to Quantity of Transactions
• General Agency - it comprises all the business of the principal;
or
• Special Agency - it comprises one or more specific transactions.
▪ As to Nature of Acts Authorized
• Agency Couched in General Terms - it comprises only acts of
administration, even if the principal should state that he
withholds no power or that the agent may execute such acts as
he may consider appropriate, or even though the agency should
authorize a general and unlimited management; or
• Agency Couched in Specific or Explicit Terms - it indicates the
particular function or functions which the agent is authorized to
exercise, whether the same be acts of administration or acts of
dominion.
o Conferment of Mandate in Actual Agency
▪ How Made: It may be made expressly or impliedly. It may also be
given orally unless the law requires a specific form.
▪ Express Mandate
• General Rule: No form is required.
• Exception: When the agency relates to the sale of a piece of
land or any interest therein, the authority of the agent must be
in writing; otherwise, the sale shall be void.
▪ Implied Conferment of Mandate: Implied from acts of the principal,
from his silence or lack of action, or his failure to repudiate the
agency, knowing that another person is acting on his behalf without
authority.
▪ Acceptance of Mandate: May also be express, or implied from his acts
which carry out the agency, or from his silence or inaction according
to the circumstances. Between persons who are present, the
acceptance of agency may also be implied if the principal delivers his
power of attorney to the agent and the latter receives it without any
objection. For persons who are absent, the acceptance of the agency
cannot be implied from the silence of the agent, except:
• When the principal transmits his power of attorney to the
agent, who receives it without any objection; or
• When the principal entrusts to him by letter or telegram a
power of attorney with respect to the business in which he is
habitually engaged as an not reply to the letter or telegram.
o Agency By Estoppel
▪ Concept: One who clothes another apparent authority as his agent,
and holds him out to the public as such, cannot be permitted to deny
 the authority of such person to act as his agent, to the prejudice of
innocent third parties dealing with such person in good faith.
▪ Requisites
• The principal manifested a representation of the agent’s
authority or knowingly allowed the agent to assume such
authority;
• The third person, in good faith, relied upon such
representation; and
• Relying upon such representation, such third person has
changed his position to his detriment. An agency by estoppel,
which is similar to the doctrine of apparent authority, requires
proof of reliance upon the representations, and that, in turn,
needs proof that the representations predated the action taken
in reliance.
▪ How It May Arise
• By Special Information: If a person specially 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.433 Such
power shall continue to be in full force until the notice is
rescinded in the same manner in which it was given.
• By Public Advertisement: If a person states by public
advertisement that he has given a power of attorney to a third
person, the latter thereby becomes a duly authorized agent
with regard to any person. Such power shall continue to be in
full force until the notice is rescinded in the same manner in
which it was given.

• Extent of Agency
o As to Quantity of Transactions Covered
▪ General Agency - when it comprises all the business of the principal.
▪ Special Agency - when it comprises one or more specific transactions.
o As to Nature of Acts Authorized
▪ Agency Couched in General Terms: it comprises only acts of
administration, even if the principal should state that he withholds no
power or that the agent may execute such acts as he may consider
appropriate, or even though the agency should authorize a general
and unlimited management.
▪ Agency Couched in Explicit or Specific Terms: the agency indicates
the particular function or functions which the agent is authorized to
exercise, whether the same be acts of administration or acts of
dominion.
o Power of Attorney
▪ Definition
• A power of attorney is only but an instrument in writing by
which a person, as principal, appoints another as his agent and
confers upon him the authority to perform certain specified acts
on behalf of the principal.
• It must be strictly construed and pursued. The instrument will
be held to grant only those powers which are specified therein,
and the agent may neither go beyond nor deviate from the
power of attorney.
▪ Formalities Required
• The law does not even require that the special power of
attorney be in writing, but the same must be duly established
by evidence other than the self-serving assertion of the party
 claiming that such authority was verbally given him. The
requirements of a special power of attorney in Article 1878 of
the Civil Code and of a special authority in Rule 138 of the
Rules of Court refer to the nature of the authorization and not
its form.
• The exception to this rule is the requirement in Article 1874 of
the Civil Code that the authority of the agent to sell a piece of
land or any interest therein be in writing; otherwise, the sale is
void.
▪ General and Special Powers of Attorney
• A general power permits the agent to do all acts for which the
law does not require a special power.
• However, the special power of attorney can be included in the
general power when it is specified therein the act or transaction
for which the special power is required.
• Thus, even if a document is titled as a general power of
attorney, the requirement of a special power of attorney is met
if there is a clear mandate from the principal specifically
authorizing the performance of the act.
▪ When Special Powers Necessary
• To make payments as are not usually considered acts of
administration;
• To effect novations which put an end to obligations already in
existence at the time the agency was constituted;
• To compromise, to submit questions to arbitration, to renounce
the right to appeal from judgment, to waive objections to the
venue of an action or to abandon a prescription already
acquired—but a special power to compromise does not
authorize submission to arbitration;
• To waive any obligation gratuitously;
• To enter into any contract by which the ownership of an
immovable is transmitted or acquired, either gratuitously or for
a valuable consideration, to create or convey real rights over an
immovable property, and to lease any real property to another
person for more than one year;—a special power to sell
excludes the power to mortgage; and a special power to
mortgage does not include the power to sell;
• To make gifts, except customary ones for charity or those made
to employees in the business managed by the agent;
• To loan or borrow money, unless the latter act (borrowing) be
urgent and indispensable for the preservation of the things
which are under administration, and to obligate the principal as
a guarantor or surety—there is a difference between authority
to mortgage and authority to contract an obligation and the
authority to mortgage does not carry with it the authority to
contract obligation; thus, where the power of attorney given to
the husband by the wife was limited to a grant o' authority to
mortgage a parcel of land titled in the wife’s name, the wife
may not be held liable for the payment of the mortgage debt
contracted by the husband;
• To bind the principal to render some service without
compensation and to bind the principal in a contract of
partnership;
• To accept or repudiate an inheritance;
• To ratify or recognize obligations contracted before the agency;
and
 • Any other act of strict dominion.
o Each of the powers enumerated above are named “acts
of strict dominion,” and cannot be implied powers; and
that one form of named special power cannot give the
presumption that it includes under any form of
construction or interpretation another special power of
attorney. However, every grant of power implies and
carries with it, as an incident, authority to do acts, or use
whatever means are reasonably necessary and proper to
the accomplishment of the purpose for which the agency
was created, unless the inference of such power is
expressly excluded by the instrument creating the
agency or by the circumstances of the business to which
the agency relates.
o For example, when an attorney-in-fact has been
empowered to pay the debts of the principal and to
employ legal counsel to defend the principal’s interest,
he has the implied power to pay on behalf of the
principal the attorney’s fees charged by the lawyer.

• Duties and Liabilities of the Parties

o Duties and Liabilities of Agent to Principal
▪ When Agency is Declined
• In case a person declines an agency, he is bound to observe
the diligence of a good father of a family in the custody and
preservation of the goods forwarded to him by the owner until
the latter should appoint an agent or take charge of the goods.
▪ Duty to Advance Necessary Funds
• Only if stipulated. However, even if there is such stipulation,
the agent cannot be compelled to advance the necessary funds
if the principal is insolvent.
▪ Duty in Case of Principal’s Death
• The death of the principal extinguishes the agency, but the
agent still has the obligation to finish the business already
begun before the death of the principal, should delay entail any
danger.
▪ Appointment of Substitute
• Rule: The agent may appoint a substitute, except if the
principal has prohibited him from doing so.
• If Authorized by Principal
o The acts of the substitute will bind the principal.
o If the agent appointed a substitute designated by the
principal, the agent is not liable for the acts of the
substitute.
o If the agent appointed a substitute of his own choice, he
is also not liable for the acts of the substitute unless he
appointed a person who was notoriously incompetent or
insolvent.
o If he appointed a substitute who is notoriously
incompetent or insolvent, the principal may furthermore
bring an action against the substitute with respect to the
obligations which the latter has contracted under the
substitution.
• If Not Authorized But Not Prohibited
o The acts of the substitute will bind the principal but the
agent will be liable for the acts of the substitute. The
 principal may furthermore bring an action against the
substitute with respect to the obligations which the latter
has contracted under the substitution.
• If Prohibited
o The acts of the substitute shall not be enforceable
against the principal unless the same are ratified by the
latter.
▪ Duty to Follow Instructions
• Rule: The agent is required to act in accordance with the
instructions of the principal.
• Exceptions:
o If he performs the agency in a manner more
advantageous to the principal than that specified by the
latter; and
o In case of sudden emergency not caused by the agent’s
fault, where there is time to communicate with the
principal, but something must be done and a strict
compliance with the instructions becomes impossible or
would be detrimental to the interests of the principal.
▪ Liability by Reason of Conflict of Interest
• The agent shall be liable for damages to the principal if, there
being a conflict between his interests and those of the principal,
he should prefer his own.
▪ If Authorized to Borrow Money
• Agent can be the lender at the current rate of interest.
▪ If Authorized to Lend At Interest
• Agent cannot borrow it without the consent of the principal.
▪ If Authorized to Sell
• Agent cannot buy for himself without the consent of the
principal; otherwise, the contract is void.
▪ Duty to Exercise Due Diligence
• Rule: In the absence of instructions from the principal, the
agent, in the execution of the agency, must do all that a good
father of a family would do, as required by the nature of the
business. Hence, the agent also has the obligation not to carry
out an agency if its execution would manifestly result in loss or
damage to the principal.
• Liability for Fraud and Negligence: The agent is responsible not
only for fraud, but also for negligence. Pursuant to this rule, the
law imposes upon the agent the absolute obligation to make a
full disclosure or complete account to his principal of all his
transactions and other material facts relevant to the agency
and to deliver to the principal whatever he may have received
by virtue of the agency, even though it may not be owing to
the principal, so much so that the law does not countenance
any stipulation exempting the agent from such an obligation
and considers such an exemption as void.
• Effect of Compensation: However, the negligence of the agent
shall be judged with more or less rigor by the courts, according
to whether the agency was or was not for a compensation.
• If He Uses Money of Principal for Own Use
o The agent owes interest in the sums he has applied to
his own use from the day on which he did so, and on
those which he still owes after the extinguishment of the
agency.
 ▪ Rule on Sale by Commission Agent
• Duties on Care of Goods:
o He shall be responsible for the goods received by him in
the terms and conditions and as described in the
consignment, unless upon receiving them he should
make a written statement of the damage and
deterioration suffered by the same;
o A commission agent who handles goods of the same kind
and mark, which belongs to different owners, shall
distinguish them by countermarks, and designate the
merchandise respectively belonging to each principal.
• Rule on Sale on Credit
o He cannot sell on credit unless with the consent of the
principal.
o If he does, the principal may demand from him payment
in cash, but the commission agent shall be entitled to
any interest or benefit, which may result from such sale.
o If he sells on credit with authority from the principal, he
shall inform the principal, with a statement of the names
of the buyers.
o If he fails to do so, the sale shall be deemed to have
been made for cash insofar as the principal is concerned.
• Del Credere Agent
o A commission agent who receives a guaranty commission
(called a del credere commission), in addition to the
ordinary commission, is known as a “del credere agent.”
He bears the risk of collection, and he shall pay the
principal the proceeds of the sale on the same terms
agreed upon with the purchaser. However, the liability of
the del credere agent does not preclude the principal
from resorting to the purchaser to obtain payment, at
any time before the debt is paid.
▪ Duty to Collect
• A commission agent who does not collect the credits of his
principal at the time when they become due and demandable
shall be liable for damages. However, he is not liable if he can
prove that he exercised due diligence for that purpose.
▪ Liability of Two or More Agents
• Rule: Their liability is merely joint if solidarity has not been
expressly stipulated.
• If Solidarity is Stipulated: Each of the agents is responsible for
the non-fulfillment of the agency, and for the fault or
negligence of his fellow agents, except in the latter case when
the fellow agents acted beyond the scope of their authority.

o Duties and Liabilities of Principal to Agent:

▪ Duty to Pay Compensation
• Rule: Agency is presumed to be for compensation unless there
is proof to the contrary.
▪ Doctrine of Procuring Cause
• Rule: In order for an agent to be entitled to a commission, he
must be the procuring cause of the sale, which simply means
that the measures employed by him and the efforts he exerted
must result in a sale. In other words, an agent receives his
commission only upon the successful conclusion of a sale.
• Conversely, it follows that where his efforts are unsuccessful, or
 there was no effort on his part, he is not entitled to a
commission. The doctrine applies even if the sale took place
after the authority of the agent had lapsed so long there was
proximate, close, and causal connection between the agent’s
efforts and the principal’s sale of his property. In fact, even if
the agent was not the efficient procuring cause and the sale
took place after the expiration of his authority, he is
nonetheless entitled to his commission when he took diligent
steps to bring back together the parties, such that a sale was
finalized and consummated between them.
▪ Obligation to Advance Necessary Funds
• Rule: In the absence of stipulation that the agent shall advance
the funds necessary to carry out the agency, the same must be
advanced by the principal, should the agent so request.
• Instance Where Principal Not Liable for Expenses Incurred by
Agent:
o 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;
o When the expenses were due to the fault of the agent;
o When the agent incurred them with knowledge that an
unfavorable result would ensue, if the principal was not
aware thereof; or
o When it was stipulated that the expenses would be borne
by the agent, or that the latter would be allowed only a
certain sum.
▪ Duty to Indemnify Agent for Damages
• Rule: Principal must indemnify the agent for all the damages
which the execution of the agency may have caused the latter.
• Exception: Principal not liable if the damages were occasioned
by the fault or negligence on the part of the agent.
▪ Agent’s Lien
• The agent may retain in pledge the things which are the object
of the agency until the principal effects the reimbursement and
pays the indemnity mentioned herein. The lien may be enforced
in the same way as a pledge, that is, by having the property
sold at a public auction, in the manner prescribed by law.
▪ Liability of Two or More Principals
• If two or more persons have appointed an agent for a common
transaction or undertaking, they shall be solidarity liable to the
agent for the all the consequences of the agency.

• Rights and Liabilities of Parties in Relation to Third Persons

o When Agent Acted Within Scope of His Authority
▪ Rule: It is the principal who is liable to the third person while the
agent is completely absolved of any liability, as a rule. This rule
applies whether or not the third person dealing with the agent
believes that the agent has actual authority.
▪ Exceptions: Agent becomes liable to the third person even if he acted
within the scope of his authority when:
• He expressly binds himself; or
• He is guilty of fraud or negligence.
▪ As to Liability of Third Person: The liability of the third person is to the
principal and not to the agent. The agent has neither rights nor
liabilities as against the third party.
o When Agent Acted Beyond Scope of His Authority or Without Authority
▪ Rule: The contract does not bind the principal; it is unenforceable if
not ratified by the principal. However, if the sale of a parcel of land or
any interest therein is made by agent without authority from the
principal, the sale is void and it is the agent himself who becomes
liable to a third party with whom he contracted with when he exceeds
the limits of his authority without giving notice of his powers to the
third person.
• But if he notified the third person of the limits of his authority,
he is not liable to such third person, unless he undertook to
secure the principal’s ratification.
• As to the third person, when he was not given notice of the
agent’s power, he can hold the agent personally liable to him.
But when he is aware of such limits of authority, he is to blame,
and is not entitled to recover damages from the agent, unless
the latter undertook to secure the principal’s ratification.
▪ Exception: The principal becomes liable even if the agent has
exceeded his powers in the following instances:
• When the principal ratifies the contract, either expressly or
impliedly, in which case, only the principal becomes liable to
the third person; or
• When the principal allowed the agent to act as though he had
full powers, in which case, the principal becomes solidarily
liable with the agent.
o When Agent Contracted in His Name
▪ Rule: If an agent acts in his own name, the principal has no right of
action against the third person with whom the agent has contracted;
neither have such persons against the principal. In such case the
agent is the one directly bound in favor of the person with whom he
has contracted, as if the transaction were his own. As between the
principal and the agent, the former can avail of the benefits derived
by the latter from the contract with the third person, or the former
may sue the latter for damages because of non-compliance with the
agency.
▪ Exception: When the contract involves things belonging to the
principal, hence, the contract must be considered as entered into
between the principal and the third person. Corollarily, if the principal
can be obliged to perform his duties under the contract, then it can
also demand the enforcement of its rights arising from the contract.
However, the exception does not apply where the agent has exceeded
his authority.
o When Both Principal and Agent Transacted
▪ Rule: When both the principal and agent entered into a contract over
the same thing, that of prior date shall be preferred, without prejudice
to the provisions of Article 1544 of the Civil Code.
▪ Who Rears Liability: If the agent has acted in good faith, the principal
shall be liable in damages to the third person whose contract must be
rejected. If the agent acted in bad faith, he alone shall be responsible.
o Liability for Delict or Quasi-delict Committed by Agent
▪ So long as the agent acts within the scope of his authority, the
principal is liable for the delict or quasi-delict of his agent. But the
agent is liable to the principal not only for fraud, but also for
negligence.
o Liability in Agency by Estoppel
▪ Who is Liable to Third Person: It is the principal who is liable.
▪ Requisites: In order for the principal to be liable, it is necessary that
 the following requisites must be established:
• The principal manifested a representation of the agent’s
authority or knowingly allowed the agent to assume such
authority;
• The third person, in good faith, relied upon such
representation; and
• Relying upon such representation, such third person has
changed his position to his detriment.
o In agency by estoppel, the apparent authority is
determined only by the acts of the principal and not by
the acts of the agent. The principal is, therefore, not
responsible where the agent’s own conduct and
statements have created the apparent authority.

• Extent of Agency
o Modes of Extinguishment
▪ Revocation;
▪ Withdrawal of the agent;
▪ Death, civil interdiction, insanity, or insolvency of the principal or of
the agent;
▪ Dissolution of the firm or corporation which entrusted or accepted the
agency;
▪ Accomplishment of the object or purpose of the agency;
▪ Expiration of the period for which the agency was constituted; or
▪ Any other modes provided by the general law for the extinction of
obligations, so far as applicable.
o Revocation
▪ Rule: Generally, the agency may be revoked by the principal at will,
and compel the agent to return the document evidencing the agency.
▪ Exceptions: When the agency is coupled with interest, as in the
following cases:
• A bilateral contract depends upon it;
• If it is the means of fulfilling an obligation already contracted;
or
• If a partner is appointed manager of a partnership in the
contract of partnership and his removal from the management
is unjustifiable.
▪ When Agency Deemed Revoked
• When a new agent is appointed for the same business or
transaction, the previous agency is revoked from the day on
which notice thereof was given to the former agent;
• When the principal directly manages the business entrusted to
the agent, dealing directly with third persons; or
• A general power of attorney is revoked by a special one granted
to another agent, as regards the special matter involved in the
latter.
▪ Necessity of Notice: As between the agent and principal, in order for
the revocation to be effective against the agent, the latter must be
duly notified. As between the principal and third person:
• 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; and
• 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. Notice of the revocation in a
newspaper of is a sufficient warning to third persons.
 o Withdrawal by Agent
▪ Rule: Agent may withdraw from the agency by giving due notice to
the principal.
▪ Liability for Damages: If the principal should suffer any damage by
reason of the withdrawal by the agent, the latter must indemnify the
principal therefor, unless the agent should base his withdrawal upon
the impossibility of continuing the performance of the agency without
grave detriment to himself.
▪ Duty of Agent Upon Withdrawal: The agent must continue to act until
the principal has had reasonable opportunity to take the necessary
steps to meet the situation, even if he should withdraw from the
agency.
o Effect of Death
▪ Rule: Agency is extinguished by the death of the principal or the
agent.
▪ Exceptions:
• Agency shall remain in full force and effect even after the death
of the principal, if it has been constituted in the common
interest of the latter and of the agent, or in the interest of a
third person who has accepted the stipulation in his favor; and
• 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.

IV. Credit Transactions

A. Loans

By the contract of loan, one of the parties delivers to another, either something
not consumable so that the latter may use the same for a certain time and return it, in
which case the contract is called a commodatum; or money or other consumable thing,
upon the condition that the same amount of the same kind and quality shall be paid, in
which case the contract is simply called a loan or mutuum.

• Consumable and Non-consumable Things

o A thing is consumable when it cannot be used in a manner appropriate to its
nature without being consumed.
o On the other hand, a non-consumable thing is a movable thing which can be
used in a manner appropriate to its nature without it being consumed.

• Fungible and Non-Fungible Things

o A fungible thing is one where the parties have agreed to allow the
substitution of the thing given or delivered with an equivalent thing.
o A non-fungible thing is one where the parties have the intention of having
the same identical thing returned after the intended use.

• Irreplaceability of Non-fungible Thing

o GR: Non-fungible things are irreplaceable. They must be returned to the
lender after the purpose of the loan had been accomplished.
o XPN: Non-fungible things may be replaced by agreement of the parties. In
such case, the contract is barter and not loan.

• Delivery Essential to Perfection of Loan

o Delivery is necessary in view of the purpose of the contract which is to
transfer either the use or ownership of the thing loaned.
 o An accepted promise to deliver something by way of commodatum or simple
loan is binding upon the parties, but the commodatum or simple loan itself
shall not be perfected until the delivery of the object of the contract.

• Unlawful Purpose of the Contract of Loan

o If the loan is executed for illegal or immoral or unlawful purpose or use, the
contract is void. The bailor may immediately recover the thing before any
illegal act is committed, and provided he is innocent or in good faith.

1. Kinds

• Mutuum
o Definition
▪ It is where the lender delivers to the borrower money or a
consumable thing upon the condition that the latter shall pay same
amount of the same kind and quality.
o Characteristics of a Contract of Mutuum
▪ Borrower acquires ownership of the thing;
▪ If the thing loaned is money, payment must be made in the currency
stipulated, and if it is not possible to deliver such currency, then in
the currency which is legal tender in the Philippines.
• NOTE: In case of extraordinary deflation or inflation, the basis
of payment shall be the value of the currency at the time of the
creation of the obligation; and
▪ If fungible thing other than money was loaned, the borrower is
obliged to pay the lender another thing of the same kind, quality and
quantity even if it should change in value.
o Perfection of the Contract of Mutuum
▪ Real contracts, such as deposit, pledge and commodatum, are not
perfected until the delivery of the object of the obligation. While
mutuum or simple loan is not mentioned, it has the same character as
commodatum. Hence, mutuum is also a real contract which cannot be
perfected until the delivery of the object.
▪ An accepted promise to make a future loan is a consensual contract
and therefore, binding upon the parties but it is only after delivery,
will the real contract of loan arise.
▪ Mere issuance of checks does not perfect the contract of loan. It is
only after the checks have been encashed that the contact may be
deemed perfected.
o Governing Rules on Payment of Loan
▪ If the object of loan is:
• Money – Governed by Arts. 1249 and 1250, NCC.
o GR: Payment shall be made in the currency stipulated.
o XPN: If not, that currency which is legal tender in the
Philippines.
o In case of extraordinary inflation – payment shall be
made at the value of the currency at the time of the
creation of the obligation, unless there is an agreement
to the contrary.
o Loan of money can be payable in kind if there is an
agreement between the parties.
• Consumable or Fungible thing – Debtor or borrower shall pay
another thing of the same kind, quality and quantity even if it
should change in value. If it cannot be done, the value of the
thing at the time of its perfection (delivery) shall be the basis of
the payment of the loan.
 o Destruction of the Thing Loaned
▪ The destruction of the thing loaned does not extinguish one’s
obligation in a simple loan because his obligation is not to return the
thing loaned but to pay a generic thing.

• Commodatum
o Definition
▪ It is where the bailor (lender) delivers to the bailee (borrower) a non-
consumable thing so that the latter may use it for a given time and
return the identical thing.
o Obligations of the Parties
▪ Obligations of the Bailee (Borrower)
• Ordinary Expenses: The bailee is obliged to pay for the ordinary
expenses for the use and preservation of the thing loaned.
• Loss of Thing Loaned: The bailee is liable for the loss of the
thing loaned if:
o It was lost through his fault; or
o Even if it should be lost through a fortuitous event:
▪ If he devotes the thing loaned to any purpose
different from that for which it has been loaned;
▪ If he keeps it longer than the period stipulated, or
after the accomplishment of the use for which the
commodatum has been constituted;
▪ If the thing has been delivered with appraisal of its
value, unless there is a stipulation exempting the
bailee from responsibility in case of a fortuitous
event;
▪ If he lends or leases the thing to a third person,
who is not a member of his household; or
▪ If, being able to save either the thing borrowed or
his own thing, he chose to save the latter.
• Liability for Deterioration
o The bailee does not answer for the deterioration of the
thing loaned due only to the use thereof and without his
fault.
• Liability of Two or More Bailees: They are solidarity liable.
• Return of Thing Loaned
o When to Return: Upon expiration of the period stipulated
or after the accomplishment of the use agreed upon.
o Contract of Precarium: the bailor may demand for the
return of the thing loaned at will in a contract of
precarium, which exists when:
▪ The duration of the contract or the use to which
the thing loaned should be devoted has not been
stipulated; or
▪ When the use of the thing loaned is merely
tolerated by the owner.
o When Bailee Commits Acts of Ingratitude: The bailor may
demand immediate return of the thing if the bailee
commits any act of ingratitude specified in Article 765.
o Urgent Need by Bailor: Should the bailor have urgent
need of the thing, he may demand its return or
temporary use, in which case the contract of
commodatum is suspended.
o Right of Retention: The bailee has the right to retain the
thing borrowed only when the bailor is liable for damages
 because the bailee suffered damages by reason of the
flaws or defects of the thing which are known to the
bailor, but the latter did not advise the former of the
existence of the same. The bailor cannot exempt himself
from the payment of expenses or damages by
abandoning the thing to the bailee.
▪ Obligations of the Bailor
• Extraordinary Expenses
o Rule: Extraordinary expenses for the preservation of the
thing loaned shall be for the account of the bailor.
o If Bailee Advances Such Expenses: He shall be entitled to
a refund provided he notified the bailor before incurring
said expenses, except when they are so urgent that the
reply to the notification cannot be awaited without
danger.
o Exception to Rule: If the extraordinary expenses arise on
the occasion of the actual use of the thing by the bailee,
even though he acted without fault, the expenses shall
be borne equally by both the bailor and the bailee, unless
there is a stipulation to the contrary.

Commodatum Mutuum
As to Object
Non-consumable and non-fungible. Money or consumable thing.
As to Cause
Gratuitous, otherwise it is a lease. May or may not be gratuitous.
As to Purpose
Use or temporary possession of the thing Consumption
loaned.

GR: Not its fruit because the bailor remains

the owner.

XPNs: Use of the fruits is stipulated;

enjoyment of the fruits is stipulated; or
enjoyment of the fruits is incidental to its
use.
As to Subject Matter
Real or personal property. Only personal property.

Generally non-consumable things but may

cover consumables if the purpose of the
contract is for exhibition.
As to Ownership of the Thing
Retained by the bailor. Passes to the debtor.
As to Thing to be Returned
Exact thing loaned. Equal amount of the same kind and quality.
Who Bears Risk of Loss
Bailor Debtor
When to Return
In case of urgent need even before the Only after the expiration of the term.
expiration of term (the contract is in the
meantime suspended).
Contract
Contract of use. Contract of consumption.
 2. Interest

• Definition
o It is the compensation to be paid by the borrower for the use of the money
lent to him by the lender. It is paid either as compensation for the use of
money (monetary interest) or as damages (compensatory interest).

• Classes of Interest
o Simple or Monetary – the interest which is paid for the use or forbearance of
the money, at a certain rate stipulated in writing by the parties;
o Compound – the interest which is imposed upon accrued interest, that is,
the interest due and unpaid;
o Legal – that interest which the law directs to be paid in the absence of any
agreement as to the rate; and
o Compensatory – the interest paid by virtue of damages for delay or failure to
pay principal loan on which interest is demanded.

• Requisites for Recovery of Interest

o The payment of interest must be expressly stipulated;
o The agreement to pay interest must be in writing; and
o The interest must be lawful.

• Rules on Interest
o GR: No interest shall be due unless it is stipulated in writing.
▪ NOTE: This applies only to interest for the use of money and not to
interest imposed as items of damages.
o XPNs
▪ In case of interest on damages or indemnity for damages, it need not
be in writing; or
▪ Interest accruing from unpaid interest.

• Stipulation of a Particular Interest Rate

o If a particular rate of interest has been expressly stipulated by the parties,
that interest, not the legal rate of interest shall be applied.
• Legal Rate for Loan or Forbearance of Money
o The legal rate of interest for the loan or forbearance of any money, goods,
or credits accruing from June 30, 2013, and downwards is still 12% p.a.,
while the legal rate beginning July 1, 2013, is 6%.

Q: In dire need of money, Zenaida mortgaged a parcel of land to Atty. Bulatao to

secure a loan worth P200,000. The real estate mortgage entered by the parties
stipulated a 5% per month interest. Zenaida failed to pay the loan later on and
as such Atty. Bulatao foreclosed the property. Were the stipulated interest rate
and the ensuing foreclosure sale valid?

A: NO. The Court has ruled that 5% per month or 60% per annum interest rate is highly
iniquitous and unreasonable; and since the interest rate agreed upon is void, the rate of
interest should be 12% per annum (the then prevailing interest rate prescribed by the
Central Bank of the Philippines for loans or forbearances of money) from the date of
judicial or extrajudicial demand.

The foreclosure proceedings are also void. Since the obligation of making interest
payments is illegal and thus non-demandable, the payment of the principal loan
obligation was likewise not yet demandable. With Zenaida not being in a state of default,
the foreclosure of the subject properties should not have proceeded.
• Interest in Equitable Mortgage
o There can be no interest to be collected in equitable mortgage because the
same is not stipulated in writing.

• Increase in Interest Rates

o No increase in interest shall be due unless such increase has also been
expressly stipulated.

• Rule on Compounding of Interest

o GR: Accrued interest (interest due and unpaid) shall not earn interest.
o XPNS:
▪ When there is express stipulation made by the parties - that the
interest due and unpaid shall be added to the principal obligation and
the resulting total amount shall earn interest (Art. 1959, NCC); or
▪ When judicial demand has been made upon the borrower.

• Floating Interest
o Floating interest is the interest stipulated by banks which is not fixed and
made to depend upon the prevailing market conditions, considering the
fluctuating economic conditions.
o A stipulation for floating interest is not valid. A stipulation for a floating rate
of interest in a letter of credit in which there is no reference rate set either
by it or by the Central Bank, leaving the determination thereof to the sole
will and control of the lender bank is invalid.

• Escalation Clauses
o Definition
▪ Escalation clauses refer to stipulations allowing an increase in the
interest rate agreed upon by the contracting parties.
o De-escalation Clauses
▪ An escalation clause can be valid only if it also includes a de-
escalation clause or a stipulation that the rate of interest agreed upon
shall be reduced in the event that the maximum rate of interest is
reduced by law or by the Monetary Board.

B. Deposit

• Nature and Characteristics

o Definition
▪ A deposit is constituted from the moment a person receives a thing
belonging to another, with the obligation of safely keeping it and of
returning the same. The parties are the depositor (depositante), he
who delivers the thing to another under circumstances coming within
the definition of deposit, and the depositary (depositario), he to whom
the thing is delivered.
o Principal Purpose
▪ The principal purpose of the contract is safekeeping. If the
safekeeping of the thing delivered is not the principal purpose of the
contract, there is no deposit but some other contract.
▪ Thus, in the case of valet parking, the contract entered into is one of
deposit while in an ordinary car parking, the contract entered into is
one of lease of things
o Real Contract
▪ Rule: The contract of deposit itself is a real contract—it is not
perfected until the delivery of the thing.
▪ Consensual Contract: However, an agreement to constitute a deposit
 is binding, but such is not the contract of deposit itself. The same is
true in a consensual contract and such agreement shall give rise to an
obligation to do and to an action for damages in case of breach.
o Subject Matter
▪ Extrajudicial Deposit: Only movable things may be the object of a
deposit. Necessarily, the movable must be corporeal considering the
purpose of the contract.
▪ Judicial Deposit: Movable as well as immovable property may be the
object of sequestration or judicial deposit.
o Compensation
▪ Rule: Generally, it is a gratuitous contract.
▪ Exceptions: It is for a compensation when:
• There is an agreement to that effect; or
• Even without an agreement, if the depositary is engaged in the
business of storing goods. If the deposit is gratuitous, it is a
unilateral contract because all the obligations devolve upon the
depositary and none on the depositor. However, if the deposit
is for compensation, it becomes a bilateral contract.
o Kinds of Deposit
▪ General Classification
• Extrajudicial Deposit – where the deposit is constituted by the
will of the parties and only corporeal movable property may be
its object;
• Judicial Deposit – it is the court order that gives rise to this kind
of deposit, and it takes place when an attachment or seizure of
property in litigation is ordered. As to judicial deposit, the
object may either be movable or immovable property.

Judicial Deposit Extrajudicial Deposit

Creation
Will of the court. Will of the contracting parties.
As to Possession of Thing
The sequestrator possesses the thing in The depositary holds the thing by will of the
virtual representation of the person who by depositor.
the decision of the court should turn out to
be its owner and proprietor.
Status
No contract. There is a contract.
Purpose
Security or to ensure the right of a party to Custody and safekeeping.
property or to recover in case of favorable
judgment.
Subject Matter
Movables or immovables but generally Movables only.
immovable.
Cause
Always onerous. Generally gratuitous but may be
compensated.
When the Thing Must be Returned
Upon order of the court or when litigation is Upon demand of depositor.
ended.
In Whose Behalf it is Held
Person who has a right or on behalf of the Depositor or third person designated.
winner.
 ▪ Classifications of Extrajudicial Deposit
• Voluntary Deposit – where the deposit is made by the will of
the depositor.
• Necessary Deposit - where the deposit is not by reason of the
depositor’s will, but it takes place when:
o It is made in compliance with a legal obligation; or
o It takes place on the occasion of any calamity, such as
fire, storm, flood, pillage, shipwreck, or other similar
events.
▪ The first is governed by the law establishing it;
while the second is governed by the rules on
voluntary deposit.
▪ Form of Deposit: A contract of deposit may be entered into orally or in
writing.
▪ Extinguishment of Voluntary Deposit: A deposit is extinguished:
• Upon the loss or destruction of the thing deposited; or
• In case of a gratuitous deposit, upon the death of either the
depositor or the depositary.

• Voluntary Deposit
o Parties
▪ Depositor
• Need Not Be Owner: It is not essential that the depositor be the
owner of the thing deposited. In fact, the depositary cannot
demand that the depositor prove his ownership of the thing
deposited.“' A deposit constituted by a non-owner of the thing
is valid between the parties, but the owner is not precluded
from exercising reinvindicatory action against the depositary.
• Remedy of Depositary: If the depositary has reasonable
grounds to believe that the thing has not been lawfully acquired
by the depositor, he may return the same.
• When Depositary Discovered Thing Was Stolen: Should the
depositary discover that the thing deposited has been stolen
and who its true owner is, the depositary is required to advise
the latter of the deposit. If the owner, in spite of such
information, does not claim it within one month, the depositary
shall be relieved of all responsibility by returning the thing
deposited to the depositor.
• Deposit by Two or More Persons: A deposit may also be made
by two or more persons, each of whom believes himself entitled
to the thing deposited with a third person, who shall deliver it
in a proper case to the one to whom it belongs. When there are
two or more depositors, if they are not solidary, and the thing
admits of division, each cannot demand more than his share.
When there is solidarity or the thing does not admit of division,
the depositary may return the thing to any one of them.
• When Depositor is Incapacitated: If the depositor is
incapacitated but the depositary is capacitated, the latter is
subject to all the obligations of a depositary, and may be
compelled to return the thing by the guardian, or administrator,
of the depositor, or by the latter himself if he should acquire
capacity. If the depositor should lose his capacity to contract
after having made the deposit, the thing cannot be returned
except to the persons who may have the administration of his
property and rights.
 ▪ Depositary
• When Depositary is Incapacitated: If the depositary is
incapacitated while the depositor is capacitated, the depositor
shall have an action against the depositary only in the following
situations:
o When the thing is still in the possession of the
depositary, in which case an action for recovery may be
resorted to; or
o When the depositary himself is enriched or benefited by
the price of the thing, in which case an action for
recovery of the said sum may be resorted to.

• Necessary Deposit in Hotels or Inns

o Concept
▪ The deposit of effects made by travelers in hotels or inns shall also be
regarded as necessary and the keepers of hotels or inns shall also be
regarded as depositaries. As such depositaries, hotels and inns are
liable for the safety of the effects introduced in its premises.
o Extent of Liability
▪ The hotel-keeper is liable even for the vehicles, animals, and articles
which have been introduced or placed in the annexes of the hotel;
▪ The responsibility of the hotels or inns shall include the loss of, or
injury to the personal property of the guests caused by the servants
or employees of the keepers of hotels or inns as well as by strangers;
but not that which may proceed from any force majeure. The act of a
thief or robber, who has entered the hotel, is not deemed force
majeure, unless it is done with the use of arms or through an
irresistible force.
o Requisites for Liability
▪ The keepers of hotels or inns shall be liable for the safety of the
personal effects introduced by hotel guests provided that:
• Notice was given to the keepers, or to their employees, of the
effects brought by the guests; and
• The guests take the precautions which the hotels or inns
advised relative to the care and vigilance of their effects.
▪ To hold hotelkeepers or innkeepers liable for the effects of their
guests, it is not necessary that they be actually delivered to the
innkeepers or their employees. It is enough that such effects are
within the hotel or inn.
▪ The hotel-keeper cannot free himself from responsibility by posting
notices to the effect that he is not liable for the articles brought by the
guest. Any stipulation between the hotel-keeper and the guest
whereby the responsibility of the former is suppressed or
diminished shall be void.
o When Keepers of Hotels or Inns Not Liable
▪ The keepers of hotels or inns shall not be liable for the loss of, or
injury to the personal property of the guests, in the following
situations:
• When it is caused by force majeure—but the act of a thief or
robber who has entered the hotel is not deemed so unless it is
done with the use of arms or through irresistible force;
• When such loss or injury is due to the acts of the guest, his
family, servants, or visitors, provided that the hotel-keeper is
not guilty of concurrent negligence; or
• When such loss or injury arises from the character of the things
brought into the hotel.
 o Innkeeper’s Lien
▪ The hotel-keeper has a right to retain the things brought into the
hotel by the guest as a security for credits on account of lodging and
supplies usually furnished to hotel guests. This is called the
“innkeeper’s lien.”

C. Guaranty and Suretyship

Guaranty Suretyship
Liability depends upon an independent Surety assumes liability as a regular party
agreement to pay the obligation of the to the contract.
principal if he fails to do so.
Guarantor is secondarily liable. Surety is primarily liable.
Guarantor binds himself to pay if the Surety undertakes to pay if principal does
principal cannot pay. not pay.
Insurer of solvency of debtor. Insurer of the debt.
Guarantor can avail of the benefit of Surety cannot avail of the benefit of
excussion and division in case creditor excussion and division.
proceeds against him.
Both guarantor and surety promise or undertake to answer for the debt, default, or
miscarriage of another person.
A guaranty or surety does not only cover present obligations of the principal debtor, but it
may also secure future debts.

• Guaranty
o Definition
▪ Guaranty is a contract where a person called the guarantor binds
himself to the creditor to fulfill the obligation of the principal debtor in
case the latter should fail to do so.
o Kinds
▪ As to its Origin
• Conventional – it is constituted by agreement of the parties;
• Legal – imposed by virtue of a provision of law; or
• Judicial – required by a court to guarantee the eventual right of
the parties in a case.
▪ As to Person
• Single – it is constituted solely to guarantee or secure
performance by the debtor of the principal obligation; or
• Double or sub-guaranty – it is constituted to secure the
fulfillment of the obligation of a guarantor by a sub-guarantor.
▪ As to Scope and Extent
• Definite – one where the guaranty is limited to the principal
obligation only, or to a specific portion thereof; or
• Indefinite or Simple – one where the guaranty included all the
accessory obligations of the principal, e.g., costs.
o Concepts
▪ Guarantor Cannot be Debtor Himself: The guarantor is a person
distinct from the person guaranteed. Thus, a person cannot be both
the primary debtor and the guarantor of his own debt, for it is
inconsistent with the very' purpose of a guarantee which is for the
creditor to proceed against a third person if the debtor defaults in his
obligation.
▪ Obligation of Guarantor is Subsidiary: A contract of guaranty gives
rise to a subsidiary obligation on the part of the guarantor. It is only
after the creditor has proceeded against the properties of the principal
debtor and the debt remains unsatisfied that a guarantor can be held
 liable to answer for any unpaid amount. This is the principle of
excussion.
▪ Governed by Statute of Frauds: The undertaking of the guarantor (but
not the contract of guaranty itself) is covered by the Statute of
Frauds. It is only the undertaking of the guarantor that is required to
be in writing; the consent of the creditor (or the acceptance of the
guaranty) may be proven by parol evidence.
o Right to Reimbursement and Subrogation Upon Payment
▪ (a) Applicability of Articles 2066 and 2067: Article 2066 of the Civil
Code assures that “[t]he guarantor who pays for a debtor must be
indemnified by the latter,” such indemnity comprising of, among
others, “the total amount ofthe debt.” Further, Article 2067 of the
Civil Code likewise establishes that “the guarantor who pays is
subrogated by virtue thereofto all the rights which the creditor had
against the debtor.” The rights to indemnification and subrogation as
established and granted to the guarantor by Articles 2066 and 2067
extend as well to sureties as defined under Article 2047.™
▪ Right to Reimbursement
• Rule: The guarantor who pays for a debtor must be indemnified
by the latter.
• Exceptions:
o If the guarantor has paid without notifying the debtor,
and the latter not being aware of the payment, repeats
the payment, the guarantor has no remedy whatever
against the debtor, but only against the creditor.
o If the guaranty is entered into without the knowledge or
consent, or against the will of the principal debtor, the
guarantor is entitled to indemnity only to the extent that
the payment has been beneficial to the debtor. If the
payment has not benefited the debtor at all, the
guarantor does not acquire any valid claim for
reimbursement.
▪ Right to Subrogation
• Rule: The guarantor who pays is subrogated by virtue thereof
to all the rights which the creditor had against the debtor.
• In Case of Partial Payment: Guarantor is not yet entitled to
subrogation. A guarantor cannot exercise the right of
subrogation until the principal obligation has been fully
extinguished
o Remedy of Guarantor Before Payment
▪ The remedy that may be exercised is either to obtain release from
the guaranty, or to demand a security that shall protect him
from any proceedings by the creditor and from the danger of
insolvency of the debtor.
o Extinguishment of Guaranty
▪ Principal obligation is extinguished;
▪ Same causes as all other obligations;
• Payment or performance;
• Loss of the thing due;
• By condonation or remission of the debt;
• By confusion or merger of the rights of the creditor and debtor;
• By compensation;
• By novation; or
• Other causes such as annulment, rescission, fulfillment of a
resolutory condition and prescription.
▪ Release by acceptance of property by the creditor;
 • If the creditor accepts payment in form of immovable or
immovable property, there is a novation on the subject matter.
• NOTE: Eviction revives the principal obligation, but not the
guaranty, for the creditor here took the risk.
▪ Release in favor of one of the guarantors, without consent of the
others, benefits all to the extent of the share of the guarantor to
whom it has been granted;
▪ Extension granted to debtor by creditor without the consent of the
guarantor; or
▪ When the guarantors through some act of the creditor cannot be
subrogated to the rights, mortgages and preferences of the latter.
o Benefit of Excussion
▪ Definition
• The benefit of excussion is a right by which the guarantor
cannot be compelled to pay the creditor unless the latter has
exhausted all the properties of the principal debtor and has
resorted to all legal remedies against such debtor.
▪ Requisites
o The guarantor must set up the right of excussion against
the creditor upon the latter’s demand for payment from
him; and
o He must point out to the creditor the available property
of the debtor which is not exempted from execution is
found within the Philippine territory.
o Benefit of Division
▪ When there are several guarantors of only one debtor and for the
same debt and they did not bind themselves solidarily, any one of the
of the co-guarantors has the right to have the creditor divide the
claim which he may have against all of them, the creditor not being
able then to demand from each co-guarantor more than the portion
that devolves on him to satisfy by reason of the said division.

• Suretyship
o Definition
▪ Suretyship is a contract where a person binds himself solidarily with
the principal debtor. Here, there is an undertaking that the debt shall
be paid.
o Liability is Direct and Primary: Although a surety contract is in essence
secondary only to a valid principal obligation, his liability to the creditor or
promisee of the principal is said to be direct, primary, and absolute; in other
words, he is directly and equally bound with the principal.719 Thus, a
creditor can go directly against the surety although the principal debtor is
solvent and is able to pay or no prior demand is made on the principal
debtor.
o Governed by Statute of Frauds: Suretyship is a contractual relation resulting
from an agreement whereby one person, the surety, engages to be
answerable for the debt, default, or miscarriage of another, known as the
principal. Hence, a contract of suretyship is covered by the Statute of
Frauds.
o Consideration in Suretyship: The surety becomes liable for the debt or duty
of another although he possesses no direct or personal interest over the
obligations, nor does he receive any benefit therefrom. The consideration
necessary to support a surety obligation need not pass directly to the
surety; a consideration moving to the principal alone will suffice.
 D. Mortgage
1. Chattel Mortgage

(not included)

2. Real Estate Mortgage

(check table)

E. Pledge

(check table)

F. Antichresis

(check table)

Pledge Real Estate Mortgage Antichresis

Definition
An accessory contract whereby It is a contract whereby the A contract whereby the
a debtor delivers to the debtor secures to the creditor creditor acquires the right to
creditor or a third person a the fulfillment of a principal receive the fruits of an
movable or personal property, obligation, specially subjecting immovable of the debtor, with
or document evidencing to such security, immovable the obligation to apply them to
incorporeal rights, to secure property or real rights over the payment of interest, if
the fulfillment of a principal immovable property, in case owing, and thereafter to the
obligation with the condition the principal obligation is not principal of his credit.
that when the obligation is paid or complied with at the
satisfied, the thing delivered time stipulated.
shall be returned to the
pledgor with all its fruits and
accessions, if any.

Note: It is now governed by

the PPSA.
Object of the Contract
Movable or personal property, Immovable property or real Fruits of an immovable.
or document evidencing rights over immovable
incorporeal rights. property.

Movable properties which are

within the commerce of men
provided it is susceptible of
possession. And incorporeal
rights evidenced by proper
documents may be pledged.
Necessity of Delivery
Property must be delivered. Delivery is not necessary. Property is delivered to the
creditor.
Capacity to Sell the Thing
The pledgor can sell the thing The mortgagor can sell the
pledged with the consent of property mortgaged even
the pledgee. without the consent of the
mortgagee.
A third person who pledged and mortgaged his property is not liable for any deficiency.
A pledge, mortgage or antichresis is indivisible.
A stipulation whereby the thing pledged or mortgaged or subject of antichresis shall automatically
become the property of the creditor in the event of non-payment of the debt within the term fixed
shall be deemed null and void.
 • Pactum Commissorium
o Definition
▪ Pactum Commissorium is a stipulation whereby the thing pledged or
mortgaged or subject of antichresis shall automatically become the
property of the creditor in the event of non-payment of the debt
within the term fixed. Such stipulation is null and void.
o Pactum Commissorium when Allowed
▪ While the law prohibits the creditor from appropriating to himself the
things pledged or mortgaged, and from disposing them, this does not
mean that a stipulation is prohibited whereby the creditor is
authorized, in case of nonpayment within the term fixed by the
parties, to sell the thing mortgaged at public auction, or to
adjudicate the same to himself in case of failure of said sale,
nor is there any reason to prevent it.
▪ This is not against the law, since what the law prohibits is only
the acquisition by the creditor of the property mortgaged after
non-payment of debt, and the above stated article simply
authorizes him to sell it with the aforesaid conditions, which
authorization is inherent in the ownership, and is not against morals
and public order.

Q: X borrowed money from Y and gave a piece of land as security by way of

mortgage. It was expressly agreed between the parties in the mortgage
contract that upon nonpayment of the debt on time by X, the mortgaged land
would already belong to Y. If X defaulted in paying, would Y now become the
owner of the mortgaged land? Why?

A: NO, Y would not become the owner of the land. The stipulation is in the nature of
Pactum Commissorium which is prohibited by law. The property should be sold at public
auction and the proceeds thereof applied to the indebtedness. Any excess shall be given
to the mortgagor.

V. Compromise

• Definition
o A compromise is a contract whereby the parties, by making reciprocal
concessions, avoid litigation, or put an end to one already commenced.

• Civil Cases Not Subject to Compromise

o The following are not subject to compromise:
▪ The civil status of persons;
▪ The validity of a marriage or a legal separation;
▪ Any ground for legal separation;
▪ Future support;
▪ The jurisdiction of courts; and
▪ Future legitime.

• Compromise Not Appealable

o The judgment rendered in accordance with a compromise is not appealable,
and is immediately executory.

• Effect of Compromise
o A compromise agreement has the effect and authority of res judicata
between the parties and is immediately final and executory, unless
rescinded upon grounds that vitiate consent. Once it is stamped with judicial
imprimatur, it becomes more than a mere contract between parties.
 VI. Quasi-Contacts

• Definition
o A quasi-contract is that juridical relation resulting from a lawful, voluntary,
and unilateral act, and which has for its purpose the payment of indemnity
to the end that no one shall be unjustly enriched or benefited at the expense
of another.
▪ NOTE: There is actually no agreement between the parties but there
is deemed to be consent that exist between them; that consent is
supplied by the law and not the parties themselves.
▪ It is the law that presumes that there is consent between the parties
in that quasi contract. This is in order to prevent unjust
enrichment of one at the expense of another.

• Prescription
o Actions in quasi-contracts must be commenced within six (6) years.

A. Negotiorum Gestio

• Definition
o This takes place when a person voluntarily takes charge of another’s
abandoned business or property without the owner’s authority (Art. 2144,
NCC). Reimbursement must be made to the gestor for necessary and useful
expenses, as a rule. (Art. 2150, NCC)

B. Solutio Indebiti

• Definition
o This takes place when something is received when there is no right to
demand it, and it was unduly delivered by mistake. The recipient has the
duty to return it. (Art. 2154, NCC)

• Requisites
o He who paid was NOT under obligation to do so;
o The payment was made by reason of an essential mistake of fact.

Q: The Philippine Science High School (PSHS) entered into a contract with N.C.
Roxas, Inc. for the construction of the PSHS-Mindanao Campus Building
Complex. Later, the PSHS Board of Trustees terminated the contract for failure
of the contractor to finish the project on time. The PSHS Management
erroneously computed the liquidated damages against N.C. Roxas, Inc. in the
amount of P252,114.79, instead of P2,400,134.65, which amount was supposed
to be deducted from the payment to N.C. Roxas, Inc. Unfortunately, N.C. Roxas,
Inc. was paid without deducting the aforementioned amount. Consequently,
there was an overpayment in the progress billings made to N.C. Roxas, Inc. It
would appear that PSHS incurred a total expenditure of P8,641,470.47, instead
of only P6,793,450.41. Can the government recover the excess payment
(liquidated damages) from N.C. Roxas, Inc.?

A: YES. N.C. Roxas, Inc.'s liability to return the disallowed amount may be enforced
based on the principle of solutio indebiti. Art. 2154 of the Civil Code explains the principle
of solutio indebiti. Said provision provides that if something is received when there is no
right to demand it, and it was unduly delivered through mistake, the obligation to return
it arises. In such a case, a creditor-debtor relationship is created under a quasi-contract
whereby the payor becomes the creditor who then has the right to demand the return of
payment made by mistake, and the person who has no right to receive such payment
becomes obligated to return the same.

The principle of solutio indebiti applies where (1) a payment is made when there exists
no binding relation between the payor, who has no duty to pay, and the person who
received the payment; and (2) the payment is made through mistake, and not through
liberality or some other cause. Evidently, because of the erroneous computation of
liquidated damages, the contractor, N.C. Roxas, Inc., through mistake, received more
than what was due to it under the contract. There being no binding obligation on the part
of PSHS to pay the excess amount, N.C. Roxas, Inc. is therefore bound to return the
same| (Collado v. Villar, G.R. No. 193143, 01 Dec. 2020, J. Caguioa)

VII. Torts and Damages

A tort is a civil wrong wherein a person’s conduct causes a compensable injury to the person,
property, or recognized interest of another, in violation of a duty imposed by law.

A. Principles
1. Abuse of Rights

• Concept
o A right, though by itself legal because recognized or granted by law as such,
may nevertheless become the source of some illegality. When a light is
exercised in a manner which does not conform with the norms enshrined in
Article 19 and results in damage to another, a legal wrong is thereby
committed for which the wrongdoer must be held responsible.
o This principle is based upon the famous maxim summum jus summa injuria
(the abuse of a right is the greatest possible wrong).

• Elements (LBP)
o There is a Legal right or duty;
o Such duty is exercised in Bad faith; and
o It is for the sole intent of Prejudicing or injuring another.

• Principle of Damnum Absque Injuria

o It means damage without injury.
o The legitimate exercise of a person's rights, even if it causes loss to another,
does not automatically result in an actionable injury. The law does not
prescribe a remedy for the loss.
▪ This principle does not, however, apply when there is an abuse of a
person's right, or when the exercise of this right is suspended or
extinguished pursuant to a court order.
o Injury is the illegal invasion of a legal right; damage is the loss, hurt, or
harm which results from the injury; and damages are the recompense or
compensation awarded for the damage suffered.
o There can be damage without injury in instances where the loss or harm
was not the result of a violation of a legal duty. In such cases, the
consequences must be borne by the injured person alone (Ibid.)

• Articles 19, 20 and 21 in the Enforcement and Sanctions of Abuse of Right

o While Article 19 lays down a rule of conduct for the government of human
relations and for the maintenance of social order, it does not provide a
remedy for its violation. Generally, an action for damages under either
Article 20 or Article 21 would be proper.
o Article 20 speaks of the general sanction for all other provisions of law
which do not especially provide for their own sanction.
o Article 21, on the other hand, speaks of an act which is legal but is contrary
 to morals, good custom, public order or public policy and is done with intent
to injure.

2. Unjust Enrichment

• Concept
o No one shall unjustly enrich himself at the expense of another.
o The principle of unjust enrichment is codified under Article 22 of the Civil
Code: Every person who through an act of performance by another, or any
other means, acquires or comes into possession of something at the
expense of the latter without just or legal ground, shall return the same to
him.

• Application
o The article applies only if:
▪ Someone acquires or comes into possession of “something” which
means delivery or acquisition of things”; and
▪ Acquisition is undue and at the expense of another, which means
without any just or legal ground.

• Requisites
o A person is unjustly benefited; and
o Such benefit is derived at the expense of or with damages to another.
▪ Moreover, to substantiate a claim for unjust enrichment, the claimant
must unequivocally prove that another party knowingly received
something of value to which he was not entitled and that the state of
affairs are such that it would be unjust for the person to keep the
benefit.

3. Liability Without Fault (Accion In Rem Verso)

• Concept
o It is an action for recovery of what has been paid or delivered without just
cause or legal ground. (Rabuya, 2006)
o Every person who through an act of performance by another, or any other
means, acquires or comes into possession of something at the expense of
the latter without just or legal ground, shall return the same to him. (Art.
22, NCC)
o Accion in rem verso is considered merely an auxiliary action, available only
when there is no other remedy on contract, quasi-contract, crime, and
quasi-delict. Hence, if there is an obtainable action under any other
institution of positive law, that action must be resorted to, and the principle
of accion in rem verso will not lie.

• Requisites (ELWA)
o The defendant has been Enriched;
o The plaintiff has suffered a Loss;
o The enrichment of the defendant is Without just or legal ground; and
o The plaintiff has no other Action based on contract, quasi-contract, crime or
quasi-delict.

• Accion in rem verso vs. Solutio Indebiti

o In accion in rem verso, it is not necessary that there should have been
mistake in the payment unlike in solutio indebiti where mistake is an
essential element.
• Accion in Rem Verso vs. Unjust Enrichment
o An accion in rem verso is merely an auxiliary action available only when
there is no other remedy on contract, quasi-contract, crime and quasi-delict,
while unjust enrichment, wherein one is unjustly enriched at the expense of
or from the efforts or obligations of others, may be availed of as a
prerequisite for the enforcement of the doctrine of restitution.

• Liability Without Fault or Negligence

o Even when an act or event causing damage to another’s property was not
due to the fault or negligence of the defendant, the latter shall be liable for
indemnity if through the act or event, he was benefited. (Art. 23, NCC)

4. Acts Contrary to Law

• Concept
o Every person who, contrary to law, willfully or negligently causes damage to
another, shall indemnify the latter for the same.

• Scope
o This article is broad enough to cover all legal (not moral) wrongs done in
violation of law, whether willfully or negligently.

• General Sanctions for Violation of Other Laws.

o The rule in Article 20 compliments the principle of abuse of rights
enumerated in Article 19. It “pervades the entire legal system, and renders
it impossible that a person who suffers damage because another has
violated some legal provisions, should find himself without relief.
o It furnishes the general sanction for violations of other laws which do not
specifically provide any sanction, penalty or liability for such violation.

• Conduct May be Both a Crime and a Quasi-Delict

o Any person who willfully or negligently causes damage to another in his
person, his property, or in any other right shall be obliged to indemnify the
latter. A felony may be committed by means of deceit (when performed with
deliberate intent) or by means of fault or negligence. (Art. 3, Revised Penal
Code.) If the fault or negligence does not constitute a penal offense, the
actor is liable only for quasi-delict under Article 2176.
o In either case, it is essential that the act is voluntary for the obligation to
indemnify to arise

5. Acts Contrary to Morals (Contra Bonus Mores)

• Concept
o Any person who willfully causes loss or injury to another in a manner that is
contrary to morals, good customs, or public policy shall compensate the
latter for the damage. (Art. 21, NCC)
o It fills countless gaps in the statutes, which leave so many victims of moral
wrongs helpless, even though they suffered material and moral damages.
(Tolentino, 1987)

• Elements of an Action Under Article 21

o There is an act which is legal;
o Such act is contrary to morals, good customs, public order or policy; and
o It is done with intent to injure.

• Civil Liability for Moral Negligence

 o There is no civil liability for moral negligence. A person is required to act
with prudence towards others, but not with charity; the law imposes
diligence and not altruism. Hence, the failure to make sacrifices or egoism
does not constitute a source of liability. (Tolentino, 1987)
▪ Illustration: A person who fails to render assistance to a drowning
person or to the victim of an accident, cannot be held liable for
damages.
o While a person can be absolved from criminal liability because his negligence
was not proven beyond reasonable doubt, he can still be held civilly liable if
his negligence was established by preponderance of evidence. The failure of
the evidence to prove negligence with moral certainty does not negate (and
is in fact compatible with) a ruling that there was preponderant evidence of
such negligence. And that is sufficient to hold him civilly liable.

• Breach of Promise to Marry

o GR: A breach of promise to marry per se is not an actionable wrong. There
is no provision in the NCC authorizing an action for breach of promise to
marry.
o XPN: When the act constitutes one where damages pursuant to Art. 21 of
the NCC may be recovered and is not a mere breach of promise to marry,
such as:
▪ Where the woman is a victim of moral seduction.
▪ Where one formally sets a wedding and go through and spend for all
the preparations and publicity, only to walk out of it when the
matrimony was about to be solemnized.
▪ Where the woman is a victim of abduction and rape, and thereafter
the accused promised to marry her to avoid criminal liability but later
reneged on his promise.

B. Classification of Torts
1. Intentional

• Concept
o It is when the actor desires to cause the consequences of his act.

2. Negligent

• Concept
o They are voluntary acts or omissions that result in the injury of others
without intending to cause the same, where the actor fails to exercise due
care.

3. Strict Liability

• Concept
o It is when a person is made liable, independent of fault or negligence, upon
submission of proof of certain facts. Here, fault or negligence are immaterial.

C. The Tortfeasor

• Definition
o It refers to the person who committed the act or omission causing damage
to another.

1. Joint
• Concept
o It may be stated as a general rule that joint tortfeasors are all the persons
who command, instigate, promote, encourage, advise, countenance,
cooperate in, aid or abet the commission of a tort, or who approve of it after
it is done, if done for their benefit. They are each liable as principals, to the
same extent and in the same manner as if they had performed the wrongful
act themselves.

• Liability
o Joint tortfeasors are jointly and severally liable for the tort which they
commit. The persons injured may sue all of them or any number less than
all. Each is liable for the whole damages caused by all, and all together are
jointly liable for the whole damage. It is no defense for one sued alone, that
the others who participated in the wrongful act are not joined with him as
defendants; nor is it any excuse for him that his participation in the tort was
insignificant as compared to that of the others.
o Joint tortfeasors are not liable pro rata. The damages cannot be apportioned
among them, except among themselves. They cannot insist upon an
apportionment, for the purpose of each paying an aliquot part. They are
jointly and severally liable for the whole amount.

2. Direct

• Persons Who are Responsible for the Tortfeasor

o Parents over their minor children, guardians over their ward, employers over
their employees, the State over its special agent, teachers or heads of
establishments of arts and trades over their pupils and students or
apprentices are responsible for the tortfeasor.
▪ These persons are liable for the negligence of those for whom they
are responsible because of the relationship between them. The liability
contemplated is primary and direct and not subsidiary, so that the
aggrieved party may directly sue the person responsible without need
of a court decision convicting the one acting and proof of such
person’s insolvency.
• This, however, is subject to the defense of due diligence of a
good father of the family.

D. Culpa Criminal vs. Quasi-Delict vs. Culpa Contractual

1. Nature of Liability
 E. Proximate Cause
1. Concept

• Proximate cause is the cause which in nature and continuous sequence,

unbroken by any efficient intervening cause produces the injury and without which
the result would not have occurred.

2. Doctrine of Last Clear Chance

• Concept
o This is also called as the “Humanitarian Negligence Doctrine.”
o Where both parties are negligent but the negligent act of one succeeds that
of the other by an appreciable interval of time, the one who has the last
reasonable opportunity to avoid the impending harm and fails to do so, is
chargeable with the consequences, without reference to the prior negligence
of the other party.
o The doctrine of last clear chance is a theory adopted to mitigate the
harshness of the contributory negligence of the plaintiff.

• Requisites
o Plaintiff is placed in danger by his own negligent acts, and he is unable to
get out from such situation by any means;
o Defendant knows that the plaintiff is in danger and knows or should have
known that the plaintiff was unable to extricate himself therefrom; and
o Defendant had the last clear chance or opportunity to avoid the accident
through the exercise of ordinary care but failed to do so, and the accident
occurred as a proximate result of such failure.

• Instances when Doctrine is NOT Applicable

o When the injury or accident cannot be avoided by the application of all
means at hand after the peril has been discovered;
o If the defendant’s negligence is a concurrent cause and which was still in
operation up to the time the injury was inflicted;
o Where the plaintiff, a passenger, filed an action against a carrier based on
contract;
o If the actor, though negligent, was not aware of the danger or risk brought
about by the prior fraud or negligent act;
o In case of a collapse of a building or structure;
o Where both parties are negligent; or
o In case of collision, it applies in a suit between the owners and drivers of
colliding vehicles and not where a passenger demands responsibility from
the carrier to enforce its contractual obligations.
▪ NOTE: There is a different rule in case of collision of vessels. The
doctrine of last clear chance in tort is not applicable to collisions of
vessels as “if both vessels may be blamed for the collision, each one
shall be liable for his own damages, and both shall be jointly
responsible for the losses and damages suffered by their cargoes.”

Q: Mr. and Mrs. R own a burned-out building, the firewall of which collapsed and
destroyed the shop occupied by the family of Mr. and Mrs. S, which resulted in
injuries to said couple and the death of their daughter. Mr. and Mrs. S had been
warned by Mr. & Mrs. R to vacate the shop in view of its proximity to the
weakened wall but the former failed to do so. Mr. & Mrs. S filed against Mr, and
Mrs. R an action for recovery of damages the former suffered as a result of the
collapse of the firewall. In their defense, Mr. and Mrs. R relied on the doctrine of
last clear chance, alleging that Mr. and Mrs. S had the last clear chance of
avoiding the accident, had they heeded the former’s warning to vacate the shop,
and therefore Mr. and Mrs. R’s prior negligence should be disregarded. If you
were the judge, how would you decide the case? (1990 BAR)

A: I would decide in favor of Mr. & Mrs. S. The proprietor of a building or structure is
responsible for the damages resulting from its total or partial collapse if it should be due
to the lack of necessary repairs. (Art. 2190, NCC)

With respect to the defense of last clear chance, the same is not tenable as enunciated by
the Supreme Court in De Roy v. CA, where it held that the doctrine of last clear chance is
not applicable in instances covered by Art 2190 of the Civil Code.

Further, in Phoenix Construction, Inc. v. IAC, the Supreme Court held that the role of the
common law "last clear chance" doctrine in relation to Art. 2179 of the Civil Code is
merely to mitigate damages within the context of contributory negligence.

F. Vicarious Liability

• Concept of Vicarious Liability

o Article 2180 of the Civil Code provides that a person is not only liable for
one’s own quasidelictual acts, but also for those persons for whom one is
responsible for. This liability is popularly known as vicarious or imputed
liability.” The principle ofvicarious liability is based on the civil law principle
ofpaterfamilias for failure to exercise due care and vigilance over the acts of
one’s subordinates to prevent damage to another.

• Vicarious Liability of Persons Exercising Parental Authority

o If Child is Minor
▪ Under the Family Code, parents and other persons exercising
parental authority shall be civilly liable for the injuries and
damages caused by the acts or omissions of their
unemancipated children living in their company and under
their parental authority subject to the appropriate defenses
provided by law.
• However, if the quasi-delict is committed by the child while he
is under the actual supervision, instruction, or custody of those
persons exercising special parental authority, it is the latter
who shall be principally and solidarily liable for damages caused
by the acts or omissions of the unemancipated minor. The
parents, judicial guardians, or the persons exercising substitute
parental authority over said minor shall be subsidiarily liable.
o However, they will not be liable if they can prove that
they exercised the proper diligence required under the
particular circumstances to prevent damage.
o If At Least 18 But Below 21
▪ The applicable provisions are the second and third paragraphs of
Article 2180. According to Article 236 of the Family Code, the
vicarious liability of those persons exercising parental authority
(parents and guardians) shall continue to be applicable provided the
following conditions are satisfied:
• The age of the child is at least 18 but below 21; and
• The child is living in their company.
o Comparison Between Family Code and Civil Code Provisions
▪ Under Article 2180 of the Civil Code, the responsibility of the father
and mother is not simultaneous, but alternate. The father is primarily
responsible while the mother answers only “in case of his death or
 incapacity.
▪ In the Family Code, specifically Article 221, the responsibilities of the
father and mother are now simultaneous and not alternate.

• Vicarious Liability of Employers

o Concept
▪ When the employee causes damage due to his own negligence while
performing his own duties, there arises the juris tantum presumption
that the employer is negligent, rebuttable only by proof of observance
of the diligence of a good father of a family.
▪ The “diligence of a good father” referred to in the last paragraph of
Article 2180 means diligence in the selection and supervision of
employees.
o Requisites for Employer’s Presumed Liability
▪ Proof of Two Requisites
• In order for the presumed liability of the employer to attach,
Article 2180 requires proof of two things:
o Existence of an employer-employee relationship; and
o That the employee acted within the scope of his or her
assigned tasks.
▪ Employer-Employee Relationship
• It is necessary to establish the employer-employee relationship,
for the same cannot be assumed. It is incumbent upon the
plaintiff to prove the relationship by preponderant evidence.
• In Belen v. Belen, the Court ruled that it was enough for the
defendant to deny an alleged employment relationship. The
defendant is under no obligation to prove the negative
averment.
o In Filcar Transport Services v. Espinas, the Court held
that the registered owner is deemed the employer of the
negligent driver, and is thus vicariously liable. Citing
Equitable Leasing Corporation v. Suyom, the Court ruled
that insofar as third persons are concerned, the
registered owner of the motor vehicle is the employer of
the negligent driver, and the actual employer is
considered merely as an agent of such owner. Thus,
whether there is an employer-employee relationship
between the registered owner and the driver is irrelevant
in determining the liability of the registered owner who
the law holds primarily and directly responsible for any
accident, injury, or death caused by the operation of the
vehicle in the streets and highways.
o In Mamaril v. Boy Scouts of the Philippines, the Court
found that there was no employer-employee relationship
between Boy Scouts of the Philippines (BSP) and the
security guards assigned to it by an agency pursuant to a
Guard Service Contract. Liability for illegal or harmful
acts committed by the security guards attaches to the
employer agency, and not to the clients or customers of
such agency.
o In the absence of an employer-employee relationship
establishing vicarious liability, the driver’s negligence
should not be attributed to a fellow employee who only
happens to be an occupant of the vehicle.
▪ Performing Assigned Task
• The burden of proving that the employee was acting within the
 scope of his assigned task is incumbent upon the plaintiff and
not on the employer.
▪ Registered-Owner Rule
• Under the registered owner rule, the registered owner of a
motor vehicle is liable for death or injuries caused by the
operation of the vehicle.
• The principle upon which this doctrine is based is that in dealing
with registered motor vehicles, the public has the right to
assume or presume that the registered owner is the actual
owner thereof, for it would be difficult for the public to enforce
the actions that they may have for injuries caused to them by
the vehicles being negligently operated if the public should be
required to prove who the actual owner is.
▪ Where Employer is Also Registered Owner of Vehicle
• In a situation where the employer is also the registered owner
of the vehicle which caused the injury, the decisions of the
Court in the past are conflicting. There are decisions which
relied on the requisites of Article 2180, but there are also
decisions which applied the registered owner rule.
o Employer’s Defense
▪ To avoid liability for a quasi-delict committed by his employee, an
employer must overcome the presumption by presenting convincing
proof that he exercised the care and diligence of a good father of a
family in the selection and supervision of his employee.
o Nature of Employer’s Liability
▪ If Under Article 2180
• The liability of the employer for the negligent conduct of the
subordinate is direct and primary, subject to the defense of due
diligence in the selection and supervision of the employee.
▪ Article 2180 Inapplicable in Delict
• If the cause of action against the employee is based on delict, it
is not correct to hold the employer jointly and severally liable
with the employee, based on quasi-delict under Articles 2176
and 2180 of the Civil Code.
▪ Compared with Employer’s Liability in Delict
• In delict, the liability of the employer is merely subsidiary, not
solidary. Before the employers’ subsidiary liability is enforced,
adequate evidence must exist establishing that:
o They are indeed the employers of the convicted
employees;
o They are engaged in some kind of industry;
o The crime was committed by the employees in the
discharge of their duties; and
o The execution against the latter has not been satisfied
due to insolvency.

• Vicarious Liability of Schools, Administrators, and Teachers

o When Student is a Minor
▪ If the student who commits the quasi-delict is still a minor, the
provisions of the FamilyCode will apply. Under the Family Code, when
a minor student commits a quasi-delict while he or she is under the
actual supervision, instruction, or custody of those persons granted
special parental authority, it is the latter who shall be principally and
solidarity liable for damages caused by the acts or omissions of the
unemancipated minor; while the parents, guardians, or the persons
exercising parental authority over said minor shall be subsidiarily
 liable.
• They shall not be liable, however, if they are able to prove that
they exercised the proper diligence required under the
particular circumstances to prevent damage.
▪ Under the Family Code, the following shall have parental authority
over the minor child under their supervision, instruction, or custody:
• The school;
• Its administrators;
• Its teachers; or
• The individual, entity, or institution engaged in childcare.
o When Student is No Longer a Minor
▪ Applicable law
• The applicable law is Article 2180, paragraph 7 of the Civil
Code.
• Teachers in general shall be liable for the acts of their students
except where the school is technical in nature, in which case it
is the head thereof who shall be answerable.
▪ When Student is Considered Under Custody
• The student is in the custody of the school authorities as long
as he is under the control and influence of the school and within
its premises, whether the semester has not yet begun or has
already ended.
▪ When Assailant is Not Its Student
• Article 2180 does not apply where the injuries suffered by a
student at the school was caused by outsiders. In this case, the
recovery of damages is based on the relationship between the
student-victim and the school, with their relationship being
based on the enrollment contract.
▪ Enrollment Contract Rule
• Under the enrollment contract, institutions of learning have the
“built-in” obligation of providing a conducive atmosphere for
learning, an atmosphere where there are no constant threats to
life and limb, and one where peace and order are maintained.

• Vicarious Liability of the State

o Two Aspects
▪ The liability of the State has two aspects, namely:
• Its public or governmental aspect where it is liable for the
tortious acts of special agents only; and
o The State assumes limited liability for the damage
caused by the tortious acts or conduct of its special
agent.
o Under the Civil Code, the State is responsible vicariously
when it acts through a special agent; but not when the
damage has been caused by the official to whom the task
done properly pertains
• Its private or business aspect (as when it engages in private
enterprises) where it becomes liable as an ordinary employer.
o Special Agent
▪ If Public Official
• The State’s agent, if a public official, must not only be specially
commissioned to do a particular task but such task must be
foreign to said official’s usual governmental functions.
▪ If Private Person
• If the State’s agent is not a public official, and is commissioned
to perform non-governmental functions, then the State
 assumes the role of an ordinary employer and will be held liable
as such for its agent’s ton.
o Test of Liability
▪ If Discharging Governmental Functions
• Rule
o If the injury is caused in the course of the performance
of a governmental function or duty, the principle of non-
suability of the State applies.
o However, for local government units (LGUs), the Local
Government Code of 1991 provides that LGUs and their
officials are not exempt from liability for the death or
injury to persons or damage to property.
• Exception
o The State is not liable for the damage caused by public
officials who are in the performance of their usual
governmental functions. In the latter case, the said
public official may be held liable for the commission of
quasi-delict under Article 2176.
▪ If Discharging Private or Proprietary Functions
• If the State or the LGUs engages in private or proprietary
functions, it becomes liable as an ordinary employer under
Article 2180(5) of the Civil Code.

G. Res Ipsa Loquitur (Doctrine of Common Knowledge)

• Concept
o Literally, res ipsa loquitur means "the thing speaks for itself." It is the rule
that the fact of the occurrence of an injury, taken with the surrounding
circumstances, may permit an inference or raise a presumption of
negligence, or make out a plaintiff’s prima facie case, and present a question
of fact for defendant to meet with an explanation.
o However, res ipsa loquitur is not a rule of substantive law and, as such, does
not create nor constitute an independent or separate ground of liability.
Instead, it is considered as merely evidentiary or in the nature of a
procedural rule.

• Requisites
o The accident is of such character as to warrant an inference that it would not
have happened except for the defendant’s negligence;
o The accident must have been caused by an agency or instrumentality within
the exclusive management or control of the person charged with the
negligence complained of; and
o The accident must not have been due to any voluntary action or contribution
on the part of the person injured.
▪ Thus, it is not applicable when an unexplained accident may be
attributable to one of several causes, for some of which the defendant
could not be responsible.

• When Doctrine is Applicable

o All that the plaintiff must prove is the accident itself; no other proof of
negligence is required beyond the accident itself. It relates to the fact of an
injury that sets out an inference to the cause thereof or establishes the
plaintiff’s prima facie case. The doctrine rests on inference and not on
presumption.
• Uses and Applications of the Doctrine
o In medical negligence cases;
o In cases where the exercise of judicial discretion is abused; and
o In practical instances.

• Some Cases Where Doctrine Was Held Inapplicable

o Where there is direct proof of absence or presence of negligence;
o Where other causes, including the conduct of the plaintiff and third persons,
are not sufficiently eliminated by the evidence; and
o When an unexplained accident may be attributable to one of several causes,
for some of which the defendant could not be held responsible.

H. Damnum Absque Injuria

• Concept
o Damage without injury – The proper exercise of a lawful right cannot
constitute a legal wrong for which an action will lie, although the act may
result in damage to another, for no legal right has been invaded. One may
use any lawful means to accomplish a lawful purpose and though the means
adopted may cause damage to another, no cause of action arises in the
latter’s favor. Any injury or damage occasioned thereby is damnum absque
injuria. The courts can give no redress for hardship to an individual resulting
from action reasonably calculated to achieve a lawful end by lawful means.
▪ When the conjunction of damage and wrong is wanting there is no
damnum absque injuria.
▪ The principle does not apply when the exercise of this right is
suspended or extinguished pursuant to a court order.

• Liability without Fault different from Damnum Absque

o Injuria liability without fault includes:
▪ Strict Liability
• There is strict liability if one is made independent of fault,
negligence or intent after establishing certain facts specified by
law. It includes liability for conversion and for injuries caused
by animals, ultra-hazardous activities and nuisance.
▪ Product Liability Law
• It is the law which governs the liability of manufacturers and
sellers for damages resulting from defective products.
o The actual tortfeasor is not exempted from liability. The minor, ward,
employee, special agent, pupil, students, and apprentices who actually
committed the delictual acts are not exempted by the law from personal
responsibility.

I. Defenses

• Defenses in Negligence
o Plaintiff’s own negligence was the immediate and proximate cause of his
injury
o Fortuitous event is the proximate and only cause
o Assumption of risk
o Barred by prescription (4 years from the time of the commission)
o Complete involuntariness

J. Negligence

• Concept
 o Negligence is the omission of that degree of diligence which is required by
the nature of the obligation and corresponding to the circumstances of the
persons, time and place.
o An actionable negligence may be culpa contractual, culpa aquiliana, or
criminal negligence. Thus, an action for damages for negligent act of the
defendant may be based on contract, quasi-delict, or delict. The bases for
liability are separate and distinct from each other even if only one act is
involved.

• When is Negligence Excused

o GR: Negligence is excused when events that transpired were unforeseen or,
which though foreseen, were inevitable. (Art. 1174, NCC)
o XPN:
▪ In cases specified by law;
▪ When declared by stipulation; or
▪ When the nature of obligation requires the assumption of risk.

• Quantum of Proof on Negligence

o The quantum of proof is preponderance of evidence.

• Burden of Proof
o GR: Plaintiff alleging damage due to negligent acts in his complaint has the
burden of proving such negligence.
o XPN: When the rules or the law provide for cases when negligence is
presumed.

• Doctrine of Comparative Negligence

o The negligence of both the plaintiff and the defendant are compared for the
purpose of reaching an equitable apportionment of their respective liabilities
for the damages caused and suffered by the plaintiff. (Pineda, 2009)
o The relative degree of negligence of the parties is considered in determining
whether, and to what degree, either should be responsible for his negligence
(apportionment of damages).
▪ NOTE: Under the modified form, the plaintiff can recover only if his
negligence is less than or equals that of the defendant. Expressed in
terms of percentages, a plaintiff who is charged with 80% of the total
negligence can recover only 20% of his damages.

1. Standard of Care

• Concept of a Good Father of the Family

o The general standard of test is Bonus Pater Familias or that of a good father
of a family. If the law or contract does not state the diligence which is to be
observed in the performance, that which is expected of a good father of a
family shall be required.

• Concept of Good Faith

o Good faith refers to the state of the mind which is manifested by the acts of
the individual concerned. It consists of the intention to abstain from taking
an unconscionable and unscrupulous advantage of another.

• Application of Standard of Diligence to Children

o GR: The action of a child will not necessarily be judged according to the
standard of an adult.
o XPN: If the minor is mature enough to understand and appreciate the nature
and consequences of his actions. He shall be considered negligent.
• Diligence Before the Fact
o The conduct that should be examined in negligence cases is prior conduct or
conduct prior to the injury that resulted or, in proper cases, the aggravation
thereof.

2. Presumptions of Negligence

• GR: A person is generally presumed to have taken ordinary care of his concerns.
• There are, however, exceptions when negligence is presumed:
o Art. 2184, NCC
▪ It is disputably presumed that a driver was negligent if he had been
found guilty of reckless driving or violating traffic regulations at least
twice within the next preceding two months.
o Art. 2185, NCC
▪ Unless there is proof to the contrary, it is presumed that a person
driving a motor vehicle has been negligent if at the time of the
mishap, he was violating any traffic regulation.
▪ NOTE: Proof of traffic violation is required.
o Art. 2188, NCC
▪ There is prima facie presumption of negligence on the part of the
defendant if the death or injury results from his possession of
dangerous weapons or substances, such as firearms and poison,
except when possession or use thereof is indispensable in his
occupation or business.
▪ NOTE: Proof of possession of dangerous weapons or substances is
required.
o Captain of the Ship Doctrine
▪ A surgeon is likened to a captain of a ship, such that it is his duty to
control everything going on in the operating room. The surgeon in
charge of an operation is liable for the negligence of his assistants
during the time when those assistants are under the surgeon’s
control.
o Art. 1756, NCC
▪ In case of death or injuries of passengers, common carriers are
presumed to have been at fault or acted negligently, unless they
prove that they observed extraordinary diligence prescribed.

K. Damages

• Concept
o In legal contemplation, the term “damages” is the sum of money which the
law awards or imposes as a pecuniary compensation, a recompense or
satisfaction for an injury done or wrong sustained as a consequence either of
a breach of a contractual obligation or a tortious act.
o A complaint for damages is personal in nature (personal action).

• Double Recovery
o Responsibility for fault or negligence under quasidelict is entirely separate
and distinct from the civil liability arising from negligence under the Penal
Code. But the plaintiff cannot recover damages twice for the same act or
omission of the defendant.

1. Kinds of Damages
a) Actual and Compensatory Damages
• Concept
o Actual damages are such compensation or damages for an injury that will
put the injured party in the position in which he had been before he was
injured. They pertain to such injuries or losses that are actually sustained
and susceptible of measurement.

• Kinds
o Damnum Emergens/Dano Emergente (actual damages)
▪ All the natural and probable consequence of the act or omission
complained of, classified as one for the loss of what a person already
possesses.
o Lucrum Cessans/Lucro Cesante (compensatory damages)
▪ For failure to receive, as benefit, that which would have pertained to
him (expected profits).

• Abrazaldo Doctrine
o Temperate damages may be awarded where the amount of the actual
damages that the heirs are entitled to cannot be shown. Such temperate
damages, considering current jurisprudence fixing the indemnity for death at
P50,000, should be one half thereof, which is P25,000.

b) Moral Damages

• Concept
o It includes physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation,
and similar injury. (Art. 2217, NCC)
o Although incapable of pecuniary computation, moral damages, nevertheless,
must somehow be proportional to and in approximation of the suffering
inflicted. Such damages, to be recoverable, must be the proximate result of
a wrongful act or omission, the factual basis for which is satisfactorily
established by the aggrieved party.

c) Nominal Damages

• Concept
o Nominal damages are adjudged 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 of Nominal Damages

o Plaintiff has a right;
o Such right is violated; and
o The purpose of awarding damages is to vindicate or recognize the right
violated.

d) Temperate or Moderate Damages

• Concept
o Temperate damages are those damages, which are more than nominal but
less than compensatory, and may be recovered when the court finds that
some pecuniary loss has been suffered but its amount cannot be proved with
certainty.

• Elements of Temperate Damages

 o Some pecuniary loss;
o Loss is incapable of pecuniary estimation; and
o The damages awarded are reasonable.

e) Liquidated Damages

• Concept
o Liquidated damages are fixed damages previously agreed by the parties to
the contract and payable to the innocent party in case of breach by the
other.

f) Exemplary or Corrective Damages

• Concept
o Exemplary damages or corrective damages are imposed, by way of example
or correction for the public good, in addition to the moral, temperate,
liquidated or compensatory damages.

• Cases Where Exemplary Damages May Be Imposed As Accessory Damages

o GR: Exemplary damages cannot be recovered as a matter of right.
o XPN: They can be imposed in the following cases:
▪ Criminal offense – when the crime was committed with one or more
aggravating circumstances;
▪ Quasi-delicts – when the defendant acted with gross negligence; and
▪ Contracts and Quasi-contracts – when defendant acted in wanton,
fraudulent, reckless, oppressive, or malevolent manner.

• Requirements for an Award of Exemplary Damages

o The claimant’s right to exemplary damages has been established;
o Their determination depends upon the amount of compensatory damages
that may be awarded to the claimant; and
o The act must be accompanied by bad faith or done in a wanton, fraudulent,
oppressive or malevolent manner.

2. When Damages May be Recovered

(check requisites)

L. Damages in Case of Death

In cases of murder, the award of moral damages is mandatory without need of

allegation and proof other than the death of the victim.

M. Duty of Injured Party

The injured party is obligated to undertake measures that will alleviate and not aggravate
his condition after the infliction of the injury or nuisance.

The party suffering loss or injury must exercise the diligence of a good father of the
family to minimize the damages resulting from the act or omission. (Art. 2203, NCC)