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C 0 N N 1 5 5 1 0 N
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C 0 R E G R O UP
R a n i a3 o y a
EdeICruz R o m u a I d o M e n z o n 3 r.
M a iSu a r e z
Diana Gervacio
T 86 ASUP¢e
A yp p a B i ap s o n
C 0 PI PI ITT E E H E A D
S P r o f. C a r o I i n a A u s t r i a
P r o f. S o I o m o n L u m b a
P r o f . R o b e r t o D i o
Kristine Bongcaron P r o f. G w e n G re c i a - D e Ve r a
Michelle Dy r ¢ u i r ¥ f D I T O RS
Patrich Leccio
M i c h e I I e A r i a s
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OBLIGATIONS
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CONTRACTS
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PRIVATE
INTERNATIONAL LAW
PERSONS & FAMILY RELATIONS
Table of Contents
SUCCESSION
Table of Contents
OBLIGATIONS
Table of Contents
CONTRACTS
Table of Contents
Chapter I. Introduction................................427
Chapter XI. Property....................................447
Chapter II. Jurisdiction................................429 I. Controlling Law—Lex Situs/Lex Rei
I. Bases of Exercise of Judicial Jurisdiction Sitae 447
429 II. Exceptions to Lex Situs.....................447
II. Exercise of Jurisdiction.....................429 III. Situs of Certain Properties................447
III. Ways of Dealing with Jurisdiction in a
Conflicts Problem......................................430 Chapter XII. Contracts.................................449
I. Extrinsic Validity of Contracts...........449
Chapter III. Choice of Law...........................431 II. Extrinsic Validity of Contracts...........449
I. Approaches to Choice of Law...........431 III. Capacity to Enter Into Contracts.......449
IV. Choice of Law Issues in Conflicts
Chapter IV. Characterization.......................433 Contracts Cases........................................449
I. Types of Characterization.................433 V. Limitation Choice of Law...................450
II. Depecage.........................................433 VI. Applicable Law in the Absence of
Effective Choice.........................................450
Chapter V. Renvoi........................................434
I. Definition...........................................434 Chapter XIII. Succession.............................451
II. Ways of Dealing with Renvoi............434 I. Extrinsic Validity (Arts. 17, 815-817, CC)
451
Chapter VI. Notice and Proof of Foreign Law II. Intrinsic Validity.................................451
.......................................................................435 III. Interpretation of Wills........................451
I. Proof of Foreign Law.........................435 IV. Revocation........................................451
II. Exceptions to the Application of Foreign V. Probate.............................................451
Law 435 VI. Administration of Estates..................452
VII. Trusts............................................452
Chapter VII. Nationality...............................436
I. Determination of Nationality..............436 Chapter XIV. Torts and Crimes...................453
II. Procedure for Naturalization.............436 I. Torts..................................................453
III. Loss of Philippine Citizenship...........437 II. Crimes..............................................454
IV. Problems in Applying the Nationality
Principle.....................................................438 Chapter XV. Torts and Crimes....................455
I. Personal Law of Corporations...........455
Chapter VIII. Domicile..................................439 II. Domicile/Residence of Corporations 455
I. Domicile............................................439 III. Jurisdiction Over Foreign Corporations
II. Comparative Merits and Demerits of 455
Domicile and Nationality............................440 IV. Right of Foreign Corporations to Bring
Suit 456
Chapter IX. Principles on Personal Status
and Capacity................................................441 Chapter XVI. Foreign Judgments...............457
I. Definition...........................................441 I. Recognition v. Enforcement..............457
II. Beginning and End of Personality.....441 II. Bases of Recognition and Enforcement
III. Absence............................................441 457
IV. Name................................................442 III. Policy of Preclusion Underlying
V. Age of Majority..................................442 Recognition and Enforcement...................457
VI. Capacity............................................442 IV. Requisites for Recognition or
Enforcement..............................................457
Chapter X. Family Relations.......................443 V. Procedures for Enforcement.............457
I. Marriage............................................443 VI. Effect of Foreign Judgment in the
II. Divorce and Separation....................445 Philippines.................................................458
III. Annulment and Declaration of Nullity
445 IV.................................Parental Relations
446
V. Adoption............................................446
BAR 0PERAT10N5
C 0 N N 1 5 5 1 0 N
2 0 1 0
C 0 R E G R O UP
R a n i a3 o y a
EdeICruz R o m u a I d o M e n z o n 3 r.
M a iSu a r e z
Diana Gervacio
T 86 ASUP¢e
A yp p a B i ap s o n
C 0 PI PI ITT E E H E A D S
Kristine Bongcaron
Michelle Dy
Patrich Leccio
M i c h e I I e A r i a s
C a m i I I e M a r a n a n
A n g e I a S a n d a Io
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i I I H e r n a n d e z
S £ C it £ T A e î A r
C h a r i ss e M e n d oza
L 0 G í 5 T ł C 5
Dahlia Salam at
V i k to r F o n t a n i I Ia
Ł A Y 0 U T
Kae Guerrero
G i n
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CIVIL LAW REVIEWER TABLE of CONTENTS
the latter implies that of the former. The Complete respiration = test/sign of
capacity or incapacity of persons depends independent life
upon the law. Both juridical capacity and 4
capacity to act are not rights but qualities of Note: For a fetus that had an intra-uterine life
7. Absence
B. Kinds of Domicile
Chapter II. Citizenship and Domicile
(asked in ’75, ’81, ’87, ’93, ’05 and ’08 bar
1. Domicile of Origin 8
exams)
Domicile of parents of a person at the
II. Domicile
1. Physical Presence
2. Intent to remain permanently (animus
manendi)
CIVIL LAW REVIEWER Chapter III. MARRIAGE
Absence Defect
Effect VOID VOIDABLE
Illustration - marriage - consent of
entered into by either party
a person <18 was obtained
(Art 35 (1)) through fraud,
force,
- marriage intimidation or
entered into by undue
persons of the influence
same sex (Art 45 (3)
(Jones (4)FC)
v
Hallahan)
- marriage
contracted
through mistake
of one
contracting
party as to the
identity of the
other
(Art 35 (5))
Absence Irregularity
Effect VOID No effect on
validity but party
responsible will
be liable.
Illustration - Marriage is - lack of valid
void when notification of
solemnized by a both parties
priest not duly desiring a
authorized by his ceremony in a
Church to remote place
solemnize was held to be
marriage. only a mere
(Art 7 FC) IRREGULARITY
(Navarro vs.
Domagtoy 1996)
Marriage License—
1. Marriages Exempt from marriage
license requirement (AREC)
a. Marriage in Articulo mortis (Art. 27, FC)
b. Marriage in Remote and
inaccessible places (Art. 28, FC)
c. Marriages by Muslims and Ethnic
cultural minorities provided they are
solemnized in accordance with
their customs, rites or practices.
(Art. 33, FC)
d. Marriage by parties who have
Cohabited for at least 5 years
without any legal impediment. (Art.
34, FC, Ninal v
Badayog (2000))
Absence Irregularity
Effect VOID No effect on
validity but party
responsible will be
liable.
Illustration - Issuance - mere
of the Civil IRREGULARITIES
Registrar of a in the marriage
CERTIFICATE license, such as a
Absence Irregularity a. Appearance of contracting parties
DUE SEARCH typographical personally before the solemnizing officer
AND error, do not affect (Art 3 FC) 11
INABILITY TO the validity of a b. Personal declaration that they take each
I. Grounds
Connected Provisions—
As to Subsequent Upon
Burden of Proof: two successive marriages,
effect on marriage is reappearance,
presumption on validity of 2nd marriage and subsequen automatically judicial proceeding
burden on party ATTACKING VALIDITY OF 2 ND t marriage terminated by the is necessary to
MARR. PRESUMPTION in favor of recording of an declare marriage
INNOCENCE prevails over PRESUMPTION of affidavit of null and void
CONTINUANCE OF LIFE OF 1ST SPOUSE & reappearance of the
MARITAL RELATIONS. absent spouse
VI. Jurisdiction
1. Proceedings for legal separation shall be Van Dorn v. Romillo, 139 SCRA 139 (1985)
terminated at whatever stage. (Art. 66, FC) Before the effectivity of the FC, the SC
2. If there is a final decree of legal separation, applied Article 15 of the CC, from the
it shall be set aside. (Art. 66, FC) foreigner’s perspective, to decree the validity
3. The separation of property and forfeiture of of a divorce with respect to the Filipino
share of guilty spouse shall subsist, unless spouse to prevent the unjust result to the
the spouses agree to revive their former Filipino spouse as the alien spouse is
property regime or to institute another already capacitated to remarry.
property regime. ( Art. 66 cf. Art. 67, FC)
4. Joint custody of children is restored. Quita v. Dandan, 300 SCRA 406 (1998)
5. The right to intestate succession by guilty The time of obtaining foreign citizenship is
spouse from innocent spouse is restored. necessary to determine the validity of
The right to testamentary succession divorce obtained by the spouse who applied
depends on the will of the innocent spouse. for foreign citizenship. It must be
ascertained that when that spouse obtained
the divorce, he/she was no longer bound by
VII. Divorce Philippine domestic law
(asked in ’87, ’90, ’96, ’97, ’99, ’02, ’06 bar
Llorente v. CA, 345 SCRA 592 (2000)
exams)
A 2nd marriage obtained by a Filipino who is
already a US citizen at the time of the
General Rule—
divorce and the remarriage makes the 2 nd
Divorce is not allowed in the Philippines and
marriage completely valid.
even for Filipinos abroad.
Garcia v. Recio, 366 SCRA 437 (2001)
Exception—
Philippine courts do not take cognizance of
Foreign and Muslim divorces.
foreign laws. The foreign law granting
divorce as well as the nature of the divorce
Foreign Divorces (asked in ’09 bar exam)—
granted (w/n it was absolute) must be
proven.
Art. 15, Civil Code. Laws relating to family rights and
duties, or to the status, condition and legal capacity of
the persons are binding upon citizens of the Republic vs. Orbecido, (2005)
Philippines, even though living abroad. The period of reckoning to determine
citizenship for the purpose of the application
The Nationality Theory of Jurisdiction / of Art.26 par.2 is the time of securing a
Nationality Principle applies to personal divorce.
rights.
Muslim Divorces—
2. Judicial authorization may be obtained when the
Presidential Decree 1083 (Code of Muslim consent of one spouse is required by law for any
Personal Laws) transaction of the other (subject to Art. 239), and 27
and
rules
3. Profits Divided equally between spouses, Depends upon respective capitals of
irrespective of the amount of capital that partners, or upon their agreement
they bring into marriage
4. Equality No equality between spouses in control, General rule is that all partners have
management, and disposition, because equal rights in administration,
the law grants the husband some management, and control of
predominance. partnership.
5. Personality No juridical personality Considered a juridical person
6. Commencement At precise moment of celebration of At the time agreed upon by partners
marriage
7. Regulation By law By agreement of parties; subsidiarily,
by law
8. Purpose Not particularly for profit For profit
9. Causes Death, legal separation, annulment, Death, insolvency, civil interdiction,
JDN, judicial separation of property termination of term, express will of any
for dissolution partner, etc. (Arts 1830-1931)
10. Effect of death Dissolution of partnership Surviving partners may choose to
of a partner continue partnership
11. Division of Only upon dissolution There can be division of profits without
properties dissolution
12. Management Joint; in case of disagreement, the Same as individual partners, except
husband’s decision shall prevail, wife when one or more partners designated
has recourse to courts as managers.
CPG ACP
1. Property acquired Each spouse retains his/her property; Properties become part of community
before marriage. only fruits part of conjugal property property
2. Property acquired Part of conjugal property Becomes community property
during marriage
3. Upon dissolution Separate properties are returned; net Net remainder of ACP divided equally
of marriage profits divided between spouses or between spouses or heirs
heirs
4. Basis Capital and properties of spouses kept Mutual trust and confidence between
separate and distinct from benefits; spouses; fosters oneness of spouses
insurmountable obstacle to
presumption of solidarity
5. Liquidation Exclusive properties will have to be Easier to liquidate because net
identified and returned, and remainder of community properties are
sometimes, identification is difficult. simply divided between spouses or
heirs.
B. Husband and Wife Place in Common 4. Share of either spouse in hidden treasure,
Fund (PIPF-EC) (Art. 106) whether as finder or owner of property
1. The proceeds, products, fruits, and income where treasure is found 35
of their separate properties; 5. Acquired through occupation such as
Chapter IX. The Family and the Family stranger takes the case out of the ambit of
Home FC 151.
41
B. General Rule
B. Exceptions in the exemption of the
For a suit between members of the same family family home from execution (Art. 156)
to prosper, the following are required:
1. Earnest efforts towards a compromise have 1. Nonpayment of taxes.
been made 2. Debts incurred prior to the constitution of the
2. Such efforts have failed family home.
3. Such earnest efforts and the fact of failure 3. Debts secured by mortgages on the
must be alleged premises before or after such constitution.
Note: The case will be dismissed if it is shown 4. Debts due to laborers, mechanics,
that no such efforts were made. architects, builders, materialmen and others
who have rendered service or furnished
material for the construction of the building.
C. Exceptions to the general rule
(VJLAFF)
C. Beneficiaries of the family home (Art.
1. Civil status of persons, 154)
2. Validity of marriage or a legal separation,
3. Any ground for legal separation, 1. Husband and wife, or an unmarried person
4. Future support, who is the head of the family
5. Jurisdiction of courts, 2. Parents (may include parent-in-laws),
6. Future legitime ascendants, descendants, brothers and
sisters (legitimate/illegitimate), who are living
Hontiveros v. RTC, (1999) in the family home and who depend on the
Whenever a stranger is a party in a case head of the family for support
involving family members, the requisite
showing of earnest efforts to compromise is Requisites to be a beneficiary (RLD)—
no longer mandatory, as such inclusion of a 1. The relationship is within those
enumerated
2. They live in the family home
3. They are dependent for legal support on the Versola v. Mandolaria, (2006)
head of the family The proof that the house is the family home
must be alleged against creditors; Applied 42
Requirements for the sale, alienation, the rule in Art. 160, FC.
Chapter X. Paternity and Filiation b. And under Art. 53 (the second marriage
of a widow or widower who has not
delivered to his or her children by his or 43
KINDS OF FILIATION her first marriage the legitime of said
1. Spouses;
2. Legitimate ascendants and descendants;
3. Parents and their children (legitimate
and illegitimate) and the children of
the latter (legitimate and illegitimate);
4. Legitimate brothers and sisters, whether of
full or half-blood; B. Order of priority if there are multiple
5. Illegitimate brothers and sisters, EXCEPT recipients (Sempio-Diy)
when the need for support of one (of age) is 52
1. Observe order in Article 199 (SDAB);
due to a cause imputable to his/her fault or
[NOTE: De facto separation does not affect the Lacson v. Lacson, (2006)
ACP, except that the spouse who leaves the Acknowledgment of and commitment to
conjugal home without just cause shall not be comply with support obligation through a
entitled to support (Art. 100).] note in his own handwriting is proof that a
demand was made.
I. Parental Authority
(asked in ’94, ‘03 and ’05 bar exams)
(patria potestas):
It’s 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 this under certain circumstances
(Manresa).
Liability of parents for torts committed by St. Mary’s Academy v. Carpitanos, (2002)
their minor children (Art. 221 FC; Art. 2180 The special parental authority and
CC)— responsibility applies to all authorized
Parents and other persons exercising activities, whether inside or outside the
parental authority are civilly liable for the premises of the school, entity or institution.
torts of their unemancipated children:
Provided they are living in their Liability of those exercising special parental
company, and authority over the child (Art. 219 FC)—
Subject to the appropriate defenses 1. They are principally and solidarily liable
provided by law, like observing the for damages caused by the acts or missions
diligence of a good father of a family to of the minor child while under their
prevent the damage (Libi v. IAC, 1992) supervision, instruction or custody.
If the minor child is, therefore, not living with HOWEVER, this liability is subject to the
the parents but has been entrusted to the defense that the person exercising parental
care of other persons, or is an intern in authority exercised proper diligence.
school, the liability does not apply. 2. The parents and judicial guardians of the
This liability of the parents and those minor or those exercising substitute parental
exercising parental authority over the child is authority over the minor are subsidiarily
solidary and primary and direct, not liable for said acts and omissions of the
subsidiary minor.
Art. 3, PD603—
to be born well
right to a wholesome family life
right to a well-rounded development
right to a balanced diet, adequate clothing,
shelter, proper medical attention, and all
basic physical requirements of a healthy life
raised in an atmosphere of morality and
rectitude
education commensurate to his abilities
full opportunities for a safe and wholesome
recreation
protection against exploitation and other bad
influences
right to the care, assistance and protection
of the State
right to an efficient and honest government
CIVIL LAW REVIEWER Chapter XIV. FUNERALS
EdeICruz R o m u a I d o M e n z o n 3 r.
M a iSu a r e z
Diana Gervacio
T 86 ASUP¢e
A yp p a B i ap s o n
C 0 PI PI ITT E E H E A D S
Kristine Bongcaron
Michelle Dy
Patrich Leccio
M i c h e I I e A r i a s
C a m i I I e M a r a n a n
A n g e I a S a n d a Io
Ł € C I u ü e S
L i I i b e t h P e r e z
H O C K B A R
i I I H e r n a n d e z
S £ C it £ T A e î A r
C h a r i ss e M e n d oza
L 0 G í 5 T ł C 5
Dahlia Salam at
V i k to r F o n t a n i I Ia
Ł A Y 0 U T
Kae Guerrero
G i n
n0Tf£
S U C C E S S I ON
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CIVIL LAW REVIEWER TABLE of CONTENTS
SUCCESSION
Table of Contents
SUCCESSION
II. Opening of Succession (Art. 777, CC) I. Concept of Partition............................83
59 II. Effects of Partition...............................84
III. Kinds of Succession (Art. 778, CC).....59 III. Nullification of Partition.......................84
IV. Heirs...................................................60 IV. Important Periods in Partition..............85
Chapter II. Testamentary Succession..........61 Chapter VI. Application of the Important
I. Concept..............................................61 Concepts through Sample Computational
II. Testamentary Capacity.......................61 Problems........................................................86
III. Formalities of Wills..............................61 I. Institution of Heirs...............................86
IV. Qualifications of Witnesses to a Notarial II. Legitimes............................................86
Will 62 III. Intestate Succession...........................87
V. Qualifications of Witnesses to a Notarial IV. Accretion.............................................87
Will 63 V. Collation..............................................88
VI. Institution of Heirs...............................63
VII. Applicable Principles of Private
International Law.........................................63
VIII. Codicils and Incorporation by
Reference....................................................64
IX. Revocation of Wills and Testamentary
Dispositions.................................................64
X. Allowance and Disallowance of Wills 65
XI. Substitution of Heirs............................66
XII. Legitimes........................................67
XIII. Preterition.......................................69
XIV. Reserva Troncal.............................69
XV. Disinheritance.................................70
XVI. Legacies and Devises....................71
SUCCESSION
Kristine Bongcaron DEFINITION OF SUCCESSION
Emil Lunasco OPENING OF SUCCESSION
Lead Writers
KINDS OF SUCCESSION
Alex Lopez KINDS OF HEIRS 59
Writer
SUCCESSION
CIVIL LAW I. Definition of Succession (Art. 774,
CC)
Kristine Bongcaron
Patricia Tobias It is a mode of acquisition
Subject Editors by virtue of which the property, rights and
obligations
ACADEMICS COMMITTEE
to the extent of the value of the inheritance,
Kristine Bongcaron of a person
Michelle Dy are transmitted through his death to another
Patrich Leccio
Editors-in-Chief or others
either by his will, or by operation of law
PRINTING & DISTRIBUTION a process of transmission of property,
Kae Guerrero rights, and obligations not extinguished by
death (Balane)
DESIGN & LAYOUT
Pat Hernandez
Viktor Fontanilla II. Opening of Succession (Art. 777, CC)
Rusell Aragones
Romualdo Menzon Jr.
Rania Joya The rights to succession are transmitted
from the moment of the death of the
LECTURES COMMITTEE decedent.
Michelle Arias However, a person may be “presumed”
Camille Maranan dead for the purpose of opening his
Angela Sandalo succession (Rules on presumptive death
Heads in Arts. 390-391, CC). In this case,
Katz Manzano Mary Rose Beley succession is only of provisional character
Sam Nuñez Krizel Malabanan because there is always a chance that the
Arianne Cerezo Marcrese Banaag
Volunteers
absentee may still be alive.
60
IV. Heirs
SUCCESSION
Those who are called to the whole or to an
aliquot portion of the inheritance either by
will or by operation of law
Chapter II. Testamentary Succession disease, injury or other cause. (Art. 799,
CC)
Soundness of mind is presumed (Art.
Concept of Testamentary Succession 800, CC)
Testamentary Capacity
Formalities of Wills
III. Formalities of Wills 61
Qualifications of Witnesses to a Notarial Will
SUCCESSION
Amending a Will
Institution of Heirs Kinds of Wills—
Applicable Principles of Private International Law 1. Notarial will- Ordinary or attested will (Arts.
Codicils and Incorporation by Reference 804-808, CC)
RevocationofwillsandTestamentary disposition 2. Holographic will (Arts. 804 and 810, CC)
Allowance and Disallowance of wills
Substitution of Heirs
Legitimes Common Requirements for Both Kinds of
Preterition Wills (Art. 804, CC) —
Reserva Troncal 1. Every will must be in writing; and
Disinheritance
2. Executed in the language known to the
Legacies and Devices
testator.
_
SUCCESSION
Jaboneta vs. Gustilo, (1906): Not b. Testator shall personally designate two
whether they actually saw each other persons to read the contents and
sign, but whether they might have seen communicate it to him in some
each other sign had they chosen to do practicable manner.
so considering their mental and physical 2. Blind (Art. 808, CC)
condition and position with relation to a. The will shall be read to the testator
each other at the moment of inscription twice - By one of the subscribing
of each signature. witnesses and by the notary public
acknowledging the will.
5. MARGINAL SIGNATURES: Testator or his b. In the case of Garcia vs. Vasquez
representative shall write his name, and the (1970), the court considered a testator
witnesses shall sign each and every page suffering from Glaucoma as legally
except the last page (Art. 805, CC) blind.
_
Exceptions:
When the will consists of only one Requisites for a Holographic Will—
page 1. In writing (Art. 804, CC)
Abangan vs. Abangan, (1919): 2. In a language known to the testator (Art.
When the will consists of only two 804, CC)
pages, the first of which contains all 3. Entirely written, dated and signed in the
dispositions and is signed at the hand of the testator himself (Art. 810, CC)
bottom by the testator and the
witnesses, and the second page
contains only the attestation clause IV. Qualifications of Witnesses to a
duly signed at the bottom by the Notarial Will
witnesses.
Qualifications (Art. 820, CC)—
In the case of Matias vs. Salud (1957),
1. Of sound mind
the use of thumbprint was allowed.
2. Aged 18 years or over
3. Not blind, deaf or dumb
Icasiano vs. Icasiano, (1964): The
4. Able to read and write
inadvertent failure of one witness to affix
his signature to one page of a
Disqualifications (Art. 821, CC)—
testament, due to the simultaneous
1. Person not domiciled in the Philippines
lifting of two pages in the course of
2. Those who have been convicted of
signing, is not per se sufficient to justify
falsification, perjury, or false testimony.
denial of probate.
SUCCESSION
Holographic Codicil; or
Additional dispositions Three principles in institution of heirs—
below the signature, 1. Equality of heirs (Art. 846, CC)
dated and signed in the
hand of the testator. a. Heirs instituted without designation of
shares shall inherit in equal parts
Codicil (Art. 825, CC)- it is a supplement b. NOTE: This applies even to institution of
or addition to a will, made AFTER the full and half-blood siblings.
execution and annexed to be taken as
2. Individuality of institution (Art. 847, CC)
part thereof, by which any disposition
made in the original is explained, Example: I designate A, B, and the
added to, or altered. children of C. Unless otherwise stated, if
C has two children, the estate will be
distributed in four equal parts.
Effect of insertion written by another person
3. Simultaneity of institution (Art. 849, CC)
on the validity of a holographic will)—
Example: I designate my brother A and
When made Effect his children. A and his children will
After the execution, Insertion considered not inherit at the same time, unless
without consent of written. Validity cannot be otherwise expressly stated that they will
testator defeated by the malice or inherit successively.
caprice of a third person
After execution, with Will is valid, insertion is Institution based on a false cause (Art. 850,
consent void. CC)—
After execution, validated Insertion becomes part of GENERAL RULE EXCEPTION
by testator’s signature the will. Entire will False cause is If the testator would
becomes void because it
is not wholly written by
considered not written not have made the
the testator. and the institution will institution had he
Contemporaneous to the Will is void because it is take effect known the false cause,
execution of the will not written entirely by the the institution would
testator NOT take effect
SUCCESSION
Outside of the 1. Law of the country
Philippines in which it is executed Reference
Filipino (Art. 17, CC); or
2. Philippine Law (Art. Codicil (Arts. 825-826, CC)—
815, CC)
1. It is a supplement or addition to a will,
Alien Philippines 1. Philippine Law; or
2. Law of the country 2. made after the execution of a will,
of which testator is a 3. and annexed to be taken as a part of the
citizen or subject (Art. will,
817, CC) 4. by which any disposition made in the original
Outside of the 1. Law of the place will is explained, added to, or altered.
Philippines where the will is 5. in order that it may be effective, it shall be
executed (Art. 17, executed as in the case of a will.
CC); or
2. Law of the place Incorporation by Reference; Requisites (Art,
where the testator
resides; or
827, CC)—
3. Law of the 1. The document or paper referred to in the will
testator’s country; or must be in existence at the time of the
4. Philippine Law (Art. execution of the will.
816, CC) 2. The will must clearly describe and
identify the same, stating among other
Aspects of the Will Governed by the National things the number of pages thereof.
Law of the Decedent— 3. It must be identified by clear and
1. Order of succession; satisfactory proof as the document or paper
2. Amount of successional rights; referred to therein; and
3. Intrinsic validity of testamentary 4. It must be signed by the testator and the
provisions; and witnesses on each and every page,
4. Capacity to succeed. except in case of voluminous books of
account or inventories.
Joint Will—
1. A single testamentary instrument,
2. Which contains the wills of two or more IX. Revocation of Wills and
persons, Testamentary Dispositions
3. Jointly executed by them,
4. Either for their reciprocal benefit or for the
benefit of a third person. Modes of Revocation (Art. 830, CC)—
1. By implication of law; or
Mutual Wills— 2. By the execution of a will, codicil or other
1. Executed pursuant to an agreement writing executed as provided in the case of
between two or more persons, wills; or
2. Jointly executed by them, 3. By burning, tearing, canceling, or
3. Either for their reciprocal benefit or for the obliterating the will with the intention of
benefit of a third person. revoking it, by the testator himself, or by
some other person in his presence, and
Reciprocal Wills— by his express direction.
1. Testators name each other as beneficiaries
in their own wills, Note: The act contemplating revocation must be
2. under similar testamentary plans done at any time before the death of the
testator. The right of revocation cannot be
Note: A will that is both joint and mutual is one waived or restricted. (Art. 828, CC)
executed jointly by two or more persons,
the provisions of which are reciprocal and
which shows on its face the devises are
Law Governing Revocation (Art. 829, CC)— extrinsic validity of such wills may be
examined.
Place of Testator’s Governing
Revocation Domicile Law Exceptions:
Philippines, or Philippine Law a. Acain vs Diongson (1987): When the will
Philippines some other is intrinsically void, on its face such that 65
country to rule on its formal validity would be a
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Philippines Philippine Law futile exercise
1. Law of the b. Valera vs. Inserto, (1987): Claimants are
place where all heirs, and they consent, either,
the will was expressly or impliedly, to the submission
Foreign made; or of the question of intrinsic validity to the
Country 2. Law of the court.
Outside the place in which c. Pastor vs. CA, (1983): Probate court
Philippines the testator may pass upon the title thereto, but such
had his determination is provisional and not
domicile at the conclusive, and is subject to the final
time of decision in a separate action to resolve
revocation title.
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fideicommissary of the second heir. (Art.
863, CC)
Definition of Substitution (Art. 857, CC)—
1. It is the appointment of another heir, Requisites of a Fideicommisary Substitution
2. So that he may enter into the inheritance in (Arts. 863-865, CC)—
default of the heir originally instituted. 1. A Fiduciary or First Heir instituted is
entrusted with the obligation to preserve
Classes of Substitution— and to transmit to a Fideicommissary
1. Simple or Common: The testator may Substitute or Second Heir the whole or part
designate one or more persons to substitute of the inheritance.
the heir/s instituted in case the heirs should: 2. The substitution must not go beyond one
a. die before him (predecease), degree from the heir originally instituted.
b. should not wish to accept the 3. The Fiduciary Heir and the
inheritance (repudiation), or Fideicommissary are living at the time of
c. should be incapacitated to accept the the death of the testator.
inheritance (incapacitated). (Art. 859, 4. The fideicommissary substitution must be
CC) expressly made.
2. Brief or Compendious (Art. 860, CC) 5. The fideicommissary substitution is imposed
a. Brief – Two or more persons were on the free portion of the estate and
designated by the testator to substitute never on the legitime
for only one heir
b. Compendious – One person is Note:
designated to take the place of two or a. Palacios vs. Ramirez (1982): “Degree”
more heirs refers to degree of relationship.
3. Reciprocal b. PCIB vs. Escolin (1974): In the absence
If the heirs instituted in unequal shares of an obligation on the part of the first
should be reciprocally substituted, the heir to preserve the property for the
substitute shall acquire the share of the second heir, there is no fideicommissary
heir who dies, renounces, or is substitution.
incapacitated, unless it clearly appears
that the intention of the testator was Effects of predecease of the first
otherwise. If there is more than one heir/fiduciary or the second
substitute, they shall have the same heir/fideicommisary—
share in the substitution as the
institution. Legend:
Example (only 1 substitute): If two heirs T – Testator
are reciprocally substituted, then if one FH – First Heir / Fiduciary
of them dies before the testator dies, SH – Second Heir / Fideicommissary
renounces, or turns out to be Substitute
incapacitated, the other will get his
share, regardless of whether or not their Situation 1: If the following is the sequence
shares are equal. of death of the three parties: FH – SH – T,
Example (more than 1 substitute): A is who will inherit? The legal heirs. There is
instituted to 1/3, B to 1/6, and C to ½. If no fideicommissary substitution because FH
C dies before the testator, renounces or and SH are not living at the time of the
turns out to be incapacitated, then the testator’s death. (Art 863, CC)
other two will get his shares in the same
proportion as in the institution. A will get Situation 2: T – SH – FH, who will inherit?
twice as much as B (because his share The SH and his heirs under Art. 866, CC.
of 1/3 in the institution is twice the size This is because the SH passes his rights to
of B’s share of 1/6) his own heirs when he dies before FH.
Situation 3: FH – T – SH, who will inherit? Specific Rules on Legitimes—
No specific provision in law, but SH inherits 1. Direct Descending Line
because the T intended him to inherit. a. Rule of Preference between lines (Art
978 and 985, CC)
Those in the direct descending line
XII. Legitimes shall exclude those in the direct 67
ascending and collateral lines; and
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Definition of Legitime (Art. 886, CC)— Those in the direct ascending line
1. It is that part of the testator’s property which shall, in turn, exclude those in the
he cannot dispose of, collateral line.
2. Because the law has reserved it for his b. Rule of Proximity (Art 926, CC)
compulsory heirs. The relative nearest in degree
excludes the farther one
Classes of Compulsory Heirs (Art. 887, CC)— c. Right or representation ad infinitum in
1. Primary: Those who have precedence case of predecease, incapacity, or
over and exclude other compulsory heirs: disinheritance (Art 972 and 992, CC)
Legitimate Children and Legitimate For decedents who are Legitimate
Descendants with respect to their Children, only the Legitimate
Legitimate Parents and Ascendants Descendants are entitled to right of
2. Secondary: Those who succeed only in representation.
the absence of the Primary compulsory For decedents who are Illegitimate
heirs: Children, both the Legitimate and
a. Legitimate Parents and Legitimate the Illegitimate Descendants can
Ascendants, with respect to their represent, only with respect to the
Legitimate Children and Descendants. decedent’s illegitimate parents.
(They will inherit only in default of d. If all the Legitimate Children
legitimate children and their repudiate their legitime, the next
descendants) generation of Legitimate Descendants
b. Illegitimate Parents with respect to their may succeed in their own right.
Illegitimate Children. (They will inherit
only in default of the illegitimate and 2. Direct Ascending Line
legitimate children and their respective a. Rule of division between lines
descendants). Note that other The father and the mother shall
illegitimate ascendants are not included. inherit equally if both living. One
3. Concurring: Those who succeed together succeeds to the entire estate of the
with the primary or the secondary child if the other is dead. (Art. 986,
compulsory heirs:
CC)
a. Widow or Widower / Surviving Spouse
(Legitimate) In default of the mother and the
b. Illegitimate Children and Illegitimate Descendants father, the ascendants nearest in
degree will inherit. (Art. 987)
If there are more than one relative of
If the testator is a If the testator is an the same degree but of different
LEGITIMATE CHILD: ILLEGITIMATE CHILD:
1. LC and descendants 1. LC and descendants lines, one half will go to the paternal
2. In default of No. 1, LP 2. ILC and descendants ascendants and the other half to the
and ascendants maternal ascendants. (Art. 987)
3. SS 3. In default of Nos. 1-2. b. Rule of equal division
ILP only The relatives who are in the same
4. IC and descendants 4. SS
Legend: degree shall inherit in equal shares.
LC – Legitimate Children (Art 987)
ILC – Illegitimate Children
SS – Surviving Spouse
LP – Legitimate Parents
ILP – Illegitimate Parents
Summary of Legitimes of Compulsory Heirs—
(Asked in ’82, ’85, ’86, ’97, ’99, ’03, and ’05)
Surviving LC & SS ILC LP & ILP
Relatives Descendants Ascendants
1 LC alone ½ (divided by #
of children) 68
2 1 LC, SS ½ ¼
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3 LC, SS ½ (divided by # Same as
of children) share of 1
LC
4 LC, ILC ½ ½ share of 1
LC
5 1 LC, SS, ILC ½ ¼ ½ share of 1
(preferred) LC
6 2 or more LC, SS, ½ (divided by # Same as ½ share of 1
ILC of children) share of 1 LC
LC
7 LP alone ½
8 LP, ILC ¼ ½
9 LP, SS ¼ ½
1/8
10 LP, SS, ILC ¼ ½
11 ILC alone ½ (divided
by # of
children)
1/3
12 ILC, SS 1/3
(divided
by # of
children)
13 SS alone ½ or 1/3 if
marriage in
articulo
mortis
14 ILP alone ½
15 ILP, SS ¼ ¼
1/3 1/3 1/3
16 Adopter, ILC, SS (adopter)
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compulsory heir. (Reservatarios) belonging to the line from
3. 3. The compulsory heir omitted must be of which said property came.
the direct line. _
4. The omitted compulsory heir must be living
at the time of the testator’s death or must C. Reserva Minima v. Reserva Maxima
at least have been conceived before the
testator’s death. Situation—
1. The prepositus acquired property
B. Effects of Preterition (Art. 854, CC) gratuitously from an ascendant or a brother
1. The institution of the heir is annulled. or sister
2. Devises and legacies shall remain valid as 2. In his will, he institutes as his heir his
long as they are not inofficious.
ascendant (who is also a compulsory heir)
3. If the omitted compulsory heir should die
before the testator, the institution shall be such that the ascendant receives half of the
effective, without prejudice to the right of estate by operation of law as legitime and
representation. the other half by testamentary disposition
3. Neri vs. Akutin (1941): When there are
no devises and legacies, preterition will Problem—
result in the annulment of the will and
Will the property acquired gratuitiously by
give rise to intestate succession.
the prepositus from the source be treated as
XIV. Reserva Troncal acquired by the ascendant-heir by operation
(Asked in ’79, ’82, ’85, and ’87) of law (legitime) and therefore reservable or
by testamentary disposition?
A. Concept of Reserva Troncal (Art. 891,
CC) Two Views—
1. Reserva Maxima: The entire property will be
Situation—
considered acquired as legitime and
1. A descendant (prepositus) inherits or
acquires property from an ascendant therefore wholly reservable
(source) by gratiutious title or from a brother 2. Reserva Minima: One half is reservable, the
or sister other half is not subject to reserva troncal
2. The same property is inherited by another (Tolentino, p. 284)
ascendant (reservista) or is otherwise _
acquired by him by operation of law from the
said descendant (prepositus) D. Extinguishment of the Reserva
(Tolentino, p. 300-305) (LDD-RRP)
Then an obligation arises— 1. Loss of the reservable property
The said ascendant (reservista) must
2. Death of the reservista
reserve the property for the benefit of the
relatives of the deceased descendant within 3. Death of all the relatives within the third
the third civil degree and who belong to the degree belonging to the line from which the
line from which the said property came property came
(reservatorios). 4. Renunciation by the reservatorios
_ 5. Registration of the reservable property
under the Torrens system as free
B. Requisites for Reserva Troncal
6. Prescription, when the reservista holds the
(Chua vs. CFI and Gonzales vs. CFI)
1. That the property was acquired by a property adversely against the reservatorios,
descendant (Prepositus) from an ascendant as free from reservation
XV. Disinheritance room for doubt as to who is intended to be
(Asked in ’82, ’84, ’99, ’00, and ’08) disinherited.
2. It must be for a cause designated by law.
A. Definition of Disinheritance (Art. 915, CC) 3. It must be made in a valid will.
1. It is the act by which the testator 4. It must be made expressly, stating the cause
2. For just cause in the will itself. 70
3. Deprives a compulsory heir of his right to the 5. The cause must be certain and true, and
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legitime. must be proved by the interested heir if the
person should deny it.
B. Requisites of a Valid Disinheritance 6. It must be unconditional.
1. Heir disinherited must be designated by 7. It must be total.
name or in such a manner as to leave no
_ _ _
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It is bequeathed It is devised
STATUS OF EFFECT ON THE
Persons Charged With the Duty to Give PROPERTY GIVEN LEGACY/DEVISE
Legacies and Devises in a Will— BY LEGACY/DEVISE
1. Compulsory heir, provided, their legitimes
The thing already Ineffective
are not impaired (Art. 925, CC)
belongs to the legatee
2. Voluntary heir
or devisee at the time
3. Legatee or devisee can be charged with
of the execution of the
the duty of giving a sub-legacy or sub- will (Art. 932, CC)
devisee but only to the extent of the value of
The thing is subject to Valid only as to the
the legacy or devise given him (Art. 925,
an encumbrance or interest or
CC)
interest of another encumbrance
4. The estate represented by the executor
person (Art. 932, CC)
or administrator, if no one is charged with
Legatee or devisee Ineffective
this duty to pay or deliver the legacy or
subsequently alienates
devise in the will
the thing (Art. 933,CC)
a. If there is an administration proceeding,
After alienating the Ineffective
it constitutes a charge upon the estate.
thing, the legatee or
b. If there is no administration proceeding,
devisee subsequently
it is a charge upon the heirs.
reacquires it
gratuitously (Art. 933,
CC)
Validity and Effect of Legacy or Devise—
After alienating the Legatee or devisee
Legacy or devise of a thing belonging to
thing, the legatee or can demand
another (Art. 930, CC)
devisee acquires it by reimbursement from
onerous title (Art. 933, the heir or estate
STATUS OF PROPERTY EFFECT ON
CC)
GIVEN BY THE LEGACY/
LEGACY/DEVISE DEVISE
Testator erroneously Void
believed that the property
Different Objects of Legacies and Devises (Art. 934-944,CC)—
1. Legacy of a thing pledged or mortgaged to secure a debt (Art 934, CC)
2. Legacy of credit, or remission or release of a debt (Art 935 CC)
3. Legacy to the debtor of thing pledged by him (Art 936, CC)
4. Legacy or devise to a creditor if the testator orders the payment of a debt (Art 939, CC)
5. Alternative legacies and devises (Art 940, CC) 72
6. Legacy of generic personal property or indeterminate real property (Art 941, CC)
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7. Legacy of education (Art 944, CC)
8. Legacy of support (Art 944, CC)
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Preferential legacies or devises Legacy for Support
All Other legacies or devises pro rata Legacy for Education
Legacy/devise of Specific, determinate thing
which forms a part of the estate
All Others pro rata
Application: Application:
When the reduction is necessary to When there are no compulsory heirs and the
preserve the legitime of compulsory entire estate is distributed by the testator as
heirs from impairment whether there are legacies or devises; or
donations inter vivos or not; or When there are compulsory heirs but their
When, although, the legitime has been legitime has already been provided for by the
preserved by the testator himself there are testator and there are no donations inter
donations inter vivos. vivos.
NOTE: NOTE:
Art. 911, CC governs when there is a conflict Art. 950, CC governs when the question of
between compulsory heirs and the devisees reduction is exclusively among legatees and
and legatees. devisees themselves.
Chapter III. Intestate Succession Note: In all cases where there has been an
institution of heirs, follow the I.S.R.A.I order:
a. If the Institution fails, Substitution
Causes for Legal or Intestate Succession occurs.
The Intestate or Legal Heirs b. If there is no substitute, the right of
Fundamental Underlying Principles in Legal or Intestate Succession Representation applies in the direct 74
Relationship descending line to the legitime if the
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The right of Representation
vacancy is caused by predecease,
Order of Legal or Intestate Succession
incapacity, or disinheritance.
Concurrence in Legal or Intestate Succession
c. The right of Accretion applies to the
Outline of Intestate Shares
Order of Concurrence in the case of an Adopted Child
free portion when the requisites in Art.
1016 are present.
d. If there is no substitute, and the right of
Representation or Accretion are not
The Civil Code does not state a definition of proper, the rules on Intestate
legal or intestate succession. Art. 960 only succession shall apply.
enumerates the instances when legal
succession takes place. This enumeration is not
exclusive, as there are other instances where II. The Intestate or Legal Heirs
intestacy may occur, as listed below.
1. Relatives
a. Legitimate ascendants
b. Illegitimate parents
I. Causes for Legal or Intestate c. Legitimate children
Succession d. Illegitimate children
1. If a person dies without a will (Art 960[1]) e. Surviving Spouse
2. If a person dies with a void will (Art 960[1]) f. Brothers, sisters, nephews and nieces
3. If a person dies with a will which has (BSNN)
subsequently lost its validity (Art 960[1]) g. Other collateral relatives
4. When the will does not institute an heir (Art 2. Surviving spouse
960[2]) 3. State (through escheat proceedings)
5. When the will does not dispose of all the
property belonging to the testator. Legal
succession shall take place only with III. Fundamental Underlying Principles in
respect to the property which the testator Legal or Intestate Succession
has not disposed (Art 960[2])
6. If the suspensive condition attached to the
Rule of Preference between Lines—
institution of the heir does not happen or is
1. Those in the direct descending line shall
not fulfilled (Art 960[3])
exclude those in the direct ascending and
7. If the heir dies before the testator (Art
collateral lines;
960[3])
2. Those in the direct ascending line shall, in
8. If the heir repudiates the inheritance, there
turn, exclude those in the collateral line.
being no substitution, and no right of
accretion takes place (Art 960[3])
Rule of Proximity—
9. When the heir instituted is incapable of
The relative nearest in degree excludes the
succeeding, except in cases provided in
farther one. (Art. 962, par.1 CC), saving the right
the Civil Code (Art 960[4])
of representation when it properly takes place.
10. Preterition – Intestacy may be total or partial
depending on whether or not there are
Rule of Equal Division—
legacies or devises (Balane, p.426)
1. The relatives who are in the same degree
11. Upon the expiration of a resolutory term
shall inherit in equal shares. (Arts. 962
attached to the institution of heir (Balane,
par.2, 987 and 1006, CC)
p.426)
2. Exceptions: (Balane pp.427-428)
12. Upon fulfillment if a resolutory condition
a. the rule of preference of lines
attached to the institution of heir, rendering
b. the distinction between legitimate and
the will ineffective (Balane, p.426)
illegitimate filiation (the ratio under
present law is 2:1) (Art 983, in relation to
Article 895 as amended by Article 176
CIVIL LAW REVIEWER Chapter III. INTESTATE SUCCESSION
FC)
c. the rule of division by line in the In adoption, the legal filiation is personal and
ascending line Article 987 par.2) exists only between the adopter and the
d. the distinction between full-blood and adopted. The adopted is deemed a
half-blood relationship among brothers legitimate child of the adopter, but still
and sisters, as well as nephews and remains as an intestate heir of his natural
nieces. (Art 1006 and 1008) parents and other blood relatives. (Art. 189, 75
e. representation FC)
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Rule of Barrier between the legitimate family
and the illegitimate family (the iron-curtain
rule)— V. The Right of Representation (Art. 970,
The illegitimate family cannot inherit by intestate CC)
succession from the legitimate family and vice- (Asked in ’77, ’82, ’85, ’88, ’92, ’97, and ’07)
versa. (Art. 992, CC)
It is a right created by fiction of law;
Rule of Double Share for full blood By virtue of which the representative is
collaterals— raised to the place and degree of the person
When full and half-blood brothers or sisters, represented;
nephews or nieces, survive, the full blood shall And acquires the rights which the latter
take a portion in the inheritance double that of would have if he were living or if he would
the half-blood. (Arts. 895 and 983, CC) have inherited.
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Grandchildren inherit from the On the other hand, a legitimate child may
grandparents by right of represent either a legitimate or illegitimate
representation, if proper. parent in the inheritance of either a
legitimate or illegitimate grandparents. (Arts.
Exception— 902, 989,990)
Whenever all the children repudiate,
the grandchildren inherit in their own Representation in Adoption (Asked in ’94,
right because representation is not ’04, and ’07)—
proper. (Art 969, CC) If the adopting parent should die before
the adopted child, the later cannot
Right of representation in the collateral line represent the former in the inheritance
is only possible in INTESTATE succession. of the parents or ascendants of the
It cannot take place in testamentary adopter. The adopted child is not related
succession. to the deceased in that case, because
filiation created by fiction of law is
In determining whether or not representation exclusively between the adopter and the
is proper, apply the DOUBLE HEIRSHIP adopted. (TOLENTINO pp. 448-449)
TEST (Art. 973, CC): the representative
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and Descendants Collaterals and LC and
State LP
LP and Collaterals and LC ILC and
Legitimate ascendants State SS
ILP Collaterals and LC and ILC SS
State
SS Collaterals other than No one LC, ILC, LP, ILP
siblings, nephews and nieces Siblings
Nephews
Nieces
Siblings, All other collaterals and LC, ILC, LP, ILP SS
Nephews State
Nieces
Other collaterals within 5th Collateral more remote in LC, ILC, LP, ILP and Collaterals in the same
degree degree and SS degree
State
State No one Everyone No one
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c. Note: the nearer relative excludes the
(Art. 994/995, CC) more remote relatives.
13. Surviving spouse and illegitimate 22. State
parents Illegitimate parents get ½ and the If there are no other intestate heirs, the State
spouse gets the other ½ (by analogy with inherits the entire estate through escheat
Art. 997, CC) proceedings. (Art. 1011, CC)
14. Surviving spouse and legitimate brothers
and sisters, nephews and nieces
Surviving spouse gets ½ of the estate, while IX. Order of Concurrence in the Case of
the rest gets the other ½ with the nephews an Adopted Child (Art, 190, FC)
and nieces inheriting by representation if (Asked in ’79, ’86, ’04 and ’07)
proper. (Art. 1001, CC)
15. Surviving spouse and illegitimate
brothers and sisters, nephews and
nieces
Surviving spouse gets ½ of the estate while
the rest gets the other ½ with the nephews
and nieces inheriting by representation, if
proper; Note that all the other relatives
should be “illegitimate” because of the iron-
curtain rule. (Art. 994,CC)
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Collation the legitimes. (Arts. 1021 and 1018, CC)
It is a right by virtue of which, when two or more The heirs to whom the inheritance accrues
persons are called to the same inheritance, shall succeed to all the rights and
devise or legacy, the part assigned to one who obligations which the heir who renounced or
renounces or cannot receive his share or who could not receive it would have had. (Art.
died before the testator is added or incorporated 1020, CC)
to that of his co-heirs, co-devisees, or co-
legatees. In testamentary succession, when the right
of accretion does not take place, the vacant
Accretion happens when there is portion of the instituted heirs, if no substitute
repudiation, incapacity, or predecease of has been designated, shall pass to the legal
an heir. heirs of the testator, who shall receive it with
the same charges and obligations. (Art
It is the mechanism where the share of an 1022, CC)
heir is increased by vacant shares vacated
by heirs who cannot inherit for various Accretion shall also take place among
reasons. (RATIONALE: the decedent devisees, legatees and usufructuaries under
intended to give the property to nobody but the same conditions established for heirs.
the co-heirs.) (Art 1023, CC)
_ _ _
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succession opens; (Art 1025) and attempted against their virtue;
He must not be incapacitated or disqualified b. Any person who has been convicted of
by law to succeed. (Art 1024, par.1) an attempt against the life of the
testator, his or her spouse,
B. Who Are Incapable of Succeeding descendants, or ascendants;
c. Any person who has accused the
BASED ON UNDUE INFLUENCE OR testator of a crime for which the law
INTEREST (Art. 1027, CC) – PIGRAP prescribes imprisonment for six years or
Priest who heard the last confession of more, if the accusation has been found
the testator during his last illness, or the groundless;
minister of the gospel who extended d. Any heir of full age who, having
spiritual aid to him during the same knowledge of the violent death of the
period; testator, should fail to report it to an
Individuals, associations and officer of the law within a month, unless
corporations not permitted by law to the authorities have already taken
inherit; action; this prohibition shall not apply to
Guardian with respect to testamentary cases wherein, according to law, there is
dispositions given by a ward in his favor no obligation to make an accusation;
before the final accounts of the e. Any person convicted of adultery or
guardianship have been approved, even concubinage with the spouse of the
if the testator should die after the testator;
approval thereof; except if the guardian f. Any person who by fraud, violence,
is his ascendant, descendant, brother, intimidation, or undue influence should
sister, or spouse; cause the testator to make a will or to
Relatives of the priest or minister of the change one already made;
gospel within the fourth degree, the g. Any person who by the same means
church, order, chapter, community, prevents another from making a will, or
organization, or institution to which such from revoking one already made, or who
priest or minister may belong; supplants, conceals, or alters the latter's
Attesting witness to the execution of a will;
will, the spouse, parents, or children, or h. Any person who falsifies or forges a
any one claiming under such witness, supposed will of the decedent.
spouse, parents, or children;
Physician, surgeon, nurse, health officer C. Pardon of Acts of Unworthiness
or druggist who took care of the testator
during his last illness.
SUCCESSION
Heirs in Two Capacities (Art. 1055, CC)—
1056, CC) 1. If a person is called to the same inheritance
3. Retroactive (Art 1042, CC) as an heir by will and by law and he
repudiates the inheritance in his capacity as
Requisites (Art. 1043, CC)— a testamentary heir, he will be considered to
1. Certainty of death of the decedent have also repudiated the inheritance as a
2. Certainty of the right to the inheritance legal heir.
2. If he repudiates it as a legal heir, without his
Acceptance vs. Repudiation— being a testamentary heir, he may still
1. Acceptance involves the confirmation of accept it in the latter capacity.
transmission of successional rights, while
repudiation renders such transmission
ineffective.
2. Repudiation is equivalent to an act of
IV. Collation (Arts. 1061-1077, CC)
disposition and alienation. (Asked in ’77, ’78, ’79, and ’93)
3. The publicity required for repudiation is
necessary for the protection of other heirs A. Concept of Collation
and also of creditors. To collate is to bring back or to return to the
hereditary mass in fact or by fiction property
Forms of Acceptance (Arts. 1049 – 1050, CC) which came from the estate of the decedent,
— during his lifetime by donation or other
1. Express Acceptance – one made in a gratuitous title but which the law considers
public or private document. (Art. 1049 par. as an advance from the inheritance. (Art
1) 1061, CC)
2. Tacit Acceptance – one resulting from acts It is the act by virtue of which, the
by which the intention to accept is compulsory heir who concurs with other
necessarily implied or from acts which one compulsory heirs in the inheritance bring
would have no right to do except in the back to the common hereditary mass the
capacity of an heir. property which they may have received from
the testator so that a division may be
Examples: (Art. 1050, CC) effected according to law and the will of the
a. when the heir sells, donates or assigns testator.
his right In reducing inofficious donations, the last to
b. when the heir demands partition of the be donated should be the first to be
inheritance reduced.
c. when the heir alienates some objects of RATIONALE FOR COLLATION: If
the inheritance, etc. donations inter vivos will not be collated,
3. Implied acceptance - Within thirty days then the rule on legitimes shall be
after the court has issued an order for the circumvented or disregarded.
distribution of the estate in accordance with
the Rules of Court, the heirs, devisees and B. Operations Related to Collation
legatees shall signify to the court having Collation – adding to the mass of the
jurisdiction whether they accept or repudiate hereditary estate the value of the donation or
the inheritance; if they do not do so within gratuitous disposition.
that time, they are deemed to have accepted Imputing or Charging – crediting the
the inheritance. (Art 1057, CC) donation as an advance on the legitime (if
the donee is a compulsory heir) or on the
Forms of Repudiation (Art. 1051, CC)— free portion (if the donee is a stranger).
1. in a public instrument acknowledged before (BALANE p 522)
a notary public; or Reduction – determining to what extent the
donation will remain and to what extent it is
excessive or inofficious.
Restitution – returning or the act of exceptions
payment of the excess to the mass of
hereditary estate.
D. What to Collate
Any property or right received by gratuitous
title during the testator’s lifetime (Art 1061,
CC)
All that they may have received from the
decedent during his lifetime. (Art 1061, CC)
Expenses incurred by the parents in giving
their children a professional, vocational or
other career shall not be brought to collation
unless the parents so provide, or unless
they impair the legitime; but when their
collation is required, the sum which the child
would have spent if he had lived in the
house and company of his parents shall be
deducted therefrom. (Art 1068, CC)
Any sums paid by a parent in satisfaction of
the debts of his children, election expenses,
fines, and similar expenses shall be brought
to collation. (Art 1069, CC)
SUCCESSION
clothing and outfit, except when
they exceed 1/10 of the sum
disposable by will. (Art. 1070,
CC)
Neither shall donations to the
spouse of the child be brought to
collation; but if they have been
given by the parent to the
spouses jointly, the child shall be
obliged to bring to collation one-
half of the thing donated. (Art.
1066, CC)
SUCCESSION
2. Voluntary heir upon fulfillment of condition if
any (Art 1084, CC)
I. Concept of Partition 3. Legatee or devisee
4. Any person who has acquired interest in the
Separate, Divide, Assign. Partition is the estate
separation, division and assignment of a
thing held in common among those to whom When Partition Cannot Be Demanded—
it may belong. The thing itself or its value 1. When expressly Prohibited by the testator
may be divided. (Art. 1079, CC) for a period not exceeding 20 years (Art
Owned in common. Before partition, the 1083, CC)
whole estate of the decedent is owned in 2. When the co-heirs Agreed that the estate
common by the heirs. (Art 1078, CC) shall not be divided for a period not
Thing or value may be divided. (Art 1079) exceeding 10 years, renewable for another
Acts deemed partition. Every act which is 10 years
intended to put an end to indivision among 3. When Prohibited by law
heirs and legatees or devisees is deemed a 4. When to partition the estate would render it
parition, although it should purport to be a unserviceable for the use for which it is
sale, an exchange, a compromise, or any intended
other transaction. (Art 1082, CC)
Prohibition to Partition—
A void partition may be valid if— 1. The prohibition to partition for a period not
1. the will was in fact a partition exceeding 20 years can be imposed on the
2. the beneficiaries of the void will were legal legitime.
heirs 2. If the prohibition to the partition is for more
than 20 years, the excess is void.
The titles of acquisition or ownership of each 3. Even if a prohibition is imposed, the heirs by
property shall be delivered to the co-heir to mutual agreement can still make the
whom said property has been adjudicated. partition.
(Art. 1089 CC)
Effects of Inclusion of Intruder in Partition
Kinds of Partition— (Art 1108, CC)—
1. Judicial v. Extrajudicial Partition 1. Between a true heir and several mistaken
a. Judicial – Partition done by Court heirs – partition is void.
pursuant to an Order of Distribution 2. Between several true heirs and a mistaken
which may or may not be based on a heir – transmission to mistaken heir is void
project of partition. 3. Through error or mistake, share of true
b. Extra-judicial – partition made by the heir is allotted to mistaken heir – partition
decedent himself by an act inter vivos or shall not be rescinded unless there is bad
by will or by a third person entrusted by faith or fraud on the part of the other
the decedent or by the heirs themselves. persons interested, but the latter shall be
(PARAS) proportionately obliged to pay the true heir of
2. Partition Inter Vivos (Asked in ‘85) his share. The partition with respect to the
It is one that merely allocates specific mistaken heir is void. (Sempio-Dy)
items or pieces of property on the basis
of the pro-indiviso shares fixed by law or Right of Redemption in Partition—
given under the will to heirs or Should any of the heirs sell his hereditary
successors. (Art. 1080, cc) rights to a stranger before the partition, any
or all of the co-heirs may be subrogated to
Who May Effect Partition— the rights of the purchaser by reimbursing
1. The Decedent, during his lifetime by an act him for the price of the sale, provided they
inter vivos or by will (Art.1080, CC) do so within the period of one month from
CIVIL LAW REVIEWER Chapter V. PARTITION and DISTRIBUTION of ESTATE
the time they were notified in writing of the When its has been so expressly stipulated in
sale by the vendor (Art. 1088, CC) the agreement of partition
Strangers – those who are not heirs on the Unless there has been bad faith
succession. When the eviction is due to a cause
subsequent to the partition, or has been
caused by the fault of the distributee of the 84
II. Effects of Partition property. (Art. 1096, CC)
SUCCESSION
Effect—
A partition legally made confers upon each heir III. Nullification of Partition
the exclusive ownership of the property (Asked in ‘90)
adjudicated to him (Art 1091, CC)
Causes for Rescission or Annulment—
Warranty— 1. A partition may be rescinded or annulled for
After the partition has been made, the co- the same causes as contracts. (Art 1097,
heirs shall be reciprocally bound to warrant CC)
the title to, and the quality of, each property 2. A partition, judicial or extra-judicial, may also
adjudicated (Art. 1092 CC) be rescinded on account of lesion, when any
The reciprocal obligation of warranty one of the co-heirs received things whose
referred to in the preceding article shall be value is less by at least one-fourth, than the
proportionate to the respective share to which he is entitled, considering the
hereditary shares of the co-heirs; value of the things at the time they were
But if any one of them should be adjudicated (Art. 1098, CC)
insolvent, the other co-heirs shall be This article applies only to cases of
liable for his part in the same proportion, partition among-coheirs
deducting the part corresponding to the Lesion is the injury suffered in
one who should be indemnified. consequence of inequality of situation by
Those who pay for the insolvent heir one party who does not receive the full
shall have a right of action against him equivalent for what she gives in a sale
for reimbursement, should his financial or any commutative contract
condition improve (Art. 1093 CC) 3. The partition made by the testator cannot be
An action to enforce the warranty among the impugned on the ground of lesion, except
co-heirs must be brought within ten years when the legitime of the compulsory heirs is
from the date the right of action accrues. thereby prejudiced, or when it appears or
(Art. 1094 CC) may be reasonably be presumed, that the
If a credit should be assigned as collectible, intention of the testator was otherwise. (Art.
the co-heirs shall not be liable for the 1099, CC)
subsequent insolvency of the debtor of the 4. Preterition of a compulsory heir in the
estate, but only for his insolvency at the partition (Art 1104, CC):
time the partition is made. (Art 1095, CC) Partition shall not be rescinded unless
The warranty of the solvency of the debtor bad faith or fraud on the part of other
can only be enforced during the five years heirs is proved.
following the partition. The culpable heirs shall share in the
Co-heirs do not warrant bad debts, if so damages of the prejudiced compulsory
known to, and accepted by the distributee. heir proportionately.
But if such debts are not assigned to a 5. A partition which includes a person believed
co-heir, and should be collected, in to be an heir, but who is not, shall be void
whole or in part, the amount collected only with respect to such person. (Art.
shall be distributed proportionately 1105 CC
among the heirs. (Art. 1095 CC) _
SUCCESSION
5 years from To claim property escheated to
nor those who have not received more than delivery to the the State
their just share (Art. 1101, CC) State
1 month To report knowledge of violent
An heir who has alienated the whole or a death of decedent lest he be
considerable part of the real property considered unworthy
adjudicated to him cannot maintain an action 5 years from the Action for declaration of
for rescission on the ground of lesion, but he time disqualified incapacity & for recovery of the
person took inheritance, devise or legacy
shall have a right to be indemnified in cash possession
(Art. 1102, CC) 30 days from Must signify
issuance of order acceptance/repudiation
The omission of one or more objects or of distribution otherwise, deemed accepted
securities of the inheritance shall not cause 1 month form Right to repurchase hereditary
the rescission of the partition on the ground written notice of rights sold to a stranger by a co-
of lesion, but the partition shall be completed sale heir
by the distribution of the objects or securities 10 years To enforce warranty of
which have been omitted. (Art. 1103, CC) title/quality of property
adjudicated to co-heir from the
time right of action accrues
Difference of Nullity from Rescission—
5 years from To enforce warranty of solvency
Nullity is not the same as Rescission: partition of debtor of the estate at the time
1. Nullity - the act is supposed to never have partition is made
existed 4 years form Action for rescission of partition
2. Rescission - the act is valid at the origin partition on account of lesion
though it afterwards became ineffective
CIVIL LAW REVIEWER Chapter VI. APPLICATION
Chapter VI. Application of the Important property. How will you compute the proportional
Concepts through Sample increase in each heirs’ shares in order not to
Computational Problems exceed the total estate of Mickey (assuming no
legitimes were impaired)?
I. Institution of Heirs Legitimes
II. III.Intestate
IV. Succession
Goofy’s 1/3 of 12,000 4,000 86
original share:
II. III. IV.
SUCCESSION
Donald’s 1/4 of 12,000 3,000
original share:
The Effect of Partition Nullification of Partition Important Periods in Partition
Minnie’s 1/4 of 12,000 3,000
original share:
TOTAL: 10,000
(Based on the lectures of Prof. Danilo L. DEFICIENCY
Concepcion) : 2,000
SUCCESSION
Mario = P15,000
Luigi = P15,000
B. Legitimes: Concurrence of Spouse and
Legitimate Children—
Princess toadstool died, survived by her Further reductions shall be made since the
husband, kupa, her legitimate child, mushroom, amount will still exceed the net estate. Following
and by her two illegitimate children, mario and the law of legitimes, namely that the legitime of
luigi. She has a total estate of p120,000. How the legitimate child and the surviving spouse
much legitime is allotted by law to each heir? shall be preferred over the illegitimate children’s
shares, the reduction will be suffered by the
The legitimate child gets ½. illegitimate children.
The wife gets ½ of the share of the legitimate
child (because there is only one legitimate child) Final Answer:
The illegitimate children will each get ½ of the Ultimate Warrior – P35,000
share of the legitimate child. Stone Cold – P8750
Undertaker – P8750
Mushroom – P60,000 Sable – P17,500
Kupa – P30,000
Mario – P30,000
Luigi – P30,000 IV. Accretion
But this will yield a total of p150,000. Thus the Goku died testate, leaving an estate of P720. In
shares of the illegitimate children must be his will, he instituted his sons to his entire estate.
reduced. His sons are Vegeta, Napa, Raditz and Freeza.
Vegeta, who had two children (Trunks and
Reduction = excess / number of illegitimate Bulma), predeceased Goku. Napa, who hated
children
his father’s guts, repudiated his share in the P50,000 to Spiderman. In 1982, he made a
will. donation to Robinhood worth P100,000.
Compute for the shares of each heir.
Raditz, who likewise has two children
Total Estate = Gross Estate – Liabilities +
(Tenshenhan and Chowzu), was found to be
Donations Inter Vivos
incapacitated to inherit from his father.
Total Estate = 90,000 – 0 + 150,000 = P240,000 88
Lastly, Freeza, the youngest and most beloved
SUCCESSION
Determine the Legitimes:
son of Goku, has a son, Magneato.
Legitimate Children = ½ of Total Estate
Therefore: Spiderman = P60,000
Determine Legitime and Free Portion: Robinhood = P60,000
Heir Will
Vegeta (predeceased) 180 = legitime:120
free: 60 Surviving Spouse = amount equal to Legitimate
Napa (repudiated) 180 (automatically Child
becomes free portion) Therefore: Sandy = P60,000 Determine
Raditz (incapacitated) 180 = legitime:120
free: 60 their Intestate Shares
Freeza 180 = legitime:120 Heir Final Answer
free: 60 Spiderman 80, 000
(60,000 = legitime)
Determine amount received by heirs through Robinhood 80,000
representation for the legitimes (60,000 = legitime)
Heir Representation for Sandy 80,000
Legitime (60,000 = legitime)
Vegeta (predeceased) Legitime = 120
Trunks: 60 Determine Advances
Bulma: 60 Heir Advance
Napa (repudiated) Spiderman 50,000
Raditz (incapacitated) Legitime = 120 Robinhood 100,000
Tenshenhan: 60 Sandy
Chowzu: 60
Freeza Compute:
Heir Computation
Determine if there is accretion: Spiderman Legitime: 60,000 – 50,000 = 10,000
Heir Accretion Free Portion = 20,000
Vegeta (predeceased) - 60 Robinhood Legitime: 60,000 – 60,000 = 0
Napa (repudiated) -180 Free Portion: 20,000 – 20,000 = 0
Raditz (incapacitated) -60 (20,000 still unaccounted for)
Freeza + (60 + 60 + 180) or + Sandy
300
Since Robinhood’s share has been exhausted
COMPUTE: but there is still a deficiency of 20,000, this
Heir Final Answer 20,000 will be deducted from the free portions
Vegeta (predeceased) Trunks: 60 of Spiderman and Sandy Pro Rata.
Bulma: 60
Napa (repudiated) 0
Heir Computation
Raditz (incapacitated) Tenshenhan: 60
Chowzu: 60 Spiderman Legitime Left: 10,000
Freeza 480 Free Portion Left =
20,000 – 10,000 = 10,000
Robinhood 0
Sandy Legitime: 60,000
V. Collation Free Portion: 20,000 – 10,000 =
10,000
Sponge Bob died intestate on September 17,
1985. He left an estate of P90,000. He was Therefore –
survived by his wife, Sandy, and his two children
Spiderman and Robinhood. During Mr. Bob’s
lifetime, on January 1, 1980, he donated
Heir Final Answer
Spiderman 20,000
Robinhood 0
Sandy 70,000
- end of Succession -
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CIVIL LAW REVIEWER TABLE of CONTENTS
OBLIGATIONS
Table of Contents
OBLIGATIONS
I. Kinds of Prestations............................93
II. Breach of Obligation...........................94
III. Fortuitous Event (Force Majeure).......96
IV. Remedies to Creditors........................96
V. Usurious Transactions and Rules on
Interest........................................................97
OBLIGATIONS
Writers
Article 1156, Civil Code. An obligation is a juridical
CIVIL LAW necessity to give, to do or not to do.
Kristine Bongcaron
Patricia Tobias I. Obligations
Subject Editors
OBLIGATIONS
with fault or negligence causing damage to
D. Delicts (Acts or omissions punished by law; another; not a crime nor a contract)
crimes)
Quasi-Delict Crimes
Extent of Civil Liability Private, against Public, against the State
Governed by the Revised Penal Code and the individual
Criminal intent is not Criminal intent is
Civil Code, includes:
necessary necessary for criminal
1. Restitution; liability
2. Reparation of damages caused; and
3. Indemnity for consequential damages (Art. Present in any act or An act can is only
omission where fault or punishable when there is
104, Revised Penal Code).
negligence intervenes a law penalizing it
(Tolentino, 1987)
Enforcement of Civil Liability Gives rise to liability for There are crimes from
damages to the injured which no civil liability
1. Independent: Criminal and civil action party arises
arising from the same offense may be Reparation, Fine or imprisonment or
instituted separately. compensation o both, to public treasury
2. Suspended: However, after criminal action indemnification of r
has been commenced prosecution for civil injury suffered by th
action is suspended in whatever stage it injured party e
may be found, until final judgment in the th
criminal proceeding is rendered; e
3. Impliedly Instituted: Civil action is impliedly Preponderance of Proof of guilt beyond
evidence reasonable doubt
instituted with the criminal action, when:
Can be compromised Can never be
○ offended party expressly waives the civil compromised
action or reserves the right to institute a
separate civil action; or Requisites of Liability (DWD)
○ the law provides for an independent civil
1. Wrongful act or omission by fault or
action negligence
negligent act may give rise to an action based on delict or quasi- delict and the injured party isD
2. amage
free or injury
to choose whichproven byenforce.
remedy to the person
claiming
vil action is based on quasi-delict, there is no need to reserve the right to file a civil action in the criminalrecovery
case.
3. Direct causal connection between the fault or
negligence and the damage or injury
OBLIGATIONS
I. Kinds of Prestations identified by same class as
individuality. long as it is of
the same kind.
KINDS OF PRESTATION
Cannot be Can be
1. TO GIVE: real obligation; to deliver either substituted. substituted by
(1) a specific or determinate thing, or (2) a any of the same
generic or indeterminate thing. class and same
2. TO DO: positive personal obligation; kind.
includes all kinds of work or services.
3. NOT TO DO: negative personal
obligation; to abstain from doing an act;
includes the obligation not to give.
Not To Not to do what should not be done To ask to undo what should not be done
Do To shoulder the cost of undoing what To recover damages, where it would be
should not have been done physically or legally impossible to undo
To pay for damages in case of breach what has been undone, because of :
o the very nature of the act itself;
o rights acquired by third persons who
acted in good faith;
o when the effects of the acts prohibited
are definite in character and will not 94
cease even if the thing prohibited be
OBLIGATIONS
undone.
OBLIGATIONS
Effects Effects
Culpa Contractual Culpa Aquiliana Asked 1. The debtor is liable 1. The responsibility of
in ’83, ’84, and ’86) for damages the debtor is
Negligence is merely Negligence is substantive 2. The debtor is liable reduced to fraud
incidental in the and independent even if the loss is due and gross
performance of an to fortuitous events negligence
obligation 3. For determinate 2. The debtor is
There is always a pre- There may or may not be objects, the debtor exempted from risk
existing contractual a pre-existing contractual shall bear the risk of of loss of the thing
relation obligation loss which is borne by
The source of obligation The source of obligation the creditor
of defendant to pay is the defendant’s 3. The expenses
damages is the breach or negligence itself incurred by the
non-fulfillment of the debtor for the
contract preservation of the
Proof of the existence of The negligence of the thing after the mora
the contract and of its defendant must be shall be chargeable
breach or non-fulfillment proved to the creditor
is sufficient prima facie to 4. If the obligation
warrant recovery bears interest, the
Proof of diligence in the Proof of diligence in the debtor does not
selection and supervision selection and supervision have to pay from
of the employees is NOT of the employee is a the time of delay
available as defense defense 5. The creditor is liable
for damages
Culpa Criminal: wrong or negligence in 6. The debtor may
the commission of a crime relieve himself of
obligation by
consigning the thing
3. DELAY or DEFAULT (MORA): failure to
perform an obligation on time which Rules on Mora, Delay or Default
constitutes breach of the obligation (De
Unilateral Obligations Reciprocal Obligations
Leon, 2003). General Rule: General Rule:
Mora Solvendi: delay on the part of the Delay occurs from the
debtor to fulfill his obligation either to “No demand no delay”. moment one party fulfills
give (Ex re) or to do (Ex persona), his undertaking, while the
(Asked in ’83, ’84, ’85, and ’86); The mere expiration of other does not comply or
the period fixed by the is not ready to comply in
No Mora Solvendi in: parties is not enough in a proper manner with
Negative Obligations because delay order that the debtor may what is incumbent upon
is impossible (De Leon, 2003); incur in delay. him.
Natural Obligations (Tolentino, No delay if neither party
performs his undertaking
1987). (Art. 1169, par. 2).
Exceptions Exception:
Mora Accipiendi: delay on the part of 1. the obligation or law different dates for the
the creditor to accept the performance of provides performance of
the obligation 2. time is of the respective obligations are
Compensatio Morae: delay of the essence fixed by the parties
parties in reciprocal obligations; effect: 3. demand useless
as if there is no default. 4. debtor
acknowledges that
he is in default
4. CONTRAVENTION OF THE TENOR:
violation of the terms and conditions 2. The event must be unforeseeable or
stipulated in the obligation, which must not inevitable
be due to a fortuitous event or force majeure 3. The event renders it impossible for debtor to
(De Leon, 2003). fulfill his obligation in a normal manner
“In any manner contravenes the 4. The debtor must be free from any
tenor” means any illicit act, which participation in the aggravation of the injury
impairs the strict and faithful fulfillment to the creditor (Tolentino, 1987; De Leon,
of the obligation, or every kind of 2003)
defective performance (Tolentino, 1987). 5. It must be the only and sole cause, not 96
merely a proximate cause.
OBLIGATIONS
III. Fortuitous Event (Force Majeure)
IV. Remedies to Creditors
Any event which could not be foreseen, or which
though foreseen are inevitable (Art. 1174) Art. 1170, Civil Code. Those who in the performance
of their obligations are guilty of fraud, negligence, or
A happening independent of the will of the delay and those who in any manner contravene the
debtor and which makes the normal fulfillment of tenor thereof, are liable for damages.
the obligation impossible (De Leon, 2003).
Transmissibility of Rights
A. Act of God: an accident, due directly or Art. 1178: Rights acquired by virtue of an
exclusively to natural causes without human obligation are transmissible in character,
intervention, which by no amount of UNLESS prohibited:
foresight, pains or care, reasonably to have 1. by their very nature (i.e. personal
been expected, cold have been prevented. obligations)
B. Act of Man: force majeure is a superior or 2. by stipulation of the parties
irresistible force, which is essentially an act 3. by operation of law
of man; Includes unavoidable accidents, (De Leon, 2003)
even if there has been an intervention of
human element, provided that no fault or Primary Remedies
negligence can be imputed to the debtor Arts. 1165-1168: PRESS
(Asked in ’81, ’87 and ’88) 1. Specific Performance – performance
by the debtor of the prestation itself
Liability in case of Fortuitous Event 2. Substituted Performance – someone
No person shall be responsible for fortuitous else performs or something else is
events, UNLESS: performed at the debtor’s expense
1. expressly specified by law (Arts. 552(2), 3. Equivalent Performance – right to
1942, 2147, 2148, 2159) claim damages (in either performance or
2. liability specified by stipulation rescission)
3. the nature of the obligations requires 4. Rescission – right to rescind or cancel
assumption of risk (Art. 1174) the contract
4. when debtor is guilty of concurrent or 5. Pursue the Leviable – to attach the
contributory negligence properties of the debtor, except those
5. debtor has promised to deliver the same exempt by law from execution
thing to two or more persons who do not
have the same interests (Art. 1165 par. 3) Subsidiary Remedies of Creditor
6. the thing is lost due to the obligor’s fraud,
negligence, delay or contravention of the General Rule: Contracts are binding only
tenor of the obligation (Art. 1170) between the parties thereto, and their heirs,
7. the obligation to deliver a specific thing assignees, and the estate, UNLESS: Accion
arises from a crime (Art. 1268) Subrogatoria and Accion Pauliana
8. the object is a generic thing, i.e. the genus 1. Accion Subrogatoria: right of creditor to
never perishes exercise all of the rights and bring all of the
actions which his debtor may have against
Requisites for Exemption third persons; Novation by change of debtor
1. The event must be independent of the (Art. 1291, par.3).
debtor’s will (fraud or negligence)
Requisites
a. Debtor to whom the right of action Siguan v. Lim, (1999): Petitioner cannot invoke the credit of a different creditor
properly pertains must be indebted to
the creditor
b. The debt is due and demandable
c. The creditor must be prejudiced by the
failure of the debtor to collect his own
debt from 3rd persons either through
malice or negligence 97
d. The debtor’s assets are insufficient V. Usurious Transactions and Rules on
(debtor is insolvent) Interest
OBLIGATIONS
e. The right of action is not purely personal
to the debtor
USURY: stipulation of interest rates higher than
the ceiling provided by law.
2. Accion Pauliana: Rescission, which
involves the right of the creditor to attack or
Note: Usury Law (Act No. 2655, as amended)
impugn by means of a rescissory action any
was repealed by Central Bank Circular No. 905,
act of the debtor which is in fraud and to the
Dec. 10, 1982.
prejudice of his rights as creditor.
INTEREST
Requisites: CASAL
a. There is a credit in favor of plaintiff
Art. 1176, Civil Code. Receipt of the principal without
prior to alienation reservation as to the interest shall give rise to a
b. The debtor has performed a disputable presumption that the interest has been
subsequent contract conveying a paid. Receipt of the latter installment without
patrimonial benefit to third persons reservation as to prior installments shall likewise give
c. The creditor has no other legal remedy rise to a disputable presumption that such prior
to satisfy his claim installments have been paid.
d. The debtor’s acts are fraudulent to the
prejudice of the creditor Determination of Interests
e. The third person who received the Eastern Shipping Lines v. CA (1961)
property is an accomplice in the fraud
Chapter III. Different Kinds of Obligations The mere intention of the debtor to
prevent, without actually preventing
PURE AND CONDITIONAL OBLIGATIONS fulfillment is not sufficient.
RECIPROCAL OBLIGATIONS Constructive fulfillment will not hold
OBLIGATIONS WITH A PERIOD when the debtor acts pursuant to a
ALTERNATIVE AND FACULTATIVE OBLIGATIONS right. There is constructive
JOINT AND SOLIDARY OBLIGATIONS fulfilment:
DIVISIBLE AND INDIVISIBLE OBLIGATIONS a. Intent of the obligor to prevent
OBLIGATIONS WITH A PENAL CLAUSE
fulfilment; and 98
b. Actual prevention of compliance
OBLIGATIONS
I. Pure and Conditional Obligations Principle of Retroactivity in
(Asked in ’79, ’88, ’00, ’03) Suspensive Conditions
Art.1187, par.1: once the condition is
Pure Obligation (Art.1179): Effectivity or fulfilled its effects must logically retroact
extinguishment does not depend upon the to the moment when the essential
fulfillment or non-fulfillment of a condition or elements, which gave birth to the
upon the expiration of a term or period and obligation have taken place. The
characterized by the quality of its being condition which is imposed is only
IMMEDIATELY DEMANDABLE. accidental, not an essential element of
the obligation.
Conditional Obligation (Art.1181): Effectivity is Applied only to consensual
subject to the fulfillment or non-fulfillment of a contracts. No application to real
condition, which is characterized to be a contracts which can only be
FUTURE and UNCERTAIN event. perfected by delivery.
To Give To Do/Not To Do
Effects of Conditions
If reciprocal, the fruits In obligations to do or not
1. Suspensive Condition: Obligation shall and interests shall be to do, the court shall
only be effective upon the fulfillment of the deemed to have been determine the retroactive
condition (Art.1181). What is acquired by the mutually compensated effect of the condition
obligee upon the constitution of the as a matter of justice and that has been complied
obligation is mere hope or expectancy, but is convenience with.
protected by law. (Art. 1187, par. 1) (Art. 1187, par. 2)
If unilateral, the debtor The power of the court
Before Fulfillment After Fulfillment shall appropriate the includes the
The demandability and The obligation arises or fruits and interests determination whether or
acquisition or effectivity becomes effective. received, unless from the not there will be any
of the rights arising from The obligor can be nature and circumstance retroactive effects. This
the obligation is compelled to comply with it should be inferred that rule shall likewise apply
suspended. Anything what is incumbent upon the intention of the in obligations with a
paid by mistake during him. persons constituting the resolutory condition (Art.
same was different. 1190 par. 3)
such time may be
recovered.
Preservation of Creditor’s Rights
Doctrine of Constructive Fulfillment Art.1188, par.1: The creditormay,
of Suspensive Conditions before the fulfillment of the condition,
Art. 1186: the condition shall be deemed bring the appropriate action for the
fulfilled when the obligor actually preservation of his rights. However, this
prevented the obligee from complying does not grant any preference of credit
with the condition, and that such but only allows the bringing of the proper
prevention must have been voluntary or action for the preservation of the
willful in character. creditor’s rights.
Applicable to suspensive conditions
and not to resolutory conditions. 2. Resolutory Condition: Obligation becomes
The article can have no application demandable immediately after its
to an external contingency which is establishment or constitution. The rights are
lawfully within the control of the immediately vested to the creditor, but
obligor. always subject to the threat or danger of
extinction by the happening of the resolutory
condition (Tolentino, 1987).
CIVIL LAW REVIEWER Chapter III. DIFFERENT KINDS of OBLIGATIONS
and the price thereof remitted to the islands. There were still other conditions that had to concur to effect the sale, mainly that of the presence of a buyer, ready, able a
Before Fulfillment After Fulfillment
Preservation of creditor’s Whatever may have
rights (Art. 1188, par. 1) been paid or delivered by
also applies to one or both of the parties
obligations with a upon the constitution of
resolutory condition the obligation shall have
to be returned upon the
fulfillment of the 6. Impossible Condition: conditions which
condition. There is no are impossible, contrary to good customs, or 99
return to the status quo. public policy and those prohibited by law
OBLIGATIONS
However, when condition
shall annul the obligations which depend
is not fulfilled, rights are
consolidated and they upon them (Art. 1183).
become absolute in If pre-existing obligation, only the
character impossible condition is void, but not the
obligation.
3. Potestative Condition If divisible obligation, that part which is not affected
by the impossible or unlawful condition shall be
Exclusively Exclusively Exclusively valid.
upon the upon the upon the If the condition is not to do an impossible thing, it
Creditor’s Will Debtor’s Will Debtor’s Will shall be considered as not having been agreed
in case of a in case of a upon (Art 1183, par. 2). Consequently, it becomes
Suspensive Resolutory pure and immediately demandable.
Condition Condition If attached to a simple or remuneratory
(Art. 1182) (Art. 1179, par donation (Art. 727), or testamentary
2)
Condition and Condition and Condition and
disposition (Art. 873), condition is
obligation is obligation are obligation is considered as not imposed while the
valid void because to valid because in obligation is valid.
allow such such situation,
condition would the position of 7. Positive Condition: Obligation shall be
be equivalent to the debtor is extinguished as soon as the time expires or
sanctioning exactly the if it becomes indubitable that the event will
obligations same as the not take place (Art.1184)
which are position of the
illusory. It also creditor when
8. Negative Condition: Obligation shall be
constitutes a the condition is
direct suspensive. It rendered effective from the moment the time
contravention of does not render indicated has lapsed, or if it has become
the principle of the obligation evident that the event will not occur
mutuality of illusory. (Art.1185)
contracts. When no period has been fixed, the
intention of the parties is controlling,
4. Casual Condition: The fulfillment of the and the time shall be that which the
condition depends upon chance and/or upon parties may have contemplated, taking
the will of a third person (Art. 1182) into account the nature of the obligation
(Art 1185, par. 2).
5. Mixed Condition: The fulfillment of the
condition depends partly upon the will of a
party to the obligation and partly upon Effects of Loss, Deterioration, and
chance and/or will of a third person Improvement in Real Obligations Pending the
Condition
ndorsement saying that she’ll pay her debt if the house in which she lives is sold. Such condition (Art.
depended 1189)
upon her exclusive will thus it is void.
Deterioration Impairment to be Creditor may shouldered by the first infractor. This shall
borne by the choose be determined by the courts. However, if it
creditor between cannot be determined who was the first
bringing an infractor, the contract shall be deemed
action for
extinguished and each shall bear his own
rescission of
the obligation damages (Art.1192).
OR bringing an
udicially rescind the contract on account of the breach of the other
actionparty. However,
for this is without prejudice to the option of the other party to resort to the courts in ord
specific 100
performance
OBLIGATIONS
with damages
in either case.
II. Reciprocal Obligations Period or Term (Asked in ’84, ’86 and ’91):
Interval of time, which either suspends
demandability or produces extinguishment.
Obligations which are established from same The period must be: future, certain, and possible
cause, such that one obligation is correlative to (Tolentino, 1987).
the other. It results in mutual relationship
between the creditor and the debtor. It is Fortuitous event does not interrupt the
performed simultaneously, so that the running of the period. It only relieves the
performance of one is conditioned upon the contracting parties from the fulfillment of
simultaneous fulfillment of the other. their respective obligations during the
period.
Tacit Resolutory Condition: if one of the Kinds of Period (Art. 1193):
parties fail to comply with what is incumbent 1. Ex die - period with a suspensive effect.
upon him, there is a right on the part of the other Obligation becomes demandable after
to rescind the obligation. The power to rescind is the lapse of the period.
given to the injured party (Tolentino, 1987). 2. In diem - period with a resolutory effect.
Obligation is demandable at once but is
Rescission of Reciprocal Obligations (Art. extinguished upon the lapse of the
1191, CC) period.
Right to rescind is implied in reciprocal
obligations thus where one party fails to Art. 1180, Civil Code. When the debtor binds himself
comply with this obligation under a contact, to pay when his means permit him to do so, the
the other party has the right to either obligation shall be deemed to be one with a period,
demand the performance or ask for the subject to the provisions of Article 1197.
resolution of the contract.
Based on the breach of faith committed by the person who is Term/Period and Condition Distinguished
supposed to comply with the obligation as compared to the
rescission referred to in Art. 1308 which involves the damage Term/Period Condition
or lesion, or injury to the economic interest of a person. Interval of time which is Fact or event which is
Where both parties have committed a breach of obligation, future and certain future and uncertain
the liability will be Must necessarily come, May or may not happen
although it may not be
known when
Exerts an influence upon Exerts an influence upon Art. 1197 does not apply to contract of
the time of demandability the very existence of the services and to pure obligations.
or extinguishment of an obligation itself The court, however, to prevent
obligation
unreasonable interpretations of the
No retroactive effect Has retroactive effect
immediate demandability of pure obligations,
unless there is an
agreement to the contrary may fix a reasonable time in which the
When it is left exclusively When it is left exclusively debtor may pay.
to the will of the debtor, to the will of the debtor, (Tolentino, 1987)
the existence of the the very existence of the 101
obligation is not affected obligation is affected When Debtor Loses Right to Use Period
OBLIGATIONS
Art.1198: I GIV A LA
Benefit of the Period 1. Debtor becomes Insolvent, unless he gives
Presumption: Period in an obligation is a guaranty or security for his debt, after
presumed to be established for the benefit of obligation is contracted
both the creditor and debtor, UNLESS: If from 2. Debtor fails to furnish the Guaranties or
the tenor of the obligation or other securities promised
circumstances, it shall appear that the period 3. Debtor by his own acts Impaired said
has been established in favor of either the guaranties or securities after their
creditor or debtor (Art. 1196). establishment, and when through a
fortuitous event they disappear, unless he
Period for the Benefit of either Creditor or Debtor immediately gives new one equally
satisfactory
4. Debtor Violates any undertaking, in
Creditor Debtor consideration of which the creditor agreed to
Creditor may demand Debtor may oppose any the period
the fulfillment or premature demand on 5. Debtor attempts to Abscond
performance of the the part of the oblige for 6. By Law or stipulation
obligation at any time the performance of the 7. Parties stipulate an Acceleration Clause
but the obligor cannot obligation, of if he so
compel him to accept desires, he may
payment before the renounce the benefit of In the cases provided, the obligation becomes
expiration of the period the period by performing immediately due and demandable even if the
his obligation in advance period has not yet expired. The obligation is thus
converted into a pure obligation (Tolentino,
When court may fix period 1987).
Art. 1197: as general rule, the court is not
authorized to fix a period for the parties (De IV. Alternative and Facultative
Leon, 2003). Obligations
Phil. Sugar Estates, provides: First, the Court shall determine:
Alternative Obligations Facultative Obligations
ation does not fix a period, but from its nature and circumstances, it can be inferred that a period was intended
Several objects are due Only one object is due
d is void, such as when it depends upon the will of the debtor
May be complied with by May be complied with by
or binds himself when his means permit him to do so. delivery of one of the the delivery of another
must decide what period was “probably contemplated by the parties”. objects or by performance object or by the
of one of the prestations performance of another
which are alternatively prestation in substitution
due of that which is due
Choice may pertain to Choice pertains only to
debtor, creditor, or third the debtor
person
The only action that can be maintained Loss/impossibility of all Loss/impossibility of the
under Art. 1197 is the action to ask the objects/prestations due to object/prestation due to
courts to fix the term within which the debtor fortuitous event shall fortuitous event is
must comply with his obligation. The extinguish the obligation. sufficient to extinguish
fulfillment of the obligation itself cannot be The loss/impossibility of the obligation
demanded until after the court has fixed the one of the things does not
period for compliance, therewith, and such extinguish the obligation.
period has arrived. Culpable loss of any of Culpable loss of the
the objects alternatively object which the debtor
due before the choice is may deliver in Effect of Loss of Objects
made may give rise to substitution before the
liability on the part of the substitution is effected Art. 1204: Debtor’s Choice
debtor does not give rise to any Fortuitous Debtor’s Fault
liability on the part of the Event
debtor All Lost Debtor is Creditor shall have
released from the a right to indemnity
A. Alternative Obligations obligation for damages based
on the value of the
Several prestations are due but the performance last thing which 102
of one is sufficient (De Leon, 2003). disappeared or
OBLIGATIONS
service which
Right of Choice become impossible
Some Debtor to deliver Debtor to deliver
Art. 1200: to the debtor, UNLESS:
that which he that which the
1. when it is expressly granted to the shall choose creditor shall
creditor from among the choose from among
2. when it is expressly granted to a third remainder the remainder
person without damages
One Debtor to deliver Debtor to deliver
Limitations to the right of choice Remains that which that which remains
1. impossible prestations remains
2. unlawful prestations
3. those which could not have been the Art. 1205: Creditor’s Choice
object of the obligation Fortuitous Debtor’s Fault
4. only one prestation practicable (Art. Event
1202) All Lost Debtor is Creditor may claim
(De Leon, 2003) released from the the price/value of
obligation any of them with
When choice shall produce effect indemnity for
damages
Art. 1201: Choice shall produce no effect except
Some Debtor to deliver creditor may claim
from the time it has been communicated. The
that which he any of those
effect of the notice is to limit the obligation of the shall choose subsisting without a
object or prestation selected. Notice of selection from among the right to damages
or choice may be in any form provided it is remainder OR price/value of
sufficient to make the other party know that the the thing lost with
selection has been made. It can be: right to damages
o oral One Creditor may Creditor may claim
o in writing Remains claim any of the remaining thing
o tacit those subsisting without a right to
without a right to damages OR the
o any other equivocal means damages OR price/value of the
Choice of the debtor when communicated to price/value of the thing lost with right
the creditor does not require the latter’s thing lost with to damages
concurrence. right to damages
When the choice is rendered impossible
through the creditor’s fault, the debtor may
bring an action to rescind the contract with B. Facultative Obligation
damages (Art.1203).
Obligation is converted into a simple Only one prestation has been agreed upon but
obligation when: the debtor may render another in substitution
o When the person who has the right of (De Leon, 2003)
choice has communicated his choice
(Art. 1201) Effect of Loss of Substitute
o When only one prestation is practicable
(Art. 1202) Before Substitution is After Substitution is
Made Made
If due to bad faith or The loss or
fraud of obligor: obligor deterioration of the
is liable substitute on account
of the obligor’s delay,
negligence or fraud
If due to the negligence obligor is liable authorize a creditor to demand anything
of the obligor: obligor is because once from his co-debtors
not liable substitution is made, 5. Defense of res judicata is not extended from
the obligation is one debtor to another
converted into a simple
one with the substituted
thing as the object of Joint Divisible Obligation
the obligation. Art. 1208: Each creditor can demand only for the
payment of his proportionate share of the
credit, while each debtor can be liable only for 103
the payment of his proportionate share of the
V. Joint and Solidary Obligations
OBLIGATIONS
debit
OBLIGATIONS
others, with the right on the part of the
Indivisibility Solidarity
debtor-payor to recover from the others their
Refers to the prestation Refers to the legal tie or
which constitutes the vinculum, and respective shares.
object of the obligation consequently to the Creation of a relationship of mutual
subjects or parties of guaranty among co-debtors
the obligation The total remission of the debt in favor
Plurality of subjects is not Plurality of subjects is of a debtor releases all the debtors
required indispensable All the debtors are liable for the loss of
In case of breach, When there is liability the thing due, even if such loss is
obligation is converted into on the part of the caused by the fault of only one of them
indemnity for damages debtors because of the and for delay, even if it is caused by just
because the indivisibility of breach, the solidarity
the obligation is terminated among the debtors
one of them
The indivisibility of anremains
obligation does not The interruption of prescription as to
necessarily give rise to solidarity. Nor does one debtor affects all the others; but the
solidarity itself imply indivisibility. (Art. 1211) renunciation by one debtor of
prescription already had does not
Kinds of Solidary Obligations prejudice the others
1. Active (solidarity among creditors): Each 3. Mixed: Solidarity among creditors and
creditor has the authority to claim and debtors
enforce the rights of all, with the resulting Solidarity is not destroyed by the fact
obligation of paying everyone of what that the obligation of each debtor is
belongs to him. subject to different conditions or periods.
Creation of a relationship of mutual The creditor can commence an action
agency among co-creditors. against anyone of the debtors for the
compliance with the entire obligation
minus the portion or share which
corresponds to the debtor affected by
the condition or period.
_ _ _
Assignment of Loss or
Compensation &
Rights in Solidary Novation Remission Impossibility
Confusion
Obligations
The solidary If prejudicial, the If it is partial, the If entire If not debtors’
creditor cannot solidary creditor rules regarding obligation, fault, the
assign his right who effected the application of obligation is totally obligation is
because it is novation shall payment shall extinguished. extinguished
predicated upon reimburse the apply (w/o) If for the benefit If thru debtors’
mutual others for prejudice to the of one of the OR fortuitous
confidence, damages incurred right of other debtors covering event after delay,
UNLESS, the (1) by them; creditors who his entire share, the obligation is
the assignment is If beneficial and have not caused he is completely converted into
to a co-creditor; secured by one, the confusion or released from the indemnity for
(2) assignment is he shall be liable compensation to creditor/s. damages but the
with consent of to the others for be reimbursed to If for the benefit solidary character
co-creditor the share the extent that of one of the of the obligation
(obligation & their rights are debtors and it remains.
benefits) which diminished or covers only part
CIVIL LAW REVIEWER Chapter III. DIFFERENT KINDS of OBLIGATIONS
OBLIGATIONS
If by subrogating
a third person in
creditor’s rights,
the obligation is
not in reality
extinguished as
the relation
between the other
creditors and the
debtor/s is
maintained.
Effects of Prejudicial and Beneficial Acts A creditor’s right to The solidary debtor who
(Art.1212) proceed against the made the payment shall
surety exists have the right to claim
1. Each one of the solidary creditors may do independently of his right from his co-debtors the
whatever may be useful or beneficial to the to proceed against the share which corresponds
others, but not anything which may be principal to them with interest,
prejudicial to the latter. UNLESS barred by
2. As far as the debtors are concerned, a prescription or illegality.
prejudicial act performed by a solidary (Art. 1218)
creditor is binding.
3. As between the solidary creditors, the
creditor who performed such act shall incur
the obligation of indemnifying the others for
damages.
Effects
The creditor may proceed If two or more solidary
against any one of the debtors offer to pay, the
solidary debtors or all creditor may choose
simultaneously (Art. which offer to accept.
1216) (Art. 1217)
CIVIL LAW REVIEWER Chapter III. DIFFERENT KINDS of OBLIGATIONS
intervening period may be demanded. (Art.
When a solidary debtor pays the 1217 par. 2)
entire obligation, the resulting When one of the solidary debtors cannot reimburse
obligation of the co- debtors to his share to the debtor paying the obligation due to
reimburse him becomes joint. insolvency, such share shall be borne by all his co-
If payment was made before the debt debtors, in proportion to the debt of each. (Art.
became due, no interest during the 1217, par. 2)
Demand Upon a Payment by a Debtor Inchausti v. Yulo, (1914): Debtors obligated themselves solidarily, so creditor ca
Solidary Debtor
The demand made Full payment made by
against one of them shall one of the solidary
not be an obstacle to debtors extinguishes the
those which may obligation. (Art. 1217)
subsequently be directed
against the others so
long as the debt has not
been fully collected. (Art.
1216)
VI. Divisible and Indivisible Obligations If the principal obligation is void, penal
clause shall also be void. However, the
A. Divisible Obligations nullity of the penal clause does not carry
with it the nullity of the principal
One which is susceptible of partial performance; obligation (Art.1230).
that is, the debtor can legally perform the
obligation by parts and the creditor cannot Purposes of Penalty
demand a single performance of the entire 1. Funcion coercitiva de garantia - to insure the
obligation (Tolentino, 1987). performance of the obligation.
2. Funcion liquidatoria - to liquidate the amount of
106
damages to be awarded to the injured party in
OBLIGATIONS
B. Indivisible Obligations
case of breach of the principal obligation
(compensatory).
One which cannot be validly performed in parts 3. Function estrictamente penal - to punish the
(Tolentino, 1987). obligor in case of breach of the principal
Divisibility/indivisibility refers to the obligation (punitive).
performance of the prestation and not to the
thing which is the object thereof. The thing Effects of Penalty
may be divisible, yet the obligation may be 1. The penalty shall substitute the indemnity for
indivisible. damages and payment of interest in case of
When the obligation has for its object the non-compliance (Art. 1226), UNLESS:
execution of a certain number of days of a. There is a stipulation to the contrary
work, the accomplishment of work by b. The obligor refuses to pay the penalty
metrical units, or analogous things which by c. The obligor is guilty of fraud
their nature are susceptible of partial 2. Debtor cannot exempt himself from the
performance, it shall be divisible (Art.1225, performance of the principal obligation by
par. 2). paying the stipulated penalty unless this
When there is plurality of debtors and right has been expressly reserved for him
creditors, the effect of divisibility/indivisibility (Art. 1227).
of the obligation depend upon whether the 3. Creditor cannot demand the fulfillment of the
obligation is joint or solidary. principal obligation and demanding the
A joint indivisible obligation give rise to satisfaction of the penalty at the same time
indemnity for damages from the time anyone unless the right has been clearly granted to
of the debtors does not comply with is him (Art. 1227). Tacit or implied grant is
undertaking. admissible.
(Art. 1224) a. If creditor has chosen fulfillment of the
principal obligation and performance thereof
become impossible without his fault, he may
Effect
still demand the satisfaction of the penalty.
Creditor cannot be compelled partially to receive b. If there was fault on the part of the debtor,
the prestation in which the obligation consists; creditor may demand not only satisfaction of
neither may the debtor be required to make the penalty but also the payment of damages.
partial payment (Art. 1248), UNLESS: c. If creditor chooses to demand the
The obligation expressly stipulates the satisfaction of the penalty, he cannot
contrary afterwards demand the fulfillment of the
The different prestations constituting the obligation.
objects of the obligation are subject to
different terms and conditions Proof of Actual Damage
The obligation is in part liquidated and in part Art. 1228: Proof of actual damages is not
unliquidated necessary is applicable only to the general rule
stated in Art. 1226 and not to the exceptions.
The penalty is exactly identical with what is
VII. Oblligations with a Penal Clause known as “liquidated damages” in Art. 2226.
singular. There must be full and faithful compliance with the terms of the contract.
Chapter IV. Extinguishment of
Obligations
B. Payment by Cession (Art. 1255)
PAYMENT OR PERFORMANCE
LOSS OF THE THING DUE OR IMPOSSIBILITY OF PERFORMANCE Act whereby a debtor abandons all his property
CONDONATION OR REMISSION OF THE DEBT to his creditors, so that the latter may apply the
CONFUSION OR MERGER OF RIGHTS proceeds (of its sale) to their credits.
COMPENSATION
NOVATION
107
C. Dation in payment (Art. 1245)
OBLIGATIONS
Delivery and transmission of ownership of a
thing by the debtor to the creditor as an
I. Payment or Performance accepted equivalent of the performance of the
obligation (dacion en pago).
Art. 1232, Civil Code. Payment means not only
Dation in payment Payment by cession
delivery of money but also performance, in any
manner, of the obligation. In favor of only one There are various
creditor creditors
See Diagrams of Prof. Labitag at the end Payment extinguishes the Extinguishes credits
section of Obligations. obligation to the extent of only up to the extent of
the value of the thing proceeds from sale of
SPECIAL FORMS OF PAYMENT delivered, unless the assigned property,
parties agree that the unless otherwise
obligation be totally agreed upon
A. Application of Payment (Art. 1252) extinguished
Transfer of ownership of Only possession and
Designation of the debt to which should be thing alienated to creditor administration with
applied a payment made by a debtor who owes authorization to convert
several debts to the same creditor property to cash with
which the debts shall
Rules on Application— be paid
1. Preferential right of debtor - debtor has the Not necessarily in state of Assignment
right to select which of his debts he is financial difficulty presupposes
insolvency of debtor.
paying.
Assignment of only some Assignment involves all
2. The debtor makes the designation at the specific thing the property of the
time he makes the payment debtor.
3. If not, the creditor makes the application, by
so stating in the receipt that he issues, D. Tender of payment and consignation
unless there is cause for invalidating the
contract. 1. Tender of payment: Manifestation made by
4. If neither the creditor nor debtor exercises debtor to creditor of his desire to comply
the right to apply, or if the application is not with his obligation, with offer of immediate
valid, the application is made by operation of performance
law. Preparatory act to consignation
5. If debt produces interest - payment not Extrajudicial in character
deemed applied to the principal unless
interests are covered. 2. Consignation: Deposit of the object of
6. When no application can be inferred from obligation in a competent court in
the circumstances of payment, it is applied accordance to the rules prescribed by law,
to: to the most onerous debt of the debtor; or whenever the creditor unjustly refuses
if debts due are of the same nature and payment or because of some circumstances
burden, to all the debts in proportion which render direct payment to the creditor
7. Rules of application of payment may not be impossible or inadvisable.
invoked by a surety or solidary guarantor. Principal act which constitutes a form of
payment.
Reparations Commission vs. Universal Deep Sea Judicial in character.
Fishing Corp. (1978): Rules on application of payment
cannot be made applicable to a person whose
obligation as a mere surety is both contingent and
CIVIL LAW REVIEWER Chapter IV. EXTINGUISHMENT of OBLIGATIONS
When Tender and Refusal Not Required (Art. 2. After approval of the court or acceptance by
1259)— the creditor, with the consent of the latter -
1. Creditor is absent or unknown, or does not Obligation remains in force, but guarantors
appear at the place of payment and co-debtors are liberated. Preference of
2. Creditor is incapacitated to receive the thing the creditor over the thing is lost.
due at time of payment 3. After approval of the court or acceptance by
3. Without just cause, creditor refuses to give the creditor, and without creditor’s consent -
receipt Obligation subsists, without change in the
4. Two or more persons claim the same right to liability of guarantors and co-debtors, or the
collect 108
creditor’s right of preference.
OBLIGATIONS
5. Title of the obligation has been lost
Art. 1259, Civil Code. Expenses of consignation,
Effects of Withdrawal by Debtor when properly made, shall be charged against the
Arts. 1260- 1261 creditor.
1. Before approval of the court - Obligation
remains in force.
Application of
Cession Dation Tender and Consignation
Payment
Requisites Requisites Requisites Requisites
1. Plurality of 1. Plurality of debts 1. Should not be 1. There is a debt due
debts 2. Plurality of prejudicial to 2. consignation is made because
2. Debts are of creditors other creditors of some legal cause
the same kind 3. Partial insolvency 2. Should not 3. previous notice of consignation
3. Debts are owed of the debtor constitute a was given to those persons
to the same 4. Abandonment of pactum interested in the performance
creditor and by the totality of the commissorium of the obligation
the same debtor’s 4. amount or thing due was
debtor properties for the placed at the disposal of the
4. All debts must benefit of the court
be due creditors 5. after the consignation has been
5. Payment made 5. Acceptance by made, the persons interested
is not sufficient the creditors were notified thereof
to cover all
debts
Effects Effects Effects Effects
Payment of debt Assignment liberates Extinguishment of If accepted by the creditor or
designated as to debtor up to the debt from as an declared properly made by the
corresponding amount of the net equivalent of the Court:
amount proceeds of the sale performance of the 1. Debtor is released in same
of his assets obligation manner as if he had performed
Assignment does not the obligation at the time of
vets title to the consignation
property in the 2. Accrual of interest is
creditors, suspended from the moment of
who are only consignation.
authorized to sell it. 3. Deterioration or loss of the
thing or amount consigned,
occurring without the fault of
debtor, must be borne by
creditor from the moment of
deposit
4. Any increment or increase in
the value of the thing after
consignation inures to the
benefit of the creditor
CIVIL LAW REVIEWER Chapter IV. EXTINGUISHMENT of OBLIGATIONS
OBLIGATIONS
Effects of Loss
B. Impossibility of Performance (Arts. 1266-
Obligation to Deliver a Obligation to Deliver a
Specific Thing Generic Thing 1267, CC)
Extinguishment of the Loss of a generic thing
obligation if the thing was does not extinguish an When prestation becomes legally or physically
destroyed w/o fault of the obligation, UNLESS, impossible (by fortuitous event or force
debtor and before he has Delimited generic majeure), the debtor is released.Impossibility
incurred delay. things: kind or class is must have occurred without fault of debtor, and
limited itself, and the after the obligation has been constituted.
whole class perishes
PARTIAL IMPOSSIBILITY
1. Courts shall determine whether it is so
Action against 3rd persons - creditor shall have important as to extinguish the obligation.
all the rights of action the debtor may have 2. If debtor has performed part of the obligation
against 3rd persons by reason of the loss. when impossibility occurred, creditor must
pay the part done as long as he benefits
Presumption: The loss was due to the debtor’s from it.
fault, UNLESS: 3. If debtor received full payment from creditor,
1. Law provides that the debtor shall be liable he must return excess amount
even if the loss is due to fortuitous events corresponding to part which was impossible
(Arts. 1942, 1979, 2147, 2159) to perform.
2. Obligor is made liable by express stipulation
3. Nature of the obligation requires an Doctrine of Unforeseen Events
assumption of risk When the service has become so difficult as to
4. Fault or negligence concurs with the be manifestly beyond the contemplation of all
fortuitous event the parties, the obligor may be released in whole
5. Loss occurs after delay or in part (De Leon, 2003).
6. Debtor has promised to deliver the same
thing to two or more different parties Requisites:
7. Obligation arises from a criminal act 1. Event could not have been foreseen at the
8. Borrower in commodatum: saves his own time of the constitution of the contract.
things and not the thing of the creditor 2. Event makes performance extremely difficult
during a fortuitous event but not impossible.
3. Event not due to any act of the parties.
In Reciprocal Obligations 4. Contract is for future prestation.
Extinguishment of the obligation due to loss of
the thing or impossibility of performance affects
both the creditor and debtor; the entire juridical
relation is extinguished.
III. Condonation or Remission of the
Debt
Partial loss
Art. 1264: Partial loss due to a fortuitous event CONDONATION: An act of liberality, by virtue of
does not extinguish the obligation; thing due which, without receiving any equivalent, creditor
shall be delivered in its present condition, renounces the enforcement of the obligation.
without any liability on the part of the debtor, The obligation is extinguished either in whole or
UNLESS, the obligation is extinguished when in such part of the same which to remission
the part lost was of such extent as to make the refers.
thing useless.
Requisites Effects
1. Debt must be existing and demandable Arts. 1275- 1277:
2. Renunciation must be gratuitous; without 1. The obligation is extinguished from the time
any consideration the characters of the debtor and creditor are
3. Debtor must accept the remission merged in the same person.
2. In joint obligations, confusion does not
Effect extinguish the obligation except as regards
Art. 1273: Renunciation of the principal debt the corresponding share of the creditor or
shall extinguish the accessory obligations, but debtor in whom the two characters concur.
remission of the latter leaves the principal 110
3. In solidary obligations, confusion in one of
obligation in force.
OBLIGATIONS
the solidary debtors extinguishes the entire
obligation.
Presumptions 4. Obligation is not extinguished when
Arts. 1271, 1272, 1274: confusion takes place in the person of
Whenever the private document in which the subsidiary debtor (e.g. guarantor), but
debt is found in the possession of the merger in the person of the principal debtor
debtor, it shall be presumed that the creditor shall benefit the former.
delivered it voluntarily, unless contrary is
proved.
Delivery of a private document evidencing V. Compensation
credit, made voluntarily by the creditor to the
debtor, implies the renunciation of the action
COMPENSATION: Offsetting of two obligations
of creditor against the latter.
which are reciprocally extinguished if they are of
the same value, or extinguished to the
Kinds
concurrent amount if of different values. (Asked
1. As to form (Art. 1270)
in ’80, ’81, ’98, and ’02)
Express: made formally; in accordance
with forms of ordinary donations
Compensation Confusion
Implied: inferred from the act of the
parties There must always be 2 Involves only one
2. As to extent obligations obligation
Total: entire obligation
Partial: may refer only to amount of There are 2 persons who are There is only one
indebtedness, or to an accessory mutually debtors and person whom the
obligation, or to some other aspect of creditors of each other in 2 characters of the
the obligation separate obligations, each creditor and debtor
arising from the same cause. meet
3. As to constitution
Inter vivos: effective during the lifetime
Kinds
of the creditor
1. As to extent
Mortis causa: effective upon death of the
Total: Debts are of the same amount
creditor; must be contained in a will or
Partial: Amounts are not equal
testament
2. As to origin
Legal: takes place by operation of law
Conventional: parties agree to
IV. Confusion or Merger of Rights compensate their mutual obligations
even when some requisite in Art. 1279 is
CONFUSION: The meeting in one person of the lacking (Art. 1282).
qualities of creditor and debtor of the same Judicial: decreed by court when there is
obligation. counterclaim; effective upon final
judgment (Art. 1283).
Requisites Facultative: when it can be claimed by
1. It should take place between principal debtor one of the parties who, however, has the
and creditor right to object to it.
2. It must be complete and definite- Parties
must meet all the qualities of creditor and
debtor in the obligation/ in the part affected.
CIVIL LAW REVIEWER Chapter IV. EXTINGUISHMENT of OBLIGATIONS
OBLIGATIONS
3. Both debts are due extinguished to the one in lieu of the old. (Asked in ’78, ’88, ’94 and ’01)
4. Debts are liquidated concurrent amount,
and demandable eventhough the Requisites
5. There must be no creditors and debtors 1. A previous valid obligation
retention or are not aware of the 2. Agreement of all the parties to the new
controversy over compensation. obligation
either of the debts, 4. Accessory
commenced by 3rd obligations are also
3. Extinguishment of the old obligation
persons and extinguished. 4. Validity of the new obligation
communicated in
due time to the Novation is not presumed.
debtor Express novation: Parties must expressly
6. Compensation is not disclose their intent to extinguish the old
prohibited by law obligation by creating a new one.
Implied novation: No specific form is
Compensation is prohibited in: required. There must be incompatibility
1. Contracts of depositum between the old and new obligation or
2. Contracts of commodatum contract.
3. Future support due by gratuitous title (Asked in ’79, ’82, ’88, and ’94)
4. Civil liability arising from a penal offense
5. ofObligations
g obligation, only proof due
incompatibility to thethe
between government
old and new obligation would warrant a novation by implication. The restructuring agreement merely provided fo
6. Damage caused to the partnership by a
partner
ASSIGNMENT OF CREDIT (Art. 1285):
No effect and does not bind the debtor unless and until the latter
is notified of the assignment or learns of it.
Without
With Debtor’s With Debtor’s
Debtor’s
Consent Knowledge
Knowlege Test of Incompatibility
Debtor’s Debtor may set Debtor may Whether or not the old and new obligation can
consent to up setup
stand together, each one having an independent
assignment of compensation compensation
credit of debts of all credits existence. No incompatibility exists when they
constitutes a (maturing) (maturing) prior can stand together. Hence, there is no novation.
waiver of before the to the Incompatibility exists when they cannot stand
compensation, assignment of assignment and together. Hence, there is novation.
unless he credit but not of also latter ones
reserved his subsequent until he had Effects
right to ones knowledge of
compensation. the assignment. In General If Original If New
t take place because some legal requisites in favor of the creditor are lacking. Creditor may renounce his right to compensation,
Obligation is and he himself mayisset it up.As opposed
Obligation
Void Void
1. Old Novation is void if New obligation is
obligation is the original void, the old
extinguished obligation was obligation
and replaced void, except subsists, unless
by the new when annulment the parties
one may be claimed intended that the
stipulated. only by the former realations
CIVIL LAW REVIEWER Chapter IV. EXTINGUISHMENT of OBLIGATIONS
OBLIGATIONS
before novation debtor and creditor
2. Knowledge or
consent of the old
Accessory obligations are also extinguished, but may subsist debtor is not
only insofar as they may benefit 3rd persons who did not give required
their consent to the novation OR may not be affected upon Effects Effects
agreement between the parties. 1. Old debtor is 1. Insolvency of the
released new debtor revives
Original or new obligation with suspensive or 2. Insolvency of the the obligation of the
resolutory condition new debtor does not old debtor if it was
Art. 1299: If original obligation was subject to a revive the old anterior and public,
obligation in case the and known to the old
suspensive or resolutory condition, the new old debtor did not debtor.
obligation shall be under the same condition, agree to expromision 2. New debtor can
unless it is otherwise stipulated. 3. If with knowledge demand
and consent of old reimbursement of
Compatible Conditions Incompatible debtor, new debtor the entire amount he
Conditions can demand has paid, from the
Fulfillment of both Original obligation is reimbursement the original debtor. He
conditions: new extinguished, while entire amount paid may compel creditor
obligation becomes new obligation exists and w/ subrogation to subrogate him to
demandable Demandability shall of creditor’s rights all of his rights.
Fulfillment of be subject to 4. If without knowledge
condition concerning fulfillment/ of the old debtor,
the original nonfulfillment of the new debtor can
obligation: old condition affecting it demand
obligation is revived; reimbursement only
new obligation loses up to the extent that
force the latter has been
Fulfillment of benefited w/o
condition concerning subrogation of
the new obligation: creditor’s rights
no novation;
requisite of a 2. Subrogation of a 3rd person in the rights of the
previous valid and
creditor
effective obligation
lacking a. Conventional subrogation: by
agreement of the parties;
OBJECTIVE NOVATION Requisites: the consent of the 3rd person, and of the
1. Change of the subject matter original parties (Art. 1301).
2. Change of causa or consideration
3. Change of the principal conditions or terms
Conventional Assignment of credit
subrogation
SUBJECTIVE NOVATION Debtor’s consent is Debtor’s consent is not
1. Substitution of the Debtor: Consent of necessary required
creditor is an indispensable requirement Extinguishes an Refers to the same right
both in expromision and delegacion. obligation and gives which passes from one
rise to a new one person to another, without
modifying or extinguishing
the obligation
CIVIL LAW REVIEWER Chapter IV. EXTINGUISHMENT of OBLIGATIONS
OBLIGATIONS
2. When a 3rd person not interested in
the obligation pays with the express
or tacit approval of the debtor
3. When, even without the knowledge
of the debtor, a person interested in
the fulfillment of the obligation
without prejudice to the effects of
confusion as to the latter’s share
effects of confusion as to the latter’s
share
Effects
Total Partial
1. Transfers to the 1. A creditor, to whom
person subrogated partial payment has
the credit with all the been made, may
rights thereto exercise his right for
appertaining, either the remainder, and
against the debtor or shall be preferred to
3rd persons. the person
2. Obligation is not subrogated in his
extinguished, even if place in virtue of the
the intention is to partial payment.
pay it.
3. Defenses against the
old creditor are
retained, unless
waived by the debtor
CIVIL LAW REVIEWER Charts: PAYMENT & PERFORMANCE
OBLIGATIONS
1. Debtor or his: C = Creditor
2. Authorized Agent D = Debtor
3. Heir
4. Successor-in- interest
3rd PERSON
No free disposal & no capacity to alienate Effects: Payment is invalid w/o prejudice to
In Obligation to Give, if PAYOR has
natural obligations
Minor who entered contract w/o consent of parent or guardian
Effects: No right to recover fungible
thing delivered to creditor who spent 114
or consumed it in good faith
CIVIL LAW REVIEWER Charts: PAYMENT & PERFORMANCE
In GENERAL
Creditor /person in whose favor obligation was constituted, or
His successor in interest, or
Any person authorized to received payment (1240)
115
OBLIGATIONS
G – NOT valid
Payment to Incapacitated Creditor (1241)
1) If C has kept the thing delivered
2) Insofar as payment benefited C
If any judicial/extrajudicial demand is made by any one of the creditors who made the demand (1214)
115
In GENERAL
The very prestation (thing or service
Give: Debtor cannot compel C to receive a different specific thing even latter has same value or more valuable tha
Specific thing itself
Obligation to give a SPECIFIC thing
Accessions & accessories 116
If with loss, improvements, deterioration Apply Art. 1189
OBLIGATIONS
G:
C cannot demand a thing of superior quality; can demand inferior
D cannot deliver a thing of inferior quality
Unless quality & circumstances have been stated (1246) purpose and other circumstances of obligation considered
Obligation to give a GENERIC thing
Obligation to pay sum of money, if D alienates property to C = DACION EN PAGO governed by law on SALES (1245)
Payment of INTEREST
No interest (i.e., for the use of someone’s money) shall be due unless expressly stipulated in writing
CIVIL LAW REVIEWER Charts: PAYMENT & PERFORMANCE
Exceptions: 117
Contrary stipulation
OBLIGATIONS
When debt is in part liquidated & in part unliquidated
When there are several subjects/parties are bound under different terms/conditions
In Case of SUBSTANTIAL PERFORMANCE IN GOOD FAITH (1234)D may recover as if there had
been complete fulfillment
- Less damages suffered by C
INTEREST – If principal amount is received w/o reservation as to interest interest is presumed to have been paid (1176; 1253)
PRESUMPTIONS
in payment of INTERESTS & INSTALLMENTS
In GENERAL
In the place designated in the obligation
OBLIGATIONS
Unless there is a contraryexpress stipulation
In GENERAL
Extrajudicial expenses
If no place is designated required by the payment shall be borne by DEBTOR
When obligation is due and demandable but D may pay before due date if period is for benefit of D
In GENERAL
Payment to be made when the creditor makesademand (judicially/extrajudicially)
119
OBLIGATIONS
Exceptions wherein demand of creditor is not necessary for delay to exist:
When obligation/law expressly declares
Nature & circumstances of the obligation designation of time is controlling motive or establishment of contract
When demand would be useless
Because C may compel D to pay, and failure to pay will allow C to satisfy credit from properties of D that are not exempt from execution
- end of Obligations -
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CIVIL LAW REVIEWER TABLE of CONTENTS
CONTRACTS
Table of Contents
CONTRACTS
III. Cause...............................................127
CONTRACTS
Kristine Bongcaron
Patricia Tobias A. To formation:
Subject Editors
1. Consensual: consent is enough; e.g.
ACADEMICS COMMITTEE sale
2. Real: consent and delivery is required;
Kristine Bongcaron
Michelle Dy e.g. deposit, pledge
Patrich Leccio 3. Solemn or formal: special formalities are
Editors-in-Chief required for perfection e.g. donation of
realty
PRINTING & DISTRIBUTION
Kae Guerrero B. To relation to other contracts:
1. Principal: may exist alone; e.g. lease
DESIGN & LAYOUT 2. Accessory: depends on another contract
Pat Hernandez for its existence; e.g. guaranty
Viktor Fontanilla 3. Preparatory: a preliminary step towards
Rusell Aragones the celebration of a subsequent
Romualdo Menzon Jr.
contract; e.g. agency
Rania Joya
G. To their purpose
CIVIL LAW REVIEWER Chapter I. GENERAL PROVISIONS
CONTRACTS
Article 1305, Civil Code. INNOMINATE IV. Charactertics of Contracts (MARCO)
CONTRACTS shall be regulated by the stipulations
of the parties, by the general provisions of Titles I
and II of [the Civil Code], by the rules governing the A. MUTUALITY
most analogous nominate contracts, and by the The contract must bind both contracting parties;
customs of the place. its validity or compliance cannot be left to the will
of one of them (Art.1308).
Classes of Innominate Contracts
Taylor v.1.Uy Teng
Do utPiao,
des: I give
1922: soathat
[BUT] you may
contract mayexpressly
give confer upon one party the right to cancel the contract because the exercise of that right is
2. Do ut facias: I give so that you may do
3. Facio ut facias: I do so that you may do
4. Facio ut des: I do so that you may give
The release must be binding on both parties.
The determination of the performance may
II. Elements of Contracts be left to a 3rd person, whose decision shall
NOT be binding if:
A. Essential: Those without which the contract It is evidently inequitable (the courts will
would not exist (consent, object, causa). decide)
The decision had not been made known
B. Natural: Those which are derived from the to both parties (Art.1309)
nature of the contract and ordinarily
accompany the same-they are presumed to B. AUTONOMY
exist unless the contrary is stipulated e.g. The contracting parties may establish such
warranty in sales stipulations, clauses, terms and conditions as
they may deem convenient, provided they are
C. Accidental: Those which exist only if not contrary to law, morals, good customs,
stipulated public order, or public policy (Art. 1306).
Requisites: D. CONSENSUALITY
a. There must be a stipulation in favor of a Contracts are perfected by mere consent and
third person from that moment, the parties are bound not only
b. The stipulation must be part, not the to the fulfillment of what has been expressly
whole of the contract stipulated but also to all consequences which,
c. The contracting parties must have 124
according to their nature, may be in keeping with
clearly and deliberately conferred a good faith, usage and law, (Art.1315) EXCEPT
CONTRACTS
favor upon a third person, NOT a mere real contracts, such as deposit, pledge and
incidental benefit or interest. commodatum, are not perfected until the
d. The third person must have delivery of the object of the obligation.
communicated his acceptance to the (Tolentino)
obligor before its revocation
e. No relation of agency exists between E. OBLIGATORY FORCE
any of the parties and the third person
favored Art. 1159, Civil Code. Obligations arising from
contracts have the force of law between the
Florentino v. Encarnacion, 1977: contracting parties and should be complied with in
a. Contracts to perform personal acts good faith.
which cannot be as well performed by
others are discharged by the death of Art. 1308, Civil Code. The contract must bind both
contracting parties; its validity or compliance cannot
the promissor. Conversely, where the
be left to the will of one of them.
service or act is of such a character that
it may as well be performed by another,
Art. 1315, Civil Code. Contracts are perfected by
or where the contract, by its terms, mere consent, and from that moment the parties are
shows that performance by others bound not only to the fulfillment of what has been
was contemplated, death does not expressly stipulated but also to all the consequences
terminate the contract or excuse which, according to their nature, may be in keeping
nonperformance. with good faith, usage and law.
b. In this case the stipulation is a
stipulation pour atrui because the true Art. 1356, Civil Code. Contracts shall be obligatory,
intent of the parties is to confer a direct in whatever form they may have been entered into,
and material benefit upon a third party. provided all the essential requisites for their validity
are present. However, when the law requires that a
contract be in some form in order that it may be valid
Accion Directa: Where the statute
or enforceable, or that a contract be proved in a
authorizes the creditor to sue on his certain way, that requirement is absolute and
debtor’s contract, e.g. lessor v. sub- indispensable. In such cases, the right of the parties
lessee (Art. 1651,1652) (J.B.L. Reyes) stated in the following article cannot be exercised.
3. Fraud—
Where the contract is entered into in order to
defraud a person (Art. 1313)
4. Tortuous Interference—
Where the third person induces a
contracting party to violate his contract
(Art.1314).
CIVIL LAW REVIEWER Chapter II. ESSENTIAL REQUISITES
CONTRACTS
made by the other. (Manresa)
Requisites:
Requisites: a. Unqualified and Unconditional, i.e. it
1. It must be manifested by the concurrence of must conform with all the terms of the
the offer and acceptance (Arts. 1319-1326) offer, otherwise it is a counter-offer (Art.
2. The contracting parties must possess the 1319)
necessary legal capacity (Arts. 1327-1329) b. Communicated to the offeror and
3. It must be intelligent, free, spontaneous, and learned by him (Arts. 1319, 1322). If
real (not vitiated) (Arts. 1330-1346) made through an agent, the offer is
accepted from the time the acceptance
A. Concurrence is communicated to such agent.
1. Offer: a unilateral proposition which one c. Express/Implied, but is not presumed
party makes to the other for the celebration
of the contract. (Tolentino) OPTION CONTRACT: A preparatory contract in which
one party grants to the other, for a fixed period, the
Requisites: option to decide whether or not to enter into a principal
a. Definite contract. (Art. 1324)
b. Intentional
c. Complete
With consideration Without consideration
Invitations to make offers Offeror cannot Offeror may withdraw by
(advertisements) unilaterally withdraw his communicating withdrawal
offer to the offeree before
Business advertisements of things for acceptance
sale, are NOT definite offers, just
invitations to make an offer, UNLESS
B. Capacity
the contrary appears (Art. 1325)
1. Incapacitated to Give Consent
Advertisements for bidders are
a. Minors, UNLESS, the minor’s consent
invitations to make proposals, advertiser
is operative in contracts:
is NOT bound to accept lowest or
For necessaries (Art.1427)
highest bid, UNLESS contrary appears;
Where the minor actively
the bidder is the offeror (Art. 1326).
misrepresents his age (estoppel)
Statements of intention: no contract
results even if accepted
ome terms. Mercado v. Espiritu, 1917:
ate for deciding to perform or not to perform said act. It was merely a position to deliberate whether orMinors heldpurchase
not he would in estoppel through
the yacht and invitation to a proposal be
active misrepresentation
Bambalan v. Maramba, 1928:
There is no estoppel if the minority
was known.
b. Insane or demented persons,
UNLESS, they contract during a lucid
interval
c. Deaf-mutes who do not know how to
read and write.
2. Disqualified to Contract (Art. 1329): 2. Intimidation
a. Those under Civil interdiction for When one of the contracting parties is
transactions inter vivos (RPC Art. 34) compelled by a reasonable and well-
b. Undischarged insolvents (Insolvency grounded fear of an imminent and grave evil
Law, Sec.24) upon his person or property, or upon the
c. Husband and wife: cannot donate (Art. person or property of his spouse,
123 FC) to each other, nor sell if the descendants or ascendants, to give his
marriage is under ACP (Art.1490) consent (Art. 1335).
d. The ff. cannot purchase (Art. 1491):
ofThe
he assented to the requirements guardian: the
the defendants, hiscivil
ward’s property
and criminal actions against them would be dropped. A contract is valid even though one of the parties ente
The agent: the principal’s property 126
Executors and administrators:
property under administration
CONTRACTS
Public officers-state property under
their administration
Justices, judges, prosecutors, clerks
of court, lawyers-property attached
in litigation.
e. Members of Ethnic Minorities: their contracts (excluding sale
of personal property or personal service contracts) must be 3. Violence
approved by the Governor or his representative. (Public Irresistible force used to extort consent
Land Act) (J.B.L. Reyes)
4. Undue Influence
Incapacity to Give Disqualification to When a person takes improper advantage of
Consent (Art. 1327) Contract (Art.1329) his power over the will of another, depriving
Restrains the exercise of Restrains the very right the latter of a reasonable freedom of choice
the right to contract itself
(Art. 1337).
Based on subjective Based on public policy
circumstances of certain and morality
persons Circumstances:
a. Relationship of the parties (family,
Voidable Void spiritual, confidential etc.)
b. That the person unduly influenced was
C. Vices of Consent (Art. 1330, CC) (MIVUF) suffering from infirmity (mental
1. Mistake weakness, ignorance etc.) (Art.1337)
Inadvertent and excusable disregard of a
circumstance material to the contract. (J.B.L. 5. Fraud
Reyes) When through insidious words or
In order that mistake may invalidate machinations of one of the contracting
consent, it should refer to the parties, the other is induced to enter into a
substance of the thing which is the contract which, without them, he would not
object of the contract, or to those have agreed to (Art. 1338).
conditions which have principally moved
one or both parties to enter into the Art. 1339, Civil Code. Failure to disclose facts, when
contract (Art.1331) there is a duty to reveal them, as when the parties are
bound by confidential relations, constitutes fraud.
Art. 1340, Civil Code. The usual exaggerations in
Mistake of Fact Mistake of Law Mutual Mistake
trade, when the other party had an opportunity to
When one or When one or Must be as
know the facts, are not in themselves fraudulent.
both contracting both parties to the legal
parties believe arrive at an effect of an
that a fact exists erroneous agreement Art. 1341, Civil Code. A mere expression of an
opinion does not signify fraud, unless made by an
when in reality it conclusion on Must be
does not, or vice the mutual expert and the other party has relied on the former's
special knowledge.
versa interpretation of Real purpose
a question of of the parties
law or the legal must have
effects been Art. 1342, Civil Code. Misrepresentation by a third
frustrated person does not vitiate consent, unless, such
misrepresentation has created substantial mistake
and the same is mutual. Aleatory contract: where one of the contracting
parties assumes the risk that the thing will never
Art. 1343, Civil Code. Misrepresentation made in come into existence, e.g. insurance
good faith is not fraudulent but may constitute error.
Requisites:
a. Lawful: Not contrary to law, morals, good
customs, public order or public policy.
b. Actual or possible
c. Transmissible: Within the commerce of man
d. Determinate or determinable
CONTRACTS
cause which was
true and lawful
Lesion or Cause is not Shall not invalidate
inadequacy proportionate to the contract
of cause object except when
CIVIL LAW REVIEWER Chapter II. ESSENTIAL REQUISITES
a)there is fraud,
mistake, undue
influence
b)when parties
intended a
donation
desire to benefit Liguez, but also to secure her cohabiting with him, so that he could gratify his sexual impulses. The donation was an onerous transaction and clearly pred
128
CONTRACTS
CIVIL LAW REVIEWER Chapter III. FORMS OF CONTRACTS
CONTRACTS
3. Partnership where immovable property
iritual System of the Spanish Code: The law looks more on the spirit rather than the form of contracts.
or real rights are contributed to the
common fund (Arts.1771 and 1773)
Exceptions:
v. CA, 1998: A contract may be encompassed in several instruments even though every instrument is not signed by the parties since it is sufficient if the unsigned instrum
When the law requires that a contract be in
some form for validity (Arts. 1357-1358)
When the law requires that contract be in
some form to be enforceable (Statute of
Frauds)
CONTRACTS
instrument; parties, the the least the doubt shall
contract shall transmission be settled in
3. Such failure to express their true intention is
be null and of rights and favor of the
due to mistake, fraud, inequitable conduct, void. interests shall greatest
or accident; and prevail. reciprocity of
4. There is clear and convincing proof of interests.
mistake, fraud, inequitable conduct, or
accident.
If the mistake, fraud, inequitable conduct, or accident has prevented the meeting of the minds of the parties, the proper remedy is not reformation
RESCISSIBLE
VOIDABLE
UNENFORCEABLE
VOID OR INEXISTENT
CONTRACTS
contracts? (Art representation to things in
guardians defraud existing
1381; see also Art of absentees litigation
creditors
1382)
What makes it When the acts of When the acts When the creditors If entered into by
defective? administration of administration cannot in any other the defendant
cause LESION or cause LESION manner collect the without the
damage to the or damage to claims due them knowledge &
WARD they the ABSENTEE approval of the
represent by more they represent litigants or
than 25% of the by more than competent judicial
value of the thing 25% of the value authority
of the thin
Effect on the Valid until rescinded (Art 1380)
Contract
How to rescind? Direct Action (different from action for Accion Pauliana for Contracts in Fraud of
rescission under Art 1191) Creditors
By ward, or by
guardian ad litem
of ward during
incapacity of ward
in an action
against the
original guardian
When to rescind Within four years Within 4 years Within 4 years from Within 4 years
(Art 1389) from [re-] gaining from knowledge knowledge of from knowledge of
capacity of domicile of fraudulent contract fraudulent contract
absentee
CIVIL LAW REVIEWER Chapter VI. DEFECTIVE CONTRACTS
What makes it
Incapacity of one party to the Consent vitiated by mistake, violence,
defective? (Art
contract intimidation, undue influence or fraud
1390)
Effect on the Valid until annulled by competent court (Art 1390 last par)
Contract
How to annul? 1. Directly, by an action for annulment
2. Indirectly, by counterclaim asking for positive action of the court to set aside the
contract
CONTRACTS
institute proceedings (art 1401 par 1);
2. the right of action is based upon the incapacity of any one of the contracting
parties and the thing is lost through the fault or fraud of the plaintiff (Art 1401 par
2)
Who can/cannot 1. Parties who are obliged principally or subsidiarily
annul? 2. Persons who are capable cannot allege the incapacity of those with whom they
(Art 1397) contracted
3. Persons who exerted intimidation, violence, or undue intimidation, or employed
fraud, or caused mistake, cannot base their action upon these flaws of the
contract
When? (Art 1391) Within four years after guardianship of Within four years
minors or incapacitated persons 1. After intimidation, violence or undue
ceases influence ceases
2. From the time of discovery of mistake
or fraud
Effect of 1. Mutual restitution of the things delivered, along with fruits and price paid with
Annulment interest (Art 1398)
2. Damages to be paid by party who caused defect of the contract, by virtue of
Article 20 and 21 of the Civil Code
How to Cure 1. Express (written or oral manifestation) or tacit ratification (acts or conduct) by
Defect? (Arts injured party, or guardian of incapacitated person.
1392 - 1396) - Ratification does not require the conformity of the contracting party
who has no right to bring the action for annulment (Art 1395)
CIVIL LAW REVIEWER Chapter VI. DEFECTIVE CONTRACTS
Effect on the No effect unless ratified. Cannot be enforced by a proper action in court.
Contract
How to assail? Not by direct action. Not by direct action. Not by direct action. 133
1. As a defense, by 1. As a defense, by motion 1. As a defense, by
CONTRACTS
motion to dismiss the to dismiss the complaint motion to dismiss the
complaint on the on the ground that the complaint on the
ground that the contract is unenforceable; ground that the
contract is 2. Objection to the contract is
unenforceable presentation of oral unenforceable
evidence to prove an oral
contract (See Art 1405)
Who can assail? By person whose name By party against whom the By party against whom
*an the contract was entered contract is being enforced; the contract is being
unenforceable into; By owner of property. or his privies. enforced; or his privies;
contract cannot or parents or guardians
be assailed by persons, as it is a
third persons (Art personal defense
1408)
When? When a party asks the court to enforce the contract
CONTRACTS
beginning (Art 3.Those whose cause or object did not exist at the time of the transaction
1409) 4.Those whose object is outside the commerce of men
5.Those which contemplate an impossible service
6.Those where the intention of the parties relative to the principal object of the
contract cannot be ascertained
7.Those expressly prohibited or declared void by law
How to assail? 1. File for action for declaration of inexistence or nullity of contract
2.As a defense during trial (Art 1409 last par). Such defense not available to third
persons not directly affected by contract (Art 1421)
3.In pari delicto applies when cause or object of contract constitutes a criminal
offense (Art 1411)
Who can assail? 1. Innocent party Art 1. Any of the parties 1. Any person whose
1411 par 2; Art 1412 2. Any person whose interests are
par2) interests are directly directly affected by
2. Less-guilty party, upon affected by the contract the contract Art
court discretion (Art 1421) (1421)
3. Incapacitated person 2. By party for whose
who is a party to an protection the
illegal contract, upon prohibition of the
court discretion (Art law is designed (Art
1415) 1416)
4. Any person whose
interests are directly
affected by the
contract (Art 1421)
When? The action or defense does not prescribe (Art 1410)
- end of Contracts -
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CIVIL LAW REVIEWER TABLE of CONTENTS
PROPERTY
Table of Contents
PROPERTY
X. Conditions Not Affecting Usufruct.....194
III. Kinds of Accession............................147 Chapter VIII. Easement................................196
IV. Principles Governing Each Kind of I. Concept............................................196
Accession..................................................147 II. Essential Features............................196
Chapter IV. Quieting of Title........................152 III. Classification of Servitudes...............197
I. In General.........................................152 IV. General Rules Relating to Servitudes
II. Purpose............................................152 198
III. Nature: Quasi in Rem.......................152 V. Modes of Acquiring Easements........198
IV. Requisites.........................................152 VI. Rights and Obligations of Owners of
V. Prescription of Action........................153 Dominant and Servient Estates.................199
Chapter V. Co-Ownership...........................154 VII. Modes of Extinguishment of
I. Definition...........................................154 Easements................................................200
II. Characteristics..................................154 VIII. Legal Easements..........................202
III. Difference between Co-ownership and Chapter IX. Nuisance...................................212
Joint Tenancy............................................155 I. Definition...........................................212
IV. Difference between Co-ownership and II. Classes.............................................212
Partnership................................................155 III. Liability in Case of Nuisance.............213
V. Sources of Co-Ownership.................155 IV. Regulation of Nuisances...................214
VI. Rights of Each Co-owner over the Thing Chapter X. Modes of Acquiring Ownership
or Property Owned in Common.................157 ....................................................................... 217
VII. Implication of Co-owner’s Right over I. Mode v. Title.....................................217
His Ideal Share..........................................161 II. Mode.................................................217
VIII. Rules on Co-Ownership Not Chapter XI. Donation...................................222
Applicable to CPG or ACP.........................161 I. Nature...............................................222
IX. Special Rules on Ownership of Different II. Requisites.........................................222
Stories of a House as Differentiated from III. Kinds.................................................222
Provisions of the Condominium Act 162 IV. Who May Give or Receive Donations
X. Extinguishment of Co-Ownership 166 223
Chapter VI. Possession...............................168 V. Who May Not Give or Receive
I. Definition...........................................168 Donations..................................................224
II. Degrees of Possession.....................169 VI. Acceptance.......................................225
III. Classes of Possession......................169 VII. Form.............................................225
IV. Cases of Possession........................169 VIII. What May Be Donated.................225
V. What Things May be Possessed.......170 IX. Effect.................................................226
VI. What May Not Be Possessed by Private X. Revocation and Reduction................227
Persons.....................................................171 Chapter XII. Lease........................................232
VII. Acquisition of Possession.............171 I. General Characteristics....................232
VIII. Effects of Possession...................173 II. Kinds.................................................232
IX. Effects of Possession in the Concept of III. Lease of Things................................232
Owner........................................................177
X. Presumption in Favor of the
Possessor—for Acquisitive Prescription....178
XI. Possesion May Be Lost By...............179
CIVIL LAW REVIEWER Chapter I. DEFINITION and CLASSIFICATION of PROPERTY
PROPERTY
Property
Prof. Solomon Lumba
Faculty Editor
Michelle Go DEFINITION
Lead Writer
CLASSIFICATION
Erika Esperas UNDER THE CIVIL CODE
Katrina Michelle Mancao
Celie Mari Santos BY OWNERSHIP
Writers OTHER CLASSIFICATIONS
CIVIL LAW I. Definition
Kristine Bongcaron
Patricia Tobias PROPERTY: Mass of things or objects
Subject Editors
characterized by
ACADEMICS COMMITTEE 1. Utility – capacity to satisfy human wants 137
Kristine Bongcaron 2. Individualityand substantivity – separate and
PROPERTY
Michelle Dy autonomous existence
Patrich Leccio 3. Susceptibility of being appropriated – those
Editors-in-Chief which cannot be appropriated because of
their distance, depth or immensity cannot be
PRINTING & DISTRIBUTION
considered as things (i.e. stars, ocean)
Kae Guerrero
them permanently attached to the land, and b. However, by special treatment of Act
forming a permanent part of it; the animals 1508 (Sec. 7, Chattel Mortgage Law),
in these places are included; growing crops may be subject of a
7. Fertilizer actually used on a piece of land; Chattel Mortgage.
8. Mines, quarries, and slag dumps, while the c. For the purpose of attachment: growing
matter thereof forms part of the bed, and crops are to be attached in the same
waters either running or stagnant; manner as realty. (Rule 59, Sec. 7)
9. Docks and structures which, though floating,
are intended by their nature and object to 2. Par. 3: Things incorporated
remain at a fixed place on a river, lake, or a. Res vinta in Roman Law
coast; b. “Attachment in a fixed manner”:
10. Contracts for public works, and servitudes breakage or injury in case of separation
and other real rights over immovable will be substantial e.g. wells, sewers,
property. aqueducts and railways
Whether attached by the owner
Immovables by Nature— himself or some other person 138
Those which cannot be moved from place to 3. Par. 7: Fertilizer
PROPERTY
place; their intrinsic quality have no utility except Actually used” means it has been spread
in a fixed place (Par. 1 & 8) over the land.
1. Par. 1: Lands, building, roads and
constructions
a. Buildings Immovables by Destination—
To be considered a building, their Those which are essentially movables but by the
adherence to the land must be purpose for which they have been placed in an
permanent and substantial. immovable, partake of the nature of an
Buildings have been considered as immovable because of the added utility derived
immovables, despite: therefrom (Par. 4, 5, 6 & 9)
Treatment by the parties e.g. 1. Par. 4: Fixtures and ornaments
they constitute a separate Requisites:
mortgage on the building and a. Placed by the owner or by the tenant as
the land (Punzalan v. agent of the owner;
Lacsamana) b. With intention of attaching them
Separate Ownership i.e. a permanently even if adherence will not
building on rented land is still involve breakage or injury.
considered an immovable.
(Tolentino) Where the improvement or ornaments
2. Par. 8: Mineral deposits and waters placed by the lessee are not to pass to the
a. Mineral Deposits owner at the expiration of the lease, they
Minerals still deposited in the soil remain movables for chattel mortgage
When minerals have been purposes. (Davao Sawmill v. Castillo)
extracted, they become chattel.
b. Slag Dump: dirt and soil taken from a 2. Par. 3 v. Par. 4
mine and piled upon the surface of the Par. 3 Par. 4
ground. Inside the dump can be found Cannot be separated from Can be separated from
the minerals. immovable without immovable without
c. Waters: those still attached to or running breaking or deterioration breaking or deterioration
thru the soil or the ground. Need not be placed by the
Must be placed by the
owner, or by his agent,
owner expressed or implied
Immovables by Incorporation—
Those which are essentially movables but are Real property by
Real property by
incorporation and
attached to an immovable in such a way as to be incorporation
destination
an integral part thereof (Par. 2, 3, 4, 6 & 7)
1. Par. 2: Trees and plants
a. Trees and plants: only immovables 3. Par. 5: Machinery and equipment
when they are attached to the land or a. Immovable characteristic depends upon
form an integral part of an immovable their being destined for use in the
When they have been cut or industry or work in the tenement;
uprooted, they become movables. The moment they are separated,
(from the immovable or from the
industry or work in which they are
utilized) they recover their usufruct and lease of real property for a imm
condition as movables. period of 1 year and registered ova
If it is still needed for the industry ble
but separated from the tenement Effect of Enumeration: Art. 415 not absolute that
temporarily, the property continues — whi
to be immovable. 1. Parties may by agreement treat as movable ch
b. Requisites for Immovability in Par. 5: that which is enumerated by law as is
Placed by the owner or the tenant immovable, but effective only as to them. lega
as agent of the owner; lly
Adapted to the needs of the industry The view that parties to a deed of chattel mov
or work carried on mortgage may agree to consider a house as able
EXCEPT: When estoppel operates personal property for the purposes of said .
contract, "is good only insofar as the
Parties to a contract may by agreement contracting parties are concerned. It is
treat as personal property that which by based, partly, upon the principle of estoppel"
nature would be real property, as long (Evangelista vs. Alto Surety)
as no interest of third parties would be
prejudiced. That characterization is 2. For purposes of taxation, improvements on
effective as between the parties. land are commonly taxed as realty, even
(Makati Leasing v. Wearever) though for some purposes, they might be
considered as personalty.
c. EFFECT of Attachment
Machinery become part of the It is a familiar phenomenon to see things
immovable. classified as real property for purposes of
The installation of machinery and taxation, which on general principle, might
equipment in a mortgaged sugar be considered personal property. (Manila
central for the purpose of carrying Electric v. Central Bank)
out the industrial functions of the
latter and increasing production,
constitutes a permanent MOVABLES OR PERSONAL PROPERTY
improvement on said sugar central
and subjects said machinery and Article 416, Civil Code. The following things are
equipment to the mortgage deemed to be personal property:
constituted thereon. (Berkenkotter 1. Those movables susceptible of
v. Cu Unjieng) appropriation which are not included in the
preceding article;
4. Par. 6: Animal houses and animals therein 2. Real property which by any special
a. Requisites: provision of law is considered as personal
Placed by the owner or the tenant property;
as agent of the owner, with the 3. Forces of nature which are brought under
control by science; and
intention of permanent attachment;
4. In general, all things which can be
Forming a permanent part of the transported from place to place without
immovable. impairment of the real property to which
they are fixed.
5. Par. 9: Docks and fixed floating structures
a. A floating house tied to a shore or bank Article 417, Civil Code. The following are also
post and used as a residence is considered as personal property:
considered real property, considering 1. Obligations and actions which have for
that the waters on which it floats are their object movables or demandable
considered immovables. sums; and
b. But if the floating house makes it a point 2. Shares of stock of agricultural, commercial
and industrial entities, although they may
to journey from place to place, it
assumes the category of a vessel, and
is considered immovable property
Tests to Determine Movable Character—
1. By exclusion – everything NOT included in
Immovables by Analogy (Par. 10)—
Article 415
Contracts for public works, servitudes, other
real rights over immovable property e.g.
Parties cannot by agreement treat as
139
PROPERTY
If the value of the gain cannot be
2. By description – an object is immovable if it ascertained, a fine of from 200 to 500
possesses: pesos shall be imposed.
a. Ability to change location – whether it
can be carried from place to place; 2. Robbery and theft can be committed only
b. Without substantial injury to the against personal property.
immovable to which it is attached. Art. 293. Who are guilty of robbery.
Any person who, with intent to gain,
The steel towers built by MERALCO are not shall take any personal property
buildings or constructions since they are belonging to another, by means of
removable and merely attached to a square violence or intimidation of any person, or
metal frame by means of bolts, which when using force upon anything shall be guilty
unscrewed could easily be dismantled and of robbery.
moved from place to place, without breaking
the material or causing deterioration to the Art. 308. Who are liable for theft.
object they are attached. (Board of Theft is committed by any person who, 140
Assessment Appeals v. Meralco) with intent to gain but without violence
PROPERTY
against or intimidation of persons nor
3. By special provision of law – real property is force upon things, shall take personal
considered as personal property property of another without the latter's
a. Growing crops under the Chattel consent.
Mortgage Law
b. Machinery installed by a lessee not Form of Contracts Involving Movables and
acting as agent of the owner (Davao Immovables—
Sawmill v. Castillo) 1. Subject matter of specific contracts: only
c. Intellectual property – considered real property can be the subject of real
personal property; it consists in the mortgage (Art. 2124) and antichresis (Art
pecuniary benefit which the owner can 2132); only personal property can be the
get by the reproduction or manufacture subject of voluntary deposit (Art. 1966),
of his work. pledge (Art. 2094) and chattel mortgage (Act
1508)
4. By forces of nature – e.g. electricity, gas, 2. Donations of real property are required to
heat, oxygen be in a public instrument (Art. 749) but a
donation of a movable mat be made orally or
in writing (Art. 748)
IMPORTANCE AND SIGNIFICANCE OF
CLASSIFICATION UNDER THE CIVIL CODE Acquisitive Prescription—
1. Real Property can be acquired by
Criminal Law— prescription in 30 years (bad faith) and 10
1. Usurpation of property can take place only years (good faith).
with respect to real property. 2. Movables can be acquired by prescription in
8 years (bad faith) and 4 years (good faith).
Art. 312. Occupation of real property
or usurpation of real rights in Venue—
property. 1. Rule 4, Sec. 1: Venue of real actions.
Actions affecting title to or possession of
Any person who, by means of violence real property, or interest therein, shall be
against or intimidation of persons, shall commenced and tried in the proper court
take possession of any real property or which has jurisdiction over the area
shall usurp any real rights in property wherein the real property involved, or a
belonging to another, in addition to the portion thereof, is situated. Forcible
penalty incurred for the acts of violence entry and detainer actions shall be
executed by him, shall be punished by a commenced and tried in the municipal
fine from 50 to 100 per centum of the trial court of the municipality or city
gain which he shall have obtained, but wherein the real property involved, or a
not less than 75 pesos. portion thereof, is situated.
2. Rule 4, Sec. 2: Venue of personal actions. Classifications—
All other actions may be commenced 1. Administered by the State
and tried where the plaintiff or any of the a. For public use—may be used by
principal plaintiffs resides, or where the everybody, even by strangers or aliens,
defendant or any of the principal in accordance with its nature but nobody
defendants resides, or in the case of a can exercise over it the rights of a
non-resident defendant where he may private owner.
be found, at the election of the plaintiff. b. For public service—may be used only by
authorized persons but exists for the
Governing Law— benefit of all e.g. fortresses, unleased
1. Immovables are governed by the law of the mines and civil buildings
country wherein they are located c. For development and national wealth—
2. Movables are governed by the personal includes natural resources such as
laws of the owner which in some cases is minerals, coal, oil and forest
the law of his nationality and in other cases,
the law of his domicile. 2. Administered by Municipal Corporations 141
PROPERTY
Action for Recovery of Possession— Article 424, Civil Code. Property for public use, in
1. Possession of real property may be the provinces, cities, and municipalities, consist of
recovered through accion reivindicatoria, the provincial roads, city streets, municipal streets,
accion publiciana, forcible entry and the squares, fountains, public waters, promenades,
unlawful detainer. and public works for public service paid for by said
2. Possession of movable property may be provinces, cities, or municipalities.
recovered through replevin.
PROPERTY
special laws.
PROPERTY
exhibition.
Susceptibility to substitution—
1. Fungibles
Things which because of their nature or the
will of the parties, are capable of being
substituted by others of the same kind, not
having a distinct individuality.
2. Non-Fungibles
Things which cannot be substituted for
another
By susceptibility to deterioration—
1. Deteriorable that deteriorate through use or
by time
2. Non-deteriorable
By reason of designation—
1. Generic
That which indicates its homogenous nature,
but not the individual such as a horse,
house, dress, without indicating it.
CIVIL LAW REVIEWER Chapter II. OWNERSHIP
PROPERTY
Once property is lost, the owner can no
longer use force, but must file action to
recover
PROPERTY
a. Can construct works, make plantings Prescription of Action: 30 years
and excavations b. Accion Publiciana: Recovery of a better
b. Respecting servitudes and reasonable right to possess (de jure)
requirements of aerial navigation Judgment as to who has the better
c. Easement of lateral and subjacent right of possession
support Also, actions for ejectment not filed
2. Subject to laws and ordinances— within 1 year must be filed as accion
The doctrine that ownership of the land publiciana
extends to the periphery of the universe Prescription: 10 years
(Cujus est solum ejus est usque ad c. Accion Interdictal: Recovery of
coelum, usque ad infernos) is no longer actual/physical possession (de facto)
applied in the modern world, in view of the FORCIBLE ENTRY: Lawful possessor
doctrine that the air is a public highway. (US deprived through FISTS:
v. Causby) o FISTS (Force, Intimidation,
Strategy, Threats, Stealth)
Right to Hidden Treasure— o Prescription: 1 year from
Article 438, Civil Code. Hidden treasure belongs to dispossession (force,
the owner of the land, building, or other property on
intimidation, threats) or from
which it is found.
knowledge of dispossession
Nevertheless, when the discovery is made on the (strategy, stealth)
property of another, or of the State or any of its UNLAWFUL DETAINER: Possessor
subdivisions, and by chance, one-half thereof shall refused to vacate upon demand by
be allowed to the finder. If the finder is a trespasser, owner
he shall not be entitled to any share of the treasure. o Legal possession (by
permission/tolerance) becomes
If the things found be of interest to science or the unlawful upon failure to vacate
arts, the State may acquire them at their just price,
o Prescription of action: 1 year
which shall be divided in conformity with the rule
from last notice to vacate
stated.
Article 439, Civil Code. By treasure is understood, In case of leases of residential units, the
for legal purposes, any hidden and unknown deposit grounds for judicial ejectment are limited to
of money, jewelry or other precious objects, the those enumerated in, RA 9653: Rent
lawful ownership of which does not appear Control Law of 2009 (See Section on
Special Laws)
1. Legal concept of hidden treasure
a. Consist of money jewels or other 3. Requisites for Recovery [Art. 434, Civil
precious objects Code]
b. Hidden and unknown, such that the a. Property must be identified
finding is a real discovery Through a relocation survey and a title
2. Owner also owns hidden treasure found in properly identifying boundaries and
the land subject to: location
b. Plaintiff must rely on the strength of his 2. Specific Limitations
title and not on weakness of defendant’s a. Legal Servitudes: once requisites are
title satisfied, the servient owner may ask
Right must be founded on positive title the Court to declare the existence of an
and not on lack or insufficiency of easement
defendant’s Art. 644 & 678: Aqueduct
Ei incumbit probatio qui dicit, non Art. 679: Planting of trees
qui negat: He who asserts, not he Art. 670: Light and View
who denied must prove Art. 649 & 652: Right of Way
Art. 637: Passage of water from upper
to lower tenements
IV. Limitations on Real Right of Art. 676: Drainage of buildings
Ownership Art. 684-687: Lateral and subjacent
support
Limitations Provided by Law— b. Must not injure the rights of a third
person 146
1. In General
a. Police Power: Property taken with no Sic Utere Tuo Ut Alienum Non
PROPERTY
compensation for general welfare Laedas
When any property is condemned or The owner of a thing cannot make use
seized by competent authority in the thereof in such manner as to injure the
interest of health, safety or security, rights of a third person. [Art. 431, Civil
the owner thereof shall not be entitled Code]
to compensation, unless he can show c. Act in State of Necessity—
that such condemnation or seizure is The owner of a thing has no right to
unjustified. [Art. 436, Civil Code] prohibit the interference of another with
Requisites: To justify the exercise of the same, if the interference is
police power, the following must necessary to avert an imminent danger
appear: and the threatened damage, compared
o The interests of the public to the damage arising to the owner from
generally, require such the interference, is much greater. The
interference (as distinguished owner may demand from the person
from those of a particular class) benefited, indemnity for the damage to
o The means are reasonably him. [Art. 432, Civil Code]
necessary for the
accomplishment of a purpose,
and not unduly oppressive
b. Taxation: Forced contribution to the
operation of government
c. Eminent Domain: Property taken for
public use/purpose, but subject to due
process and payment of just
compensation
Requisites – To justify the exercise of
the right of eminent domain, the
following requisites must all be
present:
o Private property as the object of
the expropriation;
o The property is taken by the
State or by competent authority;
o The purpose of the taking is for
public use;
o The taking must be attended
with due process of law;
o There is payment of just
compensation
CIVIL LAW REVIEWER Chapter III. ACCESSION
PROPERTY
thereto, either naturally or artificially Time of Accrual depending on kind:
PROPERTY
c. Meaning of BAD FAITH Bad faith of one party neutralizes the
Bad faith bad faith of the other
o On the part of the landowner:
Whenever the building, planting
Case 2: BPS builds, plants, or sows on another’s ;and using his own materials
Landowner BPS and Owner of Material
Good faith Good faith
Landowner has option to: BPS has right to retain (right of retention) the land
a. Acquire the improvement after paying until the payment of indemnity
indemnity which may be the original cost of
improvement OR increase in value of the whole NOTE: During this period BPS is not required to pay
brought about by the improvement rent.
b. Sell the land to the BP or collect rent from
sower UNLESS value of land is more than the
thing built, planted or sown or BP shall pay rent
fixed by parties or by the court in case of
CIVIL LAW REVIEWER Chapter III. ACCESSION
disagreement.
NOTE: Landowner can be forced to choose under pain
of direct contempt or court can choose for him.
Good faith Bad faith
Landowner has right to collect damages in any case Pay damages to landowner
and option to: BPS lose materials without right to indemnity
a. Acquire improvements without paying No right to refuse to buy the land
indemnity if the improvements are still standing Recover necessary expenses for preservation of
on the land land
b. Sell the land to BP or collect rent from the
sower unless value of the improvements in
which case there will be a forced lease
c. Order demolition of improvements or
restoration o0f land to its former condition at
the expense of the BPS
PROPERTY
Bad faith Good faith
Landowner must indemnify BPS for the BPS has right to :
improvements and pay damages as if he himself did a. Be indemnified for damages
the BPS b. Remove all improvements in any event
Landowner has no option to sell the land and
cannot compel BPS to buy the land unless BPS
agrees to
Bad faith Bad faith
Same as though acted in bad faith under Article 453 Same as though acted in bad faith under Article 453
Case 3: BPS builds, plants or sows on another’s land with materials owned by third persons
Landowner BPS Owner of Material
Good faith Good faith Good faith
Right to acquire improvements Right of retention until Collect value of material
and pay indemnity to BPS; necessary and useful expenses primarily from BPS and
subsdiarily liable to OM are paid subsidiarily liable for landowner
Has option to: Pay value of materials to OM if BPS is insolvent
a. Sell land to BP except if the Limited right of removal
value of the land is
considerably more
b. Rent to sower
Good faith Good faith Bad faith
Right to acquire improvements Right of retention until Lose the material without right
and pay indemnity to BPS necessary and useful expenses to indemnity
Has option to: are paid. Must pay for damages to BPS
a. Sell land to BP except if the Keep BPS without indemnity to
value of the land is OM and collect damages from
considerably more him
b. Rent to sower
Without subsidiarily liability for
cost of materials
Good faith Bad faith Bad faith
Landowner has right to collect Recover necessary expenses Recover value from BPS (as if
damages in any case and for preservation of land from both are in good faith)
option to: landowner unless landowner If BPS acquires improvement,
a. Acquire improvements w/o sells land remove materials if feasible w/o
paying for indemnity; or injury
b. Demolition or restoration; No action against landowner but
or liable to landowner for damages
c. Sell to BP, or to rent to
sower
Pay necessary expenses to
BPS
Bad faith Bad faith Bad faith
Same as when all acted in good Same as when all acted in good Same as when all acted in good
faith under Article 453 faith under Article 453 faith under Article 453
CIVIL LAW REVIEWER Chapter III. ACCESSION
Bad faith Good faith Good faith
Acquire improvement after May remove improvements Remove materials if possible
paying indemnity and damages Be indemnified for damages in w/o injury
to BPS unless latter decides to any event Collect value of materials from
remove BPS; subsidiarily from
Subsidiarily liable to OM for landowner
value of materials
Bad faith Bad faith Good faith
Acquire improvements after Right of retention until Collect value of materials
indemnity; subsidiarily liable to necessary expenses are paid primarily from BPS and
OM for value of materials Pay value of materials to OM subsidiarily from landowner
Has option to: and pay him damages Collect damages from BPS
a. Sell the land to BP except if If BPS acquires improvements,
the value of the land is remove materials in any event
considerably more
b. Rent to sower 150
Good faith Bad faith Good faith
PROPERTY
Acquire imrovement after Right of retention until Collect value of materials
paying indemnity; subsidiarily necessary expenses are paid primarily from BPS and
liable to OM Pay value of materials to OM subsidiarily from landowner
Landowner has option to: Pay damages to OM Collect damages from BPS
a. Sell land to BP except if If BPS acquires improvements,
value of land is absolute right of removal in any
considerably more event
b. Rent to sower
Bad faith Good faith Bad faith
Acquire improvements and pay Receive indemnity for damages No right to indemnity
indemnity and damages to BPS Absolute right of removal of Loses right to mnaterial
unless latter decides to remove improvements in any event
materials
PROPERTY
area they lost
o Owners of the lands adjoining
the old bed are given the right to
acquire the same by paying the
value of the land
Not exceeding the value
of the land invaded by
the new bed (the old
property of the owner)
o The new bed opened by the
river on a private estate shall
become of public dominion
d. FORMATION OF ISLANDS
Belong to the State if:
o Formed on the SEAS within the
jurisdiction of the Philippines
o Formed on LAKES
o Formed on NAVIGABLE or
FLOATABLE RIVERS
Capable of affording a
channel or passage for
ships and vessels
Must be sufficient not only
to float bancas and light
boats, but also bigger
watercraft
Deep enough to allow
unobstructed movements of
ships and vessels
TEST: can be used as a
highway of commerce, trade
and travel
Belong to the Owners of the nearest
margins or banks if
o Formed through successive
accumulation of alluvial deposits
o On NON-NAVIGABLE and
NON-FLOATABLE RIVERS
If island is in the middle:
divided longitudinally in half.
CIVIL LAW REVIEWER Chapter IV. QUIETING OF TITLE
PROPERTY
a. Unless made in a legal proceeding
Article 476, Civil Code. Whenever there is a cloud b. Or asserting that an instrument or entry
on title to real property or any interest therein, by in plaintiff’s favor is not what it purports
reason of any instrument, record, claim,
to be
encumbrance or proceeding which is apparently
valid or effective but is in truth and in fact invalid,
3. To boundary disputes
ineffective, voidable, or unenforceable, and may be 4. To deeds by strangers to the title unless
prejudicial to said title, an action may be brought to purporting to convey the property of the
remove such cloud or to quiet the title. plaintiff
5. To instruments invalid on their face
An action may also be brought to prevent a cloud 6. Where the validity of the instrument involves
from being cast upon title to real property or any a pure question of law
interest therein.
PROPERTY
d. Such instrument, etc. may be prejudicial property in possession has a continuing
to the true owner or possessor. right to invoke a court of equity to
remove a cloud that is a continuing
B. The plaintiff must have legal or equitable
menace to his title. Such a menace is
title to, or interest in the real property—
compared to a continuing nuisance or
trespass which is treated as successive
Article 477, Civil Code. The plaintiff must have
nuisances or trespasses, not barred by
legal or equitable title to, or interest in the real
property which is the subject matter of the action. He statute until continued without
need not be in possession of said property. interruption for a length of time sufficient
1. Legal title: the party is the registered owner to affect a change of title as a matter of
of the property. law." (Pingol v. CA)
2. Equitable title: the person has the
beneficial ownership of the property. 2. When the plaintiff is not in possession of
the property, the action to quiet title may
C. Plaintiff must return the benefits received prescribe.
from the defendant— a. 10 yrs. – ordinary prescription
b. 30 yrs. – extraordinary prescription
Article 479, Civil Code. The plaintiff must return to Article 480, Civil Code. The principles of the
the defendant all benefits he may have received general law on the quieting of title are hereby
from the latter, or reimburse him for expenses that adopted insofar as they are not in conflict with this
may have redounded to the plaintiff’s benefit. Code.
NOTE: REQUISITES OF AN ACTION TO Article 481, Civil Code. The procedure for the
PREVENT A CLOUD— quieting of title or the removal of a cloud therefrom
1. Plaintiff has a title to a real property or shall be governed by such rules of court as the
interest therein Supreme Court shall promulgate.
2. Defendant is bent on creating a cloud on the
title or interest therein. The danger must not
be merely speculative or imaginary but
imminent.
3. Unless the defendant is restrained or
stopped, the title or interest of the plaintiff
will be prejudiced or adversely affected.
V. Prescription of Action
1. When plaintiff is in possession of the
property – the action to quiet title does not
prescribe.
a. The reason is that the owner of the
property or right may wait until his
possession is disturbed or his title is
CIVIL LAW REVIEWER Chapter V. CO-OWNERSHIP
I. Definition
Article 484, Civil Code. There is co-ownership
whenever the ownership of an undivided thing or
right belongs to different persons.
PROPERTY
right or object of ownership
1. There are at least 2 persons
2. There is unity or material indivision of a single
object.
PROPERTY
Disposal of share
b. Each co-owner may enjoy the whole
A partner may not
property and use it.
Each co-owner may dispose of his
Only limitation: a co-owner cannot use dispose of his undivided share/interest or transfer
or enjoy the property in a manner that share without the consent the same to a 3rd person
shall injure the interest of his other co- of others without the consent of
owners. (Pardell v. Bartolome) others
Mutual representation
III. Difference between Co-ownership No mutual representation Generally, a partner
(except if there is a binds other partners
and Joint Tenancy special authority for such (there is mutual
representation) representation)
Co-Ownership Joint Tenancy Effect of legal disability/ incapacity/ death
Origin Does not dissolve the co-
Civil Law Common Law Dissolves partnership
ownership
Other names Profit distribution
Tenancy in Common, Must be proportional to
Joint ownership, Depends upon the
ownership in common, the interest of each co-
“all for one, one for all” stipulation in their
Co-dominium owner (not subject to
Extent of ownership contract
stipulation)
Every joint tenant owns Duration
Each co-owner owns
the whole property General rule: an
undivided thing + own
because their rights are agreement to keep the
ideal part/share of each No term limit set by law
inseparable ownership for more than
Right to dispose of share 10 years is void
A joint tenant may not Attachment
dispose of his Creditors of a partner
Each co-owner may
share/interest without theCreditors of a co-owner cannot attach and sell on
dispose of his undivided
consent of others can attach on the shares execution the shares of
share without the consent
(rationale: he may of others other partners in the
of others.
prejudice the others by partnership
alienating his share)
Effect of death
The ownership of a joint V. Sources of Co-Ownership
tenant dies with him, and A. Law
his surviving joint tenants 1. Cohabitation: co-ownership between common law
The share of a co-owner
are subrogated to his spouses—
descends to his heirs
rights by virtue of jus The Family Code, in the following
accrescendi
(survivorship) provisions, made the rules on co-
Effect of legal disability/incapacity ownership apply
Defense of one can be Article 147: between a man and a
Defense against woman capacitated to marry each
used by all, as
prescription is exclusive
disability/incapacity other
to the co-owner with
inures to the benefit of
disability/incapacity
the others for purposes of
Article 148: between a man and a Nevertheless, when the discovery is
woman not capacitated to marry each made on the property of another, or
other of the State or any of its
Article 90: if matter is not provided in subdivisions, and by chance, one-half
the FC Chapter on ACP, then rules on thereof shall be allowed to the finder. If
co-ownership will apply the finder is a trespasser, he shall not be
entitled to any share of the treasure.
2. Purchase creating implied trust: co-
ownership between persons who agree to If the things found be of interest to
purchase property— science or the arts, the State may
Article 1452, Civil Code. If two or more acquire them at their just price, which
persons agree to purchase property and shall be divided in conformity with the
by common consent the legal title is rule stated.
taken in the name of one of them for the
benefit of all, a trust is created by force 7. Easement of Party Wall – co-ownership
of law in favor of the others in proportion of part-owners of a party wall 156
to the interest of each. Article 658, Civil Code. The easement
PROPERTY
3. Intestate succession: co-ownership of party wall shall be governed by the
between the heirs before partition of the provisions of this Title, by the local
estate ordinances and customs insofar as they
a. Article 1078, Civil Code. Where there do not conflict with the same, and by the
are two or more heirs, the whole estate
rules of co-ownership.
of the decedent is, before its partition,
owned in common by such heirs, subject
to the payment of debts of the 8. Occupation: Harvesting and Fishing: co-
deceased. ownership by two or more persons who
b. Intestate Succession (without will) have seized a res nullius thing
c. For as long as the estate is left
9. Condominium Law: co-ownership of the
undivided the heirs will be considered
common areas by holders of units
co-owners of the inheritance. If one of
the heirs dies, his heirs will in turn be co- Sec. 6, RA 4726. The Condominium
owners of the surviving original heirs. Act. Unless otherwise expressly
4. Donation: Co-ownership between donees provided in the enabling or master deed
Article 753, Civil Code. When a or the declaration of restrictions, the
donation is made to several persons incidents of a condominium grant are as
jointly, it is understood to be in equal follows:
shares, and there shall be no right of (c) Unless otherwise, provided,
accretion among them, unless the donor the common areas are held in
has otherwise provided. common by the holders of units,
5. Chance/Commixtion in Good Faith: Co- in equal shares, one for each
ownership between owners of 2 things that unit.
are mixed by chance or by will of the owners
Article 472, Civil Code. If by the will of B. Contracts
their owners two things of the same or 1. By Agreement of Two or More Persons
different kinds are mixed, or if the mixture a. Article 494, Civil Code. No co-owner
occurs by chance, and in the latter case the shall be obliged to remain in the co-
things are not separable without injury, ownership. Each co-owner may demand
each owner shall acquire at any time the partition of the thing
a right proportional to the part belonging owned in common, insofar as his share
to him, bearing in mind the value of the is concerned.
things mixed or confused.
6. Hidden Treasure – co-ownership between Nevertheless, an agreement to keep the
finder and owner of the land thing undivided for a certain period of
Article 438, Civil Code. Hidden time, not exceeding ten years, shall be
treasure belongs to the owner of the valid. This term may be extended by a
land, building, or other property on new agreement.
which it is found.
A donor or testator may prohibit partition each, only the usufruct passing to the
for a period which shall not exceed partnership.
twenty years.
3. By Associations and Societies with
Neither shall there be any partition when Secret Articles
it is prohibited by law. Article 1775, Civil Code. Associations
and societies, whose articles are kept
No prescription shall run in favor of a co- secret among the members, and
owner or co-heir against his co-owners wherein any one of the members may
or co-heirs so long as he expressly or contract in his own name with third
impliedly recognizes the co-ownership. persons, shall have no juridical
personality, and shall be governed by
b. Two or more persons may agree to
the provisions relating to co-ownership.
create a co-ownership
c. Note: there is a 10-year term limit for
ownership by agreement; BUT: Term VI. Rights of Each Co-owner over the 157
may be extended by a new agreement Thing or Property Owned in Common
PROPERTY
2. By the creation of a Universal Rights of Each Co-owner over the Thing or
Partnership Property Owned in Common
a. Of all present property 1. To use the thing according to the purpose
Article 1778, Civil Code. A intended (Jus Utendi)
partnership of all present property is 2. To share in the benefits in proportion to his
that in which the partners contribute all interest provided the charges are borne by
the property which actually belongs to each in the same proportion
them to a common fund, with the 3. To bring an action in ejectment
intention of dividing the same among 4. To compel the other co-owners to contribute
themselves, as well as all the profits to expense for preservation of the property
which they may acquire therewith. owned in common and to the payment of
taxes
Article 1779, Civil Code. In a 5. To oppose any act of Alteration
universal partnership of all present 6. To protest against acts of majority which are
property, the property which belonged seriously prejudicial to the minority
to each of the partners at the time of 7. To exercise legal redemption
the constitution of the partnership, 8. To ask for partition
becomes the common property of all
the partners, as well as all the profits Right use the thing according to the purpose
which they may acquire therewith. intended (Jus Utendi)—
Article 486, Civil Code. Each co-owner may use
A stipulation for the common the thing owned in common, provided he does so in
enjoyment of any other profits may accordance with the purpose for which it is intended
also be made; but the property which and in such a way as not to injure the interest of the
the partners may acquire co-ownership or prevent the other co-owners from
subsequently by inheritance, legacy, using it according to their rights. The purpose of the
co-ownership may be changed by agreement,
or donation cannot be included in such
express or implied.
stipulation, except the fruits thereof.
1. Limitations on co-owner’s right:
b. Of profits
a. Use must be to the purpose for which it
Article 1780, Civil Code. A universal
is intended.
partnership of profits comprises all that
As stipulated in the agreement
the partners may acquire by their
In the absence of agreement, the
industry or work during the existence of
purpose for which it was ordinarily
the partnership.
adapted according to its nature.
In the absence of the above, the use
Movable or immovable property which
for which it was previously or formerly
each of the partners may possess at the
devoted.
time of the celebration of the contract
b. Use must be without prejudice to the
shall continue to pertain exclusively to
interest of the co-ownership.
c. Use must not prevent the other co- property owned in common and to the
owners from making use of the property payment of taxes—
according to their own rights.
Article 488, Civil Code. Each co-owner shall have a
2. Changing the purpose of the thing— right to compel the other co-owners to contribute to
The purpose of the thing may be changed the expenses of preservation of the thing or right
by an agreement, express or implied, owned in common and to the taxes. Any one of the
provided that the following will be observed: latter may exempt himself from this obligation by
It does not cause injury or prejudice to renouncing so much of his undivided interest as may
the interest of the co-ownership be equivalent to his share of the expenses and
Any act against the collective interest taxes. No such waiver shall be made if it is
prejudicial to the co-ownership.
is an act against ownership.
A co-owner cannot devote the
community property to his exclusive 1. This provision includes only necessary
use expenses and taxes, and NOT those for
It does not prevent the use by other mere luxury, embellishment or pleasure 158
co-owners a. Expenses for preservation: those which,
if not made, would endanger the
PROPERTY
Right to share in the benefits in proportion to existence of the thing or reduce its value
his interest provided the charges are borne or productivity
by each in the same proportion— b. Not used for the improvement of the
thing (what is intended is the
Article 485, Civil Code. The share of the co- preservation of the thing, not gaining
owners, in the benefits as well as in the charges, profit from it)
shall be proportional to their respective interests. 2. Renunciation
Any stipulation in a contract to the contrary shall be a. Other co-owners have the option not to
void. contribute by renouncing so much of his
undivided interest as may be equivalent
The portions belonging to the co-owners in the co- to his share of the necessary expenses
ownership shall be presumed equal, unless the and taxes
contrary is proved.
Must be express; thus, failure to pay
is not a renunciation
Right to bring an action in ejectment—
Requires the consent of other co-
owners because it is a case of dacion
Article 487, Civil Code. Any one of the co-owners
en pago (cessation of rights) involving
may bring an action in ejectment.
expenses and taxes already paid
1. Action in Ejectment covers all kinds of action
(J.B.L. Reyes)
for recovery of possession (reivindicatoria,
b. A co-owner cannot renounce his share if
publiciana, forcible entry, unlawful detainer)
it will be prejudicial to another co-owner
2. There is no need to include all the co-
owners as co-plaintiffs because the suit is
3. Procedure: Repairs for preservation
deemed to be instituted for the benefit of all
3. But the action will not prosper if the action is
Article 489, Civil Code. Repairs for preservation
brought for the benefit of the plaintiff alone may be made at the will of one of the co-owners, but
and not for the co-ownership he must, if practicable, first notify his co-owners of
4. Article 487 of the Civil Code, which provides the necessity for such repairs. Expenses to improve
simply that “any one of the co-owners may or embellish the thing shall be decided upon by a
bring an action in ejectment,” is a categorical majority as determined in article 492.
and an unqualified authority in favor of a. Notify other co-owners, as far as
owner to evict the petitioners from the practicable
portions of lot. The rule is a co-owner may b. However, a co-owner can advance
bring an action to exercise and protect the expenses for preservation of the
rights of all. When the action is brought by property even without prior consent of
one co-owner for the benefit of all, a others. He is entitled to reimbursement
favorable decision will benefit them; but an for the amount spent for necessary
adverse decision cannot prejudice their expenses.
rights. (Resuena v. CA)
PROPERTY
o Co-owner only entitled to be
reimbursed for the amount that
should have been spent had he a. Alteration without consent of all is illegal
notified the others, and The one who did the alteration will lose whatever he
difference shall be borne by him spent in case he is made to demolish the work he
alone has done (no right to reimbursement)
b. Decision by majority must be followed Damages to the non-consenting co-
owner can also be granted by the
Right to oppose any act of Alteration— court
b. Note: This is subject to ratification – if
Article 491, Civil Code. None of the co-owners co-owners decide to contribute to the
shall, without the consent of the others, make expenses by reimbursing the co-owner
alterations in the thing owned in common, even who made the alteration (effect: benefit
though benefits for all would result therefrom. of alteration will inure to the co-
However, if the withholding of the consent by one or ownership)
more of the co-owners is clearly prejudicial to the
common interest, the courts may afford adequate Right to protest against acts of majority
relief. which are seriously prejudicial to the
1. Alteration: a change which more or less minority—
permanently changes the use of a thing and
adversely affecting the condition of the thing Article 492(3), Civil Code. Should there be no
or its enjoyment by the others. majority, or should the resolution of the majority be
2. It involves: seriously prejudicial to those interested in the
a. Change of the thing from the state or property owned in common, the court, at the
essence in which the others believe it instance of an interested party, shall order such
should remain, or measures as it may deem proper, including the
b. Withdrawal of the thing from the use to appointment of an administrator.
which they wish to be intended, or 1. Acts of administration
c. Any other transformation which a. Acts of management that do not involve
prejudices the condition or substance of alteration of the property
the thing or its enjoyment by the others b. Acts which are temporary in character
3. Rule: Any act of alteration requires so much so that they do not bind the
UNANIMOUS CONSENT OF ALL CO- property for a long time
WORKERS c. Acts that do not create real rights over
a. BUT when there is unreasonable the common property
withholding of consent: the co-owner
may go to court to seek adequate relief. 2. Rule:
b. Note: consent may be express or tacit If there is a disagreement or conflict of
c. Reason for the rule: alteration is an act opinions by and among the co-owners
of ownership, not of mere on the matter of administration and
administration. better enjoyment of the common
property, the resolution of the co-owners
representing the controlling interest (not a. The vendor is in a better position to b
majority in number) shall be binding know things involving the property and e
upon all co-owners. the sale
3. Who can be the administrator? p
b. Redemption of the property by a co-
He or she may or may not be a co- owner does not vest him sole r
owner, PROVIDED that the co-owners ownership over said property. e
delegated him or her. Redemption will inure to the benefit of all f
4. What can an administrator do? co-owners. Redemption is not a mode of e
a. PROVIDED there is a unanimous termination of relationship. (Mariano v. r
consent of all co-owners, an CA) r
administrator may compromise on, e
donate, cede, alienate, mortgage, or 5. Other cases where right of redemption is d
encumber the common property given .
b. If the amount of individual contribution is a. Rural land
undetermined, the law presumes that Article 1621, Civil Code. The
they all contributed proportionately owners of adjoining lands shall also
(Lavadia v. Cosme) have the right of redemption when a
piece of rural land, the area of which
Right to exercise legal redemption— does not exceed one hectare, is
alienated, unless the grantee does
Article 1620, Civil Code. A co-owner of a thing may
not own any rural land.
exercise the right of redemption in case the shares
of all the other co-owners or of any of them, are sold
to a third person. If the price of the alienation is This right is not applicable to
grossly excessive, the redemptioner shall pay only a adjacent lands which are separated
reasonable one. by brooks, drains, ravines, roads
and other apparent servitudes for
Should two or more co-owners desire to exercise the benefit of other estates.
the right of redemption, they may only do so in
proportion to the share they may respectively have If two or more adjoining owners
in the thing owned in common.
desire to exercise the right of
Article 1623, Civil Code. The right of legal pre- redemption at the same time, the
emption or redemption shall not be exercised except owner of the adjoining land of
within thirty days from the notice in writing by the smaller area shall be preferred; and
prospective vendor, or by the vendor, as the case should both lands have the same
may be. The deed of sale shall not be recorded in area, the one who first requested
the Registry of Property, unless accompanied by an the redemption.
affidavit of the vendor that he has given written
notice thereof to all possible redemptioners. b. Urban land
Article 1622, Civil Code. Whenever a
The right of redemption of co-owners excludes that
of adjoining owners.
piece of urban land which is so small
and so situated that a major portion
1. Redemption: Act of reclaiming possession thereof cannot be used for any
of something by payment of a specific price practical purpose within a reasonable
2. The 30-day redemption period starts from time, having been bought merely for
the date of written notification of the sale speculation, is about to be re-sold, the
made by the co-owner. owner of any adjoining land has a right
Without such written notice, the 30-day of pre-emption at a reasonable price.
period does not start to run
3. Exceptions: If the re-sale has been perfected, the
a. Estoppel by laches (inaction) owner of the adjoining land shall have
If there is oral notification and a right of redemption, also at a
several years have passed (implied reasonable price.
waiver) and there is reliance on the
non-action of co-owners When two or more owners of adjoining
b. Estoppel by silence lands wish to exercise the right of pre-
When there is duty to speak emption or redemption, the owner
4. Note: The written notification must come whose intended use of the land in
from the prospective vendor question appears best justified shall
160
PROPERTY
Right to ask for partition— 30 days from notification of prospective co-
owner vendor)
Article 494, Civil Code. No co-owner shall be 3. To substitute another person in the
obliged to remain in the co-ownership. Each co- enjoyment of thing
owner may demand at any time the partition of the 4. To renounce part of his interest to reimburse
thing owned in common, insofar as his share is necessary expenses incurred by another co-
concerned.
owner (Article 488)
Nevertheless, an agreement to keep the thing
undivided for a certain period of time, not exceeding Article 488, Civil Code. Each co-owner shall have a
ten years, shall be valid. This term may be extended right to compel the other co-owners to contribute to
by a new agreement. the expenses of preservation of the thing or right
owned in common and to the taxes. Any one of the
A donor or testator may prohibit partition for a period latter may exempt himself from this obligation by
which shall not exceed twenty years. renouncing so much of his undivided interest as may
be equivalent to his share of the expenses and
Neither shall there be any partition when it is taxes. No such waiver shall be made if it is 161
prohibited by law. prejudicial to the co-ownership.
PROPERTY
No prescription shall run in favor of a co-owner or B. Effect of Transaction by Each Owner
co-heir against his co-owners or co-heirs so long as 1. Limited to his share in the partition
he expressly or impliedly recognizes the co- 2. Transferee does not acquire any specific
ownership. portion of the whole property until partition
3. Creditors of co-owners may intervene in the
1. Partition: segregation or division of a partition to attack the same if it is prejudicial
property in common to those to whom it (Art. 499)
belongs
2. Rule: Right to demand partition does not Article 499, Civil Code. The partition of a thing
prescribe owned in common shall not prejudice third persons,
3. Exceptions to the rule: who shall retain the rights of mortgage, servitude or
a. When indivision within 10 years is any other real rights belonging to them before the
stipulated by the co-owners division was made. Personal rights pertaining to
b. When co-ownership is imposed as a third persons against the co-ownership shall also
condition in a donation or in a last will remain in force, notwithstanding the partition.
and testament by the
Note: Creditors cannot ask for rescission even if
transferor/donor/testator
not notified in the absence of fraud (Art. 497,
c. When from the nature of the property in
Civil Code)
common, it cannot be divided (i.e. party
wall)
Article 497, Civil Code. The creditors or assignees
d. When partition is generally prohibited by of the co-owners may take part in the division of the
law (i.e. ACP, party wall) thing owned in common and object to its being
e. When the partition would render the effected without their concurrence. But they cannot
thing unserviceable or the thing held in impugn any partition already executed, unless there
common is essentially indivisible— has been fraud, or in case it was made
If the thing cannot be physically notwithstanding a formal opposition presented to
partitioned, they may sell the thing prevent it, without prejudice to the right of the debtor
and the co-owners may divide the or assignor to maintain its validity.
proceeds)
f. When acquisitive prescription has set in VIII. Rules on Co-Ownership Not
favor of a stranger to con-ownership or Applicable to CPG or ACP
in favor of a co-owner
These two regimes are governed by the
VII. Implication of Co-owner’s Right over provisions on the Family Code
His Ideal Share Even void marriages and cohabitation of
incapacitated persons are governed by
A. Rights of a Co-owner Article 50, 147, and 148 of the Family Code
1. To share in fruits and benefits
2. To alienate, mortgage, or encumber and
dispose his ideal share (but other co-owners
may exercise right of legal redemption within
IX. Special Rules on Ownership of master deed which shall contain, among others, the
Different Stories of a House as following:
Differentiated from Provisions of the
Condominium Act a. Description of the land on which the building
or buildings and improvements are to be
located;
RA 4726. THE CONDOMINIUM ACT
b. Description of the building or buildings,
stating the number of storeys and basement,
Sec. 2. A Condominium is an interest in real
the number of units and their accessories, if
property consisting of a separate interests in a unit
any;
in a residential, industrial or commercial building or
in an industrial estate and an undivided interests in
c. Description of the common areas and
common, directly and indirectly, in the land, or the
facilities;
appurtenant interest of their respective units in the
common areas.
d. A statement of the exact nature of the
The real right in condominium may be ownership or
interest acquired or to be acquired by the 162
purchased in the separate units and the
any interest in real property recognized by law on
PROPERTY
common areas of the condominium projects.
property in the Civil Code and other pertinent laws.
Where title to or to appurtenant interests in
the common areas is to be held by a
Sec. 3. As used in this Act, unless the context
condominium corporation, a statement to
otherwise requires:
this effect shall be included;
b. Unit" means a part of the condominium
project intended for any type of independent
e. A certificate of the registered owner of the
use or ownership, including one or more
property, if he is other than those executing
rooms or spaces located in one or more
the master deed, as well as of all registered
floors (or parts of floors) in a building or
holders of any lien or encumbrances on the
buildings and such accessories as may be
property, that they consent to the
appended thereto: Provided, that in the
registration of the deed;
case of an industrial estate wherein the
condominium project consists of several
f. The following plans shall be appended to the
buildings, plants and factories may, by
deed as integral parts thereof:
themselves, be considered separately as
individual units as herein defined.
1. A survey plan of the land included in the
project, unless a survey plan of the same
c. "Project" means the entire parcel of real
property had previously been filed in said
property divided or to be divided in
office.
condominiums, including all structures
thereon.
2. A diagrammatic floor plan of the building
or buildings each unit, its relative
d. "Industrial Estate or Estate" means a certain
location and approximate dimensions.
tract of land which is subdivided and
developed primarily for industrial purposes
g. Any reasonable restriction not contrary to
and which usually includes provisions for
law, morals, or public policy regarding the
basic infrastructure facilities and common
right of any condominium owner to alienate
services such as roads, water, electricity,
or dispose off his condominium.
drainage and waste disposal system.
h. The enabling or master deed may be
e. "Common areas" means the entire project
amended or revoked upon registration of an
except all units separately granted or held
instrument executed by a simple majority of
or reserved.
the registered owners of the property:
Provided, That in a condominium project
f. "To divide" real property means to divide the
exclusively for either residential or
ownership thereof or other interests therein
commercial use, simple majority shall be on
by conveying one or more condominium
a per unit of ownership basis and that in the
therein but less than the whole thereof.
case of mixed use, simple majority shall be
Sec. 4. The provisions of this Act shall apply to on a floor area of ownership basis:
property divided or to be divided into condominium Provided, further, That prior notifications to
only if there shall be recorded in the Register of all registered owners shall be submitted to
Deeds of the province or city in which the property the Housing and Land Use Regulatory
lies, and duly annotated in the corresponding Board and the city/municipal engineer for
certificate of title of the land, if the latter had been approval before it can be registered. Until
patented or registered under either the Land registration of a revocation, the provisions of
Registration or Cadastral Acts, an enabling or this Act shall continue to apply to such
property.
d. A non-exclusive easement for ingress,
Sec. 5. Any transfer or conveyance of a unit or an
egress and support through the common
apartment, office or store or other space therein,
areas in appurtenant to each unit and the
shall include the transfer or conveyance of the
common areas are subject to such
undivided interest in the common areas or in a
easement.
proper case, the membership or share holdings in
the condominium corporation: Provided, however,
e. Each condominium owner shall have the
That where the common areas in the condominium
exclusive right to paint, repaint, tile, wax,
project are held by the owners of separate units as
paper or otherwise refinish and decorate the
co-owners hereof, no condominium unit therein shall
inner surfaces of the walls, ceilings, floors,
be conveyed or transferred to persons other than
windows and doors hounding his own unit:
Filipino citizens or corporation at least 60% of the
provided, that in the case of an industrial
capital stock of which belong to Filipino citizens,
estate condominium unit, such right may be
except in cases of hereditary succession. Where the
exercised over the external surfaces of the
common areas in a condominium project are held by
said unit.
a corporation, no transfer or conveyance of a unit
shall be valid if the concomitant transfer of the 163
f. Each condominium owner shall have the
appurtenant membership or stockholding in the
PROPERTY
exclusive right to mortgage, pledge or
corporation will cause the alien interest in such
encumber his condominium and to have the
corporation to exceed the limits imposed by existing
same appraised independently of the other
laws.
condominium owner.
Sec. 6. Unless otherwise expressly provided in the
g. Each condominium owner has also the
enabling or master deed or the declaration of
absolute right to sell or dispose of his
restrictions, the incidents of a condominium grant
condominium unless the master deed
are as follows:
contains a requirements that the property be
first offered to the condominium owners
a. the boundary of the unit granted are the
within a reasonable period of time before
interior surfaces of the perimeter walls,
the same is offered to outside parties;
floors, ceiling, windows and doors thereof:
Provided, that in the case of an industrial
Sec. 7. Except as provided in the following section,
estate condominium projects, wherein whole
the common areas shall remain undivided, and there
buildings, plants or factories may be
shall be no judicial partition thereof.
considered as unit defined under section 3
(b) hereof, the boundary of a unit shall Sec. 8. Where several persons own condominium
include the outer surfaces of the perimeter in a condominium project, an action may be brought
walls of said buildings, plants or factories. by one or more such person for partition thereof, by
The following are not part of the unit: sale of the entire project, as if the owners of all the
bearing walls, columns, floors, roofs, condominium in such project were co-owners of the
foundations, and other common structural entire project in the same proportion as their
elements of the buildings; lobbies, interests in the common areas: Provided, however,
stairways, hall ways and other areas of that a partition shall be made only upon a showing:
common use, elevator equipment and
shafts, central heating, central refrigeration a. That three years after damage or
and central air conditioning equipment, destruction to the project which renders a
reservoir, tanks, pumps and other central material part thereof unfit for its use prior
services and facilities, pipes, ducts, flues, thereto, the project had not been rebuilt or
chutes, conduits wires and other utility repaired substantially to its state prior to its
installations, wherever located, except the damage or destruction; or
outlets thereof when located within the unit.
b. That damage or destruction to the project
b. There shall pass with the unit, as an
has rendered one half or more of the units
appurtenant thereof, an exclusive casement therein untenantable and that condominium
for the use of the air space encompasses by
owners holding in aggregate more than 30
the boundaries of the unit as it exists at any percent interest in the common areas are
particular time and as the unit may lawfully
opposed to the repair or restoration of the
be altered or reconstructed from time to projects; or
time. Such easement shall be automatically
terminated in any air space upon destruction c. That project has been in existence in excess
of the units as to render it untenantable. of 50 years, that it is obsolete and
uneconomical, and that condominium
c. Unless otherwise provided, the common owners holding in aggregate more than 50
areas are held in common by the holders of percent interest in the common areas are
units, in equal share one for each unit. opposed to repair or restoration or
remodeling or modernizing of the project; or
5. For payment of taxes and special
assessments which would be a lien
d. That the project or a material part thereof
upon the entire project or common
has been condemned or expropriated and
areas, and for discharge of any lien or
that the project is no longer viable, or that
encumbrance levied against the entire
the condominium owners holding in
project or the common areas;
aggregate more than 70 percent interest in
6. For reconstruction of any portion or
the common areas are opposed to the
portions of any damage to or
continuation of the condominium regime
destruction of the project;
after expropriation or condemnation of a
7. The manner for delegation of its
material proportion thereof; or
powers;
8. For entry by its officers and agents into
e. That the condition for such partition by sale
any unit when necessary in connection
set forth in the declaration of restrictions
with the maintenance or construction
duly registered in accordance with the terms
for which such body is responsible;
of this Act, have been met.
9. For a power of attorney to the
Sec. 9. The owner of a project shall, prior to the
management body to sell the entire 164
project for the benefit of all of the
conveyance of any condominium therein, register a
PROPERTY
owners thereof when partition of the
declaration of restrictions relating to such project,
project may be authorized under
which restrictions shall constitute a lien upon each
Section 8 of this Act, which said power
condominium in the project, and shall insure to and
shall be binding upon all of the
bind all condominium owners in the project. Such
condominium owners regardless of
liens, unless otherwise provided, may be enforced
whether they assume the obligations of
by any condominium owner in the project or by the
the restrictions or not.
management body of such project. The Register of
b. The manner and procedure for amending
Deeds shall enter and annotate the declaration of
such restrictions: Provided, That the vote of
restrictions upon the certificate of title covering the
not less than a majority in interest of the
land included within the project, if the land is
owners is obtained.
patented or registered under the Land Registration
or Cadastral Acts.
c. For independent audit of the accounts of
the management body;
The declaration of restrictions shall provide for the
management of the project by anyone of the
d. For reasonable assessments to meet
following management bodies: a condominium
authorized expenditures, each
corporation, an association of the condominium
condominium unit to be assessed
owners, a board of governors elected by
separately for its share of such expenses in
condominium owners, or a management agent
proportion (unless otherwise provided) to
elected by the owners or by the board named in the
its owners fractional interest in any
declaration. It shall also provide for voting majorities
common areas;
quorums, notices, meeting date, and other rules
governing such body or bodies.
e. For the subordination of the liens securing
such assessments to other liens either
Such declaration of restrictions, among other things, generally or specifically described;
may also provide:
f. For conditions, other than those provided
a. As to any such management body; for in Sections eight and thirteen of this Act,
1. For the powers thereof, including power upon which partition of the project and
to enforce the provisions of the dissolution of the condominium corporation
declarations of restrictions; may be made. Such right to partition or
2. For maintenance of insurance policies, dissolution may be conditioned upon failure
insuring condominium owners against of the condominium owners to rebuild
loss by fire, casualty, liability, within a certain period or upon specified
workmen's compensation and other inadequacy of insurance proceeds, or upon
insurable risks, and for bonding of the specified percentage of damage to the
members of any management body; building, or upon a decision of an arbitrator,
3. Provisions for maintenance, utility, or upon any other reasonable condition.
gardening and other services benefiting
the common areas, for the employment Sec. 10. Whenever the common areas in a
of personnel necessary for the condominium project are held by a condominium
operation of the building, and legal, corporation, such corporation shall constitute the
accounting and other professional and management body of the project. The corporate
technical services; purposes of such a corporation shall be limited to
4. For purchase of materials, supplies and the holding of the common areas, either in
the like needed by the common areas; ownership or any other interest in real property
recognized by law, to the management of the
d. That project or material part thereof has
project, and to such other purposes as may be
been condemned or expropriated and that
necessary, incidental or convenient to the
the project is no longer viable or that the
accomplishment of said purposes. The articles of
members holding in aggregate more than
incorporation or by-laws of the corporation shall not
70 percent interest in the corporation if non-
contain any provision contrary to or inconsistent with
stock, or the stockholders representing
the provisions of this Act, the enabling or master
more than 70 percent of the capital stock
deed, or the declaration of restrictions of the project.
entitled to vote, if a stock corporation, are
Membership in a condominium corporation,
opposed to the continuation of the
regardless of whether it is a stock or non-stock
condominium regime after expropriation or
corporation, shall not be transferable separately
condemnation of a material portion thereof;
from the condominium unit of which it is an
or
appurtenance. When a member or stockholder
ceases to own a unit in the project in which the
e. That the conditions for such a dissolution
condominium corporation owns or holds the
set forth in the declaration of restrictions of
common areas, he shall automatically cease to be a
the project in which the corporation, are
member or stockholder of the condominium
corporation.
opposed to the continuation of the 165
condominium regime after expropriation or
PROPERTY
condemnation of a material portion thereof.
Sec. 11. The registration and regulation of a
condominium corporation shall be vested with the
Sec. 14. The condominium corporation may also be
Housing And Land Use Regulatory Board (HLURB)
dissolved by the affirmative vote of all the
and the term of the said corporation shall be
stockholders or members thereof at a general or
coterminous with the duration of the subdivision
special meeting duly called for such purpose:
projects, the provision of the corporation law to the
Provided, that all the requirements of Section 62 of
contrary notwithstanding.
the Corporation Law are complied with.
Sec. 12. The dissolution of the condominium
xxx
corporation in any manner and any of the causes
provided by law shall be governed by the provisions
Sec. 16. A condominium corporation shall not,
of the Title XIV of the Corporation Code.
during its existence, sell, exchange, lease or
otherwise dispose of the common areas owned or
Sec. 13. Until the enabling or the master deed of
held by it in the condominium project unless
the project in which the condominium corporation
authorized by the affirmative vote of a simple
owns or holds the common areas is revoked the
majority of the registered owners: provided, that
corporation shall not be voluntarily dissolved through
prior notification to all registered owners are done
an action for dissolution under Rule 104 of the Rules
and provided further, that the condominium
of Court except upon a showing:
corporation may expand or integrate the project with
another upon the affirmative vote of a simple
a. The three years after damage or majority of the registered owners, subject only to the
destruction to the project in which damage final approval of the HLURB.
or destruction renders a materials part
thereof unfit for its use prior thereto, the
xxx
project has not been rebuilt or repaired
substantially to its state prior to its damage
Sec. 19. Where the enabling or master deed
or destruction; or provides that the land included within a
condominium project are to be owned in common by
b. The damage or destruction to the project the condominium owners therein the Register of
has rendered one half or more of the units
Deeds may at the request of all the condominium
therein untenantable and that more than 30 owner and upon surrender of all their condominium
percent of the member of the corporation
owner's copies, cancel the certificate of title of the
entitled to vote, if a stock corporation, are property and issue a new one in the name of said
opposed to the repair or reconstruction of
condominium owners as pro-indiviso co-owners
the project; or thereof.
c. That the project has been in existence
xxx
excess of 50 years, that it is obsolete and
uneconomical and that more than 50 Sec. 23. Where, in an action for partition of a
percent of the members of the corporation
condominium corporation on the ground that the
if non-stock or stockholders representing project or a material part thereof has been
more than 50 percent of the capital stock
condemned or expropriated, the court finds that the
entitled to vote, if a stock corporation, are condition provided in this Act or in the declaration
opposed to the repair or restoration or
have not been met, the court may decree a
remodeling or modernizing of the project; or reorganization of the project declaring which portion
or portions of the project shall continue as a
condominium project, the owners thereof, and the
respective rights of the remaining owners and the What Does the Housing and Land Use
just compensation, if any, that a condominium owner Regulatory Board Do?—
may be entitled to due to deprivation of his property. They hear the complaints of buyers.
Upon receipt of a copy of the decree, the Register of
Deeds shall enter and annotate the same on the
pertinent certificate of title.
Important Documents in Condo Ownership
1. Deed of sale
Sec. 24. Any deed declaration or plan for a 2. Master deed (Sec. 4)
condominium project shall be liberally construed to 3. Declaration of restrictions (Sec. 9): pertains
facilitate the operation of the project, and its to how common areas will be governed and
provisions shall be presumed to be independent and who will do the governing
several. a. i.e. how to contribute to common area
expenses: contribution to maintenance,
Sec. 25. The building and design standards for
condominium projects to be promulgated by HLURB
upkeep, repair of common areas
included
shall provide for, among others, accessibility
b. there is an “Assessment”, which is a lien 166
features for disabled persons pursuant to Batas
Pambansa Bilang 344 of 1994. upon the condo unit
PROPERTY
Sec. 26. Whenever real property has been divided X. Extinguishment of Co-Ownership
into condominiums, each condominium separately
owned shall be separately assessed, for purposes of
real property taxation and other tax purposes, to the A. Total destruction of thing or loss of the
owners thereof and tax on each such condominium property co-owned
shall constitute a lien solely thereon.
Is there still co-ownership if a building is
Sec. 27. All acts or parts of Acts in conflict on destroyed?—Yes, over the land and the
inconsistent with this Act are hereby amended
debris.
insofar as condominium and its incidents are
concerned.
B. Merger of all interests in one person
Concept of Condominium—
C. Acquisitive Presciption
It is an interest in real property consisting of a:
By whom—
1. SEPARATE INTEREST in a unit in a
1. A third person (Art. 1106)
a. residential, or
2. A co-owner against the other co-owners
b. industrial, or
c. commercial building
Requisites—
2. UNDIVIDED INTEREST in common directly
1. Unequivocal acts of repudiation of the rights
or indirectly,
of the other co-owners (you oust the other
a. in the land on which it is located
co-owners)
b. in other common areas of the building
a. Must be shown by clear and convincing
evidence
When Ownership of the Unit is Acquired—
b. Must be within the knowledge of the
1. Ownership is acquired only after the buyer
other co-owners
had fully paid the purchase price.
c. Must not be a mere refusal to recognize
2. The ownership of the unit is what makes the
the others as co-owners
buyer a shareholder in the condominium.
2. Open and adverse possession - Not mere
silent possession
Note: The condominium law effectively
separates the building from the land (by a
Note: there is a presumption that
master deed)
possession of a co-owner is NOT adverse
Prescription only arises and produces all
3. Building is deemed an accessory
effects when the acts are clearly meant
to oust the rights of the other co-owners
Amendments—
Co-ownership in common areas means shared
D. Partition or
expenses in these areas
Division Effects of
1. Sec 4: simple majority of the property
Partition—
2. Sec 16: common areas may be disposed by
1. Confers upon each heir the exclusive
affirmative vote of a simple majority of the
ownership of the property adjudicated to him
registered owners
2. Co-heirs shall be reciprocally bound to Form: Oral or Written (Statute of Frauds
warrant the title to and the quality of each does not operate here because it is not a
property adjudicated conveyance of property but a mere
3. Reciprocal obligation of warranty shall be segregation or designation of which parts
proportionate to the respective hereditary belong to whom)
shares of co-heirs Rules of Court does not preclude
4. An action to enforce warranty must be agreements or settlements.
brought within 10 years from the date the Action for Partition:
right accrues a. WON the plaintiff is indeed a co-owner
5. The co-heirs shall not be liable for the of the property
subsequent insolvency of the debtor of the b. HOW will the property be divided
estate between the plaintiff and defendant.
Intervention of creditors and assignees:
Note: Unless partition is effected, each heir a. The law does not expressly require that
cannot claim sole ownership over a there should be a previous notice to the
definite portion of the land and cannot creditors and assignees before a 167
dispose of the same. Heirs become the partition can be validly made, but the
PROPERTY
undivided owner of the whole estate – right of creditors and assignees to take
each co-owner shall have full ownership part in the division presupposes the duty
if his part even as to fruits and benefits. to notify them.
He may alienate, assign or mortgage his b. If notice is not given, the partition will not
share. The effect of such act shall be be binding on them.
limited to the portion allotted to him c. Once notice has been given, it is the
during partition. Until said partition duty of creditors and assignees to
though, he cannot alienate a specific intervene and make known their stand.
part of the estate. A co-owner cannot i. If they fail to do this, they cannot
adjudicate to himself a definite portion question the division made,
owned in common until partition by except in case of fraud.
agreement or by a judicial decree. Until ii. If they formulate a formal
then, they can only sell their question to its being made, they
successional rights. (Carvaria v. CA) can contest such partition mad
in spite of their opposition.
Rights of Creditors of Individual Co-
Owners—
PROPERTY
another.
b. Doctrine of constructive possession applies when
the possession is under title calling for the whole.
It does not apply where possession is without
title.
.
II. Degrees of Possession Code, cannot and should not become
A. Mere holding or possession without title owners.
whatsoever and in violation of the right
of the owner IV. Cases of Possession
e.g. possession of a thief or usurper of
land
A. Possession for Oneself, or Possession
Here, both the possessor and the public
Exercised in One’s Own Name and
know that the possession is wrongful.
Possession in the Name of Another.
B. Possession with juridical title but not that are civil possessors according
Article 524, Civil Code. Possession may be
of ownership exercised in one'sto thename or in that of another.
own
e.g. possession of a tenant, depository
agent, bailee trustee, lessee, antichretic Name
creditor. under
This possession is peaceably acquired. which
This degree of possession will never posses
ripen into full ownership as long as there sion
is no repudiation of concept under which may be
property is held. exercis
ed—
C. Possession with just title or title 1. In
sufficient to transfer ownership, but not one
from the true owner ’s
e.g. possession of a vendee from a ow
vendor who pretends to be the owner. n
This degree of possession ripens into na
full ownership by lapse of time. me
–
D. Possession with a just title from the true the
owner. fact
This is possession that springs from of
ownership. pos
ses
III. Classes of Possession sion
The Old Civil Code had a distinction between and
natural possession and civil possession. This the
distinction has been abolished by the present righ
Code. t to
suc
A. Natural Possession h
Physical holding of a thing (detention); all pos
retention or enjoyment of a thing or right. ses
sion
B. Civil Possession is
Natural possession coupled with the fou
intention of acquiring ownership of the thing nd
or right. in
the
The following may be said to have civil sa
possession: me
a. The owner himself, who holds and per
enjoys the things belonging to him. son
b. The possessor who is not the owner but .
has the intention to act as such, and is 2. In
considered as such by others. the
c. The thief and the usurper who, in spite na
of their intention and the fact that they me
of another – the one in actual possession is without
any right of his own, but is merely an instrument of
another in the exercise of the latter’s possession.
PROPERTY
persons not sui juris and the conjugal partnership
2. Voluntary – effected through the mutual consent of
the parties
e.g. agents or administrators appointed by the
owner or possessor.
Third person may also voluntary exercise
possession in the name of another, but it does
not become effective unless ratified by the
person in whose name it is exercise.
PROPERTY
Owner— A misconception of the law, no matter
a. Converted into ownership by the lapse how honest cannot have the effect of
of time necessary for prescription making one a possessor in good faith,
b. Possessor can bring all actions when he does not hold a title valid in
necessary to protect his possession, form or a deed sufficient in terms to
availing himself of any action which an transfer property.
owner can bring, except accion
revindicatoria which is substituted by 2. Possessor in bad faith – one who knows
accion publiciana. his title is defective
c. He can ask for the inscription of Only personal knowledge of the flaw in
possession in the registry of property the title or mode of acquisition can make
d. Upon recovering possession from one him a possessor in bad faith for bad faith
who has unlawfully deprived him of it, he is not transmissible from one person to
can demand fruits and damages another.
e. He can do on the thing possessed Mistake upon a doubtful or difficult
everything that the law authorizes an question of law as a basis of good faith
owner to do; he can exercise the right of Mistake or ignorance of the law, by
pre-emption and is entitled to the itself, cannot become the basis of good
indemnity in case of appropriation. faith. What makes the error or ignorance
a basis of good faith is the presence of
C. Possession in Good Faith and an apparent “doubt” or “difficulty” in the
Possession in Bad Faith law. In other words, the law is complex,
ambiguous, or vague such that it is open
Article 526, Civil Code. He is deemed a possessor
to two or more interpretations.
in good faith who is not aware that there exists in his
title or mode of acquisition any flaw which
When the ignorance of the law is gross
invalidates it. and inexcusable, as when a person of
average intelligence would know the
He is deemed a possessor in bad faith who law, such ignorance cannot be the basis
possesses in any case contrary to the foregoing. of good faith. Otherwise, the intendment
of Article 3 which states that, “Ignorance
Mistake upon a doubtful or difficult question of law of the law excuses no one from
may be the basis of good faith. compliance therewith,” will be defeated.
1. Possessor in good faith – one who is
unaware that there exists a flaw which
V. What Things May be Possessed
invalidates his acquisition of the thing.
Good faith – consists in the possessor’s Article 530, Civil Code. Only things and rights
belief that the person from whom he which are susceptible of being appropriated may be
received a thing was the owner of the the object of possession.
same and could convey his title.
Not all things susceptible of appropriation can be
the object of prescription (See Art. 1113)
VI. What May Not Be Possessed by tranferee the things which are being
Private Persons transferred
1. Res Communes
2. Property of Public Dominion 3. By execution of proper acts under legal
3. Right under discontinuous and/or non- formalities
apparent easement This mode of acquiring possession
refers to juridical acts or the acquisition
VII. Acquisition of Possession of possession by sufficient title
evidenced by the performance of
required formalities.
A. Ways of Acquiring Possession Examples:
Donations
Article 531, Civil Code. Possession is acquired by
Succession
the material occupation of a thing or the exercise of
a right, or by the fact that it is subject to the action of Contracts (like a sale with right to
our will, or by the proper acts and legal formalities repurchase)
Judicial possession 171
established for acquiring such right.
Execution of judgments
PROPERTY
1. By material occupation of the thing Execution and registration of public
“Material occupation” – occupation, instruments
under this provision, is used in its Inscription of possessory information
ordinary meaning or general sense and titles
not in its technical meaning under Article The execution of the required formalities
712, which defines occupation as a is equivalent to delivery of the property
mode of acquiring ownership. subject thereof.
Possession acquired by material
occupation is only possession as a fact, B. By Whom May Possession Be Acquired
not the legal right of possession.
Constructive delivery is considered as Article 532, Civil Code. Possession may be
an equivalent of material occupation in acquired by the same person who is to enjoy it, by
his legal representative, by his agent, or by any
two situations where such occupation is
person without any power whatever: but in the last
essential to the acquisition of case, the possession shall not be considered as
possession: acquired until the person in whose name the act of
Tradicion brevi manu – takes place possession was executed has ratified the same,
when one who possess a thing by without prejudice to the juridical consequences of
title other than ownership, continues negotiorum gestio in a proper case.
to possess the same under a new
title, that of ownership. Possession may be acquired by—
Tradicion constitutum possessorium 1. by the same person
– takes place when the owner 2. by his legal representative
alienates the thing, but continues to 3. by his agent
posses the same under a different 4. by any person without any power
title. whatsoever but subject to ratification,
without prejudice to proper case or
2. By subjection to the action of one’s will negotiorum gestio (Arts. 2144, 2149, 2150)
This mode of acquiring possession 5. qualifiedly, minors and incapacitated
refers more to the right of possession persons
than to possession as a fact. The “action
of our will” must be juridical, in the sense By the same person—
that it must be according to law. Elements of personal acquisition:
This includes the following kinds of 1. Must have the capacity to acquire
constructive delivery: possession
Tradicion symbolica – effected by 2. Must have the intent to possess
delivering some object or symbol 3. The possibility to acquire possession must
placing the thing under the control of be present.
the transferee
Tradicion longa manu – effected by
the transferor pointing out to the
By his legal representative— the advantages of the same shall be liable for
Requisites of acquisition through another: obligations incurred in his interest, and shall
1. That the representative or agent has the reimburse the officious manager for the necessary
intention to acquire the thing or exercise the and useful expenses and for the damages which the
latter may have suffered in the performance of his
right for another, and not for himself
duties.
2. That the person for whom the thing has
been acquired or the right exercised, has the The same obligation shall be incumbent upon him
intention of possessing such thing or when the management had for its purpose the
exercising such right prevention of an imminent and manifest loss,
although no benefit may have been derived.
Note:
Bad faith is personal and Qualifiedly, minors and incapacitated
intransmissible. Its effects must be persons—
therefore, be suffered only by the person Article 535, Civil Code. Minors and incapacitated
who acted in bad faith; his heir should persons may acquire the possession of things; but
not be saddled with the consequences they need the assistance of their legal 172
Good faith can only benefit the person representatives in order to exercise the rights which
PROPERTY
who has it; and the good faith of the heir from the possession arise in their favor.
cannot erase the effects of bad faith of
his predecessor. Incapacitated – all those who do not have
the capacity to act (insane, lunatic, deaf-
Article 534, Civil Code. On who succeeds by mutes who cannot read and write,
hereditary title shall not suffer the consequences of spendthrifts and those under civil
the wrongful possession of the decedent, if it is not interdiction)
shown that he was aware of the flaws affecting it; Object of possession – things only, not
but the effects of possession in good faith shall not rights.
benefit him except from the date of the death of the
decedent.
Method of acquisition – material occupation;
acquisition by means for which the
By any person without any power incapacitated person has the capacity, such
whatsoever but subject to ratification, as acquisition by succession, testate or
without prejudice to proper case or intestate, or by donations propter nuptias,
negotiorum gestio (Arts. 2144, 2149, 2150)— pure and simple donations
Article 2144, Civil Code. Whoever voluntarily takes C. What Do Not Affect Possession
charge of the agency or management of the
business or property of another, without any power Article 537, Civil Code. Acts merely tolerated, and
from the latter, is obliged to continue the same until those executed clandestinely and without the
the termination of the affair and its incidents, or to knowledge of the possessor of a thing, or by
require the person concerned to substitute him, if violence, do not affect possession.
the owner is in a position to do so. This juridical
relation does not arise in either of these instances: 1. Acts merely tolerated
1. When the property or business is not
neglected or abandoned;
Those which by reason of
2. If in fact the manager has been tacitly neighborliness or familiarity, the owner
authorized by the owner. of property allows his neighbor or
another person to do on the property;
In the first case, the provisions of Articles 1317, Those particular services or benefits
1403, No. 1, and 1404 regarding unauthorized which one’s property can give to another
contracts shall govern. without material injury or prejudice to the
owner, who permits them out of
In the second case, the rules on agency in Title X of
friendship or courtesy
this Book shall be applicable.
Acts of little disturbances which a
Article 2149, Civil Code. The ratification of the person, in the interest of neighborliness
management by the owner of the business produces or friendly relations permits others to do
the effects of an express agency, even if the on his property, although continued for a
business may not have been successful. long time, no right will be acquired by
prescription
Article 2150, Civil Code. Although the officious
management may not have been expressly ratified, Note: Permissive use merely tolerated by
the owner of the property or business who enjoys
the possessor cannot affect possession
and cannot be the basis of acquisitive General Rule—
prescription. Possession to constitute Possession cannot be recognized in two
the foundation of prescriptive right, must different personalities, except in cases of co-
be possession under claim of title, it possession by co-possessors without conflict of
must be adverse. (Cuaycong v. claims of interest.
Benedicto)
In case of conflicting possession –
2. Acts executed clandestinely and without preference is given to—
the knowledge of the possessor 1. Present possessor or actual possessor
2. If there are two or more possessors, the one
Article 1108, Civil Code. Possession has to be in
longer in possession
the concept of an owner, public, peaceful and
uninterrupted. 3. If the dates of possession are the same, the
one who presents a title
3. Acts of violence as long as the 4. If all conditions are equal, the thing shall be
possessor objects thereto (i.e. he files a placed in judicial deposit pending
determination of possession or ownership 173
case)
through proper proceedings
PROPERTY
Article 536, Civil Code. In no case may possession
be acquired through force or intimidation as long as
there is a possessor who objects thereto. He who VIII. Effects of Possession
believes that he has an action or a right to deprive
another of the holding of a thing, must invoke the aid A. Right to be Protected in His Possession
of the competent court, if the holder should refuse to
deliver the thing. In general, every possessor has a right to be
respected in his possession; if disturbed therein,
Possession acquired by force, not only possessor has a right to be protected in or
when one forcibly takes away the restored to said possession.
property from another, but also when
one occupied the property in the Article 539, Civil Code. Every possessor has a
property in the absence of another, and right to be respected in his possession; and should
repels the latter upon his return. he be disturbed therein he shall be protected in or
Force may be actual or threatened; and restored to said possession by the means
may be employed by the possessor established by the laws and the Rules of Court.
himself, or by another for him, and
against any possessor. A possessor deprived of his possession through
Effect on Possession: Acts mentioned forcible entry may within ten days from the filing of
the complaint present a motion to secure from the
do not constitute true possession. They competent court, in the action for forcible entry, a
do not interrupt the period of prescription writ of preliminary mandatory injunction to restore
nor affect the rights to the fruits. him in his possession. The court shall decide the
For all purposes that may be favorable motion within thirty (30) days from the filing thereof.
to the true possessor, his possession is
not considered interrupted. “Every possessor” – includes all kinds of
possession, from that of an owner to that of a
D. Rules to Solve Conflicts of Possession mere holder, except that which constitutes a
crime.
possession, the present possessor shall be preferred; if there are two possessors, the one longer in possession; if the dates of the possession are the same, the one who
Reason for the rule: To prevent anyone from
taking the administration of justice into his own
hands. Even the owner cannot forcibly eject the
possessor, but must resort to the courts.
PROPERTY
time within one year after such unlawful antichretic creditors
deprivation, the action of forcible entry. 4. Co-owner, with regard to common property;
“by force, intimidation, strategy, or Except: When he holds the same adversely
stealth” – includes every situation or against all of them with notice to them the
condition under which one person can exclusive claim of ownership
wrongfully enter upon real property and
exclude another, who has had prior Article 542, Civil Code. The possession of real
possession therefrom. property presumes that of the movables therein, so
long as it is not shown or proved that they should be
2. Accion Publiciana (based on superior right excluded.
of possession, no ownership)
Action for the recovery of possession of Refers to all kinds of possession, whether in
real property upon mere allegation and concept of owner or not, in good faith or in bad
proof of a better title thereto faith, and in one’s own name or another’s –in
reference to things only, NOT rights.
3. Accion Reinvindicatoria (recovery of
possession based on a claim of ownership) Article 543, Civil Code. Each one of the
An action setting up title and right to participants of a thing possessed in common shall
possession be deemed to have exclusively possessed the part
Not barred by a judgment in an action which may be allotted to him upon the division
thereof, for the entire period during which the co-
for forcible entry and unlawful detainer
possession lasted. Interruption in the possession of
the whole or a part of a thing possessed in common
4. Action for Replevin (possession or shall be to the prejudice of all the possessors.
ownership for movable property) However, in case of civil interruption, the Rules of
Court shall apply.
Lawful Possessor Can Employ Self-help—
PROPERTY
law leans toward the latter Article 546, Civil Code. Necessary expenses shall
be refunded to every possessor; but only the
Right of the possessor in good faith— possessor in good faith may retain the thing until he
Only limited to the fruits of the thing. He must has been reimbursed therefor.
restore the fruits received from the time such
good faith ceased. He has no rights to the Useful expenses shall be refunded only to the
objects which do not constitute fruits. possessor in good faith with the same right of
retention, the person who has defeated him in the
possession having the option of refunding the
Legal interruption of possession in good
amount of the expenses or of paying the increase in
faith— value which the thing may have acquired by reason
Takes place when an action is filed against him thereof.
—from the time he learns of the complaint, from
the time he is summoned to the trial. Necessary Expenses—
1. Imposed by the thing itself and have no
Article 545, Civil Code. If at the time the good faith relation to the desire or purpose of the
ceases, there should be any natural or industrial
possessor; hence they are reimbursed,
fruits, the possessor shall have a right to a part of
the expenses of cultivation, and to a part of the net
whatever may be the juridical character of
harvest, both in proportion to the time of the the person who advanced them.
possession. 2. They are the “cost of living” for the thing and
must be reimbursed to the one who paid
The charges shall be divided on the same basis by them, irrespective of GF or BF. Only a
the two possessors. possessor in GF is entitled to retain the thing
until he is reimbursed
The owner of the thing may, should he so desire, 3. Those imposed for the preservation of the
give the possessor in good faith the right to finish
thing. They are not considered
the cultivation and gathering of the growing fruits, as
an indemnity for his part of the expenses of improvements; they do not increase the
cultivation and the net proceeds; the possessor in value of the thing, but merely prevent them
good faith who for any reason whatever should from becoming useless.
refuse to accept this concession, shall lose the right
to be indemnified in any other manner. Useful Expenses—
1. Incurred to give greater utility or productivity
Old Civil Code New Civil Code to the thing
Possessor in GF was 2. e.g. Wall surrounding an estate, an irrigation
reimbursed the entire Proportionate division of system, planting in an uncultivated land, a
expense of cultivation expenses of production fishpond, an elevator in the building, electric
incurred by him
lighting system
3. They are reimbursed only to the possessor
“Charges” – Those which are incurred, not on the thing itself in GF as a compensation or reward for him.
but because of it. Possessor in BF cannot recover such
It is borne by the two possessors in proportion to their expenses
respective possession.
Article 547, Civil Code. If the useful improvements
can be removed without damage to the principal
thing, the possessor in good faith may remove them, Article 549, Civil Code. The possessor in bad faith
unless the person who recovers the possession shall reimburse the fruits received and those which
exercises the option under paragraph 2 of the the legitimate possessor could have received, and
preceding article. shall have a right only to the expenses mentioned in
paragraph 1 of Article 546 and in Article 443. The
Article 548, Civil Code. Expenses for pure luxury or expenses incurred in improvements for pure luxury
mere pleasure shall not be refunded to the or mere pleasure shall not be refunded to the
possessor in good faith; but he may remove the possessor in bad faith, but he may remove the
ornaments with which he has embellished the objects for which such expenses have been
principal thing if it suffers no injury thereby, and if his incurred, provided that the thing suffers no injury
successor in the possession does not prefer to thereby, and that the lawful possessor does not
refund the amount expended. prefer to retain them by paying the value they may
have at the time he enters into possession..
PROPERTY
substance of the thing itself, but only the Article 550, Civil Code. Improvements caused by
comfort, convenience or enjoyment of the nature or time shall always inure to the benefit of the
possessor. They are not the subject of person who has succeeded in recovering
reimbursement, because the law does not possession
compensate personal whims or caprices.
2. e.g. Opening of a garden, placing fountains Includes all the natural accessions
and statues in it, adorning the ceilings referred to by articles 457-465, and all
paintings, and the walls with reliefs those which do not depend upon the will
of the possessor.
e.g. widening of the streets, rising of fountains of
Useful Expenses Expenses for Luxury fresh or mineral water, increase of foliage of trees
Those which increase the
Those which merely
income derived from the
embellished the thing
thing
Result: Increase in the
Liability for loss or deterioration of property
products, either by possessor in bad faith—
absolutely, or because of
Result: Benefit or Article 552, Civil Code. A possessor in good faith
greater facilities for
advantage is only for the shall not be liable for the deterioration or loss of the
producing them
convenience of definite thing possessed, except in cases in which it is
possessors proved that he has acted with fraudulent intent or
Includes expenses
resulting in real benefit or negligence, after the judicial summons.
advantage to the thing
The resulting utility is The utility is for the A possessor in bad faith shall be liable for
essential and absolute, to possessor or particular deterioration or loss in every case, even if caused by
all who may have the persons alone and is a fortuitous event.
thing. therefore accidental.
Possessor in GF Possessor in BF
Entitled to the fruits while possession is in GF Must reimburse the legitimate possessor
Fruits Received
and before legal interruption (544) (549)
Entitled to part of the expenses of cultivation,
and to a part of the net harvest, in proportion
to the time of the possession.
Must reimburse the legitimate possessor
Pending Fruits
Indemnity may be, at the owner’s option, (549)
1. In money, OR
2. By allowing full cultivation and gathering
of the fruits (545)
Must share with the legitimate possessor, in
Charges proportion to the time of the possession (545) Same as with GF (545)
PROPERTY
to Title (Art. 559) proved. This presumption is prima facie
and it prevails until contrary is proved.
Article 559, Civil Code. The possession of movable
property acquired in good faith is equivalent to a Just title – that which is legally sufficient
title. Nevertheless, one who has lost any movable or to transfer the ownership or the real right
has been unlawfully deprived thereof may recover it to which it relates.
from the person in possession of the same.
If the possessor of a movable lost or which the For the purposes of prescription, there is
owner has been unlawfully deprived, has acquired it just title when the adverse claimant
in good faith at a public sale, the owner cannot came into possession of the property
obtain its return without reimbursing the price paid through one of the modes recognized by
therefor law for the acquisition of ownership or
other real rights, but the grantor was not
Possessor has actual title which is defeasible the owner or could not transmit any
only by true owner. right. (Art. 1129)
IX. Effects of Possession in the Concept 5. Possessor may ask for inscription of such
real right of possession in the registry of
of Owner
property
1. Possession may be lapsed of time ripen into 6. Has right to the fruits and reimbursement of
full ownership, subject to certain exceptions. expenses (assuming he is possessor in
good faith)
2. Presumption of just title and cannot be
obliged to show or prove it (Art. 541); 7. Upon recovery of possession which has
exception (Art. 1131) unlawfully deprived may demand fruits and
damages
Article 541, Civil Code. A possessor in the concept
of owner has in his favor the legal presumption that 8. Generally, he can do on the things
he possesses with a just title and he cannot be possessed everything that the law
obliged to show or prove it.
authorizes the owner to do until he is ousted Of non-interruption of possession in favor of
by one who had a better right. present possessor who proves possession
at a previous time until the contrary is
9. Possession in good faith and possession in proved—
bad faith (Art. 528)
Mistake upon doubtful or difficult Article 554, Civil Code. A present possessor who
question of law as a basis of good faith shows his possession at some previous time, is
(Art. 526, par 3) presumed to have held possession also during the
intermediate period, in the absence of proof to the
contrary.
X. Presumption in Favor of the
Article 1120, Civil Code. Possession is interrupted
Possessor—for Acquisitive for the purposes of prescription, naturally or civilly.
Prescription
Article 1121, Civil Code. Possession is naturally
interrupted when through any cause it should cease
Of good faith until contrary is proved— 178
for more than one year.
PROPERTY
Article 527, Civil Code. Good faith is always The old possession is not revived if a new
presumed, and upon him who alleges bad faith on possession should be exercised by the same
the part of a possessor rests the burden of proof. adverse claimant.
Presumption is only juris tantum because Article 1122, Civil Code. If the natural interruption
possession is the outward sign of is for only one year or less, the time elapsed shall be
ownership. Unless such proof of bad faith is counted in favor of the prescription.
presented, the possessor will be held to be
Article 1123, Civil Code. Civil interruption is
in good faith. produced by judicial summons to the possessor.
So long as the possessor is not actually
aware of any defect invalidating his title, he Article 1124, Civil Code. Judicial summons shall be
is deemed a possessor in good faith. deemed not to have been issued and shall not give
rise to interruption:
Of continuity of initial good faith in which 1. If it should be void for lack of legal
possession was commenced of possession solemnities;
in good faith does not lose this character 2. If the plaintiff should desist from the
complaint or should allow the proceedings
except in case and from the moment
to lapse;
possessor became aware or is not unaware 3. If the possessor should be absolved from
of improper or wrongful possession— the complaint.
PROPERTY
before its partition, owned in common by such heirs, has lasted longer than one year; real
subject to the payment of debts of the deceased.
right of possession not lost after 10
years - (Subject to Article 537)
3. Of just title in favor of possessor in concept Article 537, Civil Code. Acts merely tolerated, and
of owner those executed clandestinely and without the
knowledge of the possessor of a thing, or by
Article 541, Civil Code. A possessor in the concept violence, do not affect possession.
of owner has in his favor the legal presumption that
he possesses with a just title and he cannot be Possession that is lost here refers only
obliged to show or prove it.
to possession as a fact (de facto), not
Article 1141, Civil Code. Real actions over the legal right of possession (de jure). It
immovables prescribe after thirty years. is the possession that the new
possessor acquires.
This provision is without prejudice to what is Real right of possession is lost only after
established for the acquisition of ownership and 10 years.
other real rights by prescription. After one year, the actions for forcible
entry and unlawful detainer can no
longer be brought. But accion publiciana
XI. Possesion May Be Lost By may still be instituted to recover
possession de jure
Article 555, Civil Code. A possessor may lose his
possession: Article 553, Civil Code. One who recovers
1. By the abandonment of the thing; possession shall not be obliged to pay for
improvements which have ceased to exist at the
2. By an assignment made to another either by time he takes possession of the thing.
onerous or gratuitous title;
The improvements, having ceased to
3. By the destruction or total loss of the thing, or exist, the lawful possessor or owner
because it goes out of commerce; cannot benefit from them; hence he
should not pay for them.
4. By the possession of another, subject to the Necessary expenses are not considered
provisions of Article 537, if the new possession
improvements, and even if the object for
has lasted longer than one year. But the real
right of possession is not lost till after the lapse which they were incurred no longer
of ten years. exists at the time of entry upon
possession, the lawful possessor or
A. Abandonment owner has to pay for them.
Includes the giving up possession, and
not necessarily of ownership by every
possessor. Article 557, Civil Code. The possession of
immovables and of real rights is not deemed lost, or
transferred for purposes of prescription to the
prejudice of third persons, except in accordance with
CIVIL LAW REVIEWER Chapter VI. POSSESSION
PROPERTY
Article 556, Civil Code. The possession of
movables is not deemed lost so long as they remain
under the control of the possessor, even though for
the time being he may not know their whereabouts.
Kinds of Animals:
1. Wild—those which live naturally
independent of man
2. Domesticated—those which, being wild by
nature, have become accustomed to
recognize the authority of man. When they
observe this custom, they are placed in the
same category as domestic and when they
lose it, they are considered as wild.
3. Domestic or Tame—those which are
bornand reared ordinarily under the control
and care of man; they are under the
ownership of man, and do not become res
nullius unless they are abandoned.
CIVIL LAW REVIEWER Chapter VII. USUFRUCT
PROPERTY
By the nature of Always a real Quasi-real or
Article 562, Civil Code. Usufruct gives a right to the right right personal right
enjoy the property of another with the obligation of By the creator Need not be an
preserving its form and substance, unless the title of the right Owner owner
constituting it or the law otherwise provides. Active owner or
Passive owner
lessor who
Objects of Usufruct— who allows the
By the cause makes the
1. Independent Rights usufructuary to
lessee enjoy
enjoy the thing the thing
A servitude which is dependent on the
tenement to which it attaches cannot be Generally
the object of usufruct covers all the Generally
By the extent of
2. Things utility of which covers a
enjoyment
the thing is particular utility
Non-consumable things
capable
Consumable things, but only as to their May be created May only be
value if appraised, or on an equal by law, by will of created by the
quantity and quality if they were not By the origin
the parties, or will of the
appraised by prescription parties
3. Unproductive things e.g. sterile or absolutely Pays for
As regards Generally not
unproductive land, or things for mere ordinary repairs
repairs borne by a
pleasure, such as promenades, statues or and taxes on
and taxes the fruits lessee
paintings, even if they do not produce any
utility.
Usufruct vs. Servitude—
II. Characteristics Basis Usufruct Servitudes
May involve May only
Characteristics— As to the object real or personal involve real
1. It is a real right property property
2. Of temporary duration Covers all the
By the extent or Limited to a
3. To derive all advantages from the thing due uses of the
enjoyment thing particular use
to normal exploitation
PROPERTY
the contract is unenforceable unless a. Simultaneous: at the same time
in writing b. Successive: one after the other
b. By act mortis causa – such as testament
Limitations on successive usufruct—
2. Legal: as provided by law 1. If usufruct is by donation, ALL donees must
be alive.
Usufruct of parents over the property of
Article 756, Civil Code. The ownership of property
unemancipated children (now limited to the
may also be donated to one person and the usufruct
collectively daily needs of the family as per to another or others, provided all the donees are
the Family Code) living at the time of the donation.
Article 226, Family Code. The property of the 2. Fiduciary or first heir and the second heir
unemancipated child earned or acquired with his must be alive at the time of the death of the
work or industry or by onerous or gratuitous title testator.
shall belong to the child in ownership and shall be
devoted exclusively to the latter's support and
education, unless the title or transfer provides Article 863, Civil Code. A fideicommissary
otherwise. substitution by virtue of which the fiduciary or first
heir instituted is entrusted with the obligation to
The right of the parents over the fruits and income of preserve and to transmit to a second heir the whole
the child's property shall be limited primarily to the or part of the inheritance, shall be valid and shall
child's support and secondarily to the collective daily take effect, provided such substitution does not go
needs of the family. beyond one degree from the heir originally instituted,
and provided further, that the fiduciary or first heir
3. Mixed: created both by law and the acts of and the second heir are living at the time of the
death of the testator.
persons
3. If by testamentary succession, there must
Article 565, Civil Code. The rights and obligations be only 2 successive usufructuaries, and
of the usufructuary shall be those provided in the both must be alive or at least already
title constituting the usufruct; in default of such title, conceived at the time of the testator’s death.
or in case it is deficient, the provisions contained in
the two following Chapters shall be observed.
Article 869, Civil Code. A provision whereby the
The rights and duties of the usufructuary testator leaves to a person the whole or part of the
provided by law may be modified or inheritance, and to another the usufruct, shall be
valid. If he gives the usufruct to various persons, not
eliminated by the parties.
simultaneously, but successively, the provisions of
The title constituting the usufruct may Article 863 shall apply
validly authorize the usufructuary to
alienate the thing itself held in usufruct. C. By Object of Usufruct
If the usufructuary is authorized to
alienate the thing in case of Article 564, Civil Code. Usufruct may be
necessity, it is the usufructuary who constituted on the whole or a part of the fruits of the
thing, in favor of one more persons, simultaneously
or successively, and in every case from or to a
certain day, purely or conditionally. It may also be 2. As to object
constituted on a right, provided it is not strictly a. Singular: only on particular property
personal or intransmissible. of the owner
b. Universal: pertains to the whole
1. Rights property;
a. Must not be strictly personal or
intransmissible. Article 598, Civil Code. If the usufruct be
b. Usufruct over a real right is by itself a constituted on the whole of a patrimony, and if at the
real right. time of its constitution the owner has debts, the
c. Right to receive present or future provisions of Articles 758 and 759 relating to
support cannot be the object of the donations shall be applied, both with respect to the
usufruct. maintenance of the usufruct and to the obligation of
the usufructuary to pay such debts.
2. Things The same rule shall be applied in case the owner is
a. Normal: involves non-consummable obliged, at the time the usufruct is constituted, to
things where the form and substance make periodical payments, even if there should be
183
are preserved no known capital.
PROPERTY
b. Abnormal or irregular
Article 595, Civil Code. The owner may construct
any works and make any improvements of which the
immovable in usufruct is susceptible, or make new
plantings thereon if it be rural, provided that such
acts do not cause a diminution in the value of the
usufruct or prejudice the right of the usufructuary.
PROPERTY
substance of the thing. Without need to The owner shall
Usufructuary rights may be transferred, reimburse the expenses reimburse to the
to the owners usufructuary ordinary
assigned or otherwise disposed of by cultivation expenses
the usufructuary. from the proceeds of the
Not exempt from execution and can be fruits (not to exceed the
sold at public auction. value of the fruits)
Without prejudice to the Rights of innocent 3rd
2. As to hidden treasure, usufructuary is right of 3rd persons e.g. if parties should not be
considered a stranger without a right to a the fruits had been prejudiced.
share, unless he is also the finder of the planted by a possessor
treasure in good faith, the
pending crop expenses
and charges shall be
prorated
dustrial and civil fruits of the property in usufruct. With respect to hidden treasure which may between
be found on the said
land or tenement, he shall be considered a stranger.
possessor and the
usufructuary
lding, or other property on which it is found.
de. Civil fruits are deemed to accrue daily, and belong to the usufructuary in proportion to the time the usufruct may last.
de. Whenever a usufruct is constituted on the right to receive a rent or periodical pension, whether in money or in fruits, or in the interest on bonds or securities payable
ural, industrial and civil fruits of the property in usufruct. With respect to hidden treasure which may be found on the land or tenement, he shall be considered a strange
PROPERTY
Article 572, Civil Code. The usufructuary may
personally enjoy the thing in usufruct, lease it to as the tenant thereof; and,
another, or alienate his right of usufruct, even by a as long as the obligations
gratuitous title; but all the contracts he may enter she had assumed towards
into as such usufructuary shall terminate upon the the owner are fulfilled.
expiration of the usufruct, saving leases of rural (Fabie v. Gutierrez David)
lands, which shall be considered as subsisting A lease executed by the owner
during the agricultural year. before the creation of the
usufruct is not extinguished by
a. Exceptions: such usufruct.
Legal usufructs cannot be leased.
Caucion juratoria (lease would d. Limitations on the Right to Lease the
show that the usufructuary does not Property
need the property badly) Usufructuary cannot alienate a thing
b. Effect of the transfer of right: in usufruct
The transfer or lease of the usufruct Cannot alienate or dispose of
does NOT terminate the relation of the objects included in the
the usufructuary with the owner usufruct
Death of the transferee does not Cannot renounce a servitude
terminate the usufruct but it Cannot mortgage or pledge a
terminates upon the death of the thing
usufructuary who made the transfer. EXCEPT: When the right of
c. Rules as to Lease usufruct is converted into the
The property in usufruct may be right of ownership
leased even without the consent of o When the things are
the owner. consumable (574);
The lease should be for the same o When the things by their
period as the usufruct. nature are intended for sale,
EXCEPT: leases of rural lands such as the merchandise in
continues for the remainder of a commercial
the agricultural year establishment; and
A lease executed by the o When the things, whatever
usufructuary before the their nature, are delivered
termination of the usufruct and under appraisal as
subsisting after the termination equivalent to their sale
of the usufruct must be
respected, but the rents for the Future crops may be sold but such
remaining period will belong to sale would be void if not ratified by
the owner. the owner.
o If the usufructuary has The buyer’s remedy is to
leased the lands or recover from the usufructuary.
tenements given in usufruct, Only voluntary usufruct can be
and the usufruct should alienated.
The usufructuary-lessor is liable for If the increase in value exceeds the
the act of the substitute. damages, and the improvements
A usufructuary who alienates or are of such nature that they can be
leases his right of usufruct shall removed without injury to the thing
answer for any damage which in usufruct, the settlement of the
the things in usufruct may suffer difference must be agreed upon by
through the fault or negligence the parties.
of the person who substitutes If the improvements cannot be
him. (Art. 590, Civil Code) removed without injury, the excess
in value accrues to the owner.
PROPERTY
may deem proper, provided he does not alter its 1. Right to mortgage right of usufruct
form or substance; but he shall have no right to be
indemnified therefor. He may, however, remove
such improvements, should it be possible to do so Article 572, Civil Code. The usufructuary may
without damage to the property. personally enjoy the thing in usufruct, lease it to
another, or alienate his right of usufruct, even by a
Usufructuary is not entitled to gratuitous title; but all the contracts he may enter
reimbursement. into as such usufructuary shall terminate upon the
expiration of the usufruct, saving leases of rural
Whenever the usufructuary can remove
lands, which shall be considered as subsisting
the improvements without injury to the during the agricultural year.
property in usufruct, he has the right to
do so, and the owner cannot prevent Does not include parental usufruct
him from doing so even upon payment because of personal and family
of their value. considerations.
This right does not involve an obligation
– if the usufructuary does not wish to 2. Right to alienate the usufruct except in
exercise it, he cannot be compelled by purely personal usufructs or when title
the owner to remove the improvements. constituting it prohibits the same
This right to remove improvements can Parental usufruct is inalienable
be enforced only against the owner, not
against a purchaser in good faith to
whom a clean title has been issued.
Usufructuary may set off the VI. Rights of the Naked Owner
improvements against any damage to
the property 1. At the beginning of the usufruct (see
obligations of usufructuary at the beginning
Article 580, Civil Code. The usufructuary may set of the usufruct)
off the improvements he may have made on the 2. During the usufruct
property against any damage to the same. a. Retains title to the thing or property
b. He may alienate the property: he may
It is necessary that the not alter the form or substance of the
improvements should have thing; nor do anything prejudicial to the
increased the value of the property, usufructuary
and that the damages are imputable
to the usufructuary. Article 581, Civil Code. The owner of property the
Increase in value and the amount of usufruct of which is held by another, may alienate it,
damages are set off against each but he cannot alter its form or substance, or do
other. anything thereon which may be prejudicial to the
If the damages exceed the increase usufructuary.
in value, the difference should be
c. He may construct buildings, make
paid by the usufructuary as
improvements and plantings, provided:
indemnity.
Value of the usufruct is not impaired
Rights of the usufructuary are not Title constituting usufruct excused the
prejudiced making of inventory
Title constituting usufruct already makes an
inventory
VII. Obligations of the Usufructuary
A. At the Beginning of Usufruct or Before To give a bond for the faithful performance of
Exercising the Usufruct duties as usufructuary—
Any kind of sufficient security is allowed, e.g.
Article 583, Civil Code. The usufructuary, before cash, personal bond, mortgage
entering upon the enjoyment of the property, is No bond is required in the following
obliged: a. No prejudice would result (Art. 585)
1. To make, after notice to the owner or his b. Usufruct is reserved by a donor (Art.
legitimate representative, an inventory of all the 584)
property, which shall contain an appraisal of the Gratitude on the donee’s part
movables and a description of the condition of demands that the donor be excused 187
the immovables;
from filing the bond
PROPERTY
2. To give security, binding himself to fulfill the
obligations imposed upon him in accordance c. Title constituting usufruct excused
with this Chapter. usufructuary
d. If usufructuary takes possession under a
[NOTE: These requirements are NOT conditions caucion juratoria (Art. 587)
precedent to the commencement of the right of The security given may be by a
the usufructuary but merely to the entry upon personal bond, a pledge, or a
the possession and enjoyment of the property.] mortgage.
It is only by way of exception that a
To make an inventory— caucion juratoria is allowed, and
Requisites only under the special
a. Immovables must be described circumstances:
b. Movables appraised because they are o Proper court petition
easily lost or deteriorated. o Necessity for delivery of
Concurrence of the owner in the making of furniture, implements or house
the inventory included in the usufruct
Expenses for the making of the inventory o Approval of the court
are borne by the usufructuary o Sworn promise
Inventory may be in a private document, A usufructuary under this can
except when immovables are involved (a neither alienate his right nor lease
public instrument is prescribed to affect 3 rd the property, for that would mean
persons) that he does not need the dwelling
Failure to make an inventory failure does not or the implements and furniture.
affect the rights of the usufructuary to enjoy
the property and its fruits. Article 585, Civil Code. The share of the co-
a. A prima facie presumption arises that owners, in the benefits as well as in the charges,
shall be proportional to their respective interests.
the property was received by the
Any stipulation in a contract to the contrary shall be
usfructuary in good condition void.
b. Even if he is already in possession, he
may still be required to make an The portions belonging to the co-owners in the co-
inventory. ownership shall be presumed equal, unless the
Exceptions to the requirement of contrary is proved.
inventory
a. No one will be injured thereby Article 584, Civil Code. The provisions of No. 2 of
the preceding article shall not apply to the donor
b. Title of the usufruct excuses the making
who has reserved the usufruct of the property
of the inventory donated, or to the parents who are usufructuaries of
their children's property, except when the parents
Article 585, Civil Code. The usufructuary, whatever contract a second marriage.
may be the title of the usufruct, may be excused
from the obligation of making an inventory or of Article 587, Civil Code. If the usufructuary who has
giving security, when no one will be injured thereby. not given security claims, by virtue of a promise
under oath, the delivery of the furniture necessary
for his use, and that he and his family be allowed to
live in a house included in the usufruct, the court o He shall have the ff. options:
may grant this petition, after due consideration of the 1. Receivership of realty, sale of
facts of the case. movables, deposit of securities,
or investment of money; or
The same rule shall be observed with respect to
2. Retention of the property as
implements, tools and other movable property
necessary for an industry or vocation in which he is administrator.
engaged. o Net products less administration
expenses fixed by agreement or by
If the owner does not wish that certain articles be the Court, shall be delivered to the
sold because of their artistic worth or because they usufructuary.
have a sentimental value, he may demand their
delivery to him upon his giving security for the Right of the usufructuary
payment of the legal interest on their appraised o He may alienate his right over the
value. property which he does not possess
in the same form as he holds it,
without prejudice to the right of the 188
Effect of filing a bond transferee to give the required
PROPERTY
security.
Article 588, Civil Code. After the security has been
given by the usufructuary, he shall have a right to all
the proceeds and benefits from the day on which, in
accordance with the title constituting the usufruct, he B. During the Usufruct
should have commenced to receive them
To take care of the thing like a good father of
Retroactivity: upon giving the security, a family—
the usufructuary will be entitled to all the
benefits accruing since the time when Article 589, Civil Code. The usufructuary shall take
he should have begun to receive them. care of the things given in usufruct as a good father
of a family.
Effect of failure to give bond Article 610, Civil Code. A usufruct is not
extinguished by bad use of the thing in usufruct; but
Article 586, Civil Code. Should the usufructuary fail if the abuse should cause considerable injury to the
to give security in the cases in which he is bound to owner, the latter may demand that the thing be
give it, the owner may demand that the immovables delivered to him, binding himself to pay annually to
be placed under administration, that the movables the usufructuary the net proceeds of the same, after
be sold, that the public bonds, instruments of credit deducting the expenses and the compensation
payable to order or to bearer be converted into which may be allowed him for its administration.
registered certificates or deposited in a bank or
public institution, and that the capital or sums in
1. When damages are caused to the property
cash and the proceeds of the sale of the movable
property be invested in safe securities. by the fault or negligence of the
usufructuary, the naked owner need not wait
The interest on the proceeds of the sale of the for the termination of the usufruct before
movables and that on public securities and bonds, bringing the action to recover proper
and the proceeds of the property placed under indemnity.
administration, shall belong to the usufructuary. 2. The bad use of a thing, which causes
considerable injury, entitles the owner to
Furthermore, the owner may, if he so prefers, until demand the delivery and administration of
the usufructuary gives security or is excused from so
the thing.
doing, retain in his possession the property in
usufruct as administrator, subject to the obligation to 3. The exercise of this remedy does NOT
deliver to the usufructuary the net proceeds thereof, extinguish the usufruct.
after deducting the sums which may be agreed upon
or judicially allowed him for such administration. To undertake ordinary repairs—
Right of the naked owner Article 592, Civil Code. The usufructuary is obliged
o Potestative right; if he does not wish to make the ordinary repairs needed by the thing
to exercise it, he may deliver the given in usufruct.
property to the usufructuary.
By ordinary repairs are understood such as are
o Delivery, however, does not mean a required by the wear and tear due to the natural use
renunciation of the right to demand of the thing and are indispensable for its
security. preservation. Should the usufructuary fail to make
them after demand by the owner, the latter may 2. General Rule: Naked owner must make the
make them at the expense of the usufructuary. extraordinary repairs
Usufructuary obliged to pay legal
1. Ordinary repairs: interest on the amount while usufruct
a. Deteriorations or defects arise from the lasts
natural use of the thing;
b. Repairs are necessary for the 3. If the extraordinary repairs are
preservation of the thing. indispensable, and the naked owner fails to
2. The usufructuary is bound to pay only for the undertake them, the usufructuary may make
repairs made during the existence of the such repairs
usufruct. Requisites:
If the defects existed already at the time a. There must be due notification to
the usufruct began, the obligation to the naked owner of the urgency – if
defray the ordinary repairs falls upon the it is not urgent, there is no obligation
owner. to give notice.
3. If the defects are caused by the ordinary use b. The naked owner failed to make 189
of the thing, the usufructuary may exempt them
PROPERTY
himself from making the repairs by returning c. The repair is needed for
to the owner the fruits received during the preservation
time that the defects took place. The usufructuary who has made the
EXCEPT: When the ordinary repairs are extraordinary repairs necessary for
due to defects caused by the fault of the preservation, is entitled to recover from
usufructuary the owner the increase in value which
4. If the usufructuary fails to make the repairs the tenement acquired by reason of
even after demand, the owner may make such works.
them at the expense of the usufructuary Usufructuary may retain until he is paid.
To notify owner of need to undertake To pay for annual charges and taxes on the
extraordinary repairs— fruits—
Article 593, Civil Code. Extraordinary repairs shall Article 596, Civil Code. The payment of annual
be at the expense of the owner. The usufructuary is charges and taxes and of those considered as a lien
obliged to notify the owner when the need for such on the fruits, shall be at the expense of the
repairs is urgent. usufructuary for all the time that the usufruct lasts.
Article 594, Civil Code. If the owner should make Article 597, Civil Code. The taxes which, during the
the extraordinary repairs, he shall have a right to usufruct, may be imposed directly on the capital,
demand of the usufructuary the legal interest on the shall be at the expense of the owner.
amount expended for the time that the usufruct
lasts. If the latter has paid them, the usufructuary shall pay
him the proper interest on the sums which may have
Should he not make them when they are been paid in that character; and, if the said sums
indispensable for the preservation of the thing, the have been advanced by the usufructuary, he shall
usufructuary may make them; but he shall have a recover the amount thereof at the termination of the
right to demand of the owner, at the termination of usufruct.
the usufruct, the increase in value which the
immovable may have acquired by reason of the Article 612, Civil Code. Upon the termination of the
repairs. usufruct, the thing in usufruct shall be delivered to
the owner, without prejudice to the right of retention
1. Extraordinary repairs pertaining to the usufructuary or his heirs for taxes
a. Those caused by exceptional and extraordinary expenses which should be
circumstances, whether or not they are reimbursed. After the delivery has been made, the
necessary for the preservation of the security or mortgage shall be cancelled.
thing;
b. Those caused by the natural use of the It is well settled that a real tax, being a
thing, but are not necessary for its burden upon the capital, should be paid
preservation. by the owner of the land and not by a
usufructuary. There is no merit in the
contention of distinguishing public lands
into alienable and indisposable. All
properties owned by the government, interest on bonds or securities payable to bearer,
without any distinction, are exempt from each payment due shall be considered as the
taxation. (Board of Assessment proceeds or fruits of such right.
Appeals of Zamboanga del Sur v.
Whenever it consists in the enjoyment of benefits
Samar Mining Company, Inc.)
accruing from a participation in any industrial or
commercial enterprise, the date of the distribution of
To notify owner of any act detrimental to which is not fixed, such benefits shall have the same
ownership— character.
Article 601, Civil Code. The usufructuary shall be In either case they shall be distributed as civil fruits,
obliged to notify the owner of any act of a third and shall be applied in the manner prescribed in the
person, of which he may have knowledge, that may preceding article.
be prejudicial to the rights of ownership, and he shall
be liable should he not do so, for damages, as if B. Usufruct of property owned in
they had been caused through his own fault. common
Article 582, Civil Code. The usufructuary of a part 190
of a thing held in common shall exercise all the
PROPERTY
To shoulder the costs of litigation re rights pertaining to the owner thereof with respect to
usufruct— the administration and the collection of fruits or
interest. Should the co-ownership cease by reason
Article 602, Civil Code. The expenses, costs and of the division of the thing held in common, the
liabilities in suits brought with regard to the usufruct usufruct of the part allotted to the co-owner shall
shall be borne by the usufructuary. belong to the usufructuary.
C. At the Time of the Termination of the Article 591, Civil Code. If the usufruct be
Usufruct constituted on a flock or herd of livestock, the
To deliver the thing in usufruct to the usufructuary shall be obliged to replace with the
owner in the condition in which he has young thereof the animals that die each year from
received it, after undertaking ordinary natural causes, or are lost due to the rapacity of
repairs beasts of prey.
Exception: abnormal usufruct – return
If the animals on which the usufruct is constituted
the thing of same kind, quantity and should all perish, without the fault of the
quality; if with appraised value, must usufructuary, on account of some contagious
return value appraised disease or any other uncommon event, the
usufructuary shall fulfill his obligation by delivering to
the owner the remains which may have been saved
from the misfortune.
VIII. Special Cases of Usufruct
Should the herd or flock perish in part, also by
A. Usufruct over a pension or periodical accident and without the fault of the usufructuary,
income the usufruct shall continue on the part saved.
Article 570, Civil Code. Whenever a usufruct is Should the usufruct be on sterile animals, it shall be
constituted on the right to receive a rent or periodical considered, with respect to its effects, as though
pension, whether in money or in fruits, or in the constituted on fungible things.
1. On sterile stock: same rules on the enforcement of the action he acquires the thing
consumable property govern (i.e. claimed, the usufruct shall be limited to the fruits, the
replacement upon termination) dominion remaining with the owner.
2. On fruitful stock
a. Must replace ordinary losses of the 1. The action may be instituted in the
stock with the young if: usufructuary’s name. As the owner of the
Some animals die from natural usufruct, he is properly deemed a proper
causes party in interest.
Some animals are lost due to 2. If the purpose is the recovery of the property
rapacity of beasts of prey or right, he is still required under 578 to
obtain the naked owner’s authority.
b. There is no obligation to replace if: 3. If the purpose is to object to or prevent
There is a total loss of animals disturbances over the property, no special
because of some unexpected or authority from the naked owner is needed.
unnatural loss (like contagious
disease or any other uncommon 191
event, provided the usufructuary has F. Usufruct on mortgaged property
PROPERTY
no fault);
If all perish, the usufructuary Article 600, Civil Code. The usufructuary of a
should deliver the remains to mortgaged immovable shall not be obliged to pay
the owner. the debt for the security of which the mortgage was
There is a partial loss constituted.
If a part of the stock perishes,
the usufruct subsists on the Should the immovable be attached or sold judicially
remainder. for the payment of the debt, the owner shall be liable
to the usufructuary for whatever the latter may lose
by reason thereof.
D. Usufruct over fruit bearing trees and 1. When the usufruct is universal and some
sprout and woodlands objects are mortgaged, apply Art. 598.
2. If the usufructuary mortgaged the usufruct
Article 575, Civil Code. The usufructuary of fruit- himself, he is liable to pay his own debt.
bearing trees and shrubs may make use of the dead
trunks, and even of those cut off or uprooted by
accident, under the obligation to replace them with G. Usufruct over an entire patrimony
new plants.
Article 576, Civil Code. If the owner should make Article 598, Civil Code. If the usufruct be
the extraordinary repairs, If in consequence of a constituted on the whole of a patrimony, and if at the
calamity or extraordinary event, the trees or shrubs time of its constitution the owner has debts, the
shall have disappeared in such considerable provisions of Articles 758 and 759 relating to
number that it would not be possible or it would be donations shall be applied, both with respect to the
too burdensome to replace them, the usufructuary maintenance of the usufruct and to the obligation of
may leave the dead, fallen or uprooted trunks at the the usufructuary to pay such debts
disposal of the owner, and demand that the latter
remove them and clear the land. The same rule shall be applied in case the owner is
obliged, at the time the usufruct is constituted, to
The usufructuary can: make periodical payments, even if there should be
1. Use dead trunks and those cut off or no known capital.
uprooted by accident.
2. Make usual cuttings that owner used to do. 1. Applies when:
3. Cut the trees that are not useful a. If the usufruct is a universal one
b. And the naked owner – Has debts or is
obliged to make periodical payments
E. Usufruct on a right of action (whether or not there be known capital)
2. General rule: the usufructuary is not liable
for the owner’s debts.
Article 578, Civil Code. The usufructuary of an 3. Exceptions:
action to recover real property or a real right, or any a. When it is so stipulated; in which case
movable property, has the right to bring the action
and to oblige the owner thereof to give him the
The usufructuary shall be liable for
authority for this purpose and to furnish him the debt specified.
whatever proof he may have. If in consequence of
If there is no specification, he is
liable only for debts incurred by the IX. Extinguishment of Usufruct
owner before the usufruct was
constituted. Article 603, Civil Code. Usufruct is extinguished:
1. By the death of the usufructuary, unless a
b. When the usufruct is constituted in fraud contrary intention clearly appears;
2. By the expiration of the period for which it was
of creditors
constituted, or by the fulfillment of any
4. In no case shall the usufructuary be resolutory condition provided in the title
responsible for debts exceeding the benefits creating the usufruct;
under the usufruct. (except when the 3. By merger of the usufruct and ownership in the
contrary intention appears) same person;
4. By renunciation of the usufructuary;
H. Usufruct over deteriorable property 5. By the total loss of the thing in usufruct;
6. By the termination of the right of the person
constituting the usufruct;
Article 573, Civil Code. Whenever the usufruct 7. By prescription.
includes things which, without being consumed, 192
gradually deteriorate through wear and tear, the
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usufructuary shall have the right to make use thereof
A. Death of usufructuary
in accordance with the purpose for which they are
intended, and shall not be obliged to return them at
the termination of the usufruct except in their Exceptions—
condition at that time; but he shall be obliged to 1. In multiple usufructs: it ends at the death
indemnify the owner for any deterioration they may of the last survivor
have suffered by reason of his fraud or negligence.
a. If simultaneously constituted: all the
1. It is sufficient if the usufructuary returns the usufructuaries must be alive (or at least
things in the condition in which they may conceived) at the time of constitution.
have been found at the time of the expiration b. If successively constituted:
of the usufruct despite ordinary defects If by virtue of donation – all the
caused by use and deterioration produced donees-usufructuaries must be
by age and time. living at the time of the donation;
EXCEPT when caused by the If by will – there should only be 2
usufructuary’s fraud and negligence. successive usufructuaries and both
2. If usufructuary does not return the things must have been alive at the time of
upon the expiration of the usufruct, he testator’s death.
should pay an indemnity equivalent to the
value of the things at the time of such 2. If the period is fixed by reference to the life
expiration.
Article 574, Civil Code. Whenever the usufruct of another or there is a resolutory condition
includes things which cannot be used without being Death does not affect the usufruct and
consumed, the usufructuary shall have the right to the right is transmitted to the heirs of the
I.make use of them
Usufruct under the obligation
over consumable of paying
property usfructuary until the expiration of the
Article their
611, appraised
Civil Code.value at theconstituted
A usufruct terminationin of the term or the fulfillment of the condition.
favor ofusufruct,
several ifpersons
they were appraised
living at the when
time ofdelivered.
its In
caseshall
constitution they not
were
be not appraised,until
extinguished he death
shall of
have the Article 606, Civil Code. A usufruct granted for the
the last right to return at the same quantity and quality, or
survivor. time that may elapse before a third person attains a
pay their current price at the time the usufruct certain age, shall subsist for the number of years
ceases. specified, even if the third person should die before
the period expires, unless such usufruct has been
expressly granted only in consideration of the
existence of such person.
Abnormal Usufruct
If the thing is appraised at delivery, the
usufructuary must pay their appraised
value at the termination of the usufruct.
If they were not appraised, he must
3. When a contrary intention clearly appears
return the same kind and quality or pay
If the usufructuary dies before the
the current price at the expiration of the
happening of a resolutory condition, the
usufruct.
usufruct is extinguished.
1st view: usufruct is personal and it Article 607, Civil Code. If the usufruct is constituted
CANNOT be extended beyond the on immovable property of which a building forms
lifetime of the usufructuary. (Sanchez part, and the latter should be destroyed in any
Roman and SC) manner whatsoever, the usufructuary shall have a
right to make use of the land and the materials.
B. Expiration of period or fulfillment of The same rule shall be applied if the usufruct is
resolutory condition imposed on constituted on a building only and the same should
usufruct by person constituting the be destroyed. But in such a case, if the owner
usufruct should wish to construct another building, he shall
have a right to occupy the land and to make use of
1. In favor of juridical persons: period cannot the materials, being obliged to pay to the
exceed 50yrs. usufructuary, during the continuance of the usufruct,
the interest upon the sum equivalent to the value of
the land and of the materials.
Article 605, Civil Code. Usufruct cannot be
constituted in favor of a town, corporation, or
association for more than fifty years. If it has been
Article 608, Civil Code. If the usufructuary shares 193
with the owner the insurance of the tenement given
constituted, and before the expiration of such period
in usufruct, the former shall, in case of loss, continue
PROPERTY
the town is abandoned, or the corporation or
in the enjoyment of the new building, should one be
association is dissolved, the usufruct shall be
constructed, or shall receive the interest on the
extinguished by reason thereof.
insurance indemnity if the owner does not wish to
rebuild.
2. Time that may elapse before a 3 rd person
attains a certain age, even if the latter dies Should the usufructuary have refused to contribute
before period expires, unless granted only in to the insurance, the owner insuring the tenement
consideration of his existence alone, the latter shall receive the full amount of the
insurance indemnity in case of loss, saving always
Article 606, Civil Code. A usufruct granted for the the right granted to the usufructuary in the preceding
time that may elapse before a third person attains a article.
certain age, shall subsist for the number of years
specified, even if the third person should die before See Summary of Arts. 607 and 608
the period expires, unless such usufruct has been
expressly granted only in consideration of the F. Termination of right of person
existence of such person. constituting the usufruct
Example: usufructs constituted by a
vendee a retro terminate upon
C. Merger of rights of usufruct and naked redemption
ownership in one person
Illustration: H was the usufructuary of G. Prescription
land owned by X. x dies, leaving in his Adverse possession against the owner
will, the naked ownership of the land to or the usfructuary.
H. the usufruct is extinguished because It is not the non-use which extinguishes
now H is both the naked owner and the the usufruct by prescription, but the use
usufructuary. by a 3rd person.
There can be no prescription as long as
D. Renunciation of usufruct the usfructuary receives the rents from
1. Waiver: voluntary surrender of the rights of the lease of the property, or he enjoys
the usufructuary, made by him with intent to the price of the sale of his right.
surrender them
2. Limitations
a. Must be express: tacit renunciation is
not sufficient
b. Does not need the consent of naked
owner
c. If made in fraud of creditors, waiver may
be rescinded by them through action
under Article 1381 (accion pauliana)
SITUATION EFFECT
Art. 607
If destroyed property is not insured
If the building forms part of an immovable under Usufruct continues over the land and the remaining
usufruct materials
If usufruct is on the building only Usufruct continues over the land and materials (plus
interests), if owner does not rebuild
If owner rebuilds, usufructuary must allow owner to
occupy the land and to make use of materials; but the
owner must pay interest on the value of both the land
and the materials.
Art. 608 194
If destroyed property is insured before termination of the usufruct
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When insurance premium paid by owner and If owner rebuilds, usufruct subsists on new building
usufructuary (par. 1) If owner does not rebuild interest upon insurance
proceeds paid to usufructuary
When the insurance taken by the naked owner Owner entitled to insurance money (no interest paid to
only because usufructuary refuses to contribute to usufructuary)
the premium (par. 2) If he does not rebuild, usufruct continues over
remaining land and/or owner may pay interest on
value of both materials and land (607)
If owner rebuilds, usufruct does not continue on new
building, but owner must pay interest on value of land
and old materials
When insurance taken by usufructuary only Insurance proceeds goes to the usufructuary
depends on value of usufructuary’s insurable No obligation to rebuild
interest Usufruct continues on the land
Owner has not share in insurance proceeds
195
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CIVIL LAW REVIEWER Chapter VIII. EASEMENT
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imposes on the owner a restriction as to
I. Concept his enjoyment of his own property.
Art. 613, Civil Code. An easement or servitude is an o Being an abnormal limitation of
encumbrance imposed upon an immovable for the ownership, it cannot be
benefit of another immovable belonging to a different presumed.
owner.
The immovable in favor of which the easement is 5. It creates a relation between tenements
established is called the dominant estate; that which o No transfer of ownership, but a
is subject thereto, the servient estate. (530) relationship is created, depending on the
easement.
A real right which burdens a thing with a 6. Generally, it may consist in the owner of
prestation of determinate servitudes for the the dominant estate demanding that the
exclusive enjoyment of one who is NOT an owner of the servient estate refrain from
owner of a tenement doing something (servitus in non
faciendo) or that the latter permit that
A real right by virtue of which the owner has something be done over the servient
to ABSTAIN from doing or ALLOW property (servitus in patendo), but not in
somebody else to do something to his the right to demand that the owner of the
property for the benefit of another servient right to demand that the owner
of the servient estate do something
II. Essential Features (servitus in faciendo) except if such act
is an accessory obligation to a preadial
servitude (obligation propter rem)
1. It is a real right – it gives an action in rem o Servient owner merely allows something
or real action against any possessor of to be done to his estate.
the servient estate o EXCEPTIONS: Praedial servitudes
o Owner of the dominant estate can file a a. Right to place beams in an adjoining
real action for enforcement of right to an wall to support a structure
easement b. Right to use another’s wall to
o Action in rem: an action against the support a building
thing itself, instead of against the
person. 7. It is inherent or inseparable from estate
to which they actively or passively
2. It is a right enjoyed over another property belong
(jus in re aliena) – it cannot exist in one’s
property (nulli res sua servit) Art. 617, Civil Code. Easements are inseparable
o When a dominant and servient estate from the estate to which they actively or passively
have the same owner, an easement is belong.
extinguished. Separate ownership is a
prerequisite to an easement.
o Easements are merely accessory to the
tenements, and a “quality thereof.” They b. Voluntary: Created by the will of the
cannot exist without tenements.
owners of the estate through contract
o Easements exist even if they are not
expressly stated or annotated as an
*** There is no such thing as a JUDICIAL
encumbrance of the titles.
EASEMENT. The Courts cannot create
easements, they can only declare the existence
8. It is intransmissible – it cannot be
of one, if it exists by virtue of the law or will of
alienated separately from the
the parties.
tenement affected or benefited
o Any alienation of the property covered
3. As to its exercise (Article 615)
carries with it the servitudes affecting
said property. But this affects only the
Art. 615, Civil Code. Easements may be continuous
portion of the tenement with the or discontinuous, apparent or nonapparent.
easement, meaning the portions
unaffected can be alienated without the Continuous easements are those the use of which is 197
servitude. or may be incessant, without the intervention of any
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act of man.
9. It is indivisible
Discontinuous easements are those which are used
Art. 618, Civil Code. Easements are indivisible. If the at intervals and depend upon the acts of man.
servient estate is divided between two or more
persons, the easement is not modified, and each of Apparent easements are those which are made
them must bear it on the part which corresponds to known and are continually kept in view by external
him. signs that reveal the use and enjoyment of the same.
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the primary obligation is still negative. be considered, should either of them be alienated, as
a title in order that the easement may continue
o Illustration: Under Article 680: the owner actively and passively, unless, at the time the
of a tree whose branches extend over to ownership of the two estates is divided, the contrary
a neighboring property is required to cut should be provided in the title of conveyance of either
off the extended branches, but the real of them, or the sign aforesaid should be removed
essence of the easement is the before the execution of the deed. This provision shall
obligation NOT TO ALLOW the also apply in case of the division of a thing owned in
branches of the tree to extend beyond common by two or more persons.
the land
3. Servitus servitutes esse non potes: There o Illustration: The presence of 4 windows
can be no servitude over another servitude was considered an apparent sign which
created a negative easement of light
4. A servitude must be exercised civiliter – and view (altius non tollendi) i.e. not to
in a way least burdensome to the owner of build a structure that will cover the
the land windows. (Amor v. Florentino)
Requisites—
A. By Title – juridical act which gives rise 1. Easement must be continuous and
to the servitude (e.g. law, donations, apparent.
contracts or wills) Although the road had been used for
more than 20 years, since an easement
Because the road was voluntarily created as a
of right of way is a discontinuous
servitude by the owner, he may close it at his
pleasure. But while the road is open, he may not easement, it CANNOT be acquired by
capriciously exclude the owner of the tuba saloon prescription because of the requirement
from its use. (North Negros Sugar v. Hidalgo) of continuous or uninterrupted
possession. Since the dominant owner
1. If easement has been acquired but no proof cannot be continually and
of existence of easement available, and uninterruptedly crossing the servient
easement is one that cannot be acquired by estate, but can do so only at intervals,
prescription the easement is necessarily of an
intermittent or discontinuous nature.
(Ronquillo v. Roco)Sasa
A. Of Dominant Estate
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estate cannot use the easement except for the benefit a. To use the easement for benefit of
of the immovable originally contemplated. Neither can immovable and in the manner
he exercise the easement in any other manner than originally established
that previously established. o Article 626 (supra): Right to use
the easement for the benefit of the
o Owner of the dominant estate is immovable originally contemplated,
granted the right to use the principal and in the manner originally
easement, and all accessory established.
servitudes o If established for a particular
o Example: Easement of drawing purpose, the easement cannot be
water carries with it the easement of used for a different one. However, if
right of way to the place where established in a general way,
water is drawn. without specific purpose, the
o Limitation: Only for the original easement can be used for all the
immovable and the original purpose needs of the dominant estate.
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If the owner of the servient estate should make use of caused by the change to the
the easement in any manner whatsoever, he shall owner of the dominant estate or
also be obliged to contribute to the expenses in the to those who may have a right
proportion stated, saving an agreement to the
contrary.
to use the easement
use, unless when the use becomes possible, o EXCEPT: If the suspension exceeds 10
sufficient time for prescription has elapsed, in years, the easement is deemed
accordance with the provisions of the preceding extinguished by non-user
number;
4. By the expiration of the term or the fulfillment of 4. Expiration of the term or fulfillment of
the condition, if the easement is temporary or
conditional;
resolutory condition
5. By the renunciation of the owner of the dominant o Applicable only to voluntary easements
estate;
6. By the redemption agreed upon between the 5. Renunciation of the owner of the
owners of the dominant and servient estates. dominant estate
(546a) o Must be specific, clear, express
(distinguished from non-user)
Modes of Extinguishment—
1. Merger: must be absolute, perfect and 6. Redemption agreed upon between the
definite, not merely temporary owners
o Absolute: Ownership of the property 201
must be absolute, thus not applicable to 7. Other causes not mentioned in Article
PROPERTY
lease, usufruct, etc. 631
o Perfect: Merger must not be subject to o Annulment and rescission of the
a condition title constituting the voluntary
o If the merger is temporary, there is at easement
most a suspension of the easement, but o Termination of the right of grantor of the
no extinguishment. voluntary easement
o Abandonment of the servient estate
2. By non-user for 10 years Owner of the servient estate gives
o Owner of dominant estate does not up ownership of the easement (e.g.
exercise right over easement. the strip of land where the right of
o Inaction, not outright renunciation. way is constituted) in favor of the
o Due to voluntary abstention by the dominant estate.
dominant owner, and not to a fortuitous The easement is extinguished
event because ownership is transferred to
o Computation of the period the dominant owner, who now owns
▪ Discontinuous easements: counted both properties.
from the day they ceased to be used o Eminent domain
▪ Continuous easements: counted The government’s power to
from the day an act adverse to the expropriate property for public use,
exercise of the easement took place subject to the payment of just
E.g. in an easement of light and compensation.
view, the erection of works o Special cause for extinction of legal
obstructing the servitude would rights of way; if right of way no longer
commence the period of necessary
prescription Art. 655, Civil Code
o Use by a co-owner of the dominant If the right of way granted to a
estate bars prescription with respect to surrounded estate ceases to be
the others necessary because its owner
o Servitudes not yet exercised cannot be has joined it to another abutting
extinguished by non-user on a public road, the owner of
An easement must have first been the servient estate may demand
used, before it can be extinguished that the easement be
by inaction. extinguished, returning what he
may have received by way of
3. Extinguishment by impossibility of use indemnity. The interest on the
o Impossibility referred to must render the indemnity shall be deemed to be
entire easement unusable for all time. in payment of rent for the use of
o Impossibility of using the easement due the easement.
to the condition of the tenements (e.g. The same rule shall be applied
flooding) only suspends the servitude in case a new road is opened
until it can be used again. giving access to the isolated
estate.
In both cases, the public a. REQUISITE: Waters must flow naturally,
highway must substantially meet without the intervention of man
the needs of the dominant b. DUTIES:
estate in order that the o DOMINANT OWNER (Higher
easement may be extinguished. Estate)
Right of way ceases to be Cannot construct works to
necessary: increase the burden e.g. canals
Owner of the of the dominant draining other lands into the
estate has joined to another lower estate, works which
abutting on a public road prevent absorption of water like
A new road is opened giving pavements which make the
access to the isolated estate ground more impervious than it
Requisite: the public highway must is.
substantially meet the needs of the May demand that the servient
dominant estate in order that the owner allow him to make works
easement may be extinguished necessary to remove 202
Owner of the servient estate may obstructions impeding natural
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demand that the easement be passage
extinguished. o SERVIENT OWNER (Lower Estate)
Owner of the servient estate must Cannot make works which
return indemnity he received (value would impede the servitude e.g.
of the land) dams which would block the
natural flow, walls, ditches that
VIII. Legal Easements enclose the tenements.
Can construct works that he
A. Law governing legal easements may deem necessary to prevent
damage to himself, so long as
1. For public easements he does not cause damage to
a. Special laws and regulations relating inferior tenements
thereto (ex: PD 1067 and PD 705)
b. By the provisions of Chapter 2, Title VII, 2. Easements on lands along riverbanks
Book II, NCC
Article 638, Civil Code. The banks of rivers and
2. For private legal easements streams, even in case they are of private ownership,
a. By agreement of the interested parties are subject throughout their entire length and within a
zone of three meters along their margins, to the
whenever the law does not prohibit it easement of public use in the general interest of
and no injury is suffered by a 3rd person navigation, floatage, fishing and salvage.
b. By the provisions of Chapter 2, title VII,
Book II Estates adjoining the banks of navigable or floatable
rivers are, furthermore, subject to the easement of
B. Private legal easements provided for by towpath for the exclusive service of river navigation
the NCC and floatage.
THOSE ESTABLISHED FOR THE USE OF If it be necessary for such purpose to occupy lands of
private ownership, the proper indemnity shall first be
WATER OR EASEMENTS RELATING TO paid.
WATERS—
3. Abutment of a dam
1. Natural drainage of waters
Article 637, Civil Code. Lower estates are obliged to
receive the waters which naturally and without the
intervention of man descend from the higher estates, Article 639, Civil Code. Whenever for the
as well as the stones or earth which they carry with diversion or taking of water from a river or brook, or
them. for the use of any other continuous or discontinuous
stream, it should be necessary to build a dam, and
The owner of the lower estate cannot construct works the person who is to construct it is not the owner of
which will impede this easement; neither can the the banks, or lands which must support it, he may
owner of the higher estate make works which will establish the easement of abutment of a dam, after
increase the burden. payment of the proper indemnity. (554)
o Easement of abutment of a dam may be o REQUISITES:
established after payment of proper 1) Dominant owner must prove that:
indemnity
a) He can dispose of the water
o REQUISITES:
b) Water is sufficient for the use for
1) Construction of dam mecessary for
which it is intended
the use of any other continuous or
c) The proposed right of way is the
discontinuous stream
most convenient and the least
2) Person who is to construct the dam
onerous to third persons
is NOT the owner of the banks or
2) Dominant owner must also
lands which must support the dam
indemnify the servient estate in the
manner determined by laws and
4. Aqueduct
regulations
3) Dominant owner cannot impose the
Article 642, Civil Code. Any person who may wish to easement of aqueduct on buildings,
use upon his own estate any water of which he can courtyards, annexes, outhouses,
dispose shall have the right to make it flow through orchards or gardens already existing 203
the intervening estates, with the obligation to
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indemnify their owners, as well as the owners of the
Existing structures cannot be injured to
lower estates upon which the waters may filter or
descend.
establish the easement.
RIGHT OF SERVIENT OWNER:
Article 643, Civil Code. One desiring to make use of May fence or build over the
the right granted in the preceding article is obliged: aqueduct in such a manner as not to
1. To prove that he can dispose of the water and cause any damage, or render
that it is sufficient for the use for which it is impossible any necessary repairs
intended; and cleanings
2. To show that the proposed right of way is the
most convenient and the least onerous to third 5. Stop lock and sluice gate
persons;
3. To indemnify the owner of the servient estate in
the manner determined by the laws and Article 647, Civil Code. One who for the purpose of
regulations. irrigating or improving his estate, has to construct a
stop lock or sluice gate in the bed of the stream from
Article 644, Civil Code. The easement of aqueduct which the water is to be taken, may demand that the
for private interest cannot be imposed on buildings, owners of the banks permit its construction, after
courtyards, annexes, or outhouses, or on orchards or payment of damages, including those caused by the
gardens already existing. new easement to such owners and to the other
irrigators.
Article 645, Civil Code. The easement of aqueduct
does not prevent the owner of the servient estate from 6. Stop lock and sluice gate
closing or fencing it, or from building over the 1. REQUISITES:
aqueduct in such manner as not to cause the latter 1) Can be imposed only for reasons of
any damage, or render necessary repairs and public use in favor of a town or
cleanings impossible. village
2) After payment of proper indemnity
Article 645, Civil Code. For legal purposes, the
easement of aqueduct shall be considered as
continuous and apparent, even though the flow of the
water may not be continuous, or its use depends THE EASEMENT OF RIGHT OF WAY—
upon the needs of the dominant estate, or upon a
schedule of alternate days or hours. Article 649, Civil Code. The owner, or any person
who by virtue of a real right may cultivate or use any
o Any person wishing to use upon his own immovable, which is surrounded by other immovables
estate any water can make it flow pertaining to other persons and without adequate
outlet to a public highway, is entitled to demand a
through intervening estates with
right of way through the neighboring estates, after
obligation to indemnify owners of such payment of the proper indemnity.
estates
o Considered as a continuous and Should this easement be established in such a
apparent easement, even though the manner that its use may be continuous for all the
flow of water may not be continuous needs of the dominant estate, establishing a
permanent passage, the indemnity shall consist of the
value of the land occupied and the amount of the
damage caused to the servient estate.
7. RULES FOR ESTABLISHING THE
In case the right of way is limited to the necessary RIGHT OF WAY
passage for the cultivation of the estate surrounded 1) Must be established at the point
by others and for the gathering of its crops through LEAST prejudicial to the servient
the servient estate without a permanent way, the
estate
indemnity shall consist in the payment of the damage
caused by such encumbrance.
This easement is not compulsory if the isolation of the Art. 650, Civil Code. The easement of right of way
immovable is due to the proprietor's own acts. (564a) shall be established at the point least prejudicial to
the servient estate, and, insofar
causedas consistent with
by
this rule, where the distanceencumbrance.
from the dominant estate
2. Who may demand: to a public highway may be the shortest.
(1) The owner of the dominant estate
(2) Any person with the real right to a
cultivate or use the immovable e.g.
a usufructuary
3. REQUISITES:
(1) Dominant estate is surrounded by
other immovables owned by other
persons
(2) There must absolutely be no access
to a public highway
(3) Even if there is access, it is difficult
or dangerous to use, or grossly
insufficient
4. Mere inconvenience in the use
of an outlet does not render the
easement a necessity.
5. An adequate outlet is one that
is sufficient for the purpose and
needs of the dominant owner,
and can be established at a
reasonable expense.
6. Does not necessarily have to be
by land – an outlet through a
navigable river if suitable to the
needs of the tenement is
sufficient.
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servient estate must prevail over the
criterion of shortest distance although
this is a matter of judicial appreciation.
While shortest distance may ordinarily
imply least prejudice, it is not always so
as when there are permanent structures
obstructing the shortest distance; while
on the other hand, the longest distance
may be free of obstructions and the
easiest or most convenient to pass
through. (Quimen v. CA)
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watering places, resting places (ii) In dividing walls of gardens or yards,
and animal folds, shall be situated in cities, towns or rural
governed by the ordinances and communities
regulations relating thereto, and, (iii) In fences, walls and live hedges
in the absence thereof, by the dividing rural lands
usages and customs of the (iv) Ditches or drains between two
place. estates
Without prejudice to rights
legally acquired, the animal path b. EXTERIOR SIGNS CONTRARY TO
shall not exceed in any case the THE EASEMENT OF PARTY WALL
width of 75 meters, and the (merely illustrative and not exclusive)
animal trail that of 37 meters (i) A window or opening in the dividing
and 50 centimeters. wall of buildings
Whenever it is necessary to (ii) A lower part of the wall slants or
establish a compulsory projects outward on one side of the
easement of the right of way or wall, while the other side is straight 206
for a watering place for animals, and plumb on its facement
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the provisions of this Section (iii) Entire wall is built WITHIN the
and those of Articles 640 and boundaries of one of the estates
641 shall be observed. In this (iv) Dividing wall bears the burden of
case the width shall not exceed beams, floors and roof frame of only
10 meters one of the buildings
(v) Dividing wall between courtyards,
THE EASEMENT OF PARTY WALL— garden or tenements is constructed
in such a way that the it sheds water
Article 659, Civil Code. The existence of an
upon only one of the estates
easement of party wall is presumed, unless there is a
title, or exterior sign, or proof to the contrary: (vi) Dividing wall has stepping stones
1. In dividing walls of adjoining buildings up to the which project from the surface of
point of common elevation; one side only, but not on the other
2. In dividing walls of gardens or yards situated in (vii) Lands enclosed by fences or live
cities, towns, or in rural communities; hedges adjoin others which are not
3. In fences, walls and live hedges dividing rural enclosed
lands.
EXCEPT: if the defects were occasioned THE EASEMENT OF LIGHT AND VIEW—
only by one owner 1. NATURE OF THE EASEMENT
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of the adjoining land or tenement
PROPERTY
Owner may be ordered by the compel the closure of the opening
Court to close them DOES NOT MEAN that the
Even if the adjoining owner servitude of light and view has been
does not object to the acquired.
construction of such structures Period of acquisitive prescription will
at first, he cannot be held to be only start to run from the time the
in estoppel, except if 10-year owner asserting the servitude has
period of acquisitive prescription forbidden the owner of the adjoining
has passed. tenement from doing something he
Does not give rise to could lawfully do.
prescription THUS, although the action to
Mere opening of the window in compel the closure might have
violation of the distances does prescribed, the owner of the
not give rise to the easement of adjoining estate may still build on
light and view by prescription his own land a structure which might
obstruct the view.
o In buildings separated by a public way
or alley, not less than 3 meters wide, the THE EASEMENT OF DRAINAGE OF
distances required (2 m, 60 cm) do not BUILDINGS
apply.
o If an easement is acquired to have direct Article 674, Civil Code. The owner of a building shall
views, balconies or belvederes, the be obliged to construct its roof or covering in such
owner of the servient estate must not manner that the rain water shall fall on his own land or
build at less than 3 meters from the on a street or public place, and not on the land of his
boundary line of the two tenements. neighbor, even though the adjacent land may belong
The distances may be stipulated by to two or more persons, one of whom is the owner of
the parties, but should not be less the roof.
than what is prescribed by the law
Even if it should fall on his own land, the owner shall
(2 meters and 60 cm) be obliged to collect the water in such a way as not to
cause damage to the adjacent land or tenement.
3. EXCEPTION TO EASEMENT vs. DIRECT
VIEW Article 675, Civil Code. The owner of a tenement or
o Owners of a wall (not a party wall) a piece of land, subject to the easement of receiving
adjoining a tenement of another can water falling from roofs, may build in such manner as
make openings to admit light without to receive the water upon his own roof or give it
complying with the distance another outlet in accordance with local ordinances or
customs, and in such a way as not to cause any
requirements SO LONG AS:
nuisance or damage whatever to the dominant estate.
Openings are made at the height of
the ceiling joists (horizontal beams) Article 676, Civil Code. Whenever the yard or court
or immediately under the ceiling of a house is surrounded by other houses, and it is
Size: 30 cm square not possible to give an outlet through the house itself
to the rain water collected thereon, the establishment
of an easement of drainage can be demanded, giving renounced by stipulation on the part of the adjoining
an outlet to the water at the point of the contiguous proprietors.
lands or tenements where its egress may be easiest,
and establishing a conduit for the drainage in such In the absence of regulations, such precautions shall
manner as to cause the least damage to the servient be taken as may be considered necessary, in order to
estate, after payment of the property indemnity. avoid any damage to the neighboring lands or
tenements.
1. Regulating the disposal of rain water
a. Owner of a building is obliged to Article 679, Civil Code. No trees shall be planted
construct a roof or covering so as to near a tenement or piece of land belonging to another
ensure that the rain water shall fall on except at the distance authorized by the ordinances
his own land, or on a street or public or customs of the place, and, in the absence thereof,
place, and NOT on the land of his at a distance of at least two meters from the dividing
line of the estates if tall trees are planted and at a
neighbor.
distance of at least fifty centimeters if shrubs or small
b. Owner is also obliged to collect the war trees are planted.
falling on his own land so as not to
cause damage to adjacent tenements
209
Every landowner shall have the right to demand that
2. Rain water is res nullius, and has no
PROPERTY
trees hereafter planted at a shorter distance from his
owner. This article merely imposes a land or tenement be uprooted.
limitation on the use of one’s property, so
that rain water falling thereon may not The provisions of this article also apply to trees which
cause damage. have grown spontaneously.
3. Obligation to collect water (#2) is an
Article 680, Civil Code. If the branches of any tree
exception to the rule requiring lower should extend over a neighboring estate, tenement,
tenements to receive water flowing from garden or yard, the owner of the latter shall have the
higher tenements. right to demand that they be cut off insofar as they
may spread over his property, and, if it be the roots of
EASEMENT GIVING AN OUTLET TO THE a neighboring tree which should penetrate into the
WATER THROUGH CONTIGUOUS land of another, the latter may cut them off himself
ESTATES— within his property.
o Requisites:
Art. 681, Civil Code. Fruits naturally falling upon
a. Yard or court of a house is surrounded
adjacent land belong to the owner of said land.
by other houses
b. Water is collected thereon
c. Not possible to give an outlet through 1. SUMMARY
the house itself CONSTRUCTIONS may be built only after
d. Establishment of conduit for drainage complying with prescribed regulations
must be at a point where egress is (special laws, ordinances, regulations):
easiest and where it will cause the least a. Constructions or plantings near fortified
damage to the servient estate places or fortresses
e. After payment of proper indemnity b. Aqueduct, well, sewer, furnace, forge,
chimney, stable, depository of corrosive
INTERMEDIATE DISTANCES AND WORKS substances, machinery, factory (with
FOR CERTAIN CONSTRUCTIONS AND dangerous and noxious substances)
PLANTINGS— Distances must be observed and
protective works necessary for the
Article 677, Civil Code. No constructions can be built conditions must be made
or plantings made near fortified places or fortresses c. Trees planted near a tenement or piece
without compliance with the conditions required in
of land
special laws, ordinances, and regulations relating
thereto
In the absence of ordinances or
customs of the place:
Article 675, Civil Code. No person shall build any (1) TALL TREES: At a distance of
aqueduct, well, sewer, furnace, forge, chimney, at least 2 meters from the
stable, depository of corrosive substances, dividing line of the estates
machinery, or factory which by reason of its nature or
products is dangerous or noxious, without observing (2) SHRUBS/SMALL TREES: At
the distances prescribed by the regulations and least 50 cm from the dividing
customs of the place, and without making the
line
necessary protective works, subject, in regard to the
manner thereof, to the conditions prescribed by such
regulations. These prohibitions cannot be altered or
If trees are planted at a shorter o Material impairment depends on the
distance, landowner may demand nature and purpose of the tenement e.g.
that it be uprooted dwelling house vs. factory
o Degree of annoyance to be tolerated
2. Plantings Encroaching on Adjoining depends on what is usual for a specific
Estates locality.
a. Branches of any tree extending over a
neighboring estate, garden, etc. Article 683, Civil Code. Subject to zoning, health,
police and other laws and regulations, factories and
Owner of the adjoining estate has the shops may be maintained provided the least possible
right to demand that they be cut off annoyance is caused to the neighborhood.
insofar as they may spread over his
property.
EASEMENT OF LATERAL AND SUBJACENT
b. Roots of a neighboring tree which SUPPORT—
should penetrate into the land of another 210
o Owner may cut the roots off himself Article 684, Civil Code. No proprietor shall make
PROPERTY
within his property, even without such excavations upon his land as to deprive any
notice to the owner of the trees adjacent land or building of sufficient lateral or
o Roots, by accession are converted subjacent support.
into the property of the owner of the
land into which they penetrate. 1. An owner cannot make such excavations as
o Also, cutting off the roots will not to deprive any adjacent land or building of
give the cutter any benefit, in sufficient lateral or subjacent support
contrast to cutting off the branches
of a tree. 2. LATERAL SUPPORT
o PRESCRIPTION OF ACTION TO a. Limitation on the right to excavate on his
CUT: Period only starts to run after own land: one cannot excavate so close
the owner of the estate has to an adjoining estate as to deprive it of
demanded that the owner of the natural support and cause it to crumble.
trees cut off the branches or roots, b. Not necessary that the excavation is
and the latter refuses. made on the lot immediately adjoining. It
The fact that the owner does not is sufficient if the excavation results in a
cut off the trees only constituted slide in the plaintiff’s property
mere tolerance. c. An owner who makes excavations can
either:
c. Fruits naturally falling upon adjacent Observe a sufficient distance to
land belong to the owner of the land permit the necessary lateral support
o Not by right of occupation but by of adjoining land
principle of accession. Support the latter artificially through
o Owner of the tree retains ownership: walls, etc.
If he picks the fruits from the
branches which invade the 3. SUBJACENT SUPPORT
neighboring tenement a. Exists when there is severance of
If fruits fall on immovables for ownership (surface owner vs. substrata
public use (not considered as owner) as in mines and tunnels.
fruits of these b. The owners of the rights below the
surface are burdened with the easement
to refrain from removing such sufficient
THE EASEMENT AGAINST NUISANCES— support which will protect the surface
from subsidence or sinking, and keep it
Article 682, Civil Code. Every building or piece of securely at its original level.
land is subject to the easement which prohibits the
proprietor or possessor from committing nuisance 4. REMEDIES FOR VIOLATION
through noise, jarring, offensive odor, smoke, heat, a. Action for Damages against the one who
dust, water, glare and other causes. made the excavation, whether owner or
contractor, etc.
CIVIL LAW REVIEWER Chapter VIII. EASEMENT
b. Injunction
Restraining the owner from
excavating so as to deprive the land
of natural support
Will prohibit merely any excavation
which shall cause the plaintiff’s land
to fall away due to withdrawal of
support
5. OTHER RULES:
a. Stipulations or testamentary provisions
allowing excavations that cause danger
to adjacent land or building is VOID.
b. Also applicable to future constructions
c. Any proprietor intending to make any
excavation shall notify all owners of 211
adjacent lands.
PROPERTY
Notice must sufficiently inform the
adjoining owner of the nature and
extent of the proposed excavation,
so as to enable the owner to take
the necessary precautions to protect
his property.
No formal notice is necessary if the
adjoining owner already has actual
knowledge of such excavation.
But giving notice does not absolve
the excavator from the duty to
exercise reasonable care to avoid
injury to neighbors.
CIVIL LAW REVIEWER Chapter IX. NUISANCE
PROPERTY
any public highway or street, or any body of 3) Annoyance to senses –
water; or slaughterhouses and cowhide storage
5. Hinders or impairs the use of property.
vats from which emanated vile and
To constitute a nuisance there must be an offensive odors; noise of animals kept in
arbitrary or abusive use of property or disregard residential neighborhood
of commonly accepted standards set by society. o To be judged by the effect they are
calculated to produce upon
Nuisance v. Trespass— ordinary people under normal
circumstances, not by their effect
Nuisance Trespass upon the oversensitive, the
Use of one’s own fastidious or the sick, nor, on the
property in such a other hand, by their effect upon
manner as to cause injury those who are abnormally
to the property or right or Direct infringement of indifferent to such things, or who by
interest of another, and another’s right of long experience have learned to
generally results from the property. endure them without
commission of an act inconvenience.
beyond the limits of the o Inconvenience must be materially
property affected.
interfering with the ordinary
Injury is consequential Injury is immediate
comfort, physically, of human
existence.
Nuisance v. Negligence—
4) Shocking to decency – bawdy or
Nuisance Negligence
disorderly house; building used for either
Whether it was
lewdness or of assignation or
unreasonable for the Whether the defendant’s prostitution
defendant to act as he use of his property was 5) Hinders or impairs the use of
did in view of the unreasonable as to property – illegal construction on
threatened danger or plaintiff, without regard to another’s land
harm to one in plaintiff’s foreseeability of injury.
position.
Liability for the resulting
injury to others
II. Classes
Liability is based on a
regardless of the degree
want of proper care
Art. 695, Civil Code. Nuisance is either public or
of care or skill exercised private. A public nuisance affects a community or
to avoid such injury. neighborhood or any considerable number of
Principles ordinarily apply persons, although the extent of the annoyance,
where the cause of action Principles ordinarily apply danger or damage upon individuals may be unequal.
is for continuing harm where the cause of action A private nuisance is one that is not included in the
caused by continuing or is for harm resulting from foregoing definition.
recurrent acts which one act which created an
cause discomfort or unreasonable risk of 1. According to Nature (old classification)
annoyance to plaintiff in injury. a. Nuisance per se or at law
the use of his property.
o An act, occupation or structure 3. Doctrine of Attractive Nuisance
which is a nuisance at all times and o One who maintains on his premises
under any circumstances,
dangerous instrumentalities or
regardless of location or
appliances of a character likely to attract
surroundings.
children in play, and who fails to
exercise ordinary care to prevent
b. Nuisance per accidens or in fact children from playing therewith or
o One that becomes a nuisance by resorting thereto, is liable to a child of
reason of circumstances and tender years who is injured thereby,
surroundings. even if the child is technically a
o It is not a nuisance by its nature but trespasser in the premises.
it may become so by reason of the o Basis of liability – The attractiveness is
locality, surrounding, or the manner an invitation to children. Safeguards to
in which it is conducted, managed, prevent danger must therefore be set
etc. up.
213
Per se Per accidens
A swimming pool or water tank is not an
PROPERTY
The wrong is established
attractive nuisance, for while it is attractive, it
by proof of the mere act. Proof of the act and its
cannot be a nuisance, being merely an imitation
It becomes a nuisance consequences.
of the work of nature. (Hidalgo Enterprises v.
as a matter of law.
Balandan)
PROPERTY
For joint liability, there must be some abate the nuisance
joint or concurrent act or community of 2) Injunction – where the injury
action or duty, or the several wrongful occasioned by an indictable
acts done at several times must have nuisance is pressing or imminent, so
concurred in their effects as one single that the public safety is menaced or
act to produce the injury complained of. public rights are obstructed or
interfered with, and the special
o Right to recover damages circumstances are such that the
ordinary process of the court is not
Art. 697, Civil Code. The abatement of a sufficiently prompt or effective to
nuisance does not preclude the right of any
person injured to recover damages for its
prevent the injury or obstruction, the
past existence. remedy can be injunction provided
the right is clear and the wrong has
Abatement and damages are not been acquiesced in by the
cumulative remedies. plaintiff.
PROPERTY
Action becomes a tort if an
individual has suffered particular Article 706, Civil Code. Any person injured by a
harm, in which case the nuisance is private nuisance may abate it by removing, or if
treated as a private nuisance with necessary, by destroying the thing which constitutes
the nuisance, without committing a breach of the
respect to such person.
peace or doing unnecessary injury. However, it is
indispensable that the procedure for extrajudicial
3. Requisites of the right of a private abatement of a public nuisance by a private person
individual to abate a public nuisance be followed.
b. Defenses to action:
1) Public necessity – private
interest must yield to the
public good; creation of
nuisance amounts to taking
of property therefore just
compensation must be
made.
2) Estoppel – one who
voluntarily places himself in
a situation whereby he
suffers an injury will not be
heard to say that his damage
is due to a nuisance
maintained by another.
CIVIL LAW REVIEWER Chapter IX. NUISANCE
PROPERTY
2) Enjoin the sale or destruction of the
property
3) Action for the proceeds of its sale
and damages if it has been sold
4) Enjoin private parties from
proceeding to abate a supposed
nuisance
CIVIL LAW REVIEWER Chapter X. MODES of ACQUIRING OWNERSHIP
PROPERTY
Article 712, Civil Code. Ownership is acquired by • Requisites:
occupation and by intellectual creation. o Corporeal personal property
Ownership and other real rights over property are
o Property susceptible of
acquired and transmitted by law, by donation, by
appropriation – not res communes
testate and intestate succession, and in consequence
of certain contracts, by tradition. o Seizure with intent to appropriate
o Res nullius (no owner) or res
They may also be acquired by means of prescription. derelict (abandoned property)
o Observance of conditions
Mode is a specific cause which produces prescribed by law
dominion and other real rights as a result of
the co-existence of special status of things, • Kinds:
capacity and intention of persons and o Of Animals
fulfillment of the requisites of law. Wild or feral animals – seizure
(hunting/fishing) in open season
Title is every juridical right which gives a by means NOT prohibited
means to the acquisition of real rights but in Tamed/domesticated animals –
itself is insufficient to produce them. general rule: belong to the
tamer but upon recovering
Ownership is not transferred by contract freedom are susceptible to
merely but by tradition or delivery. Contracts occupation UNLESS claimed
only constitute titles or rights to transfer or within 20days from seizure by
acquisition of ownership, while delivery is another (ART. 716)
the mode accomplishing the same. Tame/domestic animals – not
acquired by occupation
Distinctions: EXCEPT when ABANDONED
• Specific rules
property shall have the right
o Not applicable to ownership of a granted him in article 438 of this
piece of land
Code.
The ownership of a piece of
o Lost movables; procedure after
land cannot be acquired by finding lost movables
occupation. (Article 714, Civil Art. 719, CC
Code) Whoever finds a movable,
State owns a piece of land which is not treasure, must
which has no owner therefore it return it to its previous
cannot be acquired by possessor. If the latter is
occupation. unknown, the finder shall
immediately deposit it with
o Privilege to hunt and fish the mayor of the city or
regulated by special law
municipality where the
Article 715, Civil Code. The
finding has taken place.
right to hunt and to fish is
The finding shall be publicly 218
regulated by special laws.
announced by the mayor for
PROPERTY
two consecutive weeks in
o Occupation of a swarm of bees
the way he deems best.
or domesticated animals
If the movable cannot be
Article 716, Civil Code. The
kept without deterioration, or
owner of a swarm of bees shall
without expenses which
have a right to pursue them to
considerably diminish its
another’s land, indemnifying the
value, it shall be sold at
possessor of the latter for the
public auction eight days
damage. If the owner has not
after the publication.
pursued the swarm, or ceases
Six months from the
to do so within two consecutive
publication having elapsed
days, the possessor of the land
without the owner having
may occupy or retain the same.
appeared, the thing found,
The twenty days to be counted
or its value, shall be
from their occupation by another
awarded to the finder. The
person. This period having
finder and the owner shall
expired, they shall pertain to him
be obliged, as the case may
who has caught and kept them.
be, to reimburse the
expenses.
Article 560, Civil Code. Wild
Article 720, CC. If the owner
animals are possessed only
should appear in time, he shall
while they are under one's
be obliged to pay, as a reward
control; domesticated or tamed
to the finder, one-tenth of the
animals are considered
sum or of the price of the thing
domestic or tame if they retain
found.
the habit of returning to the
premises of the possessor.
2. INTELLECTUAL CREATION
o Pigeons
Article 721, Civil Code. By intellectual creation,and
the fish
following persons acquire ownership:
The author with regard to his literary, dramatic,
Article historical,
717, legal, philosophical,
Civil Code.scientific or other work
The composer; as to his musical composition;
Pigeons and fish which from
The painter, sculptor, or other artist, with respect
their to the product
respective of his art;
breeding places
The scientist or technologist or any otherpass
persontowith regard to
another his discovery
pertaining to ora invention.
different owner shall belong to
Article 722, Civil Code. The author and the
thecomposer,
latter, mentioned
provided inthey
Nos. 1have
and 2 of the preceding article, shall have the ownership of their creations even before the pub
not been enticed by some
artifice or fraud.
o Hidden treasure
Article 718, Civil Code. He
who by chance discovers
hidden treasure in another’s
CIVIL LAW REVIEWER Chapter X. MODES of ACQUIRING OWNERSHIP
The painter, sculptor or other artist shall have 2. TRADEMARKS, TRADE NAMES and
dominion over the product of his art even before it is SERVICE MARKS
copyrighted.
Definitions under the Trademark Law
The scientist or technologist has the ownership of his (RA 166):
discovery or invention even before it is patented. o Trademark - any word, name,
symbol, emblem, sign or device or
Article 723, Civil Code. Letters and other private any combination thereof adopted
communications in writing are owned by the person to and used by a manufacturer or
whom they are addressed and delivered, but they merchant to identify his goods and
cannot be published or disseminated without the distinguish them from those
consent of the writer or his heirs. However, the court manufactured, sold or dealt in by
may authorize their publication or dissemination if the
others.
public good or the interest of justice so requires.
o Trade-name - individual names and
surnames, firm names, trade- 219
Article 724, Civil Code. Special laws govern
names, devices or words used by
PROPERTY
copyright and patent.
manufacturers, industrialists,
Dual interest in letters (ART. 723): merchants, agriculturists, and others
o From the viewpoint of the to identify their business, vocations
SENDER/WRITER – the intellectual or occupations
property consists in the ideas and o Service mark - mark used in the
thoughts expressed therein. sale or advertising of services to
o From the viewpoint of the identify the services of one person
RECIPIENT – the paper or material and distinguish them from the
used where the writing was services of others
impressed or done, pertains in
ownership to the recipient. 3. GEOGRAPHIC INDICATIONS of ORIGIN
False designation of origin is punishable
Intellectual Property Code of 1997 under ART. 189 of RPC
(RA 8293) is the special law which
governs copyright and patent 4. INDUSTRIAL DESIGNS
Any composition of lines and colors or
INTELLECTUAL PROPERTY RIGHTS any 3-dimensional form, w/n associated
with lines and colors
1. COPYRIGHT and RELATED RIGHTS 5. PATENTS
Copyright An exclusive right to invention granted to
o an intangible, incorporeal right a patentee, his heirs or assigns for the
o granted by statute term thereof
o to the author or originator of certain Essential elements of an invention to
literary or artistic productions, be patentable:
o whereby he is invested, for a o Novelty
specific period, o Prior art
30 YRS. renewable for another Requisites:
30 YRS. o There must be an invention
40 YRS for SERIAL publications o Of a new and useful machine,
from the publication of the 1st product/substance of possible
volume renewable for 30 YRS. advantage to the public
o with the sole and exclusive privilege o Not previously known or used or
of multiplying copies of the same described in printed publications or
and publishing and selling them. in public use or on sale in the Phils.
Purpose of the law: protect and control or covered by prior patent
the visible thing created and the o Includes new and original industrial
intangible estate arising from the designs
privilege of publishing and selling to o NOT patentable if:
others copies of the thing produced Contrary to public order, morals,
public health or welfare
Kinds Abstract idea/principle/theorem
o Common law copyright
6. TOPOGRAPHIES of INTEGRATED o Public
CIRCUITS
o Peaceful
7. RIGHTS of PERFORMERS, PRODUCERS o Uninterrupted
of SOUND RECORDINGS and
o Adverse
BROADCASTING ORGANIZATIONS
8. PROTECTION of UNDISCLOSED
ACQUISITIVE v. EXTINCTIVE
INFORMATION
Acquisitive
Extinctive Prescription
Prescription
vests the property and
B. DERIVATIVE raise a new title in the Statute of limitation
occupant
Positive action of the Inaction or neglect of the
Derivative modes of acquiring ownership are
possessor owner
based on a right previously held by another
person, and therefore, subject to the same
characteristics, powers, burdens, etc. as when Requisites common to ordinary 220
held by previous owner. and extraordinary acquisitive
PROPERTY
prescription:
1. LAW – should be interpreted to apply only to o Capacity of the acquirer
situations where ownership is vested o Capacity of the loser to lose by
independently of the other modes prescription
o Object susceptible to prescription
2. DONATION – see next chapter o Lapse of required time
Ordinary acquisitive
3. SUCCESSION MORTIS CAUSA - Movable property – 4yrs
- Immovable – 10yrs
Article 774, Civil Code. Succession is a mode of Extraordinary acquisitive
acquisition by virtue of which the property, rights and - Movable – 8yrs
obligations to the extent of the value of the - Immovable – 30yrs
inheritance, of a person are transmitted through his
death to another or others either by his will or by Additional requirements for ordinary
operation of law. acquisitive prescription:
o Good faith
Article 776, Civil Code. The inheritance includes all
the property, rights and obligations of a person which o Just title
are not extinguished by his death
5. TRADITION
Article 777, Civil Code. The rights to the succession Requisites:
are transmitted from the moment of the death of the o Pre-existence of right in estate of
decedent. grantor
o Just cause or title for the
Elements of Succession: transmission
o Transmission of property, rights and o Intention
obligations to another o Capacity
o Cause of transmission is the DEATH o Act of giving it outward form,
of the decedent physically, symbolically or legally
o Procedure of transmission is by
WILL or OPERATION of LAW Kinds:
o ACCEPTANCE of the inheritance by o Real tradition – PHYSICALY
the heir DELIVERY of the thing; actual
Rights to the succession are vested as transfer of control and possession
of the MOMENT of DEATH of the with intent to pass ownership or real
decedent right over the property
Movable – hand to hand transfer
4. (ACQUISITIVE) PRESCRIPTION of the thing
Mode of acquiring ownership through Immovable – material acts
the lapse of time in the manner and performed by grantee
under the conditions laid down by law
Possession should be:
o In the concept of an owner
CIVIL LAW REVIEWER Chapter X. MODES of ACQUIRING OWNERSHIP
PROPERTY
of ownership
Traditio constitutum
possessorium – owner
remains in possession of the
thing but in another concept
Quasi-tradition – delivery of
incorporeal things or rights by
the grantee of his right with the
owner’s consent
Tradition by operation of law
CIVIL LAW REVIEWER Chapter XI. DONATION
PROPERTY
Succession.
UNILATERAL obligations on the donor’s
part
Requires CONSENT of BOTH donor Becomes effective upon the death of
and donee though it produces donor
obligations only on the side of the Donor’s death ahead of the donee is a
DONOR SUSPENSIVE CONDITION for the
III. Kinds
1. INTER VIVOS
PROPERTY
reduction or reduced only after inofficious, it is for Law on donations FC 86
suppression the donations reduced first, or revocation
mortis causa had even suppressed
been reduced or
exhausted
B. As to cause or consideration
her it’s one of disposition or of execution, is CONTROLLING to determine whether the donation is mortis causa or inter vivos.
1. SIMPLE – made out of PURE LIBERALITY
or because
TIME of TRANSFER of ownership even if transfer of property donated may be subject to a condition or a term.of the MERITS of the done
2. REMUNERATORY – made for SERVICES
already rendered to the donor
3. ONEROUS – imposes a BURDEN inferior in
value to property donated
a. Improper – burden EQUAL in value to
epends on whether the donor intended to transfer ownership over the properties upon the execution of the deed. (Gestopa v. CA; Austria-Magat v. CA)
property donated
b. Sub-modo or modal – imposes a
prestation upon donee as to how
property donated will be applied
c. Mixed donations – ex: sale for price
3. PROPTER NUPTIAS lower than value of property
Article 82, Family Code. When the donor intends
that the donation shall take effect during the lifetime A simple or pure donation is one whose cause is pure liberality, while an onero
of the donor, though the property shall not be
delivered till after the donor's death, this shall be a
donation inter vivos. The fruits of the property from
the time of the acceptance of the donation, shall
pertain to the donee, unless the donor provides C. As to effectivity or extinguishment
otherwise.
1. PURE – donation is without conditions or
Article 87, Family Code. Every donation or grant of periods
gratuitous advantage, direct or indirect, between the
spouses during the marriage shall be void, except
2. CONDITIONAL – donation is subject to
moderate gifts which the spouses may give each suspensive or resolutory conditions
other on the occasion of any family rejoicing. The 3. WITH A TERM
prohibition shall also apply to persons living together
IV. Who May Give or Receive Donations
Requisites
o Must be made BEFORE the Article 735, Civil Code. All persons who may
celebration of marriage contract and dispose of their property may make a
o Made in CONSIDERATION of the donation.
marriage
o Made in FAVOR of ONE or BOTH of Article 737, Civil Code. The donor's capacity shall
the future spouses be determined as of the time of the making of the
donation.
Article 738, Civil Code. All those who are not sister, or spouse, shall be valid;
specially disqualified by law therefor may accept 4. Any attesting witness to the execution of a will,
donations. the spouse, parents, or children, or any one
claiming under such witness, spouse, parents, or
Article 741, Civil Code. Minors and others who children;
cannot enter into a contract may become donees but 5. Any physician, surgeon, nurse, health officer or
acceptance shall be done through their parents or druggist who took care of the testator during his
legal representatives. last illness;
6. Individuals, associations and corporations not
Article 737, Civil Code. Donations made to permitted by law to inherit.
conceived and unborn children may be accepted by
those persons who would legally represent them if Article 1032, Civil Code. The following are incapable
they were already born. of succeeding by reason of unworthiness:
1. Parents who have abandoned their children or
Capacity to donate is required for donations induced their daughters to lead a corrupt or
immoral life, or attempted against their virtue;
inter vivos and NOT mortis causa 2. Any person who has been convicted of an
o Donor’s capacity determined as of the attempt against the life of the testator, his or her 224
TIME of the DONATION. Subsequent spouse, descendants, or ascendants;
PROPERTY
incapacity is immaterial 3. Any person who has accused the testator of a
Capacity to accept donations – ALL persons crime for which the law prescribes imprisonment
NOT disqualified by law may be donees for six years or more, if the accusation has been
found groundless;
4. Any heir of full age who, having knowledge of the
violent death of the testator, should fail to report it
V. Who May Not Give or Receive to an officer of the law within a month, unless the
Donations authorities have already taken action; this
prohibition shall not apply to cases wherein,
Article 736, Civil Code. All persons who may according to law, there is no obligation to make
contract and dispose of their property may make a an accusation;
donation.
Article 740, Civil Code. Incapacity to succeed by will
Article 739, Civil Code. The following donations shall shall be applicable to donations inter vivos.
be void:
Article 743, Civil Code. Donations made to
1. Those made between persons who were guilty of
incapacitated persons shall be void, though simulated
adultery or concubinage at the time of the
under the guise of another contract or through a
donation;
person who is interposed.
2. Those made between persons found guilty of the
same criminal offense, in consideration thereof;
Article 744, Civil Code. Donations of the same thing
3. Those made to a public officer or his wife,
to two or more different donees shall be governed by
descedants and ascendants, by reason of his
the provisions concerning the sale of the same thing
office.In the case referred to in No. 1, the action
to two or more different persons.
for declaration of nullity may be brought by the
spouse of the donor or donee; and the guilt of the
donor and donee may be proved by A. By reason of public policy (ART. 739)
preponderance of evidence in the same action. 1. Those made between persons guilty of
adultery or concubinage at the time of
Article 1027, Civil Code. The following are incapable donation
of succeeding: 2. Those made between persons guilty of the
1. The priest who heard the confession of the same criminal offense if the donation is
testator during his last illness, or the minister of
the gospel who extended spiritual aid to him
made in consideration thereof
during the same period; 3. Those made to a public officer, his spouse,
2. The relatives of such priest or minister of the descendants, and/or ascendants by reason
gospel within the fourth degree, the church, of the office
order, chapter, community, organization, or
institution to which such priest or minister may B. By reason of donee’s unworthiness
belong; (ART. 1032 and 1027 [except (4)])
3. A guardian with respect to testamentary C. By reason of prejudice to creditors or
dispositions given by a ward in his favor before heirs (voidable)
the final accounts of the guardianship have been
approved, even if the testator should die after the
approval thereof; nevertheless, any provision
made by the ward in favor of the guardian when
the latter is his ascendant, descendant, brother,
VI. Acceptance
Donation is perfected upon the B. REAL PROPERTY
DONOR’S LEARNING of the Article 749, Civil Code. In order that the donation of
acceptance an immovable may be valid, it must be made in a
Acceptance may be made during the public document, specifying therein the property
LIFETIME of BOTH donor and donee donated and the value of the charges which the
donee must satisfy.
A. WHO MAY ACCEPT
The acceptance may be made in the same deed of
Article 745, Civil Code. The donee must accept the donation or in a separate public document, but it shall
donation personally, or through an authorized person not take effect unless it is done during the lifetime of
with a special power for the purpose, or with a general the donor.
and sufficient power; otherwise, the donation shall be
void. If the acceptance is made in a separate instrument,
the donor shall be notified thereof in an authentic
Article 747, Civil Code. Persons who accept form, and this step shall be noted in both instruments. 225
donations in representation of others who may not do
PROPERTY
so by themselves, shall be obliged to make the Must be in PUBLIC INSTRUMENT
notification and notation of which Article 749 speaks. specifying donated property and
burdens assumed by the donee
Acceptance or consent must be regardless of value
PERSONAL or through a person Acceptance must be EITHER:
AUTHORIZED generally or specifically o In the SAME INSTRUMENT OR
o In ANOTHER PUBLIC
B. TIME of ACCEPTANCE INSTRUMENT notified to the donor
in authentic form and noted in both
Article 746, Civil Code. Acceptance must be made deeds
during the lifetime of the donor and of the donee.
has been accepted in a public instrument and the donor duly notified thereof. Where the deed fails to show the acceptance, or where the formal notice of the acceptan
The donation is perfected only upon the moment the donor knows of the donee’s acceptance. If the acceptance is made in a separate instrument
VII. Form
Exceptions:
A. PERSONAL PROPERTY o Donations propter nuptias – need
NO express acceptance
Article 748 , The donation of a movable may be o Onerous donations – form governed
made orally or in writing. by the rules of contracts
An oral donation requires the simultaneous delivery of
the thing or of the document representing the right VIII. What May Be Donated
donated.
A. ALL PRESENT PROPERTY or PART
If the value of the personal property donated exceeds THEREOF of THE DONOR
five thousand pesos, the donation and the
acceptance shall be made in writing, otherwise, the
donation shall be void. 1. Provided he RESERVES, in full ownership
or usufruct, sufficient means for support of
WITH simultaneous delivery of donated himself and all relatives entitled to be
supported by donor at the time of
property – may be oral UNLESS it
acceptance
exceeds P5k in which case it’s VOID if
NOT in writing
Article 750, Civil Code. The donations may
WITHOUT simultaneous delivery – must
comprehend all the present property of the donor, or
be in WRITING including the part thereof, provided he reserves, in full ownership or
ACCEPTANCE regardless of value in usufruct, sufficient means for the support of himself,
Donations of future property shall be governed by the provisions on testamentary succession and the formalities of wills.
the donation, are by law entitled to be supported by the donor. Without such reservation, the donation shall be reduced in petition of any person affected.
pouses may give each other in their marriage settlements as much as one- fifth of their present property, and with respect to their future property, only in the event of de
2. Provided that NO PERSON may give or
receive by way of donation, more than he
may give or receive by will (ART. 752); also,
reserves property sufficient to pay donor’s
debts contracted before donation, otherwise,
donation is in FRAUD of creditors (ARTS.
759, 1387) b. Donation propter nuptias by an
ascendant consisting of jewelry,
Article 752, Civil Code. The provisions of Article 750 furniture or clothing not to exceed 1/10
notwithstanding, no person may give or receive, by of disposable portion
way of donation, more than he may give or receive by
will.
226
Article 1070, Civil Code. Wedding gifts by parents
PROPERTY
and ascendants consisting of jewelry, clothing, and
The donation shall be inofficious in all that it may outfit, shall not be reduced as inofficious except
exceed this limitation.
insofar as they may exceed one-tenth of the sum
which is disposable by will.
Article 759, Civil Code. There being no stipulation
regarding the payment of debts, the donee shall be B. WHAT MAY NOT BE DONATED –
responsible therefor only when the donation has been FUTURE PROPERTY
made in fraud of creditors
.
Article 751, Civil Code. Donations cannot
The donation is always presumed to be in fraud of
comprehend future property.
creditors, when at the time thereof the donor did not
reserve sufficient property to pay his debts prior to the
By future property is understood anything which the
donation.
donor cannot dispose of at the time of the donation.
Article 1387, Civil Code. All contracts by virtue of Includes ALL property that belongs to
which the debtor alienates property by gratuitous title
others at the time the donation is made
are presumed to have been entered into in fraud of
creditors, when the donor did not reserve sufficient
although it may or may not later
property to pay all debts contracted before the belong to the donor
donation.
IX. Effect
Alienations by onerous title are also presumed
fraudulent when made by persons against whom
some judgment has been issued. The decision or A. IN GENERAL
attachment need not refer to the property alienated,
and need not have been obtained by the party 1. Donee may demand actual delivery of thing
seeking the rescission. donated
2. Donee is SUBROGATED to rights of donor
In addition to these presumptions, the design to in the property donated
defraud creditors may be proved in any other manner
recognized by the law of evidence.
Article 754, Civil Code. The donee is subrogated to
all the rights and actions which in case of eviction
3. If donation EXCEEDS the disposable or free would pertain to the donor. The latter, on the other
portion of his estate, donation is inofficious hand, is not obliged to warrant the things donated,
4. EXCEPTIONS save when the donation is onerous, in which case the
a. Donations provided for in marriage donor shall be liable for eviction to the concurrence of
settlements between future spouses – the burden.
not more than 1/5 of present property
The donor shall also be liable for eviction or hidden
defects in case of bad faith on his part.
FC Article 84. If the future spouses agree upon a
regime other than the absolute community of 3. Donor NOT obliged to warrant things
property, they cannot donate to each other in their
donated EXCEPT in onerous donations in
marriage settlements more than one-fifth of their
present property. Any excess shall be considered
which case donor is liable for eviction up to
void. extent of burden (ART. 754)
4. Donor is liable for EVICTION or HIDDEN third person in violation of what is provided in the
DEFECTS in case of BF on his part (ART. preceding paragraph shall be void, but shall not nullify
754) the donation.
5. In donation propter nuptias, donor must
RELEASE property donated from mortgages 4. Payment of donor’s debt
and other encumbrances UNLESS the
contrary has been stipulated Article 758, Civil Code. When the donation imposes
upon the donee the obligation to pay the debts of the
Article 131, Civil Code. The donor by reason of donor, if the clause does not contain any declaration
marriage shall release the property donated from to the contrary, the former is understood to be liable
mortgages and all other encumbrances upon the to pay only the debts which appear to have been
same, with the exception of easements, unless in the previously contracted. In no case shall the donee be
marriage settlements or in the contracts the contrary responsible for the debts exceeding the value of the
has been stipulated. property donated, unless a contrary intention clearly
appears.
6. Donations to several donees jointly – NO If expressly stipulated – donee to pay
right of accretion EXCEPT: only debts contracted BEFORE the
227
a. Donor provides otherwise donation UNLESS specified otherwise.
PROPERTY
b. Donation to husband and wife jointly But in no case shall donee be
with right of accretion UNLESS donor responsible for debts exceeding value of
provides otherwise property donated unless clearly intended
If there’s NO stipulation – donee
Article 753, Civil Code. When a donation is made to
answerable only for donor’s debt ONLY
several persons jointly, it is understood to be in equal in case donation is in fraud of creditors
shares, and there shall be no right of accretion among
them, unless the donor has otherwise provided. 5. Illegal or impossible conditions
The preceding paragraph shall not be applicable to Article 272, Civil Code. Children who are legitimated
donations made to the husband and wife jointly, by subsequent marriage shall enjoy the same rights
between whom there shall be a right of accretion, if as legitimate children.
the contrary has not been provided by the donor.
Article 1183, Civil Code. Impossible conditions,
B. SPECIAL PROVISIONS those contrary to good customs or public policy and
those prohibited by law shall annul the obligation
1. Reservation by donor of power to dispose which depends upon them. If the obligation is
divisible, that part thereof which is not affected by the
(in whole or in part) or to encumber property
impossible or unlawful condition shall be valid.
donated The condition not to do an impossible thing shall be
considered as not having been agreed upon.
A. DISTINCTIONS
Revocation Reduction
2. Donation of naked ownership to one donee Total, whether the Made insofar as the
and usufruct to another legitime is impaired or not legitime is prejudiced
Benefits the donor’s heirs
(except when made on
Benefits the donor
the ground of the
appearance of a child)
B. CAUSES of REVOCATION OR
3. Conventional reversion in favor of donor or REDUCTION
other person
1. Inofficiousness
Article 752, Civil Code. The provisions of Article 750 notwithstanding, no perso
For the reduction of donations the provisions of this Extent of revocation – only to the
Chapter and of Articles 911 and 912 of this Code shall extent of the presumptive legitime of the
govern. child
Prescription – 4yrs
Article 773, Civil Code. If, there being two or more
donations, the disposable portion is not sufficient to C. REVOCATION ONLY 228
cover all of them, those of the more recent date shall
PROPERTY
be suppressed or reduced with regard to the excess. 1. Ingratitude
Effect of revocation on alienations and Article 764, par. 2, Civil Code. In this case, the
property donated shall be returned to the donor, the
encumbrances
alienations made by the donee and the mortgages
imposed thereon by him being void, with the
Article 766, Civil Code. Although the donation is limitations established, with regard to third persons,
revoked on account of ingratitude, nevertheless, the by the Mortgage Law and the Land Registration Laws.
alienations and mortgages effected before the
notation of the complaint for revocation in the Registry Article 767, Civil Code. In the case referred to in the
of Property shall subsist. first paragraph of the preceding article, the donor shall
have a right to demand from the donee the value of
Later ones shall be void. property alienated which he cannot recover from third
persons, or the sum for which the same has been
Article 767, , Civil Code.In the case referred to in the mortgaged.
first paragraph of the preceding article, the donor shall 229
have a right to demand from the donee the value of
PROPERTY
property alienated which he cannot recover from third
persons, or the sum for which the same has been
mortgaged. Effect as to fruits
The value of said property shall be fixed as of the time Article 768, Civil Code. When the donation is
of the donation. revoked for any of the causes stated in Article 760, or
by reason of ingratitude, or when it is reduced
2. Violation of condition because it is inofficious, the donee shall not return the
fruits except from the filing of the complaint.
If the revocation is based upon noncompliance with
any of the conditions imposed in the donation, the
D. Effect of revocation or reduction donee shall return not only the property but also the
fruits thereof which he may have received after having
Article 762, Civil Code. Upon the revocation or failed to fulfill the condition.
reduction of the donation by the birth, appearance or
adoption of a child, the property affected shall be
returned or its value if the donee has sold the same.
SUMMARY—
Limitation:
1) He reserves in full ownership or
in usufruct, sufficient means for
his support and all relatives who
are at the time of the acceptance
of the donation are, by law,
entitled to be supported
PROPERTY
(Article 739)
Who are allowed to accept Who are not allowed:
donations: Those who are not 1) Made between person who are
specifically disqualified by law guilty of adultery and
(Article 738) concubinage (Article 739)
2) Made between persons found
Those who are allowed, with guilty of the same criminal
qualifications: offense, in consideration thereof
1) Minors and others who are (Article 739)
incapacitated (see Article 38), 3) Made to a public officer or his
Donee
provided that their acceptance is wife, descendant and
done through their parents or ascendants, by reason of his
legal representatives (Article office (Article 739)
741) 4) Those who cannot succeed by
2) Conceived and unborn children, will (Article 740)
provided that the donation is 5) Those made to incapacitated
accepted by those who would persons, although simulated
legally represent them if they under the guise of another
were already born contract (Article 743)
Who may accept (Article 745):
1) Donee personally
When to accept: during the lifetime of
Acceptance of the donation 2) Authorized person with a special
the donor or donee (Article 746)
power for the purpose or with a
general sufficient power
He shall be subrogated to all the
What the donee acquires with the rights and actions that would pertain
thing to the donor in case of eviction
(Article 754)
Exception: when the donation is
Obligation of the donor No obligation to warrant (Article 754)
onerous
If the donation so states, the donee
may be obliged to pay the debts
previously contracted by the donor
Exception: when contrary intention
Obligation of the donee and in no case shall he be
appears
responsible for the debts exceeding
the value of the thing donated (Article
758)
Right to dispose of some of the If the donor dies without exercising
What may be reserved by the
things donated, or of dome amount this right, the portion reserved shall
donor which shall be a charge thereon belong to the donee
The property donated may be
Limitation to (2): the third person
restored or returned to
Reversion whoul be living at the time of the
1) Donor or his estate; or
2) Another person donation
CIVIL LAW REVIEWER Chapter XI. DONATION
REVOCATION/REDUCTION
PROPERTY
revocation in the
registry of property
subsist
Failure to reserve At any time, by the Reduced to the
sufficient means for donor or relatives Not transmissible extent necessary to Donee entitled
support entitled o support provide support
Donation takes
Inofficiousness for effect on the lifetime
Within 5 years from
being in excess of Transmitted to of donor. Reduction
the death of the Donee entitled
what the donor can donor’s heirs only upon his death
donor
give by will with regard to the
excess
Rescission within 4
Returned for the Fruits returned/ if
years from the Transmitted to
Fraud against benefit of the impossible,
perfection of creditor’s heirs or
creditors creditor who brought indemnify creditor
donation/ knowledge successors-in-interest
of the donation the action for damages
CIVIL LAW REVIEWER Chapter XII. LEASE
PROPERTY
USUFRUCT, COMMODATUM
PROPERTY
has not been fixed, it is understood to be from year to
year, if the rent agreed upon is annual; from month to compliance with his or the lessee’s
month, if it is monthly; from week to week, if the rent obligations or vice versa
is weekly; and from day to day, if the rent is to be Sublessee is NOT a party to the contract
paid daily. However, even though a monthly rent is between the lessor and lessee
paid, and no period for the lease has been set, the
Obligation of sublessee to lessor
courts may fix a longer term for the lease after the
lessee has occupied the premises for over one year.
If the rent is weekly, the courts may likewise Article 1651, Civil Code. Without prejudice to his
determine a longer period after the lessee has been obligation toward the sublessor, the sublessee is
in possession for over six months. In case of daily bound to the lessor for all acts which refer to the use
rent, the courts may also fix a longer period after the and preservation of the thing leased in the manner
lessee has stayed in the place for over one month. stipulated between the lessor and the lessee.
E. ASSIGNMENT of LEASE
For RENTS
Article 1649, Civil Code. The lessee cannot assign Article 1652, Civil Code. The sublessee is
the lease without the consent of the lessor, unless subsidiarily liable to the lessor for any rent due from
there is a stipulation to the contrary. the lessee. However, the sublessee shall not be
responsible beyond the amount of rent due from him,
General Rule: lessee CANNOT assign in accordance with the terms of the sublease, at the
the lease WITHOUT the CONSENT of the time of the extrajudicial demand by the lessor.
lessor
Payments of rent in advance by the sublessee shall
UNLESS there’s a stipulation to the
be deemed not to have been made, so far as the
contrary lessor's claim is concerned, unless said payments
ASSIGNMENT v. SUBLEASE were effected in virtue of the custom of the place.
PROPERTY
become necessary to make some urgent repairs upon absence of stipulation
the thing leased, which cannot be deferred until the been devoted, unless
according to the nature of
termination of the lease, the lessee is obliged to there is a stipulation to
the thing leased and
tolerate the work, although it may be very annoying to the contrary custom of the place.
him, and although during the same, he may be Maintain the lessee in the
deprived of a part of the premises. peaceful and adequate
Pay for the expenses for
enjoyment of the lease
If the repairs last more than forty days the rent shall the deed of lease.
for the entire duration of
be reduced in proportion to the time - including the the contract.
first forty days - and the part of the property of which
the lessee has been deprived.
3. Right of LESSEE to suspend payment
When the work is of such a nature that the portion of rentals
which the lessee and his family need for their dwelling
becomes uninhabitable, he may rescind the contract if Article 1658, Civil Code. The lessee may suspend
the main purpose of the lease is to provide a dwelling the payment of the rent in case the lessor fails to
place for the lessee. make the necessary repairs or to maintain the lessee
in peaceful and adequate enjoyment of the property
Article 1663, Civil Code. The lessee is obliged to leased.
bring to the knowledge of the proprietor, within the
shortest possible time, every usurpation or untoward 4. Right to ask for RESCISSION
act which any third person may have committed or
may be openly preparing to carry out upon the thing
Article 1659, Civil Code. If the lessor or the lessee
leased.
should not comply with the obligations set forth in
Articles 1654 and 1657, the aggrieved party may ask
He is also obliged to advise the owner, with the same
for the rescission of the contract and indemnification
urgency, of the need of all repairs included in No. 2 of
for damages, or only the latter, allowing the contract
Article 1654.
to remain in force.
In both cases the lessee shall be liable for the
Article 1660, Civil Code. If a dwelling place or any
damages which, through his negligence, may be
other building intended for human habitation is in
suffered by the proprietor.
such a condition that its use brings imminent and
serious danger to life or health, the lessee may
If the lessor fails to make urgent repairs, the lessee, in
terminate the lease at once by notifying the lessor,
order to avoid an imminent danger, may order the
even if at the time the contract was perfected the
repairs at the lessor's cost.
former knew of the dangerous condition or waived the
right to rescind the lease on account of this condition.
Article 1665, Civil Code. The lessee shall return the
thing leased, upon the termination of the lease, as he
received it, save what has been lost or impaired by 5. LESSOR not obliged to answer for
the lapse of time, or by ordinary wear and tear, or mere act of trespass by a 3rd person
from an inevitable cause.
Article 1664, Civil Code. The lessor is not obliged to
Article 1668, Civil Code. The lessee is liable for any answer for a mere act of trespass which a third
deterioration caused by members of his household person may cause on the use of the thing leased; but
and by guests and visitors. the lessee shall have a direct action against the
intruder.
CIVIL LAW REVIEWER Chapter XII. LEASE
PROPERTY
land which is under a lease that is not recorded in the
Registry of Property may terminate the lease, save
when there is a stipulation to the contrary in the
I. RIGHT to ASK for PRELIMINARY contract of sale, or when the purchaser knows of the
MANDATORY INJUNCTION in existence of the lease.
UNLAWFUL DETAINER CASES
If the buyer makes use of this right, the lessee may
demand that he be allowed to gather the fruits of the
Article 1674, Civil Code. In ejectment cases where harvest which corresponds to the current agricultural
an appeal is taken the remedy granted in Article 539, year and that the vendor indemnify him for damages
second paragraph, shall also apply, if the higher court suffered.
is satisfied that the lessee's appeal is frivolous or
dilatory, or that the lessor's appeal is prima facie If the sale is fictitious, for the purpose of extinguishing
meritorious. The period of ten days referred to in said the lease, the supposed vendee cannot make use of
article shall be counted from the time the appeal is the right granted in the first paragraph of this article.
perfected. The sale is presumed to be fictitious if at the time the
supposed vendee demands the termination of the
Article 539 (2), Civil Code. A possessor deprived of lease, the sale is not recorded in the Registry of
his possession through forcible entry may within ten Property.
days from the filing of the complaint present a motion
to secure from the competent court, in the action for Article 1677, Civil Code. The purchaser in a sale
forcible entry, a writ of preliminary mandatory with the right of redemption cannot make use of the
injunction to restore him in his possession. The court power to eject the lessee until the end of the period
shall decide the motion within thirty (30) days from the for the redemption.
filing thereof.
hargeable against him. Article 1680, Civil Code. The lessee shall have no
right to a reduction of the rent on account of the
sterility
day, if the rent is to be of the
paid daily. land leased,
However, or by reason
even though of rent
a monthly the loss of and no period for the lease has been set, the courts may fix a longer term for the lease aft
is paid,
fruits due to ordinary fortuitous events; but he shall
have such right in case of the loss of more than one-
on of the lease of thehalfpremises.
of the fruits through extraordinary and unforeseen
fortuitous events, save always when there is a
specific stipulation to the contrary.
PROPERTY
Article 1681, Civil Code. Neither does the lessee
have any right to a reduction of the rent if the fruits
are lost after they have been separated from their
stalk, root or trunk.
- end of Property-
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CIVIL LAW REVIEWER TABLE of CONTENTS
C. DEED
An instrument in writing which any real
estate or interest therein is created,
alienated, mortgaged or assigned or by
which title to any real estate may be affected
in law or equity. Necessarily includes:
1. The name of the Grantor
2. The name of the Grantee
3. Words of grant
4. Description of property
5. Signatue of grantor
6. Witnesses
D. FEE SIMPLE
Absolute title; absolute estate in perpetuity.
Land is conferred upon a man and his heirs
absolutely and without any limitation
imposed upon the state.
E. REGISTRATION
Process whereby the State provides a public
record of the title itself upon which a
prospective purchaser or someone else
interested may rely. It is a means to
guarantee the title
F. RECORDING
It is the process whereby Register of Deeds
writes information in his Registry Book. This
does not guarantee the title
II. Nature and stages farmers; not transferable except by hereditary
succession.
Land registration is a proceeding in rem.
Roxas vs. Enriquez, (1914): A proceeding in rem, V. Jurisdiction
dealing with a tangible res, may be instituted and
carried to judgment, without personal service. (Asked in ’83)
PD 1529
PD 1529
Sec. 2
Sec. 2 Nature of registration proceedings; jurisdiction
Nature of registration proceedings; jurisdiction of
of courts. Judicial proceedings for the registration of
courts. xxx (Courts of First Instance) Regional Trial
lands throughout the Philippines shall be in rem and
Courts shall have exclusive jurisdiction over all
shall be based on the generally accepted principles
applications for original registration of title to lands,
underlying the Torrens system. xxx
including improvements and interests therein, and
3 Stages: over all petitions filed after original registration of title,
1. Production & delivery of deed by grantor to with power to hear and determine all questions arising
grantee without registration upon such applications or petitions. xxx
2. Deed of conveyance is recorded to bind 3rd
persons BP 129
3. Registration of title Sec. 34
Delegated jurisdiction in cadastral and land
240
registration cases. Metropolitan Trial Courts,
Registration
ing you need to know about original land registration: a summary of pertinent laws, stepsin original does
registration not vest among
proceedings, or give title to the
others.
land, but merely confirms and thereafter
NS:
protects the title already possessed by the
owner, making it imprescriptible by
occupation of third parties. It does not give
the owner any better title than he has.
(Asked in ’98)
tes of Title and Registration
Vagalidad vs. Vagalidad, (2006):
omplete Titles Registration is not a mode of acquiring
ownership. A certificate of title cannot be
used to protect a usurper from the true
owner or as a shield for the commission of
fraud.
Camitan and Lopez vs. Fidelity Investment
Corp.: (2008,Nachura):Possession of an
I. Laws Governing Land Registration owner’s duplicate copy of a certificate of 242
title is not necessarily equivalent to
A. PD NO. 1529
PD 1529 PD 1529
Sec. 15 Sec. 16
Form and contents. The application for land Non-resident applicant. If the applicant is not a
registration shall be in writing, signed by the resident of the Philippines, he shall file with his
application or the person duly authorized in his behalf, application an instrument in due form appointing an
and sworn to before any officer authorized to agent or representative residing in the Philippines,
administer oaths for the province or city where the giving his full name and postal address, and shall
application was actually signed. If there is more than therein agree that the service of any legal process in
one applicant, the application shall be signed and the proceedings under or growing out of the
sworn to by and in behalf of each. application made upon his agent or representative
shall be of the same legal effect as if made upon the
The application shall contain a description of the land applicant within the Philippines. If the agent or
and shall state the citizenship and civil status of the representative dies, or leaves the Philippines, the
applicant, whether single or married, and, if married, applicant shall forthwith make another appointment
the name of the wife or husband, and, if the marriage for the substitute, and, if he fails to do so the court
has been legally dissolved, when and how the may dismiss the application.
marriage relation terminated. It shall also state the full
names and addresses of all occupants of the land If the land bounded by a road, the applicant
and those of the adjoining owners, if known, and, if must state in his application if he claims any
not known, it shall state the extent of the search made portion of the land within the limits of the
to find them. road, or if he likes to have the boundaries
determined.
The application for land registration shall If the applicant is a non-resident, he shall
be: appoint an agent or representative who is a
in writing Philippine resident.
Intestate Estate of Don Mariano San Pedro 2. By mailing.
vs. CA, (1996): A person claiming ownership (a) Mailing of notice to persons named in the
of real property must clearly identify the land application. The Commissioner of Land Registration
shall also, within seven days after publication of said
claimed by him. notice in the Official Gazette, as hereinbefore
In re: Application for Land Registration vs. provided, cause a copy of the notice of initial hearing
Republic, (2008, Nachura): An applicant in a to be mailed to every person named in the notice
land registration case must prove the facts whose address is known.
and circumstances evidencing the alleged
ownership of the land applied for. General (b) Mailing of notice to the Secretary of Public
statements which are mere conclusions of Highways, the Provincial Governor and the Mayor. If
law and not factual proof of possession are the applicant requests to have the line of a public way
unavailing. The deeds in its favor only or road determined, the Commissioner of Land
Registration shall cause a copy of said notice of initial
proved possession of its predecessors-in- hearing to be mailed to the Secretary of Public
interest as early as 1948. (The law now Highways, to the Provincial Governor, and to the
stands that a mere showing of possession Mayor of the municipality or city, as the case may be,
for 30 years is not sufficient. OCEN in which the land lies.
possession must be shown to have stated
on June 12, 1945 or earlier.) (c) Mailing of notice to the Secretary of Agrarian
Reform, the Solicitor General, the Director of Lands, 245
E. INITIAL HEARING the Director of Public Works, the Director of Forest
C. PRIVATE CORPORATIONS
NOTE:
MAXIMUM LAND THAT CAN BE APPLIED
FOR: 144 hectares 250
In case of foreigner, it sufficient that he is
PD 1529 253
Sec 52. Constructive notice upon registration. Every
Every deed or other instrument, whether voluntary or V. Registration of Deeds of Sale and
involuntary, so filed with the Register of Deeds shall Transfers
be numbered and indexed and endorsed with a
reference to the proper certificate of title. All records 255
PD 1529
and papers relative to registered land in the office of
1. REGISTRATION OF ATTACHMENT/
PD 1529 OTHER LIENS
Sec 68. Implied, trusts, how established. Whoever a. Copy of writ in order to preserve any lien,
claims an interest in registered land by reason of any right or attachment upon registered land
implied or constructive trust shall file for registration may be filed with Register of Deeds where
with the Register of Deeds a sworn statement thereof land lies, containing number of certificate of
containing a description of the land, the name of the title of land to be affected or description of
registered owner and a reference to the number of the land
certificate of title. Such claim shall not affect the title
b. Register of Deeds to index attachment in
of a purchaser for value and in good faith before its
registration.
names of both plaintiff & defendant or name
of person whom property is held or in whose
Powers of attorney and revocations shall be name stands in the records
registered with the Register of Deeds of the c. If duplicate of certificate of title is not
province or city where the land lies. presented:
Register of Deeds shall within 36 hours b. In personam (all persons interested
send notice to registered owner by mail shall be notified so that they are given
stating that there has been registration opportunity to be heard)
& requesting him to produce duplicate c. Notice to be given to delinquent tax
so that memorandum be made payer at last known address
If owner neglects or refuses – Register d. Publication of notice must also be made
of Deeds shall report matter to court. in English, Spanish & local dialect &
Court after notice shall enter an order to posted in a public & conspicuous place
owner to surrender certificate at time & in place wherein property is situated &
place to be named therein. at main entrance of provincial building
d. Although notice of attachment is not noted in e. Sale cannot affect rights of other lien
duplicate, notation in book of entry of holders unless given right to defend
Register of Deeds produces effect of their rights: due process must be strictly
registration already observed
f. Tax lien superior to attachment
2. EFFECT OF REGISTRATION OF g. No need to register tax lien because it is
ATTACHMENT: automatically registered once the tax
a. Creates real right accrues
b. Has priority over execution sale h. But sale of registered land to foreclose a 258
c. But between 2 attachments – tax lien need to be registered.
3. REQUISITES
The adverse claimant must give a statement
signed and sworn before a notary public, the
ff in writing:
a. his alleged right or interest
b. how and under whom such alleged right
or interest is acquired
c. the description of the land in which the
right or interest is claimed and
d. the number of the certificate of title
CIVIL LAW REVIEWER Chapter 6: SYSTEM of REGISTRATION of UNREGISTERED LANDS
Inalienable Alienable
I. Classification of Land of the Public
Domain 262
Public
Lands of the Public Domain gricultu
1 Upon registration, there shall be paid to the Register of Deeds ¼ of 1% of the assessed value of the real estate on the
basis of the last assessment for taxation purposes, as contribution to the Assurance Fund.
CIVIL LAW REVIEWER Chapter 9: RECONSTITUTION of TITLES
RECONSTITUTED CERTIFICATE OF
Chapter 9: Reconstitution 0f Titles TITLE HAS BEEN ISSUED?
The ROD or party concerned should notify the
(Asked in ’96) proper RTC. After which, shall order the
Grounds cancellation of the reconstituted certificate of
Petitions For Reconstitution title and render, with respect to the
Duties of the Land Registration Authority memoranda of new liens and encumbrances, if
Effects of Fraud in the Reconstitution any, made in the reconstituted certificate of
title, after its reconstitution, such judgment as
justice and equity may require:
Provided, however, That if the reconstituted
certificate of title has been cancelled by virtue
I. Grounds of any deed or instrument, whether voluntary
or involuntary, or by an order of the court, and
A. LOSS a new certificate of title has been issued, the
B. DESTRUCTION procedure prescribed above, with respect to
the memorandum of new liens and
II. Petitions for Reconstitution encumbrances made on the reconstituted
certificate of title, after its reconstitution, shall
A. WHO MAY FILE? be followed with respect to the new certificate 266
1. Registered owner of title, and to such new liens and
EdeICruz R o m u a I d o M e n z o n 3 r.
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CIVIL LAW REVIEWER TABLE of CONTENTS
SALES
Table of Contents
SALES
Immovables and Unregistered Lands........286
SALES
Prof. Roberto N. Dio
Faculty Editor DEFINITION
Jaim Mari M. Crisostomo ELEMENTS
Lead Writer CONSENT
ssa Mary Ann C. Cedeño Eva Marie Guttierez Kristoffer Gabriel L. Madrid Ros Jean Nonato SUBJECT MATTER
Writers
PRICE
CIVIL LAW STAGES
Kristine Bongcaron Patricia Tobias Subject Editors PREPARATION/NEGOTIATION
ACADEMICS COMMITTEE PERFECTION
Kristine Bongcaron Michelle Dy Patrich Leccio Editors-in-Chief CONSUMMATION
PRINTING & DISTRIBUTION KINDS
Kae Guerrero ABSOLUTE
DESIGN & LAYOUT CONDITIONAL
at Hernandez Viktor Fontanilla Rusell Aragones FORM
Romualdo Menzon Jr. SALE DISTINGUISHED FROM OTHER CONTRACTS
Rania Joya DONATION
LECTURES COMMITTEE BARTER
Michelle Arias Camille Maranan Angela Sandalo Heads CONTRACT FOR A PIECE OF WORK
tz ManzanoMary Rose Beley Sam NuñezKrizel Malabanan Arianne CerezoMarcrese Banaag LEASE OF THINGS
Volunteers AGENCY TO BUY AND SELL
DACION EN PAGO
MOCK BAR COMMITTEE CONTRACT TO SELL
269
SALES
Lilibeth Perez BILATERAL PROMISE TO BUY AND SELL
BAR CANDIDATES WELFARE
ahlia Salamat
LOGISTICS I. Definition (Art 1458, CC)
Charisse Mendoza
SECRETARIAT COMMITTEE Contract where one of the parties (Seller)
Jill Hernandez obligates himself to:
Head
Loraine MendozaFaye Celso Mary MendozaJoie Bajo Transfer ownership of and
Members
to deliver a determinate thing;
and the other (Buyer) to pay a price certain in
money or its equivalent.
II. Elements
A. CONSENT
Meeting of minds upon the thing which is the
object of the contract and the price. (Art 1475,
CC)
Requisites—
1. Capacity
2. Offer and acceptance
3. No vitiation
CAPACITY Rationale: Guardianship is a trust of the
highest order, and the trustee can not be
All persons who have capacity to enter into allowed to have any inducement o
obligations may enter into a contract of sale (Art neglect his ward’s interest. (Phil Trust
1489, CC) Co v Roldan, 1956)
SALES
If only 1 party is incapacitated: the provisions of law governing the form of
VOIDABLE contracts. (Art. 1475, CC)
-If necessaries are sold and delivered to A private instrument signed by the
an incapacitated person: must pay a defendant reciting that he bought from the
reasonable price therefore. (Art 1489, plaintiff a property at a specific address for a
CC) specific price to be paid as soon as a bill of
“Necessaries” – those which are sale is signed is not a mere draft but a
indispensable for sustenance, dwelling, perfected agreement and hence, obligatory,
clothing, medical attendance, education even if there was no statement as to area or
and transportation. (Art 194, Family price per meter. (Goyena v. Tambunting,
Code) 1902)
SALES
highest or lowest bid
common law spouses. (Calimlim- Exception: Unless the contrary appears
Canulas v Fortun, 1984) BUT if (Art. 1326, CC)
already sold to a third person who relied
on the title of his immediate seller, Form of Acceptance—
reconveyance to the seller spouse is no unconditional
longer available (Cruz v CA, 1997) Qualified acceptance = counter-offer (Art.
1319, CC)
3. Specific Incapacity May be express or implied (Art. 1320, CC)
Contracts expressly prohibited by law Acceptance must be in accordance with the
are void and cannot be ratified. Neither terms and conditions of the offer. There is
can the right to set-up the defense of no meeting of the minds if the offer lapsed
illegality be waived. (Art. 1409 (7), CC) even though the offeree later on was willing
Sales entered into by guardians, to accept the terms and conditions of the
administrators, and agents (specific offer. (Beaumont vs. Prieto, 1916)
incapacities) in violation of Art. 1491
may be ratified by means of and in the
form of a new contract when the cause MUST NOT BE VITIATED
of nullity has ceased to exist. Ratification A contract where consent is given through
is valid only from date of execution of mistake, violence, intimidation, undue
the new contract and does not retroact. influence, or fraud is voidable. (Art. 1330,
Those entered into by public 1390 (2), CC)
officer/employees, justices and judges, There is fraud where through insidious
and lawyers also in violation of Art. 1491 words or machinations of one of contracting
are inexistent and void from the parties, the other is induced to enter into a
beginning. (Rubias v Batiller, 1973). contract which, without them, he would not
have agreed to. (Art. 1338, CC)
OFFER AND ACCEPTANCE
In General—
The contract of sale is perfected at the B. SUBJECT MATTER
moment there is meeting of the minds upon
the thing which is the object of the contract Requisites—
and upon the price. 1. Licit
From that moment, the parties may 2. Existing, future or contingent
reciprocally demand performance, subject to 3. Determinate or determinable
MUST BE LICIT (ART. 1459) come into existence: the price even if the
contract is considered as thing does not actually
The thing is licit when— not made and there is no came into existence
1. Within the commerce of man (Art 1347, CC) obligation to pay the
Example of properties that are not within the price
commerce of man: In case of doubt the presumption is in favor of
a. Those belonging to the State or its emptio rei speratae since it is more in keeping with
political subdivisions intended for public the commutative character of the contract.
use or public service. (Art 420, CC).
b. Church DETERMINATE OR DETERMINABLE
c. Narcotics or dangerous drugs except A thing is determinate when it is particularly
upon prescription (RA 6425, the designated or physically segregated from all others
dangerous drugs act of 1972) of the same class. (Art 1460, CC)
2. Rights are also licit when not intransmissible A thing is determinable when it is capable
(Art 1347, CC) of being made determinate at the time
the contract was entered into without the
Sale of future inheritance is void. (Art. 1347, necessity of a new or further agreement
CC)— between the parties. (Art 1460, CC)
1. The rights to succession are transmitted Failure to state the exact location of the land
from the moment of the death of the does not make the subject matter
decedent (Art. 777, CC). Thus, one cannot indeterminate, so long as it can be located.
sell or promise to sell what he expects to (Camacho v C,A 2007)
The fact that the exact area of subject land 272
inherit from a living person. (Rivero v.
Serrano, 1950) in the contract of sale is subject to the result
SALES
2. -Heir may sell his hereditary rights (which of a survey does not render the subject
have accrued). matter indeterminate. (Heirs of Juan San
Andres v. Rodriguez (2000))
When the subject matter is illicit, the contract of
sale is void (Art. 1409 (7)) Particular Kinds—
1. Future Goods
EXISTING, FUTURE, CONTINGENT Sale of future goods or those goods which
are to be manufactured, raised, or acquired
The goods which form the subject of a by seller after the perfection of the sale is
contract of sale may be either— valid (Art 1462, CC). “Future goods” are
1. existing goods owned or possessed by the those capable of future existence.
seller;
2. goods to be manufactured, raised, acquired 2. Sale of Undivided Interest or Share
by the seller, also called “future goods”; a. Sole owner of a thing may sell an
3. whose acquisition of the seller depends undivided interest therein. (Art
upon a contingency which may or may not 1463,CC) Ex., a fraction (½ or half) or
happen. (Art 1462, CC) percentage (50%), or “my share in the
4. Things having potential existence may be property.”
the object of a contract of sale. (Art 1461, b. The sale of an undivided share in a specific mass of
CC) fungible goods makes the buyer a co-owner of the
entire mass in proportion to the amount he bought.
(Art 1464,CC)
Sale of MERE hope or Sale of VAIN hope or c. Co-owner cannot sell more than his share
expectancy expectancy
(Yturralde v CA, 1972) (Asked in 01, 02)
Valid BUT subject to Void
condition that the thing
will come into existence Example: Sale of a 3. Sale of Things in Litigation
falsified raffle ticket a. Sale of things under litigation entered into by
Example: “Next catch” of which will never win. defendant, without the approval of the litigants or
Emptio Rei Speratei
a fisherman. Emptio Spei the court is rescissible. (Art 1381 (4))
Valid Void b. NO RESCISSION where the thing is legally in the
Parties make the Parties intend the possession of 3rd persons who did not act in bad
contract depend upon contract to exist at all faith (Art 1385 (2))
the existence of a thing, events
If the thing does not Buyer will have to pay
4. Things Subject to Resolutory Condition 2. But if thing or part thereof has been
Sale of things subject to a resolutory delivered and appropriated by the buyer, he
condition, i.e. things acquired under legal or must pay a reasonable price therefore.
conventional right of redemption, or subject a. What is reasonable price? A question
to reserva troncal, may be the object of a of fact dependent on circumstances.
contract of sale. (Asked in 99) (Art 1465, (Art 1474, CC)
CC) b. In the case of Philippine Free Press v
CA (2005), the court held that the price
5. Quantity of Subject Matter not determinate was reasonable based on factual
The fact that the quantity is not determinate determination predicated on offered
shall not be an obstacle to the existence of evidence (Company’s Balance
the contract provided it is possible to Sheet showed the book value or fair
determine the same, without the need of market value of its shares)
new contract. (Art. 1349, CC)
SALES
2. In Money or its equivalent be considered a barter if the value of the
3. Real thing exceed the amount of money or its
equivalent.(Art 1468,CC)
CERTAIN OR ASCERTAINABLE AT THE TIME
OF PERFECTION REAL
SALES
must have been actually or Option Money vs. Earnest Money (Limson vs.
constructively aware of the Ca, 2001)—
right of 1st refusal at the time
he bought it.
OPTION MONEY EARNEST MONEY
The sanction for the
Separate and distinct Part of purchase price
enforcement of the right of first consideration from the (Art 1482, CC)
refusal against third persons is purchase price
based on Art. 19 of NCC, as no Given when sale is not Given only when there
real right was created on the yet perfected is already a sale
property. When given, the would- When given, the buyer
be-buyer is not required is bound to pay the
Difference from sale: to buy, but may even balance
forfeit it depending on
SALE RIGHT OF 1ST REFUSAL the terms of the option
Bilateral Unilateral Grantee of option is still Buyer manifests his
Price and other Price and other terms are yet to undecided whether or earnest desire to buy
terms of payment be agreed upon not to buy or sell the the property
are certain property (Baviera)
the thing to be sold must be determinate
SALES
extinguishment of the sale. (See obligations of
Separate No need for a separate seller and buyer, Chapter II)
consideration is consideratio
necessary n
Grantee has the No right to buy or sell, only a
right to buy or sell right to match the 1st offer to IV. Kinds of Sale
buy should the grantor decide (Asked in 97, 00)
to sell
A. Absolute Sale
B. Perfection
Sale is not subject to any condition
(Asked in ’88 and ’91)
whatsoever; title passes to the buyer upon
delivery of thing sold
When Perfected—
1. Contract of sale is a consensual contract, B. Conditional Sale
hence perfected at the moment of the Contract is subject to certain conditions
meeting of the minds of the parties as to the (usually the payment of the purchase price);
object of the contract and the price. (Art title will only pass once the conditions have
1475,CC) been fulfilled
2. It is the proof of all the essential elements of
the contract of sale, and not the mere giving In some cases, the Court makes finer
of earnest money, which establishes the distinctions between a conditional sale and a
existence of a perfected sale. (Platinum contract to sell:
Plans Phils. vs. Cucueco, 2006) a. Contract to sell- The fulfilment of the
suspensive condition, which is the full
Effect of Perfection— payment of the price, will not
From the moment of the perfection of the automatically transfer ownership to the
contract of sale, the parties may reciprocally buyer although the property may have
demand performance, subject to the provisions been previously delivered to him.
of the Statute of Frauds. (Art 1475,CC) b. Conditional Sale: The fulfilment of the
suspensive condition renders the sale
Earnest Money—
absolute and affects the seller’s title
Definition- paid in advance of the purchase
thereto such that if there was previous
price agreed upon by the parties in a contract of
delivery of the property, the seller’s
sale, given by the buyer to the seller, to bind the
ownership or title the property is
latter to the bargain. (Asked in 93, 02)
automatically transferred to the buyer.
(Ursal vs. CA, 2005)
V. Form VI. Sale Distinguished From Other
Contracts
General rule: No form required as to validity
since sale is perfected by consent of the parties.
A. DONATION
The sale may be (Art.1483,CC): SALE DONATION
1. Written Onerous Gratuitous
2. Oral Perfected by mere Must comply with the
3. Partly written and partly oral consent formalities required by
4. Inferred from the conduct of the parties law. (Art 745, CC)
SALES
Sale not to be performed within 1 Barter is a contract where one of the parties
year binds himself to give one thing in consideration
Sale of real property or an interest of the other’s promise to give another thing
therein (Art 1358, CC) (Art.1638, CC)
c. Applies only to executory contracts, not
to contracts either totally or partially If consideration consists partly in money and
performed. (Iñigo v. Estate of Maloto, partly in another thing, the intention of the
1967) parties determines whether the contract is one of
sale or barter:
2. Sale of realty by an agent If manifest intention is not clear: Barter
Agent’s authority must be in writing, when the value of thing is more than the
otherwise the sale is void (Art.1874, CC) amount of money or its equivalent,
otherwise, sale. (Art.1468)
3. Sale of large cattle
To be valid, transfer of large cattle must be C. CONTRACT FOR A PIECE OF WORK
registered with the municipal treasurer
(Sec.529, Revised Administrative Code) SALE CONTRACT FOR A
PIECE OF WORK
Goods are manufactured Goods are manufactured
Electronic Commerce Act (RA 8792)
or procured in the for customer upon his
1. Electronic documents have the legal effect, ordinary course of special order
validity or enforceability of any other business
document or legal writing For the general market, Specifically for customer
2. As long as electronic document maintains its whether on hand or not
integrity and reliability and is capable of
being displayed to the person to whom it is The fact that the object were made by the seller
to be presented, containing the electronic only when customers placed their orders, does
signature of the person sending it. (Sec 7, 8 not alter the nature of the contract of sale, for it
of RA 8792) only accepted such orders as called for the
employment of such materials as it ordinarily
manufactured or was in a position habitually to
manufacture such. (Celestino Co & Co vs.
Collector, 1956)
SALES
(Asked in 97, 01, 03)
4. When to Deliver
Absent a stipulation as to time, delivery must
I. Obligations of the Seller be made within a reasonable time; demand
or tender of delivery shall be made at a
Obligations of the Seller (TWPP)— reasonable hour.
1. Transfer ownership
2. Warrant against eviction and hidden defects Ways of Effecting Delivery—
1. Actual Delivery
3. Preserve the thing
4. Pay for the expensed for the execution and a. When deemed made: when the thing 278
sold is placed in the control and
registration of the deed of sale
SALES
possession of the vendee (Art. 1497)
A. To transfer ownership b. Not always essential to passing of title
(Asked in 84, 98, 99, 03) (Art. 1475)
c. Parties may agree when and on what
Obligation to transfer ownership and to deliver is conditions the ownership in the subject
really implied in every contract of sale (Arts. of the contract shall pass to the buyer
1458-1459) (example: Art 1478 where ownership will
only pass after full payment of the price)
Transfer of ownership requires delivery (Art.
2. Constructive Delivery
1495)
a. Execution of public instrument (Art
1498, par. 1)
General Concepts—
General rule: produces the same
1. Delivery comprises 2 obligations in Art.
legal effects of actual delivery.
1495:
Exceptions:
a. Actual duty to deliver
The intention of the parties is
b. Transfer of ownership – can only be
otherwise.
accomplished via delivery
At the time of execution, the
subject matter was not subject
2. What to Deliver
to the control of the seller which
a. Thing sold (Art. 1495)
must subsist for a reasonable
b. Fruits (Art. 1164 & 1537)
length of time after execution.
c. Accessions and accessories (Art. 1166
(Pasagui v Villablanca, 68
& 1537)
SCRA 18)
Improvements by seller at his
“Control” over thing sold must be
expense grants him a usufructuary
such that seller is capable of
right.
physically transferring it to buyer
No indemnification
But he may remove it to the extent
b. Symbolic Delivery
that there is no damage (Art. 1538)
Delivery of keys of the place or
depositary where the movable is
3. Where to Deliver
stored or kept. (Art 1498, CC)
a. A hierarchy is followed (STOR):
Unless otherwise agreed, when
Stipulation
Usage of trade symbolic delivery has been made,
the seller is not obliged to remove
Seller’s place of business (office)
tenants to place the buyer in actual
possession of the property as he F.A.S.: “Free Alongside”
has already complied with his Seller bears the expenses of
obligation to transfer ownership of transportation until he delivers
and deliver the thing sold. (Power the goods alongside a vessel at
Commercial and Industrial Corp. a named port.
v. CA, 1997; Sabio v. The
International Corporate Bank,
Inc., 2001) Completeness of Delivery—
1. When may the seller refuse to deliver:
c. Tradition Longa Manu (Long Hand) a. No payment yet or no period for
Delivery of thing by mere payment has been fixed in the contract
agreement. (Art.1524);
Example: Seller points to the b. The buyer loses the right to make use
property without actually transferring of the term, as when:
physical possession thereof. He becomes insolvent UNLESS he
When an employer assigned all its gives a guaranty or security for the
rights and title to all surplus property debt;
salvaged by the contractor, tradition He does not does not furnish the
longa manu takes place. Delivery is seller the guaranties or securities he
upon the moment a thing is promised;
salvaged. (Board of Liquidators v. He impairs the guaranties or
Floro, 1960) securities or they disappear 279
fortuitously UNLESS he immediately
d. Tradition Brevi Manu (Short Hand)
SALES
gives new ones equally satisfactory;
MOVABLE is delivered when the buyer
He violates any undertaking, in
had the thing already in his possession
consideration of which the seller
before the sale took place, not as owner
agreed to the period;
but as lessee, borrower, or depositary. He attempts to abscond. (Art.1536)
e. Tradition Constitutum Possessorium 2. Rules on Sales of Goods
Seller continues to be in possession of a. When Quantity less than expected
the property sold, by virtue of a lease Buyer may reject all
contract agreement with the vendee. Buyer accepts with knowledge of
seller’s inability to deliver the rest –
f. Delivery to a Common Carrier buyer pays at contract price
General Rule: Delivery to the Buyer has used or disposed prior to
courier or carrier tantamount to knowing seller’s inability to deliver
delivery to buyer. the rest – buyer pays fair value
Exceptions b. Quantity more than expected
Seller reserved title by the form If divisible, buyer may reject excess
of the bill of lading, with intent to If indivisible, buyer may reject all
remain the owner, not merely for c. Quality different or different goods
the purpose of securing If divisible, buyer may accept the
payment, OR goods compliant with contract and
Contrary intent appears in the reject those that are not
contract (i.e. seller is required to If indivisible, buyer may reject all
deliver goods to buyer at the (Art. 1522)
point of destination) d. Sale of specific mass of goods
F.O.B.: “Free on Board”
In the sale of fungibles where the
When seller bears the expenses
measure or weight has not been
of transportation up to the
agreed upon nor is there a fixed rate
F.O.B. point. based upon a measurement, the
subject matter of the sale is a
C.I.F.: “Cost, Insurance,
determinate object – the specific
Freight”
mass; seller is merely required to
Price quoted includes the costs
deliver such mass even if actual
of the goods, insurance, and
quantity falls short of parties’
freight charges on the goods up
estimate (Art. 1480)
to the point of destination.
e. Delivery by installments Effect of Delivery—
By default, buyer is not bound to 1. Delivery, generally, results in transfer of
accept delivery of goods by ownership from seller to buyer.
instalments 2. As such, it also transfers the risk of loss of
In a contract of delivery by the thing sold to the buyer.
installment to be paid for via 3. Acceptance is not a condition for the
installment as well, delay or breach completeness of delivery; even with such
may not necessarily mean breach of refusal of acceptance, delivery will be
the entire contract; depending on deemed completed and produce its legal
the circumstances, breach may be effects.
severable and the aggrieved party 4. By default, expenses of and incidental to
is entitled to damages and not putting the goods into a deliverable state
rescission. (Art. 1583) must be borne by seller. (Art. 1521)
SALES
proportionate reduction in price b. Retains the goods without giving notice
Buyer may only avail of rescission if of rejection after the time fixed has
the area deficiency is 10% or more expired, if no time has been fixed, after
of total area or if the inferior value of the expiration of a reasonable time (Art
the part of the land exceeds 10% of 1502, CC)
the price agreed upon. (Art. 1539)
If the area turns out to be greater Difference between sale on approval and sale on
than that stated, buyer may accept return
area included and reject the excess
or accept all and pay a Sale on Approval Sale on Return
proportionate increase in price (Art. Ownership does not pass Ownership passes upon
1540) upon delivery delivery, but buyer may revest
ownership in the seller by
b. Sale for lump sum returning or tendering the
Follows the same rule as the sale of goods within the time fixed in
a specific mass which is explained the contract
above Depends on the character Depends on the will of the
or quality of goods buyer
There is no change in price even if
Subject to a suspensive Subject to a resolutory
area or number turns out to be condition condition
greater or lesser than that stated Risk of loss remains with Risk of loss remains with the
(Art. 1542) the seller buyer
Exception: when the excess or
deficiency is no longer reasonable;
in Asian v Jalandoni, 1923, 644 sq 2. Express Reservation
m was found to be unreasonable. If it was stipulated that ownership in the
Exception to the exception: when thing shall not pass to the purchaser until he
buyer expressly assumes risk on has fully paid the price. (Art 1478, CC)
actual area of the land. (Garcia v
Veloso, 1941) 3. Implied Reservation
If the price per unit or measure is The following are instances when there is an
not provided for in the contract, then implied reservation of ownership
the rules of lump sum sale should a. Goods are shipped, but by the bill of
prevail. (Sta. Ana v Hernandez, lading goods are deliverable to the seller
1966) or his agent, or to the order of the seller
or his agent
b. Bill of lading is retained by the seller or 6. Sale by person having a voidable title
his agent. a. True owner may recover the thing when
c. When the seller of the goods draws on provided the ff. requisites concur:
the buyer for the price and transmits the Subject matter is movable
bill of exchange and bill of lading to the Owner has either lost the thing or
buyer, and the latter does not honor the has been unlawfully deprived. (Art
bill of exchange by returning the bill of 559, CC)
lading to the seller. b. Reimbursement is necessary before
owner can recover when:
4. When sale not valid Buyer acted in good faith
eg. When the thing sold is a public property Acquired at a public auction (Art
559, CC)
5. When Seller is not the owner c. Recovery no longer possible when:
(Asked in 77, 78, 86, 87) Buyer in good faith
Acquired it at a merchant’s store,
General Rule: Ownership is not acquired by fair or market. (Art 1506, CC)
the buyer. One cannot give what one does
not have. (Art 1505, CC)
B. To warrant against eviction & hidden
Exceptions: (RE-ROM) defects (Art. 1495; 1547)
a. Seller has a Right to transfer ownership
Seller need not be the owner of the Warranties— 281
thing at the time of perfection of the A statement or representation made by the seller
SALES
contract It is sufficient that seller has contemporaneously and as part of the contract
a right to transfer ownership thereof of sale, having reference to the character,
at the time it is delivered (Art. 1459) quality, or title of the goods, and by which he
One who sells something he does promises or undertakes to ensure that certain
not own yet is bound by the sale facts are or shall be as he then represents.
when he acquires the thing later
(Bucton vs Gabar, 55 SCRA 469) Effects of Warranties—
b. Estoppel: Owner is by his conduct 1. Natural tendency is to induce buyer to
precluded from denying the seller’s purchase the subject matter
authority to sell. (Art. 1434) 2. Buyer purchases subject matter relying
c. Registered land bought in good faith thereon
General rule: Buyer need not go 3. Seller liable for damages in case of breach
beyond the Torrens title
Exception: When he has actual Effects of Waivers—
knowledge of facts and Only applicable to waiver of warranty against
circumstances that would impel a eviction (see the following section) – parties may
reasonably cautious man to make increase or decrease warranty against eviction
further inquiry but the effect depends on good/bad faith of the
d. Order of courts Statutory Sale seller
In execution sale, the buyer merely 1. Seller in bad faith and there is warranty
steps into the shoes of the judgment against eviction – null and void
debtor (Rule 39, sec. 33, ROC) 2. buyer without knowledge of a particular risk,
e. When goods are purchased in made general renunciation of warranty – not
Merchant’s store, Fair, or Market (Art waiver but merely limits liability of seller in
1505, CC) case of eviction (pay value of subject matter
The policy of the law has always at time of eviction)
been that where the rights and 3. buyer with knowledge of risk of eviction
interest of the vendor clash with that assumed its consequences and made a
of an innocent buyer for value, the waiver – vendor not liable
latter must be protected. (Sun 4. waiver to a specific case of eviction – wipes
Brothers and Co. V. Velasco, out warranty as to that specific risk but not
(1958) as to eviction caused by other reasons
Condition v. Warranty— Express Warranty False Representation
Concealment of facts When concealment of
Condition Warranty does not necessarily facts comes with an
Pertains to and affects Goes into the amount to false active misstatement of
the existence of the performance of an representation fact or a partial
obligation obligation and may, in statement of fact such
itself, be an obligation that withholding of that
Non-happening does not Non-fulfillment unsaid portion makes
amount to breach of constitutes breach of that which is stated
contract contract absolutely false
Must be stipulated Stipulation or operation However, buyer who
of law fails to inspect condition
May attach to either to Always relates to the of property despite
the seller’s duty to subject matter or the ample opportunity to do
deliver thing or some seller’s obligations as to so and no opposition on
other circumstance the subject matter the part of seller cannot
later on allege false
If seller has promised that the condition representation. (Phil
Mftg Co. v Go Jucco,
should happen or be performed, the
1926) This is because
buyer may treat the nonperformance of buyer’s duty to inspect
the condition as a breach of warranty. remains despite false
(Art.1545) representation by the
seller. Buyer has the 282
Form— duty to exercise due
1. Express Warranty (APIR) diligence.
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For there to be express warranty, the
following requisites must concur:
a. An affirmation of fact or any promise 2. Implied Warranty
relating to the thing sold; a. Implied Warranty of Title
b. The natural tendency of such affirmation b. Implied Warranty against Encumbrance
or promise is to induce the buyer to buy; / Non-Apparent Servitudes
c. The buyer buys the thing relying c. Implied Warranty against Hidden
thereon. (Art. 1546) Defects (Art. 1547)
d. Made before the sale not upon delivery Implied warranty as to
or any other point Merchantable Quality and Fitness
of Goods
An express warranty can be made by and Implied warranty against
also be binding on the seller even in the sale Redhibitory Defect in the Sale of
of a second hand article. (Moles v. IAC, Animals (Art. 1572)
1989) Quality and Fitness of Goods in
Sale by Sample or Description
Express Warranty Dealer’s or Trader’s d. Other Warranties
Talk
What is specifically Affirmation of the Implied Warranty of Title—
represented as true in value of the thing or 1. Implied warranty arises by operation of law
said document cannot be statement of the and need not be stipulated in the contract of
considered as mere seller’s opinion only sale.
dealer's talk. (Moles v. is not a warranty 2. Warranty of Seller’s Right to Sell: seller
IAC, 1989) unless:
warrants his right to sell at the time the
- The seller made
it as an expert; ownership is to pass.
- It was relied upon Inapplicable to a sheriff, auctioneer,
by the buyer. mortgagee, pledgee, or other person
(Art.1546) professing to sell by virtue of authority in
Ordinarily, what does fact or law. (Art. 1547)
not appear on the face 3. Warranty against Eviction: seller warrants
of the written that buyer, from the time ownership passes,
instrument (Moles v.
shall have and enjoy legal and peaceful
IAC, 1989)
possession of the thing. Its requisites are:
a. Buyer is deprived of the whole or a part
of the thing sold;
b. Eviction is by final judgment relies on the seller’s skill or judgment
c. Final judgment based on a right prior to (Art.1562(1))
the sale or an act imputable to the
vendor Implied warranty against Redhibitory Defect
d. Seller is summoned and made co- in the Sale of Animals (Art. 1572)—
defendant in the suit for eviction at the Redhibitory defect- a hidden defect of
instance of the buyer. (Power animals of such nature that expert
Commercial and Industrial Corp. v. knowledge is not sufficient to discover it,
CA, 1997) even in case a professional inspection has
been made
Implied Warranty against Encumbrance / No warranty in case of (Art. 1574):
Non-Apparent Servitudes— a. Animals sold at fairs or public auctions
Requisites for breach: b. Livestock sold as condemned
1. Thing sold is an immovable The following sales are void (Art. 1575):
2. Burden or servitude encumbering the thing a. Sale of animals suffering from
sold is contagious diseases
a. Non-apparent to the naked eye b. Sale of animals unfit for the purpose for
b. Not mentioned in the agreement which they are acquired as stated in the
c. Of such nature that it must be presumed contract
that the buyer would not have bought it Veterinarian liable if he fails to discover or
had he been aware thereof disclose the hidden defect through
d. Not recorded in the Registry of Property ignorance or bad faith (Art 1576) 283
unless there is an express warranty that Seller liable if animal dies within 3 days after
SALES
the thing is free from all burdens and its purchase due to a disease that existed at
encumbrances (Art.1560) the time of sale. (Art 1578)
Implied warranty against Hidden Defects— Other Warranties—
Requisites for breach: 1. Warranty in Sale of Consumer Goods
1. The defect renders the thing sold unfit for Consumer goods – goods primarily for
the use for which it was intended OR personal, family, household or agricultural
diminishes its fitness for such use to such an purposes, which shall include but not limited
extent that had the buyer been aware to food, drugs, cosmetics, and devices
thereof, he would not have bought it or (Sec.4(q), RA 7493: Consumer Act of the
would have paid a lower price; Phil)
2. The defect is not patent or visible;
3. The buyer is not an expert who, by reason of Kinds:
his trade or profession, should have known a. “Full warranty”- if the written warranty
the defect meets the minimum standards
4. The seller is aware of the hidden fault or b. “Limited warranty- if the written warranty
defect, OR even he is not aware thereof, if does not meet the minimum standards
there is no stipulation to the contrary (Sec.6(c), RA7394)
(Arts.1561 &1566)
Minimum standard for warranties that the
Implied warranty as to Merchantable Quality warrantor shall:
and Fitness of Goods— a. Remedy such consumer product within
Merchantable Quality: a reasonable time and without charge in
1. Where the goods are brought by description case of a defect, malfunction or failure to
from a seller who deals in goods of that conform to such written warranty;
description (Art.1562) b. Permit the consumer to elect whether to
2. In a sale by sample, if the seller is a dealer ask for a refund or replacement without
in goods of that kind and the defect is not charge of such product or part, as the
apparent on reasonable examination of the case may be, where after reasonable
sample (Art.1566) number of attempts to remedy the defect
or malfunction, the product continues to
Fitness for a particular purpose: Where the have the defect or to malfunction
buyer expressly or impliedly makes known to the
seller the particular purpose for which the goods The warrantor will not be required to perform
are acquired AND it appears that the buyer the above duties if he can show that the
defect, malfunction or failure to conform to a
written warranty was caused by damage due Exception: if there is a stipulation to the
to unreasonable use thereof. (Sec.68(d), contrary (Art. 1487)
RA 7394)
Expenses incurred subsequent to the transfer of
2. Warranty in sale of Subdivision Lot or title are to be borne by the buyer, unless caused
Condominium Units by the fault of the seller
The owner or developer shall be answerable
and liable for the facilities, improvements,
infrastructures or other forms of
development represented or promised in II. Obligations of the Buyer
brochures, advertisements and other sales
propaganda disseminated by the owner or Obligations of the Buyer—
developer or his agents and the same shall 1. To Accept delivery
form part of the sales warranties enforceable 2. To Pay the price of the thing sold
against said owner or developer, jointly and
severally. (Sec.19, PD 957: The Pertinent Rules—
Subdivision and Condominium Buyers’ 1. In a contract of sale, the seller is not
Protective Decree) required to deliver the thing sold until the
price is paid nor is the buyer required to pay
the price before the thing is delivered in the
absence of an agreement to the contrary
C. To preserve the thing, pending delivery, (Art 1524)
with proper diligence (Art. 1163)
284
2. If stipulated, then the buyer is bound to
accept delivery and to pay the price at the
SALES
Duration: From the perfection of sale until time and place designated
delivery (Art 1480) 3. If there is no stipulation as to the time and
place of payment and delivery, the buyer is
Default standard of care: Diligence of a good bound to pay at the time and place of
father of a family delivery
4. In the absence also of stipulation, as to the
General rule: seller is liable for loss or place of delivery, it shall be made wherever
deterioration (Art. 1174) the thing might be at the moment the
contract was perfected (Art. 1521)
Exception: fortuitous event (Art. 1174) 5. If only the time for delivery of the thing sold
has been fixed in the contract, the vendee is
Exception to exception: seller is still liable for required to pay even before the thing is
fortuitous event if delivered to him.
1. Law provides for it (e.g. delay or promising
to deliver the same thing to 2 or more First Obligation: accept delivery—
persons with different interests – Art. 1165) 1. Form
2. By stipulation a. Express: buyer intimates acceptance
3. Nature of obligation requires assumption of b. Implied:
risk Goods delivered to the buyer and he
does any act in relation to them that
Fungibles sold for a price fixed according to is inconsistent with the ownership of
weight, number or measure: duty to preserve the seller.
begins only after the things are weighed, After the lapse of a reasonable time,
counted or measured except when seller is the buyer retains the goods without
already in delay. intimating to the seller that he has
rejected them. (Art.1585)
2. Manner
D. To pay for the expenses for the execution Right of Inspection: reasonable
and registration of the deed of sale (Art. opportunity to examine the goods upon
1487) delivery. If there is a stipulation that delivery
is preconditioned on payment, then buyer
General rule: The seller has the duty to pay for has no right of inspection until he has paid.
the expenses for the execution and registration (Art.1584) Exception: in case such right of
of the deed of sale inspection is permitted by agreement or
usage trade.
3. Effect of Refusal to accept new term (Heirs of Escanlar, et.al. v.
a. If buyer refuses to accept goods, having CA, 1997)
the right to do so, he is not bound to R.A. 6552 (Maceda Law) – applies to
return them to the seller; it being sale or financing of real estate on
sufficient that he notifies the seller of his installment (Rillo v. Court of
refusal to accept Appeals,1997)
If he voluntarily constitutes himself a Buyer is awarded a grace period of
depositary of the goods, he shall be 1 month per year of installments
liable as such. (Art.1587) paid or 60 days, whichever is
b. Unjust refusal to accept still results to higher, within which he may pay
transfer of ownership; title to the goods without additional interest
passes to the buyer from the moment o may be used once every 5
they are placed at his disposal, except if years of the life of the contract
ownership has been reserved by the or any of its extensions
seller (Art.1588) If contract is to be cancelled, seller
must first:
Second Obligation: pay the price of the thing o 30 day notice of cancellation,
sold (Art. 1582)— and
1. Payment of interest o refund cash surrender value to
Buyer is liable for interest when: (SFD) buyer; amount is equivalent to
a. Interest is stipulated; 50% of total payments made
b. Thing sold produces fruits or income; including deposits, options and 285
c. Buyer is in default - interest accrues down-payments plus 5% for
from the time of judicial or extrajudicial
SALES
every year in excess of 5 years
demand for payment of the life of the contract or any
of its extensions
2. Suspension of payments
Buyer may suspend payment when:
a. his ownership or possession of the thing
is disturbed or
b. he has reasonable grounds to fear such
disturbance by a vindicatory action or a
foreclosure of mortgage
Chapter III. Double Sales both registration in its ordinary and strict
sense and cancellation, annotation, and
(Asked in 77, 87, 89, 98, 01, 04) even marginal notes. (Cheng v. Genato,
1998)
General Rule
Requisites NOTE: Pencilled entries on the title are not
Rulesgoverningsaleofmovables, immovables and unregistered lands considered registration (AFPMBAI v.
Purchaser in good faith
Court of Appeals, 1999).
SALES
transmitting, acknowledging, modifying or
sold;
extinguishing rights with respect to lands not
4. Same seller
registered under the Land Registration Act
or the Spanish Mortgage Law, are required
to be registered in the Registry of Property
III. Rules Governing Sale of Movables, to prejudice 3rd persons, although such
Immovables and Unregistered Lands registration is understood to be “w/o
prejudice to a 3rd party with a better right”.
A. Sale of Movables (PD 1528 Sec 113)
Ownership shall be transferred to the person 2. Art. 1544 applies to unregistered land
who may have first taken possession in subject to a conventional sale (because of
good faith. Art. 1358) but NOT to unregistered land
subject to judicial sale.
B. Immovables
1. Ownership belongs to the person who: E. Purchaser in good faith
a. In good faith first recorded in the (Asked in 76, 86, 08)
Registry of Property; OR 1. General Characteristics
b. If there is no inscription, ownership a. One who buys the property of another,
passes to the person who in good faith without notice that some other person
was first in possession; OR has a right to or interest in such
c. In the absence thereof, to the person property, and who pays a full and fair
who presents the oldest title, price for the sale, at the time of the
PROVIDED there is good faith. NOTE: purchase or before he has notice of the
good faith is required all the time. claim/interest of some other person in
the property. (Agricultural and Home
NOTE: Extension Development Group v CA,
a. “Oldest Title” – any public document 1992)
showing acquisition of the land in good b. A buyer could not have failed to know or
faith. To constitute “title,” the discover that the land sold to him was in
transmission of ownership must appear adverse possession; hence he is
in a public document [Art. 1358 (1)] deemed to have acted in bad faith.
b. Examples: Deed of Sale, Deed of (Heirs of Ramon Duran v Uy, 344
Donation, Deed of Trust SCRA 238)
2. Presumption
Gen Rule: As a rule, he who asserts the
status of a purchaser in good faith and for
value, has the burden of proving such
assertion. This onus probandi cannot be
discharged by mere invocation of the legal
presumption of good faith, i.e., that everyone
is presumed to act in good faith (Mathay v
CA, 295 SCRA 556)
SALES
maybe cancelled even may be cancelled only in
before the action is one instance, i.e., after the
finally terminated for claim is adjudged invalid
causes which may not or unmeritorious by the
be attributable to the Court
claimant
Both are intended to protect the interest of a
claimant by posing as notices and caution to those
said with the property that same is subject to a
claim.
GENERAL RULE
EXCEPTION
I. General Rule
II. Exceptions
1. Contrary stipulation
2. An obligation to deliver a generic thing is
not extinguished by loss. (Art 1263, CC)
3. Risk of loss of specific things is subject to
the ff:
a. When loss occurs before perfection,
288
such loss is borne by seller
SALES
b. When loss occurs at time of perfection,
loss must have occurred before the
contract was entered into, without the
knowledge of both parties
SALES
purpose, whenever such warranties would
Purpose— have been implied had the contract been
1. Evidence of possession or control of goods transfer the goods without a document
described therein
2. Medium of transferring title and possession He does not warrant that—
over the goods described therein without 1. Common carrier will fulfill its obligation to
having to effect actual delivery thereof deliver the gods
(Villanueva) 2. Previous indorsers will fulfill their obligation
3. The custody of a negotiable warehouse (Art. 1516-1517, CC)
receipts issued to the order of the owner, or
to bearer, is a representation of title upon Goods in the hands of the carrier covered by
which bona fide purchasers for value are a negotiable document cannot be attached or
entitled to rely, despite breaches of trust or levied upon, UNLESS—
violations of agreement on the part of the 1. Document is first surrendered to the carrier;
apparent owner. (Siy Cong Bieng vs. or
HSBC, 56 Phil 598) 2. Impounded by the court; or
3. Its negotiation is enjoined. (Art. 1519-
1520,CC)
II. Negotiable Documents of Title
290
SALES
CIVIL LAW REVIEWER Chapter VI. REMEDIES of the SELLER and BUYER
Chapter VI. Remedies of the Seller and a. Possessory lien over the goods—
Buyer
Right to retain possession of goods until
payment or tender of the whole price, or
GENERAL REMEDIES unless he agrees to sell on credit (1526-
SPECIFIC PERFORMANCE 1529, 1503, 1535)
RESCISSION
DAMAGES When available:
REMEDIES OF THE SELLER Goods are sold without stipulation
IN THE SALE OF MOVABLES
as to credit
EXTRAJUDICIAL REMEDIES
Goods are sold on credit, but term
JUDICIAL REMEDIES
of credit has expired
IN THE SALE OF IMMOVABLES
RESCISSION FORANTICIPATORY BREACH
Buyer becomes INSOLVENT
SPECIFICPERFORMANCEWITH DAMAGES
RESCISSION WITH DAMAGES When lost:
MACEDA LAW Seller delivers goods to carrier or
REMEDIES OF THE BUYER other bailee for transmission to the
FORBREACHOFOBLIGATIONTO PRESERVE buyer under a straight or non-
FORBREACHOFOBLIGATIONTO DELIVER negotiable bill of lading
FOR BREACH OF WARRANTY Buyer/his agent lawfully obtains
possession of goods
Seller waives it 291
Not lost in remainder of goods
SALES
when only partial delivery is
I. General Remedies (Art. 1191, CC) made (unless such is symbolic
delivery of the whole)
Not lost by mere fact that seller
The following remedies arise from the bilateral
obtained a judgment for the
nature of the contract of sale:
1. Specific performance (Asked in 02) price
2. Rescission (Asked in 03, 08)
When revived: Goods are returned by
General rule is that rescission of a
the buyer in a wrongful repudiation of
contract will not be permitted for a slight
the contract
or casual breach, but only for such
substantial and fundamental breach
b. Right of stoppage in transitu—
as would defeat the very object of the
parties in making the agreement.
(Song Fo & Co. vs. Hawaiian- An extension of the lien for the price;
Philippine Co., (1925)) entitles unpaid seller to resume
possession of the goods while they are
3. Damages
in transit before the goods come in
Neither party incurs in delay if the other does not possession of the vendee (1530-1532,
comply or is not ready to comply in a proper 1535, 1636[2])
manner with what is incumbent upon him (Art
Available when: Vendee becomes
1169, CC)
INSOLVENT
Prescriptive periods—
When are goods in transit?
1. 10 years if based on written contract
From time of delivery to the
2. 6 years if based on oral contract
carrier or other bailee by the seller,
for the purpose of transmission to
II. Remedies of the Seller the buyer, until the buyer or his
agent takes such delivery from the
A. In the Sale of Movables carrier.
1. Extrajudicial or Self-Help Remedies Even when goods have reached
[NOTE: No need to resort to the courts; as their ultimate destination, if buyer
long as possession of the goods has not yet rejects them and carrier retains
passed to the buyer] possession
To terminate transit by delivery Effects:
to a middleman, delivery must Seller is no longer liable to the
be to keep, not to transport. original buyer upon the contract of
sale or for any profit made by the
When are goods no longer in transit? resale
Buyer obtained delivery of the Buyer at resale acquires good title
goods before such have reached as against the original owner
their ultimate destination In case resale is at a loss, seller
Goods have arrived at ultimate entitled to recover the difference
destination, but carrier refuses to from the original buyer
deliver Seller may recover damages from
Carrier enters into a new contract original buyer for breach of contract
with the buyer upon arrival of the
goods at their ultimate destination d. Special right to rescind:
SALES
Measure of damages: Estimated loss Also applies when seller assigns
directly and naturally resulting in the his credit to someone else
ordinary course of events from the
buyer’s breach Alternative Remedies of the unpaid
Where there is available market for seller under Recto Law
goods: Difference between the Specific Performance
contract price and the market price Cancellation of sale: If vendee fails
at the time the goods ought to have to pay 2 or more installments
been accepted or if no time was When the seller cancels the sale
fixed, at the time of refusal to accept by repossessing the property
If the resale was made with sold, he is barred from exacting
diligence, resale price is evidence of payment for its price.
market value, taking into account Foreclosure of Chattel Mortgage: If
whether or not the goods could be vendee fails to pay 2 or more
readily sold installments
Where labor/expense was If seller chooses this remedy, he
necessary for seller to fulfill his shall have no further action to
obligation: Labor performed and recover any unpaid balance,
expenses made by seller before and any stipulation to the
receiving notice of buyer’s contrary shall be void
repudiation or countermand Motors vs. Sapinoso, (1970):
Profit that the seller would have What Art 1484 (3) prohibits is 293
made if sale had been fully “further action against the
SALES
performed purchaser to recover any unpaid
balance of the price;” and
c. Rescission by giving the buyer notice of although this Court has
the election to rescind (1597) construed the word “action” to
mean “any judicial or
Under this rule, rescission would bar an extrajudicial proceeding by
action on the contract because it means virtue of which the vendor may
cancellation of the contractual lawfully be enabled to exact
obligations between the parties. recovery of the supposed
(Baviera) unsatisfied balance of the
purchase price from the
d. Special rule for sale of movables by purchaser or his privy,” there is
instalments – Recto Law (1484, 1485) no occasion at this stage to
(Asked in ‘99) apply the restrictive provision of
the said article because there
Applies in cases of: has not yet been a foreclosure
Sale of movables in installment sale resulting in a deficiency.
Levy Hermanos vs. Gervacio, The payment of the sum of
(1939): The rule is intended to P1,250 of Sapinoso was a
apply to sales of movables, the voluntary act on his part and did
price of which is payable in 2 or not result from a “further action”
more installments, but not to instituted by Northern Motors.
straight-term sales where the Bachrach Motor Co., Inc. v.
price is payable in full, after Millan, (1935): Purpose of the
making a down payment law is to remedy the abuses
because the law aims to protect committed in foreclosure of
improvident buyers who may be chattel mortgages. It prevents
tempted to buy beyond their mortgagees from seizing the
means. mortgaged property, buying it at
Lease of personal property with foreclosure sale for a low price
option to buy and then bringing the suit
When lessor has deprived the against the mortgagor for a
lessee of the possession or deficiency judgment. The
enjoyment of the thing (Ex. almost invariable result of this
When lessor files a complaint procedure was that the
for replevin against lessee) mortgagor found himself minus
the property and still owing 4. Maceda Law: Sale of Residential Realty
practically the full amount of his on Installments
original indebtedness. (Asked in 77, 89, 99, 00)
Nonato vs. IAC (1985): Remedies are RA 6552: An Act To Provide Protection for
ALTERNATIVE, not cumulative, i.e. Buyers of Real Estate on Installment
exercise of one bars exercise of the Payments
others
DOES not apply to:
NOTE: “Unpaid Seller” (1525): a. Industrial lots
e. When the whole of the price has not b. Commercial buildings
been paid or tendered; c. Sale to tenants under Agricultural
f. When a bill of exchange or other Reform Code (RA 3844)
negotiable instrument has been received
as conditional payment, and the Imposes ADDITIONAL REQUIREMENTS
condition on which it was received has FOR A VALID RESCISSION:
been broken by reason of the dishonor a. If buyer has paid at least 2 years of
of the instrument, the insolvency of the installments: GRN
buyer, or otherwise. Grace period: 1 month per year of
installment payments made. BUT
buyer may only avail of it only once
B. In the Sale of Immovables
in every 5 years 294
Refund of Cash Surrender Value
1. Rescission for Anticipatory Breach
SALES
(CSV): 50% of total amount paid +
(1591)
5% for every year after the 1st 5
a. Available when seller has reasonable
years of installments
grounds to fear the loss of the
immovable property sold and its price BUT not greater than 90% of
b. Example: Buyer destroys the building total amount paid
sold, there being no security therefor, Notice of cancellation of demand for
and buyer becomes insolvent rescission by notarial act, effective
c. Court has no discretion to compel the 30 days from the buyer’s receipt
seller to wait for the expiration of the thereof and upon full payment of
period to pay, or to grant the buyer more CSV
time to pay
b. If buyer has paid less than 2 years: GN
Grace period: at least 60 days
2. Specific Performance + Damages (1191)
Notice of cancellation or demand for
a. Seller may choose between specific
rescission by notarial act, effective
performance and rescission, with
30 days upon receipt thereof
damages in either case
b. Court has discretion, for a just cause, to
c. Down payments, deposits, or options on
give the buyer more time to pay even if
the contract shall be included in the total
the seller chooses rescission
number of installments made
3. Rescission + Damages (1191)
d. Seller may go to court for judicial
a. If seller chose specific performance, and
rescission in lieu of a notarial act of
such becomes impossible, he may still
rescission
avail of rescission
b. If absolute sale, seller must make a
e. During the grace period, buyer shall
demand for rescission
have the right:
Judicially, OR
To sell or assign his rights, to be
By a notarial act evidenced in a notarial instrument
c. Necessary even if automatic rescission To update his account
is stipulated To pay in advance any installment,
d. Effect of lack of demand: Buyer can still or the full unpaid balance of the
pay price, without any interest
e. Effect of demand: Court may not grant
buyer a new term
III. Remedies of the Buyer deficiency from goods of the same kind and quality, UNLESS a contrary intent appears.
SALES
1. Perishes 2. If for a lump sum:
2. Goes out of commerce
Everything is within Not everything is
3. Disappears in such a way that its existence
boundaries, even if less or within boundaries
is unknown or it cannot be recovered more than stated area
No remedy Proportional
If thing deteriorates— Rudolf Lietz, Inc. v. CA, reduction in price
(2005): Where both the area OR
Without fault of seller Through fault of seller and the boundaries of the Rescission
No breach Rescission + damages immovable are declared, the
Impairment shall be Or area covered within the
borne by buyer Specific performance + boundaries of the immovable
damages prevails over the stated area.
SALES
CIVIL LAW REVIEWER Chapter VI. REMEDIES of the SELLER and BUYER
2. If sale is rescinded:
a. Buyer must return animal in condition in
which it was sold and delivered
b. Buyer shall be liable for injury due to his
negligence.
3. Prescriptive period: 40 days from delivery
SALES
discovery of the non-
conformity
CIVIL LAW REVIEWER Chapter VII. EXTINGUISHMENT of SALE
SALES
10. Redemption (Conventional or Legal) How exercised—
1. Returning the ff. to the buyer: (PEN)
a. Price of the sale;
II. Conventional Redemption b. Expenses of the contract and other
legitimate payments made by reason of
the sale;
Definition—
c. Necessary and useful expenses made
1. Vendor reserves the right to repurchase the
on the thing sold
thing sold, with the obligation to comply with
2. Complying with any other stipulation agreed
the provisions of Article 1616 and other
upon, if any.
stipulations which may have been agreed
upon. (Art 1601,CC)
NOTE:
2. Available when the seller reserves the right
1. BPI Family Savings Bank, Inc. v. Veloso,
to repurchase the thing sold in the same
(2004): The general rule in redemption is
instrument of sale as one of the stipulations
that it is not sufficient that a person offering
of the contract (Villarica v CA, 1968)
to redeem manifests his desire to do so. The
statement of intention must be accompanied
Period (Asked in 77)—
by an actual and simultaneous tender of
General Rule: Follow period stipulated in
payment for the full amount of the
contract, but should not exceed 10 years.
repurchase price.
1. If no period stipulated, then it shall be four
2. Paez v. Magno, (1949):Tender of payment
years from the execution of the contract
is enough (i.e., consignation is not
2. But vendor may still exercise the right to
necessary), if made on time, as a basis for
repurchase within thirty days from the time
action against the buyer to compel him to
final judgment was rendered in a civil action
resell. But that tender does not in itself
on the basis that the contract was a true
relieve the buyer from his obligation to pay
sale with right to repurchase
the price when redemption is allowed by the
court.
By whom exercised—
1. Vendor
Effect of redemption—
2. His heirs, assigns or agents
1. The seller shall receive the thing free from
3. Creditor, if he has exhausted the property of
all charges or mortgages constituted by the
the vendor
buyer BUT he shall respect leases executed
by the buyer in good faith and in accordance
with local custom.
2. If there are growing fruits at the time of sale
and at the time of redemption: no the realty taxes having been paid by them, the
reimbursement or prorating if the buyer did contracts which purported to be pacto de retro
not pay indemnity at the time of sale transactions are presumed to be equitable
3. If there were no growing fruits at the time of mortgages, whether registered or not, there
sale, but some exist at the time of being no third parties involved.
redemption: fruits prorated (buyer entitled to
part corresponding to time he possessed the Legaspi v. Spouses Ong, (2005): A pactum
land in the last year, counted from the commissorium is a stipulation enabling the
anniversary of the date of sale) mortgagee to acquire ownership of the
mortgaged properties without need of
Effect of non-redemption— foreclosure proceedings which is a nullity being
Ownership is consolidated in the buyer BUT contrary to the provisions of Article 2088 of the
the consolidation shall not be recorded in Civil Code. The inclusion of such stipulation in
the Registry of property w/o a judicial order, the deed shows the intention to mortgage rather
after the vendor has been duly heard. than to sell.
SALES
reserved at the time of
the perfection of the main Sale with right to Equitable mortgage
contract of sale repurchase
Does not need its Must have a Right to repurchase the When any of the
separate consideration to consideration separate thing sold granted to cases in Art. 1602
be valid and effective and distinct from the the vendor in a arise
purchase price to be valid separate instrument
and effective (Arts. 1324 from the deed of sale
and 1479)
The maximum period for The period of the option Presumption that a contract is an equitable
the exercise of the right contract may be beyond mortgage arises when (5P-R)—
to repurchase cannot the 10-year period
exceed 10 years 1. Price unusually inadequate;
Requires in addition a May be exercised by 2. Possession retained by the seller as lessee
tender of payment of the notice of its exercise to or otherwise;
amount required by law, the offeror 3. Period of redemption extended (or granted
including consignment anew) upon or after the expiration of the
thereof if tender of right to repurchase;
payment cannot be made 4. Part of the purchase price retained by the
effectively on the buyer seller;
5. Payment of taxes on the thing sold borne by
the seller;
III. Equitable Mortgage 6. Any other case where it may be fairly
(Asked in 79, 80, 82, 84, 86, 89, 91, 05) inferred that the Real intention of the parties
is for the transaction to secure a debt or
Definition— other obligation.
Molina v. CA, (2003): An equitable mortgage is
For the presumption of an equitable
defined as one which, although lacking in some
mortgage to arise under Art. 1602, 2
formality, or form or words, or other requisites
requisites must concur (Molina v. CA, 2003)
demanded by a statute, nevertheless reveals the
—
intention of the parties to charge real property
1. That the parties entered into a contract
as security for a debt, and contains nothing
denominated as a contract of sale, and
impossible or contrary to law.
2. That their intention was to secure an existing
debt by way of a mortgage.
Tan v. Valdehueza, (2003): The Valdehuezas
having remained in possession of the land and
In case of doubt, a contract purporting to be a Period to Redeem—
sale with right to repurchase shall be construed
as an equitable mortgage (Art. 1603) To whom granted Period
a. Co-owner (Art 1620) 30 days from notice
Rationale behind provision on equitable - In writing
mortgage— b. Adjoining owner of - By the seller
1. Circumvention of usury law Rural Land (Article - Of the actual execution
2. Circumvention of prohibition against pactum 1621) and delivery of the deed
commissorium – creditor cannot appropriate of sale
the things given by way of pledge or c. Adjoining owner of
urban land (Art. 1622) Doromal v. CA: Actual
mortgage since remedy here is foreclosure.
knowledge of the sale is
immaterial
Remedies of apparent vendor—
1. If the instrument does not reflect the true Conejero v. CA: the law
agreement, the remedy is reformation did not provide for a
2. If decreed to be an equitable mortgage, then particular mode of written
any money, fruits or other benefit to be notice, thus any
received by the buyer as rent or otherwise compliance with “written
considered as interest. notice” should suffice,
including the giving of a
3. If decreed as a true sale with right to
copy of the deed of sale
purchase- seller may redeem w/in 30 days Debtor in case a 30 days from the date the
from finality of judgment, even if the period credit or assignee demands 300
for redemption has expired. incorporeal right in payment from debtor
SALES
litigation is sold
(Art.1634)
IV. Legal Redemption Applicant or his widow 5 yrs. from date of
or legal heirs in case of conveyance
sale of homestead
Definition— (Sec.119, Public
Right to be subrogated: Land Act)
a. upon the same terms and conditions Taxpayer in case of tax 1 year from date of
stipulated in the contract, sale (Sec. 215, forfeiture
NIRC)
b. in the place of one who acquires a thing
Judgment debtor, 1 year from the date of
by purchase or dation in payment, or by
successor–in- interest, registration of the
any other transaction whereby or creditor with certificate of sale
ownership is transmitted by onerous title subsequent lien, in case
(Art 1619, CC) of execution sale
(Rule 39, Sec.27,
Applies to transfers of ownership by onerous ROC)
title where subrogation is possible. Hence, it Debtor-mortgagor, 1 year from the date of
cannot apply to barter or to transfer by successors-in- interest, the sale
judicial/judgment
gratuitous title or hereditary succession.
creditor, any person
Applies to sales with pacto de retro having a lien on the
(BAVIERA citing MANRESA) property, in case of
extrajudicial foreclosure
Manner— of mortgage (Act No.
1. a formal offer to redeem or 3135. Sec. 6. )
2. filing of an action in court together with the Debtor-mortgagor in 90 days from finality of
consignation of the redemption price within case of judicial judgment
the reglementary period foreclosure of real
estate mortgage IF the
mortgagee is a bank or
a banking institution.
(The
General Banking
Law of 2000)
Agricultural lessee w/o 2 years from the Order of preference if two or more wish to
knowledge of sale of registration of the sale exercise the right:
landholding a. Owner with smaller land area
(Agrarian Land b. If same land area, then the one who first
Reform Code,
requested the redemption
Sec.12)
Ortega v. Orcine, (1971): What constitutes
Instances of Legal Redemption—
“rural” or “urban” is to be determined from
1. Redemption by Co-owners (Art. 1621)
the character of the community or vicinity in
which it is found, and NOT from the nature
A co-owner of a thing may exercise the right
of the land itself nor the purpose to which it
of redemption in case the shares of all the
is devoted
co-owners or any of them are sold to a third
person
3. Redemption by adjoining land-owners of
a. Third person” refers to all persons who
urban land (applies only to small
are not heirs of the vendor, by will or
portions of urban land) (Art. 1621)
intestate succession
b. The right is available not only to original Right of Pre-emption Right of Redemption
co-owners, but to those who had later
Owner of any adjoining If the resale has been
acquired the share of the co-owner land has a right of pre- perfected, the owner of
c. But the right of redemption may be emption at a reasonable the adjoining land shall
exercised by a co-owner only when part price when: have a right of 301
of the community property is sold to a -Urban land is so small redemption, also at a
stranger. When the portion is sold to and so situated that a reasonable price
SALES
another co-owner, the right does not major portion of it cannot
arise because a new participant is not be used for any practical Priority if 2 or more
added to the co-ownership (Fernandez purpose w/in a adjoining owners want to
reasonable time; redeem: owner whose
v. Taun)
-Was bought merely for intended use of the land
speculation; appears to be best
If the price of the alienation is grossly -Was resold justified
excessive, the redemptioner shall pay only a
Arises before sale Arises after sale
reasonable one
No rescission because There can be rescission
no sale exists yet of the original sale
Should two or more co-owners desire to The action is directed Action is directed against
exercise the right, they may also do so in against prospective buyer
proportion to the share they may seller
respectively have in the thing owned in
common
4. Redemption of
Rationale: Public Policy, since co- Credit
ownership is a hindrance to the Available when it is sold while in litigation
development and administration of the (From the time the complaint is answered)
property (BAVIERA)
NOT available when the assignment in favor
2. Redemption by Adjoining Land-owners of:
of rural land (Art. 1621) a. Co-heir/co-owner of right assigned
b. Creditor in payment of his credit
The ff. Requisites must concur: c. Possessor of a tenement or piece of
a. A piece of rural land is alienated land which is subject to the right
b. Area does not exceed one hectare assigned
SALES
c. From whom: Subsequent purchasers sold to 3rd person without the knowledge
of the lessee, the latter shall have the
right to redeem the same at a
6. Redemption in Foreclosure and reasonable price and consideration
Execution Sales b. Period: within 180 days from notice in writing
Who may redeem In extra judicial
foreclosure
-Debtor
-Successor in interest
-Judicial or judgment
creditor of said debtor
-Junior encumbrancer
In execution sales
-Judgment debtor
-Successor in interest
-Creditor having a lien
on the property sold by
attachment, judgment or
mortgage on the
property subsequent to
the judgment
Period to redeem Extra judicial foreclosure
- within 1 year from the
date of the sale
Execution sale
- within 12 months after
the sale
If land is mortgaged in
favor of a bank
- within 1 year after the
sale (not available in
case of a corporate
mortgagor)
Amount of redemption -Amount of the purchase
-Interest at 1% per
month from the time of
CIVIL LAW REVIEWER Chapter VIII. PHILIPPINE BULK SALES
LAW
Chapter VIII. Philippine Bulk Sales Law III. Duty of Seller
(Act 3952)
1. Sworn statement of list of creditors
PURPOSE Contents:
COVERAGE o Names + addresses of all
DUTY OF SELLER creditors
EFFECT OF NON-COMPLIANCE o Amount of indebtedness due or
owing
I. Purpose When delivered: Before any part of
the purchase price is received, or
any promissory note or evidence of
Purpose (Villanueva)— indebtedness therefor
To compel the seller in bulk to execute Delivered to:
and deliver a verified list of his creditors o Buyer, mortgagee or agent
to his buyer, and notice of intended sale o If corporation: president, vice-
to be sent in advance to said creditors president, treasurer or secretary
and to use the proceeds to cover o If partnership firm: a member
payment of outstanding liabilities thereof
To protect creditor of merchant stores
2. Pro-rata application of the purchase or
The Law is constitutional as a valid exercise of mortgage money to the payment of
police power of the State. (Liwanag v. 303
listed creditors
Menghraj, (1941))
SALES
3. Inventory of the goods, wares,
merchandise, provisions or materials
II. Coverage When made: at least 10 days before
sale or mortgage
The Law covers all transactions, whether done Contents:
in good faith or not, that fall within the Quantity
description of what is “bulk sale” (Villanueva) Cost price of each article (as far as
possible)
Transactions Covered—
Applies to sales and transfers in bulk, 4. Notice to listed creditors
including any sale, transfer, mortgage or When made: at least 10 days before
assignment of: transfer of possession
1. A stock of goods, wares, merchandise, How: personally or by registered
provisions or materials NOT in the ordinary mail
course of trade and the regular prosecution Contents: Price, terms and
of the business of the seller, transferor, conditions of sale, transfer,
mortgagor, or assignor mortgage or assignment
2. All, or substantially all, of the business or
trade theretofore conducted by the seller, 5. Consideration for the sale, transfer,
transferor, mortgagor, or assignor mortgage or assignment
3. All, or substantially all, of the fixtures and Must not be nominal
equipment used in and about the business
of the seller, transferor, mortgagor, or
assignor
On Transaction Itself—
If the purchase or mortgage money is not
applied pro-rata to the bona fide claims of listed
creditors: Sale, transfer or mortgage shall be
FRAUDULENT and VOID.
Violation Sanction
Failure to comply with criminal liability
the obligation to
prepare and deliver the Section 7: Transfer by any
sworn statement listing person, firm or corporation
his creditors and the “as owner of any stock of
application pro-rata of goods, wares,
the proceeds to the merchandise, provisions
creditors. (Sec 4) or materials, in bulk” of
title to the same without
consideration or for a
nominal consideration
304
only, subjects him to
SALES
criminal liability
On Buyer, Mortgagee, Transferee or
Assignee—
The Law imposes no direct obligation, thus a
buyer in bulk sale cannot be deemed to be
subject to the criminal liability under the Law
- end of Sales -
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CIVIL LAW REVIEWER TABLE of CONTENTS
CREDIT TRANSACTIONS
Table of Contents
CREDIT TRANSACTIONS
III. Characteristics of Deposit.................314
IV. Deposit Distinguished From Mutuum
and Commodatum.....................................314
V. Obligations of the Depositary............314
VI. Obligations of the Depositor..............317
VII. Extinguishment of Deposit (Art. 1995)
317
VIII. Necessary Deposit.......................317
IX. Judicial Deposit.................................318
CREDIT TRANSACTIONS
Prof. Roberto N. Dio
Faculty Editor TYPES OF CREDIT TRANSACTIONS
Katrina Elena Guerrero SECURITY
Lead Writer BAILMENT
ana Gervacio Patricia Andrea Hernandez
Mark Luciano Ixara Maroto Writers CREDIT TRANSACTIONS - include all
CIVIL LAW transactions involving the purchase or loan of
Kristine Bongcaron Patricia Tobias Subject Editors goods, services or money in the present with a
ACADEMICS COMMITTEE promise to pay or deliver in the future (contract
Kristine Bongcaron Michelle Dy Patrich Leccio Editors-in-Chief of security)
PRINTING & DISTRIBUTION
Kae Guerrero
DESIGN & LAYOUT
I. Types of Credit Transactions
at Hernandez Viktor Fontanilla Rusell Aragones
Romualdo Menzon Jr. Secured transactions or contracts of real
Rania Joya security – Those supported by collateral or an
LECTURES COMMITTEE encumbrance of property
Michelle Arias Camille Maranan Angela Sandalo Heads
tz ManzanoMary Rose Beley Sam NuñezKrizel Malabanan Arianne CerezoMarcrese Banaag Unsecured transactions or contracts of
Volunteers personal security – Those the fulfillment of
which by the principal debtor is secured or
MOCK BAR COMMITTEE supported only by a promise to pay or the
Lilibeth Perez personal commitment of another such as a
BAR CANDIDATES WELFARE guarantor or surety
ahlia Salamat 307
LOGISTICS
CREDIT TRANSACTIONS
Charisse Mendoza
II. Security
SECRETARIAT COMMITTEE
Jill Hernandez
Head SECURITY - something given, deposited or
Loraine MendozaFaye Celso Mary MendozaJoie Bajo serving as a means to ensure the fulfillment or
Members enforcement of an obligation or of protecting
some interest in property.
2 TYPES OF SECURITY
1. Personal Security – as when an individual
becomes a surety or a guarantor
2. Real Security - as when a mortgage,
pledge, antichresis, charge or lien or other
device used to have property held, out of
which the person to be made secure can be
compensated for loss. Thus, a secured
creditor is one who holds a security from his
debtor for payment of the latter’s debts.
III. Bailment
PARTIES IN BAILMENT
1. Bailor – the giver, the party who delivers
possession/custody of the thing bailed
2. Bailee – the recipient, the party who
receives the possession/custody of the thing
delivered
CREDIT TRANSACTIONS
c. Hire for carriage of goods – for goods
delivered to be carried from place to
place by a common carrier (Art.1732) or
private person
d. Hire of custody – for storage of goods
delivered (Arts.1507-1520, Warehouse
Receipts Law)
CREDIT TRANSACTIONS
(Art 418)
What is the effect of an accepted promise to GENERAL RULE: Bailee is not liable for loss or
deliver by way of commodatum or mutuum? damage due to a fortuitous event (Art.1174),
It is binding upon the parties, but the since the bailor retains ownership of the thing
contract of loan shall not be perfected until
delivery of the contract. (Art.1934) EXCEPTION: Bailee is liable even for loss due
to a fortuitous event when: (Art 1942)
Who may be bailor in commodatum? 1. He devotes the thing to any purpose
1. Anyone. The bailor in commodatum need different from that for which it was loaned
not be the owner of the thing loaned. 2. He keeps it longer than the period
(Art.1938) stipulated, or after the accomplishment of
2. But the bailee himself may not lend nor the use for which the commodatum has
lease the thing loaned to him to a third been constituted
person (Art 1939(2)) 3. The thing loaned has been delivered with
appraisal of its value, unless there is
stipulation exempting the bailee from
GENERAL RULE: Commodatum is purely
responsibility in case of a fortuitous event
personal in character (Art.1939) such that:
4. He lends or leases the thing to a third
1. Death of either party extinguishes the
person who is a not a member of his
contract
household
2. Bailee can neither lend nor lease the thing
lent to him to a third person
5. Being able to save either the thing borrowed 310
or his own thing, he chose to save the latter.
CREDIT TRANSACTIONS
EXCEPTION: Members of the bailee’s
household may make use of the thing loaned GENERAL RULE: Bailee is liable for
deterioration of thing loaned.
EXCEPTION TO EXCEPTION: Bailee’s EXCEPTION: The deterioration of the thing is
household may NOT use it when: due only to the use thereof and without his fault
1. There is stipulation to the contrary, or (Art.1943)
2. The nature of the thing forbids such use
CREDIT TRANSACTIONS
turpitude, even though he should (non-consumable) things.
prove it, unless the crime or the act 2. In commodatum, the bailee is bound to
has been committed against the return the identical thing borrowed when the
bailee himself, his wife, or children time has expired or the purpose has been
under his authority served. In barter, the equivalent thing is
Undue refusal to give the bailor given in return for what has been received.
support when the bailee is legally or 3. Mutuum may be gratuitous and
morally bound to commodatum is always gratuitous. Barter
on the other hand is an onerous contract. It
[NOTE: Article 765 is applicable, because is really a mutual sale.
like donation, commodatum is essentially
gratuitous. (Art.1933, par.2)] [NOTE: BARTER – contract where by one of the
parties binds himself to give one thing in
2. To refund extraordinary expenses for the consideration of the other’s promise to give
preservation of the thing loaned provided another thing. (Art.1968)]
bailor is notified before the expenses were
incurred. (Art.1949) CONSUMABLE AND FUNGIBLE
EXCEPTION: Urgent need hence no DISTINGUISHED
notice is necessary. Whether a thing is consumable or not
depends on its nature and whether it is
3. To refund 50% of the extraordinary fungible or not depends on the intention of
expenses arising from actual use of bailee of the parties.
the thing loaned (Art.1949) Example: Wine is consumable by nature, but
EXCEPTION: Contrary stipulation it may be non-fungible if the intention is
merely for display or exhibition.
4. To pay damages to bailee for known hidden
flaws in the thing loaned. [NOTE: Fixed, savings, and current deposits of
money in banks and similar institutions shall be
[NOTE: Bailor has no right of abandonment; governed by the provisions concerning simple
he cannot exempt himself from payment of loan. (Art.1980)]
expenses to bailee by abandoning the thing to
the latter. (art. 1952)]
VIII. Interests from the time it is judicially demanded. In
the absence of stipulation, the rate of
INTEREST – is the compensation allowed by interest shall be 12% per annum to be
law or fixed by the parties for the loan or computed from default, i.e., from judicial or
forbearance of money, goods or credits extrajudicial demand under and subject to
the provisions of Art.1169.
KINDS OF INTEREST
1. Simple interest – Paid for the principal at a 2. When an obligation, not constituting a
certain rate fixed or stipulated by the parties. loan or forbearance of money, is
2. Compound Interest – that which is breached, an interest on the amount of
imposed upon interest due and unpaid. damages awarded may be imposed at the
3. Legal Interest – that which the law directs discretion of the court at the rate of 6% per
to be charged in the absence of any annum. No interest, however, shall be
agreement as to the rate between the adjudged on unliquidated claims or
parties. damages except when or until the demand
4. Lawful Interest – that which the laws allow can be established with reasonable
or do not prohibit certainty. Accordingly, where the demand is
5. Unlawful or Usurious Interest – paid or established with reasonable certainty, the
stipulated to be paid beyond the maximum interest shall begin to run from the time the
fixed by law. However, by virtue of CB claim is made judicially or extrajudicially (Art.
Circular 905, usury has become “legally 1169) but when such certainty cannot be so
inexistent.” reasonably established at the time the
demand is made, the interest shall begin to
When is compound interest allowed? run only from the date the judgment of the
1. When there is an express written stipulation court is made (at which time the 312
to that effect (Art.1959) quantification of damages may be deemed
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2. Upon judicial demand. HOWEVER, debtor to have been reasonably ascertained). The
is not liable to pay compound interest even actual base for the computation of legal
after judicial demand when there is no interest shall, in any case, be on the amount
stipulation for payment of interest. (Art.2212) finally adjudged.
CREDIT TRANSACTIONS
assets.”
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subject matter
Judicial – takes place when an attachment or Depositor can demand Lender must wait until
seizure of property in litigation is ordered return of subject matter expiration of the period
(Arts.2005-2008) at will granted to the debtor
Both movable and Only money or any
Extrajudicial (Art. 1967) immovable may be the other fungible thing
1. Voluntary- delivery is made by the will of object may be the object
the depositor or by two or more persons
each of whom believes himself entitled to DEPOSIT AND COMMODATUM
the thing deposited; DISTINGUISHED
2. Necessary- made in compliance with a legal
obligation, or on the occasion of any DEPOSIT COMMODATUM
calamity, or by travelers in hotels and inns Principal purpose is Principal purpose is
safekeeping transfer of use
(Arts.1996-2004) or by travelers with
May be gratuitous Always and essentially
common carriers (Arts.1734-1735)
gratuitous
In extrajudicial deposit, Both movable and
III. Characteristics of Deposit only movable immovable may be the
(corporeal) things may object.
Characteristics— be the object. But for
judicial deposits, object
1. Real Contract because it is perfected by the
may be movable or
delivery of the subject matter. immovable.
2. Principal purpose of the contract of deposit
is the safekeeping of the thing delivered.
3. If gratuitous, it is unilateral because only the V. Obligations of the Depositary
depository has an obligation. If onerous, it is
bilateral. OBLIGATIONS
1. Depositary is obliged to keep the thing
The principal purpose is safekeeping of the safely and to return it when required, even
thing delivered, so that if it is only an accessory though a specified term may have been
or secondary obligation, deposit is not stipulated in the contract. (Art.1972)
constituted but some other contract.
2. Depositary is liable if the loss occurs
through his fault or negligence. (Art.1972
in rel. to Art.1163) Loss of thing while in the EFFECT OF COMMINGLING:
depositary’s possession raises a a. The various depositors of the mingled
presumption of fault. (Art.1265) Required goods shall own the entire mass in
degree of care is greater if the deposit is for common
compensation than when it is gratuitous. b. Each depositor shall be entitled to such
portion of the entire as the amount
3. Depositary is not allowed to deposit the deposited by him bears the whole.
thing with a third person. (Art.1973)
7. Depositary is under obligation not to
EXCEPTION: There is a contrary stipulation make use of the thing deposited;
otherwise he shall be liable for damages.
NOTE: Depositary is liable for the loss of the (Art.1977)
thing deposited if:
a. He transfers the deposit with a third EXCEPTIONS:
person without authority although there a. Express permission of the depositor
is no negligence on his part and the third b. Preservation of the thing deposited
person; required its use
b. He deposits the thing with a third person
who is manifestly careless or unfit 8. Depositary is liable for loss of the thing
although authorized, even in the through a fortuitous event:
absence of negligence; or a. If it is so stipulated;
c. The thing is lost through the negligence b. If he uses the thing without the
of his employees whether the latter are depositor’s permission;
manifestly careless or not. c. If he delays its return;
EXEMPTION FROM LIABILITY: Depositary
d. If he allows others to use it, even though 315
he himself may have been authorized to
is not responsible for loss of thing without
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use the same (Art.1979)
negligence of the third person with whom he
was allowed to deposit the thing if such third 9. Where thing deposited is delivered
person is not “manifestly careless or unfit.” closed and sealed, depositary has
obligation to:
4. Depositary is obliged not to change way a. Return the thing deposited when
of deposit. He may change the way or delivered closed and sealed
manner of deposit only if there are b. Pay for damages should seal or lock be
circumstances indicating that the depositor broken through his fault, which is
would consent to the change and notice is presumed unless proven otherwise
given to depositor. HOWEVER, notice is not c. Keep secret of the deposit when the
required if delay will cause danger. seal or lock is broken, with or without his
(Art.1974) fault (Art.1982)
5. If thing deposited should earn interest, the 10. Depositary is obliged to return the
depositary is under obligation (1) to collect products, accessories and accessions of
the interest as it becomes due and (2) to the thing deposited. (Art.1983)
take such steps as may be necessary to
preserve its value and the rights 11. Depositary is obliged to pay interest on
corresponding to it. The depositary is bound sums converted to personal use.
to collect not only the interest but also the (Art.1983)
capital itself when due. (Art.1975)
12. Depositary who receives the thing in
6. Depositary has the obligation not to deposit cannot require that the depositor
commingle things deposited if so prove his ownership over the thing (Art.
stipulated, even if they are of the same kind 1984)
and quality. (Article 1976)
13. Where the thing appears to be stolen and
GENERAL RULE: The depositary is the depositary knows the true owner, he
permitted to commingle grain or other must advise the true owner about the
articles of the same kind and quality. deposit. If the owner, in spite of such
EXCEPTION: When there is a stipulation to information, does not claim it within the
the contrary period of one month, the depositary is
relieved from liability. (Art.1984, pars.2 and there was no malice on the part of the
3) If the depositary has reasonable grounds depositary
to believe that the thing has not been
lawfully acquired by the depositor, he may
TIME OF RETURN (Art.1988)
return the same. (Art.1984, par.4)
1. GENERAL RULE: The thing deposited must
be returned to the depositor upon demand,
RIGHT OF TWO OR MORE DEPOSITORS
even though a specified period or time for
(Art.1985)
such return may have been fixed.
1. Where the thing is divisible and depositors 2. EXCEPTIONS:
not solidary – each one of the depositors a. When the thing is judicially attached
can demand only his share proportionate while in the depositary’s possession
thereto. b. When notified of the opposition of a third
2. Where the thing is not divisible or the person to the return or the removal of
obligation is solidary – rules on active the thing deposited
solidarity must apply
a. Each one of the depositors may do RIGHT OF THE DEPOSITARY TO RETURN
whatever may be useful to the others THE THING (Art.1989)
but not anything which may be 1. GENERAL RULE: The depositary may
prejudicial to the latter. (Art.1212) return the thing deposited notwithstanding
b. The depositary may return the thing to that a period has been fixed for the deposit
any one of the solidary depositors if:
UNLESS a demand for its return has a. The deposit is gratuitous;
been made by one of them in which b. The reason is justifiable.
case delivery should be made to him.
(Art. 1214) [NOTE: If the depositor refuses to receive
3. Where there is a stipulation of return to one 316
the thing, the depositary may deposit the
of the depositors, the depositary is bound to
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thing at the disposal of the judicial authority.]
return it only to the person designated
although he has not made any demand for 2. EXCEPTION: When the deposit is for a
its return. valuable consideration, the depositary has
no right to return the thing before the
PERSONS TO WHOM RETURN MUST BE expiration of the time designated even if he
MADE should suffer inconvenience as a
1. The depositary is obliged to return the thing consequence.
deposited, when required, to:
a. The depositor; Is the depositary liable for loss by force
b. To his heirs or successors; or majeure or government order?
c. To the person who may have been The depositary is not liable in cases of loss
designated in the contract. (Art.1972) by force majeure or by government order.
2. If the depositor was incapacitated at the time HOWEVER, he has the duty to deliver to the
of making the deposit, the property must be depositor money or another thing he
returned to: receives in place of the thing. (Art.1990)
a. His guardian or administrator;
b. To the person who made the deposit; ALIENATION IN GOOD FAITH BY
c. To the depositor himself should he DEPOSITARY’S HEIR
acquire capacity. (Art.1970) When alienation is done in GOOD FAITH, the
3. Even if the depositor had capacity at the heir is obliged to:
time of making the deposit but he 1. Return the value of the thing deposited
subsequently loses his capacity during the 2. Assign the right to collect from the buyer.
deposit, the thing must be returned to his
legal representative. (Art.1986) NOTE: The heir does not need to pay the
actual price of the thing deposited.
PLACE OF RETURN (Art.1987)
1. At the place agreed upon by the parties When alienation is done in BAD FAITH, the heir
2. In the absence of stipulation, at the place must:
where the thing deposited might be even if it 1. Be liable for damages;
should not be the same place where the 2. Pay the actual price of the thing deposited.
original deposit was made, provided that
DEPOSITARY’S RIGHT OF RETENTION deficiency, the rules on voluntary deposit
The depositary may retain the thing in e.g. Arts. 538, 586 and 2104
pledge until the full payment of what may be 2. It takes place on the occasion of any
due him by reason of the deposit. (Art.1994) calamity, such as fire, storm, flood, pillage,
NOTE: This is an example of a pledge shipwreck, or other similar events. There
created by operation of law. (Art.2121) must be a causal relation between the
calamity and the constitution of the deposit.
VI. Obligations of the Depositor In this case the deposit is governed by the
rules on voluntary deposit and Art. 2168
1. Depositor is obliged to reimburse the 3. Made by passengers with common carriers.
depositary for expenses incurred for (Art.1754)
preservation – if deposit is gratuitous. 4. Made by travelers in hotels or inns. (Art.
(Art.1992) 1998)
2. Depositor is obliged to pay losses
incurred due to character of thing DEPOSITS BY TRAVELLERS IN HOTELS
deposited. (Art. 1993) AND INNS
Before keepers of hotels or inns may be held
GENERAL RULE: The depositary must be responsible as depositaries with regard to the
reimbursed for loss suffered by him because of effects of their guests, the following must concur:
the character of the thing deposited. 1. They have been previously informed about
the effects brought by the guests; and
EXCEPTIONS: 2. The latter have taken the precautions
1. Depositor was not aware of the danger; prescribed regarding their safekeeping.
2. Depositor was not expected to know the
dangerous character of the thing; EXTENT OF LIABILITY UNDER ART.1998 317
3. Depositor notified the depositary of such 1. Liability in hotel rooms which come under
CREDIT TRANSACTIONS
dangerous character; the term “baggage” or articles such as
4. Depositary was aware of the danger without clothing as are ordinarily used by travelers
advice from the depositor. 2. Include those lost or damages in hotel
annexes such as vehicles in the hotel’s
VII. Extinguishment of Deposit (Art. 1995) garage.
2. In the following cases, the hotel- keeper is
liable
A deposit is extinguished:
1. Upon the loss or deterioration of the thing WHEN HOTEL-KEEPER LIABLE
deposited; Regardless of the amount of care exercised -
2. Upon the death of the depositary, ONLY in 1. The loss or injury to personal property is
gratuitous deposits; caused by his servants or employees as well
3. By other modes provided in the Civil Code, as by strangers (Art. 2000).
e.g. novation, merger, etc. (See Art.1231) 2. The loss is caused by the act of a thief or
robber done without the use of arms and
EFFECT OF DEATH OF DEPOSITOR OR irresistible force. (Art. 2001)
DEPOSITARY (Art. 1995)
1. Where deposit gratuitous – death of either of WHEN HOTEL-KEEPER NOT LIABLE
the depositor or depositary extinguishes the 1. The loss or injury is cause by force majeure,
deposit (personal in nature). By the word like flood, fire, (Art.2000) theft or robbery by
“extinguished,” the law really means that the a stranger - not the hotel-keeper’s servant or
depositary is not obliged to continue with the employee with the use of firearms or
contract of deposit. irresistible force (Art.2001)
2. (2) Where deposit for compensation – not
extinguished by the death of either party. EXCEPTION: Hotel- keeper is guilty of fault
or negligence in failing to provide against the
VIII. Necessary Deposit loss or injury from his cause. (Arts.1170 and
1174)
KINDS OF NECESSARY DEPOSITS
1. It is made in compliance with a legal 2. The loss is due to the acts of the guests, his
obligation, in which case it is governed by family, servants, visitors (Art.2002)
the law establishing it, and in case of 3. The loss arises from the character of the
things brought into the hotel (Ibid.)
[NOTE: The hotel-keeper cannot free himself DEPOSITARY OF SEQUESTERED
from responsibility by posting notices to the PROPERTY
effect that he is not liable for the articles brought A person appointed by the court (Art. 2007) with
by the guest. Such kind of stipulation shall be the obligations:
VOID. (Art. 2003)] 1. To take care of the property with the
diligence of a good father of the family. (Art.
TRIPLE-V FOOD SERVICES v. FILIPINO 2008)
MERCHANTS INSURANCE COMPANY: 2. To continue in his responsibility until the
Regarding the legal deposit of a vehicle that litigation is ended or the court so orders.
was stolen while parked with Saisaki (Art. 2007)
restaurant, “the depositary may not exempt
itself from responsibility or loss or damage of APPLICABLE LAW
the thing deposited with it, by exclusionary The law on judicial deposit is remedial or
stipulation. Such stipulations are void for procedural in nature. Hence, the
being contrary to law.” Rules of Court are applicable. (Art. 2009)
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IX. Judicial Deposit
EXTRAJUDICIAL JUDICIAL
(Voluntary) deposit made Constituted by virtue of a
by free will of the court order
depositor.
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upon the principal obligation guaranteed by
it; IV. Rules Governing Guaranty
2. Subsidiary and conditional – takes effect
only when the principal debtor fails in his 1. A guaranty is generally gratuitous (2048)
obligation a. General Rule: Guaranty is gratuitous
3. Unilateral – b. Exception: When there is a stipulation to
a. It gives rise only to a duty on the part of the contrary
the guarantor in relation to the creditor 2. On the cause of a guaranty contract
and not vice versa
b. It may be entered into even without the
SEVERINO v SEVERINO: “A guarantor or
intervention of the principal debtor.
surety is bound by the same consideration that
4. Guarantor must be a person distinct from
makes the contract effective between the
the debtor – a person cannot be the
principal parties thereto.”
personal guarantor of himself
a. Presence of cause which supports
III. Classification principal obligation: Cause of the
contract is the same cause which
CLASSIFICATION OF GUARANTY supports the obligation as to the
1. Guaranty in the broad sense: principal debtor. The consideration
a. Personal – guaranty is the credit given which supports the obligation as to the
by the person who guarantees the principal debtor is a sufficient
fulfillment of the principal obligation; or consideration to support the obligation of
b. Real – guaranty is property, movable, or a guarantor or surety.
immovable b. Absence of direct consideration or
Real mortgage (2124) or antichresis benefit to guarantor: Guaranty or surety
(2132) – guaranty is immovable agreement is regarded valid despite the
Chattel mortgage (2140) or pledge absence of any direct consideration
(2093) – guaranty is movable received by the guarantor or surety,
2. As to its origin: such consideration need not pass
a. Conventional – constituted by directly to the guarantor or surety; a
agreement of the parties (2051[1]) consideration moving to the principal will
b. Legal – imposed by virtue of a provision suffice.a
proceed against the guarantor although
3. A married woman who is a guarantor he has no right of action against the
binds only her separate property, principal debtor for the reason that the
generally (2049) latter’s obligation is not civilly
enforceable. When the debtor himself
Exceptions: offers a guaranty for his natural
a. With her husband’s consent, bind the obligation, he impliedly recognizes his
community or conjugal partnership liability, thereby transforming the
property obligation from a natural into a civil one.
b. Without husband’s consent, in cases
provided by law, such as when the 7. A guaranty may secure a future debt
guaranty has redounded to the benefit of (2053)
the family.
Continuing Guaranty or Suretyship:
4. A guaranty need not be undertaken with
the knowledge of the debtor (2050) DIÑO v. CA: “Under the Civil Code, a guaranty
a. Guaranty is unilateral – exists for the may be given to secure even future debts, the
benefit of the creditor and not for the amount of which may not known at the time the
benefit of the principal debtor guaranty is executed. This is the basis for
b. Creditor has every right to take all contracts denominated as continuing guaranty
possible measures to secure payment of or suretyship.”
his credit – guaranty can be constituted
even against the will of the principal
Future debts, even if the amount is not yet
debtor
known, may be guaranteed but there can be
no claim against the guarantor until the 320
However, as regards payment made by a
amount of the debt is ascertained or fixed
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third person:
and demandable
a. Payment without the knowledge or
against the will of the debtor:
Rationale: A contract of guaranty is
Guarantor can recover only insofar
subsidiary.
as the payment has been beneficial
to the debtor
a. To secure the payment of a loan at
Guarantor cannot compel the
maturity – surety binds himself to
creditor to subrogate him in his
guarantee the punctual payment of a
rights
loan at maturity and all other obligations
b. Payment with knowledge or consent of
of indebtedness which may become due
the debtor: Subrogated to all the rights
or owing to the principal by the
which the creditor had against the
borrower.
debtor
b. To secure payment of any debt to be
subsequently incurred – a guaranty shall
5. The guaranty must be founded on a valid
be construed as continuing when by the
principal obligation (2052[1])
terms thereof it is evident that the object
Guaranty is an accessory contract: It is
is to give a standing credit to the
an indispensable condition for its
principal debtor to be used from time to
existence that there must be a principal
time either indefinitely or until a certain
obligation. Hence, if the principal
period, especially if the right to recall the
obligation is void, it is also void.
guaranty is expressly reserved.
c. To secure existing unliquidated debts –
6. A guaranty may secure the performance
refers to debts existing at the time of the
of a voidable, unenforceable, and natural
constitution of the guaranty but the
obligation (2052[2])
amount thereof is unknown and not to
A guaranty may secure the performance of
debts not yet incurred and existing at
a:
that time.
a. Voidable contract – such contract is
d. The surety agreement itself is valid and
binding, unless it is annulled by a proper
binding even before the principal
court action
obligation intended to be secured
b. Unenforceable contract – because such
thereby is born, any more than there
contract is not void
would be in saying that obligations
c. Natural obligation – the creditor may
which are subject to a condition
precedent are valid and binding before more than the total amount stipulated in
the occurrence of the condition the bond.
precedent.
Interest runs from:
A continuing guaranty is one which is not limited to a Filing of the complaint (upon judicial
single transaction, but which contemplates a future demand); or
course of dealing, covering a series of transactions, The time demand was made upon
generally for an indefinite time or until revoked. It is the surety until the principal
prospective in its operation and is generally intended obligation is fully paid (upon extra-
to provide security with respect to future transactions
judicial demand)
within certain limits, and contemplates a succession
of liabilities, for which, as they accrue, the guarantor
becomes liable. Rationale: Surety is made to pay, not by
reason of the contract, but by reason of
A continuing guaranty is one which covers all his failure to pay when demanded and for
transactions, including those arising in the future, having compelled the creditor to resort to
which are within the description or contemplation of the courts to obtain payment.
the contract, of guaranty, until the expiration or
termination thereof. A guaranty shall be construed as b. Penalty may be provided – a surety may
continuing when by the terms thereof it is evident that
be held liable for the penalty provided
the object is to give a standing credit to the principal
debtor to be used from time to time either indefinitely for in a bond for violation of the condition
or until a certain period, especially if the right to recall therein.
the guaranty is expressly reserved.
Principal’s liability may exceed
Where the contract of guaranty states that the same guarantor’s obligations
is to secure advances to be made "from time to time" 321
the guaranty will be construed to be a continuing The amount specified in a surety bond
one.”
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as the surety’s obligation does not limit
8. A guaranty may secure the performance
the extent of the damages that may be
of a conditional obligation (2053)
recovered from the principal, the latter’s
a. Principal obligation subject to a
liability being governed by theobligations
suspensive condition – the guarantor is
he assumed under his contract
liable only after the fulfillment of the
condition.
10. The existence of a guaranty is not
b. Principal obligation subject to a
presumed (2055)
resolutory condition – the happening of
the condition extinguishes both the
Guaranty requires the expression of consent
principal obligation and the guaranty
on the part of the guarantor to be bound. It
cannot be presumed because of the
9. A guarantor’s liability cannot exceed the
existence of a contract or principal
principal obligation (2054)
obligation.
General Rule: Guaranty is a subsidiary and
Rationale:
accessory contract – guarantor cannot bind
a. There be assurance that the guarantor
himself for more than the principal debtor
had the true intention to bind himself;
and even if he does, his liability shall be
b. To make certain that on making it, the
reduced to the limits of that of the debtor.
guarantor proceeded with
But the guarantor may bind himself for less
consciousness of what he was doing.
than that of the principal.
11. Contract of guaranty is covered by the
Exceptions:
Statute of Frauds (See Art. 1403(2(a))
a. Interest, judicial costs, and attorney’s
Guaranty must not only be expressed
fees as part of damages may be
but must so be reduced into writing.
recovered – creditors suing on a
Hence, it shall be unenforceable by
suretyship bond may recover from the
action, unless the same or some note or
surety as part of their damages, interest
memorandum thereof be in writing, and
at the legal rate, judicial costs, and
subscribed by the party charged, or by
attorney’s fees when appropriate, even
his agent; evidence, therefore, of the
without stipulation and even if the surety
agreement cannot be received without
would thereby become liable to pay
the writing, or a secondary evidence of
its contents. However, It need not The subsequent loss of integrity or property or
appear in a public document supervening incapacity of the guarantor would
not operate to exonerate the guarantor of the
V. Guaranty Distinguished from Others eventual liability he has contracted, and the
contract of guaranty continues. The creditor can
GUARANTY DISTINGUISHED FROM merely demand another guarantor with the
WARRANTY proper qualifications except that the creditor may
waive such remedy if he chooses and hold the
Guaranty Warranty guarantor to his bargain.
Guaranty is a contract Warranty is an
by which a person is undertaking that the title, Selection of Guarantor:
bound to another for the quality, or quantity of the 1. Specified person stipulated as guarantor:
fulfillment of a promise subject matter of a Substitution of guarantor may not be
or engagement of a third contract is what is has demanded
party been represented to be,
and relates to some
Reason: The selection of the guarantor is:
agreement made
ordinarily by the party a. Term of the agreement;
who makes the warranty b. As a party, the creditor is, therefore,
bound thereby.
GUARANTY DISTINGUISHED FROM SURETYSHIP
2. Guarantor selected by the principal debtor:
Debtor answers for the integrity, capacity,
Guaranty Suretyship and solvency of the guarantor.
Guarantor’s liability Surety assumes liability
depends upon an as a regular party to the 3. Guarantor personally designated by the 322
independent agreement undertaking creditor: Responsibility of the selection
CREDIT TRANSACTIONS
to pay the obligation should fall upon the creditor because he
Guarantor’s engagement Surety is an original considered the guarantor to have the
is a collateral promissor qualifications for the purpose.
undertaking
Guarantor is subsidiarily Surety is primarily liable
liable i.e. only obliged to i.e. bound to pay if the
pay if the principal principal does not pay VII. Effects of Guaranty
cannot pay
Guarantor not bound to Surety ordinarily held to EFFECTS OF GUARANTY BETWEEN THE
take notice of default of know every default of his GUARANTOR AND THE CREDITOR
his principal principal 1. The guarantor has the right to benefit
Guarantor often Surety not discharged from excussion/ exhaustion (2058)
discharged by the mere either by the mere
indulgence of the indulgence of the
Exceptions to the benefit of excussion
creditor and is usually creditor or by want of
not liable unless notified notice of default of the (2059)
of the principal’s default principal a. As provided in Art. 2059:
If the guarantor has expressly
renounced it; waiver is valid but it
VI. The Guarantor (Arts. 2056-2057) must be made in express terms.
If he has bound himself solidarily
Qualifications: with the debtor, the liability assumed
1. He possesses integrity; is that of a surety. The guarantor
2. He has capacity to bind himself; becomes primarily liable as a
3. He has sufficient property to answer for the solidary co- debtor. In effect, he
obligation which he guarantees. renounces in the contract itself the
benefit of exhaustion.
Exception: The creditor waives the In case of insolvency of the debtor –
requirements guarantor guarantees the solvency
of the debtor. If the debtor becomes
The qualifications above need only be present at insolvent, the liability of the
the time of the perfection of the contract. guarantor as the debtor cannot fulfill
his obligation
When he (debtor) has absconded,
or cannot be sued within the the debt
Philippines – the creditor is not c. If he is a judicial bondsman and sub-
required to go after a debtor who is surety (2084)
hiding or cannot be sued in our d. Where a pledge or mortgage has been
courts, and to incur the delays and given by him as a special security
expenses incident thereto. The e. If he fails to interpose it as a defense
exception is when the debtor has before judgment is rendered against
left a manager or representative; him.
If it may be presumed that an
execution on the property of the 2. The creditor has the right to secure a
principal debtor would not result in judgment against the guarantor prior to
the satisfaction of the obligation – if the excussion
such judicial action including
execution b would not satisfy the General rule: An ordinary personal
obligation, the guarantor can no guarantor (NOT a pledgor or mortgagor),
longer require the creditor to resort may demand exhaustion of all the property
to all such remedies against the of the debtor before he can be compelled to
debtor as the same would be but a pay.
useless formality. It is not necessary
that the debtor be judicially declared Exception: The creditor may, prior thereto,
insolvent. secure a judgment against the guarantor,
who shall be entitled, however, to a
SOUTHERN MOTORS, INC. v BARBOSA: “The deferment of the execution of said judgment
right of guarantors…to demand exhaustion of against him, until after the properties of the
the property of the principal debtor, exists only principal debtor shall have been exhausted, 323
when a pledge or a mortgage has not been to satisfy the latter’s obligation.
CREDIT TRANSACTIONS
given as special security for the payment of the
principal obligation.” 3. The creditor has the duty to make prior
demand for payment from the guarantor
LUZON STEEL CORP. v SIA: “The surety in the (2060)
present case bound itself "jointly and severally" a. The demand is to be made only after
(in solidum) with the defendant; and excussion judgment on the debt
(previous exhaustion of the property of the b. Joining the guarantor in the suit against
debtor) shall not take place "if he (the guarantor) the principal debtor is not the demand
has bound himself solidarily with the debtor".” intended by law. Actual demand has to
be made.
b. If he does not comply with Art. 2060: In
4. The guarantor has the duty to set up the
order that the guarantor may make use
benefit of excussion (2060)
of the benefit of excussion, he must:
As soon as he is required to pay,
Set it up against the creditor upon
guarantor must also point out to the
the latter’s demand for payment
creditor available property (not in
from him;
litigation or encumbered) of the debtor
Point out to the creditor:
within the Philippines.
o Available property of the debtor
– the guarantor should facilitate
5. The creditor has the duty to resort to all
the realization of the excussion
legal remedies (2061)
since he is the most interested
a. After the guarantor has fulfilled the
in its benefit.
conditions required for making use of
o Within the Philippine territory –
the benefit of exhaustion, it becomes the
excussion of property located
duty of the creditor to:
abroad would be a lengthy and
b. Exhaust all the property of the debtor
extremely difficult proceeding
pointed out by the guarantor;
and would not conform with the
c. If he fails to do so, he shall suffer the
purpose of the guaranty to
loss but only to the extent of the value of
provide the creditor with the
means of obtaining the the said property, for the insolvency of
fulfillment of the obligation. the debtor
o Sufficient to cover the amount of
6. The creditor has the duty to notify the the subrogation clause of Article 2067. The
guarantor in the action against the debtor assumption, however, is that the guarantor
(2062) who is subrogated to the rights of the
creditor, has the right to be reimbursed for
Under this article, notice to the guarantor is his answering for the obligation of the
mandatory in the action against the principal debtor. Absent this right of reimbursement,
debtor. The guarantor, however, is not duty subrogation will not be proper.
bound to appear in the case, and his non-
appearance shall not constitute default, w/ 2. The guarantor has the duty to notify the
its consequential effect. debtor before paying the creditor (2068).
CREDIT TRANSACTIONS
for its maturity, unless it be of such released (2078).
nature that it cannot be extinguished 4. A guarantor is also released if the creditor,
except within a period longer than 10 without the guarantor’s consent, extends the
years; time within which the debtor may perform his
f. If there are reasonable grounds to fear obligation (2079). This is to protect the
that the principal debtor intends to interest of the guarantor should the debtor
abscond; be insolvent during the period of extension
g. If the principal debtor is in imminent and deprive the guarantor of his right to
danger of becoming insolvent. reimbursement.
5. If through the fault of the creditor the
Rationale: To enable the guarantor to take guarantors are precluded from being
measures for the protection of his interest in subrogated to the former’s rights, the latter
view of the probability that he would be are released from the obligation. (2080)
called upon to pay the debt. As such, he
may, in the alternative, obtain release from
the guaranty; or demand security that shall
protect him from any proceedings by the
creditor; and against the insolvency of the
debtor.
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b. By judicial demand
3. The paying guarantor seeks to be
indemnified only to the extent of his
proportionate share in the total obligation.
For purposes of proportionate
reimbursement, the other guarantors may
interpose such defenses against the paying
guarantor as are available to the debtor
against the creditor, except those that are
personal to the debtor.
CREDIT TRANSACTIONS
EXCUSSION (2084)
SURETYSHIP is a relation which exists where 5. Prior demand by the creditor upon
one person (principal) has undertaken an principal not required. Surety is not
obligation and another person (surety) is also exonerated by neglect of creditor to sue
under a direct and primary obligation or other principal.
duty to the obligee, who is entitled to but one
performance, and as between the two who are STRICTISSIMI JURIS RULE APPLICABLE
bound, the second, rather than the first should ONLY TO ACCOMMODATION SURETY
perform.
Reason: An accommodation surety acts
If a person binds himself solidarily with the without motive of pecuniary gain and hence,
principal debtor, the contract is called suretyship should be protected against unjust
and the guarantor is called a surety. pecuniary impoverishment by imposing on
the principal, duties akin to those of a
fiduciary. This rule will apply only after it has
NATURE OF SURETY’S UNDERTAKING been definitely ascertained that the contract
1. Liability is contractual and accessory but is one of suretyship or guaranty.
direct
2. Liability is limited by terms of contract
3. Liability arises only if principal debtor is STRICTISSIMI JURIS RULE NOT
held liable APPLICABLE TO COMPENSATED SURETIES
a. In the absence of collusion, the surety is Reasons:
bound by a judgment against the 1. Compensated corporate sureties are 327
principal event though he was not a business association organized for the
CREDIT TRANSACTIONS
party to the proceedings; purpose of assuming classified risks in large
b. The creditor may sue, separately or numbers, for profit and on an impersonal
together, the principal debtor and the basis.
surety; 2. They are secured from all possible loss by
c. A demand or notice of default is not adequate counter-bonds or indemnity
required to fix the surety’s liability agreements.
d. Exception: Where required by the 3. Such corporations are in fact insurers and in
provisions of the contract of suretyship determining their rights and liabilities, the
e. A surety bond is void where there is not rules peculiar to suretyship do not apply.
principal debtor because such an
undertaking presupposes that the
obligation is to be enforceable against
someone else besides the surety, and
the latter can always claim that it was
never his intention to be the sole person
obligated thereby.
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5. Debtor retains the ownership of the thing
stipulation does not affect validity and
given as a security.
efficacy of the principal contract.
6. When the principal obligation becomes due,
the thing pledged or mortgaged may be
IMPORTANT POINTS
alienated for the payment to the creditor.
1. Debtor-owner bears the risk of loss of the
property.
IMPORTANT POINTS
2. Pledge or mortgage is indivisible (2089,
1. Future property cannot be pledged or
2090).
mortgaged.
Exceptions:
2. Pledge or mortgage executed by one who is
a. Where each of several things
not the owner of the property pledged or
guarantees a determinate portion of the
mortgaged is without legal existence and
credit.
registration cannot validate it.
b. Where only a portion of loan was
3. Mortgage of a conjugal property by one of
released.
the spouses is valid only as to ½ of the
c. Where there was failure of
entire property.
consideration.
4. In case of property covered by Torrens title,
a mortgagee has the right to rely upon what
3. Rule that real property, consisting of several
appears in the certificate of title and does
lots should be sold separately, applies to
not have to inquire further.
sales in execution, and not to foreclosure of
5. Pledgor or mortgagor has free disposal of
mortgages.
property.
4. The mere embodiment of a real estate
6. Thing pledged or mortgaged may be
mortgage and a chattel mortgage in one
alienated.
document does not have the effect of fusing
7. Creditor not required to sue to enforce his
both securities into an indivisible whole.
credit.
8. Pledgor or mortgagor may be a third person.
UY TONG v CA: The 2 elements for pactum commissorium to exist:
(1) thatRIGHT
there should be a pledge orWHERE
OF CREDITOR mortgage wherein a property is pledged or mortgaged by way of security for the payment of the princip
DEBTOR
FAILS TO COMPLY WITH HIS OBLIGATION
1. Creditor is merely entitled to move for the
sale of the thing pledged or mortgaged with
the formalities required by law in order to
for an automatic appropriation by the creditor of mortgage becomes unenforceable to the extent
the thing pledged or mortgaged in the event of of such failure. Where the indebtedness actually
non-payment of the principal obligation within owing to the holder of the mortgage is less than
the stipulated period. the sum named in the mortgage, the mortgage
cannot be enforced for more than the actual sum
5. Pledge or mortgage may secure all kinds of due.
obligation, be they pure or subject to
suspensive or resolutory conditions (2091). The rule of indivisibility of the mortgage as
6. A promise to constitute pledge or mortgage outlined by Article 2089 above-quoted
creates no real right, only a personal right presupposes several heirs of the debtor or
binding upon the parties, only right of action creditor which does not obtain in this case.
to compel the fulfillment of the promise but Hence, the rule of indivisibility of a mortgage
there is no pledge or mortgage yet (2092). cannot apply.
7. Under the RPC, estafa is committed by a
person who, pretending to be the owner of
any real property, shall convey, sell, BELO vs. PNB: From Art. 2089 is excepted the
encumber or mortgage the same knowing case in w/c, there being several things given in
that the real property is encumbered and mortgage or pledge, each one of them
shall dispose of the same as guarantees only a determinate portion of the
unencumbered. It is essential that fraud or credit. The debtor, in this case, shall have a right
deceit be practiced upon the vendee at the to the extinguishment of the pledge or mortgage
time of the sale. as the portion of the debt for w/c each thing is
specially answerable is satisfied. From the
wordings of the law, indivisibility arises only
II. Pledge when there is a debt, that is, there is a debtor-
creditor relationship. 329
PLEDGE is a contract by virtue of which the
CREDIT TRANSACTIONS
debtor delivers to the creditor or to a third person CHARACTERISTICS
a movable or document evidencing incorporeal 1. Real – Perfected by delivery.
rights for the purpose of securing the fulfillment 2. Accessory – Has no independent existence
of a principal obligation with the understanding of its own.
that when the obligation is fulfilled, the thing 3. Unilateral – Creates obligation solely on the
delivered shall be returned with all its fruits and part of the creditor to return the thing subject
accessions. (Art.2085 in rel to 2093) upon the fulfillment of the principal
obligation.
KINDS 4. Subsidiary – Obligation incurred does not
1. Voluntary or conventional – Created by arise until the fulfillment of the principal
agreement of parties. obligation.
2. Legal – Created by operation of law.
CAUSE OR CONSIDERATION
1. Principal
ligation to pay is the existence of a debt. Thus, in the accessory contract of real estate mortgage,obligation – In so far
the consideration as the
of the pledgor
debtor in furnishing the mortg
is concerned.
nsideration is subsequent to the mortgage, the mortgage can take effect only when 2. the
Compensation stipulated
debt secured by forasthe
it is created pledgecontract
a binding or to pay. And, w
mere liberality of the pledgor – If pledgor is
not the debtor.
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RIGHTS AND DUTIES OF CREDITOR IN A type of delivery will depend upon the nature and
PLEDGE the peculiar circumstances of each case.
1. Shall take care of the thing pledged with the
diligence of a good father of a family (2099). PNB vs. ATENDIDO: according to law, a
2. Has right to reimbursement of the expenses pledgee cannot become the owner of, nor
made for preserving the thing. Shall be liable appropriate to himself, the thing given in pledge.
for loss or deterioration of the thing by If by the contract of pledge the pledgor
reason of fraud, negligence, delay or continues to be the owner of the thing pledged
violation of the terms of the contract, but not during the pendency of the obligation, it stands
for fortuitous events (2099). to reason that in case of loss of the property, the
3. May bring actions pertaining to the owner of loss should be borne by the pledgor.
the thing in order to recover it from, or
defend it against, a 3rd person (2103). 3. Subject to the right of the pledge under article
4. Cannot use the thing without the authority of 2108, pledgor is allowed to substitute the
the owner. If he uses the thing without thing which is in danger of destruction or
authority, or if he misuses the thing when he impairment without any fault on the part of
was authorized to use it, the owner may ask the pledgee with another thing of the same
that it be judicially or extrajudicially kind and quality (2107).
deposited (2104). 4. May require that the thing be deposited with
5. May use the thing if necessary for its a 3rd person, if through the negligence or
preservation (2104). willful act of the pledgee the thing is in danger
6. May either claim another thing in pledge or of being lost or impaired (2106).
demand immediate payment of the principal
obligation if he is deceived on the substance EXTINGUISHMENT OF A PLEDGE
or quality of the thing (2109). 1. Ways to extinguish a pledge:
a. Payment of the debt.
THE PLEDGEE b. Sale of the thing pledged at public
1. Cannot deposit the thing pledged with a 3rd auction.
person, unless there is a contrary stipulation c. Thing pledged is returned by the
(2100). pledgee to the pledgor or owner (2110).
2. Is responsible for the acts of his agents or d. Written statement by the pledgee that he
employees with respect to the thing pledged renounces or abandons the pledge.For
this purpose, neither the acceptance by Useful expenses shall be refunded only to
the pledgor or owner nor the return of the possessor in good faith with the
the thing pledged is necessary, and the same right of retention, the person who
pledgee becomes a depositary (2111). has defeated him in the possession
2. Presumptions: having the option of refunding the
a. If, subsequent to the perfection of the amount of the expenses or of paying the
pledge, the thing is found in the increase in value which the thing may
possession of the pledgor or owner, have acquired and by reason thereof
there is prima facie presumption that the (Art. 546)
thing has been returned by the pledge 2. He who has executed work upon a movable
(2110). has a right to retain it by way of pledge until
b. If the thing is in the possession of a 3rd he is paid. This is called the mechanic’s
person who received it from the pledgor lien. (Art. 1731)
or owner after the constitution of the 3. 3) The agent may retain the things which are
pledge, there is prima facie presumption the objects of agency until the principal
that the thing has been returned by the effects the reimbursement and pays the
pledge (2110). indemnity. This is called the agent’s lien.
(Art. 1914)
REQUIREMENTS IN SALE OF THE THING 4. 4) The laborer’s wages shall be a lien on the
PLEDGED BY A CREDITOR, IF CREDIT IS goods manufactured or the work done.
NOT PAID ON TIME (Art 2112) 5. (Art. 1707)
1. Debt is due and unpaid.
2. Sale must be at a public auction. NOTE:
3. Notice to the pledgor and owner, stating the 1. In legal pledges, the remainder of the price
amount due.
4. Sale must be made with the intervention of a
of the sale shall be delivered to the obligor. 331
2. Public auction of legal pledges may only be
notary public.
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executed after demand of the amount for
5. If at the first auction the thing is not sold, a which the thing is retained. It shall take
second one with the same formalities shall place within one month after the demand,
be held. otherwise the pledgor may demand the
6. If at the second auction, there is no sale return of the thing pledged, provided s/he is
either, the creditor may appropriate the thing able to show that the creditor did not cause
pledged but he shall give an acquittance the public sale without justifiable grounds.
(release) for his entire claim. (Article 2122)
EFFECT OF THE SALE OF THE THING PAWNSHOP REGULATION ACT PD 114
PLEDGED (Art 2115) SEC 9: Loans granted by pawnshops shall not
1. Extinguishes the principal obligation, be less than 30% of the value of the security
whether the price of the sale is more or less offered, UNLESS the pawner manifests in
than the amount due. writing the desire to borrow a lesser amount.
2. if the price is more than amount due, the
debtor is not entitled to the excess unless SEC 10:
the contrary is provided. a. Interests not to exceed usury law
3. If the price of the sale is less, neither is the b. Pawn broker prohibited from dividing the
creditor entitled to recover the deficiency. A pawn offered to collect greater interest
contrary stipulation is void. c. Pawn broker prohibited from
requiring additional charge for
MANILA BANKING v TEODORO: safekeeping / insurance
In case of doubt as to whether a transaction is a d. Maximum service charge: Php5 to not
pledge or a dation in payment, the presumption more than 1% of the principal loan
is in favor of pledge, the latter being the lesser
transmission of rights and interests (as earlier SEC 13: Pawner who fails to pay his obligation
established in Lopez v. Court of Appeals) on the date it falls due may WITHIN 90 DAYS
from the date of the maturity of the obligation,
LEGAL PLEDGES (Article 2121) REDEEM the pawn by payment of the principal
1. Necessary expenses shall be refunded to debt and interest
every possessor, but only a possessor in
good faith may retain the thing until he has
been reimbursed.
SEC 15: Requisites of public auction of pawned as a security for a debt.
articles a. lien created through equitable mortgage
a. Public auction must be held at the ought not to be defeated by requiring
place of business of the pawn shop, or compliance with formalities necessary
within the municipality or city where it is to the validity of a voluntary real estate
located mortgage. Ex.: Pacto de retro
b. Must be under the control and direction b. ovisions governing equitable mortgage:
of a licensed auctioneer Arts. 1365, 1450, 1454, 1602, 1603,
c. Prior publication one week before the 1604 and 1607.
sale
PRINCIPLE OF INDIVISIBILITY OF PLEDGE /
III. Mortgage MORTGAGE
(ART. 2089 TO 2090)
MORTGAGE is a contract whereby the debtor
secures to the creditor the fulfillment of a DAYRIT v CA: A mortgage directly and
principal obligation, immediately making immediately subjects the property upon which it
immovable property or real rights over is imposed. It is indivisible even though the debt
immovable property answerable to the principal may be divided, and such indivisibility is likewise
obligation in case it is not complied with at the unaffected by the fact that 'the debtors are not
time stipulated. solidarity liable.
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however, a stipulation subjecting to the
mortgage improvements which the mortgagor Indivisibility applies only as to
may subsequently acquire, install or use in pledgors/mortgagors who are themselves
connection with real property already mortgaged debtors in the principal obligation, and not to
belonging to the mortgagor is valid. accommodation pledgors / mortgagors
CREDIT TRANSACTIONS
not before, registration. It must follow as a
necessary consequence that registration must
first be allowed and validity or effect litigated
INCIDENTS OF REGISTRATION OF MORTGAGE afterwards".
1. Mortgagee is entitled to registration of mortgage as a
matter of right.
2. Proceedings for registration do not determine validity
of the mortgage or its effect
3. Registration is without prejudice to better rights of
third parties.
4. Mortgage deed, once duly registered, forms part of
the records for the registration of the mortgaged
property.
5. Mortgage by a surviving spouse of his/her undivided
share in the conjugal property can be registered.
EFFECT OF INVALIDITY OF MORTGAGE case of chattel mortgage) property involved
ON THE PRINCIPAL OBLIGATION or a portion thereof is situated.
1. Principal obligation remains valid. If the court finds the complaint to be well-
2. Mortgage deed remains evidence of a founded, it shall order the mortgagor to pay
personal obligation. the amount due with interest and other
charges within a period of not less than 90
MOJICA v CA: Mortgages given to secure days nor more than 120 days from the entry
future advancements are valid and legal of judgment. If the mortgagor fails to pay at
contracts; that the amounts named as the time directed, the court, upon motion,
consideration in said contract do not limit the shall order the property to be sold to the
amount for which the mortgage may stand as highest bidder at a public auction.
security if from the four corners of the instrument Upon confirmation of the sale by the court,
the intent to secure future and other also upon motion, it shall operate to divest
indebtedness can be gathered. A mortgage the rights of all parties to the action and to
given to secure advancements is a continuing vest their rights to the purchaser subject to
security and is not discharged by repayment of such rights of redemption as may be allowed
the amount named in the mortgage, until the full by law.
amount of the advancements are paid (as Before the confirmation, the court retains
established earlier in Lim Julian v. Lutero). control of the proceedings
Execution of judgment subject to APPEAL
IV. Foreclosure of Mortgage (Art. 2085) but not annulment
The foreclosure of the property is completed
only when the sheriff’s certificate is
FORECLOSURE OF MORTGAGE
executed, acknowledged and recorded
It is the remedy available to the mortgagee by
which he subjects the mortgaged property to the 334
The proceeds of the sale shall be applied to
satisfaction of the obligation secured by the
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the payment of the:
mortgage. a. Costs of the sale;
b. Amount due the mortgagee;
In General: An action for foreclosure of a c. Claims of junior encumbrancers or
mortgage is limited to the amount mentioned persons holding subsequent mortgages
in the mortgage, EXCEPT when the in the order of their priority; and
mortgage contract intends to secure future d. Balance, if any shall be paid to the
loans or advancements mortgagor.
BLANKET mortgage / DRAGNET–
mortgage that subsumes all debts of past or NATURE OF JUDICIAL FORECLOSURE
future origin PROCEEDINGS:
Mortgage may be used as a “continuing 1. Quasi in rem action. Hence, jurisdiction may
security” which secures future be acquired through publication.
advancements and is not discharged by the 2. Foreclosure is only the result or incident of
repayment of the amount in the mortgage the failure to pay debt.
Alienation or assignment of mortgage credit 3. Survives death of mortgagor.
is valid even if it is not registered
EXTRAJUDICIAL FORECLOSURE(Act No.
ACCELERATION CLAUSE, or the stipulation
3135)
stating that on the occasion of the mortgagor’s
1. Applies to mortgages where the authority to
default, the whole sum remaining unpaid
foreclose is granted to the mortgagee.
automatically becomes due and demandable, is
2. Authority is not extinguished by death of
ALLOWED
mortgagor or mortgagee. This is an agency
coupled with interest.
KINDS OF FORECLOSURE
3. Public sale should be made after proper
1. Judicial Foreclosure
notice to the public, otherwise it is a
2. Extrajudicial Foreclosure
jurisdictional defect which could render the
sale voidable.
JUDICIAL FORECLOSURE
4. There is no need to notify the mortgagor.
Rule 68, ROC:
Proper notice consists of:
May be availed of by bringing an action in
a. posting notice in three public places
the proper court which has jurisdiction over
and / or
the area wherein the real or personal (in
b. publication in newspaper of general
circulation it is referred to as deficiency judgment.
c. purpose of notice is to obtain the best 3. Action for recovery of deficiency may be
bid for the foreclosed property filed even during redemption period.
5. Surplus proceeds of foreclosure sale belong 4. Action to recover prescribes after 10 years
to the mortgagor. from the time the right of action accrues.
6. Debtor (who must be a NATURAL
PERSON) has the right to redeem the EFFECT OF INADEQUACY OF PRICE IN
property sold within 1 year from and after FORECLOSURE SALE
the date of sale. 1. Where there is right to redeem, inadequacy
a. If the mortgagee is a bank and the of price is immaterial because the judgment
debtor is a juridical person, then there debtor may redeem the property.
is no right of redemption. However, it
may redeem the property BEFORE the Exception: Where the price is so inadequate
registration of the TCT to the buyer, as to shock the conscience of the court,
which is similar to the equity of taking into consideration the peculiar
redemption. The TCT must be circumstances.
registered within THREE MONTHS
after the foreclosure. 2. Property may be sold for less than its fair
b. The mortgagor can only legally transfer market value, upon the theory that the lesser
the right to redeem and the use of the the price the easier it is for the owner to
property during the period of redeem.
redemption. 3. The value of the mortgaged property has no
7. Remedy of party aggrieved by foreclosure is bearing on the bid price at the public
a petition to set aside sale and cancellation auction, provided that the public auction was
of writ of possession. However, if the
mortgagee is a bank, the mortgagor is
regularly and honestly conducted. 335
required to post a bond equal to the value of
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WAIVER OF SECURITY BY CREDITOR
the mortgagee’s claim. 1. Mortgagee may waive right to foreclose his
8. Republication is of the notice of sale mortgage and maintain a personal action for
necessary for validity of postponed recovery of the indebtedness.
extrajudicial sale 2. Mortgagee cannot have both remedies.
9. In foreclosure of real estate mortgage under
Act 3135, the buyer at auction may petition REDEMPTION
the land registration court for a writ of 1. It is a transaction by which the mortgagor
possession pending the one-year period of reacquires the property which may have
redemption of the foreclosedproperty. passed under the mortgage or divests the
property of the lien which the mortgage may
Nature of power of foreclosure by have created
extrajudicial sale: 2. Kinds:
1. Conferred for mortgagee’s protection. a. Equity of redemption: in judicial
2. An ancillary stipulation. foreclosure of real estate mortgage
3. A prerogative of the mortgagee. under the ROC, it is the right of the
mortgagor to redeem the mortgaged
Note: property by paying the secured debt
a. Both should be distinguished from within the 120 day period from entry of
execution sale governed by Rule 39, judgment or after the foreclosure sale,
ROC. but before the sale of the mortgaged
b. Foreclosure retroacts to the date of property or confirmation of sale
registration of mortgage. formal offer to redeem preserves the
c. A stipulation of upset price, or the right of redemption, e.g., by filing an
minimum price at which the property action to enforce the right to redeem
shall be sold to become operative in the
event of a foreclosure sale at public b. Right of redemption: in extrajudicial
auction, is null and void. foreclosure of real estate mortgage, the
right of the mortgagor to redeem the
RIGHT OF MORTGAGEE TO RECOVER property within a certain period after it
DEFICIENCY was sold for the satisfaction of the debt.
1. Mortgagee is entitled to recover deficiency. For natural persons – one year from
2. If the deficiency is embodied in a judgment, the registration of the TCT
For juridical persons – three months OBLIGATIONS OF ANTICHRETIC CREDITOR
from the foreclosure 1. to pay taxes and charges on the estate,
Formal offer to redeem must be with including necessary expenses. Creditor may
tender of redemption price to avoid said obligation by:
preserve right of redemption a. compelling debtor to reacquire
enjoyment of the property
NOTE: There is no right of redemption in b. by stipulation to the contrary
pledge and chattel mortgage. 2. to apply all the fruits, after receiving them, to
the payment of interest, if owing, and
MEDIDA v CA: The rule up to now is that thereafter to the principal
the right of a purchaser at a foreclosure sale 3. to render an account of the fruits to the
is merely inchoate until after the period of debtor
redemption has expired without the right 4. to bear the expenses necessary for its
being exercised. The title to land sold under preservation and repair
mortgage foreclosure remains, in the
mortgagor or his grantee until the expiration REMEDIES OF CREDITOR IN CASE OF NON-
of the redemption period and conveyance by PAYMENT OF DEBT
the master's deed 1. action for specific performance
2. Petition for the sale of the real property as in
a foreclosure of mortgages under Rule 68 of
V. Antichresis the Rules of Court
a. The parties, however, may agree on an
extrajudicial foreclosure in the same
ANTICHRESIS is a contract whereby the
manner as they are allowed in contracts
creditor acquires the right to receive the fruits of
an immovable of the debtor, with the obligation
of mortgage and pledge (Tavera v. El 336
Hogar Filipino, Inc. 68 Phil 712)
to apply then to the payment of the interest, if
CREDIT TRANSACTIONS
b. A stipulation authorizing the antichretic
owing, and thereafter to the principal of the
creditor to appropriate the property upon
credit (Art 2132)
the non-payment of the debt within the
agreed period is void (Art. 2088)
CHARACTERISTICS
1. Accessory contract – it secures the
performance of a principal obligation VI. Chattel Mortgage
2. formal contract – it must be in a specified
form to be valid (Art. 2134) CHATTEL MORTGAGE is a contract by virtue
of which a personal property is recorded in the
SPECIAL REQUISITES: Chattel Mortgage Register as security for the
1. it can cover only the fruits of an immovable performance of an obligation.
property
2. delivery of the immovable is necessary for If the movable, instead of being recorded, is
the creditor to receive the fruits and not that delivered to the creditor, it is pledge and not
the contract shall be binding chattel mortgage.
3. amount of principal and interest must be
specified in writing LAWS GOVERNING CHATTEL MORTGAGE
4. express agreement that debtor will give 1. Chattel Mortgage Law (Act.1508, as
possession of the property to creditor and amended).
that the latter will apply the fruits to the 2. New Civil Code.
interest, if any, then to the principal of his 3. Revised Administrative Code.
credit 4. Revised Penal Code.
5. NOTE: The obligation to pay interest is not 5. Ship Mortgage Decree of 1978 (PD 1521)
of the essence of the contract of antichresis; governs mortgage of vessels of domestic
there being nothing in the Code to show that ownership.
antichresis is only applicable to securing the
payment of interest-bearing loans. On the AFFIDAVIT OF GOOD FAITH
contrary, antichresis is susceptible of An oath in a contract of chattel mortgage
guaranteeing all kinds of obligations, pure or wherein the parties "severally swear that the
conditional mortgage is made for the purpose of
securing the obligation specified in the
conditions thereof and for no other purposes
and that the same is a just and valid RIGHT OF MORTGAGEE TO RECOVER
obligation and one not entered into for the DEFICIENCY
purpose of fraud. 1. Where mortgage foreclosed: Creditor may
maintain action for deficiency although the
EFFECT OF REGISTRATION Chattel Mortgage Law is silent on this point,
1. Creates real rights. because a chattel mortgage is given only as
2. Adds nothing to mortgage. a security and not as payment of the debt.
2. Where mortgage constituted as security for
Note: Registration of assignment of mortgage is purchase of personal property payable in
not required. installments: No deficiency judgment can be
asked and any contrary agreement shall be
RIGHT OF REDEMPTION OF MORTGAGE void.
1. When the condition of a chattel mortgage is 3. Where mortgaged property subsequently
broken, the following may exercise attached and sold: Mortgagee is entitled to
redemption: deficiency judgment in an action for specific
a. Mortgagor. performance.
b. Person holding a subsequent mortgage.
c. Subsequent attaching creditor. APPLICATION OF PROCEEDS OF SALE
2. An attaching creditor who so redeems shall 1. Costs and expenses of keeping and sale.
be subrogated to the rights of the mortgagee 2. Payment of the obligation.
and entitled to foreclose the mortgage in the 3. Claims of persons holding subsequent
same manner as a mortgagee. mortgages in their order.
3. Redemption is made by paying or delivering 4. Balance, if any, shall be paid to the
to the mortgagee the amount due on such mortgagor, or person holding rights under
mortgage and the costs and expenses
incurred by such breach of condition before
him. 337
the sale.
CREDIT TRANSACTIONS
FORECLOSURE OF CHATTEL MORTGAGE
1. Public sale.
2. Private sale – There is nothing illegal,
immoral or against public order in an
agreement for the private sale of the
personal properties covered by chattel
mortgage.
PERIOD TO FORECLOSE
1. After 30 days from the time of the condition
is broken.
2. The 30-day period is the minimum period
after violation of the mortgage condition for
the creditor to cause the sale at public
auction with at least 10 days notice to the
mortgagor and posting of public notice of
time, place, and purpose of such sale, and is
a period of grace for the mortgagor, to
discharge the obligation.
3. After the sale at public auction, the right of
redemption is no longer available to the
mortgagor.
CREDIT TRANSACTIONS
155, CC) property to which the preference refers.
Right to receive support, as well as 2. If there are 2 or more credits with respect to
money or property obtained by such the same specific movable property, they
support, shall not be levied upon on shall be satisfied pro rata, after the payment
attachment or execution. (Art. 205, of duties, taxes and fees due the State or
CC) any subdivision thereof
Sec. 13, Rule 39, ROC. 3. Those credits which enjoy preference in
Sec 118, Public Land Act. (CA 141, relation to specific real property or real rights
as amended) exclude all others to the extent of the value
b. Future property: A debtor who obtains a of the immovable or real right to which the
discharge from his debts on account of preference refers.
insolvency, is not liable for the 4. If there are 2 or more credits with respect to
unsatisfied claims of his creditors with the same specific real property or real rights,
said property. (Sec. 68 and 69, they shall be satisfied pro rata, after the
Insolvency Law, Act 1956) payment of the taxes and assessment of the
c. Property in custodia legis and of public taxes and assessments upon the immovable
dominion. property or real right.
2. Insolvency shall be governed by the 5. The excess, if any, after the payment of the
Insolvency Law. (Act 1956, as amended) credits which enjoy preference with respect
3. Exemption of conjugal property or absolute to specific property, real or personal, shall
community or property, provided that: be added to the free property which the
a. Partnership or community subsists. debtor may have, for the payment of other
b. Obligations of the insolvent spouse have credits.
not redounded to the benefit of the 6. Those credits which do not enjoy any
family. preference with respect to specific property,
4. If there is co-ownership, and one of the co- and those which enjoy preference, as to the
owners is the insolvent debtor, his undivided amount not paid, shall be satisfied according
share or interest in the property shall be to the following rules:
possessed by the assignee in insolvency a. Order established by Art 2244
proceedings because it is part of his assets. b. Common credits referred to in Art 2245
shall be paid pro rata regardless of
dates
-end of Credit Transactions -
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CIVIL LAW REVIEWER TABLE of CONTENTS
AGENCY
Table of Contents
AGENCY
X. Special Obligations of Factor/
Commission Agents...................................350
AGENCY
Head
Loraine MendozaFaye Celso Mary MendozaJoie Bajo consent of the principal, which must not, in
Members any way, be compelled by law or by any
court. (Litonjua, Jr. v. Eternit Corp.)
AGENCY
The agent must have the capacity to enter
into contracts although he/she may not have
Intent to establish agency essential
the capacity to enter into the particular
General Rule—
contract subject of the agency
1. On the part of the principal there must be an
intention to appoint or an intention naturally However, as between the principal and the
inferable from his words or actions; and agent, the agent can set up his incapacity
2. On the part of the agent, there must be an provided he is not estopped. [Paras, Civil
intention inferable from words or deeds to Code of the Philippines Annotated]
accept the appointment and act on it.
Exception—
1. Agency by estoppel; and
2. Agency by operation of law V. Determination of Existence of Agency
Designation by parties—is not controlling.
Agency by Estoppel—
1. The principal manifested a representation of Fact of existence
the agent’s authority or knowlingly allowed If relations that constitute agency exist, there
the agent to assume such authority; is agency regardless of whether or not the
2. The third person, in good faith, relied upon parties understood the exact nature of the
such representation; relation.
3. Relying upon such representation, such third
person has changed his position to his No presumption of existence
detriment. (Litonjua vs. Eternit Corporation, 1. General Rule: Agency must exist as a fact.
G.R. No. 144806) 2. Exceptions:
a. When agency arises ipso jure
Apparent Authority— b. To prevent unjust enrichment
It imposes liability, not as the result of the
reality of a contractual relationship, but Intention of the parties to create—
rather because of the actions of a principal The nature of the contract depends on the
or an employer in somehow misleading the intention of the parties as gathered from
their words and actions and the 3. Subagents
circumstances of the case. Agents of the agent The employees of the
can be controlled by contractor are not the
As between principal and 3rd person, the principal employees of the
however, agency may exist without the employer of the
express consent of the agent. contractor
AGENCY
principal; a partner can act for himself, for
his firm, and for his partners
2. Parity of Standing Test— Lease of Property
A partnership generally presupposes a Agency Lease of Property
1. Control
parity of standing between the partners, in
The agent acts under Lessee is not
which each party has an equal proprietary the control and controlled by the
interest in the capital or property contributes instruction of the lessor
& where each party exercises equal rights in principal.
the conduct of the business. (Sevilla v CA,
1988) 2. Things involved
Agency may involve Lease of property only
Independent Contractor (IC) things other than involves property
Agency IC property
1. Control
3. Binding power
The agent acts under The IC is authorized to
Agent can bind the Lessee cannot bind
the control and do the work according
principal the lessor
instruction of the to his own method,
principal. without being subject
to the other party’s
control, except insofar Agency to Sell v Sale
as the result of the Agency to Sell Sale
work is concerned 1. Ownership of goods
Agent receives the Buyer receives the
goods as the goods of goods as owner
2. Liability for tort the principal
Principal is liable for Employer not liable for
torts committed by the torts committed by the 2. Payment
agent within the scope independent Agent delivers Buyer pays the price
of his authority. contractor. proceeds of the sale to
the principal
3. Return of goods VII. Kinds
Generally, the agent generally, buyer
can return the goods cannot return the As to Manner of Creation
in case he is unable to goods bought 1. Express
sell them to a third a. Agent has been actually authorized by
person the principal
4. Discretion b. Agency may be oral or in writing, unless
Agent exercises Lessor ordinarily the law requires a specific form. [Art.
discretionary powers. performs only 1869, CC]
ministerial functions.
5. Parties
2. Implied
a. On the part of the principal:
Agent in dealing with Buyer can deal with
thing received is the thing as he From his acts
bound to act according pleases, being the his silence or lack of action;
to the instructions of owner. his failure to repudiate the agency
his principal; knowing that another person is
acting on his behalf without authority
Agency to Buy v Sale [Art. 1869, CC]
Agency to Buy Saleb. On the part of the agent:
1. Ownership of goods from his acts which carry out the agency;
The agent acquires The buyer acquires from his silence or inaction
ownership in behalf of ownership for himself. according to the circumstances [Art.
the principal 1870, CC]
2. Changes in price
Generally, any change Buyer cannot adjust Acceptance of the Agency—
in the price should be the price already Between persons who are present
borne by the principal agreed upon.
3. Payment Principal delivers his power of
The agent pays the Buyer pays the price attorney to the agent; and
purchase price in Agent receives it without
behalf of the principal objection [Art. 1871, CC] 344
Between persons who are absent:
AGENCY
Agency
Guardianship General Rule: Acceptance cannot be implied from the
Guardianship
1. Person represented silence of the agent
Agent represents a Exceptions
A guardian represents
capacitated person an i. when the principal transmits
his POA to the agent, who
incapacitated receives it without any
person. objection;
2. Source of authority ii. when the principal entrusts to
Agent is appointed by Guardian is appointed him by letter or telegram a
the principal and can by the court or by law. POA with respect to the
be removed by the
business in which he is
latter.
3. Control habitually engaged as an
The agent acts under Guardian is not subject agent, and he did not reply to
the control of the to the directions of the the letter [Art. 1872, CC]
principal. ward but must act for
the benefit of the latter. c. Agency by estoppel
4. Discretion If a person specially informs another
Agent exercises Lessor ordinarily or states by public advertisement
discretionary powers. performs only that he has given a power of
ministerial functions.
attorney to a third person, the latter
5. Binding power
Agent can make the Guardian has no
becomes a duly authorized agent,
principal personally power to impose even if previously there was never a
liable. personal liability on the meeting of minds between them.
The power shall continue to be in
full force until the notice is rescinded
in the same manner in which it was
given. [Art. 1869, CC]
d. In Litonjua, Jr. v. Eternit Corp. (2006), General Agency Special Agency
the following must be present for agency 1. Scope of authority
by estoppels to exist: All acts connected with Specific acts in
the principal manifested a the business or pursuance of particular
representation of the agent’s employment in which he instructions or with
is engaged. restrictions necessarily
authority or knowingly allowed the
implied from the act to be
agent to assume such authority; done.
the third person, in good faith, relied 2. Nature of service authorized
upon such representation; Involves continuity of No continuity of service.
relying upon such representation, service.
such third person has changed his 3. Extent to which agent may bind principal
position to his detriment. May bind his principal by Cannot bind his principal
an act within the scope of in a manner beyond or
As to Formalities his authority although it outside the specific acts
General Rule— may be contrary to the which he is authorized to
latter’s special perform.
Agency may be oral or in writing [Art. 1869, instructions.
CC] 4. Termination of authority
Exceptions— Apparent authority does Duty imposed upon the
a. When the law requires a specific form not terminate by the mere 3rd party to inquire
[Art. 1869, CC] revocation of his authority makes termination of the
b. Sale of a piece of land or any interest without notice to the 3rd relationship as between
therein— party. the principal and agent
When a sale of a piece of land or any effective as to such 3rd
interest therein is through an agent, the party, unless the agency
has been entrusted for
authority of the latter shall be in writing; the purpose of
otherwise, the sale shall be void. [Art. contracting with such 3rd
1874, CC] party. 345
5. Construction of principal’s instructions
AGENCY
It is not necessary that the real property Merely advisory in nature. Strictly construed as they
to be sold be precisely described in the limit the agent’s authority.
written authority of the agent. It is
sufficient if the authority is so expressed As to Authority Conferred
as to determine without doubt the limits 1. Agency may be couched in general or specific
of the agent’s authority. [Jimenez v terms
Rabot, 1918] a. Couched in general terms [Art. 1877,
CC]—
As to Cause or Consideration— If couched in general terms, it comprises
Agency may be onerouse or gratuitous only acts of administration, EVEN IF:
a. General Rule—Agency is presumed to the principal states that he withholds
be for compensation [Art. 1875, CC] no power; or
b. Exception—There is proof to the he states that the agent may
contrary [Art. 1875, CC] execute such acts as he may
consider appropriate; or
As to Extent of Business Covered the agency should authorize a
1. Universal— general and unlimited management
A universal agent is one authorized to b. Couched in specific terms—authorizing
do all acts for his principal which can only the performance of specific act/acts
lawfully be delegated to an agent. 2. Power of Attorney
[Siasat v. IAC (1985)] Definition—
2. General— Written authorization to an agent to
It comprises all the business of the perform specified acts in behalf of his
principal [Art. 1876, CC] principal which acts, when performed,
3. Special— shall have binding effect on the principal
It comprises one or more specific [2 Am. Jur. 30]
transactions [Art. 1876, CC] Purpose—
Not to define the agent’s authority, but to
evidence such authority to 3rd parties
Interpretation— Note—
General Rule: Power of Attorney should a. Art. 1878 refers to the nature of the
be strictly construed authorization, not to its form. Even if a
Exception: When strict construction will document is titled as a general power of
destroy the very purpose of the power attorney, the requirement of special
power of attorney is met if there is a
Special Power of Attorney—
clear mandate from the principal
A special power of attorney is an
specifically authorizing the performance
authority granted by the principal to the
of the act (Bravo-Guerrero v Bravo,
agent where the act for which it is drawn
2005)
is expressly mentioned. [Strong v.
b. What SPA to sell/mortgage does not
Repide, 1906]
include [Art. 1879, CC]
A special power to sell excludes the
A special power can be included in a
power to mortgage;
general power of attorney, either by
Special power to mortgage does not
giving authority for all acts of a particular
include the power to sell.
character or by specifying therein the
c. A special power to compromise does not
act/transaction for which a special power
authorize submission to arbitration. [Art.
is needed. [Tolentino]
1880, CC]
d. The power to legally compel the
3. When special powers are necessary [Art.
payment of debts owing to the principal
1878, CC] (PNC-WIG-LLB-PORIRS):
is an express grant of the right to bring
a. to make such Payments as are not
suit for the collection of such debts.
usually considered acts of administration
(Germann & Co v Donaldson, 1901)
b. to effect Novations which put an end to
e. A power of attorney “to loan and borrow
obligations already in existence at the
money” and to mortgage the principal’s
time the agency was constituted
property does not carry with it or imply
a. Compromise, to submit questions to
that that the agent has a legal right to 346
arbitration, to renounce the right to
make the principal liable for the personal
appeal from a judgment, to waive
AGENCY
debts of the agent. (BPI v De Coster,
objections to the venue of an action or to
1925)
abandon a prescription already acquired
f. Unless the contrary appears, the
b. to Waive any obligation gratuitously
authority of an agent must be presumed
c. to enter into any contract by which the
to include all the necessary and usual
ownership of an Immovable is
means of carrying the agency into effect.
transmitted or acquired either
(Macke v Camps, 1907)
gratuitously or for a valuable
g. If agent is empowered to borrow money
consideration
—the agent may be the lender at the
d. to make Gifts, except customary ones
current rate of interest.
for charity or those made to employees
h. If agent is empowered to lend money at
in the business managed by the agent;
interest—the agent cannot borrow the
e. to Loan or borrow money, unless the
money without the consent of the
latter act be urgent and indispensable
principal
for the preservation of the things which
i. Effect of lack of SPA where one is
are under administration
required— It is neither accurate not
f. to Lease any real property to another
correct to conclude that the absence of
person for more than one year
SPA (where one is required by law)
g. to Bind the principal to render some
renders the contract entered into by
service without compensation
virtue of said SPA void. The contract is
h. to bind the principal in a contract of
merely unenforceable. (Dungo v
Partnership
Lopena, 1962, citing Art. 1403(1), CC)
i. to Obligate the principal as a guarantor
or surety As to Nature and Effects
j. to create or convey Real rights over 1. Ostensible or Representative—agent acts in
immovable property the name and representation of the principal
k. to accept or repudiate an Inheritance
2. Simple or Commission—agent acts in his
l. to Ratify or recognize obligations
own name but for the principal’s account
contracted before the agency
3. Agency by Estoppel—there is no agency,
m. any other act of Strict dominion
and the alleged agent seemed to have
apparent or ostensible, but not real, As to Kinds of Principal
authority to represent another 1. Principal may be:
a. Disclosed
Apparent Authority Agency by Estoppel b. Partially disclosed—third persons are
Though not actually Where the principal, by unaware of principal’s identity
granted, principal his acts or omission, c. Undisclosed—agent acts in his own
knowingly permits or permits his agent to name
holds out the agent as exercise powers not 2. General Rule [Art. 1883, CC]
possessing the granted to him, even If the principal is undisclosed (agent acts in
necessary powers to act though the principal may
in a certain way. have no notice or
his own name):
knowledge of the conduct a. the agent is the one directly bound in
of the agent. favor of the person with whom he has
contracted, as if the transaction were his
Implied Agency Agency by Estoppel own
Principal alone is liable. If caused by the principal, b. the principal has no right of action
he is responsible. If against the persons with whom the
caused by the agent, he agent has contracted; neither have such
is responsible. Provided,
3rd person in good faith. persons against the principal.
Exception [Art. 1883, CC]
a. When the contract involves things
4. When the principal ratifies the acts of the agent
belonging to the principal
a. Conditions for ratification (CaP-DECK)
b. Exception qualified by National Bank
i. The principal must have Capacity
v Agudelo, 1933—
and Power to ratify
For the principal to be bound by the
ii. The act must be Done in behalf of
act of an agent who contracted in
the principal
his [agent’s] own name, it is not
iii. He must ratify the acts in its Entirety
sufficient that the contract involved
iv. The act must be Capable of
things belonging to the principal. 347
ratification
The agent should also have acted
v. He must have had Knowledge of
AGENCY
within his scope of authority.
material facts.
[National Bank v Agudelo, 1933;
b. Effects of ratification
Rural Bank of Bombon v CA, 1992]
i. With respect to the agent: It relieves
the agent from liability. He may also
3. Agent may still be sued even if principal is
recover compensation
undisclosed and contract involved things
ii. With respect to the principal: He
belonging to the principal.—
assumes responsibility for the
Even if the principal is undisclosed and the contract
unauthorized act, as fully as if the
involved things belonging to the principal, the third
agent had acted under original
person who contracted with the agent has a right of
authority; but he is not liable for acts
action not only against the principal but also against the
outside the authority approved by
agent, when the rights and obligations which are the
his ratification.
subject matter of the litigation cannot be legally and
iii. With respect to 3rd persons: They
juridically determined without hearing both of them. In
are bound by ratification. They
such case, the agent being a necessary party to the full
cannot question agent’s authority.
and complete determination of the case which
originated from his act should be included in the case as
defendant. [Beaumont v Prieto, 1921]
Ratification Estoppel
Rests on intention Rests on prejudice
Affects the entire Affects only relevant
transaction from the parts of the transaction.
beginning.
Chapter II. Obligations of the II. To Act Within the Scope of His
Agent Authority [Art. 1881, CC]
TO CARRY OUT THE AGENCY
TO ACT WITHIN THE SCOPE OF HIS AUTHORITY Authority is the power of the agent to affect the
TO ADVANCE NECESSARY FUNDS legal relations of his principal by acts done in
TOACTINACCORDANCEWITH INSTRUCTIONS accordance with the principal’s manifestations of
TO PREFER PRINCIPAL’S INTEREST OVER PERSONAL INTEREST consent.
NOT TO LOAN TO HIMSELF WITHOUT PRINCIPAL’S CONSENT
TORENDERACCOUNTANDDELIVER THINGS RECEIVED BY VIRTUE OF AGENCY When agent acting within the scope of his
TO BE RESPONSIBLE FOR SUBSTITUTES authority—
TO PAY INTEREST 1. When he is performing acts which are
TO ANSWER FOR HIS FRAUD/NEGLIGENCE
conducive to the accomplishment of the
SPECIALOBLIGATIONSOF FACTOR/COMMISSION AGENTS
purpose of the agency [Art. 1881, CC]
2. If the agency has been performed in a
manner more advantageous to the principal
than that specified by him [Art. 1882, CC]
3. Insofar as third persons, when the agent’s
act is within the terms of the power of
attorney, as written, even if the agent has in
I. To Carry Out the Agency fact exceeded the limits of his authority
Obligation to carry out the agency he according to an understanding between the
accepted [Art. 1884, CC]— principal and the agent. [Art. 1900, CC]
1. The agent is bound by his acceptance to
carry out the agency own Note:
2. He shall be liable for damages that the 1. A 3rd person with whom the agent wishes to
principal may suffer due to his non- contract on behalf of the principal may
performance [Art. 1884, CC] require the presentation of a power of
attorney or the principal’s instructions [Art. 348
Exception: An agent shall not carry out an 1902, CC]
AGENCY
agency if its execution would manifestly result in 2. The scope of the agent’s authority is what
loss or damages to the principal. [Art. 1888, CC] appears in the written terms of the power of
attorney. While third persons are bound to
Obligation to finish business began on inquire into the extent or scope of the
principal’s death [Art. 1884, CC]— agent’s authority, they are not required to go
The agent must finish the business already beyond the terms of the written power of
begun on the death of the principal, should attorney. [Siredy Enterprises, Inc. v CA,
delay entail any danger 2002]
Obligation should he decline the agency [Art. Effect when agent acts within the scope of
1885, CC]— his authority—
1. He is bound to observe the diligence of a 1. General Rule— The agent who acts as such
good father of a family in the custody and is not personally liable to the party with
preservation of the goods forwarded to him whom he contracts
by the owner until the latter should appoint 2. Exceptions—
an agent or take charge of the goods a. If he expressly bound himself [Art. 1897,
2. However, the owner must act as soon as CC]
practicable either by appointing an agent or b. If he exceeds the limits of his authority
by taking charge of the property without giving such party sufficient
notice of his powers [Art. 1897, CC]
Obligation to continue agency should he c. If he acted in his own name; except if
withdraw [Art. 1929, CC]— the contract involves things belonging to
The agent, even if he should withdraw from the principal [Art. 1883, CC]
the agency for a valid reason, must continue
to act until the principal has had reasonable
opportunity to take the necessary steps to
meet the situation.
III. To Advance the Necessary Funds V. To Prefer Interest of Principal Over
[Art. 1886, CC] Personal Interest
General Rule—
The agent is bound to advance necessary Rule in case of conflict of interest
funds, should there be a stipulation to do so. 1. General Rule—
Exception— The agent shall be liable for damages if,
When the principal is insolvent there being a conflict between his
interests and those of the principal, he
IV. To Act in Accordance with Principal’s should prefer his own. [Art. 1889, CC]
Instructions
2. Exceptions—
Obligation to act in accordance with a. The principal waives the benefit of the
principal’s instructions— rule, provided he does so with full
In the execution of the agency, the agent knowledge of the facts.
shall act in accordance with the instructions b. The interests of the agent are superior,
of the principal. [Art. 1887, CC] ex., agency coupled with an interest.
AGENCY
Effect when agent acts in accordance with
principal’s orders— VI. To Render Accounts and Deliver
Principal cannot set up the ignorance of the Things Received by Virtue of the
agent as to circumstances whereof he Agency
himself was, or ought to have been aware
[Art. 1899, CC]
Obligation to account and deliver [Art. 1891,
CC]—
Authority v Instructions
Every agent is bound to:
Authority Instructions 1. render an account of his transactions; and
The sum total of the Only a private rule of 2. deliver to the principal whatever he may
powers committed or guidance to the agent have received by virtue of the agency, even
permitted to the agent
though it may not be owing to the principal.
Relates to the subject Refers to the manner
(biz/transaction) with or mode of agent’s
which the agent is action with respect to Effect of failure to comply—
empowered to deal or matters within the If he fails to do so or uses the
act. permitted scope of money/property for his own use, the agent is
action. liable for estafa [Art. 315, RPC]
Limits of authority to Binding only on the
operate vs those who principal and agent Contrary stipulation void—
have/are charged with Every stipulation exempting the agent from
knowledge of them. the obligation to render an account shall be
void [Art. 1891, CC]
AGENCY
deemed to have been made for cash
the day on which he did so insofar as the principal is concerned.
2. those which he owes after the 5. To indemnify principal for damages for
extinguishment of the agency failure to collect the credits of his principal
when they fall due [Art. 1908, CC]—
IX. To Answer for His Negligence or General Rule:
Fraud [Art. 1909, CC] The commission agent who does not
The agent is responsible not only for fraud, but collect the credits of his principal at the
also for negligence time when they become due and
demandable shall be liable for damages
Liability shall be judged with more or less rigor Exception
by the courts, according to whether the agency If he proves that he exercised due
was or was not for a compensation diligence for that purpose
6. When he receives a guarantee commission
(del credere commission) [Art. 1907, CC]—
X. Special Obligations of Factor/ a. Bear the risk of collection
Commission Agents b. Pay the principal the proceeds of the
sale on the same terms agreed upon
Definition— with the purchaser
one whose business is to receive & sell
goods for a commission, and is entrusted by Ordinary Agent v Commission Agent
the principal with its possession [Mechem Ordinary Agent Commission Agent
on Agency] Acts for and in Acts in his own name or
behalf of the in that his principal.
Obligations of a commission agent principal.
1. For goods received [Art. 1903, CC] Need not have Must be in possession
a. He shall be responsible for the goods possession of the of the goods of the
goods of the principal.
received by him in the terms and
principal.
conditions and as described in the
consignment
CIVIL LAW REVIEWER Chapter II. OBLIGATIONS of the AGENT
351
AGENCY
CIVIL LAW REVIEWER Chapter III. LIABILITIES of the AGENT
Chapter III. Liabilities of the Agent 2. the two contracts are incompatible with each
other
3. the agent acted in bad faith
LIABILITITY TO THIRD PERSONS 4. agent shall be liable for damages to third
LIABILITY TO THE PRINCIPAL person whose contract must be rejected
LIABILITY OF TWO OR MORE AGENTS
II. Liability to the Principal
I. Liability to Third Persons
Agent is liable for damages—
Agent not personally liable as a general rule 1. Due to non-performance of agency—
— The agent is liable for the damages which,
General Rule thru his non-performance, the principal
An agent who acts as such is not personally may suffer [Art. 1884, CC]
liable to the party with whom contracts [Art. 2. For preferring personal interest to that of
1897, CC] principal—
The agent shall be liable for damages if,
Exceptions there being a conflict between his interests
1. When he acts in his own name, except when and those of the principal, he should
the contract involves things belonging to the prefer his own. [Art. 1889, CC]
principal [Art. 1883, CC] 3. Damages due to his withdrawal [Art. 1928,
2. If he expressly binds himself [Art. 1897, CC] CC]—
3. If he exceeds the limits of his authority The agent must indemnify the principal for
without giving such party sufficient notice of any damage that the principal may suffer
his powers [Art. 1897, CC] by reason of the withdrawal of the agent;
Note—When an agent contracts in his Exception: The agent should base his
own name and without the express withdrawal upon the impossibility of
authority of his principal, the obligation continuing the performance of the agency 352
so contracted by him is personal and is without grave detriment to himself.
AGENCY
not binding on his principal. [PNB v.
Agudelo] Liability of agent for acts of substitute under
Art. 1892, CC—
BUT Third persons cannot set up the The agent shall be responsible for the acts of the
fact that the agent has exceeded his substitute:
powers if the principal has ratified, or 1. when he was not given the power to appoint
has signified his willingness to ratify the one; or
agent’s acts [Art. 1901, CC] 2. when he was given such power, but without
designating the person, and the person
4. Under Art. 1898, CC— appointed was notoriously incompetent or
a. Agent contracts in the name of the insolvent.
principal;
b. He exceeds the scope of his authority; Principal may bring an action against the
c. The party with whom he contracted with substitute with respect to the obligations which
is aware of the limits of his powers; AND he has contracted under the substitution. [Art
d. The agent undertook to secure the 1893, CC]
principal’s ratification.
All acts of the substitute appointed against the
Note— Under Art. 1898, CC, the contract prohibition of the principal is void. [Art 1893, CC]
shall be void if the principal does not ratify
the contract and the party with whom the Responsibility for fraud or negligence—
agent has contracted is aware of the limits of The agent is responsible not only for fraud,
the powers granted by the principal. but also for negligence, which shall be
judged with more or less rigor by the courts,
Agent liable for damages to third persons according to whether the agency was or was
under Art. 1916 & 1917, CC— not for compensation. [Art. 1909, CC]
1. When two persons contract with regard to
the same thing, one of them with the agent
and the other with the principal;
Interest under Art. 1896, CC—
The agent owes interest on:
1. the sums he has applied to his own use from
the day on which he did so
2. those which he owes after the
extinguishment of the agency
a. If he converted for personal use, his
liability is without prejudice to a criminal
action that may be brought against him.
b. If for the sum he owes after
extinguishment, demand is not
necessary because the agent is required
to deliver to the principal whatever he
may have received by virtue of the
agency. [Art 1891, CC]
AGENCY
CC]
Chapter IV. Obligations of the Principal 3. When an agent acts in his own name, but
the contract involves things belonging to the
principal, the contract must be considered
TOCOMPLYWITHTHEOBLIGATIONS CONTRACTED BY THE AGENT as entered into between the principal and
TO ADVANCE NECESSARY SUMS AND REIMBURSE THE AGENT the third person. [Art. 1883, CC; Sy-Juco
TO INDEMNIFY AGENT FOR DAMAGES and Viardo v Sy-Juco, 1920]
TO PAY THE AGENT’S COMPENSATION 4. The principal is solidarily liable with the
BE SOLIDARILY LIABLE agent who has exceeded his authority if the
former allowed the latter to act as though he
General Rule: THE ACT OF THE AGENT IS had full power. [Art. 1911, CC]
THE ACT OF THE PRINCIPAL— 5. If two persons contract simultaneously with
Principal is bound by the acts of his agent. agent & principal for the same thing:
He has an obligation to deal fairly and in a. Contract of prior date prevails
good faith with his agent b. If applicable, follow the rule on double
sales in Art. 1544, CC. [Art. 1916, CC]
SPECIFIC OBLIGATIONS OF THE PRINCIPAL
[CARICS] Liability of Principal for Tort of Agent [Art.
3. to Comply with the obligations contracted by the 1910, CC]—
agent The principal is civilly liable to third persons
4. To Advance necessaty sums and Reimburse the for torts of an agent if he commit such in the
agent course and within the scope of the agency.
5. To Indemnify agent for damages
6. To pay the agent’s Compensation
7. be Solidarily liable Agent’s negligence or disobedience to the
principal does not relieve him from liability,
even if he had no knowledge about the tort.
I. To Comply with the obligations
Agent and principal are solidarily liable to
contracted by the agent third persons. 354
Obligations principal is bound to comply Liability of Joint Principals: Solidary [Art
AGENCY
with— 1915]—
1. obligations which the agent may have Each principal may be sued by the agent for
contracted within the scope of his authority the entire amount due, not just for
[Art. 1910, CC] proportionate shares.
Note: Principal is directly liable to creditor for Any of the principals may revoke the agency
debt incurred by agent acting within the
scope of his authority. That the agent also Requisites of Solidary Liability:
bound himself personally does not relieve a. Two or more principals
principal from liability if the debt was b. All principals concurred in the
incurred for his benefit. [Tuason v. Orozco] appointment of the same agent
c. Agent was appointed for a common
2. obligations which the agent may have undertaking
contracted beyond the scope of his authority
but were ratified expressly or tacitly by the Rules on Double Sale by Principal and Agent
principal [Art. 1910, CC] [Art. 1916-1917]
General Rule:
Note: Conditions for ratification (CaP-DECK) 1. When two persons contract with regard to
a. The principal must have Capacity and the same thing, one of them with the agent
Power to ratify. and the other with the principal
b. The act must be Done in behalf of the 2. two contracts are incompatible with each
principal other
c. He must ratify the acts in its Entirety 3. the agent acted in good faith
d. The act must be Capable of ratification 4. the principal shall be liable for damages to
e. He must have had Knowledge of the third person whose contract must be
material facts. rejected
AGENCY
b. he exceeds the scope of the his only insofar as the payment has been
authority beneficial to the debtor.”
c. the principal does not ratify the contract
d. the party with whom the agent Agent’s right to retain in pledge object of
contracted is aware of the limits of the agency should principal fail to reimburse him
powers granted by the principal; and 1. The agent may retain in pledge the things
i. the agent did not undertake to which are the object of the agency until the
secure the principal’s ratification principal:
5. Agent has no authority or acted beyond the a. effects the reimbursement set forth in
scope of his authority [Arts. 1403(1); 1910, Art. 1912, CC; and
CC; Dungo v Lopena, 1962] b. pays indemnity set forth in Art. 1913,
6. When the agent acts in his own name, CC
persons with whom the agent has 2. But agent is not entitled to the excess in
contracted have no right of action against case the thing was sold to satisfy his claim,
the principal, except when the contract and the proceeds are more than his claim
involves things belonging to the principal. [Arts. 2115, 2121, CC]. Also he must
[Art. 1883, CC] possess the thing lawfully in his capacity as
7. Unenforceable contracts under Art. 1403, agent [2 C.J.S. 457]
CC
III. To Indemnify the Agent for Damages
II. To Advance the Necessary Sums and
Reimburse the Agent
Obligation to pay indemnity for damages
[Art. 1913, CC]—
Obligation to advance sums [Art. 1912, CC]— The principal must indemnify the agent for
The principal must advance to the agent, all the damages which the execution of the
should the latter so request, the sums agency may have caused the latter, without
necessary for the execution of the agency. fault or negligence on his part.
The agent’s has the right to retain in pledge the act as though he had full powers. [Art. 1911,
object of the agency should principal fail to pay CC]
the indemnity set forth in Art. 1913, CC.
With person who appointed an agent with
IV. To Pay the Agent’s Compensation him for a common transaction—
If two or more persons have appointed an
Agency is presumed to be for a compensation, agent for a common transaction or
unless there is proof to the contrary. [Art. 1875, undertaking, they shall be solidarily liable to
CC] the agent for all the consequences of the
agency. [Art. 1915, CC]
General Rule on Commission—
The agent must be the efficient procuring
cause in order to be entitled to
compensation [Inland Realty v. Court of
Appeals]. His efforts must have resulted in
finding a ready, able and willing buyer of the
goods.
Compensation of Brokers—
Since the broker’s only job is to bring
together the parties to a transaction, it 356
follows that if the broker does not succeed in
AGENCY
bringing the mind of the purchaser and the
vendor to an agreement with reference to
the terms of a sale, he is not entitled to a
commission. [Rocha v Prats, 1922]
V. To Be Solidarily Liable
Chapter V. Extinguishment of Agency contracted with him in good faith. [Art. 1931,
CC]
3. Agent must finish business already begun
EXPIRATION OF THE PERIOD FOR WHICH IT WAS CONSTITUTED
on the death of the principal, should delay
DEATH,CIVILINTERDICTION,INSANITY, INSOLVENCY
entail any danger. [Art. 1884, CC]
WITHDRAWAL OF THE AGENT
ACCOMPLISHMENT OF THE OBJECT OF THE AGENCY
REVOCATION Obligation of heirs of agent upon agent’s
DISSOLUTION OF THE FIRM/CORPORATION death [Art. 1932, CC]—
1. They must notify the principal of the agent’s
death
2. They should adopt such measures as the
WHICH AGENCY ENTRUSTED/ACCEPTED THE circumstances may demand in the interest
of the principal in the meantime.
3. The law does not impose a duty on the
Extinguishment of Agency [EDWARD] principal’s heirs to notify the agent of the
1. Expiration of the period for which it was principal’s death. [Rallos vs Felix Go Chan]
constituted
2. Death, civil interdiction, insanity, insolvency III. Withdrawal of the agent
3. Withdrawal of the agent
4. Accomplishment of the object of the agency 1. General Rule: Agent may withdraw from the
5. Revocation agency by giving due notice to the principal
6. Dissolution of the firm/corp. Which [Art. 1928, CC]
entrusted/accepted the agency
But: If the principal should suffer any
I. Expiration of the period for which it damage by reason of the withdrawal, the
was constituted agent must indemnify him;
If created for fixed period, expiration of the
period extinguishes agency even if the Exception: If the agent based his withdrawal 357
purpose was not accomplished upon the impossibility of continuing
AGENCY
performance of the agency without grave
If no time is specified, Art. 1197 shall apply. detriment to himself. [Art. 1928, CC]
The courts may fix the period “as under the
circumstances have been probably 2. The agent, even if he should withdraw from
contemplated by the parties”. the agency for a valid reason, must continue
to act until the principal has had reasonable
Period may be implied from terms of opportunity to take the necessary steps to
agreement, purpose of agency, and the meet the situation. [Art. 1929, CC]
circumstances of the parties
IV. Accomplishment of the object of the
II. Death, civil interdiction, insanity, agency
insolvency Between principal and agent, the fulfilment
of the purpose for which agency was
Death extinguishes agency created ipso facto terminates agency even if
General Rule: Death extinguishes agency it be expressly made irrevocable. If the
purpose has not been accomplished, the
Exceptions: agency continues indefinitely for as long as
1. Agency coupled with an interest the intent to continue is manifested through
a. Interest common to principal and agent; words or actions of the parties
or
b. Interest of a 3rd person who has V. Revocation
accepted the stipulation in his favor.
[Art. 1930, CC]
Principal may revoke the agency at will as a
2. Anything done by the agent, without
general rule—
knowledge of the death of the principal or of
General Rule:
any other cause which extinguishes the
The principal may revoke the agency at will,
agency, is valid and fully effective with
and compel the agent to return the
respect to 3rd persons who may have
document evidencing the agency. Such
revocation may be express or implied. [Art. agent, as regards the special matter
1920, CC] involved in the latter [Art. 1926, CC]
d. In all three cases, there is implied
Exceptions: revocation only where the new
1. The right of the principal to terminate the appointment is incompatible with the
authority of his agent is absolute and previous one.
unrestricted, except only that he may not do
so in bad faith [Danon v Brimo, 1921] When revocation makes principal liable for
2. Agency is coupled with an interest [Art. damages
1927, CC] 1. If there is a period stipulated in the agency
a. A bilateral contract depends upon it contract, the agent may still revoke the
b. It is the means of fulfilling an obligation agent’s authority at will; but principal will be
already contracted; liable for damages.
c. Partner is appointed manager of a 2. No period fixed: principal liable if the agent
partnership in the contract of partnership can prove the former acted in bad faith.
and his removal from the management
is unjustifiable. Effect of revocation with respect to 3 rd persons
[Arts. 1921-1922,CC]
Note:
1. Powers of attorney falling under 1927 Agency to contract Agency to contract
cannot be revoked at the pleasure of the with specific with general public
principal, but may be revoked for a just persons
cause, such as when the attorney-in-fact Won’t prejudice 3rd Won’t prejudice those
betrays the interest of the principal. persons until notice is in good faith & w/o
(Coleongco v Claparols, 1964) given them. knowledge.
2. A mere statement in the power of attorney Notice must be Notice must be
that it is coupled with an interest is not personal. published (Arts. 1873,
1922).
enough. In what does such interest consist
must be stated in the power of attorney. (Del 358
Rosario v Abad, 1958) Revocation in case of solidary principals
AGENCY
3. Irrevocability of the contract cannot affect [Art. 1925, CC]—
3rd persons and is obligatory only on the When two or more principals have granted a
principal who executed the agency. (New power of attorney for a common transaction,
Manila Lumber v Republic, 1960) any one of them may revoke the same
without the consent of others.
Revocation may be express or implied
1. Express—principal clearly and directly Notice of Revocation as against third
makes a cancellation of the authority of the persons—
agent in writing or orally 1. If agent had general powers:
2. Implied— Revocation DOES NOT prejudice third
a. The appointment of a new agent for the persons who acted in good faith and
same business or transaction revokes without knowledge of the revocation
the previous agency from the day on
which notice thereof was given to the Notice of revocation in a newspaper of
former agent, without prejudice to the general circulation is a sufficient warning
provisions Art. 1921 and Art. 1922, CC to third persons
[Art. 1923, CC]
b. The agency is revoked if the principal 2. If agency is for the purpose of contracting
directly manages the business entrusted specified persons: to prejudice persons
to the agent, dealing directly with third specified, they must be given actual notice.
persons. [Art. 1924, CC]
c. A general power of attorney is revoked VI. Dissolution of the firm/corp. Which
by a special one granted to another entrusted/accepted the agency
- end of Agency -
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CIVIL LAW REVIEWER TABLE of CONTENTS
PARTNERSHIP
Table of Contents
PARTNERSHIP
IV. Liable for Acts of the Partnership......370
PARTNERSHIP
formed.
3. The parties must have legal capacity.
Exception: corporation cannot become a
partner on grounds of public policy.
4. It has a separate juridical personality (Art.
1768, CC) apart from the separate
personality of each of the member.
Note: Associations and societies, whose
articles are kept secret among the
members, and wherein any one of the
members may contract in his own name
with third persons, shall have no
juridical personality, and shall be
governed by the provisions relating
to co-ownership. (Art. 1775, CC)
PARTNERSHIP
parties; upon the to keep the
May be organized by Requires at least 5 duration is set thing
only two persons incorporators;
by law undivided, not
Juridical personality Personality commences from
exceeding ten
commences from SEC’s issuance of the
the moment of certificate of incorporation years, shall be
execution of the valid. (Art. 494,
contract of CC)
partnership Transfer of Need A co-owner can
May exercise any Can exercise such powers Interests unanimous dispose of his
power authorized by expressly granted by law or consent of share without
the partners as long incident to its existence partners to the consent of
as it is not contrary make the others
to law, etc.
assignee of
If no agreement as Power to do business is
to mgt. - every vested in the board of interest a
partner is an agent directors/ trustees partner
of the partnership Power to A partner may A co-owner
A partner as such Suit against the board/director act bind the can’t represent
may sue a co- who mismanages must be partnership the co-
partner who brought in the corp.’s name with Third ownership
mismanages Persons
Has no right of Has right of succession Dissolution Death or Death or
succession
incapacity of a incapacity of a
The partners are The stockholders are liable to
liable personally and the extent of the shares partner co-owner does
subsidiarily for subscribed by them dissolves the not dissolve the
partnership debts partnership co-ownership
Representa- There is There is no
tion mutual agency mutual agency
Partnership Co-ownership in the Securities and Exchange
Profits Must be Must always Commission (SEC). (Art. 1772, CC)
stipulated depend upon ii. FAILURE to comply with this
upon proportionate requirement shall NOT affect the
shares and any liability of the partnership and the
stipulation to members to third persons.
the contrary is
void. VI. Partnership Term
Commencement of the partnership—
1. General Rule: A partnership begins from the
IV. Rules to Determine Existence moment of the execution of the contract
Art. 1769. In determining whether a partnership 2. Exception: When otherwise agreed upon by
exists, these rules shall apply: the parties (Art. 1784, CC)
1. General Rule: Persons who are not partners
to each other are not partners as to third A Partnership may either be for—
persons 1. Fixed term or particular undertaking
2. at will
Exception: partnership by estoppel.
Extension of Life of Partnership
2. Co-ownership or co-possession and sharing 1. By express renewal of the agreement
of gross returns DO NOT establish a 2. By implied renewal—Requisites:
partnership a. A partnership is for a fixed term or
particular undertaking
3. Prima facie evidence of partnership: receipt b. It is continued after the termination of
of a share of the business profits such term or particular undertaking
without any express agreemen
Except if received in payment as:
a. A debt by instalment or otherwise; Note: Prima facie evidence of continuation—
b. As wages to an employee or rent to a a. Continuation of the business by the
landlord; partners without any settlement or
c. An annuity to a widow or representative liquidation of the partnership affairs 363
of a deceased partner; (1785)
PARTNERSHIP
d. As Interest on a loan, though the b. Effect: The rights and duties of the
amount of payment vary with the profits partners remain the same as they were
of the business; and at such termination, so far as is
e. As the consideration for the sale of consistent with a partnership at will
goodwill of a business or other property (1785)
by instalment or otherwise.
VII. Kinds of Partnerships
V. How Partnership is Formed
As to legality of existence
1. Form of Contract 1. De jure – has complied with all the
General Rule: The contract may be necessary requisites for lawful
constituted in any form (Art. 1771, CC) establishment (Arts. 1772, 1773, CC)
2. De facto – failed to comply with the
Exceptions requisites
a. Where immovable property or real rights
are contributed (Art. 1771, CC) As to its object
i. The contract must appear in a public 1. Universal (Art. 1777, CC)
instrument (1771) a. As to all present property (Art. 1778,
ii. It must have an inventory of such CC)—
immovable property signed by the Partners contribute all their properties to
parties and attached to the a common fund with the intention of
instrument (1773) dividing them among themselves as well
b. Where the capital is at least P3,000, in as all the profits they may acquire
money or property
i. The contract must appear in a public Includes all properties which belonged
instrument which must be recorded to each partner at the time of the
CIVIL LAW REVIEWER Chapter I. NATURE, FORM, and KINDS of AGENCY
PARTNERSHIP
wife, descendants, ascendants) by
reason of his office
PARTNERSHIP
losses as as to losses
between
partners but it 2. if none,
is liable to 3rd the
persons without agreement
prejudice to as to profits
reimbursement
from the 3. if none,
capitalist pro rata to
partners contribution
Partnership by Estoppel
1. Requisites of “Partner By Estoppel”:
a. The person—
represents himself as a partner of
an existing partnership or of two or
more persons not actual partners, or
consents to another representing
him as a partner of an existing
partnership or of two or more
persons not actual partners
b. Third person relied on the
misrepresentation, unaware of the
deception.
CIVIL LAW REVIEWER Chapter II. OBLIGATIONS of the PARTNERSHIP
PARTNERSHIP
Partnership may recover indemnity from by a partner for a specific purpose and he
contributing partner. later misappropriated it, such partner is
guilty of estafa. (Liwanag v CA, 2008)
2. Liable for fruits from the time they should
have been delivered without need of any Bring to partnership capital credit received
demand (Art. 1786, CC) Equal contribution by general partners:
capitalist partners shall contribute equal
3. Other duties of contributing partners: shares to the capital of the partnership (Art.
a. to preserve the property with the 1790, CC).
diligence of a good father of a family
(Art. 1163, CC) Obligation of capitalist partner to contribute
b. to indemnify the partnership for additional capital
damages caused to it by delay in 1. To contribute additional capital in case of
contribution of property (Art. 1170, CC) imminent loss, requisites:
a. There is an imminent loss of the
4. Risk of loss of things contributed (Art. 1795, business
CC) b. There is a need to contribute additional
a. Borne by the partner who owns them— capital to save the venture
If they are not fungible, so that only c. Capitalist partner refuses deliberately to
their use and fruits may be for the contribute an additional share
common benefit d. There is no agreement to the contrary
b. Borne by the partnership— 2. If refused to contribute: the partner must sell
If the things contributed are: his interest in the partnership to the other
i. fungible; partners (Art. 1791, CC)
ii. cannot be kept without deteriorating; 3. Industrial partner is exempted from
contributing.
Obligation of managing partner who is also a 2. Right to manage may either be:
creditor of the same partnership debtor a. exercised by all the partners, or
1. Requisites: b. limited to a certain number of partners
a. 2 separate credits, both demandable, called managing partners
b. one credit is owed to the partnership,
c. the other to the collecting partner who’s If a specific person has been appointed as
a managing partner. manager (Art. 1800, CC)—
2. Managing partner should: 1. If right is conferred in the articles of
a. If issued receipt for own account only partnership
apply the sum to the 2 credits in a. Manager may execute all acts of
proportion to their amounts administration despite the opposition of
b. Issued receipt for partnership’s account other partners unless he is in bad faith
apply whole sum to partnership’s b. Power is irrevocable without just or
credit (Art. 1792, CC) lawful cause.
Note: The vote of the controlling
When the partner who has received, in whole interest of the partners is necessary
or in part, his share of a partnership credit— for revocation.
Partner shall give to the partnership what he 2. If power is granted after constitution of
received if: partnership, it may be revoked at anytime
1. a debtor made a partial payment of his debt
to the partnership If two or more partners are appointed as
2. a partner received his share of the credit managers—
and the others haven’t 1. Without specification of their duties or
3. the debtor later becomes insolvent, (Art. without a stipulation of how each one will
1793, CC). act-- (Art. 1801, CC)
4. Cf. 1792: in 1793 there’s only 1 debt where a. Each one may separately execute all
the partnership is the creditor acts of administration
b. If opposed, decision of majority prevails
c. In case of a tie, the matter is to be
decided by the controlling interest.
II. Pay Damages 2. If there is a stipulation that managers must
act jointly (Art. 1802, CC)
367
a. The concurrence of all managers is
PARTNERSHIP
Liability for damages due to partner’s fault
The damages cannot be compensated with necessary for validity of the acts
the profits and benefits he may have earned b. Their absence or disability cannot be
for the partnership by his industry (Art. alleged as a defense unless there is
1794, CC). imminent danger or grave or irreparable
injury to the partnership.
Mitigation of liability
The courts may equitably lessen his If the manner of management has not been
responsibility if through his extraordinary agreed upon (Art. 1803, CC)—
efforts in other activities unusual profits have 1. All partners are considered agents and the
been realized (Art. 1794, CC) act of anyone bind the partnership without
prejudice to Art. 1801
Before a partner may sue another for 2. To make important alterations in the
alleged fraudulent management and immovable property of the partnership, even
resultant damages, a liquidation must first if useful, need the consent of all the partners
be effect to determine the extent of the
damage. Without liquidation of partnership If refusal to give consent is manifestly
affairs, partner cannot claim damages. prejudicial to the partnership, the court’s
(Soncuya v. De Luna) intervention may be sought
PARTNERSHIP
arbitration;
Maritima v Munoz, 1907).
IV. Render Full Information While the liability of the partners is joint in
transactions entered into by the partnership, a
Duty to give information: 3rd person who transacted with the partnership
1. On demand, to give true and full information can hold partners solidarily liable for the whole
of all things affecting the partnership to any obligation if the 3rd person’s case falls under
partner or their legal representatives (Art. Arts. 1822-1823 (Muñasque v. CA, 1985)
1806, CC).
2. Voluntary disclosure of material facts within However, any party may enter into a separate
his knowledge relating to/affecting obligation to perform a partnership contract.
partnership affairs (Art. 1821, CC). (Art. 1816, CC)
PARTNERSHIP
CC);
2. Misappropriation of one partner (Art. 1824,
CC)
a. partner acts within the scope of his
apparent authority
b. when partner in the course of business,
receives money or property and the
same is misapplied by the partner while
in the custody of the said partner.
Extent of liability—
firm is liable to the same extent as the
partner (Art. 1822, CC) and all partners are
solidarily liable with the firm (Art. 1824, CC)
CIVIL LAW REVIEWER Chapter III. OBLIGATIONS as to THIRD PERSONS
PARTNERSHIP
in the firm name unless—
1. It is also the surname of a general partner but as between the partners, he is not liable
2. Before the limited partner became such, the for losses (Art. 1797, CC)
business had been carried on under a name Partners are individually liable after
in which his surname appeared (Art. 1846, partnership assets are exhausted
CC)
Contracts for which partners are liable pro
rata with their individual property—
II. Bound by Partnership Admission
1. those entered into in the name and account
of the partnership
Requisites to be admissible against the 2. entered into under its signature
partnership— 3. entered into by a person authorized to act
1. it must be connected with partnership affairs for the partnership
2. it is within the scope of the partner’s Exception: partner may enter into a
authority (Art. 1820, CC) separate obligation to perform a
3. it is made during the firm’s existence partnership contract.
2. Share of 2.If no profit Any partner shall have the right to a formal 371
purely industrial sharing account as to partnership affairs—
PARTNERSHIP
partner is not stipulated - 1. If he is wrongfully excluded from the
fixed - as may losses shall be business/possession of the property by his
be just and borne according co-partners
equitable under to capital 2. If the right exists by agreement
the contribution
3. When the partner derives any profit as
circumstances
provided in Art. 1807
3.Purely 4. Whenever other circumstances render it just
industrial partner and reasonable (Art. 1809, CC)
not liable for
losses The right of a partner to demand an accounting
exists as long as the partnership exists. The
If the partners agreed to entrust to a third prescription period begins to run only upon the
person the designation of the share in profits dissolution when the final accounting is done
and losses (Art. 1798, CC)— (Fue Leung v. IAC,1989).
Designation may only be impugned if
manifestly inequitable
PARTNERSHIP
3. hold the title to partnership property in his 1. their separate property
own name without having it belong to him 2. with partnership property, with the consent
of all partners whose interests are not
Property acquired by a partner with charged/sold (Art. 1814, CC)
partnership funds—
General Rule: partnership property VI. Convery Real Property (Art. 1819, CC)
Exceptions:
1. contrary intention appears
Title in Conveyance passes title but
2. property was acquired after dissolution but partnership partnership can recover unless:
before winding up name: 1. The partner who sold it
Any partner was carrying on in the
Partner’s interest in the partnership— may convey usual way the business of
his share in the profits and surplus (Art. 1812, under the partnership hence
CC). This may be assigned, attached, subject to partnership binding the partnership; or
payment of support as there was already a name
liquidation of the partnership affairs. The 2. Buyer had no knowledge
assignee is only entitled to the profits assigned. of the lack of authority of
the seller
Conveyance of partner’s entire interest— Title in Conveyance does not pass title
It does not dissolve the partnership (Art. 1813, partnership but only equitable interest.
CC) name: Provided that: The partner who
Conveyance in sold it was carrying on in the
partner's name usual way the business of the
partnership hence binding the
partnership
CIVIL LAW REVIEWER Chapter IV. RIGHTS of PARTNERS
373
PARTNERSHIP
CIVIL LAW REVIEWER Chapter V. RIGHTS of the PARTNERSHIP
I. Acquire Immovables
An immovable property or any interest
therein may be acquired in the partnership
name, and title so acquired can only be
conveyed in the partnership name (Art.
1774, CC).
Cf Art. 1819: see table
374
PARTNERSHIP
CIVIL LAW REVIEWER Chapter VI. DISSOLUTION and WINDING UP
Chapter VI. Dissolution and Winding Up enjoyment of which has been transferred to
the partnership
3. death of a partner
DEFINITIONS
4. insolvency of any partner or the partnership
CAUSES FOR DISSOLUTION
CONSEQUENCES OF DISSOLUTION
5. civil interdiction of any partner
PARTNER’S LIABILITY
Judicial—
I. Definitions
1. Decree of court upon application (Art. 1831,
Dissolution (Art. 1828, CC)— CC)
Change in the partners’ relation caused by a. application by partner (grounds)
any partner ceasing to be associated in the insanity of any partner
carrying on of the business incapacity of any partner to perform
his part of the contract
Winding Up (JBL Reyes)— partner guilty of conduct prejudicial
Process of liquidation of partnership affairs, to the partnership business
between dissolution and termination wilfull breach of agreement by any
partner
Termination (JBL Reyes)— business can only be carried out
When all the affairs of the partnership are with loss
liquidated and the partnership is definitely b. application by purchaser of partnership
ended. It is the final settlement of accounts interest may be allowed in the following
of the partnership cases:
termination of term or undertaking
Effect of dissolution— partnership is at will and interest of
Partnership continues until winding up is partnership is assigned
completed (Art. 1829, CC).
III. Consequences of Dissolution
Effect of dissolution on the partners—
1. they cannot evade prior obligations
2. Generally, they are spared from new Except as necessary for winding up, dissolution
obligations to which they didn’t consent, terminates all authority of the partners to act for
unless these are essential for the winding up the partnership (Art. 1832, CC) 375
(Testate Estate of Mota v. Serra, 1925)
PARTNERSHIP
Partnership is not bound by any act of a
II. Causes for Dissolution partner when—
1. dissolution is not by the act, insolvency or
Voluntary— death of a partner
1. without violation of the agreement between 2. dissolution is by such act, insolvency or
the partners (Art. 1830, CC) death and the partners acting have
a. termination of the term or particular knowledge thereof
undertaking 3. acts not connected with winding up
b. express will of any partner in good faith,
when the partnership is at will Partnership is not bound with respect to
c. express will of all partners who have not third persons (Art. 1834, CC)—
assigned their interests or suffered them 1. business becomes unlawful
to be charged 2. partner dealing with third party becomes
d. bona fide expulsion of any partner in insolvent
accordance with the agreement 3. partner has no authority to wind up
2. in contravention of the agreement, by
express will of one partner Partner can bind the partnership even after
effects – partner is liable for damages; dissolution (Art. 1834, CC)—
other partners may continue the 1. acts appropriate to winding up
business 2. third person is in good faith and without
knowledge of dissolution:
Involuntary (Grounds)— a. third person who extended credit to the
1. business becomes unlawful partnership
2. specific thing promised perishes before b. third person who knew the existence of
delivery to the partnership, the use and the partnership
IV. Partner’s Liability 5. Not only the retiring partners but also the
new partnership itself which continued the
If partner transacts business with third business of the dissolved one, are liable for
persons notwithstanding death or insolvency the debts of the prior partnership. A
of a co-partner, liability shall be satisfied out withdrawing partner remains liable to a 3 rd
of partnership assets alone if— party creditor of the old partnership
1. Partner was unknown as partner to third (Singsong vs. Isabela Sawmill, 1979).
person
2. Partner is unknown and inactive in
partnership affairs
PARTNERSHIP
assign their rights to the remaining
partner
d. Any partner retires or dies without any
assignment of his right in partnership
property
e. All the partners or their representatives
assign their rights in partnership
property to one or more third persons
who promise to pay the debts and who
continue the business of the dissolved
partnership
f. Any partner wrongfully causes a
dissolution
g. When a partner is expelled
Chapter VII. Rights of Partners Upon A partner who has caused the dissolution
Dissolution wrongfully shall have the right to—
1. If the business is not continued—
a. Each partner may have the partnership
RIGHT TO WIND UP
property applied to the payment of the
RIGHT TO DAMAGES FOR/TO CONTINUE BUSINESS ON WRONGFUL DISSOLUTION
firm’s debt
RIGHT TO LIEN OR RETENTION, TO STAND IN PLACE OF CREDITOR, TO BE INDEMNIFIED
b. Surplus is applied to payment in cash of
RIGHT OF RETIRING/DECEASED PARTNER
RIGHT TO ACCOUNT
the net amount owed to the respective
partners subject to payment of damages
2. If the business is continued—
a. the right as against his co-partners and
I. Right to Wind Up all claiming through them in respect of
their interests in the partnership,
b. to have the value of his interest in the
Who has the right to wind up?
partnership, less any damage caused to
1. By agreement
his co-partners by the dissolution,
2. If there is no agreement—
ascertained and paid to him in cash, or
a. Partners who have not wrongfully
the payment secured by a bond
dissolved the partnership
approved by the court,
b. The legal representative of the last
c. to be released from all existing liabilities
surviving partner, not insolvent
of the partnership; but in ascertaining
the value of the partner's interest the
Any partner, his legal representative or his
value of the good-will of the business
assignee, upon cause shown, may obtain
shall not be considered.
winding up by the court.
III. Right to Lien or Retention, to Stand in
II. Right to Damages for or to Continue
Place of Creditor, to be Indemnified
Business on Wrongful Dissolution
Where a partnership contract is rescinded
General Rule—
on the ground of the fraud or
1. Each partner may have the partnership 377
misrepresentation of one of the parties
property applied to the payment of the firm’s
thereto, the party entitled to rescind is,
PARTNERSHIP
debt
without prejudice to any other right, entitled:
2. Surplus is applied to payment in cash of the
a. To a lien on, or right of retention of, the
net amount owed to the respective partners
surplus of the partnership property after
satisfying the partnership liabilities to
Each partner who has not caused
third persons for any sum of money paid
dissolution wrongfully shall have the right, as
by him for the purchase of an interest in
against each partner who has caused the
the partnership and for any capital or
dissolution wrongfully, to damages for
advances contributed by him;
breach of the agreement.
b. To stand, after all liabilities to third
persons have been satisfied, in the
The partners who have not caused the
place of the creditors of the partnership
dissolution wrongfully, if they all desire to
for any payments made by him in
continue the business in the same name
respect of the partnership liabilities; and
either by themselves or jointly with others,
c. To be indemnified by the person guilty of
may do so, during the agreed term for the
the fraud or making the representation
partnership and for that purpose may
against all debts and liabilities of the
possess the partnership property, provided
partnership.
a. they secure the payment by bond
approved by the court, or
b. pay any partner who has caused the IV. Right of Retiring/Deceased Partner
dissolution wrongfully, the value of his (Art. 1841, CC)
interest in the partnership at the
dissolution, less any damages Factual Situation—
recoverable 1. any partner retires or dies, and
c. In like manner indemnify him against all 2. the business is continued without any
present or future partnership liabilities. settlement of accounts as between him or
CIVIL LAW REVIEWER Chapter VII. RIGHTS of PARTNERS upon DISSOLUTION
Rights—
1. he or his legal representative as against
such person or partnership may have the
value of his interest at the date of dissolution
ascertained
2. either:
a. receive as an ordinary creditor an
amount equal to the value of his interest
in the dissolved partnership with
interest; or,
b. at his option or at the option of his legal
representative, receive in lieu of interest,
the profits attributable to the use of his
right in the property of the dissolved
partnership;
PARTNERSHIP
When right accrues—
At the date of dissolution, in the absence of
any agreement to the contrary.
CIVIL LAW REVIEWER Chapter VIII. RULES on SETTLEMENT
PARTNERSHIP
Order in case of insolvency of a partner or
his estate (in case of death)—
1. Separate creditors
2. Partnership creditors
3. Partners who gave contributions
Liquidation needed—
The business profits can’t be determined by
taking into account the result of 1 transaction
instead of all the transactions had, thus the need
for a general liquidation before a partner may
claim a specific sum as his share of the profits
(Sison v. McQuaid, 1953).
PARTNERSHIP
participate in mgt. not agreed in management
management upon, all
PERSON
7. BELIEVING PARTNER
ERRONEOUSLY HE’S A LIMITED general
partners have
an equal right in
GENERAL PARTNER business mgt
DISSOLUTION Contribution Cash, property Cash or
or industry property only,
SETTLINGOFACCOUNTSAFTER DISSOLUTION not industry
Proper party Proper party to Not proper party
to proceedings to proceedings
I. Definition proceedings by/against by/against
by or against partnership partnership
Limited Partnership the unless:
1. formed by two or more persons; partnership 1. he is also a
2. in accordance with the requirements of law; general partner
and 2. where the
object of the
3. composed of one or more general partners
proceedings is
and one or more limited partners (Art. 1843, to enforce a
CC). limited partner's
right against or
Limited partners are not bound by the liability to the
partnership’s obligations (Art. 1843, CC). partnership
Name in firm Name may Name must
name appear in firm appear in firm
name name
General Limited Partner General Limited
Partner Partnership Partnership
Prohibition to Prohibited No prohibition Dissoluti Rules governing Rules governing
engage in on and are Art. 1828-1842 are Art. 1860-1863
other Winding
business Up
Effect of Dissolves the Different effect;
retirement partnership rights
death insanity transferred to
II. Forming/Amending a Limited
or insolvency legal rep. Partnership (Art. 1844, CC)
Assignability Not assignable Assignable
of interest in Two or more persons desiring to form a
partnership partnership shall—
1. Sign and swear to a certificate which shall state the following items enumerated in Art. 1844
General
2. File for record the certificate in the Office ofLimited
Securities and Exchange Commission
Partnership Partnership
Creation May be constituted Partners must: A limited partnership is formed if there has been
in any form, except (1) Sign and swear
to a certificate
substantial compliance in good faith with Art.
where immovable
property or real which shall state 1844
rights are the items
contributed, a enumerated in Art. When the cert. of partnership may be
public instrument 1844 and amended (CSAAG – CFCTM)—
shall be necessary 1. Change in partnership name or in the
(2) File for record amount/character of contribution of any
the certificate in the limited partner
Office of the 2. Substitution of a limited partner
Securities and
Exchange
3. Additional limited partner is admitted
Commission 4. Admission of a general partner
Compos Only general 1/more general 5. General partner retires, dies, becomes
ition partners partners and insolvent or insane, or under civil interdiction
1/more limited and the business is continued:
partners a. Under a right so to do stated in the
Firm Must contain the Name must include certificate, or 381
name word “Company” the word “Limited” b. With the consent of all members
PARTNERSHIP
(SEC Memo Circ. (SEC Memo Circ.
6. Change in the character of business
#14-00) unless it’s #14-00)
7. False/erroneous statement in the cert.
a professional
partnership 8. Change in the time as stated in the cert. for
the dissolution of the partnership or return of
a contribution
Every partnership 9. Time is fixed for dissolution or return of a
shall operate under The surname of a contribution
a firm name, which limited partner shall 10. The Members want to change a statement in
may or may not not appear in the the cert. to make it more accurate (Art.
include the name of partnership name
1864, CC)
one or more of the unless:
partners.
(1) It is also the Requirements to amend—
surname of a 1. Must be in writing, under oath, and set forth
general partner, or clearly the change desired
2. Signed and sworn to by all the members,
(2) Prior to the time including the new members and assigning
when the limited members
partner became 3. The cert., as amended, must be filed in the
such, the business SEC (Art. 1865, CC)
has been carried on
under a name in
which his surname
appeared.
When the certificate shall be cancelled— b. Whose claims arose before such return.
1. When the partnership is dissolved Liabilities to partnership creditors and other
2. When all limited partners cease to be such partners—
(Art. 1864, CC) 1. Contributes services (Art. 1845, CC); Effect
a. The limited partner:
Requirements to cancel—
o Will be considered an industrial and
1. Must be in writing general partner; or
2. Signed by all the members o If the certificate states that he’s a
3. Filed with the SEC; if cancellation is court- limited partner, he will be a general
ordered, a certified copy of the order shall partner and limited partner at the
also be filed (Art.1865, CC) same time.
b. He divests himself of the privilege of
III. Limited Partner limited liability and will be exposed to all
the liabilities of a general partner.
Who may be limited partners— 2. Surname in firm name (Art.1846, CC)
1. A partnership – no General rule: the surname of a limited
2. A general partnership may be changed into partner shall not appear in the partnership
a limited one, and a partner in the former name
general partnership may be a limited partner If used in firm name, he is liable as a
in the limited partnership formed. general partner to creditors who did
not know that he is not a general
Contribution— partner.
May be cash or property, but not services. 3. False statement (Art. 1847, CC)
If a person suffers loss by reliance on the
Liabilities of a Limited Partner— false statement in the certificate, he may
General rule: He is not liable as a general hold liable any party to the certificate who
partner. His liability is limited to the extent of knew the statement to be false:
his contribution to the partnership. a. At the time he signed the certificate, or
b. Subsequently but within a sufficient time
Liabilities to the partnership (Art. 1858, CC)— before the reliance to enable him to
1. Difference between his actual contribution amend or cancel the certificate
4. Control of business (Art. 1848, CC) 382
and that stated in the certificate as having
been made a. He becomes liable as a general partner
PARTNERSHIP
2. Unpaid contributions which he agreed to without acquiring the rights of one.
make at specified future time and on the b. Control here contemplates active
conditions stated in the certificate participation in the business and not just
having the option to exercise control.
Liabilities as Trustee for the Partnership 5. Prohibited Transactions (Art. 1854, CC)
1. Specific property which he committed but a. Prohibited transactions of limited
did not contribute, or which he contributed partners:
but was wrongfully returned to him Receiving or holding as collateral
2. Money or property wrongfully paid or security any partnership property
conveyed to him Receiving any payment,
conveyance, or release from liability
Liabilities of a limited partner can be waived if it will prejudice the rights of 3 rd
or compromised only by the consent of all persons
the members. However, this too shall not b. If prohibited acts are performed
affect the right of the creditor who: Presumption of fraud on the
a. Extended credit; or creditors.
b. Whose claim arose after the filing and But the law does not absolutely
before a cancellation or amendment of prohibit the taking as collateral
the certificate. security of the property, as the
Even if a limited partner rightfully received prohibitions are modified by the
back his contribution to capital, he remains requirement of sufficient assets to
liable to the partnership for any sum discharge the partnership
necessary to discharge the liabilities of the obligations.
partnership to creditors who:
a. Extended credit or
6. Non-compliance with requisites for formation 3. Return of contribution (Art.1857,CC)
(Art. 1844 par.2, CC) a. Conditions for return:
If there is no substantial compliance: All liabilities to non-partner creditors
The partnership becomes a general had been paid, or there are
partnership with respect to 3 rd sufficient assets to satisfy them, or
persons All members consent, unless the
The members are liable as general limited partner desiring the return
partners. has lawfully demanded the return of
his contribution, or
Liabilities to separate creditors— The certificate had been cancelled
1. Right of creditors of a limited partner to or amended as to reflect the
petition a court of competent jurisdiction to: withdrawal or reduction of
a. Charge the interest of the indebted contribution.
limited partner with the payment of the b. When return may be demanded:
unsatisfied amount of the claim On the dissolution of the partnership
b. Appoint a receiver to preserve the On the arrival of the date specified
interest in the certificate
c. Make all other orders as the On the lapse of 6 months from
circumstances would require notice in writing to all other
2. The interest may be redeemed with the members if no time is specified
separate property of any general partner but c. General rule: return of contribution is in
not with partnership property. (Art. 1862,
cash, except:
CC)
if there is a statement to that effect
This is different from the rule in general
in the certificate or all partners
partnership where the interest can also
consent
be redeemed with partnership property.
d. Dissolution, upon petition of limited
(Art. 1814, CC)
partner:
When he rightfully but
Rights of Limited Partners—
unsuccessfully demands the return
1. Common rights of limited and general
of his contribution
partners (Art. 1851, CC)
The other liabilities of the
a. Demand that partnership books be kept
partnership have not been paid pr
383
at the principal place of business
property is insufficient for payment
PARTNERSHIP
b. Inspect and copy any of the books
and the limited partner would
c. Demand true and full info of all things
otherwise be entitled to the return of
affecting the partnership
his contribution
d. Demand a formal account whenever
e. In case of several limited partners:
circumstances render it just and
Members may agree to give priority
reasonable
to one or more limited partners, and
e. Resort to the court for the dissolution
This must be stated in the certificate
and winding up of the business
of partnership. The preference
f. Receive a share of the profits or other
covers –
compensation by way of income
o Return of contributions;
g. Demand the return of his contribution
o Compensation; and
provided assets are more than the
o Other matters where some
liabilities
benefit is granted (Art. 1855,
2. Loan money and transact business (Art.
CC).
1854, CC)
f. In the absence of such statement, all the
a. Limited partner allowed to loan money,
limited partners shall stand upon equal
transact business because the
footing.
relationship between the limited partner 4. Share of profits (Art. 1856, CC)
and partnership is not based on trust
When the assets exceed liabilities
and confidence. There is no conflict of
(except those to limited and general
interests.
partners), a limited partner may recover
b. Unless he is also a general partner, he
his share in the profits or compensation
is entitled to a pro rata share of the
by way of income stipulated in the
partnership assets together with the
certificate.
general creditors.
5. Assign interests (Art. 1859, CC)
a. A limited partner’s interest is assignable.
b. Substituted limited partner: a person 7. Person erroneously believing he is a limited
admitted to all the rights of a limited partner (Art. 1852, CC)
partner who has died or assigned his a. A person who has contributed capital
interest in a partnership erroneously believing that he has
He has all the rights and powers of become a limited partner:
a limited partner Does not become a general partner,
Subject to all restrictions and or
liabilities of his assignor except: Become bound by the obligations of
o those he was ignorant of when the partnership, if:
he became a limited partner and o he exercises the rights of a
could not be ascertained in the limited partner
certificate
o on ascertaining his mistake he
c. An assignee who does not become a promptly renounces his interest
substituted limited partner has: in the profits of the business
No right to require any information
or account of partnership
transactions IV. General Partner
No right to inspect partnership
books A general partner shall have all the rights and
Only entitled to receive the powers and is subject to all the restrictions and
assignor’s share of the profits or liabilities of a partner in a partnership without
other compensation by way of limited partners.
income
Only entitled to the return of the General partners cannot, without the written
assignor’s contribution consent or written ratification of all limited
d. The assignee shall have the right to partners, do the ff. (ACAP-ACA)—
become a substituted limited partner if – 1. Any act in contravention of the certificate
All the members consent, or 2. Confess judgment
The assignor is empowered in the 3. Any act which would make it impossible to
articles of partnership, and he gave carry on the partnership business
the assignee the right to be a 4. Possess partnership property, or assign
substituted limited partner. their rights in specific partnership property 384
In either case, it is still required that the for other than a partnership purpose
PARTNERSHIP
certificate be amended (Art. 1865, CC) 5. Admit a person as a general partner
and registered with the SEC. 6. Continue the business with partnership
e. That the assignee has become a property on the death, retirement, insanity,
substituted limited partner does not civil interdiction or insolvency of a general
relieve the assignor from liabilities to the partner, unless the power is granted in the
partnership under Art. 1858, as a certificate
trustee, or for false statement in the 7. Admit a person as a limited partner, unless
certificate. the right is granted in the certificate (Art.
6. Effect of death of a limited partner (Art. 1850, CC)
1861, CC)
a. Rights of executors or administrators: V. Dissolution
All the rights of a limited partner for
the purpose of settling the estate When a limited partnership may be dissolved
If the deceased had assigned his —
interest in the partnership, the 1. The misconduct of a general partner
executor or administrator may 2. Fraud on the limited partner by the general
constitute the assignee a substituted partner
limited partner if the deceased was 3. The retirement, death, insolvency, insanity,
empowered to do so or civil interdiction of a general partner,
b. The deceased limited partner’s estate is except: if the business is continued by the
liable for all the deceased’s obligations remaining general partners
and liabilities to the partnership as a a. Under a right stated in the certification
limited partner b. When all members consented to the
continuation (Art. 1860, CC)
4. When all the limited partners ceased to be
such (Art. 1864, CC)
5. End of the term for which it was to exist (Art.
1844, CC)
6. By mutual consent of the partners before the
end of the firm’s original term
7. When the limited partner demanded the
return of his contribution but was
unjustifiably denied (Art. 1857, CC)
8. The causes in Arts. 1830 and 1831.
PARTNERSHIP
4. Those to general partners other than for
capital and profits
5. Those to general partners in respect to
profits
6. Those to general partners in respect to
capital
- end of Partnership -
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B. Damages
389
Chapter II. Concept of Quasi-Delict create two kinds of civil liabilities against the
accused and, where provided by law, his
employer. Civil liability is not extinguished by
acquittal where the acquittal is based on
Elements reasonable doubt. However, the offended party
Distinguished cannot recover damages under both types of
Quasi-Delict vs. Delict liability. (Asked in the 1990 and 2003 bar
Quasi-Delict vs. Breach of Contract exams)
1
However, the court has held that there can be a tort even
CIVIL LAW REVIEWER Chapter II. CONCEPT of QUASI-DELICT
where there is a pre-existing contract between the parties.
(Far East vs. CA, infra)
CIVIL LAW REVIEWER Chapter II. CONCEPT of QUASI-DELICT
391
b) Experts/Professionals
Culion vs. Philippine(1930): When a person holds
392
himself out as being competent to do things
c) Insanity
C. Proof of Negligence
Art. 2180. …Guardians are liable for damages caused
by the minors or incapacitated persons who are under 1. Burden of Proof (ROC)
their authority and live in their company…
Art. 2182. If the minor or insane person causing Rule 131, Sec. 3(c and d)
damage has no parents or guardian, the minor or
insane person shall be answerable with his own (c) That a person intends the ordinary consequences
property in an action against him where a guardian ad of his voluntary act;
litem shall be appointed.
(d) That a person takes ordinary care of his concerns:
US vs. Baggay (1911): A lunatic or
insane person who, in spite of his 2. Presumptions
irresponsibility on account of the
deplorable condition of his deranged Art. 2184. In motor vehicle mishaps, the owner is
mind, is still reasonably and justly liable solidarily liable with his driver, if the former, who was
with his property for the consequences in the vehicle, could have, by the use of due diligence,
of his acts. prevented the misfortune. It is disputable presumed
that the driver was negligent, if he had been found
guilty of reckless driving or violating traffic regulations
ii. Emergency Rule at least twice within the next preceding two months.
Ramos vs. CA (1999): The injury itself, taken Art. 2214. In quasi-delicts, the contributory negligence
said
together with the circumstances raises the of the plaintiff shall reduce the damages that he may provisio
presumption of negligence that the defendant recover. ns,
must meet with an explanation. somethi
Genobiagon vs. CA (1989): The alleged ng that
Elements: contributory negligence of the victim, if any, does could
The accident is such that it would not not exonerate the accused in criminal cases not
have happened in the ordinary course of committed through reckless imprudence, since have
events without the negligence of one cannot allege the negligence of another to
someone; evade the effects of his own negligence.
The defendant exercises control and
management. Rakes vs. Atlantic (1907): If so, the
There is no contributory negligence on disobedience of the plaintiff in placing himself in
the part of the plaintiff. danger contributed in some degree to the injury
as a proximate, although not as its primary
DM Consunji vs. CA (2001): The res ipsa cause.
loquitur doctrine is based in part upon the theory
that the defendant in charge of the (Supreme Court in this case cited numerous
instrumentality which causes the injury either foreign precedents, mostly leaning towards the
knows the cause of the accident or has the best doctrine that contributory negligence on the part
opportunity of ascertaining it and that the plaintiff of the plaintiff did not exonerate defendant from
has no such knowledge, and therefore is liability, but it led to the reduction of damages
compelled to allege negligence in general terms awarded to the plantiff.)
and to rely upon the proof of the happening of
the accident in order to establish negligence. 3. Fortuitous Event
(NOTE: For the res ipsa loquitur doctrine to Art. 1174. Except in cases expressly specified by the
apply, it must appear that the injured party had law, or when it is otherwise declared by stipulation, or
no knowledge as to the cause of the accident, or when the nature of the obligation requires the
that the party to be charged with negligence has assumption of risk, no person shall be seen
superior knowledge or opportunity for responsible for those events which, could not
foreseen, or which, though foreseen, were inevitable.
explanation of the accident.)
Juntilla vs. Fontanar (1985): The elements of
caso fortuito are:
D. Defenses 1. the cause of the unforeseen and unexpected
occurrence, or of the failure of the debtor to
1. Plaintiff’s Negligence comply with his obligation, must be
independent of the human will;
Art. 2179. When the plaintiff’s own negligence was 2. It must be impossible to foresee the event or
the immediate and proximate cause of his injury, he if it can be foreseen, it must be impossible to
cannot recover damages. But if his negligence was avoid;
only contributory, the immediate and proximate cause 3. The occurrence must be such as to render it
of the injury being the defendant’s lack of due care, impossible for the debtor to fulfill his
the plaintiff may recover damages, but the courts shall
mitigate the damages to be awarded.
obligation in a normal manner;
4. The obligor must be free from any
Manila Electric vs. Remonquillo (1956): Even if participation in the aggravation of the injury
Manila Electric is negligent, in order that it may resulting to the creditor.
be held liable, its negligence must be the
proximate and direct cause of the accident. Hernandez vs. COA (1984): The robbery that
happened to him cannot be said to be the result
of his imprudence and negligence. This was
undoubtedly a fortuitous event covered by the
394
4. Assumption of Risk
Exception:
5. Due Diligence
7. Double Recovery
399
Parental liability is, in other words, Libi vs. IAC (1992): The parent's liability under
anchored upon parental authority coupled with 2180 should be primary and not subsidiary. If it
presumed parental dereliction in the discharge were subsidiary, the parents cannot invoke due
of the duties accompanying such authority. The diligence as a defense. Such interpretation
parental dereliction is, of course, only presumed reconciles 2180 with 2194 which calls for
and the presumption can be overturned under solidary liability of joint tortfeasors.
Article 2180 of the Civil Code by proof that the
Guardians REQUISITES FOR LIABILITY TO ATTACH:
Art. 2180, par 3. Guardians are liable for damages Parents - (mnemonic: 21 + Authority &
caused by the minors or incapacitated persons who Company):
are under their authority and live in their company. 1. The child is below 21 years old
2. The child is under the parental authority
Art. 216. In default of parents or a judicially appointed of the parents
guardian, the following person shall exercise
3. The child is living in the company of the
substitute parental authority over the child in the order
indicated: parents
The surviving grandparent, as provided in Art.
214; Guardians - (mnemonic: Authority & Company)
The oldest brother or sister, over twenty-one 1. The ward if minor is below 21 years
years of age, unless unfit or disqualified; and old. If incapacitated, the guardian is
The child's actual custodian, over twenty-one liable for the acts of the ward regardless
years of age, unless unfit or disqualified. of the latter’s age.
Whenever the appointment or a judicial guardian over 2. The child is under the parental
the property of the child becomes necessary, the authority of the parents.
same order of preference shall be observed. 3. The tortfeasor is under his authority.
4. The tortfeasor is living in his
Art. 217. In case of foundlings, abandoned neglected
or abused children and other children similarly company.
situated, parental authority shall be entrusted in
summary judicial proceedings to heads of children's Is a minor or insane tortfeasor with NO parent or
homes, orphanages and similar institutions duly guardian liable?
accredited by the proper government agency. Yes. He shall be answerable with his own
property in an action against him where a
guardian ad litem shall be appointed. (Art. 2182)
Who are liable For whose Acts Requisite for Liability to Attach
Teacher- in- charge (the one Pupils and students pupils and students remain in
designated to exercise supervision teacher’s custody regardless of the
over students) age
Head of establishment of arts and Apprentices custody regardless of the age
401
trades
Palisoc vs, Brillantes (1971): “Custody” means now be deemed to have been set aside by this
the protective and supervisory custody that the decision
school and its heads and teachers exercise over
the pupils and students for as long as they are at
attendance in the school and includes recess Amadora vs. CA (1988): Art. 2180 should apply
time. to ALL schools, academic as well as non-
academic. Where the school is academic rather
There is nothing in the law that than technical or vocational in nature,
requires that for such liability to attach, the pupil responsibility for the tort committed by the
or student who commits the tortious act must student will attach to the teacher in charge of
live and board in the school, as erroneously held such student. In establishments of arts and
by the lower court, and in the dicta in Mercado trades, it is the head thereof, and only he, who
(as well as in Exconde) on which it relied, must shall be held liable as an exception to the
general rule.
Teachers in general shall be liable for acts of 3 Essential Requisites: done by
their students except where the school is an
technical in nature, in which case it is the head 1. That the employee was chosen by the employ
thereof who shall be answerable. employer, personally or through another ee in
2. That the services are to be rendered in furthera
Salvosa v. IAC (1988): A student not “at nce of
accordance with orders which the employer
attendance in the school” cannot be in “recess” the
has the authority to give at all times
thereat. A “recess,” as the concept is embraced 3. That the illicit act of the employees was on
in the phrase “at attendance in the school,” the occasion or by reason of the entrusted to
contemplates a situation of temporary him
adjournment of school activities where the
student still remains within call of his mentor and Presumption of negligence
is not permitted to leave the school premises, or The presentation of proof of the negligence of its
the area within which the school activity is employee gives rise to the presumption that the
conducted. Recess by its nature does not defendant employer did not exercise the
include dismissal. diligence of a good father of a family in the
selection and supervision of its employees
Mere fact of being enrolled or being in the
premises of a school without more does not Nature of liability of the employer
constitute “attending school” or being in the The employer is primarily and solidarily liable for
“protective and supervisory custody” of the the tortious act of the employee. The employer
school, as concemplated by law. may recover from the employee, the amount it
will have to pay the offended party’s claim.
Ylarde vs. Aquino (1988): The principal of the
school cannot be held liable for the reason that Such recovery, however, is NOT for the entire
the school he leads is an academic school and amount. To allow such would be as if to say that
not a school of arts and trades. (Teachers’ the employer was not negligent.
liability has been asked four times from 1975-
1990, and four times from 2004- 2007) Necessity of presumption of negligence
It is difficult for any person injured to prove the
3. Owners and Managers of employer’s negligence as they would be proving
Establishments negative facts. (Here comes in the fabrication of
documents, etc.)
Who are liable For whose Requisites for
acts liability to attach
Independent contractor
Owners and Their The damage was
managers of an employees caused in the Master not generally liable for the fault or
establish-ment service of the negligence of an independent contractor
or enterprise branches in which performing some work for him
the employees
are employed A contractor may at the same time be so
-OR- situated that he would be regarded as an
The damage was employee for whose negligence the employer is
caused on the liable
occasion of their
functions
Cuison vs. Norton & Harrison (1930): Basis for
civil liability of employers is pater familias
Philippine Rabbit vs. Philam Forwarders (1975):
“Owners and managers of an establishment or
The existence of the employer-employee
enterprise” does not include a manager of a
relationship must first be established before an
corporation. (Spanish term “directores” connotes
employer may be made vicariously liable under
“employer.” But manager of a corporation is not
Art. 2180, CC.
an employer, merely an employee of the owner.)
Philtranco vs. CA (1997): The liability of the
4. Employers registered owner and driver is solidary, primary
and direct.
Art 2180, par 5. Employers shall be liable for the
damages caused by their employees and household Filamer vs. IAC (1992): “Within the scope of
helpers acting within the scope of their assigned
their assigned task” in Art. 2180 includes any act
tasks, even though the former are not engaged in any
business or industry.
402
2. Effect of Acquittal
3. Prejudicial Questions
dicial questions which must be decided before any criminal prosecution may be instituted or may proceed, shall be governed by rules of court which the Supreme Court
s of Court
sion by reason of prejudicial question.
r suspension of the criminal action based upon the pendency of a prejudicial question in a civil action may be filed in the office of the prosecutor or the court conducting
D. Joint and Solidary Liability
tions are: (a) the previously instituted civil action involves an issue similar or intimately related to the issue raised in the subsequent criminal action, and (b) the resolutio
F. Prescription
408
Elements:
a) existence of a valid contract
b) knowledge of the third person of the
existence of the contract
c) interference of the third person WITHOUT
legal justification or excuse
(So Ping Bun vs. CA, 1999)
409
Alternative Answer:
No such reservation is necessary. Under Section 1
Rule 111 of the 2000 Rules on Criminal Procedure,
what is “deemed instituted” with the criminal action is
only the action to recover civil liability arising from the
crime or ex delicto. All the other civil actions under
Articles 32, 33, 34, 2176 of the New Civil Code are no
longer “deemed instituted,” and may be filed
separately and prosecuted independently even
without any reservation in the criminal action (Section
3, Rule 111, 2000 Rules on Criminal Procedure). The
failure to make a reservation the criminal action is not
a waiver of the right to file a separate and
independent civil action based on these articles of the
New Civil Code (Casupanan vs. Laroya, G.R. No.
145391, August 26, 2002)
412
b. Furthermore, the INTEREST legal interest from the time it is JUDICIALLY demanded.
DUE shall itself earn
c. When an obligation, NOT at the rate of 6% per annum. If claim or damages are LIQUIDATED,
constituting a loan or forbearance from default, i.e., from judicial or 418
of money, is breached, an interest extrajudicial demand. (Art. 1169, Civil
on the AMOUNT OF DAMAGES Code)
For Corporations:
EdeICruz R o m u a I d o M e n z o n 3 r.
M a iSu a r e z
Diana Gervacio
T 86 ASUP¢e
A yp p a B i ap s o n
C 0 PI PI ITT E E H E A D S
Kristine Bongcaron
Michelle Dy
Patrich Leccio
M i c h e I I e A r i a s
C a m i I I e M a r a n a n
A n g e I a S a n d a Io
Ł € C I u ü e S
L i I i b e t h P e r e z
H O C K B A R
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S £ C it £ T A e î A r
C h a r i ss e M e n d oza
L 0 G í 5 T ł C 5
Dahlia Salam at
V i k to r F o n t a n i I Ia
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Kae Guerrero
G i n
n0Tf£
S U C C E S S I ON
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B. Assume Jurisdiction
Criticisms:
a. Conflicts cases were ordinarily
concerned only with private and not
governmental interests.
b. ii.Not all state legislatures publish
reports that explain background and
purpose of laws, thus courts are left
to speculate.
Illustration:
B and J, NY residents, met a car
accident in Ontario thru J’s fault. B sued
J in NY for damages. Ontario bars
recovery under a guest statute. NY does
not have a similar rule. B should be
allowed to recover. NY had a greater
and more direct interest than Ontario.
NY’s policy is to afford compensation to
a guest tortfeasor host while Ontario’s
policy is to prevent fraudulent collusion
to the prejudice of Ontario defendants
and insurance companies. Ontario had 432
no interest in denying a remedy to a NY
3. Comparative Impairment
Court weighs conflicting interests and
apply the law of the state whose interest
would be more impaired it its laws were
not followed
Chapter VI. Notice and Proof of Foreign II. Exceptions to the Application of
Law Foreign Law
DETERMINATION OF NATIONALITY Sec.1, Art IV. The following are citizens of the
PROCEDURE FOR NATURALIZATION Philippines:
LOSS OF PHILIPPINE CITIZENSHIP (1) Those who are citizens of the Philippines at the
PROBLEMS IN APPLYING THE NATIONALITY PRINCIPLE time of the adoption of this Constitution;
(2) Those whose fathers or mothers are citizens of
the Philippines;
Most civil law countries such as the (3) Those born before January 17, 1973, of Filipino
Philippines follow the NATIONAL LAW mothers, who elect Philippine citizenship upon
THEORY: (Asked in 98, 04, BAR reaching the age of majority; and
EXAMINATIONS) (4) Those who are naturalized in accordance with
law.
It is the nationality or citizenship of the
individual, which regulates the following: 1. Natural-Born Citizens
Civil status DEFINITION: Those who are citizens of
Capacity the Philippines without having to perform
Condition any act to acquire or perfect citizenship.
Family rights and duties Two principles:
Laws on Succession JUS SOLI – looks to the PLACE of
Capacity to succeed BIRTH to determine one’s
nationality
According to the Supreme Court, it is a JUS SANGUINIS
conflict of laws theory by virtue of which - means rule of DESCENT OR
jurisdiction over the particular subject matter BLOOD
affecting a person is determined by the - Principle followed in the
latter’s nationality. (Ellis vs. Republic, 1963) Philippines
2. Citizens by Naturalization
In the Philippines, the nationality principle is NATURALIZATION: confers to an
expressed in Art. 15 of the Civil Code as alien a nationality after birth by any
follows: means provided by law.
In the Philippines, this is done by
judicial method under CA No. 73 as
amended by RA 530.
2. Statelessness
Two senses:
a. DE JURE statelessness: A person has
been stripped of his nationality by his
former government without having an
opportunity to acquire another
b. DE FACTO statelessness: A person
possessed of a nationality but whose
country does not give him protection
outside its own territory (refugees)
C. Kinds of Domicile
Chapter VIII. Domicile
1. Domicile of Origin
A person’s DOMICILE AT BIRTH
DOMICILE
COMPARATIVE MERITS AND DEMERITS OF DOMICILE AND NATIONALITY LEGITIMATE CHILD ILLEGITIMATE CHILD
Follow the FATHER’s Follow the MOTHER’s
domicile domicile
Art. 69, Family Code. The husband and wife shall fix
the family domicile. In case of disagreement, the court
shall decide. The court may exempt one spouse from
living with the other if the latter should live abroad or
there are other valid and compelling reasons for such
exemption…
2. Demerits
a. does not provide solution with respect to
stateless persons
those with multiple nationalities
states with diverse legal systems
b. person’s ties to his nation may be so
attenuated if he has lived in another
country most of his life
B. Domicile
1. Merits
a. genuine link—adequate basis for him to
exercise rights therein and the state to
impose duties on him
CIVIL LAW REVIEWER Chapter IX. PRINCIPLES on PERSONAL STATUS and CAPACITY
IV. Name
A. Governing Law—
Determined by PERSONAL LAW
V. Age of Majority
A. Governing Law—Determined by
PERSONAL LAW
B. Age of Majority under Philippine Law—
Age of majority is 18 years old [RA 6809]
CIVIL LAW REVIEWER Chapter X. FAMILY RELATIONS
the 2. The
of formaliti
Situs/Lex es of a W
Rei Sitae contract t
1. The capacity to d
to transfer or convey a
acquire property t
property is are t
governed by governe o
Lex Situs. d by Lex o
Situs L
NOTE: I
Transfer of o
property to a II. Excepti V
foreigner ons to
who B
Lex
subsequently
became a Situs
Filipino
citizen shall A. Transac
be tions
recognized Not
[Llantino v Affectin
Co Liong g
Chong] Transfe
[Asked in 00- r of Title
04, BAR or
EXAMINATI Owners
CIVIL LAW REVIEWER Chapter XI. PROPERTY
Security exec
— III. Situs of uted
In Certain in
contracts Properties that
where cou
real ntry.
property A. Situs of 447
is offered Personal C. S
PLACE OF
APPLICABLE LAW
EXECUTION
Philippines Philippine Law IV. Revocation
Foreign 1. law of the place where
Country he may be (lex loci TESTATOR APPLICABLE LAW
celebrationis) [Art
Will is revoked in
815, CC] Philippine
2. Philippine law [see III Domiciliary
Tolentino 117]
Philippine Law
the Philippines
A. Controlling Law—
NOTE: Rule re: Joint Wills The probate of a will being essentially
1. Joint wills prohibited under Art. 818, CC procedural in character, the law of the
executed by Filipinos in a foreign country forum (lex fori) governs.
shall not be valid in the Philippines even
though authorized by the laws of the country B. Wills Proved and Allowed in a Foreign
where they were executed. [Art. 819, CC] Country
(Asked in 00-04 BAR EXAMINATIONS) 1. A will proved and allowed in a foreign
2. Civil Code is silent as to the validity of a joint country in accordance with the laws of that
will executed by an alien in the Philippines. It country may be allowed, filed, and recorded
is suggested that that it should not be in the proper Regional Trial Court in the
probated if it would affect the heirs in the Philippines [RULES OF COURT, Rule 77,
Philippines. Sec.1]
CIVIL LAW REVIEWER Chapter XIII. SUCCESSION
VII. Trusts
Extrinsic Validity: rules governing wills apply
Intrinsic Validity: lex situs since a trust
involves property
452
II. Crimes
A. General Rule—
Lex Loci Delicti Commissi/ Locus Regit
Actum (law of the place where the act was
committed)
B. Exceptions
1. Crimes committed by state officials,
diplomatic representatives and officials of
recognized international organizations
(based on the doctrine of state immunity
from suit.
2. Crimes committed on board a foreign vessel
even if it is within the territorial waters of the
coastal state, as long as the effect of such
crime does not affect the peace and order of
the coastal state.
3. Crimes which, although committed by
Philippine nationals abroad are punishable
under Philippine law as provided in Art. 2,
Revised Penal Code:
b. offenses committed in a Philippine 454
vessel or airship
A. General Rule—
License to transact business in the
Philippines is an essential prerequisite for
filing a suit before Philippine courts [Art. 133,
Corporation Code]
B. Exceptions—
1. isolated transactions
2. action to protect trademark, trade name,
goodwill, patent or for unfair competition
3. agreements fully transacted outside the
Philippines
4. when the petition filed is merely a corollary
defense in a suit against the corporation
456
B. Summary Proceeding
1. Followed in most civil law countries
2. A summary proceeding for enforcement is
provided by statute.
C. Judgment Registration
An authenticated copy of the foreign
judgment is filed in the registrar’s office
together with other proofs required by
domestic laws and the foreign judgment is
converted into a local one that is
immediately executory.