UP WOMEN IN LAW

For there must be courage in wisdom, grace in strength.

PANIC BOOKLET and QUIZZER

Civil Law

UP WINLAW Executive Board (2007-2008)

President: Angel Manalaysay
VP-Academics: May Caniba
VP-Externals: Suz Ojeda
VP-Finance: Jan Lee
VP-Internals: Miles Malaya
VP-Publicity: Cha Valdez
4th year Rep: Len Abellar
3rd Year Rep: Weng Salonga
2nd Year Rep: Arianne Reyes
Bar Ops Head: Karra dela Paz
Updated by: Nash Lopez

TABLE OF CONTENTS
Effect and Application of Laws

PERSONS & FAMILY RELATIONS

Persons
Absence
Civil Register
Use of Surnames
Family Relations
Marriage
Void Marriage
Voidable Marriage
Legal Separation
Property Relations Between Spouses
Absolute Community
Conjugal Partnership of Gains
Separation of Property of the Spouses
The Family
Paternity and Filiation
Illegitimate Children
Legitimated Children
Adoption
Support
Parental Authority
OBLIGATIONS & CONTRACTS
Obligations
Kinds of Obligations
Extinguishment of Obligations
Contracts
Essential Elements
Defective Contracts
Rescissible Contracts
Voidable Contracts
Unenforceable Contracts
Void Contracts
PROPERTY
Classification of Property
Ownership
Ownership in General
Right of Accession
Quieting of Title
Ruinous Buildings and Trees in Danger of Falling
Co-Ownership
Page 2 of 230

8
9
11
12
14
14

25

34

49
51
56
62
63
65

68
69
69
73
78
79
79

Possession
Usufruct
Different Modes of Acquiring Ownership
Occupation
Prescription
Prescription of Ownership and Other Real Rights
Prescription of Actions
Donation
TORTS & DAMAGES
Quasi-Delict
Damages
Actual or Compensatory Damages
Moral Damages
Nominal Damages
Temperate or Moderate Damages
Liquidated Damages
Exemplary or Corrective Damages
SALES
Definition; Characteristics
Essential Requisites
Form of Sales
Formation, Perfection and Consummation of Sales
Double Sales
Sale by Non-Owner or One Having Voidable Title
Loss, Deterioration, Fruits and Other Benefits
Remedies for Breach of Contract of Sale
Remedies of the Seller
Remedies of the Buyer
Sale of Movables by Installment (Recto Law)
Sale of Immovables (In General)
Sale of Immovables (By Installment)
Conditions and Warranties
Extinguishment
Assignment
Bulk Sales Law
Anti-Dummy Law

81
85
88
88
90

94

100
112
112
115
117
117
117
117

118
120
122
122
126
127
128
129

130
131
131
133
135
139
139
140

CREDIT TRANSACTIONS

For there must be courage in wisdom, grace in strength.

Page 230 of 230

General Provisions
Commodatum
Mutuum
Deposit
Guaranty
Pledge

140
142
143
144
148
152
Page 3 of 230

Real Mortgage
Antichresis
Chattel Mortgage
Concurrence and Preference of Credits

154
155
156
158

AGENCY
Nature, Form and Kinds of Agency
Obligations of the Agent to the Principal
Obligations of the Principal to the Agent
Extinguishment of Agency

161
168
169
174

PARTNERSHIP
General Provisions
Obligations of the Partners
Obligations Among Themselves
Property Rights
Obligations to 3rd Persons
Dissolution and Winding Up
Limited Partnership

176
180

194
197
TRUSTS

Definition; Characteristics
Express Trusts
Implied Trusts

198
201
203

SUCCESSION
Concept
Wills
Legitimes
Disinheritance
Legal Succession
Summary of Intestate Shares
Validity and Effect of Legacy/Device

To claim property escheated to the State

5 years from the time

disqualified
person
took possession
30 days from issuance
of
order
of
distribution
1 month form written
notice of sale

Action for declaration of incapacity & for recovery of

the inheritance, devise or legacy

10 years

To enforce warranty of title/quality of property

adjudicated to co-heir from the time right of action
accrues

5 years from partition

To enforce warranty of solvency of debtor of the

estate at the time partition is made

187
191

ESTOPPEL
Concept of Estoppel
Concept of Laches

5 years from delivery

to the State
1 month

207
208
213
217
219
227

To report knowledge of violent death of decedent

lest he be considered unworthy

Must signify acceptance/repudiation

deemed accepted

otherwise,

Right to repurchase hereditary rights sold to a

stranger by a co-heir

4 years form partition

Action for rescission of partition on account of lesion

Bar Question (2004). In his lifetime, a Pakistani citizen, ADIL, married three
times under Pakistani law. When he died an old widower, he left behind six
children, two sisters, three homes, and an estate worth at least 30 million pesos
in the Philippines. He was born in Lahore but last resided in Cebu City, where he
had a mansion and where two of his youngest children now live and work. Two
of his oldest children are farmers in Sulu, while the two middle-aged children are
employees in Zamboanga City. Finding that the deceased left no will, the
youngest son wanted to file intestate proceedings before the Regional Trial Court
of Cebu City. The other siblings objected, arguing that it should be in Jolo
before a Shari-a court since his lands are in Sulu. But Adils sisters in Pakistan
want the proceedings held in Lahore before a Pakistani court. Which court has
jurisdiction now and is the proper venue for the intestate proceedings? The law
of which country shall govern succession to his estate?

Answer: In so far as the properties of the decedent located in the Philippines

are concerned, they are governed by Philippine law (Article 18, Civil Code).
Under Philippine law, the proper venue for the settlement of the estate is the
domicile of the decedent at the time of his death. Since the decedent last
resided in Cebu City, that is the proper venue for the intestate settlement of his
estate. However, the successional rights to the estate of ADIL are governed by
Pakistani law, his national law, under Article 16 of the Civil Code.
Credits

UP WINLAW Panic Booklet 2006; UP Law Center Bar Q&A (1997-2006)

Page 4 of 230

Page 229 of 230

Legacy/Devise to remove
an encumbrance over a
thing belonging to
testator (Article 932 par2)
Legacy/Devise of a thing
pledged or mortgaged

L/D L/D
entitled to be
reimbursed
ii. If thing was acquired gratuitously
by L/D nothing is due
iii. If thing was owned by testator at
time will was made and L/D
acquired the thing from him
thereafter law is silent
*Balane L/D deemed revoked
*Tolentino no intention to revoke (BUT
if the testator has not alienated the thing
directly to the L/D, but to a 3rd person
and the former just acquired it from the
latter, there is an intention to revoke)
Valid, if the encumbrance can be removed for a
consideration

The encumbrance must be removed by paying

the debt unless the testator intended otherwise

(Article 934)
8. CONCEPT OF COLLATION:
a) To collate is to bring back or to return to the hereditary mass,
in fact or by fiction,
property which came from the estate of the decedent, during his
lifetime,
but which the law considers as an advance from the inheritance.
b) It is the act by virtue of which, the persons who concur in the
inheritance bring back to the common hereditary mass
the property which they have received from him,
so that a division may be effected according to law and the will of the
testator.
9. CONCEPT OF PARTITION:
It is the separation, division and assignment
of a thing held in common among those to whom it may belong
the thing itself may be divided, or its value.
10. IMPORTANT PERIODS TO REMEMBER:
1 month or less before Testator, if publicly known to be insane, burden of
making a will
proof is on the one claiming validity of the will

20 years

EFFECT AND APPLICATION OF LAWS

1. When laws take effect: 15 days after completion of publication in OG or
newspaper of general circulation. Exception: The law can provide its own date
of effectivity, i.e., it can provide for a period less than or greater than 15 days
after publication before the law takes effect.
a) Publication is MANDATORY even if the law provides its own date of
effectivity
b) Internal regulations of admin agencies binding only the agency need
not be published.
2. Ignorance of the law excuses no one from compliance therewith
(Ignorantia juris neminem excusat)
3. Retroactivity
a) General Rule: Rules are not retroactive, except when the law itself
expressly provides the contrary
b) Exception to the exception (i.e. retroactivity applies)
i. Remedial statutes
ii. Curative statutes
iii. Laws interpreting other laws
iv. Laws creating new rights
v. Penal laws when favorable to the accused who is not a
habitual delinquent
4. Acts violating mandatory or prohibitory laws are void
Exception: When law itself provides their validity
5. Requisites for a Valid Waiver:
a) person making the waiver must have the right he is waiving
b) capacity to make the waiver
c) clear and unequivocal manner
d) waiver is not contrary to law, public order, public policy, morals or good
customs and is not prejudicial to third person
6. Repeal of Laws
(a) Express repeal
(b) Implied repeal incompatible provisions between the two laws
Rule: Repeal of the repealing law revives the old law unless the contrary is
expressly provided in the last law.
7. Stare Decisis: Courts must follow the rule established in earlier decisions of
the Supreme Court.

Maximum period testator can prohibit alienation of

dispositions
Page 228 of 230

Page 5 of 230

8. Penal Laws: Those for public security & safety obligatory upon all who live
or sojourn in the Philippines.
9. Status Laws - Rules:
a) Laws relating to family rights and duties or to the status, condition
and legal capacity of persons are binding upon Filipino citizens even
though living abroad.

b)

Conflicts Rules
i.

ii.

iii.

Real property and personal property are governed by

the laws of the country where they are situated (Lex
situs)
Order of succession, amount of successional rights,
intrinsic validity of testamentary provisions are
governed by the national law of the decedent
Forms and solemnities of wills, contracts and other
public instruments- lex loci celebrationis

Bar Question (1997). How would you compare the Civil Law system in its
governance and trend with that of the Common Law system?

Answer: As regards governance Governance in Civil Law is codal, statutory

and written law. It is additionally derived from case law. Common law is
basically derived from case law.
As regards trend Civil law is now tending to rely more and more on
decisions of the courts explaining the laws. Common law is now codifying laws
more and more. So they are now merging towards similar systems.
Bar Question (1997). In 1977, Mario and Clara, both Filipino citizens, were
married in the Philippines. Three years later, they went to the US and
established their residence in San Francisco, California. In 1987, the couple
applied for, and was granted, US citizenship. In 1989, Mario, claiming to have
been abandoned by Clara, was able to secure a decree of divorce in Reno,
Nevada, USA.
In 1990, Mario returned to the Philippines and married Juana who well
Marios past life.
a. Is the marriage between Mario and Juana valid?
b. Would the renvoi doctrine have any relevance to the case?

Answer: a. Yes. In relation to Art. 15 of the Civil Code, Conflict of Laws

provides that the recognition of an absolute divorce granted in another state
rests on the citizenship of the parties at the time the divorce was granted.
(Paras, Phil. Conflict of Laws, p. 259). Applied in this case, the divorce decree
issued to Clara and Mario will be recognized as valid here considering that at the
time the foreign decree was granted, both Clara and Mario are citizens of the US,
a country which grants/allows absolute divorce. Since the marriage between

6.

Individuals, associations, and corporations not permitted by law to

inherit

Validity and Effect of Legacy/Devise

General Rule: Conveys only interest or part
Thing owned in part by owned by testator
Exception: if testator otherwise provides
testator (Article 929)
a. He may convey more than what he owns the state shld try to acquire the part or
interest owned by other parties. If other
parties are unwilling to alienate, the estate
should give the legatee/devisee the
monetary equivalent (analogy with Article
931)
b. He may convey less than what he owns
(Article 794)
General Rule:
Thing owned by another
a. If testator ordered acquisition of the thing
(Articles 930-931)
- the order should be complied with. If the
owner is unwilling to part with the thing,
the legatee/devisee should be given the
monetary equivalent
b. If testator erroneously believed that the
thing belonged to him - legacy/device is
void
Exception: if testator acquire the thing
onerously or gratuitously after making of
the disposition, disposition is validated
c. If testator knew that the thing did not

belong to him but did not order its

acquisition - code is silent but disposition
should be considered valid - there is an
implied order to acquire and doubts must
be resolved in favor of intestacy

Thing already owned to

the
legatee/devisee

a.

(Articles 932-933)

If
thing
already
belonged
to
legatee/devisee at time of execution of will
legacy/devise is void

b.

If thing was owned by another person at

time of making the will and thereafter it is
acquired by legatee/devisee

1.

If testator erroneously believed that he

owned the thing legacy /devise is void

2.

If testator was not in error i.

Page 6 of 230

If thing was acquired onerously by

Page 227 of 230

Surviving spouse

TOTAL

p.

SIBLINGS, NEPHEWS AND NIECES ALONE

Intestate Heir
Siblings, nephews,
nieces
TOTAL
q.

SHARE AS
LEGITIME

SHARE AS FREE
DISPOSAL

TOTAL INTESTATE
SHARE
1

SURVIVING SPOUSE, SIBLINGS, NEPHEWS AND NIECES

Intestate Heir
Surviving spouse

SHARE AS
LEGITIME

SHARE AS FREE
DISPOSAL

TOTAL INTESTATE
SHARE

Siblings, nephews,
nieces
TOTAL

5. DEFINITION OF ACCRETION
It is a right by virtue of which when two or more persons are called to the
same inheritance, devise or legacy the part assigned to the one who renounces
or cannot receive his share or who died before the testator is added or
incorporated to that of his co-heirs, co-devisees, or co-legatees.
7. WHO ARE INCAPABLE OF SUCCEEDING:
1. 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
2. Relatives of such priest or minister of the gospel within the 4th degree,
the church, order, chapter, community, organization, or institution to
which such priest or minister may belong
3. 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;
EXCEPT if the guardian is his ascendant, descendant, brother, sister, or
spouse
4. Attesting witness to execution of will, their spouses, parents, children or
any one claiming under such witness, spouse, parents or children
5. Physician, surgeon, nurse, health officer or druggist who took care of
the testator during his last illness
Page 226 of 230

Mario and Clara has been validly terminated. Mario and Juana can freely marry
each other.
b. No. The renvoi doctrine is relevant in cases where one country
applies the domiciliary theory and the other the nationality theory, and the issue
involved is which of the laws of the two countries should apply to determine the
order of succession, the amount of successional rights, or, the intrinsic validity of
testamentary provisions. Such issue is not involved in this case.
Bar Question (2002). Felipe is a Filipino citizen. When he went to Sydney for
vacation, he met a former business associate, who proposed to him a transaction
which took him to Moscow. Felipe brokered a contract between Sydney Coals
Corp. (Coals), an Australian firm, and Moscow Energy Corp. (Energy), a Russian
firm, for Coals to supply coal to Energy on a monthly basis for three years. Both
these firms were not doing, and still do not do, business in the Philippines. Felipe
shuttled between Sydney and Moscow to close the contract. He also executed in
Sydney a commission contract with Coals and in Moscow with Energy, under
which contracts he was guaranteed commissions by both firms based on
percentage of deliveries for the three-year period, payable in Sydney and in
Moscow, respectively, through deposits in accounts that he opened in the two
cities. Bothe firms paid Felipe his commission for four months, after which they
stopped paying him. Felipe learned from his contacts, who are residents of
Sydney and Moscow, that the two firms talked to each other and decided to cut
him off. He now files suit in Manila against both Coals and Energy for specific
performance.
A. Define or explain the principle of lex loci contractus.

Answer: Lex loci contractus may be understood in two senses, as follows:

(1) It is the law of the place where contracts, wills, and other public
instruments are executed and governs their forms and
solemnities, pursuant to the first paragraph, Article 17 of the New
Civil Code; or
(2) It is the proper law of the contract; i.e., the system of law intended
to govern the entire contract, including its essential requisites,
indicating the law of the place with which the contract has its
closest connection or where the main elements of the contract
converge. As illustrated by Zamalea v. CA (228 SCRA 23 (1993), it
is the law of the place where the airline ticket was issued, where
the passengers are nationals and residents of, and where the
defendant airline company maintained its office.
B. Define or explain the rule of forum non conveniens.

Answer: Forum non conveniens means that a court has discretionary authority
to decline jurisdiction over a cause of action when it is of the view that the action
may be justly and effectively adjudicated elsewhere.
Page 7 of 230

C. Should the Philippine court assume jurisdiction over the case? Explain.
k.

Answer: No, the Philippine courts cannot acquire jurisdiction over the case of
Felipe. Firstly, under the rule of forum non conveniens, the Philippine court is not
a convenient forum as all the incidents of the case occurred outside the
Philippines. Neither are both Coals and Energy doing business inside the
Philippines. Secondly, the contracts were not perfected in the Philippines. Under
the principle of lex loci contractus,the law of the place where the contract is
made shall apply. Lastly, the Philippine court has no power to determine the
facts surrounding the execution of said contract. And even if a proper decision
could be reached, such would have no binding effect on Coals and Energy as the
court was not able to acquire jurisdiction over the said corporations. (Manila
Hotel Corp. v. NLRC, 343 SCRA 1, 13-14 (2000))
PERSONS AND FAMILY RELATIONS
PERSONS
1. Kinds of Capacity
a) Juridical capacity fitness to be the subject of legal relations
b) Capacity to act power to do acts with legal effect
2. Restrictions on Capacity to act - do not exempt incapacitated persons from
certain obligations, e.g.
a) Minority
b) Insanity or imbecility
c) State of being deaf mute
d) Prodigality
e) Civil interdiction
3. Personality
a) Natural persons- determined by birth, extinguished by death
b) BUT conceived child shall be considered born for all purposes

favorable to it provided it be born later under the following

conditions:
i.

If it is alive at the time it is completely delivered from

the mothers womb

ii.

BUT if it had an inter-uterine life of at less than 7

months, if it lives for at least 24 hours after its

ILLEGITIMATE CHILDREN ALONE

Intestate Heir
Illegitimate children
alone
TOTAL
l.

SHARE AS
LEGITIME

SHARE AS FREE
DISPOSAL

TOTAL INTESTATE
SHARE
1

ILLEGITIMATE CHILDREN AND SURVIVING SPOUSE

SHARE AS
LEGITIME
1/3

SHARE AS FREE
DISPOSAL
1/6

TOTAL INTESTATE
SHARE

Surviving spouse

1/3

1/6

TOTAL

2/3

1/3

Intestate Heir
Illegitimate
children

m. SURVIVING SPOUSE
Intestate
Heir
Surviving
spouse
TOTAL
n.
Intestate Heir
Illegitimate
parents
TOTAL
o.

SHARE AS
LEGITIME
or 1/3

SHARE AS FREE
DISPOSAL
or 1/3

TOTAL INTESTATE
SHARE
1

or 1/3

or 1/3

ILLEGITIMATE PARENTS ALONE

SHARE AS
LEGITIME

SHARE AS FREE
DISPOSAL

TOTAL INTESTATE
SHARE
1

ILLEGITIMATE PARENTS AND SURVIVING SPOUSE

complete delivery from the maternal womb

Intestate Heir
4. Doubts as to Order of Death
Rule applies only to issue of succession (for other issues apply the presumptions
in the Rules of Court): As between 2 or more persons called to succeed each

Illegitimate
parents

SHARE AS
LEGITIME

SHARE AS FREE
DISPOSAL

other, if there is doubt as to which of them died first, whoever alleges the death
Page 8 of 230

Page 225 of 230

TOTAL INTESTATE
SHARE

g.
Intestate Heir
Legitimate
parents
TOTAL
h.
Intestate Heir
Legitimate
parents
Illegitimate
children
TOTAL
i.

LEGITIMATE PARENTS ALONE

SHARE AS
LEGITIME

SHARE AS FREE
DISPOSAL

TOTAL INTESTATE
SHARE
1

LEGITIMATE PARENTS AND ILLEGITIMATE CHILDREN

SHARE AS FREE
DISPOSAL

TOTAL INTESTATE
SHARE

Absence

Absence - special legal status of one who is not in his domicile, his whereabouts
being unknown, and it is uncertain whether he is dead or alive

LEGITIMATE PARENTS AND SURVIVING SPOUSE

SHARE AS FREE
DISPOSAL

TOTAL INTESTATE
SHARE

Surviving
spouse

TOTAL

Legitimate
parents

j.

SHARE AS FREE
DISPOSAL

Surviving spouse

1/8

1/8

Illegitimate
children

TOTAL

7/8

Legitimate
parents

LEGITIMATE PARENTS, SURVIVING SPOUSE AND

ILLEGITIMATE CHILDREN
SHARE AS
LEGITIME

Intestate Heir

5. Juridical Persons - A juridical person is an organic unit resulting from a group

of persons or mass or property to w/c the State grants or recognizes personality
and capacity to hold patrimonial rights independent of those of component
members.
a) The state and its political subdivisions
b) Other corporations, institutions and entities for public interest or
purpose, created by law
c) Corporations, partnerships and associations for private interest or
purpose

SHARE AS
LEGITIME

SHARE AS
LEGITIME

Intestate Heir

of 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.

TOTAL INTESTATE
SHARE

1. Kinds of Absence
a) Physical absence
b) Legal absence
c) Provisional Absence
i.
A person disappears from his domicile;
ii.
His whereabouts are unknown; and
a. He did not leave any agent; or
b. He left an agent but agent's power has expired
2. Stages of Absence:
(1) Temporary or provisional absence w/c happens as soon as a person
disappears from his domicile and his whereabouts are unknown, leaving
no administrator of his prop. (Articles 381-383);
(2) Normal or declared absence w/c is one juridically declared after 2
yrs. since the last news was heard from him, or 5 yrs if he left an
administrator (Articles 384-389);
(3) Definite or presumptive death w/c takes place when after the
period provided by law, a person is presumed dead; the period varies
according to circumstances. (Articles 390-396.)
(a) ordinary presumptive death
(b) qualified presumptive death

3. The Administration shall Cease in Any of the Following Cases

a) when the absentee appears personally or by means of an agent;
1/8
Page 224 of 230

1
Page 9 of 230

b)
c)

Stages of
Absence
Provisional
absence

Declaration
of Absence

when the death of the absentee is provided and his estate or

intestate heirs appear;
when a third person appears, showing by a proper document that
he has acquired the absentee's property by purchase or other title
When to file

Who may file

Remedy

No statutory
period

spouse

receivership (Art 12,

FC)
judicial separation of
property (Art 12, FC)
authority to be sole
administrator of the
conjugal partnership
(Art 12, FC)
Declaration of Absence
and Appointment of
Administrator (Spouse
shall be preferred) but
only under the
following cases:
when the absentee
has properties which
have to be taken cared
of or administered by
a representative
appointed by the Court
(Art 384, NCC)
when the spouse of
the absentee is asking
for separation of
property (Art 135, FC)
when the spouse of
the absentee is asking
the Court that the
administration of all
classes in the marriage
be transferred to her
(Art 142, FC)
Action to declare a
person presumptively
dead is proper only
when the spouse of
the absentee wants to
remarry

without
administrator
- 2 years from
time of
disappearance
with
administrator
- 5 years from
time of
disappearance

Presumption
of death

Ordinary
absence:
- 7 years
- 4 years for
purposes of
remarriage

the spouse
voluntary heirs
intestate heirs
those who may
have over the
property of the
absentee some right
subordinated to the
condition of the
absentee's death

spouse

Exception:
Page 10 of 230

Intestate
Heir
Legitimate
child

SHARE AS
LEGITIME

Illegitimate
child

share of @
legitimate child

1 for @ illegitimate child

(see above)

1 for @
illegitimate child

Surviving
spouse

Same share as a legitimate

child

TOTAL

Varies
depending on
no. of
illegitimate
children

Varies depending on no. of

illegitimate children

Legitimes
wouldnt be
impaired
1

f.

SHARE AS FREE DISPOSAL

Remaining portion of estate
after paying legitimes to be
divided by the ratio of 2:1
for @ legitimate child and
@ illegitimate child,
respectively

TOTAL INTESTATE
SHARE
Whole estate
divided by the
ratio of 2 @
legitimate child

LEGITIMATE CHILDREN, ILLEGITIMATE CHILDREN AND

SURVIVING SPOUSE

Intestate
Heir
Legitimate
children

SHARE AS
LEGITIME

SHARE AS FREE
DISPOSAL
Remaining portion of
estate, if any after
paying legitimes to be
divided by the ratio of
2 for @ legitimate child

TOTAL INTESTATE
SHARE
Whole estate divided
by the ratio of 2:1 for
@ legitimate child and
illegitimate child
respectively

Illegitimate
children

share of @
legit child

1 for @ illegitimate
child (see above)

1 for @ illegitimate
child (see above)

Surviving
spouse

Same share as a
legitimate child,
provided legitimes are
not impaired

Same share as a
legitimate child,
provided legitimes are
not impaired

TOTAL

Varies
depending on
no. of
illegitimate
children

Varies depending on
no. of illegitimate
children

Page 223 of 230

TOTAL

c.

Intestate
Heir
Legitimate
children

succession 10
years
75 years of age
5 years

LEGITIMATE CHILDREN AND SURVIVING SPOUSE

SHARE AS
LEGITIME

SHARE AS FREE
DISPOSAL
Remaining portion of
estate after paying
legitimes

TOTAL INTESTATE
SHARE
Whole estate divided
equally between total
number of children
plus the surviving
spouse

Surviving
spouse

Same as
share of @
legitimate
child

Legitimes to be divided
equally between total
no. of children plus the
surviving spouse

No. of children plus the

surviving spouse (see
above)

TOTAL

Varies on no.
of children

Varies on no. of
children

Extraordinary
Absence:
4 years (2 years
for purposes of
remarriage)
4. Period of Absence under Extraordinary Circumstances: 2 years (for purposes
of remarriage) or 4 years
a)
if a person rode an airplane or sea vessel lost in the course
of voyage, from the time of loss of the airplane or sea vessel
b)
if a person joined the armed forces who has taken part in
war, from the time he is considered missing in action
c)
danger of death under other circumstances, from time of
disappearance
Civil Register

d. LEGITIMATE CHILDREN AND ILLEGITIMATE CHILDREN

SHARE AS
LEGITIME

SHARE AS FREE
DISPOSAL

TOTAL INTESTATE SHARE

Legitimate
children

Remaining portion of
estate after paying
legitimes

Whole estate divided by

the ratio of 2:1 for each
legitimate child as
compared to the
illegitimate child

Illegitimate
children

share of
@ legitimate
child

Legitimes to be
divided by the ratio of
2 for @ legitimate
child, 1 for @
illegitimate child

1 for @ illegitimate child

provided that legitimes
wouldnt be impaired

TOTAL

Varies on
no. of
children

Varies on no. of
children

Intestate
Heir

e. ONE LEGITIMATE CHILD, ILLEGITIMATE CHILD, AND

SURVIVING SPOUSE
Page 222 of 230

1. Matters Recorded in the Civil Register

a) birth
b) marriage
c) death
d) legal separation
e) annulment of marriage
f) judgments declaring marriage void from the beginning;
g) legitimation
h) adoption
i) acknowledgement of natural children
j) naturalization
k) loss of citizenship
l) recovery of citizenship
m) civil interdiction
n) judicial determination
o) voluntary emancipation of a minor; AND
p) change of time
2. Requirements of an Adversarial Proceeding
i. Presence of opposing parties
ii. Notice to indispensable parties
iii. Relevant facts have been fully and properly developed
iv. Opposing counsel was given an opportunity to demolish the
opposite party's case (not ex parte)
Page 11 of 230

v. Evidence has been thoroughly weighed and considered

vi. Compliance with the publication requirement

Siblings, nephews
nieces

All other collaterals

and state

Legitimate
children,
illegitimate
children,
Legitimate
parents and
illegitimate
parents

Surviving spouse

Other collaterals
within 5th degree

Collateral remoter
in degree and state

Legitimate
children
Illegitimate
children
Legitimate
parents
Illegitimate
parents and
Surviving spouse

Collaterals in the
same degree

State

No one

Everyone

No one

Use of Surnames

1
2
3
4
5
6

Child Concerned
Legitimate child
Legitimated child
Adopted child
Illegitimate child
Conceived prior to the annulment
of the marriage
Conceived after the annulment of
the marriage
Wife
Valid marriage (before the husband
dies)

Mothers surname

Surname to be Used
maidens first name and surname +
her husbands surname
maidens first surname + her
husbands surname
e.g. Marife Tan
her husbands full name, but
prefixing a word indicating that she is
his wife
e.g. Mrs. Happy Tan
retain the use of her maiden name
and surname (use of husbands
surname is not a duty but merely an
option of the wife)

Marriage is annulled
- wife is the guilty party
- wife is the innocent party

Surname to be Used
Fathers surname
Fathers surname
Adopters surname
Mothers surname, fathers surname if
acknowledged
Fathers surname

Legally separated

she shall resume her maiden name

and surname
choices:
resume using her maiden name and
surname
continue employing her husbands
surname, unless:
the court decrees otherwise, or
the wife of the former husband is
married again to another person
she shall continue using the name
and surname she was employing
prior to the legal separation
(Tolentino v CA)
Page 12 of 230

A MORE DETAILED SUMMARY OF INTESTATE SHARES:

a. LEGITIMATE CHILDREN AND LEGITIMATE DESCENDANTS ALONE
Intestate Heir
Legitimate
children
TOTAL

b.
Intestate
Heir
Legitimate
child
Surviving
spouse

SHARE AS
LEGITIME

SHARE AS FREE
DISPOSAL

TOTAL INTESTATE
SHARE
1

ONE LEGITIMATE CHILD AND SURVIVING SPOUSE

SHARE AS
LEGITIME

SHARE AS FREE
DISPOSAL

TOTAL INTESTATE
SHARE

Page 221 of 230

and legitimate
ascendants

and legitimate or
illegitimate
descendants

legitimate or illegitimate
descendants

Illegitimate children
and legitimate or
illegitimate
descendants
Surviving spouse

illegitimate parents

legitimate or illegitimate
parents and legitimate
ascendants, adoptive
parents
surviving spouse

Legitimate siblings,
nephews, nieces

illegitimate siblings,
nephews, nieces

siblings, nephews, nieces

Legitimate collateral
relatives

State

State

State

surviving spouse

1. Procedural Requirements for a Petition for Change of Name

a) 3 years residency in the province where change is sought prior to
the filing;
b) must not be filed within 30d prior to an election;
c) the petition must be verified

5. CONCURRENCE IN LEGAL OR INTESTATE SUCCESSION

Intestate Heir
Legitimate children
and Legitimate
descendants

EXCLUDES
Ascendants,
collaterals and
state

EXCLUDED BY
No one

CONCURS WITH
Surviving spouse
Illegitimate
children

Illegitimate
children and
Descendants

Illegitimate
parents, collaterals
and state

No one

Legitimate parents
and legitimate
ascendants

Collaterals and
state

Legitimate
children

Surviving spouse
Legitimate
children and
legitimate
parents
Illegitimate
children and
surviving spouse

Illegitimate parents

Collaterals and
state

Surviving spouse

Collaterals other
than siblings,
nephews and
nieces

Legitimate
children and
illegitimate
children
No one

Page 220 of 230

Divorce (at least if they allow it later choices: same as widowed spouse
or for those who got divorced during
the Japanese occupation
Between Persons
Younger person is obliged to use such additional name
of surname as will avoid confusion
Between
Son may use the word Junior
e.g. Marife Lomibao-Tan, Jr.
Ascendants and
Descendants
Grandsons and other male descendants, shall either :
add a middle name
e.g. Happy Chris Tan
add the mothers surname
e.g. Happy Lomibao Tan
add the Roman numerals II, III and so on
4

Surviving spouse

Legitimate
children
Illegitimate
children
Legitimate
parents and
Illegitimate
parents

2. Proper and Reasonable Causes that may Warrant the Grant of a Petition for
Change of Name:
a) the petitioners true and official name is ridiculous;
b) the petitioners true and official name is tainted with dishonor
c) the petitioners true and official name is extremely difficult to write
or pronounce;
d) when the request for change is a consequence of a change of
status, such as when a natural child is acknowledged or
legitimated;
e) when the change is necessary to avoid confusion
3. Elements
a)
b)
c)

of Usurpation of Name
there is an actual use of another's name by the defendant
the use is unauthorized
the use of another's name is to designate personality or to identify
a person

4. Remedies available against the usurper to the person whose name has been
usurped
a) Civil (insofar as private persons are concerned)
i.
injunction
ii.
damages (actual and moral)
b) Criminal (when public affairs are prejudiced)
5. When Use of Another's Name is Not Actionable
Page 13 of 230

a)
b)
c)
d)

when the name is used as stage, screen, or pen name, provided:

use of name is in good faith; and
by using the name of another, no injury is caused to that person's
right
when use is motivated by modesty, a desire to avoid unnecessary
trouble, or other reason not prohibited by law or morals

the free portion, shall be respected. In sum, the estate of Lamberto will be
distributed as follows:
Baldo------------------ 450,000
Vilma------------------ 250,000
Elvira------------------ 250,000
Ernie------------------- 50,000
--------------1,000,000

FAMILY RELATIONS
Legal Succession

Marriage
1. Definition
a)
b)
c)
d)
e)

of Marriage
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

2. Essential Requisites of Marriage

a) Legal capacity of contracting parties
b) Consent freely given in the presence of the solemnizing officer
3. Formal Requisites of Marriage
a) Authority of solemnizing officer
b) Valid marriage license (except in cases where a marriage license is
not required)
c) Marriage ceremony
d) Authorized Solemnizing Officers
i. Incumbent member of the judiciary within the courts
jurisdiction
ii. Duly authorized priest, rabbi, imam or the minister of any
church or religious sect
iii. Ship captain or airplane chief - only in articulo mortis
between passenger or crew members while the ship is at
sea or the plane is in flight and also during stopover at
ports of call
iv. Military commander of a unit to which a captain is
assigned- only in articulo mortis , between persons within
the zone of military operations whether members of the
armed forces or civilians and only in the absence of the
chaplain
v. Consul-general, consul or vice-consul can solemnize
marriage between Filipinos abroad
vi. Mayor (Local Government Code of 1991)
4. Marriage Exempt from License Requirements
Page 14 of 230

1. CAUSES FOR LEGAL OR INTESTATE SUCCESSION:

1. If a person dies without a will
2. If a person dies with a void will
3. If a person dies with a will which has subsequently lost its validity
4. When the will does not institute an heir to, or dispose of all the property
belonging to the testator (legal succession shall take place only with
respect to the property of which the testator has not disposed)
5. If the suspensive condition attached to the institution of the heir does
not happen or is not fulfilled
6. If the heir dies before the testator,
7. If the heir repudiates the inheritance, there being no substitution, and
no right of accretion takes place
8. When the heir instituted is incapable of succeeding, except in cases
provided in the Code
2. FUNDAMENTAL UNDERLYING PRINCIPLES IN LEGAL OR INTESTATE
SUCCESSION:
1. Rule of Proximity the relative nearest in degree excludes the farther
one
2. Rule of Equal Division the relatives who are in the same degree shall
inherit in equal shares
3. DEFINITION OF RIGHT OF REPRESENTATION
It 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 of he were living or if he would have inherited.
4. ORDER OF LEGAL OR INTESTATE SUCCESSION:

Legitimate Child
Legitimate child and
legitimate
descendants

ILLEGITIMATE CHILD
legitimate child and
legitimate
descendants

ADOPTED CHILD
legitimate child and
legitimate descendants

Legitimate parents

illegitimate children

illegitimate children and

Page 219 of 230

5.
6.
7.

The cause must be certain and true, and must be proved by the
interested heir if the person disinherited should deny it
It must unconditional
It must be total

a)
b)

c)
4. VACANCY IN SUCCESSION
A) CAUSES OF VACANCY IN SUCCESSION:
1. Disinheritance - The testator creates it himself
2. Repudiation - The heir does something
3. Incapacity/Predecease - Something happens to the heir
B) HOW
1.
2.
3.

VACANCIES ARE FILLED:

Substitution
Representation
Accretion

5. ORDER OF PAYMENT IN CASE ESTATE IS INSUFFICIENT TO COVER ALL

LEGACIES AND DEVICES:
1. Remuneratory legacies or devises
2. Legacies or devises declared by the testator to be preferential
3. Legacies for Support
4. Legacies for Education
5. Legacies or devises of a specific, determinate thing which forms a part of
the estate
6. All others pro-rata
Bar Question (2000). In his last will and testament, Lamberto 1) disinherits his
daughter Wilma because she is disrespectful towards me and raises her voice
talking to me, 2) omits entirely his spouse Elvira, 3) leaves a legacy of
P100,000.00 to his mistress Rosa and P50,000.00 to his driver Ernie and 4)
institutes his son Baldo as his sole heir. How will you distribute his estate of
P1,000,000.00?

Answer: The disinheritance of Wilma was ineffective because the ground relied
upon by the testator does not constitute maltreatment under Article 919(6) of
the New Civil Code. Hence, the testamentary provisions in the will shall be
annulled but only to the extent that her legitime was impaired. The total
omission of Elvira does not constitute preterition because she is not a
compulsory heir in the direct line. Only compulsory heirs in the direct line may be
the subject of preterition. Not having been preterited, she will be entitled only to
her legitime. The legacy in favor of Rosa is void under Article 1028 for being in
consideration of her adulterous relation with the testator. She is, therefore,
disqualified to receive the legacy of 100,000 pesos. The legacy of 50,000 pesos
in favor of Ernie is not inofficious not having exceeded the free portion. Hence,
he shall be entitled to receive it. The institution of Baldo, which applies only to
Page 218 of 230

d)
e)

Marriage in articulo mortis

If the residence of either party is so located that there is no means
of transportation to enable such party to appear personally before
the civil registrar
Marriage in articulo mortis in military zones and on planes and
ships
Marriage among Muslims or among members of ethnic cultural
communities in accordance with their customs
Marriage between persons who have lived together as husband and
wife for at least five years and without any legal impediment to
marry each other

5. Flaws in the Marriage Requisites and Effects

a) ABSENCE of ANY essential or formal requisites- marriage void ab
initio
Except: If the marriage is solemnized by unauthorized person, the
marriage will still be valid if either or both contracting parties
believed in good faith that the solemnizing officer had legal
authority [Article 35 (2)]
b) Defect in ESSENTIAL Requisites- Voidable
c) Irregularity in formal requisite- Valid but party responsible for such
irregularity shall be civilly, criminally and administratively liable
6. Other requirements: if either or both parties are:
a) 18 years old and above but below 21- needs parental consent, or
else marriage voidable
b) 21 years old and above but below 25- needs parental advice, even
if lacking marriage is still valid. However, suspend the issuance of
the marriage license for a period of 3 months from the completion
of publication of the application for marriage license. If the parties
get married during the 3-month period without a license, the
marriage shall be VOID. On the other hand, if they are able to
obtain a license during the 3-month period, the marriage will still
be valid but may be held civilly and criminally liable.
c) 18 years old and above but below 25- marriage counseling, if
lacking same effect as above
7. Rule on Marriages Solemnized Abroad
a) General Rule: Marriages solemnized outside the RP in accordance
with the law of the foreign country shall be valid in the Philippines
(lex loci celebrationis)
b) Exceptions:
i. Marriage between persons below 18 years old
ii. Bigamous or polygamous marriage
iii. Mistake in identity
iv. Marriages void under Article 53
Page 15 of 230

v. Psychological incapacity
vi. Incestuous marriages
vii. Marriage void for reasons of public policy
d)

Qualified divorce law: If a Filipino is married to a foreigner and the

latter subsequently obtains a valid divorce abroad capacitating
him/her to remarry, the Filipino spouse shall likewise have the
capacity to remarry under the Philippine law.
Requisites of Art. 26 par. 2:
1) one of the spouses is a foreigner
2) a divorce decree is obtained
3) the divorce decree is obtained at the instance of the
foreign spouse
4)

under the divorce decree, the foreigner-spouse acquires

the capacity to remarry.

Bar Question (2004). BONI and ANNE met while working overseas. They
became sweethearts and got engaged to be married on New Years Eve aboard a
cruise ship in the Carribbean. They took the proper license to marry in New York
City, where there is a Filipino consulate. But as planned the wedding ceremony
was officiated by the captain of the Norwegian-registered vessel in a private
suite among selected friends.
Back in Manila, Anne discovered that Boni had been married in Bacolod
City 5 years earlier but divorced in Oslo only last year. His first wife was also a
Filipina but now based in Sweden. Boni himself is a resident of Norway where he
and Anne plan to live permanently.
Anne retains your services to advise her on whether her marriage to
Boni is valid under Philippine law? Is there anything else she should do under
the circumstances?

Answer: If Boni is still a Filipino citizen, his legal capacity is governed by

Philippine Law (Art15 Civil Code). Under Philippine Law, his marriage to Anne is
void because of a prior existing marriage which was not dissolved by the divorce
decreed in Oslo. Divorce obtained abroad by a Filipino is not recognized.
If Boni was no longer a Filipino citizen, the divorce is valid. Hence, his
marriage to Anne is valid if celebrated in accordance with the law of the place
where it was celebrated. Since the marriage was celebrated aboard a vessel of
Norwegian registry, Norwegian law applies. If the Ship Captain has authority to
solemnize the marriage aboard his ship, the marriage is valid and shall be
recognized in the Philippines.
As to the second question, if Boni is still a Filipino, Anne can file an
action for declaration of nullity of her marriage to him.
8. Obligations of Husband and Wife
a) Live together
b) Observe mutual love, respect and fidelity
Page 16 of 230

of Mr. Luna as the resevatarios of the reserved property inherited by Mrs. Luna
from her child.
When Mr. Luna died, his heirs were his wife and the unborn child. The
unborn child inherited because the inheritance was favorable to it and it was
born alive later though it lived only for five hours. Mrs. Luna inherited half of the
10 Million estate while the unborn child inherited the other half. When the child
died, it was survived by its mother, Mrs. Luna. As the only heir, Mrs. Luna
inherited, by operation of law, the estate of the child consisting of its 5 Million
inheritance from Mr. Luna. In the hands of Mrs. Luna, what she inherited from
her child was subject to the reserva troncal for the benefit of the relatives of the
child within the third degree of consanguinity and who belong to the family of
Mr. Luna, the line where the property came from.
When Mrs. Luna died, she was survived by her parents as her only
heirs. He parents will inherit her estate consisting of the 5 Million she inherited
from Mr. Luna. The other 5 Million she inherited from her child will be delivered
to the parents of Mr. Luna as beneficiaries of the reserved property.
In sum, 5 Million Pesos of Mr. Lunas estate will go to the parents of
Mrs. Luna, while the other 5 Million Pesos will go to the parents of Mr. Luna as
reservatarios.
Disinheritance
1. DEFINITION OF DISINHERITANCE - It is the act by which the testator, for just
cause, deprives a compulsory heir of his right to the legitime.
2. DIFFERENCES BETWEEN PRETERITION AND DISINHERITANCE:
Disinheritance
Express deprivation of
legitime
Always voluntary

PRETERITION
Tacit deprivation of legitime

Legal cause is present

Presumed by law to be a mere oversight

Even a compulsory heir

may be totally excluded

Compulsory heir is merely restored to his legitime

May also be voluntary but is presumed to be

involuntary (as it is an omission to mention an heir
or though mentioned, is not instituted as an heir)

3. REQUISITES FOR A VALID DISINHERITANCE:

1. Heir disinherited must be designated by name or in such a manner as to
leave no room for doubt as to who is intended
2. It must be for a cause designated by law
3. It must be made in valid will
4. It must be made expressly, stating the cause in the will itself
Page 217 of 230

b)
c)

If the impairment is partial, then the compulsory heir is entitled to

completion of legitime under Article 906
If the impairment is thru donation, then remedy is collation.

5. CONCEPT OF RESERVA TRONCAL

The ascendant who inherits from his descendant
any property which the latter may have acquired by gratuitous title
from another descendant, or a brother or sister,
is obliged to reserve such property
as he may have acquired by operation of law
for the benefit of relatives who are within the third degree
and who belong to the line from which said property came

c)
d)

Render mutual help and support

Either spouse may exercise any legitimate profession or business
without the consent of the other.
The other spouse may object on valid, serious and moral grounds.

In case of disagreement, the court shall decide whether

i.
ii.

The objection is proper AND

Benefit has accrued to the family before and after the
objection.
If benefit accrued to the family before the objection, the
resulting obligation shall be enforced against the ACP.

If benefit accrued to the family after the objection has been

made, the resulting obligation shall be enforced against the separate
property of the spouse who has not obtained consent.

REQUISITES (as provided in Chua v. CFI [1977] & reiterated in Gonzales v. CFI
[1981])
1) that the property was acquired by a descendant from an ascendant or
from a brother or sister by gratuitous title
2) that said descendant died without an issue
3) that the property is inherited by another ascendant by operation of law
4) that there are relatives within the 3rd degree belonging to the line from
which said property came
Bar Question (1999). a) Mr. Palma, a widower, has three daughters D, D-1
and D-2. He executed a Will disinheriting D because she married a man he did
not like, and instituting daughters D-1 and D-2 as his heirs to his entire estate of
P1,000,000.00. Upon Mr. Palmas death, how should his estate be divided?
Explain.
b) Mr. Luna died, leaving an estate of Ten Million (P10,000,000.00)
Pesos. His widow gave birth to a child four months after Mr. Lunas death, but
the child died five hours after birth. Two days after the childs death, the widow
of Mr. Luna also died because she suffered from the difficult childbirth. The
estate of Mr. Luna is now being claimed by his parents, and the parents of his
widow. Who is entitled to Mr. Lunas estate and why?

Answer: a) This is a case of ineffective disinheritance because marrying a man

that the father did not approve of is not a ground for disinheriting D. Therefore,
the institution of D-1 and d-2 shall be annulled insofar as it prejudices the
legitime of D, and the institution of D-1 and D-2 shall only apply on the free
portion in the amount of P500,000.00. Therefore, D, D-1 and D-2 will get their
legitimes of P500,000.00 divided into three equal parts and D-1 and D-2 will get
a reduced testamentary disposition of P250,000.00 each. Hence, the shares will
be:
D
P166,666.66
D-1
P166,666.66 + P250,000.00
D-2
P166,666.66 + P250,000.00
b) Half of the estate of Mr. Luna will go to the parents of Mrs. Luna as their
inheritance from Mrs. Luna, while the other half will be inherited by the parents
Page 216 of 230

9. VOID MARRIAGES (imprescriptible)

a) Void Ab Initio under Article 35
ii.
Contracted by any party below 18 years old
iii.
Solemnized by unauthorized solemnizing officer
(Except if either or both parties believed in good faith
that the officer had authority)
iv.
Solemnized without license (Except when license not
required)
v.
Bigamous or polygamous marriages (Except Article 41
marriage contracted by a person whose spouse has
been absent for 4 years (ordinary absence) or 2 years
(extraordinary absence) where such person has a well
founded belief that his/her absent spouse was already
dead and after the absent spouse is judicially is
declared presumptively dead)
vi.
Mistake in identity
b) Subsequent marriage void under Article 53
Rule: A person whose marriage has been annulled may remarry as
long as he complies with Art. 52 which requires the ff. after the
annulment of the marriage:
i.
partition and distribution of the spouses properties
ii.
delivery of the presumptive legitime of the children
iii.
recording in the civil registry and registries of
property of the judgment of annulment or absolute
nullity, the partition and distribution of the spouses
properties and the delivery of the childrens
presumptive legitime must be recorded in
the
appropriate civil registry and registries of property

Failure to comply with these requisites will make the subsequent

marriage void ab initio.
Page 17 of 230

c) Psychological Incapacity - Void under Article 36: Where one party, at

the time of the celebration of the marriage, was psychologically
incapacitated to comply with the essential marital obligations.
i.
incapacity exists at the time of the celebration of the
marriage
ii.
incapacity must be permanent (it continues to the
time when the case for annulment is being tried) and
incurable
iii.
incapacity must be unknown to the other contracting
party
iv.
the other spouse must not himself/herself be
incapacitated

Legitimate
parents
alone
Legitimate
parents
Illegitimate
children
Legitimate
parents
and
Surviving
spouse

Bar Question (2006). Gemma filed a petition for the declaration of nullity of
her marriage with Arnell on the ground of psychological incapacity. She alleged
that after 2 months of their marriage, Arnell showed signs of disinterest in her,
neglected her and went abroad. He returned to the Philippines after 3 years but
did not even get in touch with her. Worse, they met several times in social
functions but he snubbed her. When she got sick, he did not visit her even if he
knew of her confinement in the hospital. Meanwhile, Arnell met an accident
which disabled him from reporting for work and earning a living to support
himself. Will Gemmas suit prosper? Explain.

Legitimate
parents
Surviving
spouse
Illegitimate
children
Illegitimate
children
alone

1/8

Illegitimate
children
Surviving
spouse

1/3

Answer:
Gemmas suit will not prosper. The acts of Arnell complained about do
not by themselves constitute psychological incapacity. It is not enough to prove
the commission of those acts or the existence of his abnormal behavior. It must
be shown that those acts or that behavior was manifestation of a serious mental
disorder and that it is the root cause why he is not able to perform the essential
duties of married life. It must also be shown that such psychological incapacity,
as manifested in those acts or that behavior was existing at the time of the
celebration of the marriage. In this case, there was no showing that Arnell was
suffering from a serious mental disorder,that his behavior was a manifestation of
that disorder, and that such disorder prevented him from complying with his
duties as a married person.
d) Incestuous Marriage
i.
Between ascendants and descendants of any degree
ii.
Between brothers and sisters, whether full or half
blood
e) Void for Reason of Public Policy
i.
Between collateral blood relatives up to the 4th civil
degree
ii.
Between step-parents and step-children
Page 18 of 230

Surviving
spouse
alone

(divided
by no.
of
children)
1/3
(divided
by no.
of
children)

or 1/3 if
marriage
in articulo

mortis
Illegitimate
parents
alone
Illegitimate
parents
Surviving
spouse

4. REMEDY OF COMPULSORY HEIR IN CASE OF IMPAIRMENT OF LEGITIME:

a) 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 and
reduction of devises and legacies)
Page 215 of 230

3.

Concurring those who succeed together with the primary or the

secondary compulsory heirs
a. Widow or widower (legitimate)
b. Illegitimate children and descendants (legitimate or
illegitimate)

iii.
iv.
v.
vi.

3. SUMMARY OF LEGITIMES OF COMPULSORY HEIRS:

SURVIVING

LEGITIMATE

RELATIVES

CHILDREN &

SURVIVING ILLEGITIMATE LEGITIMATE ILLEGITIMATE

CHILDREN
PARENTS
SPOUSE
PARENTS &
ASCENDANTS

DESCENDANTS

Legitimate
children
alone
1
legitimate
child
surviving
spouse

(divided
by the # of
children)

Legitimate
children
Surviving
spouse

(divided
by no. of
children)

vii.
viii.
ix.

Rule on Bigamous Marriage (Article 41)

General Rule: Marriage contracted by any person during the subsistence of a
previous marriage is VOID.
Exception: If before the celebration of the subsequent marriage, the prior spouse
had been absent for 4 consecutive years (ordinary absence) or 2 years
(extraordinary absence) and the spouse has a well-founded belief that the
absent spouse was already dead. In this case, the subsequent marriage is valid
but it shall be automatically terminated by the recording of the affidavit of
reappearance of the absent spouse.
Exception to Exception: If both spouses of the subsequent marriage acted in bad
faith, such marriage is void ab initio.

Same as
the share
@ legit
child

Legitimate
children
Illegitimate
children

1
legitimate
child
surviving
spouse
illegitimate
children

(preferred)

2 or more
legitimate
children
surviving
spouse
Illegitimate
children

(divided
by no. of
children)

Same as
the share
of @ legit
child

Between parents-in law and children-in law

Between adopting parent and adoptive child
Between surviving spouse of the adopter and the
adopted
Between surviving spouse of the adopted and the
adopter
Between adopted and legitimate child of adopter
Between adopted children of same adopter
Between parties where one with the intention to
marry the other, killed that the other persons spouse
or his/her own spouse

of
the
share of
@ legit
child
of
the
share of
@ legit
child

of
the
share of
@ legit
child

Page 214 of 230

10. VOIDABLE MARRIAGES (annullable)

a) Grounds for Annulment of Marriage
i. Lack of parental consent
ii. Insanity of one of the parties
iii. Fraud
1) Non-disclosure of conviction by final judgment of
crime involving moral turpitude
2) Concealment of pregnancy by another man
3) Concealment of sexually transmissible disease,
regardless of nature, existing at the time of
marriage
4) Concealment of drug addiction, habitual alcoholism,
homosexuality and lesbianism
iv. Force, intimidation or undue influence
v. Impotency
vi. Affliction of sexually transmissible disease found to be
serious and which appears incurable
b)

Rules on filing the action of annulment

Page 19 of 230

Grounds for
annulment

Lack of parental
consent

Insanity of one
party

Who can
file
Party under
age
Parent or
guardian
Sane
spouse

Prescriptive period

Ratification

i.

Brief or Compendious two or more persons may be

Within 5 years after

attaining 21
Before child reaches 21

Free cohabitation
after reaching 21

ii.

Reciprocal if heirs instituted in unequal shares should be

Before death of other

party

Free cohabitation
after insane
regains sanity

Guardian of
insane
spouse
Insane
spouse

Anytime before the

death of either party

substituted for one; and one person for two or more heirs

Fraud

Injured
party

During the lucid interval

or after regaining sanity
also before death of
other party
Within 5 years from
discovery of fraud

Force,
intimidation or
undue influence
Impotence of
one party

Injured
party

Within 5 years from the

cessation of cause

Potent
party

Within 5 years after

marriage

Serious STD

Healthy
party

Within 5 years after

marriage

Free cohabitation
after knowledge of
fraud
Free cohabitation
after cause has
disappeared
Cannot be ratified
but action
prescribes
Cannot be ratified
but action
prescribes

Effects of Termination of Marriage

Status of
children

Voidable bigamous marriage

(Art 41)
Children of subsequent
marriage conceived before its
termination legitimate

Declaration
of nullity
Illegitimate
except Art 36
and Art 53

ACP/CPG shall be liquidated.

Same

Annulment
Children
conceived or
born before
annulment
decree

reciprocally substituted, the substitute shall acquire the share

of the heir who dies, renounces, or incapacitated, unless it
clearly appears that the intention of the testator was
otherwise. If there are more than one substitute, they shall
have the same share in the substitution as in the institution
2. Fideicommissary Substitution - if the testator institutes an heir with an
obligation to deliver to another the property so inherited. The heir instituted
to such condition is called the first heir or fiduciary heir, the one to receive
the property is the fideicommissary or second heir
REQUISITES FOR A FIDEICOMMISSARY SUBSTITUTION:
i. A fiduciary or first heir instituted entrusted with the
obligation to preserve and to transmit to
a
fideicommissary substitute or second heir the whole
or part of the inheritance
ii. Such substitution must not go beyond one degree
from the heir originally instituted
iii. The fiduciary or first heir and the second heir are
living at the time of the death of the testator
iv. The fideicommissary substitution must be expressly
made
v. The fideicommissary substitution is imposed on the
free portion of the estate and never on the legitime
Legitimes
1. DEFINITION OF LEGITIME
It is that part of the testators property which he cannot dispose of because
the law has reserved it for certain heirs called compulsory heirs
2. CLASSES OF COMPULSORY HEIRS:
1.

Primary those who have precedence over and exclude other

compulsory heirs
a. Legitimate children and descendants (legitimate), with respect
to their legitimate parents and ascendants

2.

Secondary those who succeed only in the absence of the primary

heirs
a. Legitimate parents and ascendants (legitimate), with respect to
their legitimate children and descendants

legitimate
Property
Relations

Spouse who contracted the

marriage in bad faith, his/her
share in the net profits of
community property shall be
forfeited in favor of common
Page 20 of 230

Same

Page 213 of 230

3.
4.

Compulsory heir omitted must be of the DIRECT LINE

The omitted compulsory heir must be LIVING at the time of testators
death or must at least have been CONCEIVED before the testators
death
Donations

B) EFFECTS OF PRETERITION:
1. The institution of heir is annulled
2. Devises and legacies shall remain valid as long as they are not
inofficious
3. If the omitted compulsory heir should die before the testator, the
institution shall be effectual, without prejudice to the right of
representation
Bar Question (2001). Because her eldest son Juan had been pestering her for
capital to start a business, Josefa gave him P100,000. Five years later, Josefa
died, leaving a last will and testament in which she instituted only her four young
children as her sole heirs. At the time of her death, her only property left was
P900,000 in a bank. Juan opposed the will on the ground of preterition. How
should Josefas estate be divided among her heirs? State briefly the reason(s) for
your answer.

Answer: There was no preterition of the oldest son because the testatrix
donated P100,000 to him. This donation is considered an advance on the sonis
inheritance. There being no preterition, the institutions in the will shall be
respected but the legitime of the oldest son has to be completed if he received
less.
After collating the donation of P100,000 to the remaining property of
P900,000, the estate of the testatrix is P1,000,000. Of this amount, one-half or
P500,000 is the legitime of the legitimate children and it follows that the legitime
of one legitimate child is P100,000. The legitime therefore of the oldest son is
P100,000. However, since the donation given him was P100,000, he has already
received in full his legitime and will not receive anything more from the
decedent. The remaining P900,000, therefore, shall go to the four younger
children by institution in the will, to be divided equally among them. Each will
receive P225,000.
15. DEFINITION OF SUBSTITUTION: It is the appointment of another heir so that
he may enter into the inheritance in default of the heir originally instituted
CLASSES OF SUBSTITUTION:
1. Vulgar or Simple the testator may designate one or more persons to
substitute the heir or heirs instituted in case such heir or heirs should:
a. die before him (PREDECEASE)
b. should not wish, (RENOUNCE) or
c. should be incapacitated to accept the inheritance (INCAPACITATED)
Page 212 of 230

Propter
Nuptias

children or if there are none,

children of the guilty spouse by
previous marriage or in default,
the innocent spouse
Shall remain VALID except

Same

Same

Same

Same

Same

Same

If donee contracted the

marriage in bad faith, donations
propter nuptias made to the
donee are revoked by operation
of law.

If both spouses acted in bad

faith, donations propter nuptias
made by one in favor of the
other are revoked by operation
of law.

Insurance

If one spouse acted in bad

faith, innocent spouse may
revoke his designation as
beneficiary in the insurance
policy even if such designation
be stipulated irrevocable

Succession

If one spouse contracted the

marriage in bad faith, he shall
be disqualified to inherit from
the innocent spouse both
testate and intestate

Distinction between Void and Voidable Marriages

As to nature
As to
susceptibility to
ratification
As to effect on
property
As to effect on
children

Void
Inexistent from the time of
performance
Cannot be ratified

No community property, only

co-ownership (Art 147)

Children are illegitimate

Exceptions:
In case of psycho incapacity
(Art 36)
Page 21 of 230

Voidable
Valid until annulled
Can be ratified either by
free cohabitation or
prescription
Absolute community exists
unless another system is
agreed upon in marriage
settlement
Children are legitimate if
conceived before decree
of annulment

As to how
marriage may be
impugned

Children born of subsequent

marriage (Art 53)
May be attacked directly or
collaterally but for purpose of
remarriage, there must be
judicial declaration of nullity.
Can still be impugned even
after death of parties

1.
2.
Cannot be attacked
collaterally, only directly,
i.e. there must be a
decree of annulment
Can no longer be
impugned after death of
one of the parties

11. LEGAL SEPARATION

a) Grounds for Legal Separation
i.
Repeated physical violence or grossly abusive conduct
directed against petitioner, a common child or a child of
the petitioner
ii.
Physical violence or moral pressure to compel change in
religious or political affiliation
iii.
Attempt to corrupt or induce petitioner to engage in
prostitution or connivance in such corruption or
inducement
iv.
Final judgment sentencing respondent to imprisonment of
more than 6 years
v.
Drug addiction or habitual alcoholism
vi.
Lesbianism or homosexuality
vii.
Subsequent bigamous marriage
viii.
Sexual infidelity or perversion
ix.
Attempt by despondent against the life of the petitioner
x.
Abandonment for more than one year without justifiable
cause
b)

c)

Grounds
i.
ii.
iii.
iv.
v.
vi.

to Deny Legal Separation

Condonation
Consent
Connivance
Mutual fault
Collusion
Prescription action for legal separation must be filed
within five years from the time of the occurrence of the
cause of action

Effects of Separation
i.
Spouses are entitled to live separately
ii.
Marriage bond is not severed
iii.
Dissolution of property regime
Page 22 of 230

3.
4.
5.
6.

If the formalities required by law have not been complied with

If the testator was insane, or otherwise mentally incapable of making a
will, at the time of its execution
If it was executed through force or under duress, or the influence of
fear, or threats
If it was procured by undue and improper pressure and influence, on
the part of the beneficiary or of some other person
If the signature of the testator was procured by fraud
If the testator acted by mistake or did not intend that the instrument
should be his will at the time of affixing his signature thereto

12. INSTITUTION OF HEIRS

A) DEFINITION OF INSTITUTION OF HEIR:
It 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
B) REQUISITES FOR A VALID INSTITUTION OF HEIR:
1. Designation in will of person/s to succeed
2. Will specifically assigns to such person an inchoate share in the
estate
3. The person so named has capacity to succeed
4. The will is formally valid
5. No vice of consent is present
6. No preterition results from the effect of such will
C) THREE PRINCIPLES IN THE INSTITUTION OF HEIRS:
1. Equality heirs who are instituted without a designation of shares
inherit in equal parts
2. Individuality heirs collectively instituted are deemed individually
named unless a contrary intent is proven
3. Simultaneity when several heirs are instituted, they are instituted
simultaneously and not successively
13. RULES REGARDING A PERSONS RIGHT TO DISPOSE OF HIS ESTATE:

1.

If one has no compulsory heirs:

a.
b.

2.

He can give his estate to any person qualified to inherit under

him
However, he must respect restrictions imposed by special laws

If one has compulsory heirs:

a.
b.

He can give only the disposable portion to strangers

Legitimes of compulsory heirs must be respected

14. PRETERITION
A) CONCEPT OF PRETERITION:
1. There must be an omission of one, some or all of the heir/s in the will
2. The omission must be that of a COMPULSORY HEIR
Page 211 of 230

3.
4.
5.
6.

Not blind, deaf or dumb

Able to read and write
Domiciled in the Philippines
Have not been convicted of falsification of a document, perjury or false
testimony

iv.
v.

vi.
8. DEFINITION OF A CODICIL
It is a supplementary or addition to a will made after the execution of
the will and annexed to be taken as a part thereof by which any disposition in
the original will may be explained, added to or altered
9. REQUISITES FOR INCORPORATION BY REFERENCE:
a) the document or paper referred to in the will must be in existence at
the time of the execution of the will
b) the will must clearly describe and identify the same, stating among
other things the number of pages thereof
c) it must be identified by clear and satisfactory proof as the document or
paper referred to therein
d) it must be signed by the testator and the witnesses on each and every
page, except in case of voluminous books of account or inventories
10. REVOCATION OF A WILL:
1. By implication of law
2. By the execution of a will, codicil or other writing executed as provided
in case of wills
3. By burning, tearing, canceling, or obliterating the will with the intention
of revoking it, by the testator himself, or by some other person in his
presence, and by his express direction
Bar Question (2003). Mr. Reyes executed a will completely valid as to form. A
week later, however, he executed another will which expressly revoked his first
will, following which he tore his first will to pieces. Upon the death of Mr. Reyes,
his second will was presented for probate by his heirs, but it was denied probate
due to formal defects. Assuming that a copy of the first will is available, may it
now be admitted to probate and given effect? Why? (5%)

Answer: Yes, the first will may be admitted to probate and given effect. When
the testator tore the first will, he was under the mistaken belief that the second
will was perfectly valid and he would not have destroyed the first will had he
known that the second will is not valid. The revocation by destruction therefore
is dependent on the validity of the second will. Since it turned out that the
second will was invalid, the tearing of the first will did not produce the effect of
revocation. This is known as the doctrine of dependent relative revocation (Molo
v. Molo, 90 Phil. 37).
11. GROUNDS FOR DISALLOWANCE OF A WILL:
Page 210 of 230

vii.

viii.

d)

Forfeiture of the share of the guilty spouse in the net

profits of the ACP/CP
Custody of minor children to innocent spouse (subject to
Article 213 which provides that parental authority shall be
exercised by parent designated by the Court)
Guilty spouse is disqualified from intestate succession and
provisions made by him in favor of the innocent spouse in
a will shall be revoked
Innocent spouse may revoke the donation made by him in
favor of the offending spouse. However, alienations, liens
and encumbrances registered in good faith before the
recording of the complaint for revocation in the registries
of property shall be respected.
Innocent spouse may revoke designation of guilty spouse
as beneficiary in insurance policy even if such designation
be stipulated as irrevocable

Effects of Reconciliation
i.
Legal separation proceedings if still pending shall be
terminated
ii.
Final decree of legal separation shall be set aside but the
separation of property and any forfeiture of the share of
the guilty spouse shall subsist unless the spouses agree to
revive their former property regime

Bar Question (2003). Which of the following remedies, i.e., (a) declaration of
nullity of marriage, (b) annulment of marriage, (c) legal separation, and/or (d)
separation of property, can be aggrieved spouse avail himself/herself of
(i) If the wife discovers after the marriage that her husband has AIDS
(ii) If the wife goes abroad to work as a nurse and refuses to come home
after the expiration of her three-year contract there.
(iii) If the husband discovers after the marriage that his wife has been a
prostitute before they got married.
(iv) If the husband has a serious affair with his secretary and refuses to stop
notwithstanding advice from relatives and friends.
(v) If the husband beats up his wife every time he comes home drunk.

Answer:
(i) Since AIDS is a serious and incurable sexually-transmissible disease, the
wife may file an action for annulment of the marriage on this ground
whether such fact was concealed or not from the wife, provided that the
disease was present at the time of the marriage. The marriage is voidable
even though the husband was not aware that he had the disease at the
time of marriage.
(ii) If the wife refuses to come home for three (3) months from the expiration
of her contract, she is presumed to have abandoned the husband and he
Page 23 of 230

may file an action for judicial separation of property. IF the refusal

continues for more than one year from the expiration of her contract, the
husband may file the action for legal separation under Art.55 (10) of the
Family Code on the ground of abandonment of petitioner by respondent
without justifiable cause for more than one year. TH wife is deemed to
have abandoned the husband when she leaves the conjugal dwelling
without any intention of returning (Article 101, FC). The intention not to
return cannot be presumed during the 3-year period of her contract.
(iii) If the husband discovers after the marriage that his wife was a prostitute
before they got married, he has no remedy. No misrepresentation or
deceit as to character, health, rank, fortune, or chastity shall constitute
fraud as legal ground for an action for the annulment of marriage.
(Article 46 FC)
(iv) The wife may file an action for legal separation. The husbands sexual
infidelity is a ground for legal separation (Article 55, FC). She may also
file an action for judicial separation of property for failure of her husband
to comply with his marital duty of fidelity (Article 135(4), 101, FC).
(v) The wife may file an action for legal separation on the ground of repeated
physical violence on her person (Article 55(1), FC). She may also file an
action for judicial separation of property for failure of the husband to
comply with his marital duty of mutual respect (Article 135(4), Article 101,
FC). She may also file an action for declaration of nullity of the marriage
if the husbands behavior constitutes psychological incapacity existing at
the time of the celebration of marriage.
Bar Question (2006). Gigi and Ric, Catholics, got married when they were 18
years old. Their marriage was solemnized on August 2, 1989 by Rics uncle, a
Baptist Minister, in Calamba, Laguna. He overlooked the fact that his license to
solemnize marriage expired the month before and that the parties do not belong
to his congregation. After 5 years of married life and blessed with 2 children, the
spouses developed irreconcilable differences, so they parted ways. While
separated, Ric fell in love with Juliet, a 16 year-old sophomore in a local college
and a Seventh-Day Adventist. They decided to get married with the consent of
Juliets parents. She presented to him a birth certificate showing she is 18 years
old. Ric never doubted her age much less the authenticity of her birth certificate.
They got married in a Catholic church in Manila. A year after, Juliet gave birth to
twins, Aissa and Aretha.
(4) If you were the counsel for Gigi, what action/s will you take to enforce and
protect her interests? Explain.

Suggested Answers:
(1) As counsel for Gigi, I will file an action for the declaration of nullity of Gigis
marriage to Ric on the ground of absence of authority of the Baptist Minister
Page 24 of 230

C) ADDITIONAL REQUISITES FOR A NOTARIAL WILL IF THE TESTATOR

BE DEAF OR A DEAF-MUTE:
1. Testator must personally read the will, if able to do so;
2. Otherwise, he shall designate two persons to read it and
communicate to him, in some practicable manner, its contents
D) ADDITIONAL REQUISITE FOR A NOTARIAL WILL IF THE TESTATOR
IS BLIND: The will shall be read to the testator twice -Once by one of
the subscribing witnesses and once by the notary public before whom
the will is acknowledged
E) REQUISITES FOR HOLOGRAPHIC WILL:
1. In writing
2. In a language or dialect known to the testator
3. Entirely written, dated, and signed by the hand of the testator
himself
5. AMENDING A WILL:
1. Notarial only through a codicil
2. Holographic in three ways
a. Dispositions may be added below the signature, PROVIDED
that said dispositions are also dated and signed, and
everything is written by the hand of the testator himself
b. Certain dispositions or additional matter may be suppressed or
inserted PROVIDED that said cancellation is signed by the
testator and written by the hand of the testator himself
c. Through a codicil which may either be notarial or holographic
6. EFFECT OF INSERTION ON THE VALIDITY OF A HOLOGRAPHIC WILL:
(Tolentino)
a) If made after the execution of the will, but without the consent of the
testator, such insertion is considered as not written because the validity
of the will cannot be defeated by the malice or caprice of a third person
b) If the insertion after the execution of the will was with the consent of
the testator, the will remains valid but the insertion is void
c) If the insertion after the execution is validated by the testator by his
signature thereon, then the insertion becomes part of the will, and the
entire will becomes void, because of failure to comply with the
requirement that it must be wholly written by the testator
d) If the insertion made by a third person is made contemporaneous to the
execution of the will, then the will is void because it is not written
entirely by the testator
7. QUALIFICATIONS OF WITNESSES TO A NOTARIAL WILL:
1. Of sound mind
2. Of the age of 18 years or more
Page 209 of 230

to solemnize the marriage between Ric and Gigi who were both nonmembers of the Baptist Church.

Wills
1. DEFINITION OF WILL- It is an act whereby a person is permitted with the
formalities prescribed by law to control to a certain degree the disposition of his
estate to take effect after his death
2. TESTAMENTARY CAPACITY:
a) All persons who are not expressly prohibited by law
b) 18 years old and above
c) Of sound mind, at the time of its execution
3. KINDS OF WILLS:
a) Notarial an ordinary or attested will
b) Holographic a handwritten will

(2) As counsel for Gigi, and on the basis of the legal presumption that her
marriage to Ric is valid, I will file the ff. actions: (1) Legal separation on the
grounds of subsequent bigamous marriage and sexual infidelity; (2)
Receivership of the conjugal or community property; (3) Judicial separation
of property; (4) Petition for sole administration of the conjugal or community
property; (5) Action for damages for abuse of rights; and (6) Action to
declare the marriage of Ric and Juliet as null and void and to recover her
share in her community of property with Ric, consisting of the portion
shared by Ric in whatever property was commonly or jointly acquired by Ric
and Juliet.
Property Relations Between Spouses

4. REQUISITES OF WILLS
A) COMMON REQUIREMENTS TO BOTH WILLS:
1. In writing
2. In a language or dialect known to the testator
B) ADDITIONAL REQUISITES FOR VALID NOTARIAL WILL:
1. Subscribed at the end by the testator himself or by the
testators name written by some other person in his presence,
and by his express direction
2. Attested & subscribed by three or more credible witnesses in
the presence of the testator and of one another
3. Each and every page, except the last, must be signed by the
testator or by the person requested by him to write his name,
and by the instrumental witnesses of the will, on the left
margin
4. Each and every page of the will must be numbered
correlatively in letters placed on the upper part of each page
5. It must contain an attestation clause, stating the following:
i. The number of pages used upon which the will is
written
ii. The fact that the testator signed the will and every
page, or caused some other person to write his name,
under his express direction, in the presence of the
instrumental witnesses
iii. All the instrumental witnesses witnessed and signed
the will and all its pages in the presence of the
testator and of one another
6. It must be acknowledged before a notary public by the testator
and the witnesses

1. What Governs Property Relations Between Spouses

a) Marriage settlement future spouses may agree upon the regime
of ACP, CPG or complete separation of property or any other
regime
b) Provision of the Family Code if there is no marriage settlement or
when the regime agreed upon is void, the system of ACP shall
govern
c) Local custom

General rule: once marriage is celebrated, there is already a property

regime and this cannot be changed - except:
1) legal separation (ACP/CPG is dissolved)
2) revival of former property regime upon reconciliation
3) petition of one spouse for separation in case of abandonment or
failure to comply with marital obligations
4) judicial dissolution of regime: joint petition or petition by
one spouse for cause. (Art 135/136)
2. Requisites
a)
b)
c)
d)

If a party executing the settlement needs parental consent, the

parent/guardian whose consent is needed must be made a party to
the agreement

e)

f)
Page 208 of 230

of Valid Marriage Settlement

In writing
Signed by the parties
Executed before the celebration of marriage

If the party executing the settlement is under civil interdiction or

any other disability, the guardian appointed by the court must be
made a party to the settlement
Registration (to bind 3rd persons)
Page 25 of 230

3. Donations by Reason of Marriage

a) Requisites
1) made before marriage
2) in consideration of marriage
3) in favor of one or both of the betrothed
b) Before Marriage
General Rule: Future spouses cannot donate to each other more than
1/5 of their present property (excess shall be considered void)
Exception: If they are governed by ACP
c) During Marriage
General Rule:
Spouses cannot donate to each other, directly or
indirectly (donations made by spouses to each other during the
marriage are void)
Exception: Moderate gifts on the occasion of any family rejoicing
d) Grounds to Revoke Donation Propter Nuptias
i.
Marriage is not celebrated or is judicially declared void
ab initio
ii.
Marriage without the needed parental consent
iii.
Marriage is annulled and donee in bad faith
iv.
If it is with a resolutory condition and the condition is
complied with
v.
In legal separation and donee is the guilty spouse
vi.
Donee commits acts of ingratitude
e) Prescriptive Period for Filing Action for Revocation of Donation
Propter Nuptias
If marriage is not celebrated (except donations
i.
contained in the marriage settlement which are
automatically rendered void if the marriage does not
take place)- 5 years (Art. 1149) from the time
marriage is not solemnized on the fixed date
ii.
If marriage is judicially declared void, it depends:

-if subsequent marriage is void pursuant to Art. 40 in

relation to Arts. 52 and 53, because contracted by a
spouse before prior void marriage is judicially
declared void by operation of law if donee-spouse
contracted subsequent void marriage in bad faith.
-Judicially declared void on grounds other than Art.
40 in relation to Arts. 52 and 53 5 years from
finality of judicial declaration of nullity (if action to
recover property)
Page 26 of 230

2.

trust) for the benefit of Juana with Juan as trustee of one-half undivided or
ideal portion of each of the two lots. Therefore, Juana can file an action for
damages against Juan for having fraudulently sold one of the two parcels
which he partly held in trust for Juanas benefit. Juana may claim actual or
compensatory damage for the loss of her share in the land; moral damages
for the mental anguish, anxiety, moral shock and wounded feelings she had
suffered; exemplary damage by way of example for the common good, and
attorneys fees.
Juana has no cause of action against the buyer who acquired the land for
value and in good faith, relying on the transfer certificate of title showing
that Juan is the registered owner of the land.
Juanas suit to have herself declared as sole owner of the entire remaining
area will not prosper because while Juans act in selling the other lot was
wrongful, it did not have the effect of forfeiting his share in the remaining
lot. However, Juana can file an action against Juan for partition or
termination of the co-ownership with a prayer that the lot sold be
adjudicated to Juan, and the remaining lot be adjudicated and reconveyed
to her.
SUCCESSION

1. DEFINITION OF SUCCESSION
It 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
2. KINDS OF SUCCESSION
a) Testamentary that which results from the designation of an heir,
made in a will executed in the form prescribed by law
b) Legal or Intestate that which takes place by operation of law in
the absence of a valid will
c) Mixed that which is effected partly by will and partly by operation
of law
3. KINDS OF HEIRS:
a) Compulsory those who succeed by force of law to some portion
of the inheritance, in an amount predetermined by law, of which
they cannot be deprived by the testator, except by a valid
disinheritance
b) Voluntary or Testamentary those who are instituted by the
testator in his will, to succeed to the portion of the inheritance of
which the testator can freely dispose
c) Legal or Intestate those who succeed to the estate of the
decedent who dies without a valid will, or to the portion of such
estate not disposed of by will
Page 207 of 230

iii.
7. Effect of Laches
a) Implied trust may be barred not only by prescription but also by laches.
b)
Laches constitutes a defense to a suit to declare and enforce an
implied trust, and for the purpose of the rule, express repudiation is not
required, unless the trustee fraudulently and successfully conceals the
facts giving rise to the trust.
c)
The doctrine of laches, however, is less strictly applied between near
relatives than when the parties are strangers to each other.
8. General Rule under Article 1448
a) A resulting trust arises in favor of a person from whom a consideration
comes for a reconveyance of property (real or personal) to another, but
the trust is rebuttable by proof of a contrary intention of the persons
from whom the consideration comes, and such proof may be by parol
evidence. The trust results only in favor of one advancing the
consideration, and not in favor of one for whose benefit the purchase
may have been made.
b) Exceptions:
No trust is implied if the person to whom the legal estate is
conveyed is a legitimate or illegitimate child of the payor. The
reason is there is a presumption that a gift or donation was
intended in favor of the child.
When an actual contrary intention is proved.
9. Article 1456 Property acquired through mistake or fraud
The mistake referred to in this article is a mistake made by a third
person, not that made by a party to the contract. For if made by a party, no
trust is created. Similarly, the fraud referred to is extra-contractual.

iv.

When marriage takes place without the required

parental consent 5 years
If resolutory condition is complied with 5 years from
happening of condition

v.

When marriage is annulled and donee in bad faith 5

years from finality of decree

vi.

If donee commits an act of ingratitude 1 year from

vii.

donors knowledge of that fact

In cases of legal separation 5 years from the time
the decree of separation has become final

Absolute Community
1. System of Absolute Community: The community property consists of all the
property owned by the spouses at the time of the celebration of the marriage or
acquired thereafter.
2. Exclusions from Community Property
a) Property acquired during the marriage by gratuitous title and its
fruits except if its expressly provided by the donor, testator or
grantor that they shall form part of the community property
b) Property for personal and exclusive use of either spouse (jewelry
forms part of the ACP)
c) Property acquired before the marriage by one with legitimate
descendants by former marriage and its fruits and income

Answers:
1. When, for convenience, the Torrens title to the two parcels pf land were
placed in Juans name alone, there was created an implied trust (a resulting

3. Charges upon the ACP

a) Support of spouses, their common children and legitimate children
of either spouse
b) Debts and obligations contracted during the marriage by
designated administrator - spouse, both spouses or by one with the
consent of the other
c) Debts and obligations contracted by either spouse without the
consent of the other to the extent that it benefited the family
d) Taxes, liens, charges and expenses upon community property
e) Taxes and expenses for mere preservation made during the
marriage upon the separate property of either spouse used by the
family
f) Expenses for professional or vocational course
g) Antenuptial debts which redounded to the benefit of the family
h) Donated or promised to common legit children for profession,
vocational course or self improvement
i) Other ante-nuptial debts, support of illegitimate child and liabilities
for crime, quasi-delicts in absence of separate property
j) Expenses of litigation between spouses unless the suit is found to
be groundless

Page 206 of 230

Page 27 of 230

Bar Question (1998). Juan and his sister Juana inherited from their mother
two parcels of farmland with exactly the same areas. For convenience, the
Torrens certificates of title covering both lots were placed in Juans name alone.
In 1996, Juan sold to an innocent purchaser one parcel in its entirety without the
knowledge and consent of Juana, and wrongfully kept for himself the entire price
paid.
1. What rights of action, if any, does Juana have against and/or the buyer?
(3%)
2. Since the two lots have the same area, suppose Juana files a complaint to
have herself declared sole owner of the entire remaining second lot,
contending that her brother had forfeited his share thereof by wrongfully
disposing of her undivided share in the first lot, will the suit prosper? (2%)

If the community property is insufficient to cover all these liabilities,

except those falling under par. 9, the spouses shall be solidarily liable
for the unpaid balance with their separate properties.
4. Administration of community property belongs to both spouses jointly.
a) In cases of disagreement, the decision of the husband prevails.
b) If the wife decides to go to court, she must do so within 5 years
from the date of the contract implementing the husbands decision.
c) Both spouses must approve any dispositions or encumbrances and
consent of the other spouse regarding the disposition must be in
writing, otherwise, the matter should be brought to court and the
court will give the authority, if proper.
d) If one spouse acts without the consent of the other or without
court approval, such disposition/encumbrance is void. However,
the transaction shall be construed as a continuing offer on the part
of the consenting spouse and the 3rd person which may be
perfected as a binding contract upon acceptance by the spouse or
court approval.
5. Termination of ACP/CPG
a) Death
b) Legal separation
c) Annulment
d) Judicial separation of property during marriage
6. Procedure for Dissolution of ACP
1. Inventory of all properties
2. Debts and obligation of ACP are paid
3. Remains of the separate properties of the spouses are
returned to the owner
4. Net remainder of the ACP is divided equally between
husband and wife
5. Presumptive legitimes of children are delivered
6. Adjudication of conjugal dwelling and custody of common
children
Conjugal Partnership of Gains
1. System of Conjugal Partnership of Gains
a) The spouses contribute the following to a common fund:
i.
Proceeds, products, fruits and income of separate
properties of spouses
ii.
Everything acquired by spouses through their efforts
iii.
Everything acquired by spouses through chance
Page 28 of 230

6. Prescriptibility of Action for Reconveyance based on Implied Trust

a) An action for reconveyance of property (real or personal) to enforce an
implied trust in ones favor prescribed in ten (10) years from the time
the right of action
b) Accrues (the action being based upon an obligation created by law),
that is, from the moment the law creates the trust because the socalled trustee does not recognize any trust and has no intention to hold
for the beneficiary.
c) Where the action for conveyance of real property is based on
constructive trust resulting from its fraudulent registration in the name
of another (see Article 1456), the action may be filed from the discovery
of the fraud or notice thereof, which is deemed to have taken place
from the inscription of the instrument and/or issuance of the new
certificate of title by virtue thereof. The issuance of said certificate of
title constitutes constructive notice to the public.
d) In another case, however, where the ownership of the land was sold
fictitiously to avoid a foreclosure of mortgage, it was ruled that the tenyear prescriptive period should be counted not from the registration of
the simulated sale, but from the date of recording of the release of the
mortgage, on which date the cestui que trust was charged with the
knowledge of the settlement of the mortgage obligation, the attainment
of the purpose for which the trust was created. But if the legitimate
owner of the subject property, which was fraudulently registered in the
name of another, had always been in possession thereof, the
constructive notice rule cannot be applied. The action for reconveyance
is in reality an action to quiet title; therefore, the action is
imprescriptible.
e) but where the rights of the beneficiary are recognized by the trustee,
the ten-year prescriptive period commences to run from the time the
trustee begins to assert his title or to hold adversely, as when the
trustee files an ejectment suit against the beneficiary, or when he
registers the deed of assignment of property to him and secures the
cancellation of the certificate of title in the name of the former owner
and the issuance of new certificate of title in his own name, or when he
sells portions of the property.
f) Continuous recognition of a resulting trust precludes any defense of
prescription or laches in a suit to declare and enforce the trust.
g) When a person through fraud succeeds in registering a land in his
name, the law creates a constructive trust in favor of the defrauded
party. (See Article 1456). The latter is granted the right to recover the
property fraudulently registered within a period of ten years. In the
computation of time necessary for prescription, the present possessor
may complete the period necessary for prescription by tacking his
possession to that of his grantor. This rule, however, applies only
where there is privity between successive possessors.
Page 205 of 230

Created by the intention (through

direct
and positive acts) of the parties
Cannot be proved by parol evidence
when it concerns an immovable or
any interest therein
In order that laches or acquisitive
prescription may bar an action to
enforce it, an express repudiation
made known to the beneficiary is
required

Comes into being by operation of law

independent of the particular intention
of the parties
Can be proved by oral evidence when it
concerns an immovable or any interest
therein
Laches constitutes a bar to actions to
enforce it, unless there is concealment
of the fact giving rise to the trust

4. When is an implied trust converted to express trust?

An implied trust may be converted to an express trust by the
recognition by the implied trustee of the right to the property of the owner.
5. Acquisition of property through prescription

a)

By trustee:
The possession of a trustee is in law possession of the cestui
que trust and, therefore, it cannot be a good ground for title
by prescription
ii. No prescription shall run in favor of a co-owner against his coowners or co-heirs as long as he expressly or impliedly
recognizes the co-ownership
iii. Express trusts disable the trustee from acquiring for his own
benefit the property committed to his management or custody
at least while he does not openly repudiate the trust and
makes such repudiation known to the beneficiary
iv. Trustee may claim title by prescription founded on adverse
possession where it appears that:
1. He has performed open and unequivocal acts of
repudiation amounting to an ouster of the cestui que

i.

trust
2.
3.
4.

b)

Such positive acts of repudiation have been made

known to the cestui que trust
The evidence thereon should be clear and conclusive;
and
The period fixed by law has prescribed (the period
commences to run from and after said repudiation
and the knowledge thereof by the cestui que trust.

By third persons:
Though the statute of limitations does not run between trustee cestui
que trust as long as the trust relation subsists, it does not run between
the trust and third persons. Thus, a third person who holds actual,
open, public, and continuous possession of a land adversely to the
trust, acquires title to the land by prescription as against such trust.
Page 204 of 230

b)

Exclusive Property in CPG

i.
That brought into the marriage as his/her own
ii.
That acquired during the marriage gratuitously
iii.
That acquired by redemption, barter or exchange with
exclusive property
iv.
That purchased with exclusive money of spouse

c)

What Constitutes CPG

i.
Those acquired during the marriage with conjugal
funds
ii.
Those obtained from labor, industry, work or
profession of either or both spouse
iii.
Fruits of conjugal property due or received during the
marriage and net fruits of separate property
iv.
Share in the hidden treasure
v.
Those acquired through occupation
vi.
Livestock in excess of what was brought to the
marriage
vii.
Those acquired by chance

2. Charges upon the CPG

a) Support of the spouses, their common children and legit children of
either spouse
b) Debts and obligations contracted by one without the consent of the
other to the extent that the family benefited
c) Debts and obligations contracted during the marriage by
administrator- spouse, both spouses or one with the consent of the
other
d) Taxes, liens, charges, expenses upon conjugal property
e) Taxes and expenses for mere preservation of separate property
f) Expenses for professional, vocational or self-improvement courses
of either spouse
g) Antenuptial debts to extent family benefited
h) Value of what is donated or promised to common legit children for
professional, vocation or self improvement courses
i) Expenses of litigation
3. Procedure for Dissolution of CPG
a) Inventory of all property
b) Amounts advanced by CP as payment for personal debts and
obligations of either spouse are credited
c) Reimbursement for use of exclusive funds
d) Debts and obligations of the CP are paid
e) Remains of exclusive properties are returned
f) Indemnify loss of deterioration of movables belonging to either
spouse used for the benefit of the family
Page 29 of 230

g)
h)
i)

Net remainder of conjugal property is divided equally

Delivery of childrens presumptive legitimes
Adjudication of conjugal dwelling and custody of children

4. Distinction between ACP and CPG

ACP
All the properties owned by the
spouses at the time of marriage
become community property

Upon dissolution and liquidation of

the community prop what is divided
equally between the spouses or their
heirs is the net remainder of the
properties of the ACP

CPG
Each spouse retains his/her property
before the marriage and only the fruits
and income of such properties become
part of the conjugal properties during the
marriage
Upon dissolution of the partnership, the
separate property of the spouses are
returned and only the net profits of the
partnership are divided equally between
the spouses of their heirs

Bar Question (1998). In 1970, Bob and Issa got married without executing a
marriage settlement. In 1975, Bob inherited from his father a residential lot upon
which, in 1981, he constructed a two-room bungalow with savings from his own
earnings. At that time, the lot was worth P800,000.00 while the house, when
finished, cost P600,000.00. In 1989, Bob died, survived only by his wife Issa and
his mother, Sofia. Assuming that the relative values of both assets remained at
the same proportion:
1. State whether Sofia can rightfully claim that the house and lot are not
conjugal but exclusive property of her deceased son.
2. Will your answer be the same if Bob died before August 3, 1988?

Answers:
1. Since Bob and Sofia got married in 1970, then the law that governs is the
New Civil Code (Persons), in which case, the property relations that
should be applied as regards the property of the spouses is the system of
relative community or conjugal partnership of gains (Art. 119, Civil Code).
By conjugal partnership of gains, the husband and the wife place in a
common fund the fruits of their separate property and the income from
their work or industry (Art. 142, Civil Code). In this instance, the lot
inherited by Bob in 1975 is his own separate property, he having acquired
the same by lucrative title (par. 2, Art. 148, Civil Code). However, the
house constructed form his own savings in 1981 during the subsistence of
his marriage with Issa is conjugal property and not exclusive property in
accordance with the principle of reverse accession provided for in Art.
158, Civil Code.
2. Yes, the answer would still be the same. Since Bob and Issa contracted
their marriage way back in 1970, then the property relations that will
Page 30 of 230

a)
b)
c)
d)
e)
f)
g)
h)

Mutual agreement of all the parties

Expiration of the term
Fulfillment of the resolutory condition
Rescission or annulment
Physical loss or legal impossibility of the subject matter of the trust
Order of the court
Merger
Accomplishment of the purpose of the trust

9. Effect of Laches
a) Cestui que trust is entitled to rely upon the fidelity of the trustee.
Laches applies from the trustee openly denies or repudiates the trust
and the beneficiary is notified thereof, or is otherwise plainly put on
guard against the trustee.
b) On the other hand, when it does not appear when the trustee
repudiated existence of the fiduciary relation, the same shall be taken
to have been made only upon the filing of his answer to the complaint.
Implied Trusts
1. Concept: Implied trusts are those which, without being expressed, are
deducible from the nature of the transactions as matter of intent, or which are
super induced on the transaction by operation of law, is matters of equity,
independently of the particular intention of the parties. The doctrine of implied
trusts is founded upon equity. As such, trust can never result from acts violative
of the law.
2. Kinds:
a) Resulting trust a trust whish is raised or created by the act or
construction of law, or in its more restricted sense, it is raised by
implication of law and presumed always to have been contemplated by
the parties, the intention as to which is to be found in the nature of
their transaction, but not expressed in the deed or instrument of
conveyance. Examples are those found in Articles 1448 to 1455 of the
NCC
b)

Constructive trust a trust raised by construction of law; in a more

restricted sense and as contra-distinguished from a resulting trust, it is
a trust not created by words, expressly or impliedly evincing a direct
intention to create a trust by the construction of equity in order to
satisfy the demands of justice; it does not arise by agreement or
intention but by operation of law

3. Distinction between Express and Implied Trusts

Express Trust

Implied Trust
Page 203 of 230

e)

The trustee cannot acquire the property held in trust by

prescription as long as the trust is admitted (if he repudiates and
this is made known to the party involved, prescription is permitted)

govern is still the relative community or conjugal partnership of gains (Art.

119, Civil Code). It will not matter if Bob died before or after August 3,
1988 (effectivity date of the Family Code), what matters is the date when
the marriage was contracted. As Bob and Issa contracted their marriage
way back in 1970, the property relation that governs them is still the
conjugal partnership of gains. (Art. 158, Civil Code)

4. May a trustee of a trust estate be personally liable?

In the absence of an express stipulation in a contract entered into by a
trustee for a corporation that the trust estate and not the trustee should be liable
on the contract; the trustee is liable in its individual capacity.

Separation of Property of the Spouses

5. When may a trustee sue as such?

Before a trustee may sue or be sued alone as such, it is essential that
his trust be express.

1. Rule: In the absence of an express declaration in the marriage settlements,

the separation of property between the spouses during the marriage shall not
take place except by judicial order.

6. Acceptance, Declination, or Renunciation by the Trustee

a) In the case of an express trust, acceptance of trust by a trustee is
necessary to charge him with the office of the trustee and the
administration of the trust and to vest the legal title in him. However,
his acceptance of the trust is not necessary to its existence and validity,
since if he declines the trust, the courts will appoint a trustee to fill the
office that he declines.
b) One designated or appointed as trustee may decline the responsibility
and thereby be free from any legal or equitable duty or liability in the
matter.
c) Unless a contrary intention appears in the instrument constituting the
trust, declination or refusal or disqualification of a trustee does not
operate to defeat or void the trust, nor does it operate to vest legal as
well as equitable title in the beneficiary.
d) Renunciation of a trust after its acceptance can only be by resignation
or retirement with court approval, with agreement of beneficiaries, and
on satisfaction of all legal liabilities growing out of the acceptance of the
trust.
e) When a person administering property in the character of a trustee
inconsistently assumes to be holding in his own right, this operates as
renunciation of the trust and the beneficiaries of the property are
entitled to maintain an action to declare their right and remove the
unfaithful trustee.

2. Judicial separation of property may either be voluntary or for sufficient cause.

a) Sufficient Cause for Judicial Separation of Property
i.
Civil interdiction of the spouse of petitioner
ii.
Judicial declaration of absence
iii.
Loss of parental authority as decreed by the court
iv.
Abandonment or failure to comply with family
obligation
v.
Administrator spouse has abused authority
vi.
Separation in fact for one year and reconciliation is
highly improbable
3. Grounds for Revival of Former Property Regime
i.
When civil interdiction of the prisoner-spouse
terminates
ii.
When the absentee spouse reappears
iii.
When the court authorizes resumption of
administration by the spouse formerly exercising such
power
iv.
When the spouse who has abandoned the conjugal
home returns and resumes common life with the
other
v.
When parental authority is judicially restored to the
spouse previously deprived thereof
vi.
When spouses agree to revive their former property
regime

7. Acceptance of Trust by the Beneficiary

a) This is essential to the creation and validity of a trust.
b) Acceptance is presumed if the granting of benefit is purely gratuitous
(no onerous condition) EXCEPT if there is proof that he really did not
accept.
c) Acceptance by the beneficiary of a gratuitous trust is not subject to the
rules for the formalities of donations.

4. Ground for Transfer of Administration of Exclusive Property of Either Spouse

a) One spouse becomes guardian of the other
b) One spouse judicially declared absent
c) One spouse sentenced to penalty with civil interdiction
d) One spouse becomes a fugitive from justice

8. Termination

5. Unions Governed by Article 147

Page 202 of 230

Page 31 of 230

a)

b)

When a man and a woman capacitated to marry each other live

exclusively with each other as husband and wife without the
benefit of marriage
A man and a woman living together under a void marriage
(inapplicable to bigamous marriage)

ground that he would be unjustly enriched if he

were permitted to retain it; the duty to convey
the property arises because it was acquired
through fraud, duress, undue influence, mistake,
or through breach of a fiduciary duty, or through
the wrongful disposition of anothers property.

Rules:

Wages and salaries earned by either spouse during the cohabitation

shall be owned by the parties in equal shares
Properties acquired by them through their joint work or industry during
the cohabitation shall be governed by the rules of co-ownership

Remember:
a) Presumption: properties acquired during the cohabitation are
presumed to have been acquired through their joint efforts, work
or industry
b) Party who did not participate in the acquisition by the other party
of any property shall be deemed to have contributed jointly in the
acquisition thereof if the formers efforts consisted in the care and
maintenance of the family and of the household
c) Parties cannot encumber or dispose by acts inter vivos their share
in the property acquired during their cohabitation and owned in
common, without the consent of the other, until after termination
of cohabitation
d) In case of void marriage if only one party is in good faith, the
share of the spouse who is in bad faith shall be forfeited
e) In favor of their common children
f) In case of default of or waiver by any or all of the common
children or their descendants, each vacant share shall belong to
the respective surviving descendants
g) In the absence of such descendants, such share belongs to the
innocent party
6. Unions Governed by Article 148
a)
Bigamous marriages
b)
Adulterous relationships
c)
Relationships in a state of concubinage
d)
Relationships where both man and woman are married to
other persons
e)
Multiple alliances of the same married man

Rules:

Only properties acquired by the parties through their actual joint

contribution of money, property or industry shall be owned in
common in proportion to their respective contributions.

Page 32 of 230

Express Trusts
1. Requisites
a) There must be:
i. A competent trustor and trustee,
ii. An ascertainable trust res, and
iii. Sufficiently certain beneficiaries
b) The requirement that the express trust be written is only for
enforceability, not for validity between the parties; hence, Article 1443
may, by analogy, be included under the Statute of Frauds;
c) By implication, for a trust over personal property, an oral agreement
is valid and enforceable between the parties;
d) Regarding third persons, the trust must be in public instrument
registered in the Registry of Property if it concerns real property.
e) Creation -There must be a clear intent to create a trust. Thus, no
particular or technical words are required.
i. By conveyance to the trustee by an act inter vivos or

mortis causa
ii.

By admission of the trustee that he holds the property

only as a trustee

iii.
2. Capacity
a)
b)
c)

The trustor must be capacitated to convey property

The trustee must be capacitated to hold property and to enter into
contract
The beneficiary must be capacitated to receive gratuitously from
the trustor

3. Administration of the Trust

a) The trustee must file a bond
b) The trustee must make an inventory of the real and personal
property in trust
c) The trustee must manage and dispose of the estate and faithfully
discharge his trust in relation thereto according to law or according
to the terms of the trust instrument as long as they are legal and
possible
d) The trustee must render a true and clear account

Page 201 of 230

b)

c)

Trustee or the person who takes and holds the legal tile to the trust
property, for the benefit of another, with certain powers and subject to
certain duties;
Beneficiary or cestui que trust or the person has an equitable interest in
the property and enjoys the benefit of the administration of the trust by
the trustee

In the absence of proof to the contrary contributions and the share

of the parties to the properties acquired during the cohabitation are
presumed equal

If one party is validly married to another:

o
o

11. Character of Office of Trustee

a) As principal The trustee is not an agent of the trust estate or of the
cestui que trust, but he acts for himself in the administration of the
trust estate, although subject to the terms of the trust and law of trusts.
b) As agent In some cases, however, a trustee has been regarded as an
agent of beneficiaries of the trust at least for certain purposes, such as
for the purpose of imputing to the beneficiaries of the trust notice given
to the trustee.
c) As fiduciary A trustee, like an executor or administrator, holds an
office of trust. The duties of the latter are, however, fixed and/or
limited by law, whereas those of trustee of an express trust are usually
governed by the intention of the trustor or of the parties, if established
by contract.
12. Classification of Trust
A. From the viewpoint of whether it becomes effective after the death
of the trustor or during his life:
a) Testamentary trust
b) Trust inter vivos (sometimes called living trusts)
B. From the viewpoint of the creative force bringing it into existence:
a) Express trust which can come into existence only by the
manifestation of an intention to create it by the one
having legal and equitable dominion over the property
made subject to it;
b) Implied trust which comes into existence either through
implication of an intention to create a trust as a matter of
law or through the imposition of the trust irrespective of
and even contrary to any such intention; it may either be:
i. A resulting trust which arises where a person
makes or causes to be made a disposition of
property under circumstances which raise an
inference that he does not intend that the person
taking or holding the property should have the
beneficial interest in the property; is founded on
the presumed intention of the parties; OR
ii. A constructive trust which is imposed where a
person holding title to property is subject to an
equitable duty to convey it to another on the
Page 200 of 230

His/her share in the co-owned properties will accrue to the

ACP/CPG of his/her existing valid marriage
If the party who acted in bad faith is not validly married to
another, his/her share shall be forfeited in the same
manner as that provided in Art 147

*The same rules on forfeiture shall apply if both parties are in bad faith
Bar Question (1997): Luis and Rizza, both 26 years of age and single, live
exclusively with each other as husband and wife without the benefit of marriage.
Luis is gainfully employed. Rizza is not employed, stays at home, and takes
charge of the household chores.
After living together for a little over twenty years, Luis was able to save
from his salary earnings during that period the amount of P200,000 presently
deposited in a bank. A house and lot worth P500,000 was recently purchased for
the same amount by the couple. Of the P500,000 used by the common-law
spouses to purchase the property, P200,000 had come from the sale of palay
harvested from the hacienda owned by Luis and P300,000 from the rentals of a
building belonging to Rizza. In fine, the sum of P500,000 had been part of the
fruits received during the period of cohabitation from their separate property. A
car worth P100,000 being used by the common law spouses, was donated just
months ago to Rizza by her parents.
Luis and Rizza now decide to terminate their cohabitation and they ask
you to give them your legal advice on the following:
a. How, under the law, should the bank deposit of P200,000, the house and
lot valued at P500,000 and the car worth P100,000 be allocated to them?
b. What would your answer be (to the above question) had Luis and Rizza
been living together all the time, i.e., since 20 years ago, under a valid
marriage?

Answer:
a. Art. 147 of the Family Code provides in part that when a man and woman who
are capacitated to marry each other, live exclusively with each other as husband
and wife without the benefit of marriage or under a void marriage, their wages
and salaries shall be owned by them in equal shares and the property acquired
by both of them through their work or industry shall be governed by the rules of
co-ownership.
In the absence of proof to the contrary, properties acquired while they
lived together shall be presumed to have been obtained by their joint efforts,
work or industry, and shall be owned by them in equal shares. A party who did
not participate in the acquisition by the other party of any property shall be
deemed to have contributed jointly in the acquisition thereof if the formers
Page 33 of 230

efforts consisted in the care and maintenance of the family and of the
household. Thus:
1. the wages and salaries of Luis in the amount of P200,000 shall be divided
equally between Luis and Rizza.
2. the house and lot valued at P500,000 having been acquired by both of
them through work or industry shall be divided between them in
proportion to their respective contribution, in consonance with the rules
on co-ownership. Hence, Luis gets 2/5 while Rizza gets 3/5 of the
P500,000.
3. the car worth P100,000 shall be exclusively owned by Rizza, the same
having been donated to her by her parents.
b. The property relations between Luis and Rizza, their marriage having been
celebrated 20 years ago (under the Civil Code) shall be governed by the conjugal
partnership of gains, under which the husband and wife place in a common fund
the proceeds, products and fruits and income from their separate properties and
those acquired by either or both spouses through their efforts or by chance, and
upon dissolution of the marriage or of the partnership, the net gains or benefits
obtained by either or both spouse shall be divided equally between them (Art.
142, Civil Code). Thus:
1. the salary of Luis deposited in the bank in the amount of P200,000 and
the house and lot valued at P500,000 shall be divided equally between
Luis and Rizza.
2. however, the car worth P100,000 donated to Rizza by her parents shall be
considered her own paraphernal property, having been acquired by
lucrative title (par. 2, Art. 148, Civil Code).

title in the trustee, whereas it is a characteristic of a bailment that the bailee has
possession of, without legal title to the property subject to the bailment.
4. Distinguished from Donation
a) A trust is an existing legal relationship and involves the separation of
legal and equitable title, whereas a gift is a transfer of property and,
except in the case of a gift in trust, involves a disposition of both legal
and equitable ownership.
b) A trust constituted between two contracting parties for the benefit of a
third person is not subject to the rules governing donations of real
property. The beneficiary of a trust may demand performance of the
obligation without having formally accepted the benefit of the trust in a
public document, upon mere acquiescence in the formation of the trust
and acceptance under the second paragraph of Article 1311 of the Civil
Code.
5. Distinguished from Contract
a) A trust always involves an ownership, embracing a set of rights and
duties fiduciary in character which may be created by a declaration
without consideration, whereas a contract is a legal obligation based on
an undertaking supported by a consideration, which obligation may or
may not be fiduciary in character.
6. Distinguished from Guardianship or Executorship
In trust, the trustee or holder has the legal title to the property; a guardian,
administrator, or executor does not have legal title to the property.

The Family
1. Family relations include those between husband and wife, parents and
children, among other ascendants and descendants and among brothers and
sisters, full or half blood.
2. Suit between members of the same family it should appear from the verified
complaint or petition that earnest efforts towards a compromise have been made
but failed
a) Allegation of earnest efforts is JURISDICTIONAL, if it is absent,
the court can dismiss the case

b)

7. Distinguished from Stipulation Pour Autrui

a) A trust may exist because of a legal provision or because of an
agreement; a stipulation pour autrui can arise only in the case of
contracts.
b) A trust refers to specific property; a stipulation pour autrui refers to
specific property or to other things.
8. Distinguished from Agency
A trust and an agency are distinguishable on the basis of the nonrepresentative role of the trustee and the representative role of the agent.

BUT this rule is inapplicable to the following cases

i.
ii.
iii.
iv.
v.
vi.

Civil status or persons

Validity of marriage or legal separation
Any ground for legal separation
Future support
Jurisdiction of courts
Future legitime

9. Co-ownership as a Trust
A co-ownership is a form of a trust, with each co-owner being a trustee
for each of the others.
10. Parties to a Trust
a) Trustor or the person who creates or established the trust;

3. Definition of Family Home

Page 34 of 230

Page 199 of 230

ii.

Delay in asserting complainants rights after he had

knowledge of the defendants conduct and after he has
had an opportunity to sue;
iii. Lack of knowledge or notice on the part of the defendant
that the complainant would assert the right on which he
bases his suit;
iv. Injury or prejudice to the defendant in the event relief is
accorded to the complainant.

a)

It is constituted jointly by the husband and the wife or by an

unmarried head of the family

b)

It is the dwelling house where they and their family reside, and the
land on which it is situated

c)

Under the FC, a family home is deemed constituted from the time it
is occupied as a family residence

2. Laches and Prescription Distinguished

PRESCRIPTION
LACHES
Concerned with the
Concerned with the fact of delay
fact of delay
A matter of time
Principally a question of inequity founded on some
change in the condition of the property or the relation
of the parties
Statutory
Not statutory
Applies to law
Applies to equity
Based on a fixed time
Not based on a fixed time

d)

Actual value of the family home shall not exceed P300,000

(URBAN) and P200,000 (RURAL) [Article 157]

e)

The Family Home is Exempt from:

1. Execution
2. Forced Sale
3. Attachment

f)

Exceptions to Exemption of Family Home (Article 155)

i.
Non-payment of taxes
ii.
incurred prior to constitution of home
iii.
Debts secured by mortgages on the premises
iv.
Debts due laborers, mechanics, architects, builders,
materialmen and others who have rendered service or
furnished materials for the construction of the building

TRUSTS
1. Definition of Trust:
a) Trust is the legal relationship between one person having an equitable
ownership in property and another person owning the legal title to such
property, the equitable ownership of the former entitling him to the
performance of certain duties and the exercise of certain powers by the
latter.
b) It is a right, enforceable in equity, to the beneficial enjoyment of
property the legal title to which is in another.
c) As it is founded in equity, it can never result from act violative of law.
2. Characteristics of Trust
a) It is a relationship;
b) It is a relationship of fiduciary character;
c) It is a relationship with respect to property, not one involving merely
personal duties;
d) It involves the existence of equitable duties, imposed upon the holder of
the title of the property to deal with it for the benefit of another;
e) It arises as a result of a manifestation of intention to create the
relationship.
3. Distinguished from Bailment
A delivery of property in trust necessarily involves a transfer of legal
title, or at least a separation of equitable interest and legal title, with the legal
Page 198 of 230

g) Beneficiaries of a Family Income

i.
Husband and wife, or unmarried head of the family
ii.
Parents, ascendants, brothers & sisters living in home and
depend on head of family for support
h) Sale, alienation, Donation, Assignment or Encumbrance of the Family
Home
i.
The person who constituted the same must give his/her
written consent
ii.
The spouse of the person who constituted the family
home must also give his/her written consent
iii.
A majority of the beneficiaries of legal age must also give
their written consent
In case of conflict, the court shall decide
iv.
i) Requisites for Creditor to Avail of the Right under Article 160
i.
He must be a judgment creditor;
ii.
His claim is not among those excepted under Article155,
and

Page 35 of 230

iii.

He has reasonable grounds to believe that the family

home is worth more than the maximum amount fixed in
Article 157

ii.
iii.

Intent or at least expectation that this conduct shall be acted upon

by at least influence the other party;
Knowledge, actual or constructive, of the real facts

b) In relation to the party claiming the estoppel

i.
j) Procedure to Avail of Right under Article 160
i.
The creditor must file a motion in the court proceeding
where he obtained a favorable for a writ of execution
against the family home.
ii.
There will be a hearing on the motion where the creditor
must prove that the actual value of the family home
exceeds the maximum amount fixed by the FC either at
the time of its constitution or as a result of improvements
introduced thereafter its constitution.
iii.
If the creditor proves that the actual value exceeds the
maximum amount the court will order its sale in execution.
iv.
If the family home is sold for more than the value allowed,
the proceeds shall be applied as follows:
a) First, the obligations enumerated in Article 155
must be paid
b) Then the judgment in favor of the creditor will be
paid, plus all the costs of execution
c) The excess, if any, shall be delivered to the
judgment debtor
Paternity and Filiation
1. Filiation of Children
a) by nature - legitimate or illegitimate
b) adoption
2. Legitimate children - conceived or born during the marriage
Rule: the presumption is always in favor of legitimacy
3. Children by Artificial Insemination
Rule: A child conceived by artificial insemination is considered legitimate under

the following conditions:

i.
ii.

iii.

The artificial insemination is made on the wife, not on another

woman
The artificial insemination on the wife is done with the sperm
of the husband or of a donor, or both the husband and a
donor
The artificial insemination has been authorized or ratified by
the spouse on a written instrument executed and signed by
them before the birth of the child, and
Page 36 of 230

ii.
iii.

Lack of knowledge or of the means of knowing the truth as to the

facts in question;
Reliance, in good faith, upon the conduct or statement as to the
facts in question;
Action or inaction based thereon of such character as to change the
position or status of the party claiming the estoppel to his injury,
detriment, or prejudice

10. Estoppel against Owner

When in a contract between third persons concerning immovable
property, one of them is misled by a person with respect to the ownership of real
right over the real estate, the latter is precluded from asserting his legal title or
interest therein, provided all these requisites are present:
a) There must be fraudulent representation or wrongful concealment
of facts known to the party estopped;
b) The party precluded must intend that the other should act upon the
facts as misrepresented;
c) The party misled must have been unaware of the true facts; and
d) The party defrauded must have acted in accordance with the
misrepresentation.

An estoppel operates on the parties to the transaction out

of which it arises and their privies.

The government is not estopped by mistake or error on

the part of its officials or agents; the erroneous application
and enforcement of the law by public officers does not
prevent a subsequent correct application of the statute.
Laches
1. Nature of Laches
a) Laches is failure or neglect, for an unreasonable and unexplained
length of time, to do that which, by exercising due diligence, could
or should have been done earlier; it is negligence or omission to
assert a right within a reasonable time, warranting a presumption
that the party entitled to assert it either has abandoned or declined
to assert it.
b) Elements of Laches
i. Conduct on the part of the defendant or of one under
whom he claims, giving rise to the situation complained
of;
Page 197 of 230

asserted in it; a written instrument is necessary for there

to be estoppel by deed
Doctrines:

If the deed or instrument is null and void because of the

contract, there is no estoppel

Ordinarily, the person estopped must be capacitated; but a

minor is clever enough to deceive others, estoppel may result

If a person, who is not a party to the instrument, notarizes the

same, he is not in estoppel
b) Equitable Estoppel or Estoppel in Pais - It arises when one by his
acts, representations or admissions, or by his silence when he ought to
speak out, intentionally or through culpable negligence, induces another
to believe certain facts to exist, and such other rightfully relies and acts
on such belief, so that he will be prejudiced if the former is permitted to
deny the existence of such facts. It takes place in a situation where
because if a partys action or omission, he is denied the right to plead or
prove an otherwise important fact.
There may be estoppel:
i. by conduct or by acceptance of benefits
ii. by representation or concealment
iii. by silence
iv. by omission
v. by laches
Doctrines:

Conduct because of ignorance or mistake does not result in

estoppel

Estoppel by laches bars an action to create a vested right

(executory interest) but does not bar an action to protect a
vested right (executed interest)

Just because a person is silent does not necessarily mean that

he will be in estoppel; there should have been a duty or
obligation to speak

A mere promise to perform or to omit at some future time

does not necessarily result in estoppel (promissory estoppel);
for this to exist, the promise must have been relied upon and
prejudice would result unless estoppel is applied
9. Elements of Estoppel in Pais

a) In relation to the party sought to be estopped

i.

Conduct amounting to false representation or concealment of

material facts or at least calculated to convey the impression that
the facts are otherwise than and consistent with those which the
party subsequently attempts to assert;
Page 196 of 230

iv.

The written instrument is recorded in civil registry together

with the birth certificate of the child

4. Presumption regarding the childs filiation if the marriage is terminated and

the mother contracts another marriage within 300 days:
Termination of 1st
marriage

2nd marriage

180 days after 2nd

marriage

presumed conceived
during the 1st marriage

300 days after

termination of 1st
marriage

presumed conceived
during the 2nd marriage

5. Impugning the Legitimacy of a Child

General Rule: Husband alone can impugn the legitimacy of a child
Exception: The heirs of the husband may impugn the childs filiation in the
following cases:
i.
If the husband dies before the expiration of period for
filing the action
ii.
If the husband dies after filing without desisting
iii.
If the child was born after the death of the husband
a) Grounds to Impugn the Legitimacy of the Child:
i.
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. 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 intercourse
ii.
If its proved that for biological or other scientific
reasons, the child could not have been that of the
husband, except in the case of children conceived
through artificial insemination
iii.
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
Page 37 of 230

b) Periods for Filing of Action to Impugn the Legitimacy of a Child

The action to impugn the legitimacy of the child shall be brought:

i.

If the husband (or his heirs, in proper cases) resides

in the city or municipality where the child was born or
where his birth certificate was recorded within 1

year
ii.

iii.

If the husband (or his heirs) does not reside in the

city or municipality where the childs birth took place
or was recorded but his residence is in the Philippines
within 2 years
If the childs birth took place or was recorded in the
Philippines while the husband has his residence
abroad, or vice-versa within 3 years

The period shall be counted from the knowledge of the childs birth or
its recording in the civil register. HOWEVER, if the childs birth was
concealed from or was unknown to the husband or his heirs, the period
shall be counted from the discovery or knowledge of the birth of the
child or of the act of registration of said birth, whichever is earlier.
6. Action to Claim Legitimacy
a)
The child can bring the action during his lifetime
b)
If the child dies after reaching majority without filing an action,
his heirs can longer file the action after death
c)
If the child dies during minority in the state of insanity, his
heirs can file the action for him within 5 years form the childs
death
d)
If the child dies after commencing the action, the action will
survive and his heirs will substitute for him
e)
If the child is a minor or incapacitated or insane, his guardian
can bring the action in his behalf
7. Legitimate filiation may be proved by any of the following:
a) Records of birth or final judgment
b) Admission of legitimate filiation in a public document or in a private
handwritten instrument and signed by the parent concerned;
c) in the absence of these evidences, the legitimate filiation may be

proved by:
i.
ii.

Open and continuous possession of the status of a

legitimate child
Any other evidence allowed by the Rules of Court

8. Rights of Legitimate Children

a) Bear surname of parents
b) Receive support from parents, ascendants and in proper cases,
from brothers and sisters
Page 38 of 230

b)

An equitable estoppel may arise, however, even where there is no

intention on the part of the person estopped to relinquish any
existing right and frequently carries the implication of fraud. It
involves the conduct of both parties.

4. Distinguished from Ratification

In ratification, the party is bound because he intended to be bound; in
estoppel, the party is bound notwithstanding the fact that there was no such
intention because the other party will be prejudiced and defrauded by his
conduct unless the law treats him as legally bound.
5. Distinguished from Fraud
Estoppel exists with or without a contract; fraud presupposes an
attempt to enter into a valid agreement or contract. While estoppel may raised
as a defense, fraud may properly be a cause of action on account of the vitiated
consent that it produces.
6. Admissions: A party may be estopped to insist upon a claim, assert an
objection, or take a position which is inconsistent with an admission which he
had previously made and in reliance upon which the other party has changed his
position.
7. Silence or Inaction
a) This is sometimes referred to as estoppel by standing by or
laches. Mere innocent silence will not work an estoppel. There
must also be some element of turpitude or negligence connected
with the silence by which another is misled to his injury. But one
who invokes this doctrine of estoppel must show not only
unjustified inaction but also some unfair injury would result to him
unless the action is held barred.
b) Estoppel by acquiescence is closely related to estoppel by silence.
In the former, a person is prevented from maintaining a position
inconsistent with one in which he has acquiesced.
8. Kinds of Estoppel
a) Technical Estoppels
i. Estoppel by record the preclusion to deny the truth of
matters set forth in a record, whether judicial or
legislative, and also to deny the facts adjudicated by a
court of competent jurisdiction Example: the
conclusiveness of a judgment on the parties to a case
ii. Estoppel by deed a bar which precludes one party to a
deed and his privies from asserting as against the other
party and his privies any right or title in derogation of the
deed, or from denying the truth of any material facts
Page 195 of 230

c)
10. AMENDMENT/CANCELLATION OF CERTIFICATE
Cancelled:
1. Partnership is dissolved other than by reason of expiry of term
2. All limited partners cease to be such
Amended:
1. Change in name of partnership, amount/character of contribution of ltd.
partner
2. Substitution of ltd. partner
3. Admission of additional ltd. partner
4. Admission of gen. partner
5. Death, insolvency, insanity, civil interdiction of gen. partner & business
is continued
6. Change in character of business
7. False/erroneous statement in certificate
8. Change in time as stated in the certificate for dissolution of
partnership/return of contribution
9. Time is fixed for dissolution of partnership. Return of contribution if no
orig. time specified
10. Change in other statement in certificate

ESTOPPEL
Estoppel
1. Estoppel (Article 1431)
a) An admission;
b) Is rendered conclusive
c) Upon the person making it; and
d) Cannot be denied or disproved against the person relying thereon
2. Concept of Estoppel
Estoppel is a bar which precludes a person from denying or asserting
anything to the contrary of that which has, in contemplation of law, been
established as the truth, either by the acts of judicial or legislative officers or by
his own deed or representation, either expressed or implied.
It concludes the truth in order to prevent fraud and falsehood, and imposes
silence on a party only when in conscience and honesty he should not be allowed
to speak.
3. Distinguished from Waiver
a) A waiver is a voluntary and intentional abandonment or
relinquishment of a known right. It carries no implication of fraud.
It involves the act or conduct of only one of the parties.
Page 194 of 230

Receive legitimate and other successional rights

Illegitimate Children
1. Periods for Filing the Action to Establish Illegitimate Filiation
a)
If the action is based on the record of the birth of the child
or on admission by the parent of the childs filiation in a
public document or in a private handwritten signed
document during the lifetime of the child
b)
If the action is based on the open and continuous
possession by the child of the status of an illegitimate child,
or on other evidences allowed by the Rules of Court and
special laws during the lifetime of the alleged parent
2. Rights of
a)
b)
c)

Illegitimate Children
Use the surname of the mother
Receive support according to the provision of the FC
Receive legitimate (1/2 of that of a legitimate child) and other
successional rights

Bar Question (2005). Steve was married to Linda, with whom he had a
daughter, Tintin. Steve fathered a son with Dina, his secretary of 20 years,
whom Dina named Joey, born on September 20, 1981. Joeys birth certificate
did not indicate the fathers name. Steve died on August 13, 1993, while Linda
died on December 3, 1993, leaving their legitimate daughter, Tintin, as sole
heir. On May 16, 1994, Dina filed a case on behalf of Joey, praying that the
latter be declared an acknowledged illegitimate son of Steve and that Joey be
given his share in Steves estate, which is now being solely held by Tintin. Tintin
put up the defense that an action for recognition shall only be filed during the
lifetime of the presumed parents and that the exceptions under Article 285 of the
Civil Code do not apply to him since the said article has been repealed by the
Family Code. In any case, according to Tintin, Joeys birth certificate does not
show that Steve is his father.
a) Does Joey have a cause of action against Tintin for recognition and
partition? Explain.

Answer: Yes, Joey has such a cause of action against Tintin. While the Family
Code has repealed provisions of the New Civil Code on proof of filiation, said
repeal did not impair vested rights. Joey was born an illegitimate child in 1981.
As an illegitimate child, he had acquired, at birth, the right to prove his filiation in
accordance with the law in force at the time. Under the NCC, an illegitimate child
may file an action to compel his recognition even after the death of the putative
father when the father died during the minority of the child. While the FC has
repealed this provision, it will not operate to prejudice Joey who has already
acquired a vested right thereto.
Page 39 of 230

b) Are the defenses set up by Tintin tenable? Explain.

Answer: The defenses of Tintin are not tenable. The fact that Joeys birth
certificate does not show that Steve was his father is of no moment. The law
does not require such mention. Beside, the NCC provides that when the father
did not sign the birth certificate, his name should not be disclosed therein. While
it is true that capacity to inherit is determined at the time of death of the
decedent and that filiation is an element of capacity to inherit, filiation is
determined not at the time of death of the decedent but at the time of the birth
of the child who is born with a status. Such status may subsequently change
such as in legitimation, but legitimation is deemed to retroact to the time of
birth. In the same manner, recognition when given voluntarily by the father, or
decreed by the court, retroacts to the time of the childs birth.
c) Supposing that Joey died during the pendency of the action, should
the action be dismissed? Explain.
Answer: If Joey filed the action and died when the NCC was still in force, his
action would be dimissed because the action was not transmissible to the heirs
of the illegitimate child (Conde v. Abaya, 13 Phil 249 [1909]). But if the action
was filed after the effectivity of the FC, and Joey died during the pendency of the
action, it should not be dismissed. Under the FC, an action commenced by a
legitimate child to claim his legitimate filiation is not extinguished by death. The
FC makes this provision applicable to the action for recognition filed by an
illegitimate child. Joey has a right to invoke this provision because it does not
impair any vested rights (Art. 175, FC).
Legitimated children
1. Requisites for Legitimation
a) The child was conceived and born outside of wedlock;
b) The parents, at the time of childs conception, were not disqualified
by any impediment to marry each other
2. Legitimation takes place by the subsequent marriage of the childs parents
3. Effect of legitimation: It confers on the child the rights of legitimate children
4. Effects of legitimation retroact to the time of the childs birth
5. Legitimation may be impugned only those who are prejudiced in their rights
within 5 years from the time the cause of action accrues

1.
2.
3.
4.
5.
6.
7.

Right to have partnership books kept at principal place of business

Right to inspect/copy books at reasonable hour
Right to have on demand true and full info of all things affecting
partnership
Right to have formal account of partnership affairs whenever
circumstances render it just and reasonable
Right to ask for dissolution and winding up by decree of court
Right to receive share of profits/other compensation by way of
income
Right to receive return of contributions provided the partnership
assets are in excess of all its liabilities

6. LOAN AND OTHER BUSINESS TRANSACTIONS WITH LIMITED PARTNERSHIP

1. Allowed
a. Granting loans to partnership
b. Transacting business with partnership
c. Receiving pro rata share of partnership assets with general
creditors if he is not also a general partner
2. Prohibited
a. Receiving/holding partnership property as collateral security
b. Receiving any payment, conveyance, release from liability if it
will prejudice right of 3rd persons
7. REQUITES FOR RETURN OF CONTRIBUTION OF LIMITED PARTNER:
1. All liabilities of partnership have been paid/if not yet paid, at least
sufficient to cover them
2. Consent of all members has been obtained
3. Certificate is cancelled/amended as to set forth withdrawal
/reduction of contribution
8. LIABILITY OF LIMITED PARTNER
AS CREDITOR
AS TRUSTEE
1.
Deficiency in Specific property stated as contributed but not yet
contribution
contributed/wrongfully returned
2.
Unpaid Money/other property wrongfully paid/ conveyed to him
contribution
on account of his contribution

Answer: The child is legitimate of the second marriage under Article 168(2) of
the Family Code which provides that a child born after one hundred eighty days

9. DISSOLUTION OF LIMITED PARTNERSHIP

Priority in Distribution of Assets:
1. Those due to creditors, including limited partners
2. Those due to limited partners in respect of their share in
profits/compensation
3. Those due to limited partners of return of capital contributed
4. Those due to general partner other than capital & profits
5. Those due to general partner in respect to profits
6. Those due to general partner for return of capital contributed

Page 40 of 230

Page 193 of 230

Bar Question (1999). a) Two (2) months after the death of her husband who
was shot by unknown criminal elements on his way home from the office, Rose
married her childhood boyfriend, and seven (7) months after said marriage, she
delivered a baby. In the absence of any evidence from Rose as to who is her
childs father, what status does the law give to said child? Explain.

partners
Name may appear in firm name
Prohibition against engaging in business
Retirement, death, insolvency, insanity of
gen partner dissolves partnership

Name must appear in firm name

No prohibition against engaging
in business
Does not have same effect; rights
transferred to legal
representative

3. REQUIREMENTS FOR FORMATION OF LIMITED PARTNERSHIP

1.

Certificate of articles of the limited partnership must state the ff.

matters:
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.
l.
m.

n.

2.

Name of partnership + word "ltd."

Character of business
Location of principal place of business
Name/place of residence of members
Term for partnership is to exist
Amount of cash/value of property contributed
Additional contributions
Time agreed upon to return contribution of limited partner
Sharing of profits/other compensation
Right of limited partner (if given) to substitute an assignee
Right to admit additional partners
Right of limited partners (if given) to priority for contributions
Right of remaining gen partners (if given) or continue business
in case of death, insanity, retirement, civil interdiction,
insolvency
Right of limited partner (if given) to demand/receive
property/cash in return for contribution

Certificate must be filed with the SEC

4. WHEN GENERAL PARTNER NEEDS CONSENT/RATIFICATION OF ALL LTD

PARTNERS:
1. Do any act in contravention of the certificate
2. Do any act which would make it impossible to carry on the ordinary
business of the partnership
3. Confess judgment against partnership
4. Possess partnership property/assign rights in specific partnership
property other than for partnership purposes
5. Admit person as general partner
6. Admit person as limited partner - unless authorized in certificate
7. Continue business with partnership property on death, retirement,
civil interdiction, insanity or insolvency of gen partner unless
authorized in certificate

following the celebration of the subsequent marriage is considered to have been

conceived during such marriage, even though it is born within three hundred
days after the termination of the former marriage.
b) Nestor is the illegitimate son of Dr. Perez. When Dr. Perez died, Nestor
intervened in the settlement of his fathers estate, claiming that he is the
illegitimate son of said deceased, but the legitimate family of Dr. Perez is
denying Nestors claim. What evidence or evidences should Nestor present so
that he may receive his rightful share in his fathers estate?

Answer: To be able to inherit, the illegitimate filiation of Nestor must have been
admitted by his father in any of the following: (1) the record of birth appearing
in the civil register, (2) a final judgment, (3) a public document signed by the
father, or (4) a private handwritten document signed by the father (Article 175 in
relation to Article 172 of the Family Code).
Adoption
1. Who May Adopt: Any person provided he is:
a.
Of age
b.
In possession of full civil capacity and legal rights
c.
In a position to support and care for his legitimate and
illegitimate children, in keeping with the means of the family
d.
At least 16 years older than the person to be adopted, unless:
i. The adopter is the natural parent of the child to
be adopted, or
ii. The adopter is the spouse of the legitimate
parent of the person to be adopted
2. Who May
a)
b)
c)

Not Adopt
Guardian with respect to ward before final accounting
Person convicted of crime involving moral turpitude
Alien

Exceptions (an alien may adopt):

i.
ii.
iii.
iv.

Former Filipino adopting a relative by blood

Alien adopting legitimate child of Filipino spouse
Joint adoption by Alien and Filipino spouse of latters
blood relative
Those allowed by rules on inter-country adoption

Bar Question (2001). A German couple filed a petition for adoption of a minor
Filipino child with the Regional Trial Court of Makati under the provisions of the
Child and Youth Welfare Code which allowed aliens to adopt. Before the petition
could be heard, the Family Code, which repealed the Child and Youth Welfare
Code, came into effect. Consequently, the Solicitor General filed a motion to

5. SPECIFIC RIGHTS OF LIMITED PARTNERS:

Page 192 of 230

Page 41 of 230

dismiss the petition, on the ground that the Family Code prohibits aliens from
adopting. If you were the judge, how will you rule on the motion?

Creditors have an equitable lien on the consideration paid to the

retiring/deceased partner by the purchaser when retiring/deceased
partner sold his interest w/o final settlement with creditors

Answer: The motion to dismiss the petition for adoption should be denied. The
law that should govern the action is the law in force at the time of the filing of
the petition. At that time, it was the Child and Youth Welfare Code that was in
effect, not the Family Code. Petitioners have already acquired a vested right on
their qualification to adopt which cannot be taken away by the Family Code.
(Republic v. Miller G.R. No. 125932, April 21, 1999, citing Republic v. CA, 205
SCRA 356)

Rights if retiring/estate of deceased partner:

3. Who May Not Be Adopted

a) Person of legal age
Exception: An adult may be adopted if he is:
i.
A child by nature of adopter or of spouse
ii.
Consistently considered by adopter as his own child
during minority
b) Alien whose country has no diplomatic relations with the Philippines
c) Person previously adopted (not yet revoked)

a.
b.

Right to
1.
2.
3.

To have the value of his interest ascertained as of the date of

dissolution
To receive as ordinary creditor the value of his share in the
dissolved partnership with interest or profits attributable to use
of his right, at his option
Account - may be exercised by:
Winding up partner
Surviving partner
Person/partnership continuing the business

Persons Authorized to Wind Up

1. Partners designated by the agreement
2. In absence of agreement, all partners who have not wrongfully
dissolved the partnership
3. Legal representative of last surviving partner

4. General Rule: Husband and Wife must jointly adopt

Exceptions:
a)
b)

One spouse adopts his/her illegitimate child

One spouse adopts legitimate child of the other

5. Written Consent Necessary For Adoption

a) Person to be adopted, if 10 years old or over
b) Natural parents or legal guardian of the person to be adopted
c) Legitimate children of the adopter, 10 years old or over
d) Adopted children of the adopter, 10 years old or over
e) Illegitimate children of the adopter, 10 years old or over and living
with him
f) Spouse of the adopted, if married
g) Spouse of the adopter, if married
6. Effects of Adoption
a) Deemed a legitimate child of the adopter
b) Acquired reciprocal rights and obligations arising from parent-child
relationship
c) Right to use surname of the adopter
d) Parental authority of natural parents terminates and vested in
adopter
e) Remains intestate heir of natural parents and blood relatives
7. Judicial Rescission of Adoption
Rule 100, ROC: Rescission and Revocation of Adoption
Page 42 of 230

Limited Partnership
1. Characteristics
a) Formed by compliance with statutory requirements
b) One or more general partners control the business
c) One or more general partners contribute to the capital and share in the
profits but do not participate in the management of the business and
are not personally liable for partnership obligations beyond their capital
contributions
d) May ask for the return of their capital contributions under conditions
prescribed by law
e) Partnership debts are paid out of common fund and the individual
properties of general partners
2. Differences between General And Limited Partner/Partnership
GENERAL
LIMITED
Personally liable for partnership obligations
Liability extends only to his
capital contributions
When manner of mgt. not agreed upon, all
No participation in management
gen partners have an equal right in the mgt.
of the business
Contribute cash, property or industry
Contribute cash or property only,
not industry
Proper party to proceedings by/against
Not proper party to proceedings
partnership
by/against partnership
Interest not assignable w/o consent of other Interest is freely assignable
Page 191 of 230

iii. Rights of partner where dissolution in contravention of agreement

1. Partner who did not cause dissolution wrongfully:
a. Apply partnership property to discharge liabilities of
partnership
b. Apply surplus, if any to pay in cash the net amount
owed to partners
c. Indemnity for damages caused by partner guilty of
wrongful dissolution
d. Continue business in same name during agreed term
e. Posses partnership property if business is continued
2.

Partner who wrongly caused dissolution:

a. If business not continued by others - apply

b.

partnership property to discharge liabilities of

partnership & receive in cash his share of surplus less
damages caused by his wrongful dissolution
If business continued by others - have the value of
his interest at time of dissolution ascertained and paid
in cash/secured by bond & be released from all
existing/future partnership liabilities

iv. Rights of injured partner where partnership contract is rescinded on

ground of f fraud/misrepresentation by 1 party:
1. Right to lien on surplus of partnership property after satisfying
partnership liabilities
2. Right to subrogation in place of creditors after payment of
partnership liabilities
3. Right of indemnification by guilty partner against all partnership
debts & liabilities
3. SETTLEMENT OF ACCOUNTS BETWEEN PARTNERS
a) Assets of the partnership:
1. Partnership property (including goodwill)
2. Contributions of the partners
b) Order of Application of Assets:
1. Partnership creditors
2. Partners as creditors
3. Partners as investors - return of capital contribution
4. Partners as investors - share of profits if any

a)
b)

Who may petition? Adoptee only.

Grounds:
i.
ii.
iii.
iv.

c)
d)

Repeated physical and verbal maltreatment

Attempt on life
Sexual assault/violence
Abandonment and failure to comply with parental
obligation
Remedy of adopter against the erring adoptee: Disinheritance

Effects of rescission:
i.
ii.
iii.
iv.

Restoration of previous legal custody (for minors) or

appointment of guardians
Extinguishment of reciprocal rights
Cancellation of amended birth certificate and
restoration of original birth certificate
The adopted shall revert to his surname prior to the
adoption

Bar Question (2000). Sometime in 1990, Sarah, born a Filipino but by then a
naturalized American citizen, and her American husband Tom, filed a petition in
the Regional Trial Court of Makati, for the adoption of the minor child of her
sister, a Filipina. Can the petition be granted?

Answer: It depends. If Tom and Sarah have been residing in the Philippines for
at least 3 years prior to the effectivity of RA 8552, the petition may be granted.
Otherwise, the petition cannot be granted because th American husband is not
qualified to adopt.
While the petition for adoption was filed in 1990, it was considered
refilled upon the effectivity of RA 8552, the Domestic Adoption Act of 1998. This
is the law applicable, the petition being still pending with the lower court.
Under the Act, Sarah and Tom must adopt jointly because they do not
fall in any of the exceptions where one of them may adopt alone. When husband
and wife must adopt jointly, the Supreme Court has held in a line of cases that
both of them must be qualified to adopt. While Sarah, an alien, is qualified to
adopt under Section 7(b)(i) of the Act for being a former Filipino citizen who
seeks to adopt a relative within the 4th degree of consanguinity or affinity, Tom,
an alien, is not qualified because he is neither a former Filipino citizen nor
married to a Filipino. One of them not being qualified to adopt, their petition has
to be denied. However, if they have been residents of the Philippines three years
prior to the effectivity of the Act and continues to reside here until the decree of
adoption is entered, they are qualified to adopt the nephew of Sarah under
Section 7(b) thereof, and the petition may granted.

4. WHEN BUSINESS OF DISSOLVED PARTNERSHIP IS CONTINUED:

Creditors of old partnership are also creditors of the new partnership

which continues the business of the old one w/o liquidation of the
partnership affairs

8. Inter-Country Adoption Act of 1995 (R.A. 8043)

Inter-country adoption shall only be resorted to after all possibilities for

the adoption of the Filipino child within the Philippines have been
exhausted.

Page 190 of 230

Page 43 of 230

Who May be Adopted Only a legally free child may be the subject of
inter-country adoption. In order that the child may be considered for
placement, the following documents must be submitted to the ICAB:
a) Child study
b) Birth certificate/foundling certificate
c) Deed of voluntary commitment/decree of abandonment/death
certificate of parents
d) Medical evaluation/history
e) Psychological evaluation, as necessary
f) Recent photo of the child.
Who may adopt Any alien or Filipino permanently residing abroad if
he/she:
1. is at least 27 yrs of age and at least 16 yrs older than the child
to be adopted, unless the adopter is the parent by nature of
the child, or the spouse of such parent
2. if married, his/her spouse must jointly file adoption
3. has the capacity to act and assume all right and responsibilities
of parental authority under Phil law, and has undergone
appropriate counseling from an accredited counselor
4. has not been convicted of a crime involving moral turpitude
5. is eligible to adopt under his/her national law
6. is in a position to provide the proper care and support and to
give the necessary moral values and example to all his
children, including the child to be adopted
7. agrees to uphold the basic rights of the child as embodied
under Phil laws, the U.N. Convention on the Rights of the
Child, and to abide by the rules and regulations issued to
implement this Act (R.A. 8043)
8. comes from a country with whom the Philippines has
diplomatic relations and whose government maintains a
similarly authorized and accredited agency and that adoption is
allowed under his/her national laws
9. possesses all the qualifications and none of the
disqualifications provided herein and in other applicable
Philippine laws.

Bar Question (2005). Hans Herber, a German national, and his Filipino wife,
Rhoda, are permanent residents of Canada. They desire so much to adopt
Magno, an 8-year old orphaned boy and a baptismal godson of Rhoda. Since the
accidental death of Magnos parents in 2004, he has been staying with his aunt
who, however, could hardly afford to feed her own family. Unfortunately, Hans
and Rhoda cannot come to the Philippines to adopt Magno although they
possess all the qualifications as adoptive parents. Is there a possibility for them
to adopt Magno? How should they go about it?

Answer: Under RA 8043 establishing the rules for inter-country adoption of

Filipino children, the spouses may file an application to adopt a Filipino child with
Page 44 of 230

(a)

(b)

b.

Situation 1 i. Had extended credit to partnership prior to

dissolution &
ii. Had no knowledge/notice of dissolution, or
Situation 2 i. Did not extend credit to partnership
ii. Had known partnership prior to dissolution
iii. Had no knowledge/notice of dissolution/fact
of dissolution not advertised in a newspaper
of general circulation in the place where
partnership is regularly carried on

Partner cannot bind the partnership anymore after

dissolution:
(1) Where dissolution is due to unlawfulness to carry on
with business (except: winding up of partnership
affairs)
(2) Where partner has become insolvent
(3) Where partner unauthorized to wind up partnership

affairs, except by transaction with one who:

(a) Situation 1 i. Had extended credit to partnership prior to
dissolution &
ii. Had no knowledge/notice of dissolution, or
(b) Situation 2 i. Did not extend credit to partnership prior to
dissolution
ii. Had known partnership prior to dissolution
iii. Had no knowledge/notice of dissolution/fact
of dissolution not advertised in a newspaper
of general circulation in the place where
partnership is regularly carried on
2. DISCHARGE OF LIABILITY
i. Dissolution does not discharge existing liability of partner, except by
agreement between:
(1) partner himself
(2) person/partnership continuing the business
(3) partnership creditors
ii. Rights of partner where dissolution not in contravention of agreement
1. Apply partnership property to discharge liabilities of
partnership
2. Apply surplus, if any to pay in cash the net amount owed to
partners
Page 189 of 230

8.
d)

Decree of court under art 1831

GROUNDS FOR DISSOLUTION BY DECREE OF COURT (art 1831):

1. Partner declared insane in any judicial proceeding or shown to be
of unsound mind
2. Incapacity of partner to perform his part of the partnership contract
3. Partner guilty of conduct prejudicial to business of partnership
4. Willful or persistent breach of partnership agreement or conduct
which makes it reasonably impracticable to carry on partnership
with him
5. Business can only be carried on at a loss
6. Other circumstances which render dissolution equitable

Upon application by purchaser of partner's interest:

1.
2.

e)

After termination of specified term/particular undertaking

Anytime if partnership at will when interest was assigned/charging
order issued

EFFECTS OF DISSOLUTION:

1. AUTHORITY OF PARTNER TO BIND PARTNERSHIP TERMINATED

General Rule: Authority of partners to bind partnership is

terminated. Exceptions:
1. Wind up partnership affairs
2. Complete transactions not finished

Qualifications:
1. With respect to partners a. Authority of partners to bind partnership by new contract
is immediately terminated when dissolution is not due to
ACT, DEATH or INSOLVENCY (ADI) of a partner (art
1833);
b. If due to ADI, partners are liable as if partnership not

dissolved, when the ff. concur:

i.
ii.

2.

If cause is ACT of partner, acting partner must

have knowledge of such dissolution
If cause is DEATH or INSOLVENCY, acting
partner must have knowledge/ notice

With respect to persons not partners (art 1834) -

a.

Partner continues to
dissolution in ff. cases:

bind

partnership

even

after

1. Transactions in connection to winding up partnership

affairs/completing transactions unfinished
2. Transactions which would bind partnership if not

dissolved, when the other party/obligee:

Page 188 of 230

the Inter-country Adoption Board (ICAB) after they have been determined fit and
eligible to adopt by the State Welfare Agency or a licensed adoption agency in
Canada. The Canadian agency will forward the required supporting documents to
the ICAB for matching with a Filipino child. The spouses, after filing a petition
with the ICAB, shall be issued the Placement Authority and when all the travel
documents of the child who is declared legally eligible for adoption as
determined by the ICAB are ready, the adoptive parents or any one of them shall
personally fetch the child in the Philippines for adoption in the court of the
foreigners country.
Support
1. Support consists of everything indispensable for:
a) Sustenance
b) Dwelling
c) Clothing
d) Medical attendance
e) Education includes schooling or training for some profession,
trade or vocation, even beyond the age of majority
f) Transportation includes expenses going to and from school, or to
from place of work
2. Amount of support shall be in proportion to the means of the giver and to the
need of the recipient
3. The Following are Obliged to Support Each Other to the Whole Extent:
a) Spouses
b) Legitimate ascendants and descendants
c) Parents and their legitimate children and the children of the latter
(legitimate or illegitimate)
d) Parents and their illegitimate children and the children of the latter
(legitimate or illegitimate)
4. Rules regarding Support to Illegitimate Brothers and Sisters (Whether Full or
Half Blood)
a) If the one asking for support is below majority age, he is entitled to
support from his illegitimate brother or sister to the full extent,
without any condition;
b) If the one asking for support is already of majority age, he is
entitled to support only if his need for support is not due to a cause
imputable to his fault or negligence
5. Properties Liable for the Support of the Relatives
a) Spouses absolute community or conjugal property
b) Common children of the spouses absolute community or conjugal
property
Page 45 of 230

c)

Children of a spouse by another marriage absolute community or

2.

conjugal property
d)

Illegitimate children of either spouse:

i.
Under the system of absolute community separate

ii.

iii.

property of the parent-spouse, if the same is

insufficient or there is no such property, the
absolute community is liable but the support is
considered as advances on the share of the parent
to be paid by him to the community at the time of
liquidation;
Under the system of conjugal partnership
separate property of the parent-spouse; if the same
is insufficient or there is no such property, the
conjugal property is liable if financially capable, but
the support paid to the child shall be deducted from
the share of the parent-spouse at the time of
liquidation of the partnership

Answers:
1. No, a conveyance by a partner of his whole interest in a partnership does
not of itself dissolve the partnership in the absence of an agreement. (Art.
1813, Civil Code)
2. Justine cannot interfere or participate in the management or administration
of the partnership business or affairs. She may, however, receive the net
profits to which Una would have otherwise been entitled. In this case,
P120,000. (Art. 1813, Civil Code)
Dissolution and Winding Up
a)

DISSOLUTION - change in the relation of the partners caused by any

partner ceasing to be associated in the carrying on of the business;
partnership is not terminated but continues until the winding up of
partnership affairs is completed

b)

WINDING UP - process of settling the business or partnership affairs after

dissolution

c)

CAUSES OF DISSOLUTION:
1. Without violation of the agreement between the partners
a. By termination of the definite term/ particular undertaking
specified in the agreement
b. By the express will of any partner, who must act in good faith,
when no definite term or particular undertaking is specified
c. By the express will of all the partners who have not assigned
their interest/ charged them for their separate debts, either
before or after the termination of any specified term or
particular undertaking
d. By the expulsion of any partner from the business bonafide in
accordance with power conferred by the agreement

Legitimate ascendants, other legitimate and

illegitimate descendants, and legitimate and
illegitimate brothers and sisters separate property
of the obligor-spouse; if the same is not sufficient
or there is none, the absolute community or
conjugal property shall be liable if financially
capable, which support shall be deducted from the
share of the spouse upon liquidation of the ACP or
CPG

6. Order of Liability if 2 or More are Obliged to Support:

i. Spouse
ii. Descendants in nearest degree
iii. Ascendants in nearest degree
iv. Brothers and sisters
7. Options of the Person Giving Support
a) To give a fixed monthly allowance; or
b) To receive and maintain the recipient in the giver's home or family
dwelling
Exception: when there is a legal or moral obstacle thereto

What are the rights of Justine, if any, should she desire to participate in the
management of the partnership and in the distribution of a net profit of
P360,000.00 which was realized after her purchase of Unas interest? (3%)

2.

Parental Authority
3.
1. Concept of Parental Authority (Patria Potestas)
Parental authority is the mass of rights and obligations which parents have in
relation to the person and property of their children until their emancipation, and
even after under certain circumstances.
Page 46 of 230

4.
5.
6.
7.

In contravention of the agreement between the partners, where

the circumstances do not permit a dissolution under any other
provision of this article, by the express will of any partner at any
time
By any event which makes it unlawful for business to be carried
on/for the members to carry it on for the partnership
Loss of specific thing promised by partner before its delivery
Death of any partner
Insolvency of a partner/partnership
Civil interdiction of any partner
Page 187 of 230

Title in name of all partners, Conveyance

in name of all partners

Conveyance will pass title

2. PARTNER BY ESTOPPEL; PARTNERSHIP BY ESTOPPEL

a) Partner by estoppel - by words or conduct, he does any of the ff.:
1. Directly represents himself to anyone as a partner in an
existing partnership or in a non-existing partnership
2. Indirectly represents himself by consenting to another
representing him as a partner in an existing partnership or in a
non existing partnership
b) Elements to establish liability as a partner on ground of estoppel:
1. Defendant represented himself as partner/represented by
others as such and not denied/refuted by defendant
2. Plaintiff relied on such representation
3. Statement of defendant not refuted
c) Liabilities in estoppel
All partners consented to
representation
No existing partnership & all
those represented consented;
Not all partners of existing
partnership
consents
to
representation
No existing partnership & not all
represented consented;
None of partners in existing
partnership consented

Partnership is liable
Person who represented himself & all those
who made representation liable prorata/jointly

Person who represented himself liable & those

who made/consented to representation
separately liable

3. OBLIGATIONS OF PARTNERSHIP TO PARTNERS

1. To refund the amounts disbursed by partner in behalf of the
partnership + corresponding interest from the time the expenses
are made (loans and advances made by a partner to the
partnership aside from capital contribution)
2. To answer for obligations partner may have contracted in good
faith in the interest of the partnership business
3. To answer for risks in consequence of its management

2. Characteristics of Parental Authority

a) It is a natural right and duty of the parents (Art. 209 FC)
b) It cannot be renounced, transferred or waived except in cases
authorized by law (Art 210 FC)
c) It is jointly exercised by the father and the mother (Art. 211, FC)
d) It is purely personal and cannot be exercised through agents
e) It is temporary
3. Who Exercises Parental Authority in Case of Absence, Death or Remarriage of
Either Parent, or Separation of the Parents
a) In case of absence of either parent parent present
b) In case of death of either parent surviving parent
c) In case of remarriage of surviving parent still the surviving
parent, unless the court appoints a guardian over the child
d) In case of separation of parents parent designated by the court
i.
The court shall take into account all relevant
considerations, especially the choice of the child
over 7 years old, unless the parent is unfit.
ii.
Tender years rule- A child under 7 years of age shall
not be separated from the mother unless the court
finds compelling reasons to order otherwise.
e) In case of death, absence or unsuitability of both parents, the
surviving grandparent shall exercise substitute parental authority.
4. Order of Substitute Parental Authority
i.
Surviving grandparent
ii.
Oldest brother or sister over 21
iii.
Childs actual custodian, over 21
Note: This applies also to appointment of guardian over the childs property
5. In case of foundlings, abandoned children, neglected children or abused
children, summary judicial proceedings shall be instituted so that they may be
entrusted to:
i.
Heads of childrens homes
ii.
Orphanages, or
iii.
Similar institutions duly accredited by the proper
government agency

Bar Question (1998). Dielle, Karlo and Una are general partners in a
merchandising firm. Having contributed equal amounts to the capital, they also
agree on equal distribution of whatever net profit is realized per fiscal period.
After two years of operation, however, Una conveys her whole interest in the
partnership to Justine, without the knowledge and consent of Dielle and Karlo.
1. Is the partnership dissolved? (2%)

6. Special Parental Authority

a) The following exercise special parental authority over the minor
child while under their supervision, instruction or custody:
i.
The school, its administrators and teachers, or
ii.
The individual, entity or institution engaged in child
care
b) Liability of Those Exercising Special Parental Authority Over the
Child -

Page 186 of 230

Page 47 of 230

They are principally and solidarily liable for damages

caused by the acts or missions of the child while under
their supervision, instruction or custody.
HOWEVER, this liability is subject to the defense that the
person exercising parental authority exercised proper
diligence.
The parents and judicial guardians of the minor or those
exercising substitute parental authority over the minor are
subsidiarily liable for said acts and omissions of the minor.

Distinction between Substitute Parental Authority and Special Parental Authority

Substitute Parental
Authority
It is exercised in case of death,
absence, or if unsuitability of
parents. Hence, it is not
exercised by the parents of
parental authority over the
minor children.

Special Parental Authority

It is exercised concurrently with the parental
authority of the parents and rest on the
theory that while the child is in the custody of
the person exercising special parental
authority, the parents temporarily relinquish
parental authority over the child to the latter

2.

Acts of strict dominion or ownership:

a.

Assign partnership property in

trust for creditors
b.
Dispose
of
good-will
of
business
c.
Do an act w/c would make it
impossible to carry on ordinary
business of partnership
d.
Confess a judgment
e.
Enter
into
compromise
concerning a partnership claim
or liability
f.
Submit partnership claim or
liability to arbitration
g.
Renounce claim of partnership
Acts in contravention of a restriction on
authority

Effects of Conveyance of Real Property Belonging to the Partnership

7. Liability of Parents for Torts Committed By Their Minor Children

a)
Parents and other person exercising parental authority are
civilly liable for the torts committed by their minor children,
PROVIDED they are living in their company
b)
This is subject to the appropriate defenses provided by law

Title in partnership name, Conveyance in

partnership name

8. Effect of Parental Authority Upon the Property of the Child

a)
The Father and Mother shall jointly exercise legal
guardianship over the property of the minor child without
court appointment
b)
In case of disagreement, the fathers decision shall prevail,
unless there is judicial order to the contrary
c)
If the market value of the property or the annual income of
the child exceeds P50,000, the parent is required to furnish
a bond of not less than 10% of the value of the childs
property or income

Title in partnership name, Conveyance in

partner's name

9. Grounds for Suspension of Parental Authority

a) Conviction of parent for crime with civil interdiction
b) Treats child with excessive harassment and cruelty
c) Gives corrupting orders, counsel or example
d) Compels child to beg
e) Subjects or allows acts of lasciviousness

Partnership not liable to 3rd persons

having actual or presumptive
knowledge of the restrictions

Conveyance
passes
title
partnership can recover if:
1.

Title in name of 1/ more partners,

Conveyance in name if partner/partners
in whose name title stands

Title in name of 1/more/all partners or

3rd person in trust for partnership,
Conveyance executed in partnership
name of in name of partners

Conveyance was not in the usual

way of business, or
2. Buyer had knowledge of lack of
authority
Conveyance does not pass title
but only equitable interest,
unless:
1. Conveyance was not in the usual
way of business, or
2. Buyer had knowledge of lack of
authority
Conveyance passes title but
partnership can recover if:
1. Conveyance was not in the usual
way of business, or
2. Buyer had knowledge of lack of
authority
Conveyance will only pass equitable
interest

10. Grounds for Termination of Parental Authority

Page 48 of 230

but

Page 185 of 230

ii.
iii.

Right not assignable

Right limited to share of what remains after partnership debts
have been paid
c) Nature of partner's right in the partnership- Share of profits and surplus
C. OBLIGATION OF PARTNERS WITH REGARD TO 3RD PERSONS
1.

2.

3.

4.

6.

11. Cases where Parental Authority May be Revived (i.e. Suspended Parental
Authority)
a) Adoption of child
b) Appointment of general abandonment
c) Judicial declaration of abandonment
d) Final judgment divesting parental authority
e) Judicial declaration of absence or incapacity or person exercising
parental authority

Notice to partner of any matter relating to partnership affairs

operates as notice to partnership except in case of fraud:

OBLIGATIONS

Knowledge of partner acting in the particular matter

acquired while a partner
b. Knowledge of the partner acting in the particular matter
then present to his mind
c. Knowledge of any other partner who reasonably could and
should have communicated it to the acting partner
Partners and the partnership are solidary liable to 3rd persons for
the partner's tort or breach of trust

Liability of incoming partner is limited to:

a.

7.
8.

His share in the partnership property for existing

obligations
b. His separate property for subsequent obligations
Creditors of partnership preferred in partnership property & may
attach partner's share in partnership assets
Every partner is an agent of the partnership

1. POWER OF PARTNER AS AGENT OF PARTNERSHIP

Acts for carrying on in the usual way the
business of the partnership

1.

Death of parents
Death of child
Emancipation of child
If the parents exercising parental authority has subjected the child
or allowed him to be subjected to sexual abuse, he shall be
permanently deprived of parental authority.

Every partnership shall operate under a firm name. Persons who

include their names in the partnership name even if they are not
members shall be liable as a partner
All partners shall be liable for contractual obligations of the
partnership with their property, after all partnership assets have
been exhausted
a. Pro rata
b. Subsidiary
Admission or representation made by any partner concerning
partnership affairs within scope of his authority is evidence against
the partnership

a.

5.

a)
b)
c)
d)

Act w/c is not apparently for the

carrying of business in the usual way

Every partner is an agent and may

execute acts with binding effect
even if he has no authority
Except: when 3rd person has
knowledge of lack of authority
Does not bind partnership unless
authorized by other partners

Page 184 of 230

OBLIGATIONS AND CONTRACTS

1. An obligation is a juridical necessity to give, to do or not to do (Art. 1156,

NCC)
2. Sources of Obligations (Art. 1157, NCC)
a) Law - must be expressly or impliedly set forth, cannot be presumed
b) Contracts - must be complied with in good faith because it is the
law between parties
c) Quasi-contracts- juridical relation resulting from lawful, voluntary
and unilateral act, and which has for its purpose the payment of
indemnity to prevent unjust enrichment
Kinds:
a. Negotiorum gestio- unauthorized management; This takes
place when a person voluntarily takes charge of anothers
abandoned business or property without the owners
authority
b. Solutio indebiti- undue payment ; This takes place when
something is received when there is no right to demand it,
and it was unduly delivered thru mistake
d) Acts or omissions punished by law; and
e) Quasi-delicts
3. Three types of obligations.-1) obligation to give
2) obligation to do; and
3) obligation not to do.
Page 49 of 230

4. Three Accessory Obligations in Obligation to Give:

a. Art. 1163.-- To take care of the thing w/ the diligence of a good
father of a family until actual delivery.
b. Art. 1164.-- To deliver the fruits to the creditor (fruits produced
after obligation to deliver arises.)
c.
Art. 1166.-- To deliver accessions and accessories.

1.

5. Remedies Available to the Creditor in case of breach

a. specific performance
b. rescission
c. damages, exclusively or in addition to either of both remedies

b.
c.
d.
4.

6. General Rule: there must be demand before delay may be incurred, except
a. express declaration in the obligation or law
b. time is of the essence
c. demand is useless
d. acknowledgment of default
7. Grounds for Liability
a. Fraud
b. Negligence
c. Delay
d. Violation of the tenor of the obligation
8. Delay is the non-fulfillment of the obligation w/ respect to time.
Kinds of Delay:
a. Mora Solvendi -- delay in the performance (on the part of the
debtor);
b. Mora Accipiendi -- delay in the acceptance (on the part of the
creditor);
c. Compensation Morae -- mutual delay
9. Loss due to Fortuitous Events (Art. 1174) Balane:
General Rule: The happening of a fortuitous event exonerates the debtor
from liability.

Exceptions:
i.
ii.
iii.

When the law so specifies - e.g., if the debtor is already in delay

(Art. 1165, par. 3.)
When the parties so agree
When the nature of the obligation requires the assumption of risk,
e.g., an insurance contract.

2.
3.
a.

5.

Right to associate another person with him in his share without

consent of other partners (subpartnership)
Right to inspect and copy partnership books at any reasonable hour
Right to a formal account as to partnership affairs (even during
existence of partnership):
If he is wrongfully excluded from partnership business or
possession of its property by his copartners
If right exists under the terms of any agreement
As provided by art 1807
Whenever other circumstances render it just and reasonable
Duty to render on demand true and full information affecting
partnership to any partner or legal representative of any deceased
partner or of any partner under legal disability
Duty to account to the partnership as fiduciary

Prohibition Against Engaging in Business

INDUSTRIAL PARTNER
PROHIBITION Industrial partner cannot
engage in business (w/n
same line of business with
the
partnership)
unless
partnership
expressly
permits him to do so
REMEDY
Capitalist partners may:
1. Exclude him from the
firm, or
2. Avail themselves of the
benefits which he may
have obtained
3. Damages, in either case

CAPITALIST PARTNER
Capitalist
partner
cannot
engage in business (with
same kind of business with
the partnership) for his own
account, unless there is a
stipulation to the contrary
Capitalist partner in violation
shall:
1. Bring to common fund
any profits accruing to
him
from
said
transaction, and
2. Bear all losses

Note: It is believed that

industrial partners are also
entitled to the remedy
granted since they are
equally prejudiced
B. PROPERTY RIGHTS OF A PARTNER

Requisites for exemption from liability due to an "act of God."-- the following

a) Comprises of:
1. His rights in specific partnership property
2. His interest in the partnership
3. His right to participate in the management

must concur:
i. the cause of the breach of the obligation must be independent of
the will of the debtor;

b) Nature of partner's right in specific partnership property

i. Equal right to possession

Page 50 of 230

Page 183 of 230

h) Rules for Distribution of Profits and Losses

DISTRIBUTION OF PROFITS DISTRIBUTION OF LOSSES
With
According to agreement
According to agreement

agreement
Without
agreement

1.

2.

Share of capitalist partner is

in proportion to his capital
contribution
Share of industrial partner
is not fixed - as may be just
and equitable under the
circumstances

1.

2.

3.

If sharing of profits is
stipulated - apply to
sharing of losses
If no profit sharing
stipulated - losses shall be
borne according to capital
contribution
Purely industrial partner
not liable for losses

ii.
iii.

the event must be either unforseeable or unavoidable;

the event must be such as to render it impossible for the debtor to
fulfill his obligation in a normal manner; and
iv. the debtor must be fee from any participation in, or aggravation of
the injury to the creditor.

Kinds of Obligations

According to Demandability:
a.
b.

i) Rights and Obligations with Respect to Management

Power of managing
Vote of partners
partner is irrevocable
representing
without just/lawful
controlling interest
cause; Revocable only
necessary to revoke
when in bad faith
power
Partner is appointed
Power is revocable any
manager after constitution of time for any cause

Partner is appointed
manager in the articles of
partnership

partnership
2 or more persons entrusted
with management of
partnership without
specification of
duties/stipulation that each
shall not act w/o the other's
consent
Stipulated that none of the
managing partners shall act
w/o the consent of others

Manner of management not

agreed upon

Each may execute all

acts of administration

Concurrence of all
necessary for the
validity of acts

1.

2.

All partners are

agents of the
partnership
Unanimous
consent required
for alteration of
immovable
property

j) Other rights and obligations of partners:

Page 182 of 230

In case of opposition,
decision of majority
shall prevail; In case
of tie, decision of
partners owning
controlling interest
shall prevail
Absence or disability of
any one cannot be
alleged unless there is
imminent danger of
grave or irreparable
injury to partnership
If refusal of partner is
manifestly prejudicial
to interest of
partnership, court's
intervention may be
sought

c.

Pure A pure obligation is one w/c is not subject to a condition or a

term.
Conditional

A condition is a future and uncertain event upon w/c an

obligation or provision is made to depend. Futurity and
uncertainty must concur as characteristics of the event.

Suspensive
condition (condition precedent) wherein the
happening of the event gives birth to an obligation

Resolutory condition (condition subsequent) wherein the

happening of the event will extinguish the obligation.

Potestative-depends upon will of debtor

Casual- depends on chance or will of 3rd persons

Mixed-depends partly upon will of the parties and partly in

chance or will of third persons

Effect of Impossible conditions:

- a positive suspensive condition to do an impossible/ illegal
thing-- The obligation is void.
- a negative condition (not to do an impossible thing)-Disregard the condition.
- a condition not to do an illegal thing (negative)-- This is
not expressly provided for in the provision but is implied.
The obligation is valid. E.g. "I will sell you a piece of land
provided you do not plant marijuana on it."
With a term/period a term is a future and certain event upon w/c the
demandability (or extinguishment) of an obligation depends. A term or
period is an interval of time, w/c, exerting an influence on an obligation
as a consequence of a juridical act, either suspends its demandability or
produces its extinguishment.
o Suspensive term (ex die -- from the day) or one the arrival of
w/c will make the obligation demandable
o Resolutory term (in die -- into the day) or one the arrival of
w/c will extinguish the obligation.
o Rule: debtor shall lose the right to make use period, when:
after the obligation is incurred, he becomes insolvent,
unless he gives new guaranty
he does not furnish creditor the promised guaranties
and securities
Page 51 of 230

by his own acts, he impaired guaranties and securities

after their establishment, and when through a fortuitous
event they disappear, unless he immediately gives new
ones equally satisfactory
debtor violates any undertaking, in consideration of
which the creditor agrees to the period
debtor attempts to abscond
General rule: If a period is attached in an obligation, the
presumption is that it is for the benefit of both parties. The
consequence is that the creditor cannot compel the
performance before the arrival of the term; the debtor cannot
compel acceptance bef. the arrival of the term.

If the term is for the benefit of the creditor.-- The creditor can
demand performance anytime; but the debtor cannot insist on
payment bef. the period.
If the term is for the benefit of the debtor.-- The creditor
cannot demand performance anytime; but the debtor can insist
on performance anytime.

According to Plurality of Objects:

a.
b.

c.

Single
Alternative where out of 2 or more prestations which may be given,
only one is due
General rule: right to choose pertains to debtor, except:
i. When the choice is expressly granted to the creditor or,
ii. When expressly granted to 3rd persons
Facultative where only one prestation is agreed upon, but the obligor
may deliver or render another in substitution

According to Plurality of Subjects:

a. Joint obligation one in w/c each of the debtors is liable only for a
proportionate part of the debt or each creditor is entitled only to a
proportionate part of the credit.

There are as many obligations as there are debtors multiplied

by the number of creditors.

Kinds of joint obligations:

i. Active joint where the obligation is joint on the
creditor's side;
ii. Passive joint where the obligation is joint on the
debtor's side; and
iii. Multiple Joint where there are multiple parties on
each side of a joint obligation.

Effects of Joint Liability:

Page 52 of 230

2.

Remedy of the other partner is not rescission but specific

performance with damages from defaulting partner

c) Obligations with respect to contribution of money and money converted

to personal use
1. To contribute on the date fixed the amount he has undertaken to
contribute to the partnership
2. To reimburse any amount he may have taken from the partnership
coffers and converted to his own use
3. To pay for the agreed or legal interest, if he fails to pay his
contribution on time or in case he takes any amount from the
common fund and converts it to his own use
4. To indemnify the partnership for the damages caused to it by delay
in the contribution or conversion of any sum for his personal
benefits
d) Obligations with respect to contribution to partnership capital
1. Partners must contribute equal shares to the capital of the
partnership unless there is stipulation to contrary
2. Partners (capitalist) must contribute additional capita.l In case of
imminent loss to the business of the partnership and there is no
stipulation otherwise; refusal to do so shall create an obligation on
his part to sell his interest to the other partners
e) Obligation of managing partners who collects debt from person who also
owed the partnership
1. Apply sum collected to 2 credits in proportion to their amounts
2. If he received it for the account of partnership, the whole sum shall
be applied to partnership credit
f) Obligation of partner who receives share of partnership credit
1. Obliged to bring to the partnership capital what he has received
even though he may have given receipt for his share only
g) Risk of Loss of Thing Contributed
Specific and determinate things which are not fungible
where only the use is contributed
Specific and determinate things the ownership of which is
transferred to the partnership
Fungible things (consumable)
Things contributed to be sold
Things brought and appraised in the inventory

Page 181 of 230

Risk is borne by
partner
Risk is borne by
partnership
Risk is borne by
partnership
Risk is borne by
partnership
Risk is borne by
partnership

g)

PARTNERS BY ESTOPPEL - one who is not really a partner but is liable

as a partner for the protection of innocent 3rd persons
h) CONTINUING PARTNER - one who continues the business of a
partnership after it has been dissolved by reason of the admission of a
new partner, retirement, death or expulsion of one of the partners
i) SURVIVING PARTNER - one who remains after a partnership has been
dissolved by death of any partner
j) SUBPARTNER - one who is not a member of the partnership who
contracts with a partner with reference to the latter's share in the
partnership
k) OSTENSIBLE - one who takes active part and known to the public as
partner in the business
l) SECRET - one who takes active part in the business but is not known to
be a partner by outside parties
m) SILENT - one who does not take any active part in the business
although he may be known to be a partner
n) DORMANT - one who does not take active part in the business and is
not known or held out as a partner
8. RELATIONS CREATED BY A CONTRACT OF PARTNERSHIP
a. Relations among the partners themselves
b. Relations of the partners with the partnership
c. Relations of the partnership with 3rd persons with whom it contracts
d. Relations of the partners with such 3rd persons
Obligations of the Partners
A. OBLIGATIONS OF THE PARTNERS AMONG THEMSELVES
a) Obligations with respect to contribution of property:
1. To contribute at the beginning of the partnership or at the
stipulated time the money, property or industry which he may have
promised to contribute
2. To answer for eviction in case the partnership is deprived of the
determinate property contributed
3. To answer to the partnership for the fruits of the property the
contribution of which he delayed, from the date they should have
been contributed up to the time of actual delivery
4. To preserve said property with the diligence of a good father of a
family pending delivery to partnership
5. To indemnify partnership for any damage caused to it by the
retention of the same or by the delay in its contribution

i.

b.

The demand by one creditor upon one debtor,

produces the effects of default only w/ respect to the
creditor who demanded and the debtor on whom the
demand was made, but not w/ respect to the others;
ii. 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
iii. The vices of each obligation arising from the personal
defect of a particular debtor or creditor does not
affect the obligation or rights of the others;
iv. The insolvency of a debtor does not increase the
responsibility of his co-debtors, nor does it authorize
a creditor to demand anything from his co-creditors;
v. In the joint divisible obligation, the defense of res
judicata is not extended from one
If the contrary does not appear, obligations are presumed to
be joint.

Solidary obligations one in w/c the debtor is liable for the entire
obligation or each creditor is entitled to demand the whole obligation.

There is solidary obligation only in three cases:

(1) When the obligation expressly so states;
(2) When the law (e.g. liability of joint tortfeasors) or
(3) When the nature of the obligation requires solidarity.

An instrument w/c begins w/ "I," "WE" or "Either of us"

promise to pay, when signed by two or more persons, makes
them solidarily liable.

Characteristics of Active Solidarity:

- Since it is a reciprocal agency, the death of a solidary
creditor does not transmit the solidarity to each of his
heirs but to all of them taken together (IV Tolentino)
- Each creditor represents others in the act of requiring
payment, and in all other acts w/c tend to secure the
credit or make it more advantageous. Hence, if he
receives only a partial payment, he must divide it among
the other creditors. He can interrupt the period of
prescription or render the debtor in default, for the benefit
of all other creditors
-

b) Effect of Failure to contribute property promised:

1. Partners becomes ipso jure a debtor of the partnership even in the
absence of any demand
Page 180 of 230

A credit once paid is shared equally among the creditors

unless a different intention appears
Debtor may pay any of the creditors but if any demand,
judicial or extrajudicial is made on him, he must pay only
to one demanding payment (Art. 1214)

Page 53 of 230

One creditor does not represent the others in such acts as

novation (even if the credit becomes more advantageous),
compensation and remission
Each creditor may renounce his right even against the will
of the debtor, and the latter need not thereafter pay the
obligation to the former

Characteristics of Passive Solidarity:

- Each debtor may be required to pay the entire obligation
but after payment, he can recover from the co-debtors
their respective shares (this is something similar to
subrogation)
- Interruption of prescription as to one debtor affects all the
others; but the renunciation by one debtor of prescription

already had does not prejudice the others, bec the

extinguishment of the obligation by prescription
extinguishes also the mutual representation among the
solidary debtors
-

The debtor who is required to pay may set up by way of

compensation his own claim against the creditor, in this
case, the effect is the same as that of payment
The total remission of the debt in favor of a debtor
releases all the debtors; but when this remission affects
only the share of one debtor, the other debtors are still
liable for the balance of the obligation
All the debtors are liable for the loss of the thing due,
even if such loss is caused by the fault of only one of
them, or by fortuitous event after one of the debtors has
incurred in delay
The interests due by reason of the delay of one of the
debtors are borne by all of them

Bar Question (2003). A, B, C, D, and E made themselves solidarily indebted to

X for the amount of P50,000. When demanded payment from A, the latter
refused to pay on the following grounds:
(a) B is only 16 years old.
(b) C has already been condoned by X.
(c) D is insolvent.
(d) E was given by X an extension of 6 months without the consent of the
other four co-debtors.
State the effect of each of the above defenses put up by A on his obligation to
pay X, if such defenses are found to be true.
Answer:
(a) A may avail the minority of B as a defense, but only for Bs share of
P10,000. A solidary debtor may avail himself of any defense which
Page 54 of 230

a.

b.

PARTNERSHIP AT WILL - one in which no time is specified and is not

formed for a particular undertaking or venture which may be terminated
anytime by mutual agreement
PARTNERSHIP WITH A FIXED TERM - the term for which the
partnership is to exist is fixed or agreed upon or one formed for a
particular undertaking

D. As to legality of existence
a. DE JURE PARTNERSHIP - one which has complied with all the legal
requirements for its establishment
b. DE FACTO - one which has failed to comply with all the legal
requirements for its establishment
E. As to representation to others
a. ORDINARY OR REAL PARTNERSHIP - one which actually exists among
the partners and also as to 3rd persons
b. OSTENSIBLE OR PARTNERSHIP BY ESTOPPEL - one which in reality is
not a partnership but is considered a partnership only in relation to
those who, by their conduct or omission, are precluded to deny or
disprove its existence
F. As to publicity
a. SECRET PARTNERSHIP - one wherein the existence of certain persons
as partners is not avowed or made known to the public by any of the
partners
b. OPEN OF NOTORIOUS PARTNERSHIP - one whose existence is avowed
or made known to the public by the members of the firm
G. As to purpose
a. COMMERCIAL OR TRADING PARTNERSHIP - one formed for the
transaction of business
b. PROFESSIONAL OR NON TRADING PARTNERSHIP - one formed for the
exercise of a profession
7. Kinds of Partners
a) CAPITALIST - one who contributes money or property to the common
fund
b) INDUSTRIAL - one who contributes only his industry or personal service
c) GENERAL - one whose liability to 3rd persons extends to his separate
property
d) LIMITED - one whose liability to 3rd persons is limited to his capital
contribution
e) MANAGING - one who manages the affairs or business of the
partnership
f) LIQUIDATING - one who takes charge of the winding up of partnership
affairs upon dissolution
Page 179 of 230

5. FORM OF PARTNERSHIP CONTRACT

a) GENERAL RULE: No special form is required for the validity of the
contract
b) EXCEPTIONS:
i.
Where immovable property/real rights are contributed
a. Public instrument is necessary
b. Inventory of the property contributed must be
made, signed by the parties and attached to the
public instrument otherwise it is VOID
Where capital is P3,000 or more, in money or property
ii.
a. Public instrument is necessary
b. Must be registered with SEC
6. CLASSIFICATIONS OF PARTNERSHIP
A. As to extent of its subject matter
a. UNIVERSAL PARTNERSHIP
i. UNIVERSAL PARTNERSHIP OF ALL PRESENT PROPERTY comprises the following:
a) Property which belonged to each of the partners
at the time of the constitution of the partnership
b) Profits which they may acquire from all property
contributed
ii. UNIVERSAL PARTNERSHIP OF PROFITS - comprises all
that the partners may acquire by their industry or work
during the existence of the partnership

Note: Persons who are prohibited from giving donations or advantage

to each other cannot enter into a universal partnership

b. PARTICULAR PARTNERSHIP - has for its objects:

i. Determinate things
ii. Their use or fruits
iii. Specific undertaking
iv. Exercise of profession or vocation
B. As to liability of partners
a. GENERAL PARTNERSHIP - consists of general partners who are liable
pro rata and subsidiarily and sometimes solidarily with their separate
property for partnership debts
b. LIMITED PARTNERSHIP - one formed by 2 or more persons having as
members one or more general partners and one or more limited
partners, the latter not being personally liable for the obligations of the
partnership

personally belongs to a solidary co-debtor, but only as to the share of that

co-debtor.
(b) A may avail of the condonation by X of Cs share of P10,000. A solidary
debtor may, in actions filed by the creditor,, avail himself of all defenses
which are derived from the nature of the obligation and of those which are
personal to him or pertain to his own share. With respect to those which
personally belong to others, he may avail himself thereof only as regards
that part of the debt for which the latter are responsible. (Article 1222,
NCC).
(c) A may not interpose the defense of insolvency of D as a defense. Applying
the principle of mutual guaranty among solidary debtors, A guaranteed the
payment of Ds share and of all the other co-debtors. Hence, A cannot avail
of the defense of Ds insolvency.
(d) The extension of six (6) months given by X to E may be availed of by A as a
partial defense but only for the share of E. There is no novation of the
obligation but only an act of liberality granted to E alone.

According to Performance:
a.
b.

Divisible - one susceptible of partial performance

Indivisible- one that must be performed in one act.

Exceptions to the Rule on Indivisibility:

i.
ii.
iii.

When the parties so provide. (Art. 1248, par. 1.)

When the nature of the obligation necessarily entails
performance in parts (e.g. easements)
Where the law provides otherwise (e.g. pledge, mortgage)

According to Sanctions for Breach:

a.
b.

Simple
With a penal clause- A penal clause is an accessory undertaking to
assume greater liability in case of breach. The purpose is to strengthen
the coercive force of the obligation. When a penal clause is present,
damages do not have to be proved.

11. Reciprocal Obligations

One where two parties are reciprocally obliged to do or give something

Cause must be identical and obligations should arise simultaneously

Obligation or promise of each party is the consideration for the

obligation or promise of the other
Compensatio Morae neither party incurs delay if the other does not or

is not ready to comply in a proper manner of what is incumbent upon

him

In a reciprocal obligation, breach by one party is a tacit resolutory

condition

Right to rescind
i.
exists only in reciprocal obligations

C. As to duration
Page 178 of 230

Page 55 of 230

ii.
iii.
iv.
v.
vi.
vii.
viii.

can be demanded only if plaintiff is ready, willing, and able to

comply, while the other is not
not absolute
needs judicial approval in certain cases
implied to exist, ergo, no need for express stipulation
may be waived
if availed of, duty of mutual restitution
not granted for slight and casual breach but for substantial
breach

Disposal/
Transferability
of interest

Power to act
with 3rd
persons

Extinguishment of Obligations
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.

Payment or performance
Loss of the thing due
Condonation or remission of the debt
Confusion or merger of the rights of the creditor and debtor
Compensation
Novation
Annulment
Rescission
Fulfillment of a resolutory condition
Prescription

1. Requisites of Payment or Performance:

A. As to the prestation
1. Identity of the object, except in dacion en pago and novation
2. Integrity delivery of the entire prestation due, except in cases of:
a. substantial performance in good faith
b. waiver of creditor
c. application of payments to equally onerous debts
3. Indivisibility
B. The payor may be
a. If without need of the creditor's consent
i. The debtor himself
ii. His heirs or assigns
iii. His agent
iv. Anyone interested in the fulfillment of the obligation (e.g.
guarantor)

Effect of payment by a third person:

If the payment was w/ the debtor's consent, the

effect is subrogation (Articles 1236-1237.) Exception:
If the person paying intended it to be a donation.
(Art. 1238.)
Page 56 of 230

Effect of
death

Dissolution

No. of
incorporators
Commencement of
juridical
personality

Partner may not

dispose of his
individual interest
unless agreed upon
by all partners
In absence of
stipulation to
contrary, a partner
may bind
partnership (each
partner is agent of
partnership)
Death of partner
results in
dissolution of
partnership
May be dissolved at
any time by the will
of any or all of the
partners
Minimum of 2
persons
From the moment
of execution of
contract of
partnership

Co-owner may
freely do so

Co-owner cannot
represent the coownership

Death of co-owner
does not
necessarily dissolve
co-ownership
May be dissolved
anytime by the will
of any or all of the
co-owners
Minimum of 2
persons
From date of
issuance of
certificate of
incorporation by
the SEC

instance
Stockholder has a
right to transfer
shares without
prior consent of
other stockholders
Management is
vested with the
Board of Directors

Death of
stockholder does
not dissolve
corporation
Can only be
dissolved with the
consent of the
state
Minimum of 5
incorporators

4. NO PRESUMPTION OF PARTNERSHIP FROM RECEIPT OF PROFITS:

a) As debt by installment
b) As wages or rent
c) As annuity
d) As interest on loan
e) As consideration for sale of goodwill of business/other property by
installments
5. EFFECTS OF UNLAWFUL PARTNERSHIP
i. The contract is void ab initio and the partnership never existed in
the eyes of the law
ii. The profits shall be confiscated in favor of the government
iii. The instruments or tools and proceeds of the crime shall also be
forfeited in favor of the government
iv. The contributions of the partners shall not be confiscated unless
they fall under no. 3
Page 177 of 230

pay the price, Richard gave him a power-of-attorney authorizing him to subdivide
the land, sell the individual lots, and deliver the proceeds to Richard, to be
applied to the purchase price. Five years later, Richard revoked the power-ofattorney and took over the sale of the subdivision lots himself. Is the revocation
valid or not? Why?

If payment was without the debtor's consent, the

third person may demand repayment to the extent
that the debtor has been benefited. (Art. 1236, par.
2.)
b. With the creditor's consent -- Anyone.

Answer: The revocation is not valid. The power of attorney given to buyer is
irrevocable because it is coupled with an interest: the agency is the means of
fulfilling the obligation of the buyer to pay the price of the land (Article 1927,
CC). In other words, a bilateral contract (contract to buy and sell the land) is
dependent on the agency.

C. Who may be the payee?

a. The obligee proper (Articles 1240, 1626.)
b. His successor or transferee (Art. 1240.)
c. His agent (ibid.)
d. Any third person subject to the following qualifications:
i. Provided it redounded to the obligee's benefit and only to the
extent of such benefit (Art. 1241, par. 2.)
ii. If it falls under Art. 1241, par. 2 nos. 1, 2 & 3, the benefit is
deemed to be total.
e. Anyone in possession of the credit (Art. 1242.)

PARTNERSHIP
General Provisions
1. PARTNERSHIP - by the contract of partnership, 2 or more persons bind
themselves to contribute money, property or industry to a common fund, with
the intention of dividing the profits among themselves
2. ESSENTIAL FEATURES:
a) There must be a mutual contribution of money, property, or industry to
a common fund
b) The object must be lawful
c) The purpose or primary purpose must be to obtain profits and divide
the same among the parties
3. PARTNERSHIP DISTINGUISHED FROM CO-OWNERSHIP AND CORPORATION
PARTNERSHIP
CO-OWNERSHIP
CORPORATION
Creation
Created by a
Created by law
Created by law
contract, my mere
agreement of the
parties
Juridical
Has a juridical
None
Has a juridical
personality
personality
personality
separate and
separate and
distinct from that of
distinct from that
each partner
of each partner
Purpose
Realization of
Common
Depends on AOI
profits
enjoyment of a
thing or right
Duration/
No limitation
10 years maximum
50 years
Term of
maximum,
existence
extendible to not
more than 50
years in any one
Page 176 of 230

Note: In all these five (5) cases, it is required that the debt should not
have been garnished. (Art. 1243.)
D. With respect to the time and place of payment
1. When payment to be made: When due
2. Place (Art. 1251.)
a. Primary rule: As stipulated
b. Secondary rule: Place where the thing was at the time the
obligation was constituted if the obligation is to deliver a
determinate thing.
c. Tertiary rule: At the debtor's domicile
2. Four Special Kinds of Payments:
i. Dacion en pago (Art. 1245.) property alienated by debtor to creditor
in satisfaction of the debt in money. Law on sales shall govern.
ii. Application of payments the designation of a debt which is being paid
by the debtor who has several obligations of the same kind in favor of
the creditor to whom the payment is made
iii. Payment by cession property is turned over by the debtor to the
creditor who acquires the right to sell it and divide the net proceeds
among themselves.
iv. Consignation deposit of the object of the obligation in a competent
court in accordance with the rules prescribed by law after refusal or
inability of the creditor to accept the tender of payment

Requisites of a Valid Consignation:

1)
2)

A debt due
That the consignation of the obligation had been made
bec. the creditor to whom tender of payment was made
refused to accept it, or bec. he was absent or
Page 57 of 230

3)

4)
5)

incapacitated, or bec. several persons claimed to be

entitled to receive the amount due
Previous notice of the consignation had been given to
the person interested in the performance of the
obligation (Art. 1257)
That the amount due was placed at the disposal of the
court (consignation proper)
That after the consignation had been made the person
interested was notifed thereof (second notice)

Necessity of Notice of Revocation

As to the agent - express notice always necessary; sufficient notice if

the party to be notified actually knows, or has reason to know, a fact

indicating that his authority has been terminated/suspended; revocation
without notice to the agent will not render invalid an act done in
pursuance of the authority
As to 3rd persons - express notice necessary

As to former customers - actual notice must be given to them because

they always assume the continuance of the agency relationship

As to other persons - notice by publication is enough

Causes for Consignation

1)
2)
3)
4)

creditor is absent or unknown, or does not appear at

the place of payment
creditor incapacitated to accept payment at the time it
is due
2 or more persons claim right to collect
when the title of the obligation has been lost

3. Loss or Impossibility of Performance object or prestation perishes,

goes out of commerce of man, disappears in such a way that its existence is
unknown or cannot be recovered.

Requisites:
1) thing lost is determinate
2) loss without any fault from debtor
3) loss occurred before delay of debtor

f) May the agency be extinguished at will?

i. AGENT may do so but subject to the contractual obligations owing
the principal (i.e. fixed period of time for the agency or purpose not
yet accomplished);
ii.
PRINCIPAL may also revoke the agency at will
Exceptions:
a. Agency coupled with interest
b. When a bilateral contract depends upon the agency
c. When the agency is the means of fulfilling an obligation
already contracted
d. When a partner is appointed as manager of a partnership
in the contract of partnership and his removal from the
management is unjustifiable.
Exception to the exception: When the agent acts to defraud the
principal

Rule of Rebus sic stantibus.--

This doctrine is also called the

doctrine of extreme difficulty and frustration of commercial object.

Requisites:
i.

The event or change could not have been foreseen at the time
of the execution of the contract.
ii. The event or change makes the performance extremely
difficult but not impossible.
iii. The event must not be due to an act of either party.
iv. The contract is for a future prestation. If the contract is of
immediate fulfillment, the gross inequality of the reciprocal
prestation may involve lesion or want of cause.
4. Condonation or Remission an act of liberality by virtue of w/c, w/o
receiving any equivalent, the creditor renounces enforcement of an obligation
w/c is extinguished in whole or in part.
Requisites:

1) Existing debt
2) Renunciation must be gratuitous
3) Acceptance by the debtor
4) Capacity of the parties
Page 58 of 230

g) Implied Revocation of Agency

i
principal appoints a new agent for the same business or
transaction, only if there is incompatibility); effective as between
the principal and the agent only if communicated to the agent;
does not prejudice rights of third persons acting in GF without
knowledge of the revocation
ii
principal directly manages the business entrusted to the agent,
dealing directly with 3rd persons
h) Effect of Extinguishment Without Notice: act of agent deemed valid insofar as
3rd parties acting in good faith and without knowledge of revocation
i) Effect of Subsequent Issuance of a SPA: The general power is impliedly
revoked as to matters covered by the special power because a special power
naturally prevails over a general power.
Bar Question (2001). Richard sold a large parcel of land in Cebu to Leo for
P100 million payable in annual installments over a period of ten years, but title
will remain with Richard until the purchase price is fully paid. To enable Leo to
Page 175 of 230

Extinguishment of Agency
a) Modes
1.
2.
3.
4.
5.
6.

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

NOTE: list not exclusive; causes particular only to agency; may be extinguished
by the modes of extinguishment of obligations in general whenever they are
applicable, like loss of the thing and novation
b) Presumption of Continuance of Agency:
It means that when once shown to have existed, an agency relation will
be presumed to have continued, in the absence of anything to show its
termination.
c) Exceptions to Extinguishment by Death
i. if the agency is coupled with an interest
ii. if the act of the agent was executed without the knowledge of the
death of the principal and the third person who contracted with the
agent acted in good faith
iii. to avoid damage
iv. if it has been constituted in the common interest of the principal
and of the agent, or in the interest of a third person who has
accepted the stipulation in his favor
d) Can the heirs continue the agency?
i. General Rule: agency calls for personal services on the part of the
agent; rights & obligations intransmissible
ii. Exceptions:
1. agency by operation of law, or a presumed or tacit agency
2. agency is coupled with an interest in the SM of the agency
(ex. power of sale in a mortgage)
e) Revocation termination of the agency by the subsequent act of the principal
Renunciation/Withdrawal - termination of the agency by the subsequent act of
the agent

Page 174 of 230

5. Confusion or Merger of Rights the meeting in one person of the qualities

of the creditor and debtor with respect to the same obligation.
Requisites:

1) It must take place between the creditor and the principle

debtor (Art. 1276.)
2) The very same obligation must be involved
6. Compensation a mode of extinguishing, to the concurrent amount, the
obligations of those persons who in their own right are reciprocally debtors and
creditors of each other.

Requisites:
1) each of the obligors are bound principally, and that at the
same time each is a principal creditor of the other
2) both debts consists of sum of money, or if consumable-same
kind and same quality
3) both debts are due
4) both are liquidated and demandable
5) compensation not prohibited by law
6) debt not garnished

Kinds of Compensation:
1) Legal Compensation (Articles 1279, 1290) - takes place
automatically by operation of law once all the requisites are
present.
2) Voluntary - agreement of the parties
3) Judicial - pleaded and effective only upon order of the court
4) Facultative Compensation - takes place when compensation is
claimable by only one of the parties but not of the other, e.g.,
Articles 1287, 1288.

Bar Question (2002). Stockton is a stockholder of Core Corp. He desires to

sell his shares in Core Corp. in view of a court suit that Core Corp. has filed
against him for damages in the amount of P10 million, plus attorneys fees of P1
million, as a result of statements published by Stockton which are allegedly
defamatory because it was calculated to injure and damage the corporations
reputation and goodwill.
The articles of incorporation of Core Corp. provide for a right of first refusal in
favor of the corporation. Accordingly, Stockton gave written notice to the
corporation of his offer to sell his shares of P10 million. The response of Core
Corp. was an acceptance of the offer in the exercise of its rights of first refusal,
offering for the purpose payment in form of compensation or set-off against the
amount of damages it is claiming against him, exclusive of the claim for
attorneys fees. Stockton rejected the offer of the corporation, arguing that
compensation between the value of the shares and the amount of damages
demanded by the corporation cannot legally take effect.
Page 59 of 230

Is Stockton correct? Give reasons for your answer.

Answer: Stockton is correct. There is no right of compensation between his

price of P10 million and Core Corp.s unliquidated claim for damages. In order
that compensation may be proper, the two debts must be liquidated and
demandable. The case for the P10 million damages being still pending in court,
the corporation has as yet no claim which is due and demandable against
Stockton.
7. Novation the extinguishment of an obligation by the substitution or change
of the obligation by a subsequent one w/c extinguishes or modifies the first,
either by changing the object or principal conditions, or by substituting the
person of the debtor, or by subrogating a third person in the rights of the
creditor.

Requisites of Novation:
1) There must be a previous valid obligation
2) Agreement of the parties to create the new obligation
3) Extinguishment of the old obligation
4) Validity of the new obligation

Subjective (Personal) or novation by a change of subject

i. Active subjective or a change of creditor; also known as
subrogation.
a. Conventional - agreement & consent of all parties;
clearly established
b. Legal - takes place by operation of law; no need for
consent; not presumed except as provided for in law:

presumed when -

11. Ratification
a) Conditions for Ratification
i. The principal must have capacity and power to ratify
ii. He must have had knowledge of material facts
iii. He must ratify the acts in its entirety
iv. The act must be capable of ratification
v. The act must be done in behalf of the principal
* To be effective, ratification need not be communicated or made known
to the agent or the third party. The act or conduct of the principal rather
than his communication is the key. But before ratification, the third party
is free to revoke the unauthorized contract.
b) Effects of Ratification
with respect to agent - relieves the agent from liability to the
i.
third party for the unauthorized transaction, and to his
principal for acting without authority; may recover
compensation
with respect to principal - assumes responsibility for the
ii.
unauthorized act, as fully as if the agent had acted under
original authority but not liable for acts outside the authority
approved by his ratification
with respect to 3rd persons - bound by ratification to the same
iii.
extent as if the ratified act had been authorized; cannot raise
the question of the agents authority to do the ratified act

1.

ii.

creditor pays another preferred creditor even

w/o debtors knowledge
2. 3rd person not interested in obligation pays w/
approval of debtor
3. person interested in fulfillment of obligation
pays debt even w/o knowledge of debtor
Passive subjective or a change of debtor
a. Expromision - initiative is from 3rd person or new
debtor; new debtor & creditor must consent; old
debtor released from obligation; subject to full
reimbursement & subrogation if made w/ consent of
old debtor; if w/o consent or against will , only
beneficial reimbursement
b. Delegacion - initiative of old debtor; all parties must
consent; full reimbursement; if insolvent new debtor
old debtor not responsible because obligation
extinguished by valid novation, unless: insolvency

iv. Estoppel of the Government - government neither estopped by the

mistake/error of its agents; may be estopped through affirmative
acts of its officers acting within the scope of their authority

Page 60 of 230

c) Distinction Between Ratification & Estoppel

Ratification
rests on intention
affects the entire transaction from the
beginning
substance of ratification is confirmation of
an authorized acts or conduct after it has
been done

Estoppel
rests on prejudice
affects only relevant parts of the
transaction
substance of estoppel is the
principals inducement to another to
act to his prejudice

d) Distinction Between Apparent Authority & Authority by Estoppel

Apparent Authority
Authority by Estoppel
though not actually granted,
where the principal, by his negligence,
principal knowingly permits/holds
permits his agent to exercise powers not
out the agent as possessing the
granted to him, even though the principal
necessary powers to act in a certain may have no notice or knowledge of the
way
conduct of the agent
Page 173 of 230

demandable, UNLESS he proves, that he exercised due

diligence for that purpose
8. Agents Right of Retention: specific (only for those goods connected with the
agency) and until the principal effects the reimbursement and pays the
indemnity
9. Principals Liability for Expenses:
a) General Rule: principal liable for the expenses incurred by the agent
b) Exceptions:
i. If the agent acted in contravention of the principal's
instructions, unless principal derives benefits from the
contract
ii. When the expenses were due to the fault of the agent
iii. When the agent incurred them with knowledge that an
unfavorable result would ensure, if the principal was not
aware thereof
iv. When it was stipulated that the expenses would be borne
by the agent, or that the latter would be allowed only a
certain sum
10. Agency by Estoppel: there is no agency at all, and the alleged agent seemed
to have apparent or ostensible, although not real authority to represent another

a) Who can be under estoppel to deny agency?

i. Estoppel of Agent- one professing to act as agent estopped to deny
his agency both as against his asserted principal and the third
persons interested in the transaction in which he is engaged
ii.

iii.

Estoppel by the Principal

a. As to agent one knowing another is acting as his agent
and fails to repudiate his acts, or accept the benefits of
them, will be estopped to deny the agency as against such
other
b. As to sub-agent to estop the principal from denying his
liability to a third person, he must have known or be
charged with knowledge of the transaction and the terms
of the agreement between the agent and sub-agent
c. As to third persons one who knows that another is
acting as his agent or permitted another to appear as his
agent, to the injury of third persons who have dealt with
the apparent agent as such in good faith and in the
exercise of reasonable prudence, is estopped to deny the
agency
Estoppel of Third Persons a third person, having dealt with one
as an agent may be estopped to deny the agency as against the
principal, agent or 3rd persons in interest
Page 172 of 230

already existing & of public knowledge or known to

him at time of delegacion
Bar Question (1998). 1. Define compensation as a mode of extinguishing an
obligation, and distinguish it from payment.
2. X, who has a savings deposit with Y Bank in the sum of P1,000,000.00, incurs
a loan obligation with the said Bank in the sum of P800,000.00 which has
become due. When X tries to withdraw his deposit, Y Bank allows only
P200,000.00 to be withdrawn, less service charges, claiming that compensation
has extinguished its obligation under the savings account to the concurrent
amount of Xs debt. X contends that compensation is improper when one of the
debts, as here, arises from a contract of deposit. Assuming that the promissory
note signed by X to evidence the loan does not provide for compensation
between said loan and his savings deposit, who is correct?

Answers:
1. Compensation is a mode of extinguishing to the concurrent amount, the
obligations of those persons who in their own right are reciprocally debtors
and creditors of each other (Tolentino, 1991 ed., p. 365, citing 2 Castan 560
and Francia v. IAC, 162 SCRA 753). It involves the simultaneous balancing
of two obligations in order to extinguish them to the extent in which the
amount of one is covered by that of the other. (De Leon, 1992 ed., p. 221,
citing 8 Manresa, 401).
Payment means not only the delivery of money but also performance of an
obligation (Article 1232, Civil Code). In payment, capacity to dispose of the
thing paid and capacity to receive payment are required for debtor and
creditor, respectively; in compensation, such capacity is not necessary,
because the compensation operates by law and not by the acts of the
parties. In payment, the performance must be complete; while in
compensation there may be partial extinguishment of an obligation.
(Tolentino, supra).
2. Y Bank is correct. Art. 1287, Civil Code, does not apply. All the requisites of
Art. 1279, Civil Code, are present. In the case of Gullas v. PNB (62 Phil.
519), the Supreme Court held: The Civil Code contains provisions regarding
compensation (set off) and deposit. These portions of Philippine law provide
that compensation shall take place when two persons are reciprocally
creditor and debtor of each other. In this connection, it has been held that
the relation existing between a depositor and a bank is that of creditor and
debtor. xxx As a general rule, a bank has a right of set off of the deposits in
its hands for the payment of any indebtedness to it on the part of a
depositor. Hence, compensation took place between the mutual obligations
of X and Y Bank.

Page 61 of 230

CONTRACTS

Instructions

1. Contracts Meeting of minds bet 2 parties whereby one binds himself with
respect to the other to give something or render some service

7. Commission Agent: One whose business is to receive and sell goods for a
commission and who is entrusted by the principal with the possession of goods
to be sold, and usually selling in his own name

2. Principal Characteristics:
a.
Autonomy of wills parties may stipulate anything as long as not
illegal, immoral, etc.
b.
Mutuality performance or validity binds both parties; not left to
will of one of parties
c.
Obligatory Force parties are bound from perfection of contract
d.
Relativity binding only between the parties, their assigns, heirs;
strangers cannot demand enforcement. Exception to relativity:
Accion pauliana, Accion directa, Stipulation pour autrui
3. Requisites for stipulation pour autrui:
1)
Parties must have clearly and deliberately conferred a favor
upon a 3rd person
2)
The stipulation in favor of a 3rd person should be a part of, not
the whole contract
3)
That the favorable stipulation should not be conditioned or
compensated by any kind of obligation whatsoever
4)
Neither of the contracting parties bears the legal
representation or authorization of 3rd party
5)
The third person communicates his acceptance before
revocation by the original parties
4. Kinds of Contracts

As to perfection or formation:
a) consensual perfected by agreement of parties
b) real perfected by delivery (e.g. commodatum, pledge, deposit)
c) formal/solemn perfected by conformity to essential formalities
(e.g. donation)

As to cause
a)
b)
c)

onerous with valuable consideration

gratuitous founded on liberality
remunerative prestation is given for service previously
rendered not as obligation

As to importance or dependence of one upon another

a)
principal contract may stand alone
accessory depends on another contract for its existence; may
b)
not exist on its own
Page 62 of 230

a)

Distinction Between Ordinary Agent & Commission Agent

Ordinary agent
acts for and in behalf of his principal
Need not have possession of principals
goods
b)

Commission agent
act on his own name or in that his
principal
must be in possession of the goods

Distinction Between Commission Agent & Broker

Commission agent
Broker
engaged in the purchase and sale for a
no custody or possession of the thing
principal of personal property which has
he disposes; merely a go-between, an
to be placed in his possession and
intermediary between the sellers and
disposal
the buyer
Has a relation with principal, buyers or maintains no relation with the thing
sellers, and property which is the object which he purchases or sells
of the transaction
c) Obligations of a Commission Agent
i. responsible for the goods received by him, as described in
the consignment, UNLESS upon receiving them he should
make a written statement of the damage and deterioration
suffered by the same
ii. if goods are of the same kind and mark but belonging to
different owners, make a distinction by counter marks and
designate the merchandise respectively belonging to each
principal
iii. cannot, without consent of the principal, sell on credit;
should he do, principal may demand payment in cash, but
the commission agent entitled to any interest/benefit
which may result from such sale
iv. if a del credere agent receiving guarantee commission,
bears the risk of collection and pay the principal the
proceeds of the sale on the same terms agreed upon with
the purchaser
v. liable for damages if agent does not collect the credits of
his principal at the time when they become due and
Page 171 of 230

the purchaser directly (NOTE: A broker is never entitled to commission for

unsuccessful efforts.)
4. Law on Double Agency:
a) disapproved by law for being against public policy and sound
morality EXCEPT where the agent acted with full knowledge and
consent of the principals
b) Compensation for a Double Agent:
i. with knowledge of both principals - recovery can be had
from both principals
ii. without the knowledge of both principals - the agent can
recover from neither
iii. with knowledge of one principal - as to the principal who
knew of that fact and as to the agent, they are in pari
delicto and the courts shall leave them as they were, the
contract between them being void as against public policy
and good morals
5. Attorney-In-Fact: One who is given authority by his principal to do a particular
act not of a legal character.
6. General Agent vs. Special Agent

Scope
Authority

of

Nature
of
Service
Authorized
Extent to Which
Agent May Bind
the Principal

Termination of
Authority

Construction of
Principals

GENERAL AGENT
all acts connected with
the business or
employment in which
he is engaged
involves continuity of
service

SPECIAL AGENT
specific acts in pursuance of
particular instructions or with
restrictions necessarily implied
from the act to be done
no continuity of service

may bind his principal

by an act within the
scope of his authority
although it may be
contrary to the latters
special instructions
apparent authority does
not terminate by the
mere revocation of his
authority without notice
to the third party

can not bind his principal in a

manner beyond or outside the
specific acts which he is authorized
to perform

merely advisory in
nature

duty imposed upon the third party

to inquire makes termination of the
relationship as between the
principal and agent effective as to
such third party unless the agency
has been entrusted for the purpose
of contracting with such third party
strictly construed as they limit the
agents authority

Page 170 of 230

c)

preparatory not an end by itself; a means through which

future contracts may be made

As to parties obliged:
a)
unilateral only one of the parties has an obligation
bilateral both parties are required to render reciprocal
b)
prestations

As to name or designation:
a)
nominate
b)
innominate
i. Do ut des I give that you may give
ii. Do ut facias I give that you may do
iii. Facio ut des I do that you may give
iv. Facio ut facias I do that you may do
5. Stages in a Contract
a) Preparation negotiation
b) Perfection/birth
c) Consummation performance
6. Essential Elements:
a) Consent meeting of minds between parties on subject matter &
cause of contract; concurrence of offer & acceptance

Note: We follow the theory of cognition and not the theory of

manifestation. Under our civil law, the offer and acceptance concur
only when the offeror comes to know, and not when the offeree
merely manifests his acceptance.

b)

Object

Persons who cannot give consent to a contract: Minors,

Insane or demented persons, Illiterates/ deaf-mutes who
do not know how to write, Intoxicated and under hypnotic
spell
Disqualified to enter into contracts: those under civil
interdiction, hospitalized lepers, prodigals, deaf and dumb
who are unable to read and write, those who by reason of
age, disease, weak mind and other similar causes, cannot
without outside aid, take care of themselves and manage
their property, becoming an easy prey for deceit and
exploitation
Vices of Consent: violence, intimidation, undue influence
Vices of Declaration-simulated contracts
The prestation

Requisites:
1)
2)

Within the commerce of man - either existing or in

potency
Licit or not contrary to law, good customs
Page 63 of 230

3)
4)

c)

Possible
Determinate as to its kind or determinable w/o need
to enter into a new contract
Cause reason why parties enter into contract

Requisites:
1)
2)
3)

It must exist
It must be true
It must be licit

7. Form required in some kinds of contracts only as contracts are generally

consensual; form is a manner in which a contract is executed or manifested
a. Informal may be entered into whatever form as long as there is
consent, object & cause
b. Formal required by law to be in certain specified form such as:
donation of real property, stipulation to pay interest, transfer of
large cattle, sale of land thru agent, contract of antichresis,
contract of partnership, registration of chattel mortgage, donation
of personal prop in excess of 5,000
c. Real creation of real rights over immovable prop must be
written
General Rule: contract is valid & binding in whatever form provided that 3
essential requisites concur except when form is important:
1) for validity (formal/solemn contracts)
2) for enforceability (statute of frauds)
3) for convenience
8. Reformation of Contracts remedy to conform to real intention of parties
due to mistake, fraud, inequitable conduct, accident.

REQUISITES:
a.
b.
c.
d.
e.

there is a written instrument

there is meeting of minds
true intention not expressed in instrument
clear & convincing proof
facts put in issue in pleadings

Note: Action prescribes 10 years from date of execution of instrument.

Remedy not available for:
1) simple donation inter vivos
2)
3)
4)
5)

wills
when real agreement is void
in cases of estoppel
when a party has already brought suit to enforce it

Page 64 of 230

Obligations of the Principal to the Agent

Comply with all the obligations agent contracted in representation of the

principal
Advance sums necessary for the execution of the agency, when agent
so requests; liable for reimbursement regardless of the undertakings
success whenever agent had advanced & has no fault; includes interest
Reimburse the agent for all advances made by him provided the agent
is free from fault
Indemnify the agent for all the damages which the execution of the
agency may have caused the latter without fault or negligence on his
part
Pay the agent the compensation agreed upon or the reasonable value
of the latters services

1. Appointment of Sub-agent - Rules:

If there is no prohibition from the principal and the agent appoints a

subagent, the agent is responsible for all the acts of the subagent.

If there is a prohibition but nevertheless the agent appoints a subagent,

all the subagents acts are void as to the principal.

If there is authority to appoint and subagent is not designated by the

principal, the agent will be liable for all the acts of the subagent if the
subagent is notoriously incompetent or insolvent.

If there is authority to appoint and subagent is designated by the

principal, the agent is released from any liability from the acts of the
subagent.
2. Responsibility of 2 or More Agents Appointed Simultaneously:
a) General Rule: liable jointly
b) Exception: solidarity has been expressly stipulated; each of the
agents becomes solidarily liable for (1) the non-fulfillment of the
agency; of for (2) the fault or negligence of his fellow agent
c) Exception to the exception: when one of the other agent/s acts
beyond the scope of his authority innocent agent is NOT liable
NOTE however that if two or more persons have appointed an agent for a
common transaction or undertaking, they shall be solidarily liable to the agent for
all the consequences of the agency. Any of them also revoke the agency.
3. Broker: negotiate contracts relative to property in behalf of others and for a
compensation or fee.

When Broker Entitled to Compensation: whenever he brings to his principal a

party who is able and willing to take the property, and enter into a valid contract
upon the terms named by the principal, although the particulars may be
arranged and the matter negotiated and completed between the principal and
Page 169 of 230

Obligations of the Agent to the Principal

a) GENERAL
i. act with utmost good faith & loyalty for the furtherance of
principals interests
ii. obey principals instructions
iii. exercise reasonable care
b) SPECIFIC
i. carry out the agency
ii. answer for damages which through his non-performance the
principal may suffer
iii. finish the business already begun on the death of the principal
should delay entail any danger (exception to the rule that death
extinguishes agency)
iv. observe the diligence of a good father in the custody and
preservation of the goods forwarded to him by the owner in case
he declines an agency, until an agent is appointed
v. advance necessary funds if there be a stipulation to do so (except
when the principal is insolvent)
vi. act in accordance with the instructions of the principal, and in
default thereof, to do all that a good father of a family would do
(NOTE: A departure from the principals instructions may be
justified by a sudden emergency, or if the instructions are
ambiguous, or if the departure is so insubstantial that it does not
affect the result and the principal suffers no damage thereby.
Further, an agent has the right to disobey the principals
instructions when the instruction calls for the performance of illegal
acts, or where he is privileged to do so to protect his security
interest in the subject matter of the agency.)
vii. not to carry out the agency if it would manifestly result in loss or
damage to the principal
viii. answer for damages if there being a conflict between his &
principals interests, he prefers his own
ix. not to loan to himself if he has been authorized to loan money at
interest
x. render an account of his transactions and deliver to the principal
whatever he may have received by virtue of the agency (If the
agent fails to deliver and instead converts or appropriates for his
own use the money or property belonging to his principal, he may
be charged with ESTAFA.)
xi. be responsible in certain cases for the act of the substitute
appointed by him
xii. pay interest on funds he has applied to his own use

Page 168 of 230

9. Defective contracts:
a) Rescissible Contracts Those which have caused a particular
economic damage either to one of the parties or to a 3rd person and which
may be set aside even if valid. It may be set aside in whole or in part, to the
extent of the damage caused.

Requisites:
1)

2)
3)
4)
5)

Rescissible under the Civil Code:

i. Contracts entered into by persons exercising fiduciary
capacity
(a) Entered into by guardian whenever ward suffers
damage by more than 1/4 of value of object
(b) Agreed upon in representation of absentees, if
absentee suffers lesion by more than of value of
property
(c) Contracts where rescission is based on fraud
committed on creditor (accion pauliana)
(d) Objects of litigation; contract entered into by
defendant w/o knowledge or approval of litigants or
judicial authority
(e) Payment by an insolvent on debts w/c are not yet
due; prejudices claim of others
(f) Provided for by law - art 1526, 1534, 1538, 1539,
1542, 1556, 1560, 1567 and 1659

ii. Under art 1382 - Payments made in a state of insolvency

Plaintiff has no other means to obtain reparation
Plaintiff must be able to return whatever he may be obliged to
return due to rescission
The things must not have been passed to 3rd parties who did not
act in bad faith
It must be made within the prescribed period

b) Voidable Contracts intrinsic defect; valid until annulled; defect is due

to vice of consent or legal incapacity, may be ratified

Kinds:
1)

those where one of the parties is incapable of giving consent

to a contract (legal incapacity)
i.
minors ( below 18 )
ii.
insane unless acted in lucid interval
iii.
deaf mute who cant read or write
iv.
persons specially disqualified: civil interdiction
v.
in state of drunkenness
vi.
in state of hypnotic spell
Page 65 of 230

2)

those where the consent is vitiated by mistake, violence,

intimidation, undue influence or fraud (vice of consent)
Mistake - refers to the subject of the thing
i.
which is the object of the contract; to the
nature of the contract; to the principal
conditions in an agreement; Error as to person
- when it is the principal consideration of the
contract; Error as to legal effect - when
mistake is mutual and frustrates the real
purpose of parties
Violence serious or irresistible force is
ii.
employed to wrest consent
Intimidation one party is compelled by a
iii.
reasonable & well-grounded fear of an
imminent & grave danger upon person &
property of himself, spouse, ascendants or
descendants (moral coercion)
iv.
Undue influence person takes improper
advantage of his power over will of another
depriving latter of reasonable freedom of
choice
Fraud thru insidious words or machinations
v.
of contracting parties, other is induced to enter
into contract w/o w/c he will not enter (dolo
causante)

c) Unenforceable Contracts valid but cannot compel its execution

unless ratified; extrinsic defect; produce legal effects only after ratified
1.

Unauthorized/No sufficient authority entered into in the name of

another when:
a. no authority conferred
b. in excess of authority conferred ( ultra vires)

Note: Curable by RATIFICATION

2.

Both parties having no capacity to contract - 2 minor or 2 insane

persons

Note: Curable by ACKNOWLEDGMENT

3.

Failure to comply with Statute of Frauds

a.
b.
c.

Agreement to be performed within a year after making

contract
Special promise to answer for debt, default or miscarriage
of another
Agreement made in consideration of promise to marry
Page 66 of 230

Exception: principal

7. mismanagement of the
business by the agent

8. tort committed by the

agent

9. agent in good faith but

prejudices 3rd parties
10. agent in bad faith
and prejudices 3rd
persons

takes advantage of a
contract or receives
benefits made under
false representation
of his agent
c. for the agents own
benefit principal still
liable; agents motive
immaterial
principal still
responsible for the
acts contracted by
the agent with
respect to 3rd
persons; principal,
however, may seek
recourse from the
agent
principal civilly liable
so long as the tort is
committed by the
agent while
performing his duties
in furtherance of the
principals business
principal is liable for
damages
only the agent is
liable for damages

NOTE: Agent always liable for fraud but not for negligence, which shall be
judged with more or less rigor by the courts, according to whether the agency
was or was not for a compensation.
Bar Question (2003). Jo-Ann asked her close friend, Aissa, to buy some
groceries for her in the supermarket. Was there a nominate contract entered
into between Jo-Ann and Aissa? In the affirmative, what was it? Explain. (5%)
Answer: Yes, there was a nominate contract. On the assumption that Aissa
accepted the request of her close friend Jo-Ann to buy some groceries for her in
the supermarket, what they entered into was the nominate contract of Agency.
Article 1868 of the New Civil Code provides that by the contract of agency a
person binds himself to render some service or to do something in
representation or on behalf of another, with the consent or authority of the
latter.
Page 167 of 230

scope of authority

3. within the scope of

authority but in the
agents name

4. within the scope of the

written power of attorney
but agent has actually
exceeded his authority
according to an
understanding between
him & the principal

5. with improper motives

6. with
misrepresentations by
the agent

unenforceable as
against the principal
but binds the agent
to the third person
not binding on the
principal; principal
has no cause of
action against the 3rd
parties and vice versa

insofar as 3rd persons

are concerned (not
required to inquire
further than the
terms of the written
power, agent acted
within scope of his
authority; principal
estopped
motive is immaterial;
as long as within the
scope of authority,
valid

a. authorized principal still liable

b. beyond the scope
of the agents
authority
GR: principal not
liable
Page 166 of 230

when ratified or when the

principal allowed the agent
to act as though he had full
powers
when the transaction
involves things belonging to
the principal
1. remedy of the principal
- damages for agents
failure to comply with the
agency
2. remedy of the third
person - If the case falls
under the general rule, he
can sue the agent. But
when the contract involves
things belonging to the
principal, he can sue the
principal. But if it cannot be
determined without
litigation who is liable, he
can sue both.

(1)3rd person knew agent

was acting for his own
benefit: principal is not
liable to 3rd third person
(2) owner is seeking
recovery of personal
property of which he has
been unlawfully deprived

d.

e.
f.

Agreement for sale of goods, chattels or things in action at

price not less than 500; exception: auction when recorded
sale in sales book
Agreement for lease of property for more than 1 year &
sale of real property regardless of price
Representation as to credit of another

d) Void or Inexistent Contracts of no legal effect

a.
It produces no effect whatsoever either against or in favor of
anyone
b.
There is no action for annulment necessary as such is ipso
jure. A judicial declaration to that effect is merely a declaration
c.
It cannot be confirmed, ratified or cured
d.
If performed, restoration is in order, except if pari delicto will
apply
e.
The right to set up the defense of nullity cannot be waived
f.
Imprescriptible
g.
Anyone may invoke the nullity of the contract whenever its
juridical effects are asserted against him
KINDS OF VOID CONTRACT:
1) Lacking in essential elements: no consent, no object, no cause
(inexistent ones) OR essential formalities are not complied with (ex.
donation propter nuptias should conform to formalities of a
donation to be valid), INCLUDING:
a.
Those w/c are absolutely simulated or fictitious no
cause
b.
Those which cause or object did not exist at the time of
the transaction no cause/object
c.
Those whose object is outside the commerce of man
no object
d.
Those w/c contemplate an impossible service no
object
e.
Those w/c intention of parties relative to principal object
of the contract cannot be ascertained
2) Prohibited by law Those expressly prohibited or declared void by
law - Contracts w/c violate any legal provision, whether it amounts
to a crime or not
3) Illegal/Illicit ones Those whose cause, object or purpose is
contrary to law, morals, good customs, public order or public policy
; Ex: Contract to sell marijuana

IN PARI DELICTO DOCTRINE both parties are guilty, no action against

each other; those who come in equity must come with clean hands; applies only
to illegal contracts & not to inexistent contracts; does not apply when a superior
public policy intervenes
Page 67 of 230

iii.

MUTUAL RESTITUTION IN VOID CONTRACTS

General Rule: parties should return to each other what they have given by
virtue of the void contract in case where nullity arose from defect in
essential elements
1. return object of contract & fruits
2. return price plus interest
Exception: No recovery can be had in cases where nullity of contract arose
from illegality of contract where parties are in pari delicto

d)

PROPERTY

Requisites:
a) Utility
b) Individuality/Substantivity
c) Susceptibility of appropriation

Classification of Property
I. Classification by Mobility
a) Immovable property
i. By nature cannot be moved from place to place because of
their nature
a) land, buildings & all kinds of constructions adhered to
soil
b) mine, quarries
ii. By incorporation essentially movables but attached to an
immovable that it becomes an integral part of it
a) trees, plants & growing fruits adhered to soil
b) everything attached to an immovable that it will break if
separated
c) statues, paintings if intended by owner to be integral
part of immovable
d) animal houses if intended by owner to become
permanently attached to immovable
iii. By destination movables but purpose is to partake of an
integral part of an immovable
a) machinery placed by owner of the tenement & tend
directly to meet the needs of such works/industry
b) fertilizers when applied to soil
c) docks & floating structures
iv. By analogy/by law contracts for public works, servitude &
other real rights over immovable property

e)

f)

the agency should authorize a general and unlimited

management
Special Powers of Attorney needed:
i. To make such payments as are not usually considered as acts
of administration
ii. To effect novations which put an end to obligations already in
existence at the time the agency was constituted
iii. To compromise, to submit questions to arbitration, to renounce
the right to appeal from a judgment, to waive objections to the
venue of an action or to abandon a prescription already
acquired
iv. To waive any obligation gratuitously
v. To enter into any contract by which the ownership of an
immovable is transmitted or acquired either gratuitously or for
a valuable consideration
vi. To make gifts, except customary ones for charity or those
made to employees in the business managed by the agent
vii. To loan or borrow money, unless the latter act be urgent and
indispensable for the preservation of the things which are
under administration
viii. To lease any real property to another person for more than
one year
ix. To bind the principal to render some service without
compensation
x. To bind the principal in a contract of partnership
xi. To obligate the principal as a guarantor or surety
xii. To create or convey real rights over immovable property
xiii. To accept or repudiate an inheritance
xiv. To ratify or recognize obligations contracted before the agency
xv. Any other act of strict dominion
Not Included in the Power to Mortgage:
i.
to sell
ii.
to execute a second mortgage
iii.
to mortgage for the agents or any 3rd persons
benefit, UNLESS clearly indicated
Power to compromise does not include submission to arbitration.

18. Effects of Acts of Agent

ACTS OF THE AGENT
EFFECT
1. in behalf of the
binds principal; agent
principal, within the
not personally liable
scope of authority

b) Movable property
2. without or beyond
Page 68 of 230

contract is
Page 165 of 230

EXCEPTION/S
agent liable if he
(1)expressly makes himself
liable; (2)exceeds the limits
of his authority without
giving the parties sufficient
notice of his powers
binding on the principal

14. Form of Agency: appointment of an agent may be oral or written; no formal

requirements
Exception: when the law requires a specific form (e.g. agents sale of real
property or any interest therein)

i.

susceptible of appropriation that are not included in

enumeration in immovable
immovable that are designated as movable by special provision
of law
forces of nature brought under control by science
things w/c can be transported w/o impairment of real property
where they are fixed
obligations which involve demandable sums (credits)
shares of stocks of agricultural, commercial & industrial entities
although they may have real estate

ii.
iii.
iv.

15. Form of Acceptance by Agent

A. Express - when it is oral or written
B. Implied - when it can be inferred from the acts of the agent which carry
out the agency, or from his silence of inaction according to the
circumstances
1. Between persons who are present implied acceptance if the
principal delivers his power of attorney to the agent and the
latter receives it without any objection
2. Between persons who are absent acceptance not deemed
implied from the silence of the agent EXCEPT:
a. When the principal transmits his power of attorney to
the agent, who receives it without any objection
b. 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
agent, and he did not reply to the letter or telegram

v.
vi.

II. Classification by Consumability

1. consumable cannot be utilized w/o being consumed
2. non-consumable
III. Classification by Ownership
1. Public dominion
a) intended for public use
b) intended for public service of state, provinces, cities &
municipalities

Characteristics:
16. Way of Giving Notice of Agency & Its Effect
a) By special information - the person appointed as agent is considered
such with respect to the person to whom it was given
b) By public advertisement - the agent is considered such with regard to
any person
17. Power of Attorney
a) Definition: instrument in writing by which one person, as principal,
appoints another as his agent and confers upon him the authority to
perform certain specified acts or kinds of acts on behalf of the principal;
primary purpose is to evidence agents authority to third parties within
whom the agent deals
b) Power of Attorney, How Construed: strictly construed and strictly
pursued; held to grant only those specified power.
Exception: when strict construction will destroy the very purpose of
the power
*Sale of a Piece of Land/Any Interest Therein: agents authority
must be in writing, otherwise sale is void
c) Agency Couched in General Terms: covers only MERE ACTS OF
ADMINISTRATION even if
i. the principal should state that he withholds no power
ii. the agent may execute such acts as he may consider
appropriate
Page 164 of 230

2.

outside the commerce of men cannot be alienated or leased

cannot be acquired by private individual through prescription

not subject to attachment & execution

cannot be burdened by voluntary easement

Private Ownership
a) patrimonial property of state, provinces, cities, municipalities
1. exist for attaining economic ends of state
2. property of public dominion when no longer intended
for public use/service declared patrimonial
b) property belonging to private persons individually or
collectively

Ownership
Ownership in General
1.

Definitions of Ownership
a)
Independent and general right of a person to control a thing
particularly in his possession, enjoyment, disposition, and
recovery, subject to no restrictions except those imposed by
the state or private persons, without prejudice to the
provisions of the law.
b)
Power of a person over a thing for purposes recognized by law
& within the limits established by law
Page 69 of 230

2.

Attributes:
a)
b)
c)
d)
e)
f)

Jus possidendi right to possess

Jus utendi right to enjoy
Jus fruendi right to fruits
Jus abutendi right to use and abuse
Jus disponendi right to dispose
Jus vindicandi right to exclude others from possession of the
thing

Agent delivers the proceeds of the sale

Agent can return the object in case he is unable
to sell the same to a third person
Agent in dealing with the thing received is bound
to act according to the instructions of his
principal

owner
Buyer pays the price
Buyer, as a general rule,
cannot return the object sold
Buyer can deal with the thing
as he pleases, being the owner

12. Distinction Between Agent & Contractor

Actions for possession:

1. movable replevin (return of a movable)
2. immovable
a) forcible entry used by person deprived of possession
through violence, intimidation (physical possession, 1 year
unlawful deprivation)
b) unlawful detainer used by lessor/person having legal right
over property when lessee/person withholding property
refuses to surrender possession of property after expiration
of lease/right to hold property (physical possession, 1 year
from unlawful deprivation)
c) accion publiciana plenary action to recover possession
d) accion reinvindicatoria recovery of dominion of property as
owner
3. Principle of self help self defense
a) Elements:
i. Person exercising rights is owner or lawful possessor
ii. There is actual or threatened unlawful physical invasion of
his property
iii. Use force as may be reasonably necessary to repel or
prevent it
b) Available only when possession has not yet been lost, if already lost
must resort to judicial process
c) May be exercised by 3rd person negotiorum gestio
4. Right to enclose or fence w/o detriment to servitude constituted
5. Right to surface & everything under it only as far as necessary for his practical
interest (benefit or enjoyment)

Agent
represents his principal
acts under the principals control and
instruction
principal is liable for torts committed by
the agent within the scope of his
authority

Independent Contractor
employed by the employer
acts according to his own method
employer not liable for torts committed
by the independent contractor.

13. Classification of Agency

As to manner of creation
Express agent has been actually authorized by the principal,
either orally or in writing
Implied agency is implied from the 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, or from the acts of the agent which carry out the
agency, or from his silence or inaction according to the
circumstances
As to character

Gratuitous agent receives no compensation for his services

Onerous agent receives compensation for his services
As to extent of business of the principal
General agency comprises all the business of the principal
Special agency comprises one or more specific transactions
As to authority conferred

Couched in general terms agency is created in general terms and

6. Right to hidden treasure found in own property
a) hidden and unknown movables w/c consist of money or precious
objects
b) owner is unknown
Page 70 of 230

is deemed to comprise only acts in the name and

representation of the principal
Simple or Commission agent acts in his own name but for the
account of the principal

Page 163 of 230

c)
7. Nature of Relationship Between Principal & Agent: Fiduciary, based on trust &
confidence
8. Distinction Between Agency & Lease of Service

Basis

Agency
representation

Lease of Service
employment

Powers &
agent exercises discretionary
lessor ordinarily performs
functions
powers
only ministerial functions
Persons involved 3 persons: principal, agent and 2 persons: lessor and lessee
the 3rd person with whom the
agent contracts
Types of
relates to commercial or business relates more to the matters
transactions
of mere manual or
transactions
mechanical execution
involved
9. Distinction Between Agency & Guardianship
Agency
Agent represents a capacitated
person
Agent is appointed by the
principal and can be removed by
the latter.
Agent is subject to the directions
of the principal.
Agent can make the principal
personally liable.

Guardianship
A guardian represents an incapacitated
person.
Guardian is appointed by the court and stands
in loco parentis.
Guardian is not subject to the directions of
the ward but must act for the benefit of the
latter
Guardian has no power to impose personal
liability on the ward.

10. Distinction Between Agency & Lease of Property

Agency
Agent is controlled by the principal.
Agency may involve things other than
property.
Agent can bind the principal.

Lease of property
Lessee is not controlled by the
lessor.
Lease of property involves
property..
Lessee cannot bind the lessor.

11. Distinction Between Agency to Sell & Sale

Agency to sell
Sale
Agent receives the goods as the principals goods Buyer receives the goods as
Page 162 of 230

by chance if property owner is state belongs to finder; also if

in anothers property; the finder must not be trespasser

Bar Question (1997). Marcelino, a treasure hunter as a hobby, has found a

map which appears to indicate the location of hidden treasure. He has an idea
of the land where the treasure might be found. Upon inquiry, he learns that the
owner of the land, Leopoldo, is a permanent resident of Canada. Nobody,
however, could give him Leopoldos exact address. Ultimately, anyway, he
enters the land and conducts a search. He succeeds.
Leopoldo, learning of Marcelinos find, seeks to recover the treasure
from Marcelino but the latter is not willing to part with it. Failing to reach an
agreement, Leopoldo sues Marcelino for the recovery of the property. Marcelino
contests the action.
How would you decide the case?

Answer: I would decide in favor of Marcelino since he is considered a finder by

chance of the hidden treasure, hence, he is entitled to of the hidden treasure.
While he may have had the intention to look for the hidden treasure, still he is a
finder by chance since it is enough that he tried to look for it. By chance the law
does not mean sheer luck such that the finder should have no intention at all to
look for the treasure. By chance means good luck, implying that one who
intentionally looks for the treasure is embraced by the provision. The reason is
that it is extremely difficult to find hidden treasure without looking for it
deliberately. Marcelino is not a trespasser since there is no prohibition for him to
enter the premises, hence, he is entitled to half of the treasure.
7. Limitation on Ownership
a) general limitations for the benefit of the state (eminent domain,
police power, taxation)
b) specific limitations imposed by law (servitude, easements)
c) specific limitations imposed by party transmitting ownership (will,
contract)
d) limitations imposed by owner himself (voluntary servitude,
mortgages, pledges)
e) inherent limitations arising from conflicts with other similar rights
(contiguity of property)
f) owner cannot make use of a thing which shall injure/prejudice
rights of 3rd persons (neighbors)
g) acts in state of necessity law permits injury or destruction of
things owned by another provided this is necessary to avert a
greater danger (with right to indemnity vs. principle of unjust
enrichment)
h) true owner must resort to judicial process when thing is in
possession of another; law creates a disputable presumption of
ownership to those in actual possession
i.
identify property
Page 71 of 230

ii.

show that he has better title

8. Property Registration Decree (P.D. 1529)

Bar Question (1998). Section 70 of Presidential Decree No. 1529, concerning
adverse claims on registered land, provides a 30-day period of effectivity of an
adverse claim, counted from the date of its registration. Suppose a notice of
averse claim based upon a contract to sell was registered on March 1, 1997 at
the instance of the BUYER, but on June 1, 1997, or after the lapse of the 30-day
period, a notice of levy on execution in favor of a JUDGMENT CREDITOR, was
also registered to enforce a final judgment for money against the registered
owner. Then, on June 15, 1997 there having been no formal cancellation of his
notice of adverse claim, the BUYER pays to the seller-owner the agreed purchase
price in full and registers the corresponding deed of sale. Because the annotation
of the notice of levy is carried over to the new title in his name, the BUYER
brings an action against the JUDGMENT CREDITOR to cancel such annotation,
but the latter claims that his lien is superior because it was annotated after the
adverse claim of the BUYER had ipso facto ceased to be effective. Will the suit
prosper?

Answer: The suit will prosper. While an adverse claim duly annotated at the
back of a title under Section 70 of P.D. 1529 is good only for 30 days,
cancellation thereof is still necessary to render it ineffective, otherwise, the
inscription thereof will remain annotated as a lien on the property. While the life
of an adverse claim is 30 days under P.D. 1529, it continues to be effective until
it is canceled by formal petition filed with the Register of Deeds.
The cancellation of the notice of levy is justified under Section 108 of
P.D. 1529 considering that the levy on execution can not be enforced against the
buyer whose adverse claim against the registered owner was recorded ahead of
the notice of levy on execution.
Bar Question (2000). Regina has been leasing foreshore land from the Bureau
of Fisheries and Aquatic Resources for the past 15 years. Recently, she learned
that Jorge was able to obtain a free patent from the Bureau of Agriculture,
covering the same land, on the basis of a certification by the District Forester
that the same is already alienable and disposable, Moreover, Jorge had already
registered the patent with the Register of Deeds of the province, and he was
issued an Original Certificate of Title for the same. Regina filed an action for
annulment of Jorges title on the ground that it was obtained fraudulently. Will
the action prosper?

Answer: An action for the annulment of Jorges Original Certificate of Title will
prosper on the following grounds:
1) Under Chapter IX of C.A. No. 141, otherwise known as the Public
Land Act, foreshore lands are disposable for residential, commercial, industrial,
Page 72 of 230

f
Those credits which do not enjoy any preference with respect to specific
property and those which enjoy preference, as to the amount not paid, shall be
satisfied according to the following rules:
i. In the order established in Article 2244;
ii. Common credits referred to in Article 2245 shall enjoy no preference
and shall be paid pro rata regardless of dated (Article 2251).
AGENCY
Nature, Form and Kinds of Agency
1. Definition: By the contract of agency a person binds himself to render some
service or to do something in representation or on behalf of another, with the
consent or authority of the latter.
2. Characteristics:
a) consensual
b) principal
c) nominate
d) unilateral; reciprocal (if for compensation)
e) preparatory
3. Basis: Representation. The acts of the agent on behalf of the principal within
the scope of his authority produce the same legal and binding effects as if they
were personally done by the principal. Hence, the distinguishing features of
agency are its representative character & its derivative authority.
4. Purpose: extend the personality of the principal through the facility of the
agent
5. Capacity of the Parties:
a) The principal may be a natural or a juridical person. And he must
be capacitated. The rule is if a person is capacitated to act for
himself or his own right, he can act through an agent.
b) As to the agent, insofar as the third persons are concerned, it is
enough that the principal is capacitated. But insofar as his
obligations to his principal are concerned, the agent must be able
to bind himself.
6. Essential Elements:
a) consent of the parties to establish the relationship;
b) object of the contract is the execution of a juridical act in relation
to third persons;
c) agent acts as a representative and not for himself; and
d) agent acts within the scope of his authority
Page 161 of 230

2. Article 2244 relates to the property of the insolvent that is not burdened with
the liens or encumbrances created or recognized by Article 2241 and 2242.

or similar productive purposes, and only by lease when not needed by the
government for public service.
2) If the land is suited or actually used for fishpond or aquaculture
purposes, it comes under the jurisdiction of the Bureau of Fisheries and Aquatic
Resources (BFAR) and can only be acquired by lease. (P.D. 705)
3) Free Patent is a mode of concession under Section 41, Chapter VII of
the Public Land Act, which is applicable only for agricultural lands.
4) The certificate of the district forester that the land is already
alienable and disposable simply means that the land is no longer needed for
forest purposes, but the Bureau of Lands could no longer dispose of it by free
patent because it is already covered by a lease contract between BFAR and
Regina. That contract must be respected.
5) The free patent of Jorge is highly irregular and void ab initio, not
only because the Bureau has no statutory authority to issue a free patent over a
foreshore area, but also because of the false statements made in his sworn
application that he has occupied and cultivated the land since July 4, 1945, as
required by the free patent law. Under Section 91 of the Public Land Act, any
patent, concession or title obtained thru false representation is void ab initio. In
cases of this nature, it is the government that shall institute annulment
proceedings considering that the suit carries with it a prayer for the reversion of
the land to the state. However, Regina is a party in interest and the case will
prosper because she has a lease contract for the same land with the
government.

6. Order of Preference of Credits

Right of Accession

a.
Those credits which enjoy preference with respect to specific movable,
excluded all others to the extent of the value of the personal property to which
the preference refers (Article 2246).

1. Accession owner of thing becomes owner of everything it may produce or

those which may be incorporated or united thereto
1. principle of justice
2. accessory follows the principal

5. Order of Preference with Respect to Other Properties of the Debtor

i. funeral expenses
ii. wages of employees one year
iii. expenses of last illness
iv. workmens compensation
v. support for one year
vi. support during insolvency
vii. fines in crimes
viii. legal expenses - administration
ix. taxes
x. tort
xi. donations
xii. appearing in public instrument or final judgment
NOTES:
1. In contrast with Articles 2241 and 2242, Article 2244 creates no liens on
determinate property which follow such property. What Article 2244 creates are
simply rights in favor or certain creditors to have the cash and other assets of
the insolvent applied in a certain sequence or order of priority (Republic vs.
Peralta, 150 SCRA 37 [1987]).

b.
If there are two or more credits with respect to the same specific
movable property, they shall be satisfied pro-rata, after the payment of duties,
taxes, and fees due the State or any subdivision thereof (Article 2247).
c.
Those credits which enjoy preference in relation to specific real property
or real rights, exclude all others to the extent of the value of the immovable or
real right to which the preference refers (Article 8).
d
If there are two or more credits with respect to the same specific real
property or real rights, they shall be satisfied pro rata, after the payment of the
taxes and assessments upon the immovable property or real right (Article 2249).
e
The excess, if any, after the payment of the credits which enjoy
preference with respect to specific property, real or personal, shall be added to
the free property which the debtor may have, for the payment of the other
credits (Article 2250).
Page 160 of 230

2. Accession continua accession to products of the thing

General Rule: Owner has the right to all natural, industrial & civil fruits
Exception: possession in good faith by another, usufruct, lease,
antichresis
3. IMMOVABLES

Accession Natural (Accretion)

a)

Alluvion - owner of lands adjoining banks of river belongs the accretion

gradually received from effects of the water's current
Requisites:
1. deposit is gradual & imperceptible
2. made through effects of current of water
3. land where accretion takes place is adjacent to banks of
river
Page 73 of 230

b)

c)

Avulsion transfer of a known portion of land from one tenement to

another by force of current of waters
Rights of riparian owner:
1. Right to portion of land transferred if not claimed by
owner within 2 years (prescription)
2. Right to trees uprooted if not claimed by owner w/in 6
months; subject to reimbursement for necessary expenses
for gathering them & putting them in safe place
Change of river bed
Right of owner of land occupied by new river course:
1. Right to old bed ipso facto in proportion to area lost
2. Owner of adjoining land to old bed shall have right to
acquire the same by paying its value value not to exceed
the value of area occupied by new bed
3. Formation of island in non-navigable river
a) owner of margin nearest to islands formed if
nearest to it
b) owner of both margins if island is in the middle
(divided into halves longitudinally)
4. building, planting & sowing

Bar Question (2001). For many years, the Rio Grande river deposited soil
along its bank, beside the titled land of Jose. In time, such deposit reached an
area of one thousand square meters. With the permission of Jose, Vicente
cultivated the said area. Ten years later, a big flood occurred in the river and
transferred the 1000 square meters to the opposite bank, beside the land of
Agustin. The land transferred is now contested by Jose and Agustin as riparian
owners and Vicente who claims ownership by prescription. Who should prevail?

Answer: Jose should prevail. The disputed area, which is an alluvion, belongs
by right of accretion to Jose, the riparian owner (Art. 457 CC). When, as given in
the problem, the very same area was transferred by flood waters to the
opposite bank, it became an avulsion and ownership thereof is retained by Jose
who has two years to remove it (Art. 459, CC). Vicentes claim based on
prescription is baseless since his possession was by mere tolerance of Jose and,
therefore, did not adversely affect Joses possession and ownership (Art. 537,
CC). Inasmuch as his possession is merely that of a holder, he cannot acquire
the disputed area by prescription.
Bar Question (2003). Andres is a riparian owner of a parcel of registered land.
His land, however, has gradually diminished in area due to the current of the
river, while the registered land of Mario on the opposite bank has gradually
increased in area by 200-square meters.
(a) Who has the better right over the 200-square meter area that has been
added to Marios registered land, Mario or Andres?
(b) May a third person acquire said 200-square meter land by prescription?
Page 74 of 230

f)

Household furniture and utensils necessary for housekeeping and

used for that purpose by the debtor, such as the debtor may select,
of a value not exceeding one thousand pesos;
g) Provisions for individual or family use insufficient for three months;
h) The professional libraries of attorneys, judges, physicians,
pharmacists, dentist, engineers, surveyors, clergymen, teachers
and other professionals, not exceeding three thousand pesos in
value;
i) One fishing boat and net, not exceeding the total value of one
thousand pesos, the property of any fisherman, by the lawful use
of which he earns a livelihood;
j) So much of the earnings of the debtor for his personal services
within the month preceding the levy as are necessary for the
support of his family;
k) Lettered gravestones;
l) All moneys, benefits, privileges or annuities accruing or in any
manner growing out of any life insurance, if the annual premiums
paid do not exceed five hundred pesos, and if they exceed the
sum, a like exemption shall exist which shall bear the same
proportion to the moneys, benefits privileges and annuities so
accruing or growing out of such insurance that said five hundred
pesos bears to the whole premiums paid;
m) The right to receive legal support, or money or property obtained
as such support, or any pension or gratuity from the government;
n) Copyrights and other properties especially exempted by law
(Section 12, Rule 39)
o) Property under legal custody and of the public dominion.
3. Preferred
a)
b)
c)
d)
e)
f)
g)
h)
i)
j)
k)
l)
m)

Credits with Respect to Specific Movable Property

taxes
malversation by public officials
vendors lien
pledge, chattel mortgage
mechanics lien
laborers wages
salvage
tenancy
carriers lien
hotels lien
crop loan
rentals - one year
deposit

NOTE: The foregoing enumeration is not an order of preference (Articles 2248

2249)
Page 159 of 230

Bar Question (2001). To secure a loan obtained from a rural bank, Purita
assigned her leasehold rights over a stall in the public market in favor of the
bank. The deed of assignment provides that is case of default in the payment,
the bank shall have the right to sell Puritas rights over the market stall as her
attorney-in-fact, and to apply the proceeds to the payment of the loan.
A. Was the assignment of leasehold rights a mortgage or a cession? Why?

Answer: The assignment was a mortgage, not a cession, of the leasehold rights.
A cession would have transferred ownership to the bank. However, the grant of
authority to the bank to sell the leasehold rights in case of default is proof that
no such ownership was transferred and that a mere encumbrance was
constituted. There would have been no need for such authority had there been a
cession.
B. Assuming the assignment to be a mortgage, does the provision giving the
bank the power to sell Puritas rights constitute pactum commissorium or not?
Why?

Answer: No, the clause in question is not a pactum commissorium. It is pactum

commissorium when default in the payment of the loan automatically vests
ownership of the encumbered property in the bank. In the problem given, the
bank does not automatically become owner of the property upon default of the
mortgagor. The bank has to sell the property and apply the proceeds to the
indebtedness.
Concurrence and Preference Of Credits
1. Liability for Obligations
The debtor is liable with all his property, present and future, for the
fulfillment of his obligations, subject to the exemptions provided by law.
2. Exempt Property
a) Family home constituted jointly by husband and wife or by
unmarried head of a family, subject to some exemptions
b) Right to receive support as well as any money or property
obtained as such support
c) Tools and implements necessarily used by him in his trade or
employment;
d) Two horses, or two cows, or two carabaos or other beasts of
burden, such as the debtor may select, not exceeding one
thousand pesos in value and necessarily used by him in his ordinary
occupation;
e) His necessary clothing and that of all his family.

Page 158 of 230

Answer: (a) Mario has a better right over the 200 square meters increase in
area by reason of accretion, applying Article 457 of the New Civil Code, which
provides that 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.
Andres cannot claim that the increase in Marios land is his own,
because such is an accretion and not a result of the sudden detachment of a
known portion of his land and its attachment to Marios land, a process called
avulsion. He can no longer claim ownership of the portion of his registered
land which was gradually and naturally eroded due to the current of the river,
because he had lost it by operation of law. That portion of the land has become
part of the public domain.
(b) Yes, a third party may acquire by prescription the 200 square
meters, increase in area, because it is not included in the Torrens Title of the
riparian owner. Hence, this does not involve the imprescriptibility conferred by
Section 47, P.D. No. 1529. The fact that the riparian land is registered does not
automatically make the accretion thereto a registered land. (Grande v. CA, 115
Phil. 521 [1962]; Jagualing v. CA 194 SCRA 607 [1991]).
Accession Industrial
General Rule: Whatever is built, planted or sown belongs to owner of land;
presumption is owner made them at his expense
Exception: contrary is proven
A. Right of owner of material
1. Right to be indemnified or paid of value of property by owner
of land
2. Right to remove materials if he can do so w/o injury to work
constructed if owner has not paid
3. Right to damages and demolition even if with injury to work if
owner of land is in bad faith
B. Right of owner when another builds, plants or sows in his land:
(OWNER & BUILDER BOTH IN GOOD FAITH)
1. Appropriate as his own after paying for indemnity
2. Oblige the planter, builder to pay for price of land or rent,
except when value of lands is greater than thing built
convert to rent
Right of Builder in good faith before payment of indemnity of
owner in good faith
1. Right to retain land & building
2. Right not to be compelled to pay for rent
3. Right of retention ceases when obliged to pay for value of
and if he fails to do so
Page 75 of 230

C. Right
1.
2.
3.
4.

of owner in good faith when builder is in bad faith

Right to appropriate what has been built w/o paying indemnity
Order demolition of building
Compel the builder to pay for price of land or rent
Right to damages

D. Right of builder in bad faith when owner is in good faith

1. Right to be reimbursed for necessary expenses
preservation of land
E. Right
1.
2.
3.

for

of Builder in good faith when owner is in bad faith

Right to indemnity for value of building
Right to damages
Right to demolish w/o payment of indemnity

F. Bad faith on both builder & owner in pari delicto (no cause of
action against each other)
G. Right of 3rd person who owns materials
1. Right to be indemnified for value of materials irrespective of
good faith or bad faith of builder or owner; if builder has no
property, owner is subsidiarily liable
2. When builder is in bad faith & owner in good faith & owner
compel builder to remove improvements, owner is not
subsidiarily liable
3. When 3rd person is paid by builder, builder may demand from
landowner the value of labor & materials
Bar Question (1999). a) Because of confusion as to the boundaries of the
adjoining lots that they bought from the same subdivision company, X
constructed a house on the adjoining lot of Y in the honest belief that it is the
land that he bought from the subdivision company. What are the respective
rights of X and Y with respect to Xs house?

Answer: The rights of Y, as owner of the lot, and X, as builder of a house

thereon, are governed by Art. 448 of the Civil Code which grants to Y the right to
choose between two remedies: (a) appropriate the house by indemnifying X for
its value plus whatever necessary expenses the latter may have incurred for the
preservation of the land, or (b) compel X to buy the land if the price of the land
is not considerably more than the value of the house. If it is, then X cannot be
obliged to buy the land but he shall pay reasonable rent, and in case of
disagreement, the court shall fix the terms of the lease.

Page 76 of 230

The registration of the chattel mortgage is an effective and binding

notice to other creditors of its existence and creates a real right or a lien which
being recorded follows the chattel wherever it goes. The registration gives the
mortgagee the symbolical possession.
5. Affidavit of Good Faith
a) The affidavit of good faith is an oath in a contract of chattel
mortgage wherein the parties severally swear that the mortgage is
made for the purpose of securing the obligation specified in the
conditions thereof and for no other purpose and that the same is
just and valid obligation and one not entered into for the purpose
of fraud.
b) The absence of the affidavit vitiates a mortgage only as against

third persons without notice like creditors and subsequent

encumbrances.
6. Foreclosure of Chattel Mortgage
a) Public Sale if the mortgagor defaults in the payment of the
secured debt or otherwise fails to comply with the conditions of the
mortgage
b) Private Sale if there is an express stipulation in the contract.
7. Right of Mortgagee to Recover Deficiency
a) The creditor may maintain an action for the deficiency although the
Chattel Mortgage Law is silent on this point
b)
The action may be sought within ten (10) years from the time the
cause of action accrues.
c) If the chattel mortgage is constituted, whether by the debtorvendee or a third person, as security for the purchase of personal
property payable in installments, no deficiency judgment can be
asked and any agreement to the contrary shall be void (Article
1484).
Bar Question (1997). On order to secure a bank loan, XYZ Corporation
surrendered its deposit certificate, with a maturity date of 1 September 1997 to
the bank. XYZ defaulted on the due repayment of the loan, prompting the bank
to encash the deposit certificate. XYZ questioned the above action taken by the
bank as being a case of pactum commissorium. The bank disagrees. What is
your opinion?

Answer: We submit that there is no pactum commissorium here. Deposits of

money in banks and similar institutions are governed by the provisions on simple
loans (Art1980, Civil Code). The relationship between the depositor and a bank
is one of creditor and debtor. Basically this is a matter of compensation as all
the elements of compensation are present in this case. (BPI vs. CA, 232 SCRA
302).
Page 157 of 230

a)
b)

To bring an action for specific performance

To petition for the sale of the real property as in a foreclosure of
mortgages under Rule 68 of the Rules of Court. The parties,
however, may agree on an extrajudicial foreclosure in the same
manner as they are allowed in contracts of mortgage and pledge

Chattel Mortgage
1. A chattel mortgage is:
a) an accessory contract because it is for the purpose of securing the
performance of a principal obligation;
b) a formal contract because for its validity, registration in the Chattel
Mortgage Register is indispensable.
c) a unilateral contract because it produces only obligations on the
part of the creditor to free the thing from the encumbrance upon
fulfillment of the obligation.

b) Suppose X was in good faith but Y knew that X was constructing on his (Ys)
land but simply kept quiet about it, thinking perhaps that he could get Xs house
later. What are the respective rights of the parties over Xs house in this case?

Answer: Since the lot owner Y is deemed to be in bad faith (Art. 453), X as the
party in good faith may (a) remove the house and demand indemnification for
damages suffered by him, or (b) demand payment of the value of the house plus
reparation for damages (Art 447, in relation to Art. 454). Y continues as owner of
the lot and becomes, under the second option, owner of the house as well, after
he pays the sums demanded.
4. MOVABLES
A. Conjunction / adjunction 2 movable things which belong to
different owners are united to form a single object
a)

2. Subject Matter of Chattel Mortgage

a) Shares of stock in a corporation
b) Interest in business
c) Machinery and house of mixed materials treated by parties as
personal property and no innocent third person will be prejudiced
thereby (Makati Leasing and Finance Corporation vs. Weaver
Textile Mills, Inc., 122 SCRA 296 [1983].
d) Vessels, the mortgage of which have been recorded with the
Philippine Coast Guard in order to be effective as to third persons
e) Motor vehicles, the mortgage of which had been registered both
with the Land Transportation Commission and the Chattel Mortgage
Registry is order to affect third persons
f) House which is intended to be demolished
g) Growing crops and large cattle (section 7, paragraphs 2 and 3, Act
No. 1508)
3. Creation of Chattel Mortgage
a) The registration of the personal property in the Chattel Mortgage
Register as security for the performance of an obligation.
b) Under the Chattel Mortgage Law, if the property as situated in a
different province from that in which the mortgagor resides, the
registration must be in both registers (Section 4, Act No. 1508);
otherwise, the chattel mortgage is void.
c) It has been ruled however that if the chattel mortgage is not
recorded, it is nevertheless binding between the parties. (Filipinas
Marble Corporation vs. Intermediate Appellate Court, 142 SCRA 180
[1986]
4. Effect of Registration

Test to determine w/c one is the principal:

i.
that to w/c the other intended to be united
as ornament or for its use of perfection
ii.
value
iii.
volume

b) Rights
i.
ii.

iii.
iv.

v.

If both are in good faith owner of principal

acquired the accessory with indemnification
If both are in good faith may separate them if
no injury will be caused; if value of accessory is
greater than principal, owner of accessory may
demand separation even if damages will be
caused to the principal (expenses to be borne by
one who caused the conjunction)
If owner of accessory is in bad faith owner of
accessory with damages to principal
If owner of principal is in bad faith owner of
accessory shall have option of principal paying
value of accessory or removal of accessory
despite destruction of principal
Owner of accessory or principal has right to
indemnity when thing adjuncts w/o his consent
may demand that a thing equal is kind, value and
price

B. Specification One employs the materials of another in whole or in

part on order to make a thing of a different kind; transformation
a) Rights:

Page 156 of 230

Page 77 of 230


i.

ii.

iii.

iv.

If person who made the transformation is in

good faith - he shall appropriate the thing
transformed as his own with indemnity to owner
of material for its value
If material is more precious than transformed
thing owner of material may appropriate the
new thing to himself after indemnity paid to labor
or demand indemnity for materials
If person who made the transformation is in bad
faith, owner of material shall appropriate the
work to himself w/o paying maker or demand
indemnity for value of materials & damages
If transformed thing is more valuable than
material, owner of material cannot appropriate

C. Commixtion / confusion 2 things of the same or different kinds are

mixed & are not separable w/o injury

Extrajudicial Foreclosure governed by Act. No. 3135 as amended, if and

when the mortgagee is given a specific power or express authority to do
so.
a. Public auction must be conducted in the province where the
property is situated.
b. Posting of notice of sale in at least 3 public places therein
c. Publication in a newspaper of general circulation
d. Personal notice to mortgagor is not required
e. Debtor has the right to redeem the property sold within the
term of one year from and after the date of the registration of
sale (Section 6).

9. Right of Mortgagee to Recover Deficiency

If there be a balance due to the mortgagee after applying the proceeds
of the sale, the mortgagee is entitled to recover the deficiency. The action to
recover a deficiency after foreclosures prescribes after ten (10) years from the
time the right of action accrues.
Antichresis

a) Rights:
i.

ii.

iii.

If both owners are in good faith Each owner

shall acquire a right proportional to the part
belonging to him (vis-a-vis the value of the things
mixed or confused)
If one owner is in bad faith he shall lose the
thing belonging to him plus indemnity for
damages caused to owner of other thing mixed
with his thing
If both in bad faith no cause of action against
each other

1. Antichresis is a contract whereby 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.
2. Characteristics
a) accessory contract
b) formal contract because the amount of the principal and of the
interest must both be in writing, otherwise the contract of
antichresis is void.
3. The fruits of the immovable which is the object of the antichresis must be
appraised at their actual market value at the time of the application.

Quieting of Title
1. Action to quiet title
a) put end to vexatious litigation in respect to property involved;
plaintiff asserts his own estate & generally declares that
defendants claim is w/o foundation
b) When proper:
1. contract has been extinguished or terminated
2. contract has prescribed
3. remove cloud
2. Action to remove cloud
a) intended to procure cancellation, delivery, release of an instrument,
encumbrance, or claim constituting a on plaintiffs title which may
be used to injure or vex him in the enjoyment of his title
Page 78 of 230

4. The property delivered stands as a security for the payment of the obligation
of the debtor in antichresis. Hence, the debtor cannot demand its return until
the debt is totally paid.

5. Obligations of Antichretic Creditor

a) pay the taxes and charges upon the estate.
b) apply the fruits, after receiving them to the interest, if owing, and
thereafter to the principal (Article 2132) in accordance with the
provisions of Article 2133 or 2138
6. Remedy of Creditor in Case of Default
Page 155 of 230

Real Mortgage

b)

1. Real Mortgage is a contract whereby the debtor secures to the creditor the
fulfillment of a principal obligation, specially subjecting to such security
immovable property or real rights over immovable property in case the principal
obligation is not complied with at the time stipulated.

c)

2. The mortgagor, as a general rule, retains possession of the property

mortgaged as security for the payment of the sum borrowed from the
mortgagee, and pays the latter a certain percent thereof as interest on his
principal by way of compensation for his sacrifice in depriving himself of the use
of said money and the enjoyment of its fruits, in order to give them to the
mortgagor.

Cloud any instrument which is inoperative but has semblance of

title
Requisites:
1. Plaintiff must have legal or equitable interest
2. Need not be in possession of property
3. Return to defendant all benefits received he who wants
justice must do justice

Ruinous Buildings and Trees in Danger of Falling

3. The objects of a real mortgage are immovable (Article 415) and alienable real
rights imposed upon immovables.

Liability for damages:

a) collapse engineer, architect or contractor
b) collapse resulting from total or partial damage; no repair made
owner; state may compel him to demolish or make necessary work to
prevent if from falling
c) if no action done by government at expense of owner

4. In order that a mortgage may be validly constituted, it must appear in a public

document duly recorded in the Registry of Property
NOTE: If the instrument of mortgage is not recorded, the mortgage is
nevertheless binding between the parties.

Co-Ownership
1. Co-ownership
a) plurality of subjects many owners
b) unity of material (indivision) of object of ownership
c) recognition of ideal shares

5. A mortgage creates a real right, a lien inseparable from the property

mortgaged, which is enforceable against the whole world. Until discharged, it
follows the property wherever it goes and subsists notwithstanding changes of
ownership.
6. Effect of Mortgage
a) The only right of a mortgagee in case of non-payment of a debt
secured by real mortgage would be to foreclose the mortgage and
have the encumbered property sold to satisfy the outstanding
indebtedness.
b) The mortgagors default does not operate to vest in the mortgagee
the ownership of the encumbered property.
7. Extent of Mortgage
General Rule: Not limited to the property itself but also extends to all its
accessions, improvements, growing fruits and rents or income (see Article 2102)
as well as to the proceeds of insurance should the property be destroyed of the
expropriation value of the property should it be expropriated.
8. Foreclosure of Mortgages

Judicial foreclosure governed by Rule 68 of the Rules of Court.

Sources:
i.
ii.
iii.
iv.
v.

Law
Contracts
succession
fortuitous event/chance commixtion
occupancy 2 persons catch a wild animal

Distinguished from partnership:

partnership created only by agreement; co-ownership has many

sources

purpose of partnership is to obtain profit; co-ownership is collective

enjoyment of a thing

in partnership there is juridical personality distinct from individuals,

none in co-ownership

partnership can be created for more than 10 years, not in coownership

partners cannot transfer rights w/o consent of other co-partners, not

co-ownership

partnership extinguished when partner dies, not in co-ownership

distribution of profits in partnerships may be stipulated, this is not

flexible in co-ownership but depends on ideal share/interest
2. Rights of co-owners

Page 154 of 230

Page 79 of 230

a)

Right to benefits proportional to respective interest; stipulation to

contrary is void
b) Right to use thing co-owned
i.
for purpose for which it is intended
ii.
without prejudice to interest of ownership
iii.
without preventing other co-owners from making use
thereof
c) Right to change purpose of co-ownership by agreement
d) Right to bring action in ejectment in behalf of other co-owner
e) Right to compel co-owners to contribute to necessary expenses for
preservation of thing and taxes
f) Right to exempt himself from obligation of paying necessary expenses
and taxes by renouncing his share in the pro-indiviso interest; but cant
be made if prejudicial to co-ownership
g) Right to make repairs for preservation of things can be made at will of
one co-owner; receive reimbursement therefrom; notice of necessity of
such repairs must be given to co-owners, if practicable
h) Right to full ownership of his part and fruits
i) Right to alienate, assign or mortgage own part; except personal rights
like right to use and habitation
j) Right to ask for partition anytime
k) Right of pre-emption
l) Right of redemption
m) Right to be adjudicated thing (subject to right of others to be
indemnified)
n) Right to share in proceeds of sale of thing if thing is indivisible and they
cannot agree that it be allotted to one of them
3. Duties/Liabilities
a) Share in charges proportional to respective interest; stipulation to
contrary is void
b) Pay necessary expenses and taxes may be exercised by only one coowner
c) Pay useful and luxurious expenses if determined by majority
d) Duty to obtain consent of all if thing is to be altered even if beneficial;
resort to court if non-consent is manifestly prejudicial
e) Duty to obtain consent of majority with regards to administration and
better enjoyment of the thing; controlling interest; court intervention if
prejudicial appointment of administrator
f) No prescription to run in favor co-owner as long as he recognizes the
co-ownership; requisites for acquisition through prescription
i.
he has repudiated through unequivocal acts
ii.
such act of repudiation is made known to other co-owners
iii.
evidence must be clear and convincing
g) Co-owners cannot ask for physical division if it would render thing
unserviceable; but can terminate co-ownership
Page 80 of 230

b)

c)

d)

e)

f)

The possession of the pledgee constitutes his security. Hence, the

debtor cannot demand for its return until the debt secured by it is
paid. But the right of retention is limited only to the fulfillment of
the principal obligation for which the pledge was created.
Pledgee has the obligation to take care of the thing pledged with
the diligence of a good father of the family. He is entitled to
reimbursement of the expenses incurred for its preservation and he
is liable for loss or deterioration by reason of fraud, negligence,
delay or violation of the terms of the contract. (Articles 1174,
1170).
Pledgee is not authorized to transfer possession of the thing
pledged to a third person.
Exception: stipulation authorizing pledgee to transfer possession.
(Article 2100)
The pledgee has no right to use the thing pledged or to appropriate
the fruits thereof without the authority of the owner. But the
pledgee can apply the fruits, income, dividends, or interest, if
owing and thereafter to the principal of his credit.
Exception: contrary stipulation

The pledgor may ask that the thing pledged be deposited judicially
or extrajudicially -1.
2.
3.

g)

h)

i)

j)

if the creditor uses the thing without authority;

if he misuses the thing in any other way (Article 2104);
if the thing is in danger of being lost or impaired because
of the negligence or willful act of the pledge.
Pledgor cannot ask for the return of the thing pledged until said
obligation is fully paid including interest due thereon and expenses
incurred for its preservation (Article 2099).
Exception: Pledgor is allowed to substitute the thing pledged
which is in danger of destruction or impairment with another thing
of the same kind and quality (Article 2107).
The possession of the thing pledged by the debtor or owner
subsequent to the perfection of the pledge gives rise to a prima
facie presumption that the thing has been returned and, therefore,
that the pledge has been extinguished.
When the thing pledged is later found in the hands of the pledgor
or the owner, only the accessory obligation of pledge is presumed
remitted, not the principal obligation itself (Article 1274).
The sale of the thing pledged extinguishes the principal obligation
whether the price of the sale is more or less than the amount due.
If the price of the sale is more than the amount due the

creditor, the debtor is not entitled to the excess unless the

contrary is provided;

In the same way, if the price of the sale is less, neither is

the creditor entitled to recover the deficiency. A contrary
stipulation is void (Article 2115).
Page 153 of 230

Pledge

h)

1. Pledge is a contract by virtue of which the debtor delivers to the creditor or to

a third person a movable (Article 2094) or document evidencing incorporeal
rights (Article 2095) for the purpose of securing the fulfillment of a principal
obligation with the understanding that when the obligation is fulfilled, the thing
delivered shall be returned with all its fruits and accessions.

i)

2. Characteristics
a) real
b) accessory contract
c) unilateral contract
d) subsidiary contract

After partition, duty to render mutual accounting of benefits and

reimbursements for expenses
Every co-owner liable for defects of title and quality of portion assigned
to each of the co-owner

4. Rights of 3rd parties

a) creditors of assignees may take part in division and object if being
effected without their concurrence, but cannot impugn unless there is
fraud or made notwithstanding their formal opposition
b) non-intervenors retain rights of mortgage and servitude and other
real rights and personal rights belonging to them before partition was
made
Possession

3. Essential Requirements
i. The pledge is constituted to secure the fulfillment of a principal
obligation.
ii. The pledgor or mortgagor is the absolute owner of the thing
pledged or mortgaged
iii. The persons constituting the pledge or mortgage have the free
disposal of their property, and in the absence thereof, that they be
legally authorized for the purpose.
iv. The thing pledged must be delivered to the creditor or to a third
person by common agreement.
4. Common Provisions Governing Pledge or Mortgage
a) Contract may be constituted only by the absolute owner of the
thing pledged or mortgaged otherwise, the pledge or mortgage is
void, such as that constituted by an impostor
b) A mortgage of conjugal property by one of the spouses is valid only
as to one-half (1/2) of the entire property.
c) While it is true that under Article 2085 it is essential that the
mortgagor be the absolute owner of the property mortgaged, a
mortgagee has the right to rely upon what appears in the
certificate of title and does not have to inquire further. Stated
differently, an innocent purchaser for value (like a mortgagee)
relying on a torrens title issued is protected.
d) A stipulation whereby the thing pledged or mortgaged or under
antichresis (Article 2137) shall automatically become the property
of the creditor in the event of non-payment of the debt within the
term fixed is known as pactum commisorium or pacto commissorio
which is forbidden by law and declared null and void (article 2088)
5. Provisions Applicable only to Pledge
a) The pledgor retains his ownership of the thing pledged. He may,
therefore, sell the same provided the pledgee consents to the sale.
Page 152 of 230

1.

Possession holding of a thing or enjoyment of a right

2.

Elements of possession:
a) occupancy actual or constructive (corpus)
b) intent to possess (animus)

3.

How acquired:
a. material occupation possession as a fact
1. physical
2. constructive - tradicion brevi manu (one who possess a
thing short of title of owner lease );
b. tradicion constitutum possesorium (owner alienates thing but
continues to possess depositary, pledgee, tenant) subject to
action of our will- possession as a right
1. tradicion simbolica delivering object or symbol of placing
thing under control of transferee (keys)
2. tradicion longa manu pointing out to transferee the
things which are being transferred
c. proper acts and legal formalities established for acquiring rights
donation, sale

4.

Rule- cannot be recognized at the same time in 2 different personalities

except co-possession

5.

Question arises regarding fact of possession, preference:

1. present possessor preferred
2. 2 possessors one longer in possession
3. dates of possession the same one who presents a title
4. both have titles judicial resolution

Page 81 of 230

6. What can be subject of possession things or rights which are susceptible of

being appropriated

f)
g)

7. Degrees of possession:
1. holding w/o title and in violation of right of owner
2. possession with juridical title but not that of owner
3. possession with just title but not from true owner
4. possession with just title from true owner

h)
i)

8. Classes of possession:
1. in concept of owner owner himself or adverse possessor

j)

Effects:
a.

2.
3.

4.

5.

6.

may be converted into ownership through acquisitive

prescription
b. bring actions necessary to protect possession
c. ask for inscription of possession
d. demand fruits and damages from one unlawfully detaining
property
in concept of holder usufruct, lessee, bailee
in oneself personal acquisition
a. he must have capacity to acquire possession
b. intent to possess
c. possibility to acquire possession
in name of another agent; subject to authority and ratification if
not authorized; negotiorum gestio
a. representative has intention to acquire for another and not
for himself
b. person from whom it is acquired has intention of
possessing it
in good faith not aware that there exist flaw in title or mode w/c
invalidates it; mistake upon doubtful question of law; always
presumed; it may be interrupted by extraneous evidence or suit
for recovery of property of true owner
in bad faith aware of defect

k)

Guarantor may either obtain release from the guaranty or demand a

security that shall protect him from any proceedings by the creditor and from
danger of debtors insolvency (Article 2071).
c) Effects of Guaranty as Between Co-guarantors
i.
one who has paid the entire debt may seek reimbursement
from each of his co-guarantors the share which is
proportionately owing him.

Requisites:
a)
b)

principal obligation is extinguished

b)
c)
d)

Rules:

2.

Possession of hereditary property is deemed transmitted w/o

interruption from moment of death (if accepted) and if not
accepted (deemed never to have possessed the same).
One who succeeds by hereditary title shall not tack the bad faith of
predecessors in interest except when he is aware of flaws affecting
title; but effects of possession in good faith shall not benefit him
except from date of death of decedent.

payment must have been made by virtue of a judicial

demand or
because the principal debtor is insolvent

8. Extinguishment of Guaranty
a) Being accessory and subsidiary, guaranty is terminated when the

9. Possession through succession

1.

In case of insolvency of the principal debtor;

When the debtor has bound himself to relieve him from
the guaranty within a specified period, and this period
has expired;
When the debt has become demandable by reason of the
expiration of the period for payment;
After the lapse of ten years, when the principal obligation
has no fixed period for its maturity, unless it be of such
nature that it cannot be extinguished except within a
period longer than ten years;
If there are reasonable grounds to fear that the principal
debtor intends to abscond;
If the principal debtor is in imminent danger of becoming
insolvent (Article 2071).

e)
f)

creditor has released the guarantor although the principal obligation

remains (Article 2078)
In case of material alteration
Release of one guarantor by the creditor without the consent of the
other guarantors benefits all to the extent of the share of the guarantor
released (Article 2078).
An extension of the term granted by the creditor to the debtor without
guarantors consent extinguishes the guaranty (Article 2029).
If there can be no subrogation because of the fault of the creditor, as
when the creditor releases or fails to register a mortgage, the
guarantors are thereby released. The same rules applies even though
the guarantors be solidarily (Article 2080).

10. Minors/ Incapacitated

Page 82 of 230

Page 151 of 230

ii.

iii.

A compromise between the creditor and the principal debtor

benefits the guarantor but does not prejudice him.
A
compromise which is entered into between the guarantor and
the creditor benefits but does not prejudice the principal
debtor (Article 2063).
Guarantor is likewise entitled to the benefit of division where
there are several guarantors of only one debtor and for the
same debt. Guarantors liability is only joint therefore, they
are not liable beyond the shares which they are respectively
bound to pay (Article 2065).
Exceptions:
a) solidarity
b) if any of the circumstances in Article 2057
should take place.

b) Between the Debtor and the Guarantor

i.
The guarantor who pays for a debtor must be indemnified by
the latter.
The indemnity comprises:
a) the total amount of the debt;
b) the legal interest thereon from the time the payment was
made known to the debtor, even though it did not earn
interest for the creditor;
c) The expenses incurred by the guarantor after having
notified the debtor that payment had been demanded of
him;
d) Damages, if they are due (Article 2066)

Exceptions:
a)

ii.

iii.

Where the guaranty is constituted without the

knowledge or against the will of the principal debtor,
the guarantor can recover only insofar as the
payment had been beneficial to the debtor (Article
2050)
b)
Payment by a third person who does not intend to be
reimbursed by the debtor is deemed to be a donation,
which, however, requires the debtors consent. But
the payment is in any case valid as to the creditor
who has accepted it (Article 1238)
c)
The right to demand reimbursement is subject to
waiver.
Guarantor has the right of subrogation against the debtor to
enable him to enforce the indemnity granted in Article 2066
and he cannot demand more than what he actually paid
(Article 2067).

Guarantor has the right to proceed against the debtor even

before payment in the following instances:
e)

When he is sued for the payment;

Page 150 of 230

may acquire material possession but not right to possession; may only
acquire them through guardian or legal representatives
11. Acquisition
a) cannot be acquired through force or intimidation when a possessor
objects thereto resort to courts
b) the following do not affect acts of possession ( not deemed
abandonment of rights ); possession not interrupted
i.
acts merely tolerated
ii.
clandestine and unknown acts
iii.
acts of violence
12. Rights of possessor:
a) Right to be respected in his possession; if disturbed protected by
means established by law; spoliation
b) Possession acquired and enjoyed in concept of owner can serve as
title for acquisitive prescription
i.
Possession has to be in concept of owner, public, peaceful
and uninterrupted
ii.
Title short of ownership
c) Person in concept of owner has in his favor the legal presumption
of just title (prima facie)
d) Possession of real property presumes that movables are included
e) Co-possessors deemed to have exclusively possessed part which
may be allotted to him; interruption in whole or in part shall be to
the prejudice of all
f) Possessor in good faith entitled to fruits received before possession
is legally interrupted (natural and industrial gathered or severed;
civil accrue daily)
g) Possessor in good faith entitled to part of net harvest and part of
expenses of cultivation if there are natural or industrial fruits (
proportionate to time of possession ); owner has option to require
possessor to finish cultivation and gathering of fruits and give net
proceeds as indemnity for his part of expenses; if possessor in
good faith refuses barred from indemnification in other manner
h) Possessor has right to be indemnified for necessary expenses
whether in good faith or in bad faith; Possessor in good faith has
right of retention over thing unless necessary expenses paid by
owner
i) Possessor in good faith has right to be reimbursed for useful
expenses with right of retention; owner has option of paying
expenses or paying the increase in value of property which thing
acquired by reason of useful expenses
j) Possessor in good faith may remove improvements if can be done
w/o damage to principal thing- unless owner exercises option of
paying; possessor in bad faith not entitled.
Page 83 of 230

k)

Possessor in good faith and bad faith may not be entitled to

payment for luxurious expense but may remove them provided
principal is not injured provided owner does not refund the
amount expended
l) Improvements caused by nature or time to inure to the benefit of
person who has succeeded in recovering possession
m) Wild animals possessed while in ones control; domesticated
possessed if they retain habit of returning back home
n) One who recovers, according to law, possession unjustly lost is
deemed to have enjoyed it w/o interruption

13. Liabilities/Duties of Possessor

a) Return of fruits if in bad faith fruits legitimate possessor could
have received
b) Bear cost of litigation
c) Possessor in good faith not liable for loss or deterioration or loss
except when fraud and negligence intervened
d) possessor in bad faith liable for loss or deterioration even if caused
by fortuitous event
e) Person who recovers possession not obliged to pay for
improvements which have ceased to exist at time of occupation
14. Loss of possession:
a) abandonment of the thing renunciation of right; intent to lose the
thing
b) assignment made to another by onerous or gratuitous title
c) destruction or total loss of the thing or thing went out of commerce
d) possession of another if new possession lasted longer that 1 year (
possession as a fact); real right of possession not lost except after
10 years
15. Possession Not Lost:
a) Even for time being he may not know their whereabouts,
possession of movable is not deemed lost
b) When agent encumbered property without express authority
except when ratified
c) Possession may still be recovered:
i.
Unlawfully deprived or lost
ii.
Acquired at public sale in good faith with reimbursement
iii.
Provision of law enabling the apparent owner to dispose
as if he is owner
iv.
Sale under order of the court
v.
Purchases made at merchant stores, fairs or markets
vi.
Negotiable document of title
16. Possession is equivalent to title
Page 84 of 230

4. Guaranty is an accessory contract therefore there must be a valid principal

obligation for guaranty to be valid. Guarantor may secure the performance of
voidable, unenforceable, natural, conditional, and future obligations (Article
2052). Guarantors liability cannot exceed the principal obligation (Article 2054).
5. Guaranty cannot be presumed. The rule of strictissimi juris commonly refers
to an accommodation surety and is not applied in case of compensated sureties.
6. The qualifications of a guarantor are:
a) He possesses integrity;
b) He has capacity to bind himself; and
c) He has sufficient property to answer for the obligation which he
guarantees
7. Where the creditor has required and stipulated that a specified person should
be a guarantor, the substitution of guarantor may not be demanded (Article
2057) because in such a case the selection of the guarantor is a term of the
agreement and as a party, the creditor, is therefore, bound thereby (see Articles
1159, 1306).
7. Effects of Guaranty
a) Between the Guarantor and the Creditor
i.
Guarantor has the right to the benefit of excussion or
exhaustion of the debtors property before he can be
compelled to pay.

Exceptions:
a)
b)
c)
d)

e)
f)

g)
h)
i)

if guarantor has expressly renounced excussion

if guarantor has bound himself solidarily with the
debtor (suretyship)
in case of debtors insolvency
when guarantor has absconded or cannot be sued
within the Philippines unless he left a manager or
representative
if it may be presumed that an execution on the
debtors property will not satisfy the obligation
if guarantor does not set up the benefit of excussion
and fails to point out to the creditor available property
of the debtor within the Philippines
if he is a judicial bondsman and sub-surety
where a pledge or mortgage has been given by the
guarantor as a special security
if guarantor fails to interpose it as a defense before
judgment is rendered against him (Saavedra vs. Price,
68 Phil. 669)
Page 149 of 230

b)

The loss is cause by the act of a thief or robber done without the
use of arms and irresistible force (Article 2001) for in this cause,
the hotelkeeper is apparently negligent.

2. Hotelkeeper is not liable in the following cases:

a) The loss or injury is caused by force majeure like flood, fire (Article
2000), theft or robbery by a stranger (not by hotelkeepers servant
or employee) with the use of arms or irresistible force (Article
2001), etc., unless he is guilty of fault or negligence in failing to
provide against the loss or injury from said cause (see Article 1170,
1174);
b) The loss is due to the acts of the guests, his family, servants or
visitors (Article 2002).
c) The loss arises from the character of the things brought into the
hotel (Article 2002).
3. Stipulations on exemption or diminution of liability is void (Article 2003).
4. Hotelkeeper has a right to retain the things of guests as security for unpaid
lodging expenses and supplies.
Guaranty
1. Guaranty is a contract whereby a person binds himself to the creditor
to fulfill the obligation of the principal debtor in case the latter should
fail to do so.
2. Characteristics
a.
b.
c.
d.

accessory
subsidiary and conditional
unilateral
requires that the guarantor must be a person
distinct from the debtor

3. Distinction between Guaranty and Suretyship

Guaranty

Suretyship

Guarantor is secondarily
liable.

Surety is primarily liable and is therefore

not entitled to the exhaustion of the
properties of the principal debtor

Guarantor binds himself

to pay only when the
principal cannot pay.

Surety assumes liability as a regular

party to the undertaking and undertakes
to pay if the principal does not pay.

Guarantor is an insurer of
the debtors solvency.

Surety is an insurer of the debt.

Page 148 of 230

a)
b)
c)

possession is in good faith

owner has voluntarily parted with the possession of the thing
possessor is in concept of an owner

Usufruct
1. Usufruct right to enjoy anothers property with correlative duty of preserving
its form and substance
a) things movable/immovable
b) rights provided it is not strictly personal
2. Kinds:
a)
b)
c)
d)
e)
f)
g)
h)
i)
j)

legal - parents over children

voluntary contracts, wills
mixed prescription
total
partial
simultaneous
successive
pure
conditional
With a term

3. Rights of usufructuary:
a) Right to civil, natural & industrial fruits of property
b) Right to hidden treasure as stranger
c) Right to transfer usufructuary rights gratuitous or onerous; but is coterminus with term of usufruct; fruits proportionate at duration of
usufruct; but cant do acts of ownership such as alienation or
conveyance except when property is:
i.
Consumable
ii.
intended for sale
iii.
appraised when delivered; if not appraised &
consumable return same quality (mutuum)
d) Right not exempt from execution and can be sold at public auction by
owner
e) Naked owner still have rights but w/o prejudice to usufructuary; may
still exercise act of ownership bring action to preserve
f) Right to fruits growing at time usufruct begins; growing fruits at
termination of usufruct belongs to owner
g) Right to necessary expenses from cultivation at end of usufruct
h) Right to enjoy accessions & servitudes in its favor & all benefits inherent
therein
i) Right to make use of dead trunks of fruit bearing trees & shrubs or
those uprooted/cut by accident but obliged to plant anew
Page 85 of 230

j)

Right of usufructuary of woodland ordinary cutting as owner does

habitually or custom of place; cannot cut down trees unless it is for the
restoration of improvement of things in usufruct must notify owner
first
k) Right to leave dead, uprooted trees at the disposal of owner with right
to demand that owner should clear & remove them if caused by
calamity or extraordinary event impossible to replace them
l) Right to oblige owner to give authority & furnish him proofs if usufruct
is extended to recover real property or real right
m) Right to necessary expenses
n) Right to introduce useful & luxurious expenses but with no obligation of
reimbursement on part of owner; may remove improvement if can be
done w/o damage
o) Right to set-off improvements against damages he made against the
property
p) Right to administer when property is co-owned; if co-ownership cease
usufruct of part allotted to co-owner belongs to usufructuary not
affected
q) Right to demand the increase in value of property if owner did not
spend for extraordinary repairs when urgent & necessary for
preservation of thing

4. Rights of naked owner

a) Alienate thing
b) Cant alter form or substance
c) Cant do anything prejudicial to usufructuary
d) Construct any works Y make any improvement provided it does not
diminish value or usufruct or prejudice right of usufructuary
5. Obligations of usufructuary:
a) Pay expenses to 3rd persons for cultivation & production at beginning of
usufruct; whose who have right to fruits should reimburse expenses
incurred
b) Generally, usufructuary has no liability when due to wear & tear, thing
deteriorates, obliged to return in that state; except when there is fraud
or negligence, then he shall be liable
c) Before entering into usufructuary:
1. Notice of inventory of property (appraisal of movables &
description)
2. Posting of security

not applicable to parents who are usufructuary of

children except when 2nd marriage contracted

excused allowed by owner, not required by law or

no one will be injured

for failure to give security, owner may demand that:

a. immovables be placed under administration
Page 86 of 230

NOTE: Otherwise, depositary may avail of consignation therefore there is no

right to return before expiration of the term designated if deposit is for valuable
consideration (Article 1989).
14. Relation between Bank and Depositor
Deposits of money in banks, whether fixed, savings and current, are governed by
the provisions on mutuum and the relation between a depositor and a bank is
that of a creditor and a debtor.
15.
Obligations of Depositor
a) He is obliged to pay expenses for the preservation of the thing
deposited, if deposit is gratuitous.
b) He is obliged to pay for losses incurred due to the character of the
thing deposited.
a)
unless depositor was not aware thereof
Exceptions:
b)
depositor was not expected to know the
dangerous character of the thing
c)
unless he notified the depositary of the
same; or
d)
depositary was aware of it without
depositors advice (Article 1993)
NOTE: Depositary has the right to retain the thing deposited in pledge until full
payment of what may be due him by reason of the deposit (Article 1994).
16. Necessary Deposit
a. Necessary deposit in compliance with a legal obligation
i. The judicial deposit of a thing, the possession of which is being
disputed in a litigation by two or more persons (Article 538);
ii. The deposit with a bank or public institution of public bonds or
instruments if credit payable to order or bearer given in usufruct
when the usufructuary does not give proper security for their
conservation (Article 586);
iii. The deposit of a thing pledged when the creditor uses the same
without the authority of the owner or misuses it in any other way
(Article 2104)
iv. Those required in suits as provided in the Rules of Court; and
v. Those constituted to guarantee contracts with the government. In
this last case, the deposit arises from an obligation of public or
administrative character.
b. Necessary deposit made on the occasion of a calamity.
c. Deposit by travelers in hotels and inns
NOTES:
1. Hotelkeeper is liable regardless of the amount in the following cases:
a) The loss or injury is caused by his servants or employees as well as
by strangers provided that notice has been given and proper
precautions taken. (Article 1998); and
Page 147 of 230

(b)
(c)

pay for damages should the seal or lock be broken through his
fault which is presumed unless proven otherwise; and
keep the secret of the deposit when the seal or lock is broken,
with or without his fault.

8. Depositary is authorized to open the thing deposited which is closed and

sealed when there is:

(a)
(b)

presumed authority
depositary), or
in case of necessity.

(keys

having

been

delivered

to

9. Depositary has the obligation to return not only the thing but also all its
products, accessions and accessories which are a consequence of ownership.
10. Persons to whom Return of Thing Deposited Must be Made
a) to the depositor, to his heirs and successors, or to the person who may
have been designated in the contract (Article 1972).
b) If the depositor was incapacitated at the time of making the deposit,
the property must be returned to his guardian or administrator or the
person who made the deposit or to the depositor himself should he
acquire capacity (Article 1970).
c) Even if the depositor had capacity at the time of making the deposit but
he subsequently loses his capacity during the deposit, the thing must be
returned to his legal representative (Article 1988).
11. Place of Return of Thing Deposited
a) at the place agreed upon by the parties, and
b) in the absence of stipulation, at the place where the thing
deposited might be even if it should not be the same place
where the original deposit was made provided the transfer was
accomplished without malice on the part of the depositary.
NOTE: Depositor shoulders the expenses for transportation
12. Time of Return of Thing Deposited
General Rule: Upon demand or at will, whether
stipulated.
a) thing is judicially attached
Exceptions:
possession
b) depositary was notified of the
to the return or the removal of
1986)
13. Right of Depositary to Return Thing Deposited

if deposit is gratuitous; and

justifiable reasons exist for its return

or not a period has been

while in the depositarys
opposition of a third person
the thing deposited (Article

b.

NI can be converted into registered

certificates or deposited in bank
c. Capital & proceeds of sale of movables be
invested in safe securities
d. Interest on proceeds or property under
admin belong to usufructuary
e. Owner may retain property as administrator
w/ obligation to deliver fruits to usufructuary
until he gives sufficient security
f. Effect of security is retroactive to day he is
entitled to fruits
d) Take care of property as a good father of family
e) Liable for negligence & fault of person who substitute him
f) If usufruct is constituted on animals duty bound to replace dead
animals that die from natural causes or became prey; if all of them
perish w/o fault but due to contagious disease / uncommon event
deliver remains saved; if perish in part due to accident continue on
remaining portion; if on sterile animals as if fungible replace same
kind & quality
g) Obliged to make ordinary repairs wear & tear due to natural use of
thing and are indispensable for preservation; owner may make them at
expense of usufructuary during existence of usufruct
h) Obliged to make expenses due to his fault; cannot escape by
renouncing usufruct
i) Pay legal interest from extraordinary expenses made by owner
j) Payment of expenses, charges & taxes affecting fruits
k) Payment of interest on amount paid by owner charges on capital
l) Obliged to notify owner of act of 3rd person prejudicial to rights of
ownership he is liable if he does not do so for damages as if it was
caused through his own fault
m) Expenses, cost & liabilities in suits brought with regard to usufructuary
borne by usufructuary
6. Obligations of owner
a) extraordinary expenses; usufructuary obliged to inform owner when
urgent is the need to make them
b) expenses after renunciation of usufruct
c) taxes & expenses imposed directly on capital
d) if property is mortgaged, usufructuary has no obligation to pay
mortgage; if attached, owner to be liable for whatever is lost by
usufructuary
e) if property is expropriated for public use owner obliged to either
replace it or pay legal interest to usufructuary of net proceeds of the
same
7. Extinguishment of usufruct

Page 146 of 230

Page 87 of 230

a)
b)
c)
d)
e)
f)
g)

death of usufructuary unless contrary intention appears

expiration of period of usufruct
merger of usufruct & ownership
renunciation of usufructuary express
total loss of thing
termination of right of person constituting usufruct
prescription use by 3rd person

8. Loss in part remaining part shall continue to be held in usufruct

9. Other rules:

Usufruct cannot be constituted in favor of a town, corp. or assoc. for

more than 50 years

Usufruct constituted on immovable whereby a building is erected - &

building is destroyed right to make use of land & materials

If owner wishes to construct a new building must pay usufructuary

the value of interest of land & materials

Owner and usufructuary share in insurance if both pays premium; if

only owner then proceeds will go to owner only

Effect of bad use of the thing owner may demand the delivery of and
administration of the thing with responsibility to deliver net fruits to
usufructuary

At termination of usufruct:
thing to be delivered to owner with right of retention for taxes &
extraordinary expenses w/c should be reimbursed
security of mortgage shall be cancelled
Different Modes of Acquiring Ownership
1. Different Modes of acquiring ownership:
a) Occupation
b) Donation
c) Prescription
d) Succession
e) Tradition

ii.
iii.

Liable if the loss occurs through his fault or negligence

Not allowed to deposit the thing with a third person
Exception: contrary stipulation
iv. Depositary is liable for the loss of the thing deposited if:
4.1
he transfers the deposit with a third person without
authority although there is no negligence on his part
and the third person
4.2.
he deposits the thing with a third person who is
manifestly careless or unfit although authorized, even
in the absence of negligence; or
4.3.
the thing is lost through the negligence of his
employees whether the latter are manifestly careless
or not
NOTE: Depositary is not responsible for loss of thing without
negligence of the third person with whom he was allowed to
deposit the thing if such third person is not manifestly careless or
unfit
v. Obliged to first notify the depositor and wait for the latters decision
if he will change the way or manner of the deposit.
Exception: If delay will cause danger
vi. If thing deposited should earn interest, the depositary is under
obligation (1) to collect the interest as it becomes due and (2) to
take such steps as may be necessary to preserve its value and the
rights corresponding to it. The depositary is bound to collect not
only the interest but also the capital itself when due.
vii. Depositary has the obligation not to commingle things deposited if
so stipulated, even if they are of the same kind and quality (Article
1976).
viii. Depositary is under obligation not to make use of the thing
deposited (because deposit is for safekeeping of the subject matter
and not for its use); otherwise he shall be liable for damages.
Exceptions: a) express permission of the depositor
b) preservation of the thing deposited required its use
(article 1977)

Occupation

6. Depositary is liable for loss through a fortuitous event even without his fault.
(a)
if it is so stipulated;
(b)
is he uses the thing without the depositors permission;
(c)
if he delays its return;
(d)
if he allows others to use it, even though he himself may have
been authorized to use the same (article 1979)

1. Requisites
a) There should be a corporeal thing (tangible) which must have a
corpus (body) & that thing should have no owner

7. Depositary has the obligation to:

(a)
return the thing deposited when delivered closed and sealed,
in the same condition;

Page 88 of 230

Page 145 of 230

2. Terms:
MODE Proximate cause of ownership ( sales, donation)
TITLE Remote cause of ownership; merely constituted the means

b)
Bar Question (2004). The parties in a contract of loan of money agreed that
the yearly interest rate is 12% and it can be increased if there is a law that
would authorize the increase of interest rates. Suppose OB, the lender, would
increase by 5% the rate of interest to be paid by TY, the borrower, without a law
authorizing such increase, would OBs action be just and valid? Why? Has TY a
remedy against the imposition of the rate increase? Explain.

Answer: OBs action is not just and valid. The debtor cannot be required to pay
the increase in interest there being no law authorizing it, as stipulated in the
contract. Increasing the rate in the absence of such law violates the principle of
mutuality of contracts.

c)
d)

2. Things susceptible to occupation

a) things that are w/o owner; abandoned (res nullius)
stolen property cannot be subject of occupation
b) animals that are the object of hunting & fishing

Kinds of animals:

1. A deposit is constituted from the moment a person receives a thing belonging

to another, with the obligation of safety keeping it and of returning the same.

a)
b)

c)

c)
d)

Real Contract
If gratuitous, it is unilateral because only the depository has an
obligation. If onerous, it is bilateral.
Principal purpose of the contract of deposit is the safekeeping of
the thing delivered.
Contract of deposit is generally gratuitous.
1) Contrary stipulation
Exceptions:
2) Depository is in the business of storing
goods
3) Property saved from destruction during
calamity without owners knowledge; just
compensation
should
be
given
the
depository.

3. Kinds of Deposit
a.
Judicial
b.
Extrajudicial
1)
Voluntary
2)
Necessary
4. Voluntary Deposit defined as one wherein the delivery is made by the will of
the depositor.
5. Obligations of the Depositary
i. To keep the thing safely and to return it when required, even
though a specified term may have been stipulated in the contract.
Page 144 of 230

wild considered res nullius when not yet captured; when

captured & escaped become res nullius again
ii. domesticated animals originally wild but have been captured
& tamed; now belong to their capturer; has habit of returning
to premises of owner; becomes res nullius if they lose that
habit of returning & regain their original state of freedom
iii. domestic/tame animals born & ordinarily raised under the
care of people; become res nullius when abandoned by owner
hidden treasure (only when found on things not belonging to anyone)
i.

Deposit

2. Characteristics:

There must be actual occupancy; thing must be subjected to ones

control/disposition
There must e an intention to occupy
Accomplished according to legal rules

3. Animals:
a)
Swarm of bees
owner shall have right to pursue them to anothers land
(owner to identify latter for damages, if any)
land owner shall occupy/retain the bees if after 2 days, owner
did not pursue the bees
b.)
Domesticated animals
may be redeemed within 20 days from occupation of another
person; if no redemption made, they shall pertain to the one
who caught them
c)
Pigeons & fish
when they go to another breeding place, they shall be owned
by the new owner provided they are not enticed
4. Movables:
1) Treasure found on anothers property
consist of (1) money, precious objects & 2) hidden & owner is
unknown
finding must be by chance in order that stranger may be
entitled to of the treasure
2) Movable found w/c is not treasure
must be returned to owner
if finder retains the thing found may be charged with theft
if owner is unknown, give to mayor; mayor shall announce
finding of the movable for 2 weeks in way he deems best
Page 89 of 230

of owner does not appear 6 months after publication, thing

found shall be awarded to finder
if owner appears, he is obliged to pay 1/10 of value of
property to finder as price
if movable is perishable or cannot be kept w/o deterioration or
w/o expenses it shall be sold at public auction 8 days after the
publication

5. What cannot be acquired by occupation -Ownership of a piece of land, because when a land is without an
owner, it pertains to the state; land that does not belong to anyone is
presumed to be public land; BUT when a property is private and it is
abandoned can be object of occupation

Prescription mode by which one acquires ownership and other real rights thru
lapse of time; also a means by which one loses ownership, rights & actions;
retroactive from the moment period began to run
1. Kinds:
a) Acquisitive
b) Extinctive
2. Who
a)
b)
c)

may acquire by prescription:

person who are capable of acquiring property by other legal modes
state
minors through guardians of personally

3. Against whom prescription run:

a) minors & incapacitated person who have guardians
b) absentees who have administrators
c) persons living abroad who have administrators
d) juridical persons except the state with regards to property not
patrimonial in character
e) between husbands & wife
f) between parents & children (during minority/insanity)
g) between guardian & ward (during guardianship)
h) between co-heirs/co-owners
i) between owner of property & person in possession of property in
concept of holder
4. Things subject to prescription: all things within the commerce of men
a) private property
b) patrimonial property of the state
5. Things not subject to prescription:
Page 90 of 230

b)

If he devotes thing to any purpose different

from that for which it has been loaned.
2. Bailee cannot retain the thing loaned as security for claims he has against the
bailor, even though by reason of extraordinary expenses.
3. Obligations of Bailor
a) To allow the bailee the use of the thing loaned for the duration of
period stipulated or until the accomplishment of the purpose for which
commodatum was constituted.
a. Urgent need during which time the
Exceptions:
commodatum is suspended.
b. Precarium -1. if duration of the contract has not
been stipulated
2. if use or purpose of the thing has
not been stipulated
3. if use of thing is merely tolerated by
the bailor
b) To refund extraordinary expenses for the preservation of the thing
loaned provided bailor is notified before the expenses were incurred.
Urgent need hence no notice is necessary.
Exception:
c) To refund 50% of the extraordinary expenses arising from actual use
of the thing loaned (i.e. caused by fortuitous event)
Contrary stipulation
Exception:
d) To pay damages to bailee for known hidden flaws in the thing
loaned.
NOTE: Bailor has the right to demand return of the thing if bailee commits any
act of ingratitude.
Simple Loan Or Mutuum
1. Definition: Mutuum is a contract whereby one of the parties delivers to
another party money or other consumable thing with the understanding that the
same amount of the same kind and quality shall be paid.
2. Rules on Interest: In order that interest may be charged, it must be expressly
stipulated in writing (Article 1956).
Exceptions:

1. Debtor in delay is liable to pay legal interest as

indemnity for damages even in the absence of
stipulation for the payment of interest (Article 2209)
2. Interest due shall earn interest (compounding
interest) from the time it is judicially demanded
although the obligation may be silent upon this point
(Article 2212) or when there is express stipulation
(Article 1959).
Page 143 of 230

Commodatum
1. Characteristics:
a) Gratuitous, otherwise it is a lease (Article 1935)
b) Purpose is the temporary use of the thing loaned (Article 1935)
c) right to use is limited to the thing loaned and not to its fruits
(Article 1935) unless there is stipulation to the contrary (Article
1940)
d) Subject matter is generally non-consumable things but may cover
consumables if the purpose of the contract is for exhibition.
e) Bailor need not to be the owner; it is sufficient that he has
possessory interest over subject matter (Article 1938).
f) Commodatum is purely personal in character hence death of either
bailor or bailee extinguishes the contract (Article 1939)

a)
b)
c)
d)

public domain
in transmissible rights
movables possessed through a crime
registered land

6. Renunciation of prescription
Persons with capacity to alienate may renounce prescription already
obtained but not the right to prescribe in the future

May be express or tacit

Prescription is deemed to have been tacitly renounced; renunciation

results from the acts w/c imply abandonment of right acquired

Creditors & persons interested in making prescription effective may

avail themselves notwithstanding express or tacit renunciation

Prescription of Ownership and Other Real Rights

General Rule: Bailee can neither lend nor lease the object of the contract to a
third person.
Exception: Member of bailees household
Exception to the exception: contrary stipulation or nature of thing forbids such
use
2. Obligations of the Bailee
a) Bailee is liable for ordinary expenses for the use and preservation of the thing
loaned.
General Rule: Bailee is not liable for loss or damage due to a fortuitous
event (because the bailor retains ownership)
a)
Bailee devote thing to a different purpose
Exceptions:
b)
Bailee keeps thing longer than the period
stipulated or after the accomplishment of the
use for which commodatum was constituted.
c)
Thing loaned was delivered with appraisal of
its value (unless there is express stipulation
to the contrary)
d)
Bailee lends thing to a third person not a
member of his household
e)
Bailee, if being able to save either the thing
borrowed or his own thing chose to save the
latter
b) Bailees are solidarily liable when the thing is loaned to two or more bailees in
the same contract.
NOTE:
1. General Rule: Bailee is not liable for ordinary wear and tear due to use of the
thing loaned.
a)
If he is guilty of fault or negligence
Exceptions:
Page 142 of 230

1. Kinds of Acquisitive prescription

a) ordinary
b) extra-ordinary
for ordinary prescription:
possession in good faith
just title
within time fixed by law
- 4 years for movables
- 8 years for immovables
d) in concept of an owner
e) public, peaceful, uninterrupted
3. Requisites for extra-ordinary prescription:
a) just title is proved
b) within time fixed by law
- 10 years for movables
- 30 years for immovables

2. Requisites
a)
b)
c)

c)
d)

in concept of an owner
public, peaceful, uninterrupted

4. Good Faith
- Reasonable belief that person who transferred thing is the owner &
could validly transmit ownership
- Must exist throughout the entire period required for prescription
5. Just Title (True and Valid) must be proved & never presumed
a) Titulo Colorado
b) Titulo Putativo
Page 91 of 230

title must be one which would have been sufficient to transfer

ownership if grantor had been the owner
through one of the modes of transferring ownership but there
is vice/defect in capacity of grantor to transmit ownership

6. In Concept of Owner
- possession not by mere tolerance of owner but adverse to that
of the owner
- claim that he owns the property
7. Public, Peaceful, Uninterrupted
- Must be known to the owner of the thing
- Acquired & maintained w/o violence
- Uninterrupted (no act of deprivation by others) in the enjoyment of
property
8. Interruption
a) Natural
- through any cause, possession ceases for more than 1 year
- if 1 year of less as if no interruption
b) Civil
- produced by judicial summons; except when
1. void for lack of legal solemnities
2. plaintiff desists from complaint/allows proceedings to
lapse
3. possessor is absolved from complaint
c) express or tacit renunciation
d) possession in wartime

b)

Bailee (Comodante) the recipient; the party who receives the

possession or custody of the thing thus delivered.

3. Loan in General
a) Characteristics:
i.
Real Contract
Unilateral Contract
ii.
b) Kinds of Loan:
Commodatum where the bailor (lender) delivers to
i.
the bailee (borrower) a non-consumable thing so that
the latter may use it for a certain time and return the
identical thing;
Mutuum where the bailor (lender) delivers to the
ii.
bailee (borrower) money or other consumable thing
upon the condition that the latter shall pay same
amount of the same kind of quality.
Distinctions between Commodatum and Mutuum
Commodatum (Hiram)

Mutuum (Utang)

1.

subject matter is non-consumable

things

1.

subject matter is money or other

consumable things

2.

ownership retained by lender

2.

ownership transferred to
borrower

3.

essentially gratuitous

3.

may be gratuitous or onerous

9. Rules in Computation of Period:

Present possessor may tack his possession to that of his grantor or

predecessor in interest

Present possessor presumed to be in continuous possession I

intervening time unless contrary is proved

First day excluded, last day included

4.

borrower must return the same

thing loaned

4.

borrower need only pay the same

amount of the same kind and
quality

5.

may involved real or personal

property

5.

involves only personal property

10. Tacking Period

- there must be privity between previous & present possessor
- possible when there is succession of rights
- if character of possession different:
v predecessor in bad faith or possessor in good faith use
extraordinary prescription

6.

loan for use or temporary

possession

6.

loan for consumption

7.

right to demand the return of the

thing loaned before expiration of
term in case of urgent need

7.

no right to demand return before

the lapse of the term agreed
upon

Bar Question (1998). In 1965, Renren bought from Robyn a parcel of

registered land evidenced by a duly executed deed of sale. The owner presented
the deed of sale and the owners certificate of title to the Register of Deeds. The

8.

loss is shouldered by bailor since

he is the owner

8.

borrower suffers the loss even if

the loss is caused exclusively by a
fortuitous event

Page 92 of 230

Page 141 of 230

3. Not covered:
a) with waiver of sellers creditor
b) receiver, assignee in insolvency proceeding
4. Duty
of law
a)
b)
c)
d)

of seller to perform the following when transaction is within the coverage

make sworn statement of listing of creditors
delivery of sworn statement to buyer
apply the proceeds pro-rata to claims of creditors shown in verified
statement
written advance disclosure to creditors

5. Effects of Non-Compliance
Failure to:
Prepare & deliver sworn listing of creditors
Apply proceeds pro-rata to listed creditors
Make
advance
written
disclosure
transactions to creditors
Register sworn statement with DTI

of

Include or omit names of creditors & correct

amount due in the statement
Sale for no consideration

On
Transaction
Fraudulent
&
void
Fraudulent
&
void
Not void
Not void
Void
Void

On Seller
Criminal
Liability
Criminal
Liability
No
Criminal
Liability
No
Criminal
Liability
Criminal
Liability
Criminal
Liability

ANTI-DUMMY LAW
1. Penalizes Filipinos who permit aliens to use them as nominees or
dummies to enjoy privileges reserved only for Filipinos
2. Management, operation as officers, employees or laborers
3. Control or non-control position
CREDIT TRANSACTIONS
General Provisions

entry was made in the day book and corresponding fees were paid as evidenced
by official receipt. However, no transfer of certificate of title was issued to
Renren because the original certificate of title in Robyns name was temporarily
misplaced after fire partly gutted the Office of the Register of Deeds. Meanwhile,
the land had been possessed by Robyns distant cousin, Mikaelo, openly,
adversely and continuously in the concept of owner since 1960. It was only in
April 1998 that Renren sued Mikaelo to recover possession. Mikaelo invoked a)
acquisitive prescription and b) laches, asking that he be declared owner of the
land. Decide the case by evaluating these defenses.

Answers: a) Renrens action to recover possession of the land will prosper. In

1965, after buying the land from Robyn, he submitted the Deed of Sale to the
Registry of Deeds for registration together with the owners duplicate copy of the
title, and paid the corresponding registration fees. Under Section 56 of P.D. No.
1529, the Deed of Sale to Renren is considered registered from the time the sale
was entered in the Day Book (now called the Primary Entry Book).
For all legal intents and purposes, Renren is considered the registered
owner of the land. After all, it was not his fault that the Registry of Deeds could
not issue the corresponding transfer certificate of title.
Mikaelos defense of prescription can not be sustained. A Torrens title is
imprescriptible. No title to registered land in derogation of the title of the
registered owner shall be acquired by prescription or adverse possession.
(Section 47, P.D. No. 1529)
The right to recover possession of registered land likewise does not
prescribe because possession is just a necessary incident of ownership.
b) Mikaelos defense of laches, however, appears to be more
sustainable. Renren bought the land and had the sale registered way back in
1965. From the facts, it appears that it was only in 1998 after an inexplicable
delay of 33 years that he took the first step asserting his right to the land. It was
not even an action to recover ownership but only possession of the land. By
ordinary standards, 33 years of neglect or inaction is too long and may be
considered unreasonable. As often held by the Supreme Court, the principle of
imprescriptibility sometimes has to yield to the equitable principle of laches which
can convert even a registered land owners claim into a stale demand.
Mikaelos claim of laches, however, is weak insofar as the element of
equity is concerned, there being no showing in the facts how he entered into the
ownership and possession of the land.
Prescription of Actions

1. Credit transactions include all transactions involving the purchase of loan of

goods, services or money in the present with a promise to pay or deliver in the
future.
2. Parties to a Bailment
a) Bailor (Comodatario) the giver, the party who delivers the
possession or custody of the thing bailed.
Page 140 of 230

1. By lapse of time fixed by law

v 30 years
action over immovables from time possession is lost
v 10 years
mortgage action
upon written contract
Page 93 of 230

v
v

v
v

8 years
6 years
5 years
4 years
1 year
-

upon obligation created by law

upon a judgement
action to recover movables from time possession is lost
upon an oral contract
upon a quasi-contract
actions where periods are not fixed by law
upon injury to rights of plaintiff
upon a quasi-delict
for forcible entry & detainer
for defamation

2. Rights not extinguished by prescription:

a) demand right of way
b) abate public /private nuisance
c) declare contract void
d) recover property subject to expressed trust
e) probate of a will
f) quiet title
Bar Question (2000). In an action brought to collect a sum of money based on
a surety agreement, the defense of laches was raised as the claim was filed
more than seven years from the maturity of the obligation. However, the action
was brought within the ten-year prescriptive period provided by law wherein
actions based on written contracts can be instituted. Will the defense prosper?
Reason.

Answer: No, the defense will not prosper. The problem did not give facts from
which laches may be inferred. Mere delay in filing an action, standing alone, does
not constitute laches (Agra v. PNB, 309 SCRA 509).
Donation
1. Characteristics:
a) Unilateral obligation imposed on the donor
b) Consensual perfected at time donor knows of acceptance

Bar Question (2000). Ambrosio died, leaving his three daughters, Belen,
Rosario and Sylvia a hacienda which was mortgaged to the Philippine National
Bank. Due to the failure of the daughters to pay the bank, the latter foreclosed
the mortgage and the hacienda was sold to it as the highest bidder. Six months
later, Sylvia won the grand prize at the lotto and used part of it to redeem the
hacienda from the bank. Thereafter, she took possession of the hacienda and
refused to share its fruits with her sisters, contending that it was owned
exclusively by her, having bought it from the bank with her own money. Is she
correct or not?
Answer: Sylvia is not correct. The 3 daughters are the co-owners of the
hacienda being the only heirs of Ambrosio. When the property was foreclosed,
the right of redemption belongs also to the 3 daughters. When Sylvia redeemed
the entire property before the lapse of the redemption period, she also exercised
the right of redemption of her co-owners on their behalf. As such she is holding
the shares of her two sisters in the property, and all the fruits corresponding
thereto, in trust for them. Redemption by one co-owner inures to the benefit of
all (Adille v. CA, 157 SCRA 455). Sylvia, however, is entitled to be reimbursed the
shares of her two sisters in the redemption price.
Assignment
1. Sale of credits & other incorporeal things
2. Effect of Assignment
a) lack of knowledge or consent of debtor not essential for validity but
has legal effects
b) assignment of rights made w/o knowledge of debtor debtor may
set up against assignee the compensation w/c would pertain to him
against assignor of all credits prior to assignment and of later ones
until he had knowledge of the assignment
c) debtor has consented to assignment cannot set up compensation
unless assignor was notified by debtor that he reserved his right to
the compensation
may still set up
d) debtor has knowledge but no consent compensation of debts previous to assignment but not the
subsequent ones.
Bulk Sales Law
1. Rationale: Protect creditor of merchant stores

2. Requisites of Donation:
a) Reduction in patrimony of donor
b) Increase in patrimony of donee
c) Intent to do act of liberality
d) Donor must be owner of property donated
Page 94 of 230

2. Three types of transactions covered:

a) Sale of goods other than in ordinary course of business
b) Sale of all or substantially all of business
c) Sale of all or substantially all of fixtures & equipments
Page 139 of 230

a)

b)

c)

d)

e)

Among co-heirs

any of the heirs sell his hereditary rights to stranger before

partition

any of the co-heirs may be subrogated to the rights of the

purchaser by redeeming said hereditary right: reimburse buyer of
the price of the sale

co-heirs has 1 month from receipt of notice in writing

Among co-owners

any or all of co-owners sells their shares to 3rd person

any co-owner may exercise right of redemption by paying

reasonable price of property to the buyer

if 2 or more co-owners desire to exercise right of redemption, they

may only do so in proportion to the share they respectively have in
thing owned in common
Among adjoining owners of:
Rural land
- where piece of rural land has an area not exceeding 1 hectare,
adjoining owner has right to redeem unless grantee does not
own a rural land
- if 2 or more adjacent lot owners desire to exercise right to
redeem, owner of adjoining lot with smaller area shall be
preferred
- if 2 or more adjacent lot owners desire to exercise right to
redeem & both have same lot area, one who first requested
shall be granted
Urban land
- when piece of land is small & cannot be used for any practical
purpose & bought merely for speculation, owner of adjoining
land can redeem
- 2 or more owners of adjoining lot desire to exercise right to
redeem, owner whose intended use is best justified shall be
preferred.
Sale of credit in litigation

When a credit or other incorporeal right in litigation is sold, debtor

shall have a right to extinguish it by reimbursing the assignee for
the price the latter paid therefor plus judicial costs, interest
Debtor may exercise right within 30 days from the date assignee

demands payment from him

Other Instances When Right of Legal Redemption is Granted:
Redemption of homesteads
Redemption in tax sales
Redemption by judgment debtor
Redemption in extrajudicial foreclosure
Redemption in judicial foreclosure of mortgage

Page 138 of 230

3. Requirements of a donation:
a) subject matter anything of value; present property & not future, must
not impair legitime
b) causa anything to support a consideration: generosity, charity,
goodwill, past service, debt
c) capacity to donate & dispose & accept donation
d) form depends on value of donation
4. Kinds of Donation according to Effectivity:
Donation Inter Vivos
Disposition and acceptance to take effect
during lifetime of donor and donee
Already pertains to the donee unless there
is a contrary intent
Formalities required - follow law on
donations and certain kinds of donations &
law on obligations and contracts
(suppletory)
Irrevocable at the instance of the donor;
may be revoked only by reasons provided
by law
Revoked only for reasons provided for by
law (except onerous donations)

Donation Mortis Causa

Disposition happens upon the
death of donor
Even if there is a term of effectivity
and effectivity is upon the death of
the donor, still entitled to fruits
Formalities required - follow law on
succession to be valid, and
donation must be in the form of a
will
Revocable ad mutuum (exclusive
will of donor)

**In case of doubt with regards to nature of donation: inter vivos

5. Acceptance
a) acceptance must be made personally or thru agent
b) donation may be made orally or in writing
movable:
5,000 & below may be oral or written, if oral it must be with
simultaneous delivery of thing/document &
acceptance need not be in writing
above 5,000 - must be written and accepted also in writing
immovable - must be in a public instrument & acceptance must
also be in a public instrument (in same instrument or in other
instrument)
Bar Question (2000). 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
Page 95 of 230

taxes/ Amanda paid these so that the donation in her favor can be registered in
the project owners office. Two months later, Anastacia died, leaver 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?

Answer: 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 Amandas 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.

6. Badges of mortis causa:

a) Title remains with donor (full or naked ownership)& conveyed only upon
death
b) Donor can revoked ad mutuum
c) Transfer is void if transferor survives transfer
Bar Question (1998). Ernesto donated in a public instrument a parcel of land
to Demetrio, who accepted it in the same document. It is there declared that the
donation shall take effect immediately, with the donee having the right to take
possession of the land and receive its fruits but not to dispose of the land while
Ernesto is alive as well as for ten years following his death. Moreover, Ernesto
also reserved in his deed his right to sell the property should he decide to
dispose of it at anytime a right which he did not exercise at all. After his death,
Ernestos heirs seasonably brought an action to recover the property, alleging
that the donation was void as it did not comply with the formalities of a will. Will
the suit prosper?

How is Redemption Effected:

1. Seller a retro must first pay the following:
a. the price of the thing sold
b. expenses of the contract and other legitimate
payments made by reason of the sale
c. necessary and useful expenses made on the thing
sold
2. Valid tender of payment is sufficient
3. Mere sending of notice without valid tender is insufficient
4. Failure to pay useful & unnecessary expenses entitles vendee
to retain land unless actual reimbursement is made
Rules In Case of Multi-Parties:
1. When an undivided thing is sold because co-owners cannot
agree that it be allotted to one of them vendee a retro may
compel the vendor to redeem the whole thing
2. When an undivided thing is sold by co-owners / co-heirs,
vendors a retro may only exercise his right over his respective
share; vendee a retro may demand that they must come to an
agreement first and may not be compelled to consent to a
partial redemption
3. When rights of co-owners over an undivided thing is sold as
regards to their own share vendee retro cannot compel one
to redeem the whole property
4. Should one of the co-heirs/co-owners succeed in redeeming
the property such vendor a retro shall be considered as
trustee with respect to the share of the other co-owners/coheirs.
Fruits
- What controls is the stipulation between parties as regards the
fruits.
- If none:

at time of execution of the sale a retro there are

visible or growing fruits there shall be no pro-rating
at time of redemption if no indemnity was paid by the
vendee a retro
at time of execution sale a retro there be no fruits but

there are fruits at time of redemption pro-rated

between vendor a retro & vendee a retro giving the
vendee a retro a part corresponding to the time he
possessed the land.

Answer: Yes, the suit will prosper as the donation did not comply with the
formalities of a will. In this instance, the fact that the donor did not intend to
transfer ownership or possession of the donated property to the donee until the
donors death, would result in a donation mortis causa and in this kind of
disposition, the formalities of a will should be complied with, otherwise, the
donation is void. In this instance, donation mortis causa embodied only in a
public instrument without the formalities of a will could not have transferred
ownership of disputed property to another.

4. Legal Redemption
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 by dation in payment or by other transaction whereby ownership is
transmitted by onerous title.

Page 96 of 230

Page 137 of 230

*Conventional redemption only extinguishes obligations pertaining to contract

of sale, not extinguish contract itself; only applies to contract of sale
*Legal redemption only applies to contract of sale
2. Conventional Redemption

seller reserved the right to repurchase thing sold

coupled with obligation to return price of the sale, expenses of contract

& other legitimate payments and the necessary & useful expenses made
on the thing sold

right is exercised only be seller in whom right is recognized in the

contract or by any person to whom right was transferred; must be in
the same contract

7. Kinds of donation INTER VIVOS

1) pure/simple
2) remuneratory
3) conditional
4) onerous
Pure/Simple
a)
Consideration
Merits of donee

3. Equitable Mortgage

A contract with right to repurchase is equitable mortgage if the

following requisites concur:

i.
ii.
iii.

price of sale with right to repurchase is unusually inadequate

seller remains in possession as lessee or otherwise
upon or after expiration of right to repurchase, another
instrument extending the period of redemption or granting
new period is executed
iv. buyer retains for himself a part of the purchase price
v. seller binds himself to pay taxes on thing sold
vi. real intention of parties is to secure the payment of a debt or
performance of other obligation
In case of doubt in determining whether it is equitable mortgage or
sale a retro (with right of repurchase) it shall be construed as
equitable mortgage
Remedy available to vendor: ask for reformation of contract
Period of Redemption:
1. No period agreed upon 4 years from date of contract
2. When there is agreement should not exceed 10 years; if it
exceeded, valid only for the first 10 years.
3. When period to redeem has expired & there has been a
previous suit on the nature of the contract seller still has 30
days from final judgment on the basis that contract was a sale
with pacto de retro: rationale: no redemption due to erroneous
belief that it is equitable mortgage which can be extinguished
by paying the loan.
4. When period has expired & seller allowed the period of
redemption to expire seller is at fault for not having
exercised his rights so should not be granted a new period.
Effect when no redemption made: no automatic transfer of ownership;
under present art 1607: there must be judicial order before ownership
of real property is consolidated in the buyer a retro
Page 136 of 230

b) law to apply/
forms
Law on donations

c) form of
acceptance
Required
d) reservation
w/regards to
personal
support &
legitime
Applicable
e) warranty
against eviction
& hidden
defects
In bad faith only
f) revocation
Applicable

Remuneratory

Conditional

Onerous

Liberality or merits
of donee or
burden/ charge of
past services
provided they do
not constitute
demandable debt

Valuable
consideration is
imposed but
value is less
than value of
thing donated

Valuable
consideration
given

Law on donations

Extent of burden

Law on
obligations
imposed>oblicon
excess>donation

Required

Required

Required

Applicable

Applicable

Not Applicable

In bad faith only

In bad faith only

Applies

Applicable

Applicable

Applicable

Who may give donations

- All persons who may contract and dispose of their property

Who may accept donations:

1. natural & juridical persons w/c are not especially disqualified by law
2. minors & other incapacitated
a) by themselves
Page 97 of 230

if pure & simple donation

if it does not require written acceptance
b) by guardian, legal representatives if needs written acceptance
1. natural guardian not more than 50,000
2. court appointed - more than 50,000
3. conceived & unborn child, represented by person who would
have been guardian if already born

Who are disqualified to donate:

1. guardians & trustees with respect to property entrusted to them
2. husband & wife
3. between paramours/persons guilty of adultery
4. between parties guilty of same criminal offense
5. made to public officers, wife, descendant, ascendant

Other persons disqualified to receive donations:

1. priest who heard confession of donor during his last illness
2. relatives of priest within 4th degree, church, order, community where
priest belongs
3. physician, nurse, etc. who took care of donor during his last illness
4. individuals, corporations, associations not permitted

What may be given: All or part of donors present property provided he

reserves sufficient means for the support of the ff:
a) himself
b) relatives who by law are entitled to his support
c) legitimes shall not be impaired
when w/o reservation or if inofficious, may be reduced on petition of
persons affected
except: conditional donation & donation mortis causa
Future property may not be donated.

8. Double Donations:
Rule: Priority in time, priority in right
If movable one who first take possession in good faith
If immovable one who recorded in registry of property in good faith
- no inscription, one who first took possession in good faith
- in the absence thereof, one who can present oldest title
9. Revocation of Donations
- applies only to donation inter vivos
- not applicable to onerous donations
With regards to donations made by person without children or
descendants at time of donation:
1. If donor should have legitimate, legitimated or illegitimate children
2. If child came out to be alive & not dead contrary to belief of donor
Page 98 of 230

unmerchantable which would

examination of the sample

not

be

apparent

on

reasonable

4. Effects of Waiver

Parties may increase or diminish implied warranty against eviction; but

effect depends on good faith or bad faith on the part of the seller:
a) seller in bad faith & there is waiver against eviction null &
void
b) buyer without knowledge of a particular risk, made general
renunciation of warranty not waiver but merely limits liability
of seller in case of eviction (pay value of subject matter at time
of eviction)
c) buyer with knowledge of risk of eviction assumed its
consequences & made a waiver vendor not liable (applicable
only to waiver of warranty against eviction)

When goods delivered to buyer, he cannot rescind sale if:

1. he knew of the breach of warranty when he accepted goods
without protest
2. he fails to notify seller within reasonable time of election to
rescind
3. he fails to return or offer to return goods to seller in
substantially as good condition as they were in at time
ownership was transferred
4. when goods deteriorated, buyer can still return them in that
condition if such is due to breach or warranty
5. Buyers Option in Case of Breach of Warranty
a) Accept goods & set up breach of warranty by way of recoupment in
diminution or extinction of the price.
b) Accept goods & maintain action against seller for damages
c) Refuse to accept goods & maintain action against seller for damages
d) Rescind contract of sale & refuse to receive goods/return them when
already received.
Extinguishment
1. Grounds:
a. payment or performance
b. loss of the subject matter
c. condonation or remission
d. confusion or merger of rights of creditor and debtor
e. compensation
f. novation
g. annulment
h. rescission
i. fulfillment of a resolutory condition
j. prescription
Page 135 of 230

c)

basis of eviction is a right prior to sale or an act imputable to

vendor
d) seller has been summoned in the suit for eviction at the
instance of buyer; or made 3rd party defendant through 3rd
party complaint brought by buyer
iii. Warranty against encumbrances (non- apparent) Requisites:
a) immovable sold is encumbered with nonapparent burden or
servitude not mentioned in the agreement
b) nature of nonapparent servitude or burden is such that it
must be presumed that the buyer would not have acquired it
had he been aware thereof
iv. Warranty against hidden defects
a) subject matter may be movable or immovable
b) nature of hidden defect is such that it should render the
subject matter unfit for the use of which it was intended or
should diminish its fitness
c) had the buyer been aware, he would not have acquired it or
would have given a lower price
Defects in Animals

Even in the case of professional inspection but hidden defect is

of such nature that expert knowledge is not sufficient to
discover it - defect shall be considered as REDHIBITORY

If vet fails to discover through ignorance or bad faith, he is

liable for damages
Sale of animals on teams (2 or more)

- when only one is defective, only one is redhibited &

not the others
- exception: when it appears buyer would not have
purchased the team without the defective one
- apply to sale of other things

Sale of animals at fair or public auction

Sale of animals with contagious disease = void

Sale of unfit animals

no warranty against hidden defects

3. Specific Implied Warranties in the Sale of Goods

a) Warranty as to fitness & quality Requisites:
1. buyer makes known to seller the particular purpose for which
goods are acquired and it appears that the buyer relied on the
sellers skill or judgment
2. goods are bought by description from seller who deals in
goods of that description
b) Sale of Goods by sample
- If seller is a dealer in goods of that kind, there is an implied warranty
that the goods shall be free from defect rendering them
Page 134 of 230

3. If donor subsequently adopts a minor child

Action for revocation based on failure to comply with condition in case
of conditional donations
Action for revocation by reason of acts of ingratitude:
1. Donee commits offense against person, honor, property of donor,
spouse, children under his parental authority
2. Donee imputes to donor any criminal offense or any cat involving
moral turpitude even if he should prove it unless act/crime has
been committed against donee himself, spouse or children under
his parental authority
3. Donee unduly refuses to give support to donor when legally or
morally bound to give support to donor

BIRTH OF CHILD
Ipso jure revocation, no
need for action, court
decision merely
Declaratory
Extent: portion which may
impair legitime of heirs
Property must be returned

NON-FULFILLMENT OF
CONDITION
Needs court action

Extent: whole portion but

court may rule partial
revocation only
Property in excess

Alienation/mortgages done
prior to recording in Register
of Deeds:
If already sold or cannot be
returned the value must be
returned
If mortgaged donor may
redeem the mortgage with
right to recover from donee
Fruits to be returned at filing
of action for revocation
Prescription of action is 4
years from birth, etc.

Alienations/mortgages
imposed are void unless
registered with Register of
Deeds

Action cannot be renounced

Action cannot be
renounced in advance
Right of action at instance
of donor but may be
transmitted to heirs
Action does not extend to

Right of action transmitted

to heirs
Action extends to donees

Fruits to be returned at
filing of complainant
Prescription is 4 years
from non-fulfilment

Page 99 of 230

INGRATITUDE
Needs court action

Extent: Whole
portion returned
Property to be
returned
Prior ones are void;
demand value of
property when
alienated and cant
be recovered or
redeemed from 3rd
persons

Prescription is 1
year from
knowledge of fact
and it was possible
to bring action

Heirs cant file

action

heirs

donees heirs

Exception to rule on intransmissibility of action with regards to revocation

due to ingratitude:
1. personal to the donor; general rule is heir cannot institute if donor did
not institute
2. heirs can only file in the ff cases:
a) donor has instituted proceedings but dies before bringing civil
action for revocation
b) donor already instituted civil action but died, heirs can
substitute
c) donee killed donor or his ingratitude caused the death of the
donor
d) donor died w/o having known the ingratitude done
e) criminal action filed but abated by death
3. can only make heirs of donee liable if complaint was already filed when
donee died

10. Inofficious donations:

shall be reduced with regards to the excess

action to reduce to be filed by heirs who have right to legitimate at time

of donation

donees/creditors of deceased donor cannot ask for reduction of

donation

if there are 2 or more donation: recent ones shall be suppressed

if 2 or more donation at same time treated equally & reduction is pro

rata but donor may impose preference which must be expressly stated
in donation
TORTS and DAMAGES

Answer: Under the same law, Bernie may, at his option, be reimbursed the total
amount paid including amortization interests but excluding delinquency interests
at the legal rate. He may also ask the Housing and Land Use Regulatory Board to
apply penal sanctions against DEVLAND consisting of payment of administrative
fine of not more than P20,000.00 and/or imprisonment for not more than 20
years.
c) Supposing DEVLAND had fully developed the subdivision but Bernie
failed to pay further installments after 4 years due to business reverses. Discuss
the rights and obligations of the parties.

Answer: Under R.A. No. 6552 (Maceda Law), DEVLAND has the right to cancel
the contract but it has to refund Bernie the cash surrender value of the payments
on the property equivalent to 50% of the total payments made.
Conditions & Warranties
CONDITION
Purports to existence of obligation

WARRANTY
Purports to performance of obligation

Condition must be stipulated to

form part of the obligation

Need not be stipulated; may form part of

obligation by provision of law

May attach itself to obligation of

seller to deliver possession &
transfer ownership

Relates to the subject matter itself or to

obligation of the seller as to the subject
matter of the sale

1. Express Warranties Requisites:

i.
ii.

Quasi-Delict
1. Article 2176, Civil Code: Whoever by act or omission causes damage to
another, there being fault or negligence, is obliged to pay for the damage
done. Such fault or negligence, if there is no pre-existing contractual relation
between the parties, is called a quasi-delict and is governed by the provision of
this Chapter.
2. Elements of Quasi-Delict
a) act or omission
b) damage or injury is caused to another
c) fault or negligence is present
d) causal connection between damage done and act/omission
e) there is no pre-existing contractual relations between the parties
Page 100 of 230

iii.

it must be an affirmation of fact or any promise by seller relating to the

subject matter of sale
natural tendency of affirmation or promise is to induce buyer to
purchase subject matter
buyer purchases the subject matter relying thereon

when breached, seller is liable for damages

2. Implied Warranties
deemed included in all contracts of sale whether parties are
actually aware or not, whether they were intended or not; by operation of law
i.
ii.

Warranty that seller has a right to sell

Warranty against eviction Requisites of breach of warranty against
eviction:
a) buyer is evicted in whole or in part from the subject matter of
sale
b) there is a final judgement
Page 133 of 230

a.

b.

2.

Pay without interest the balance within grace period of 1

month for every year of installment payment

Grace to be exercised once every 5 years

When no payment - cancelled; buyer entitled to 50% of
what he has paid + if after 5 years of installments, 5% for
every year but not to exceed 90% of total payments made

Cancellation to be effected 30 days from notice &

upon payment of cash surrender value

Buyer paid less than 2 years installment

1st Grace period is 60 days from date installment became

due
b. 2nd grace period of 30 days from notice of
cancellation/demand for rescission

buyer can still pay within the 30 day period

with interest
c. No payment after 30 day period, can cancel.
Purpose of law : Protect buyers in installments against oppressive
conditions
a.

Other rights:
1.
2.
3.
4.
5.

3. Distinguished from other sources of obligation:

CONTRACT
QUASI DELICT
Vinculum Juris Contract
Negligent act/
omission (culpa,
imprudence)

Sell rights to another

Reinstate contract by updating during grace period & before
actual cancellation
Deed of Sale to be done by notarial act
To pay in advance any installment or the full balance of price
anytime without interest
Have full payment annotated in certificate of title

Bar Question (2005). Bernie bought on installment a residential subdivision lot

from DEVLAND. After having faithfully paid the installments for 48 months,
Bernie discovered that DEVLAND had failed to develop the subdivision in
accordance with the approved plans and specifications within the time frame in
the plan. He thus wrote a letter to DEVLAND informing it that he was stopping
payment. Consequently, DEVLAND cancelled the sale and wrote Bernie,
informing him that his payments are forfeited in its favor.
a) Was the action of DEVLAND proper? Explain.

Answer: Assuming the land is a residential subdivision project under P.D. No.
957 (The Subdivision and Condominium Buyers Protective Decree), DEVLANDS
action is not proper since under Section 23 of the said law, no installment
payment shall be forfeited to the owner/developer when the buyer, after due
notice, desists from further payment due to failure of the owner-developer to
develop the subdivision according to the approved plans and within the time limit
for complying with the same.
b) Discuss the rights of Bernie under the circumstances.
Page 132 of 230

Proof Needed
Defense
Available

Pre-existing
contract
Burden of
Proof

Preponderance of
Evidence
Exercise of
extraordinary
diligence (in contract
of carriage), Force
Majeure

There is pre-existing
contract
Contractual partyProve the ff:
1. existence of a
contract
2. breach

Preponderance of
Evidence
Exercise of
diligence of a
good father of a
family in the
selection and
supervision of
employees
No pre-existing
contract
Victim - Prove the
ff.:
1. damage
2. negligence
3. causal
connection
between
negligence
and damage
done

DELICT
Act/omission
committed by
means of dolo
(deliberate,
malicious, in bad
faith)
Proof beyond
reasonable doubt

No pre-existing
contract
Prosecution Accused is
presumed
innocent until the
contrary is
proved.

4. Civil Liability in Quasi-Delict v. Delict

QUASI-DELICT

Liability of Employer

DIFFERENCE
Solidary

DELICT
Subidiary

Reservation
Requirement

Civil aspect of the quasi-delict is

impliedly instituted with criminal
action, but under 2000 Crimpro
Rules it is independent and
separate

Civil aspect is
Impliedly
instituted with
criminal action

Effect of judgement of
acquittal in a criminal
case involving same
act/omission

Not a bar to recover civil

damages EXCEPT when
judgement pronounces that the
negligence from which damage
arise is non-existent

Not a bar to
recover civil
damages

Page 101 of 230

5. What must be proved

a) Negligence - In action for culpa aquiliana, plaintiff must prove
negligence of defendant

Exception:
1. In cases where negligence is presumed or imputed by law this is only rebuttable/presumption juris tantum
2. Principle of res ipsa loquitur (the thing speaks for itself) b)
c)

grounded on the difficulty in proving thru competent evidence,

public policy considerations
Damage/injury
Causal connection between negligence and damage (to be
actionable) -Defendants negligence must be the proximate cause of the
injury sustained by the plaintiff to enable plaintiff to recover. Thus, if
plaintiffs own conduct is the cause of the injury there can be no
recovery.

If plaintiff's negligence is only contributory he is considered partly

responsible only, may still recover from defendant but must be reduced
by the courts in proportion to his own negligence
Concept of proximate cause the adequate and efficient cause which in
the natural order of events and under the particular circumstances
surrounding the case, would naturally produce the event
6. Defenses
a) CONTRIBUTORY NEGLIGENCE - the theory here is that the plaintiff was
also negligent together with the defendant; to constitute a defense,
proximate cause of injury/damage must be the negligence of defendant
b) CONCURRENT NEGLIGENCE - the theory here is that both parties are
equally negligent; the courts will leave them as they are; there can be
no recovery
c) DOCTRINE OF LAST CLEAR CHANCE - even though a persons own acts
may have placed him in a position of peril and an injury results, the
injured is entitled to recover if the defendant thru the exercise of
reasonable care and prudence might have avoided injurious
consequences to the plaintiff.

This defense is available only in an action by the driver or

owner of one vehicle against the driver or owner of the other
vehicle involved; cannot be invoked by a common carrier
against a passenger in an action for breach of contract of
carriage

Elements:
1.

plaintiff was in a position of danger by his own

negligence
Page 102 of 230

2. When is the law applicable: Sale of movables on installment

a) Sale on installment: payment by several partial payments in small
amount
b) Rationale of the law: Buyer is lulled into thinking that he could
afford because of small amounts per installment and at the same
time remedy abuse of commercial houses
c) Nature of remedies: alternative & not cumulative
d) Coverage: sale and financing transaction & contracts of lease with
option to purchase
e) Action : Judicial and Extrajudicial
Sale of Immovables (In General)
1. Remedies of Seller
a) Anticipatory breach
Seller has reasonable grounds to fear loss of immovable sold & its
price sue for RESCISSION
b) Non payment of price-RESCISSION
2. Remedies of Buyer
a) Disturbed in possession or with reasonable grounds to fear disturbance
SUSPEND PAYMENT
b) In case of subdivision or condo projects: If real estate developer fails to
comply with obligation according to approved plan:
i. RESCIND
ii. SUSPEND PAYMENT UNTIL SELLER COMPLIES
Sale Of Immovables (By Installment)
1. Law applicable

Article 1592, CC Applies only to contract of sale

Maceda Law applies to COS & CTS & Financing

2. Maceda Law (RA 6552)

Coverage: REAL ESTATE defined space vs. CONDO not defined

space (w/ common areas)
1. contract of sale
2. contract to sell
3. financing transactions
Excluded:

1. industrial
2. commercial
3. sale to tenants under agrarian laws

Rights Granted to Buyers:

1. Buyer paid at least 2 years installment
Page 131 of 230

i.

Goods are in transit

From the time goods are delivered to carrier for
purpose of transmission to buyer
Goods rejected by buyer & carrier continues to
possess them
v When are goods no longer in transit?
Reached point of destination
Before reaching destination, buyer obtains
delivery of the goods
Goods are supposed to have been delivered to
buyer but carrier refused
ii. Buyer is insolvent (failure to pay when debts become due)
b) How right is exercised:
i. Obtain actual possession of goods
ii. Give notice of claim to carrier / bailee in possession thereof
v Notice by seller to buyer is not required; notice to carrier

2.
3.

d)

is essential
4. Special Right to Resell the Goods
Requisites:
i. goods are perishable
ii. stipulated the right of resale in case buyer defaults in payment
iii. buyer in default for unreasonable time
iv. notice by seller to buyer not essential

e)

5. Special Right to Rescind

Requisites:
i. Expressly stipulated
ii. Buyer is in default for unreasonable time
**Notice needs to be given by seller to buyer

f)

Remedies of the Buyer

g)

1. When Seller fails to deliver, buyer may seek SPECIFIC PERFORMANCE

WITHOUT GIVING SELLER OPTION TO RETAIN GOODS ON PAYMENT OF
DAMAGES

h)

Sale of Movables on Installment (Recto Law)

1. Remedies
a)
b)
c)

of Seller (1484)
Exact fulfillment should the buyer fail to pay
Cancel the sale if buyer fails to pay 2 or more installments
Foreclose on chattel mortgage if buyer fails to pay 2 or more
installments
v If buyer chooses foreclosure, no further action against
buyer to recover any unpaid balance of the price
Page 130 of 230

i)
j)
k)

defendant knew of such position of the plaintiff

defendant had the least clear chance to avoid the
accident by exercise of ordinary care but failed to
exercise such last clear chance and
4. accident occurred as proximate cause of such failure

Who may invoke: plaintiff

Inapplicable to:
1. joint tortfeasors
2. defendants concurrently negligent
3. as against 3rd persons
EMERGENCY RULE a person is not expected to exercise the same
degree of care when he is compelled to act instinctively under a sudden
peril because a person confronted with a sudden emergency may be left
with no time for thought and must make a speedy decision upon
impulse or instinct

Applicable only to situations that are sudden and unexpected

such as to deprive actor of all opportunity for deliberation

But action must still be judged by the standard of the ordinary

prudent man

Absence of foreseeability
DOCTRINE OF ASSUMPTION OF RISK Volenti non fit injuria

Intentional exposure to a known danger

One who voluntarily assumed the risk of an injury from a

known danger cannot recover in an action for negligence or an
injury is incurred

Plaintiffs acceptance of risk (by law/contract/nature of

obligation) has erased defendants duty so that his negligence
is not a legal wrong

Applies to all known danger

DUE DILIGENCE diligence required by law/contract/depends on
circumstances of persons, places, things
FORTUITOUS EVENT No person shall be responsible for those events
which cannot be foreseen, or which through foreseen were inevitable.
Exception: assumption of risk
DAMNUM ABSQUE INJURIA a principle that involves damage without
injury, therefore no liability is incurred; there is no legal injury
LAW specific provision of law

EXERCISE OF DILIGENCE OF GOOD FATHER OF FAMILY IN SELECTION

AND SUPERVISION OF EMPLOYEES
PRESCRIPTION
Injury to right of plaintiff/quasi delict
4 years
Defamation
1 year
When no specific provision, must be counted from the day
they may be brought
PROSCRIPTION AGAINST DOUBLE RECOVERY - Responsibility for fault
or negligence under quasi-delict is entirely separate and distinct from

l)

Page 103 of 230

civil action arising from the RPC but plaintiff cannot recover damages 2x
for same act or omission of the defendant
m) ACT OR OMISSION IS NOT THE PROXIMATE CAUSE OF THE DAMAGE
n) OTHER GROUNDS Motion to Dismiss
a. lack of jurisdiction over person of defendant
b. lack of jurisdiction over subject matter
c. venue improperly laid
d. plaintiff has no legal capacity to sue
e. there is another action pending between same parties for
same cause
f. cause of action is barred by prior judgement /statute of
limitations
g. pleading asserting claim states no cause of action
h. claim set forth in pleading has been paid, waived,
abandoned, extinguished
i. claim is unenforceable under the provision of statute of
fraud
j. condition precedent for filing claim has not been complied
with

7. Persons Liable for Quasi-Delict

a. TORTFEASOR - Whoever by act or omission causes damage to another, there
being no fault or negligence is obliged to pay for the damage done (art 2176).
b. PERSONS VICARIOUSLY LIABLE the obligation imposed in 2176 is
demandable not only for ones own act or omission but also for those persons for
whom one is responsible (art 2180).

Vicarious liability law on imputed negligence; a person who himself is

not guilty of negligence is made liable for conduct of another
Reason:
- public policy deeper pocket/capacity to pay
- violation of duty on account of relationship he is negligent
1)

PARENTS - The father, and in case of his death or incapacity, the

mother are responsible for damage caused by minor children who
live in their company

Note: Father and Mother shall jointly exercise parental authority

over common children. In case of disagreement, father's decision
shall prevail (art 211).
2)

GUARDIANS - Guardians are liable for damages caused by the

minor or incapacitated persons who are:
i.
under their authority &
Page 104 of 230

a.

b.
4.

Loss 2 views:
Paras: BUYER
Tolentino: SELLER
Deterioration & fruits Buyer bears loss.

After delivery
Res perit domino

Owner is buyer so buyer bears risk of loss

Delivery extinguishes ownership vis-a-vis the seller & creates a new

one in favor of the buyer

Remedies of Parties For Breach Of Contract Of Sale

Remedies of the Seller
1. Subject Matter: MOVABLES (IN GENERAL)
Requisites:
a. Subject matter goods
b. Seller is unpaid not completely paid or received negotiable
instrument under a condition & condition has been breached by
reason of dishonor
c. Physical possession is with seller
Remedies
1. Possessory lien
2. Stoppage in transitu
3. Special right of re-sale
Can only be exercised when the 2
4. Special right to rescind
prior rights have been exercised
2. Possessory Lien
o Seller not bound to deliver if buyer has not paid him the price
o Right to retain; cannot be availed when seller does not have
custody
o Exercisable only in following circumstances:
1. goods sold without stipulation as to credit
2. goods sold on credit but term of credit has expired
3. buyer becomes insolvent
o

Instances when possessory lien lost:

1.

2.
3.

seller delivers goods to carrier for transmission to buyer

without reserving ownership in goods or right to possess
them
buyer or his agent lawfully obtains possession of goods
waiver

3. Stoppage In Transitu
a) Requisites:
Page 129 of 230

c.
d.

2.

sale is made under statutory power of sale or under order of a

court of competent jurisdiction
sale is made in a merchants store in accordance with code of
commerce & special laws

Sale by Seller with Voidable Title

a) Perfection Stage:
Valid sale buyer acquires title of goods
b) Consummation Stage:
Valid sale if title has not yet been avoided, buyer buys goods
under following condition:
i. in good faith
ii. for value
iii. without notice of sellers defect of title

ii.
3)

OWNERS & MANAGERS OF ESTABLISHMENT/ENTERPRISE Owners & managers of establishment or enterprise are responsible
for damages caused by their employees:
i.
in the service of the branches in which the latter are
employed OR
ii. in occasion of their function

4)

EMPLOYERS - Employers shall be liable for damages caused by

their employees & household helpers
i. employee selected by employer or through another
ii. Services rendered in accordance with orders which
employer had authority to give
iii. acting w/in the scope of their assigned task
iv. illicit act of employee was on the occasion or by reason of
the functions entrusted to him
v.
even though the former are not engaged in any business
or industry (unlike in RPC subsidiary liability of employer
attaches in case of insolvency of employer for as long as
the employer is engaged in business/industry)

3. Title as to Movable Properties

a) Rule: POSSESSION IS EQUIVALENT TO TITLE

Requisites:

b)

c)

i. Possession of a movable
ii. In good faith
Exception:
i. Owner loses movable owner can recover w/o
reimbursing price
ii. Owner is unlawfully deprived owner can recover w/o
reimbursing price
Exception to Exception:
i. Movable is bought at public sale owner can only recover
after reimbursing price
ii. Movable acquired in good faith & for value from auction

Defenses available to employers:

a)
exercise of due diligence ins election and supervision
of employees
b)
act/omission was made outside working hours and in
violation of company's rules and regulations
5)

STATE - The state is responsible when it acts through a special

agent, but not when the same is caused by an official to whom task
done properly pertains in which case art 2176 is applicable

A special agent is one who receives a definite and fixed

act or commission, foreign to the exercise of the duties of
his office if he is a special official.

6)

SCHOOLS, ADMINISTRATOR, TEACHER - Teachers or heads of

establishments of arts & trades shall be liable for damages caused
by their:
i. pupils, students & apprentices
ii. as long as they remain in their custody

Loss, Deterioration, Fruits & Other Benefits

Who Bears Risk of Loss/Deterioration/Fruits
1.

2.

3.

Before perfection
Res perit domino

Owner is seller so seller bears risk of loss

At Perfection
Res perit domino

Contract is merely inefficacious because loss of the subject matter

does not affect the validity of the sale

Seller cannot anymore comply with obligation so buyer cannot be

compelled also
After Perfection but before delivery
Page 128 of 230

live in their company

NOTE:
Family Code, art 218 - The school, its administration & teachers or the
individual, entity or institution engaged in child care shall have special
parental authority & responsibility over the minor child under their
supervision, instruction or custody (authority & responsibility shall apply
Page 105 of 230

to all authorized activities whether inside or outside the premises or the

school, entity or institution).
Family Code, art 219 - those given the authority & responsibility shall be
solidarily & principally liable for damages caused by act/omission of the
unemancipated minor; parents, judicial guardian or person exercising
substitute parental authority over said minor shall be subsidiarily liable.
Difference between Articles 218 & 2180
Art 218
School, admin, teachers engaged in
child care are made expressly liable
Liability of school, admin, teachers is
solidary and parents are made
subsidiary liable
Students involved must be minor

Art 2180
Teachers, head of establishment in
Arts and trades are made expressly
liable
No such express solidary nor
subsidiary liability is stated

Students
minor

involved

not

necessarily

Liability of the School

general rule: schools are not liable as party defendants
exception:
a) FC 218 schools are expressly made liable
b) St. Francis case ruling schools liability as employer
c) PSBA case ruling school has liability based on contract
WON Article 2180 apply to school of arts & trades only?
No. applies to all including academic institution per weight of
jurisprudence based on obiter of Justice JBL Reyes in the
Exconde case
1.

basis of liability of teacher principle of loco parentis (stand in

place of parents)

2.

so long as they remain in their custody

not literal anymore; before: boarding & living with teacher

due to peculiar characteristic of trade & arts school

as long as they are in the protective, supervisory capacity

of teacher special parental authority, includes recess
time, for any legitimate reason for a childs presence in
school

2. When does the general rule apply? When not all requisites embodied in 1544
concur.
3.

Special Rule 1544

Requisites:
a) exactly same subject matter
b) exactly same immediate seller
c) buyers represent conflicting interest
d) both sales are valid
e)

Rules on double sales under 1544

a) MOVABLE - first to posses in good faith = owner
b) IMMOVABLE
1. First to register in good faith
2. No inscription, first to possess in good faith
3. No inscription & no possession in good faith person who
presents oldest title in good faith

Bar Question (2001). One June 15, 1995, Jesus sold a parcel of registered
land to Jaime. On June 30, 1995, he sold the same land to Jose. Who has a
better right if:
a) the first sale is registered ahead of the second sale, with knowledge of
the latter. Why?

Answer: The first buyer has the better right if his sale was first to be registered,
even though the first buyer knew of the second sale. The fact that he knew of
the second sale at the time of his registration does not make him as acting in
bad faith because the sale to him was ahead in time, hence, has a priority in
right. What creates bad faith in the case of double sale of land is knowledge of a
previous sale.
b)

The second sale is registered ahead of the first sale with knowledge of
the latter? Why?

Answer: The first buyer is still to be preferred, where the second sale is
registered ahead of the first sale but with knowledge of the latter. This is
because the second buyer, who at the time he registered his sale knew that the
property had already been sold to someone else, acted in bad faith.
Sale By Non-Owner Or By One Having Voidable Title

Bar Question (2001). After working overtime upto midnight, Alberto an

executive of an insurance company drove a company vehicle to a favorite
Videoke bar where he had some drinks to unwind. At 2:00am, he drove home,
but in doing so, he bumped a tricycle, resulting in the death of its driver. May the
insurance company be held liable for the negligent act of Alberto? Why?

1. General Rule: Sale by non-owner, buyer acquires no better title than seller
had.
Exceptions:
a. owner by his conduct is precluded from denying sellers authority
(ESTOPPEL)
b. contrary is provided for in recording laws (PD 1529)

Page 106 of 230

Page 127 of 230


ii.

Not applicable to judicial sales

Sold for lump sum

When price per unit not indicated

If area delivered is either greater or lesser price will not be
adjusted accordingly

10. Time & Place of Delivery

Rules:
o follow stipulation in contact, or
o follow usage in trade, or
o sellers place of business or his residence
o specific goods place where the thing is
o at reasonable hour
11. Effect of Delivery: Title to thing is transferred/ownership is transferred
Except: If contrary is stipulated as in the case of:
a. contract to sell
b. sale on acceptance/approval
c. sale or return
d. implied reservation of ownership
12. Who Bears Expenses of Delivery Seller
13. Sale by Description/Sample:

There is acceptance BY BUYER when:

a.
b.
c.

He intimates to seller that he has accepted,

Thing delivered & he does any act inconsistent with ownership of
seller, OR
He retains without intimating to seller that he has rejected.

14. Sale of Goods on installment:

a. Goods must be delivered in full, except when stipulated
b. When not examined by buyer not accepted until examined or at
least had reasonable time to examine

Answer: The insurance company is not liable because when the accident
occurred, Alberto was not acting within the assigned tasks of his employment.
It is true that under Art. 2180 (par.5), employers are liable for damages
caused by their employees who are acting within the scope of their assigned
tasks. However, the mere fact that Alberto was using a service vehicle of the
employer at the time of the injurious accident does not necessarily mean that he
was operating the vehicle within the scope of his employment. In Castilex
Industrial Corp. v. Vasquez, Jr. (321 SCRA 393 (1999), the Supreme Court held
that notwithstanding the fact that the employee did some overtime work for the
company, the former was, nevertheless, engaged in his own affairs or carrying
out a personal purpose when he went to a restaurant at 2:00am after coming
out from work. The time of the accident (also 2:00am) was outside normal
working hours.
Bar Question (2003). If during class hours, while the teacher was chatting
with other teachers in the school corridor, a 7-year old male pupil stabs the eye
of another boy with a ballpen during a fight, causing permanent blindness to the
victim, who could be liable for damages for the boys injury: the teacher, the
school authorities, or the guilty boys parents? Explain.

Answer: The school, its administrators, and teachers have special parental
authority and responsibility over the minor child while under their supervision,
instruction or custody (Article 218, FC). They are principally and solidarily liable
for the damages caused by the acts or omissions of the unemancipated minor
unless they exercised the proper diligence required under the circumstances
(Article 219, FC). In the problem, the teacher and the school authorities are
liable for the blindness of the victim, because the student who caused it was
under their special parental authority and they were negligent. They were
negligent because they were chatting in the corridor during the class period
when the stabbing incident occurred. The incident could have been prevented
had the teacher been inside the classroom at that time. The guilty boys parents
are subsidiarily liable under Article 219 of the Family Code.
8. Persons Expressly Made Liable By Law (even without fault)

15. Acceptance of goods in general, absent contrary express stipulation, does not
discharge seller from liability in case of breach of warranties (unless no notice or
failure to give it within reasonable time)

a.

POSSESSOR OF AN ANIMAL OR WHOEVER MAKES USE OF THEM EVEN

IF THE ANIMAL IS LOST OR ESCAPED

Except:
1.
2.

16. When buyer has a right to refuse goods, no need to return; shall be
considered as depositary; unless there is stipulation to the contrary
b.

Double Sales
1. General Rule: FIRST IN TIME, PRIORITY IN RIGHT

OWNER OF MOTOR VEHICLE - In motor vehicle mishap, the owner is

solidarily
liable with the driver if:
1.

Page 126 of 230

Force majeure
Fault of the injured/damaged person

he was in the vehicle, and

Page 107 of 230

2.

could have
misfortune

through

due

diligence

prevented

the

c.

MANUFACTURERS & PROCESSORS OF FOODSTUFFS, DRINKS, TOILET

ARTICLES & SIMILAR GOODS
- they are liable for death and injuries caused by any noxious or
harmful substances used although no contractual relation exists
between them and the consumers

d.

DEFENDANT IN POSSESSION OF DANGEROUS WEAPONS OR

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

e.

PROVINCES, CITIES & MUNICIPALITIES

- shall be liable for damages for the death or injuries suffered by any
person by reason of the defective condition of roads, streets, bridges,
public buildings, and other public works under their control or
supervision

f.

PROPRIETOR OF BUILDING OR STRUCTURE

- responsible for the damages resulting from any of the ff.:
1) total or partial collapse of building or structure if due to lack of
necessary repairs
2) explosion of machinery which has not been taken cared of with
due diligence, and the inflammation of explosive substances
which have not been kept in a safe and adequate place
3) by excessive smoke, which may be harmful to persons or
property
4) by falling of trees situated at or near highways or lanes, if not
caused by force majeure
5) by emanations from tubes, canals, sewers or deposits of
infectious matter, constructed without precautions suitable to
the place

g.

ENGINEER, ARCHITECT OR CONTRACTOR

- if damage of building or structure is caused by defect in construction
which happens within 15 years from construction; action must be
brought within 10 years from collapse

h.

HEAD OF FAMILY THAT LIVES IN A BUILDING OR PART THEREOF

- liable for damages caused by things thrown or falling from the same

9. Principles
Page 108 of 230

ii.

Destination Point when goods reach the port of

destination even if not disembarked yet from the vessel,

there is delivery to the buyer
c) CIF COST, INSURANCE, FREIGHT
i. when buyer pays for services of carrier delivery to
carrier is delivery to buyer; carrier is agent of the buyer
ii. When buyer pays seller the price from moment the
vessel is at port of destination, there is already delivery to
buyer.
9. Completeness of Delivery
a. as to MOVABLES delivery of thing plus accessories & accessions in the
condition in which they were upon the perfection of the contract including its
fruits
i. if LESS buyer has 2 options:
a) reject
b) accept
1. when accepts with knowledge that seller is not going
to perform contract in full, he must pay at price
stipulated
2. when accepts & consumes before knowledge that
buyer will not perform contract in full, liable only for
fair value of goods delivered
ii. if MORE buyer has 3 options:
a) accept per contract & reject the rest
b) accept the whole pay price stipulated
c) reject whole if subject matter is indivisible
iii. if MIXED WITH GOODS OF DIFFERENT DESCRIPTION buyer has
2 options:
a) accept good w/c are in accordance with contract & reject the
rest
b) reject goods entirely if indivisible
b.

as to IMMOVABLES
i. Sold per unit or number

with statement of its area, rate at certain price

deliver all that may have been stated in the contract

if impossible, remedies of buyer:

LESS IN AREA
a) rescission
b) proportional reduction of price LACK IN AREA
SHOULD NOT BE MORE THAN 1/10 OF AREA
AGREED UPON

GREATER IN AREA
a) accept per stipulation & reject the rest
b) accept whole area pay at contract rate
Page 125 of 230

When deviations allowed:

a. anything that refers to price is material
b. small items are insignificant, does not make acceptance
unconditional
A sale by auction is perfected when the auctioneer announces its
perfection by the fall of the hammer or in other customary manner.

a)

Art 19, 20, 21 (catch-all provision)

1. ABUSE OF RIGHTS (Art 19)

ELEMENTS:
i.
ii.
iii.

5. Earnest Money
- money given as part of purchase price
- its acceptance is proof that contract of sale exists

There is a legal right or duty

Which is exercised in bad faith
For the sole intent of prejudicing or injuring another

2. GENERAL SANCTION (Art. 20) for all other provisions of law

which do not especially provide their own sanction

ELEMENTS:
i.
ii.

6. Consummation: Delivery and transfer of ownership

7. Different kinds of delivery (tradicion):
a) Actual- when thing sold is placed in the control & possession of the
buyer
b) Constructive
i.
Traditio Longa Manu - delivery of thing by mere
agreement, as possession cannot be transferred at
the time of sale (ex. when seller points to the thing
being sold without actually delivering it)
Traditio Brevi Manu - before contract of sale, the
ii.
would-be buyer was already in possession of the
subject matter of sale (ex. as lessee)
iii.
Symbolic delivery - as to movables only (ex. delivery
of the keys to a car)
Constitutum possessorium - at the time of perfection
iv.
of contract, seller continues to hold possession but no
longer as owner - merely as a holder
v.
Execution of public instrument
Exceptions:
a. when there is stipulation to contrary, execution
does not produce effect of delivery
b. when at the time of execution of instrument,
subject matter was not subject to control of the
seller
8. Delivery through Carrier - Terms:
a) FAS FREIGHT ALONG SIDE
When goods delivered alongside the ship, there is already
delivery to the buyer (twin effects deemed fulfilled)
b) FOB FREIGHT ON BOARD
i. Shipping Point goods are delivered at point of shipment;
delivery to carrier by placing goods on vessel is delivery to
buyer
Page 124 of 230

In the exercise of his legal right or duty

Willfully or negligently causes damage to another

3. CONTRA BONOS MORES (ART 21)

ELEMENTS:
i.
ii.
iii.

There is an act which is legal

But which is contrary to morals, good custom, public order
or public policy
And it is done with intent to injure

b)

UNJUST ENRICHMENT (Arts. 22, 23, 2142 & 2143)

Accion in Rem Verso: action for recovery of what has been paid

without just cause

Requisites:

i. Defendant has been enriched

ii.
Plaintiff suffered a loss
iii.
Enrichment of defendant is without just or legal
ground
iv.
Plaintiff has no other action based on contract, quasi
contract, crime or quasi-delict

Distinguished from solutio indebeti: Mistake is an essential element

in solutio indebeti but not in accion in rem verso.

c)

OSTENTATIOUS DISPLAY OF WEALTH (Art. 25) thoughtless

extravagance for pleasure or display during a period of public want or
emergency

d)

VIOLATION OF RIGHT OF PRIVACY AND FAMILY RELATIONS (Art. 26) every person shall respect the dignity, personality, privacy and peace of
mind of his neighbors and other persons.
The ff. acts though they may not constitute a criminal offense, shall
produce a cause of action for damages, prevention and other relief:
1. prying into the privacy of another's residence
Page 109 of 230

2.
3.
4.

e)

f)

g)

meddling with or disturbing the private life or family relations

of another
intriguing to cause another to be alienated from his friends
vexing or humiliating another on account of his religious
beliefs, lowly station in life. Place of birth, physical defect, or
other personal condition

DERELICTION OF OFFICIAL DUTY OF PUBLIC OFFICERS

May be brought by any person suffering from material or moral loss

because a public

servant refuses or neglects, without just cause to perform his

official duty (art 27).

REQUISITES:
1. defendant is
a public officer charged with the
performance of a duty in favor of the plaintiff
2. he refused or neglected without just cause to perform
such duty (ministerial)
3. plaintiff sustained material or moral loss as consequence
of such non-performance
4. the amount of such damages, if material
UNFAIR COMPETITION
- Unfair competition in agricultural, commercial or industrial enterprises
or in labor through the use of force, intimidation, deceit, machination or
other unjust, oppressive or highhanded method (Art 28)
MALICIOUS PROSECUTION

b.
c.
d.
e.
f.

nominate
principal; but can be attached to other principal contracts
onerous
commutative
unilateral vs contract of sale which is bilateral

3. Right of First Refusal

creates a promise to enter into a contract of sale and it has no

separate consideration, not subject to specific performance
because there is no contractual relationship here & it is not an
obligation to give (not a real contract)
New doctrine: May be subject to specific performance

Effect of new doctrine: Turned the world of policitacion upside

down because while valid option contract is not subject to specific

performance, right of first refusal which does not even have a
separate consideration may be subject to specific performance
Bar Question (1998). In a 20-year lease contract over a building, the lessee is
expressly granted a right of first refusal should the lessor decide to sell both the
land and the building. However, the lessor sold the property to a third person
who knew about the lease and in fact agreed to respect it. Consequently, the
lessee brings an action against both the lessor-seller and the buyer (a) to rescind
the sale and (b) to compel specific performance of his right of first refusal in the
sense that the lessor should be ordered to execute a deed of absolute sale in
favor of the lessee at the same price. The defendants contend that the plaintiff
can neither seek rescission of the sale nor compel specific performance of a
mere right of first refusal. Decide the case.

ELEMENTS:
1.
2.
3.
4.

that the defendant was himself the prosecutor/ he

instigated its commencement
that it finally terminates in his acquittal
that in bringing it the prosecutor acted without probable
cause, and
that he was actuated by legal malice, that is, by improper
and sinister motive

h)

VIOLATION OF RIGHTS AND LIBERTIES OF ANOTHER PERSON

i)

NUISANCE
a. Definition any act, omission, establishment, condition of property,
or anything else which:
1. injures or endangers the health or safety to others, or
2. annoys or offends the senses, or
3. shocks, defies, or disregards decency or morality, or
4. obstructs or interferes with the free passage of any public
highway or streets, or any body of water
Page 110 of 230

Answer: The action filed by the lessee, for both rescission of the offending sale
and specific performance of the right of first refusal which was violated, should
prosper. The ruling in Equatorial Realty Development, Inc. v. Mayfair Theater
Inc. (264 SCRA 483), a case with similar facts, sustains both rights of action
because the buyer in the subsequent sale knew the existence of right of first
refusal, hence in bad faith.
4. Perfection: Offer & Acceptance

Meeting of Minds
1. Offer certain
2. Acceptance absolute
Qualified acceptance merely a counter-offer which needs to be

absolutely accepted to give rise to perfected contract of sale

Business ads are mere invitations to make an offer except when it

appears to be otherwise
Acceptance by letter/telegram binds only at time it came to

knowledge of SELLER; prior thereto offer may still be withdrawn

Acceptance must be of the exact terms to be considered absolute

Page 123 of 230

a.

b.
c.

Judicial sale

Shocking to conscience of man

Higher price can be obtained at re-sale

Rescissible contracts due to lesion
Sales with right to repurchase (raises presumption of equitable
mortgage) Remedy is reformation

b.

2. Particular form is required under the statute of frauds:

a. valid & binding between parties
b. not binding to 3rd persons only

hinders or impairs use of property

NUISANCE PER SE - denounced as nuisance by common

2.

NUISANCE PER ACCIDENS - those which are in their

law or by statute
nature not nuisances, but may become so by reason of
their locality, surroundings, or the manner in which they
may be conducted, managed, etc.

Form of Sales
1. Form not important in validity of sale - Sale being consensual, may be oral
or written, perfected by mere consent as to price & subject matter

5.
Kinds:
1.

c.

REMEDIES AGAINST PUBLIC NUISANCES

1. Prosecution under the RPC or any local ordinance
2. Civil action
3. Abatement, without judicial proceeding

d.

Who May Avail of Remedies

1. Public officers
2. Private persons - if nuisance is specially injurious to
himself; the ff. steps must be made:
i. demand be first made upon owner or possessor
of the property to abate the nuisance
ii. that such demand has been rejected
iii. that the abatement be approved by the district
health officer and executed with the assistance of
local police
iv. that the value of destruction does not exceed
P3,000

e.

Remedies Against Private Nuisances

1. Civil action
2. Abatement, without judicial proceedings

f.

Doctrine of Attractive Nuisance

A class of cases within the general rule that one is liable for
the injury resulting to another from failure to exercise the
degree of care commiserate with the circumstances
The attractiveness of the premises or of the dangerous
instrumentality to children of tender years is to be considered
as an implied invitation, which takes the children who accepted
it out of the category of a trespasser and puts them in the
category of invitees, towards whom the owner of the premises
or instrumentality owes the duty of ordinary care.

3. When form is important for validity; exception by specific provision of law:

a. power to sell a piece of land granted to an agent otherwise VOID
b. sale of large cattle; must also be registered with Municipal treasurer
otherwise VOID
c. sale of land by non-Christian if not approved by Governor VOID
4. When form is important for enforceability (STATUTE OF FRAUDS)
a. Sale to be performed 1 year after
b. Agreement to sell things with value of 500 and up
c. Sale of real property or any interest therein

Exceptions:
i.
ii.
iii.

When there is a note or memorandum in writing & subscribed to by

party or his agent (contains essential terms of the contract)
When there has been partial performance/execution (seller delivers with
intent to transfer title/receives price)
when there has been failure to object to presentation of evidence (oral)
- constitutes waiver

Formation, Perfection and Consummation of a Contract of

Sale
1. Three Stages in the Life of a Contract of Sale
a) Policitacion/Negotiation Stage offer is floated, acceptance is floated
but they do not meet; the time when parties indicate their interest but
no concurrence of offer & acceptance
b) Perfection concurrence of all requisites; meeting of the minds
c) Consummation parties perform their respective undertakings
2. Option Contract Characteristics:
a. not the contract of sale by itself; distinct
Page 122 of 230

Bar Question (2006). A drug lord and his family reside in a small bungalow
where they sell shabu and other prohibited drugs. When the police found the
illegal trade, they immediately demolished the house because according to them,
Page 111 of 230

it was a nuisance per se that should be abated. Can this demolition be

sustained? Explain.

Answers:
(1) No, the demolition cannot be sustained. The house cannot be considered as
nuisance per se. To be considered a nuisance per se, the act, occupation,
or structure must be nuisance at all times and under any circumstances,
regardless of the location or surrounding. Since the demolished house was
not a nuisance during the times that it was not used for selling drugs, it
cannot be considered nuisance per se. Moreover, in the abatement of a
nuisance, whether judicially or extra-judicially, the abatement should not
inflict unnecessary damage or injury. In this case, what may be considered
as nuisance per se is not structure of the house but the use of the house for
the selling of shabu. However, the demolition of the house is not necessary
to abate the sale of shabu in that community. To demolish the house is an
unnecessary damage and injury.
(2) The selling of the shabu is not a public nuisance but a grave threat to the
welfare of the community. As such it can be enjoined and all instruments
thereof be destroyed by the law enforcers. The sale of the shabu in that
community is facilitated by the house which hides the pernicious activity
from the law enforcers. This being the case, the house may be considered
as an instrument of the crime and the law enforcers are justified in
demolishing the house in the exercise of the police powers of the State.
Damages
Kinds of Damages:
(mental)

moral, exemplary, nominal, temperate, actual, liquidated

Exception to General Rule:

a) Minors
*Status of contract: VOIDABLE only, therefore ratifiable
b) Sale between spouses
Exceptions:
i. separation of property agreed (marriage settlement)
ii. judicial separation of property
c) Guardian with regard to property of ward during period of guardianship
d) Agent with regard to property of principal
e) Executor/administrator with regard to the estate of the deceased
f) Public officers with regard to the property of the State
g) Officer of court & employee with regard to the property in litigation

2. Subject Matter of Sale

To be a valid subject matter, the following must concur:

a) Existing, Future & Contingent
i. sale of things having potential existence (emptio rei speratae)valid
ii. Sale of hope (emptio spei)- every sale of a future thing is
subject to the condition that they will come into existence
- aleatory in character but valid
- sale of empty hope is void
b) Licit must be within the commerce of men
Void if subject-matter is:
i. Contrary to law
ii. Simulated/fictitious
iii. Outside commerce of men
iv. Impossible service
c) Determinate or determinable

Actual/Compensatory
3. Price
1. CONCEPT: Adequate compensation for a. the value of loss suffered
b. profits which obligee failed to obtain
2. WHAT MUST BE DONE TO COLLECT ACTUAL DAMAGES:
a. Plead or allege the loss
i. General Damages - natural, necessary and logical
consequences of a particular wrongful act which result in
injury; need not be specifically pleaded because the law itself
implies or presumes that they resulted from the wrongful act
ii. Special Damages - damages which are the natural, but not the
necessary and inevitable result of the wrongful act; need to be
pleaded
Page 112 of 230

Price signifies the sum stipulated as equivalent of the thing sold

Characteristics of Valid Price
a) Must be real
b) Must be in money or its equivalent
c) Must be certain or ascertainable at the time of the perfection of the
contract
d) Manner of payment provided for

Gross inadequacy of price in ordinary sale does not render contract void
unless it is shocking to conscience of man.

Exceptions:
Page 121 of 230

vi.
vii.

TEST: essential clauses of whole instrument (art 1466

motherhood statement, not good law)
Agency is a personal contract; sale is a real contract (to
give) rescission is not available in agency

Bar Question (2000). A foreign manufacturer of computers and a Philippine

distributor entered into a contract whereby the distributor agreed to order
1,000 units of the manufacturers computers every month and to resell them in
the Philippines at the manufacturer's suggested prices plus 10%. All unsold
units at the end of the year shall be bought back by the manufacturer at the
same price they were ordered. The manufacturer shall hold the distributor free
and harmless from any claim for defects in the units. Is the agreement one for
sale or agency?

b.
c.

Pray for the relief that claim for loss be granted

Prove the loss

3. WHEN LOSS NEED NOT BE PROVED:

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

Answer: The contract is one of agency not sale. The notion of sale is negated
by the following indicia: (1) the price is fixed by the manufacturer with the 10%
mark-up constituting the commission; (2) the manufacturer reacquires the
unsold units at exactly the same price; and (3) warranty for the units was borne
by the manufacturer. The foregoing indicia negate sale because they indicate
that ownership over the units was never intended to transfer to the distributor.

1.

Damages in case of Good faith a.

b.

2.

Natural and probable consequence of breach of obligation, and

Parties have forseen or could have reasonably forseen at time obligation
was constituted

Damages in case of bad faith

a.

e)

f)

Dacion en pago
dacion:
contract where property is alienated to
i.
satisfy/extinguish obligation to pay debt
ii.
in dacion: novates creditor-debtor relationship into sellerbuyer
iii.
in dacion: delivery is required (real contract)
Lease
i.

in sale: obligation to absolutely transfer ownership of thing; in

lease: use of thing is for a specified period only with an

ii.
iii.

in sale: consideration is price; in lease: consideration is rent

in sale: seller needs to be owner of thing to transfer
ownership; in lease: lessor need not be owner

obligation to return

g)

Lease with option to buy

- in reality, a contract of sale but designated as lease in name only; it is
a sale by installments

Essential Requisites of a Contract of Sale

1. Consent

Parties to a Contract of Sale

General Rule: All parties with capacity to contract can enter into a valid
contract of sale
Page 120 of 230

it is sufficient that damages may be reasonably attributed to the nonperformance of the obligation
CRIMES & QUASI-CRIMES

defendant is liable for all damages that are natural and probable
consequence of the act/omission complained of

not necessary that damages have been forseen or could have been
reasonably forseen
4. VALUE OF LOSS SUFFERED (DANO EMERGENTE) - Destruction of things, fines
or penalties; medical & hospital bills, attorney's fees, interests, cost of litigation
Damages recoverable:
a. Medical & Hospital Bills
b. Loss or impairment of earning capacity (in case of physical
disability)
c. Damages for death
i. Minimum amount: P50,000
ii. Loss of earning capacity unless deceased had permanent
physical disability not caused by defendant so that
deceased had no earning capacity at time of death
iii. Support, if deceased was obliged to give support (for
period not more than 5 years)
iv. Moral damages
d. Attorney's fees - as a general rule, attorney's fees (other than
judicial costs) are not recoverable, except:
i. stipulation between parties
Page 113 of 230

ii.
iii.

iv.
v.
vi.
vii.
viii.
ix.
x.
xi.
e.
f.

when exemplary damages are awarded

when defendant's act/omission compelled plaintiff to
litigate with 3rd persons or incur expenses to protect his
interest
malicious prosecution
clearly unfounded civil action or proceeding against
plaintiff
defendant acted in gross & evident bad faith in refusing to
satisfy plaintiff's just & demandable claim
legal support actions
recovery of wages of household helpers, laborers & skilled
workers
actions for indemnity under workmen's compensation and
employer liability laws
separate civil action to recover civil liability arising from
crime
when double judicial costs are awarded

iii.

donation is governed by law on donation; sale is governed by

law on sales

b)

Barter
i.
ii.
iii.

in barter, the consideration is the giving of a thing; in sale, it is

giving of money as payment
both are governed by law on sales; both are species of the
genus sales
if consideration consists party in money & partly by thing
look at manifest intention;

if intention is not clear (1468):

a.

value of thing is equal or less than amount of money

sale
c)

Judicial costs
Interest - discretionary on part of the court

5. UNREALIZED PROFITS (LUCRO CESSANTE) - future earnings

b. value of thing is more than amount of money barter

Contract for piece of work
Test in article 1467:

contract for delivery of an article which the vendor in the

ordinary course of business manufactures or procures for
general market (whether on hand or not) sale

goods are to be manufactured specially for a customer and

upon special order and not for the general market contract

for piece of work.

6. WHEN DAMAGES MITIGATED:
a. Contributory negligence
b. In contracts, quasi-contracts and quasi-delict 1. plaintiff has contravened the terms of contract
2. plaintiff derived some benefit as result of contract
3. in case where exemplary damages are to be awarded, that
the defendant acted upon the advise of counsel
4. that the loss would have resulted in any event
5. that since the filing of the action, the defendant has done
his best to lessen the plaintiff's loss or injury
Bar Question (2003). If a pregnant woman passenger of a bus were to suffer
an abortion following a vehicular accident due to the gross negligence of the bus
driver, may she and her husband claim damages from the bus company for the
death of their unborn child? Explain. (5%)

Rules:
Timing test under art 1467; Inchausti; whether the thing

transferred would have never existed but for the order

d)

Agency
i.

ii.

Answer: No, the spouses cannot recover actual damages in the form of
indemnity for the loss of life of the unborn child. This is because the unborn
child is not yet considered a person and the law allows indemnity only for loss of
life of persons. The mother, however, may recover damages for the bodily injury
she suffered from the loss of the fetus which is considered part of her internal
organs. The parents may also recover damages for injuries that are inflicted
directly upon them, e.g., moral damages for mental anguish that attended the
Page 114 of 230

iii.
iv.

v.

contract for piece of work (abandoned)

Habituality test enunciated in Celestino v CIR; contract of
sale if manufacturer engages in activity without need to
employ extraordinary skills and equipment; contract for piece
of work is sale of service; contract of sale is sale of things.
Nature of the object test enunciated in EEI v CIR; each
products nature of execution differs from the others; products
are not ordinary products of manufacturer.
to sell
in sale, buyer pays for price of object; in agency to sell,
agent not obliged to pay for price, merely obliged to
deliver price received from buyer.
in sale, buyer becomes owner of thing; in agency;
principal remains owner even if object delivered to agent
in sale, seller warrants; in agency, agent assumes no
risk/liability as long as within the authority given
in sale, not unilaterally revocable; in agency, may be
revoked unilaterally because fiduciary & even if revoked
w/o ground
n sale, seller receives profit; in agency, agent not allowed
to profit
Page 119 of 230

2. Its amount need not be proved, because its determination depends upon the
amount of the compensatory damages that may be awarded to the claimant.

loss of the unborn child. Since there is gross negligence, exemplary damages
can also be recovered. (Geluz v. CA, 2 SCRA 801 [1961]).

3. It need not also be alleged, because it is merely incidental or dependent upon

what the court may award as compensatory damages.

Moral Damages
1. PBMF-MWSS
a. Physical suffering
b. Besmirched reputation
c. Mental anguish
d. Fright
e. Moral shock
f. Wounded feelings
g. Social humiliation
h. Serious anxiety

4. When recovered
a. Art. 2230. In criminal offenses, exemplary damages as a part of the
civil liability may be imposed when the crime was committed with
one or more aggravating circumstances. Such damages are
separate and distinct from fines and shall be paid to the offended
party.
b. Art. 2231. In quasi-delicts, exemplary damages may be granted if
the defendant acted with gross negligence.
c. Art. 2232. In contracts and quasi-contracts, the court may award
exemplary damages if the defendant acted in a wanton, fraudulent,
reckless, oppressive, or malevolent manner.

2. Sentimental value of real or personal property may be considered in

adjudicating moral damages

5. Exemplary damages cannot be recovered as a matter of right; the court will

decide whether or not they should be adjudicated.

3. The social and economic/financial standing of the offender and the offended
party should be taken into consideration in the computation of moral damages

6. A stipulation whereby exemplary damages are renounced in advance shall be

null and void.
SALES

4. Moral damages is awarded only to enable the injured party to obtain means,
diversions or amusements that will serve to alleviate the moral suffering he has
undergone, by reason of defendant's culpable action and not intended to enrich
a complainant at the expense of defendant.

1. Contract of Sale One of the contracting parties obligates himself to transfer

the ownership of and to deliver a determinate thing, and the other to pay
therefor a price certain in money or its equivalent. A contract of sale may be
absolute or conditional.
2. Characteristics of Contract of Sale:
a) Nominate - law gave it a name
b) Principal - can stand on its own; unlike accessory contract
c) Bilateral - imposes obligation on both parties
d) Onerous - with valuable consideration
e) Commutative - equal value is exchanged for equal value
f) Consensual - meeting of minds makes a perfect contract of sale but
needs delivery to consummate.
g) Title & not a mode - title gives rise to an obligation to transfer; it is a
mode w/c actually transfers ownership
3. Distinguished from other Contracts:
a) Donation
i. donation is gratuitous; sale is onerous
ii. donation is formal contract; sale is consensual
Page 118 of 230

5. IN WHAT CASES MAY MORAL DAMAGES BE RECOVERED (enumeration not

exclusive):
a.
b.
c.
d.
e.
f.
g.
h.
i.

Criminal offense resulting in physical injuries

Quasi-delicts causing physical injuries
Seduction, abduction, rape or other acts of lasciviousness
Adultery and concubinage
Illegal or arbitrary detention or arrest
Illegal search
Libel, slander or other form of defamation
Malicious prosecution
Acts mentioned in art 309 of the RPC relating to disrespect of the
dead and interference with funeral
j. Acts and actions referred to in arts 21, 26, 27, 28, 29, 30, 32, 34
and 35
k. The parents of the female seduced, abducted, raped, or abused
l. Spouse, descendants, ascendants and brother and sisters for acts
mentioned in art 309
m. Art 2220 - in cases of willful injury to property or breaches of
contract where defendant acted fraudulently or in bad faith
Page 115 of 230

Bar Question (2004,2005). DT and MT were prominent members of the

frequent travelers club of FX Airlines. In Hong King, the couple were assigned
seats in the Business Class for which they had bought tickets. On checking in,
however, they were told they were upgraded by computer to First Class for the
flight to manila because the Business Section was overbooked.
Both refused to transfer despite better seats, food, beverage and other
services in First Class. They said they had guests in Business Class they should
attend to. They felt humiliated, embarrassed and vexed, however, when the
stewardess allegedly threatened to offload them if they did not avail of the
upgrade. Thus they gave in, but during the transfer of luggage DT suffered pain
in his arm and wrist. After arrival in Manila, they demanded an apology from
FXs management as well as indemnity payment. When none was forthcoming,
they sued the airline for a million pesos in damages.
Is the airline liable for actual and moral damages? Why or why not?
Explain briefly.

Answer: FX Airlines committed breach of contract when it upgraded DT and MT,

over their objections, to First Class because they had contracted for Business
Class passage. However, although there is a breach of contract, DT and MT are
entitled to actual damages only for such pecuniary losses suffered by them as a
result of such breach. There seems to be no showing that they incurred such
pecuniary loss. There is no showing that the pain in DTs arm and wrist resulted
directly from the carriers acts complained of. Hence, they are not entitled to
actual damages. Moreover, DT could have avoided the alleged injury by
requesting the airline staff to do the luggage transfer as a matter of duty on their
part. There is also no basis to award moral damages for such breach of contract
because the facts of the problem do not show bad faith or fraud on the part of
the airline (Cathay Pacific v. Vasquez, 399 SCRA 2007 [2003]). However, they
may recover moral damages if the cause of action is based on Article 21 of the
Civil Code for the humiliation and embarrassment they felt when the stewardess
threatened to offload them if they did not avail of the upgrade.
Bar Question (2006). 1. Under Article 2219 of the Civil Code, moral damages
may be recovered in the cases specified therein, several of which are
enumerated below. Choose the case wherein you cannot recover moral
damages. Explain.
a) A criminal offense resulting in physical injuries
b) Quasi-delicts causing physical injuries
c) Immorality or dishonesty
d) Illegal search
e) Malicious prosecution

Answers:
(1) Moral damages may not be recovered in (c) immorality or dishonesty
because it is not included in the enumeration of Art. 2219 of the CC.
Page 116 of 230

(2) Moral damages may be recovered in all of the five instances enumerated
above. While immorality and dishonesty are not included in Art. 2219 of
the Civil Code, the same article provides that moral damages may be
recovered in the following analogous cases. Art. 2219 (10) provides and
includes: Acts and actions referred to in Art. 21.... Art 21 provides: 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 damages. Immorality or dishonesty is analogous to acts contrary
to morals and therefore covered by Art 2219.
Nominal Damages
1. Concept: Adjudicated in order that a right of the plaintiff, which has been
violated or invaded by the defendant, may be vindicated or recognized, and not
for the purpose of indemnifying the plaintiff for any loss suffered by him
2. ELEMENTS:
a. Plaintiff has a right
b. Right of plaintiff is violated
c. Purpose is not to identify but vindicate or recognize right violated
3. RULE: It cannot co-exist with compensatory damages. An award of nominal
damages precludes the award of temperate or moderate damages.
Temperate or Moderate Damages
1. Amount: More than nominal but less than compensatory where some
pecuniary loss has been suffered but its amount can't be proved with certainty
due to the nature of the case.
2. REQUISITES:
a. Some pecuniary loss
b. Loss is incapable of pecuniary estimation
c. Must be reasonable
Liquidated Damages
1. Those agreed upon by the parties to a contract, to be paid in case of breach
thereof
2. WHEN LIQUIDATED DAMAGES MAY BE EQUITABLY REDUCED:
a. iniquitous or unconscionable
b. partial or irregular performance
Exemplary or Corrective Damages
1. CONCEPT: imposed by way example or correction for the public good, in
addition to the moral, temperate, liquidated to compensatory damages
Page 117 of 230