PRE-WEEK NOTES and LAST MINUTE TIPS

in CIVIL LAW
For Bar 2020/2021
(By: Prof. Elmer T. Rabuya)

A. LEGAL PERSONALITY AND CAPACITY TO ACT

1. Legal or civil personality is simply legal existence. It is the fitness to be the subject of legal
relations. Capacity to act, on the other hand, is the power to do acts with legal effects. Civil
personality is inherent in a natural person; while capacity to act is not, it is acquired.

2. Death extinguishes civil personality. But civil personality is not a condition sine qua non
for death. Death is simply cessation of life. An infant who is delivered and dies without
satisfying the requirement of Article 41 of the Civil Code is considered to have died even
if it did not possess civil personality.

3. In determining legal existence (civil personality) of a natural person, distinguish between one
who is already delivered from the mother’s womb and one which is still inside the mother’s
womb (conceived or unborn child).

4. For those already delivered, determine the intra-uterine life. If the infant had an intra-uterine
life of AT LEAST 7 months, it is sufficient that it is alive at the time of complete delivery. If
satisfied, it possessed civil personality (or it had legal existence) even if it dies afterwards. But
if the intra-uterine life is LESS THAN 7 months, it must survive for at least 24 hours.

5. For the conceived or unborn child, it has civil personality or legal existence only for purposes
beneficial to it, i.e., acquisition of rights. Hence, a conceived child is entitled to: (i) legal support
from the progenitors; (ii) receive simple or pure donation; (iii) successional rights, whether
testamentary or intestate; and (iv) become a beneficiary in an insurance policy.

PROBLEM NO. 1: Continental Steel Manufacturing Corp. v. Montano (2009)

Cesar is a member of the company’s union which has an existing CBA with the employer. One of
the rights granted to union members in the CBA is entitlement to financial assistance in case of death of
a legitimate dependent of a union member. When the wife of Cesar, Sunshine, was forced to deliver the
couple’s child after six months of pregnancy, the child was already dead at the time of delivery. After the
burial of his child, Cesar applied for the financial assistance provided for in the CBA but his employer
refused to pay on the ground that Cesar’s child did not possess civil personality, hence, it did not die. It
was the contention of the employer that civil personality is a condition sine qua non for death because,
according to Article 42 of the Civil Code, death extinguishes civil personality.

Q1: Is the employer’s contention meritorious?

ANSWER: No, because possession of civil personality is not a condition sine qua non for death. Death is
simply cessation of life. The Philippine Constitution recognizes the existence of life on the part of the fetus
from the moment of conception. If said fetus is no longer alive at the time of delivery, it is considered to
have died although it may not be in possession of civil personality because it failed to satisfy the conditions
required in Article 41 of the Civil Code.

Q2: Is the issue of the civil personality of the conceived child relevant to the resolution of the case?

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ANSWER: No, because the determination of the civil personality of a conceived child is relevant only in
cases involving the acquisition of rights by the conceived child himself. Such determination is not relevant
if the issue relates to the acquisition of rights by the parent of the conceived child, as in this case.

Q3: Is Cesar entitled to the financial assistance provided for in the CBA?

ANSWER: Yes, because all the conditions required in the CBA are satisfied. As previously explained, the
child of Cesar died. Such child is a dependent of Cesar because one of the rights to which a conceived
child is entitled to is the right to be supported by its progenitors. It is also a legitimate child because it was
conceived inside a valid marriage. According to our laws, if the child is conceived inside a valid marriage,
the status of legitimacy already attaches from the moment of conception. Hence, there was death of a
legitimate dependent of a union member in this case.

PROBLEM No. 2: Geluz v. CA (1961)

Unknown to her husband, the wife had her child aborted by Geluz, a physician. This happened
three times. The first two abortions did not reach the knowledge of the husband. The husband learned,
however, of the third case of abortion. Upon learning of the third abortion, the husband filed an action for
damages against Geluz. Both the trial court and the Court of Appeals awarded damages in the amount of
P3,000 based on the provisions of the initial paragraph of Article 2206 of the Civil Code, which states:
“The amount of damages for death caused by a crime or quasi-delict shall be at least P3,000 (now P50,000
under present jurisprudence), even though there may have been mitigating circumstances…”

Q: Is the award of damages on the basis of the foregoing provision correct?

ANSWER:

No, because Article 2206 of the Civil Code does not cover the case of an unborn foetus that is not
endowed with civil personality. This is because an action for damages on account of personal injury or
death pertains primarily to the one injured and the action filed by the husband is merely on behalf of the
unborn child on account of the injuries it received. Considering that the child was already dead when it
was taken out of the mother’s womb, it was not endowed with civil personality because the law requires
the child to be alive for at least 24 hours, if the intra-uterine life was for less than 7 months; or that it must
be alive at the time of delivery, if the intra-uterine life was for at least 7 months, in order for the child to be
endowed with civil personality. Having no personality, no action may be filed on its behalf.

In this case, there is a need to dwell on the issue of the civil personality of the unborn child because
the issue in this case is primarily the right of the unborn child to maintain the action for damages.

PROBLEM No. 3:

Mary, who was six months pregnant, was hit by a van driven by Bautista as she was walking along
a public street on her way to her work as a service crew of Jollibee. The driver Bautista fled the scene of
the accident, while Mary was brought to the hospital by a good Samaritan where she and her baby were
pronounced dead on arrival.

After investigation, it was learned that the registered owner of the van was Caravan Travel
Company, engaged in the business of organizing travels and tours, and that Bautista was its employee
assigned to drive the van as its service driver.

At the time of her death, Mary just turned 18 years of age, unmarried and living in the company of
her paternal aunt, Matilda, who raised her since she was nine years old. Matilda subsequently filed an
action based on quasi-delict against Bautista and Caravan. In said action, the trial court awarded Matilda
indemnity for the death of Mary and her baby in the amount of P50,000 each.

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Q: Is the trial court correct in awarding separate indemnity for the death of Mary and her baby?

ANSWER:

No, the judgment is erroneous because Article 2206 of the Civil Code does not cover the case of
an unborn fetus that is not endowed with civil personality. An action for damages on account of personal
injury or death pertains primarily to the one injured and the action filed by Matilde is merely on behalf of
the injured.

In this case, the child was not endowed with legal personality to file the action because it was
already dead and was never taken out of the mother’s womb. Under the law, the fetus is required to be
alive for at least 24 hours in order to be endowed with legal personality if it had an intra-uterine of less
than seven months, or it must be alive upon complete delivery if the intra-uterine life was at least seven
months.

Having no legal personality, no action for damages may be filed on its behalf

B. MARITAL RELATIONSHIPS

6. If there was a previous marriage which is either valid or voidable and a subsequent marriage
is entered into during the subsistence of the prior marriage, the subsequent marriage is
bigamous under Article 35 (4) of the Family Code and the crime of bigamy is committed. The
property regime of the bigamous marriage is that provided for in Article 148 of the Family
Code.

7. The exception to bigamy (in Article 35[4]) is the subsequent marriage contemplated in Article
41 of the Family Code, if the following three requisites are satisfied prior to the celebration of
the subsequent marriage: (a) the prior spouse had been absent either for 4 or 2 years; (b) the
spouse present had a well-founded belief that the absentee spouse is already dead; and (c)
the spouse present obtained a judicial declaration of presumptive death. If all three requisites
are satisfied, the subsequent marriage is perfectly valid (and considered exception to bigamy).
On the other hand, if all three requisites are not satisfied, the subsequent marriage is
bigamous, therefore void pursuant to Article 35(4) of the FC.

8. If the subsequent marriage is valid, it may nevertheless be terminated in either of 2 ways: (a)
extrajudicial – by mere recording of the affidavit of reappearance in the appropriate civil
registry; or (b) judicial – by a judicial declaration of the termination or dissolution of the
subsequent marriage. Either way, the effects enumerated in Article 43 of the FC will be
applicable. If the spouse present contracted the marriage in good faith but the second spouse
contracted it in bad faith, the subsequent marriage is still valid. Upon its termination, however,
the bad faith of the second spouse will produce the following consequences: (i) forfeiture of
the net profits of the ACP/CPG; (ii) donation propter nuptias in his/her favor is revoked by
operation of law; (iii) his/her designation as beneficiary in the insurance policy of the other can
now be revoked, even if it was made as irrevocable; and (iv) he/she is disqualified to inherit
from the other, whether the succession is testate or intestate. On the other hand, the moment
the spouse present contracted the marriage in bad faith, the subsequent marriage is
automatically void because all three requisites enumerated in Article 41 are not satisfied.

9. If the subsequent marriage is void for being a bigamous marriage – because the three
requisites of Article 41 are not complied – the remedy of the aggrieved spouse in the prior
marriage is to file a petition to declare the second marriage void on the ground of bigamy.
Even if he/or she is not a party to the marriage to be declared void, he/she has the personality
to file the petition because he/she is the true aggrieved party in bigamy. Besides, in bigamy it
is the parties to the prior valid marriage, not the parties to the subsequent marriage, who may

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 rightfully be referred to as husband and wife. (Juliano-Llave v. Republic [2011]; Fujiki v.
Marinay [2013])

PROBLEM No. 4: SANTOS v. SANTOS (2014) (J. LEONEN CASE)

While the spouses Ricardo and Celerina were still living together in Quezon City in 2007, Ricardo
was secretly obtaining a judicial declaration of presumptive death of his spouse. In 2008, the RTC of Tarlac
City issued a judgment declaring Celerina presumptively dead. After obtaining such judicial declaration,
Ricardo abandoned Celerina and contracted another marriage in September 2008. In November 2008,
Celerina filed a petition before the Court of Appeals for the annulment of the judgment of the RTC. The CA
dismissed the petition for being a wrong mode of remedy. According to the CA, the proper remedy was
to file a sworn statement before the civil registry, declaring her reappearance in accordance with Article
42 of the Family Code.

Q1: What is the status of the subsequent marriage?

ANSWER: It is void because it is a bigamous marriage under Article 35(4) of the FC. The subsequent
marriage does not fall under the exception to bigamy as contemplated in Article 41 of the FC because all
three requisites for the application of the exception were not satisfie d prior to the celebration of the
subsequent marriage. First, Celerina was not really an absentee spouse. Second, Ricardo did not have a
well-founded belief that Celerina was already dead because he was living with her in Quezon City.

Q2: Was the CA correct in holding that the proper remedy of Celerina is to file an affidavit of reappearance?

ANSWER: No, because such remedy is applicable only when the subsequent marriage is perfectly valid.
It does not apply if the subsequent marriage is void, as in this case. The purpose of the recording of
affidavit of reappearance is to terminate a subsequent valid marriage. Hence, if the subsequent marriage
is void such purpose cannot be achieved because a void marriage does not really exist. There is nothing
to terminate in a void marriage; it only needs to be declared void.

Q3: What is the proper remedy of Celerina?

BEST ANSWER: Considering that the subsequent marriage is void for being a bigamous marriage, the
proper remedy of Celerina is to file a petition for its declaration as absolute nullity. Celerina, as the
aggrieved party, has the personality to file such petition even if she is not a party to such marriage.
According to the Court, the aggrieved spouse in a prior marriage has the personality to file a petition to
declare the subsequent marriage void if the ground is bigamy for two reasons: (1) in bigamy, she is the
true aggrieved party; and (2) in bigamy it is the parties to the prior valid marriage, not the parties to the
subsequent marriage, who may rightfully be referred to as husband and wife. (Juliano-Llave v. Republic
[2011]; Fujiki v. Marinay [2013])

ALTERNATIVE ANSWER: The petition filed by Celerina is the proper remedy because she has no
personality to file a petition to declare the subsequent marriage void pursuant to A.M. No. 02-11-10-SC
considering that she is not a party to such marriage. She cannot likewise avail of the remedy of recording
of affidavit of reappearance because the same is an applicable remedy only for the purpose of terminating
a subsequent valid marriage. It does not apply if the subsequent marriage is void since there is nothing to
be terminated in a void marriage; a void marriage does not exist. (Answer is based on Santos v. Santos)

10. The void marriage in Article 40 of the FC is different from Art. 35 (4). In Article 40, there was a
prior void marriage and a subsequent marriage is contracted by a party thereto without first
securing a judicial declaration of its nullity. The void marriage in Article 40 is no longer
bigamous. If Article 40 is violated, the only effect is that the second marriage is rendered void

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 but no crime of bigamy is committed if it is proven that the prior marriage is indeed void.
According to the landmark case of Pulido v. People (July 2021), Article 40 did not in any way
amend Article 349 of the RPC on bigamy. In Article 35 (4), the prior marriage is either valid or
voidable and such marriage is still subsisting when the second marriage is contracted. In
Article 35(4), aside from the remedy of declaring the subsequent marriage void on the ground
of bigamy, a criminal prosecution for bigamy can likewise be availed. In the void marriage
under Article 40, the property regime is either absolute community of property, conjugal
partnership of gains or complete separation; while in the void marriage under Article 35 (4),
the property regime is that provided for in Article 148 of the FC.

11. Article 40 will only apply if there was a prior void marriage which can be the subject matter of
a petition for declaration of absolute nullity. On the other hand, if no marriage had in fact taken
place, the proper remedy is not a petition to declare the marriage void because precisely there
is no marriage that may be declared void. Instead, the proper remedy is a petition for
correction or cancellation of entries in the civil registry under Rule 108. If the proper remedy
is a petition under Rule 108, the provision of Article 40 does not apply. Examples: (1) in case
the one who contracted the marriage is not really the person whose name appears in the
marriage contract because her identity was merely used by someone else in contracting a
marriage (identity theft), the proper remedy is a petition under Rule 108 because there was
really no marriage involving the true person (Republic v. Olaybar); (2) if what took place in the
alleged prior marriage is a mere private act of signing a marriage contract but without a
solemnizer, there is also no marriage because a marriage in our law is not simply a contract
between the groom and the bride; there must be a ceremony involving the State (Morigo v.
People).

12. The principle of separation between Church and State is inapplicable and cannot prevent the
court from taking cognizance of a petition for declaration of nullity of a marriage on the ground
of psychological incapacity, even if the parties involved are members of the Roman Catholic
Church and the marriage was solemnized in accordance with the canon law of said church.
This is because marriage is a social institution wherein the State is vitally interested.
Consequently, the nature, consequences and incidents of marriage are all governed by law,
regardless of the religious beliefs of the parties. (Tilar v.Republic [2017]).

13. Consent in marriage simply refers to the personal declaration made by the groom and the
bride during the marriage taking each other as husband and wife. If the same is given freely
and did not suffer from any defect, the marriage is perfectly valid. The intention, motive or
purpose of the parties in contracting the marriage do not affect its validity because the law
does not look into those for purposes of determining the validity of a marriage. The absence
of love does not also affect the validity of the marriage because while love is its ideal
consideration, it is not the only consideration. (Republic v. Albios [2013])

14. Article 26, par. 2 of the FC is applicable regardless of who may have obtained the decree of
divorce abroad. What is important is that the divorce obtained abroad is valid and it
capacitated the foreigner spouse to remarry in accordance with the national law of the
foreigner spouse. In short, if the decree of divorce obtained abroad has the effect of releasing
the foreigner spouse from the marriage, the Filipino spouse is likewise released from the
marriage regardless of who may have obtained such decree (Republic v. Manalo [2018]). But
Article 26, par. 2 of the FC is applicable only to a mix marriage of a Filipino citizen and a
foreigner. In determining whether it is a case of a mix marriage, the reckoning point is the
citizenship of the parties at the time that the valid divorce decree was obtained; not their
citizenship at the time of the celebration of the marriage (Republic v. Orbecido III [2005]).

15. In Article 26, par. 2 of the FC, the Filipino spouse is considered released from the marriage
simultaneously with the foreigner spouse, or upon the issuance of the decree of divorce.

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 However, in our jurisdiction, the existence of the foreign judgment and the foreigner’s national
laws are matters of fact which must be proven. But once proven, the judicial recognition of
the decree of divorce will always retroact to the time of its issuance. Hence, the Filipino spouse
does not necessarily commit the crime of bigamy if he/she immediately contracts another
marriage after a decree of divorce was obtained abroad but prior to its judicial recognition. In
the criminal prosecution for bigamy, the Filipino may set forth as defense the fact that he/she
had already been released from the marriage by proving that the decree of divorce obtained
abroad had already released the foreigner spouse from the marriage. In other words, the
judicial recognition of the decree of divorce obtained abroad need not be done in a proceeding
solely for that purpose; instead, it may be set forth as defense in the criminal prosecution for
bigamy. (Sarto v. People [2018])

PROBLEM No. 5: What is the effect of the following on the marital and property relations of the spouses?

(A). If the marriage between the parties is void?

ANSWER: If the marriage is void, the parties are not actually spouses and the absolute nullity of
the marriage can be questioned at any time and can be subjected to collateral attack. However, the parties
to a void marriage may not validly enter into another marriage unless they obtained first a judicial
declaration of the nullity of the prior void marriage.

As to their property relations, they shall be governed by the property regime provided for either in
Article 147 or 148. However, if the marriage is void by reason of Article 40 of the Family Code, the property
regime may either be absolute community of property, conjugal partnership of gains, or complete
separation.

(B). If the marriage between the spouses is voidable?

ANSWER: If the marriage is merely voidable, the parties are still considered married to each other
and said marriage is regarded as a valid marriage unless it is annulled by a final judgement of the court.
Upon the termination of the marriage by a final judgment of annulment, they can enter into a valid marriage
upon compliance with the requirements of Article 52 of the Family Code.

As to their property relations prior to a final judgment of annulment, they shall be governed by the
regime of absolute community of property, conjugal partnership of gains, or complete separation.

(C). If the spouses obtained a decree of legal separation?

ANSWER: Upon the issuance of a decree of legal separation, the parties remain married to each
other but they will be entitled to live separately from one another. As to their property relations, they shall
be governed by the regime of complete separation upon the issuance of the decree.

PROBLEM No. 6:

In 2003, Rosa and Victor married each other. They were blessed with one child, Samantha, who
was born in 2004. However, even before their marriage, Rosa already observed Victor to be extremely
irritable and moody. Earlier in their marriage, Rosa also observed Victor to be emotionally immature,
irresponsible, irritable, and psychologically imbalanced. Rosa later learned that Victor was a drug addict.
Due to his erratic behavior, Rosa caused Victor to be confined in a drug rehab center twice. During their
marriage Victor did not have a gainful employment and relied only for support from the construction
business put up by Rosa. Victor’s irresponsibility and mismanagement of the funds eventually caused the
closure of such business. Victor also exposed their daughter to his drug use. In 2019, Rosa also
discovered that Victor had been repeatedly subjecting Samantha to sexual abuse.

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Q1: What are the remedies available to Rosa? Explain each briefly.

ANSWER: The following are the remedies available to Rosa:

1) A remedy that is immediately available to Rosa is to obtain a Temporary Protection Order

pursuant to R.A. No. 9262 for the following purposes: (i) to remove and exclude Victor from
the family residence; (ii) to direct Victor to stay away from Rosa and Samantha at a specified
distance; and (iii) to prevent harassing, annoying, telephoning, contacting or otherwise
communicating with Rosa and Samantha, directly or indirectly.

2) Rosa may also file a criminal action against Victor for violation of R.A. No. 9262, otherwise
known as the Anti-Violence Against Women and Their Children Act of 2004,” on the ground
of the psychological and sexual abuse committed by Victor against their common children.

3) Rosa may also file a petition for legal separation against Victor on the ground of grossly
abusive conduct directed against the petitioner and a common child.

4) Lastly, Rosa may also opt to nullify her marriage to Victor on the ground of the latter’s
psychological incapacity because Victor’s acts of exposing his daughter to substance abuse
and sexually abusing her are clear manifestations of psychological incapacity.

Q2: May the acts of Victor be a ground to nullify the marriage under psychological incapacity even if those
acts were directed against the couple’s child and not against the other spouse?

ANSWER: Yes, because the spouses’ obligations to their children, once children are conceived, is as
much part of the spouses’ obligations to each other. Failure to perform these obligations to their children
may be a ground to nullify a spouse’s marriage. While it is true that marriage is a contract between the
spouses; but its cause remains to be the establishment of not just conjugal but also family life. As such,
once the parties decide and do have children, their obligation to their children become part of their
obligations to each other as spouses. What is important is that those acts are of such grievous nature that
they reflect on the capacity of one of the spouses for marriage. [Tan Andal v. Andal (2021)]

Q3: May the acts of Victor be a ground to nullify the marriage under psychological incapacity even if those
acts are already grounds for legal separation?

ANSWER: Yes, the fact that the acts of Victor constitute a ground for legal separation will not prevent the
court from voiding the marriage on the ground of psychological incapacity. A decree of legal separation
entitles spouses to live separately from each other without severing their marital bond, but no legal
conclusion is made as to whether the marriage is valid. Therefore, it is possible that the marriage is
attended by psychological incapacity of one or both spouses, with the incapacity manifested in ways that
can be considered as grounds for legal separation. At any rate, so long as a party can demonstrate that
the sexual abuse and drug addiction are manifestations of psychological incapacity existing at the time of
the celebration of the marriage, this should be enough to render the marriage void under Article 36 of the
Family Code. [Tan Andal v. Andal (2021)]

PROBLEM No. 7:

In Problem No. 6, while the spouses were still cohabiting, a parcel of land was donated to Rosa
by her aunt, although it was registered in the registry of property in the name of “Rosa, married to Victor.”
After the donation, Rosa constructed a house on said property using funds obtained from a loan she
contracted with a financing company. In the promissory note, Victor signed to give “marital consent.” In
2018, Rosa sold the house and lot without the consent of Victor. After the sale, the family transferred to a
rented apartment. In 2020, Rosa filed a petition to declare her marriage to Victor void on the ground of

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psychological incapacity, which petition was granted by the Court. The judgment became final and
executory.

In November 2021, Victor filed an action to declare the 2018 sale made by Rosa void claiming that
the house and lot is a conjugal property of the spouses because it was acquired during the marriage and
it was sold without his consent. Victor claimed that they executed a marriage settlement providing for
conjugal partnership as their property regime; hence, Victor claimed that Article 124 of the Family Code
applies.

Q1: Is the claim of Victor that the property regime of the spouses during their marriage was that of conjugal
partnership meritorious?

ANSWER: No, because in a void marriage other than Article 40 of the Family Code, the regime of conjugal
partnership of gains, absolute community and separation of property do not apply. Instead, the property
regime of a marriage that is void pursuant to Article 36 of the Family Code is that provided under Article
147 of the Family Code. Article 147 is the property regime of the parties to a void marriage who were
nonetheless capacitated to marry each other and had lived exclusively with each other.

Q2: Is the claim of Victor that the 2018 sale is void because it was made without his consent meritorious?

ANSWER: No, while Article 147 of the FC prohibits one of the parties from disposing or encumbering his
or her share in the co-owned property during the cohabitation without the consent of the other, the subject
property is not co-owned by Rosa and Victor but the exclusive property of Rosa.

While a property acquired during the parties’ cohabitation shall be presumed to have been
acquired through the parties’ joint efforts, Victor did not contribute to the acquisition of the house and lot
in whatever way. As to the lot, it was donated to Rosa by her aunt. The word “married to” in the title only
refers to the civil status of the registered owner. As to the house, it was constructed using funds coming
from the loan obtained solely by Rosa. Victor did not make any actual contributions to the acquisition of
both the house and the lot. He may not likewise be deemed to have contributed to the acquisition of
said properties since he did not care for and maintain the family and the household. [Tan Andal v.
Andal (July 2021)]

16. In the regime of absolute community of property or conjugal partnership of gains, any
disposition or encumbrance of any community or conjugal property is void if made without
the consent of both spouses or, at least, court authorization. If the action for nullity is filed and
the judgement is to be rendered while both spouses are still alive, the entire contract must be
declared void. It cannot be upheld as valid with respect to the share of the consenting spouse
in the specific property disposed or encumbered because such ideal share does not exist as
yet prior to the termination and liquidation of the property regime. However, if the action for
nullity is filed after the death of the transacting spouse, or if the judgment has not yet been
rendered at the time of the death of the transacting spouse, the transaction may now be
upheld as valid with respect to the share of the latter. In such a case, the property regime is
already terminated and may now be subjected to liquidation. Hence, the ideal share of the
transacting spouse in the specific property disposed of or encumbered had already become
an actual title. [Carlos v. Tolentino (2018)]

17. If the absolute community or the conjugal partnership of gains is terminated by the death of
one of the spouses during the effectivity of the FC, the surviving spouse has the mandatory
obligation of liquidating the property regime within 1 year from the death of the deceased
spouse. If he or she fails to do so and contracts another marriage, the subsequent marriage
shall be governed mandatorily by the regime of complete separation (Arts. 103 and 130, FC).
If without complying with said obligation and the surviving spouse sold one of the properties
of the absolute community or conjugal partnership without the consent of the other heirs of

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 the deceased spouse (such as the children of the spouses), the sale is not void. Instead, it is
only a sale of a concrete or definite portion of the co-owned property. According to
jurisprudence, if a co-owner sold a concrete or definite portion of the co-owned property prior
to partition, the sale is not void. The sale is valid but it will be treated as a sale only of the ideal
share of the selling co-owner. Hence, the buyer does not acquire ownership of the entire
property sold to him; he will only acquire the ideal share of the surviving spouse in the co-
ownership commensurate to the price paid for by the buyer. [Uy v. Estate of Vipa Fernandez
(2017)]

18. In order for a family home to be sold under Article 160 of the FC, the following requisites must
be satisfied: (i) the judgment creditor is not one of those listed in Article 155 (because if he is,
the family home is not protected and can, therefore, be sold; no need for permission from the
court); (ii) at the time of constitution, the actual value of the family home did not exceed
P300,000 in urban or P200,000 in rural areas (if already exceeded at that time, the family
residence is not duly constituted as family home); (iii) its actual value exceeded P300,000 or
P200,000, as the case may be, only after its constitution; and (iv) the increase in actual value
is by reason of voluntary improvement – improvement that is by reason of the voluntary action
of the beneficiary of the family home. If the reason for the increase is “involuntary
improvement,” it cannot be sold under Article 160, although it can be sold under Article 155.
[Eulogio v. Bell, Sr. (2015)]

19. In the registration of the birth of an illegitimate child, the law mandatorily requires the signature
of the mother in the birth certificate, whether or not the father admits paternity (Sec. 5, Civil
Registry Law). Hence, if the birth certificate of an illegitimate child was registered and signed
only by the father, without the knowledge and consent of the child’s mother, the birth
certificate is void and may not be used as basis to allow the child to use the father’s surname.
[Barcelote v. Republic (2017)]

20. If the recognition of paternity is made by the father in a private handwritten instrument but
without the father’s signature, the following rules apply: (i) if such instrument is the only proof
of filiation, the requirement that it must be signed should be strictly applied; hence, it is not
considered a competent proof of filiation and it will not authorize the child to use the father’s
surname; (ii) if, on the other hand, there are other proof of filiation and such instrument is
merely an additional proof, the requirement of signature may be relaxed; hence, such
instrument will be considered a competent proof of filiation that will authorize the child to make
use of the father’s surname. [Dela Cruz v. Gracia (2009)]

21. Ordinarily, the father may not exercise any parental authority over his illegitimate child because
the law grants the mother sole parental authority (Art. 176, FC). However, in default of the
mother and maternal grandparents, the father may be able to exercise parental authority over
his illegitimate child if he is the actual custodian pursuant to the concept of substitute parental
authority under Article 216 of the FC [Masbate v. Relucio (2018)]. For the purpose of
disqualifying the mother of the illegitimate child, the second paragraph of Article 213 of the
FC is also applicable because the provision does not qualify whether the child is legitimate or
illegitimate. [Masbate v. Relucio (2018)].

C. PROPERTY

22. Public Dominion and Patrimonial; Characteristics: (i) PD, cannot be validly alienated; P can be
validly alienated – hence, to alienate a property of PD, it must first be converted into P; (ii) PD
cannot be validly appropriated, hence, cannot be acquired by prescription; while P can be
appropriated and can be acquired by way of prescription; (iii) PD cannot be the object of
contracts; while P can be the object of contracts; (iv) PD cannot be burdened by voluntary

9
 easement; while P can be burdened by voluntary easement; and (v) PD cannot be validly
subjected to attachment, execution or force sale; while P can.

23. Property of LGUs (provinces, cities and municipalities): A. Classified as public dominion if: (i)
one of those expressly enumerated in paragraph 1of Art. 424; OR (ii) even if not mentioned in
said paragraph, if devoted to governmental or public purposes. B. Classified as patrimonial if:
(a) not enumerated in paragraph 1 of Art. 424; AND (b) devoted to proprietary or commercial
purposes.

PROBLEM No. 8: Sangguniang Panlalawigan of Bataan v. Garcia (2016)

Congress enacted R.A. No. 8562, converting the Medina Lacson de Leon School of Arts and
Trades (MLLSAT) into Bataan Polytechnic State College (BPSC) and integrating thereto the Bataan
Community Colleges (BCC). Both MLLSAT and BCC were State-run schools situated in parcels of land
registered in the name of the Province of Bataan. In the law passed by Congress, the parcels of land
occupied by MLLSAT and BCC were declared to be property of BPSC. When BPSC demanded from the
Province of Bataan the surrender of the titles covering said properties, the Province refused to do so
claiming that said properties are its patrimonial properties to which it cannot be deprived thereof without
payment of just compensation. The Province also pointed out that certain loan obligations of the Province
to the Land Bank of the Philippines (LBP) were secured with a mortgage on the subject lots.

Q1: Is the contention of the Province that said lots are its patrimonial properties tenable?

ANSWER: No, because the subject lots are properties of public dominion of the Province of Bataan. While
said properties are not included in the enumeration of property for public use in paragraph 1 of Article 424,
said properties are nonetheless devoted to governmental purposes because they are devoted to public
education purposes. Hence, they are classified as properties of public dominion of the Province of Bataan.

Q2: Is the contention of the Province that it was deprived of those properties without payment of just
compensation meritorious?

ANSWER: No. If the property of the LGU is classified as property of public dominion, the same is held in
trust for the State and subject to the paramount power of the legislature to dispose of the same. Hence,
Congress has absolute control over it. Congress can therefore validly transfer its administration and
disposition to another agency of the National Government without need of paying the LGU just
compensation. Besides, the act of Congress in giving said properties to the State College is not
expropriation because the properties involved are not properties of private ownership.

24. 3 instances where Article 448 of the NCC will apply: (i) both the landowner and the builder,
planter or sower acted in good faith – this is the limited definition of the concept of builder in
good faith where the latter asserts title to the land on which he builds; (ii) where the builder
knew that he did not own the land but they constructed improvements on the land with the
consent of the owner – this is the expanded definition of the concept of builder in good faith;
and (iii) where both the landowner and the builder acted in bad faith.

PROBLEM No. 9: Padilla, Jr. v. Malicsi (2016) (J. Leonen Case)

When the Spouses X and Y discovered that A, B, C and D constructed houses on their titled lot,
they made a demand upon said occupants to vacate their property. The occupants alleged that they
believed in all honesty and good faith that the lot belonged to V, a complete stranger to the occupants.
They claimed that they possessed the land and built their houses on the lot only after receiving V’s
permission. Operating under this belief, they entered into an agreement with V where the latter would sell
them the areas occupied by their respective houses, and pending full payment, they would each pay V
P400.00 monthly as rent. The occupants claimed to be builders in good faith invoking the case of

10
Sarmiento v. Agana, where the private respondents who constructed their residential house on a property
they had mistakenly believed to be owned by their mother but later turned out to belong to another, were
considered as builders in good faith. They further invoked the case of Macasaet v. Macasaet, where the
Court deemed the son and daughter-in-law to be builders in good faith as they introduced improvements
on the lot with the knowledge and consent of their parents, the registered lot owners.

Q: Are the occupants builders in good faith under the expanded definition?

ANSWER: No, because the one who gave them permission to construct their houses on the lot turned out
to be not its owner. In the expanded definition of the concept of builder in good faith, it is the landowner
himself who expressly consents to the construction of the improvement. In Macasaet, it was the
landowners who gave such permission.

The occupants may not likewise rely on the case of Sarmiento because that case was decided on
the basis of the peculiar circumstance of close family relations. Such circumstance does not obtain here.
In this case, the one who gave the permission to the occupants was a complete stranger to them. The
lack of blood relation should have been enough to put them on guard and convince them not to rely on
V’s claim of ownership. If they had looked into the ownership of the lot, they would have easily discovered
that it was titled to the spouses X and Y.

PROBLEM No. 10: Leviste Management Systems, Inc. v. Legaspi Towers 200, Inc. (2018)

Legaspi Towers is a condominium building in Makati consisting of seven (7) floors, with a unit on
the roof deck and two levels above said unit called Concession 2 and Concession 3. Leviste Management
Systems, Inc. (LMSI) acquired Concession 3. After acquiring Concession 3, LMSI decided to build another
unit, called Concession 4, on the roof deck of Concession 3. LMSI was able to secure the building permit
from the LGU for the construction of Concession 4. The Legaspi Condominium Corporation opposed the
construction of Concession 4 on the ground that the same is prohibited by the Master Deed of Restrictions
annotated on the title of the developer and by its By-Laws and, therefore, a nuisance. LMSI, for its part,
contends that it has the right to construct the additional unit because it owns the airspace above
Concession 3. Alternatively, LMSI argued that it is a builder in good faith.

Q: Rule on both contentions of LMSI.

ANSWER: As to LMSI’s contention that it owns the airspace above its unit, the same is not tenable
because the exclusive ownership by a condominium unit owner includes only the four walls, ceilings,
windows and doors of his unit. Such exclusive ownership does not extend to the roof or the areas above
it. Instead, the airspace or the area above Concession 3 forms part of the common area, and pertains to
the Condominium Corporation.

As to LMSI’s contention that it is a builder in good faith, it is sufficient to say that the Civil Code
provisions on builders in good faith presuppose that the owner of the land and the builder are two distinct
persons who are not bound either by specific legislation on the subject property or by contract. In other
words, Article 448 does not apply if the situation is already covered by another legislation or by contract.
Here, the ownership of a condominium unit is already governed by the Condominium Act; while the Master
Deed and the By Laws of the condominium corporation establish the contractual relations between said
condominium corporation and the unit owners, all of which prohibit the construction by a condominium
unit owner outside of his unit. Hence, the illegal structure can be ordered demolished.

25. In Belvis, Sr. v. Erola (2019), the owners of the land allowed their relatives to possess the lot,
subject to the condition that said relatives would vacate the same upon demand. The
landowners were also aware that said relatives constructed improvements on the premises
and they did not object thereto. Thus, the Court declared both the landowners and the builders
in bad faith and applied Article 448 of the Civil Code.

11
26. The Civil Code provisions on builders in good faith presuppose that the owner of the land and
the builder are two distinct persons who are not bound either by specific legislation on the
subject property or by contract. In other words, Article 448 does not apply if the situation is
already covered by another legislation or by contract. Hence, in the following situations Article
448 does not apply because there is a specific legislation or law applicable: (i) when a lessee
introduced an improvement on the leased premises – the applicable law is Article 1678 of the
Civil Code; (ii) when a usufructuary introduced an improvement on the property subject matter
of the usufruct – the applicable laws are Articles 579 and 580 of the Civil Code; and (iii) when
the vendee a retro introduced an improvement prior to the exercise by the vendor a retro of
his right of repurchase – the applicable law is Article 1616.

27. If the co-ownership is by reason of the agreement of the parties, such as when one is
considered a co-owner in the deed of sale and in the certificate of title, the fact that he did not
contribute in the payment of the purchase price of the subject properties does not necessarily
mean that he could not become a co-owner of the subject properties who can compel
partition. The law does not make a distinction as to how the co-owner derived his/her title,
may it be through gratuity or through onerous consideration. In other words, a person who
derived his title and was granted co-ownership rights through gratuity may compel partition.
[Logrosa v. Azares (2019)]

28. While alienation of the thing by sale of the property is an act of strict dominion and, therefore,
an act of alteration, it does not mean that a sale of commonly owned real property is covered
by the second paragraph of Article 491, such that if a co-owner withholds consent to the sale,
the courts, upon a showing of a clear prejudice to the common interest, may, as adequate
relief, order the grant of the withheld consent. Instead, the applicable law is Article 493 of the
Civil Code, which clearly establishes that each co-owner shall have full ownership of his part
and of its fruits and benefits. That part which ideally belongs to them, or their mental portion,
may be disposed of as they please, independent of the decision of their co-owners. Insofar
as the sale of co-owned properties is concerned, there is no common interest that may be
prejudiced should one or more of the co-owners refuse to sell the co-owned property. Thus,
when respondents disagreed to the sale, they merely asserted their individual ownership
rights. Without unanimity, there is no common interest. [Arambulo v. Nolasco (2014)]

29. Easement of Light and View and Article 624: While it is a general rule that a window or opening
situated on the wall of the dominant estate involves a negative easement, and, thus, may only
be acquired by prescription, tacked from the time of the formal prohibition upon the proprietor
of the servient estate, it is not true that all windows or openings situated on the wall of the
dominant estate may only be acquired through prescription. Under Article 624 of the Civil
Code, an easement of light and view may also be acquired by way of a title, through operation
of law, if the following requisites are present: (i) there exists an apparent sign of servitude
between two estates; (ii) the sign of the easement must be established by the owner of both
tenements; (iii) either or both of the estates are alienated by the owner; and (iv) at the time of
the alienation nothing is stated in the document of alienation contrary to the easement nor is
the sign of the easement removed before the execution of the document. Upon the division
of ownership and the foregoing requisites are complied, an easement of light and view is
created by operation of law. [Garcia v. Santos (2019)]

30. In the easement of light and view created by operation of law under Article 624, affording the
dominant estate the right to have a direct view overlooking the adjoining property, i.e., the
servient estate, the two-meter requirement under Article 670 is not applicable. Instead, Article
673 is the applicable rule. In other words, the distance between the structures erected on the
servient estate and the boundary line of the adjoining estate must be at least three meters.
[Garcia v. Santos (2019)]

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 31. Compulsory easement of right of way; requisites: The following requisites need to be
established before a person becomes entitled to demand the compulsory easement of right
of way: (i) that the dominant estate is surrounded by other immovables and has no adequate
outlet to a public highway; (ii) that the isolation was not due to acts of the proprietor of the
dominant estate; (iii) there must be payment of proper indemnity; and (iv) that the right of way
claimed is at the point least prejudicial to the servient estate.

PROBLEM No. 11: Reyes v. Valentin (2017) (J. Leonen case)

The land of Alicia Reyes was surrounded by other immovables. She filed an action for the
compulsory grant of right away against the Spouses Valentin claiming that the property of the latter was
the only adequate outlet from her property to the highway. The proposed right of way, however, would
pass through improvements, such as the garage, garden, and grotto of the Spouses Valentin. At the back
of Reyes’ lot, there was a four-meter wide irrigation canal of the National Irrigation Administration
separating the property from a public road.

Q: Is Reyes entitled to a compulsory grant of right of way?

ANSWER: No, Reyes is not entitled to a compulsory grant of right of way because her property has an
adequate outlet going to a public highway. In between her property and the highway or road, there is an
irrigation canal which can be traversed by constructing a bridge, similar to what was done by the owners
of the nearby properties. There is, therefore, no need to utilize the property of the Valentins to serve Reyes’
needs.

32. Classification of nuisance: A nuisance is classified in two ways: (a) according to the object it
affects; or (b) according to its susceptibility to summary abatement. According to the object
it affects, a nuisance is either: (i) public nuisance: one which affects a community or
neighborhood or any considerable number of persons, although the extent of the annoyance,
danger or damage upon individuals may be unequal; or (ii) private nuisance: one which violates
only private rights and produces damages to but one or a few persons or one which affects
only an individual or a limited number of individuals. According to its susceptibility to summary
abatement, a nuisance is either: nuisance per se (or nuisance at law): (i) when it is recognized
as a nuisance under any and all circumstances, because it constitutes a direct menace to
public health or safety, and, for that reason, may be abated summarily under the undefined
law of necessity; or (ii) nuisance per accidens (or nuisance in fact): one which is a nuisance
depending upon certain conditions and circumstances, and its existence being a question of
fact, it cannot be abated without due hearing thereon in a tribunal authorized to decide
whether such a thing does in law constitute a nuisance.

33. It is a standing jurisprudential rule that unless a nuisance is a nuisance per se, it may not be
summarily abated. In a number of cases, the Supreme Court clarified, however, that the
abatement of a nuisance without judicial proceedings is possible only if it is a nuisance per
se. The reason for this is that a nuisance per accidens is that which depends upon certain
conditions and circumstances, and its existence being a question of fact, it cannot be abated
without due hearing thereon in a tribunal authorized to decide whether such a thing does in
law constitute a nuisance.

34. Unless a thing is nuisance per se, it may not be abated via an ordinance, without judicial
proceedings. Such ordinance is null and void because it violates the guarantee of due process
under the Constitution. Generally, LGUs have no power to declare a particular thing as a
nuisance unless such a thing is a nuisance per se.

PROBLEM No. 12: Aquino v. Municipality of Malay, Aklan (2014)

13
 The Municipality of Malay, Aklan declared a certain area in Boracay as a “no-build zone” for the
purpose of protecting the environment. Aquino, the president of hotel already operating in Boracay applied
for a building permit for the construction of another hotel located within the no-build zone. The Municipality
denied the application. Notwithstanding the non-issuance of the building permit, the construction of the
hotel inside the no-build zone pushed through. Thus, the mayor of Malay, Aklan ordered the immediate
demolition of the illegal structure. Aquino opposed the mayor’s order on the ground that it is summary
abatement and the same is invalid because a hotel is a legitimate business and not a nuisance per se.

Q: Is Aquino correct?

ANSWER: No, while a hotel, in itself, cannot be considered as a nuisance per se but only a nuisance per
accidens because it was built in the no build zone, nonetheless, the LGU may nevertheless properly order
the hotel’s demolition because it failed to comply with the legal requirements prior to construction.

Under the LGC, mayors are empowered to order the closure and removal of illegally constructed
establishments for failing to secure the necessary permits. Given the presence of the requirements under
the LGC, whether the building constituted a nuisance per se or a nuisance per accidens becomes
immaterial. In this case, the hotel was demolished not exactly because it is a nuisance but because it failed
to comply with the legal requirements prior to construction. Under the premises, a court order that is
required under normal circumstances is hereby dispensed with.

D. OBLIGATIONS

35. Sources of obligation; solutio indebiti: Solutio indebiti applies only where no binding relation
exists between the payor and the person who received the payment. Stated otherwise, solutio
indebiti is not applicable if the parties are bound by a contract, i.e., a contract of lease.

PROBLEM No. 13: Domestic Petroleum Retailer Corp. v. MIAA (2019)

DPRC leased a portion of the property of MIAA. Thereafter, MIAA increased the rentals to be paid
by DPRC. DPRC paid the increased rentals under protest. Subsequently, the court nullified the resolution
of MIAA increasing the rate of rents for failure to observe the requirements of the Administrative Code.
DPRC sued for recovery of the overpayments. When the case reached the CA, the appellate court ruled
that the claim of DPRC, being in the nature of a claim based on the quasi-contract of solutio indebiti, had
already prescribed because the same must be filed within a period of six years.

Q: Is the CA correct in holding that the claim of DPRC for overpayment is a case of solution indebiti?

ANSWER: No, because there is a juridical relationship of lessor and lessee between the parties. Solutio
indebiti applies only where no binding relation exists between the payor and the person who received the
payment. Stated otherwise, solutio indebiti is not applicable if the parties are bound by a contract, i.e., a
contract of lease. As such, the cause of action against MIAA for recovery of overpayment is deemed to be
based on the violation of a contract instead of a quasi-contract. Such being the case, the cause of action
is based on a written contract; hence, the prescriptive period is ten, not six years.

36. Natural Obligation: Cannot be compelled in court; performance must be voluntary. It produces
the following legal consequences: (i) if performed voluntarily, the creditor is authorized to retain
the payment; (ii) it can be novated and converted into civil obligation; and (iii) it can be secured
by a contract of guaranty, suretyship, mortgage, antichresis and contracts of security involving
personal property. Examples of natural obligation: (i) when a debt has already prescribed – it
is no longer civil, but converted into natural obligation; and (ii) when the agreement for the
payment of monetary interest is made verbally – it is not a civil obligation but a case of natural
obligation.

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 37. Potestative, Casual and Mixed: Affects the validity of the obligation. But pursuant to Article
1182, the obligation IS VOID only when the condition is potestative on the part of the debtor
and it is at the same time suspensive in nature. If potestative on the part of the debtor but
resolutory, the obligation is valid. If potestative on the part of the creditor, the obligation is
valid. If condition is casual, obligation is valid. When condition is mixed, obligation is valid
even if it is partly dependent upon the debtor’s will.

38. Doctrine of constructive fulfillment of suspensive condition: If the condition is dependent partly
upon the debtor’s will and partly upon chance or will of a third person, the obligation is valid.
In this situation, if the debtor intentionally and actually prevents the fulfillment of the condition
dependent on him and the condition is also suspensive, the entire condition is deemed
constructively fulfilled under the “doctrine of constructive fulfillment of suspensive condition”
in Article 1186. On the other hand, if it is the debtor who did all in power to comply with the
condition but the entire condition is not fulfilled because of the third person, the entire
condition is also deemed constructive fulfilled under the “rule on constructive fulfilment of a
mixed conditional obligation.

39. Power of court to fix period: Applicable only when the obligation is one with a period, in the
following instances: (i) the parties failed to fix the period; (ii) duration of period is dependent
upon the sole will of the debtor; and (iii) in reciprocal obligations, when there is just cause for
fixing of period. Court cannot fix the period in the following: (i) when obligation is payable on
demand because it is a pure obligation; and (ii) when the obligation is to be performed within
a reasonable time because the period is already fixed – all the court has to determine is
whether such reasonable time has already lapsed.

40. Joint and solidary obligation: In joint obligation, each of the debtors is responsible only for his
share in the indebtedness and each of the creditors is entitled only to collect his share in the
credit; each share being considered separate and distinct from the other shares. Example: A,
B and C borrowed P1.2 Million from X, and Y, how much can X collect from A? Answer is
P200,000 only. This is because X is entitled only to P600,000 which he must collect from A, B
and C, in equal shares. In the same example, if A, B and C are solidary debtors but X and Y
are merely joint creditors, X is entitled to collect only his share of P600,000, but this time he
can collect the entire P600,000, either from A, B or C; or from all of them, or from a
combination of them. In the same example, if A, B and C are solidary debtors and X and Y
are also solidary creditors, X may now collect the entire P1.2 Million either from A, B or C; or
from all of them, or from a combination of them.

41. Divisible and Indivisible Obligation: Under Article 1225, even though the object or service may
be physically divisible, an obligation is indivisible if so provided by law or intended by the
parties.

PROBLEM No. 14: Lam v. Kodak Philippines (2016) (J. Leonen Case)

Spouses Lam and Kodak Philippines entered into an agreement for the sale of three (3) units of
the Kodak Minilab System 22XL (Minilab Equipment) in the amount of P1,796,000.00 per unit. The
agreement contemplated of a package deal involving three units of Kodak Minilab System as the
agreement refers to the object of the contract as “Minilab Equipment Package.” However, Kodak delivered
only one unit. The Law spouses issued 12 post dated checks, 2 of which were honored while the rest were
dishonored because of stop payment order by the spouses. Kodak canceled the sale and demanded for
the return of the unit. The Spouses Lao also wrote a letter to Kodak rescinding the contract on account of
Kodak’s failure to deliver the 2 other units.

15
 The Lao spouses argued that the Letter Agreement it executed with Kodak for three (3) Minilab
Equipment units was not severable, divisible, and susceptible of partial performance. They claimed that
the obligations of the parties were not susceptible of partial performance since the Letter Agreement was
for a package deal consisting of three (3) units. Kodak, in turn, argues that the parties' Letter Agreement
contained divisible obligations susceptible of partial performance as defined by Article 1225 of the New
Civil Code.

Q1: Are the obligations of the parties divisible or indivisible?

ANSWER: The Letter Agreement contained an indivisible obligation. Under Article 1225, even though the
object or service may be physically divisible, an obligation is indivisible if so provided by law or intended
by the parties.

Here, the intention of the parties is for there to be a single transaction covering all three (3) units of
the Minilab Equipment. Kodak's obligation was to deliver all products purchased under a "package," and,
in turn, the spouses' obligation was to pay for the total purchase price, payable in installments. The
intention of the parties to bind themselves to an indivisible obligation can be further discerned through
their direct acts in relation to the package deal. There was only one agreement covering all three (3) units
of the Minilab Equipment and their accessories. The Letter Agreement specified only one purpose for the
buyer, which was to obtain these units for three different outlets. If the intention of the parties were to have
a divisible contract, then separate agreements could have been made for each Minilab Equipment unit
instead of covering all three in one package deal.

Q2: Are the parties entitled to recover what they delivered to each other?

ANSWER: Yes, since they mutually cancelled the contract. When rescission is sought under Article 1191
of the Civil Code, it need not be judicially invoked because the power to resolve is implied in reciprocal
obligations. The right to resolve allows an injured party to minimize the damages he or she may suffer on
account of the other party's failure to perform what is incumbent upon him or her. When a party fails to
comply with his or her obligation, the other party's right to resolve the contract is triggered. The resolution
immediately produces legal effects if the non-performing party does not question the resolution. Court
intervention only becomes necessary when the party who allegedly failed to comply with his or her
obligation disputes the resolution of the contract. Since both parties in this case have exercised their
right to resolve under Article 1191, there is no need for a judicial decree before the resolution
produces effects.

42. Legal tender: Applicable only when the obligation is to pay a sum in money. If the problem
involves payment of the price, the following rules should be applied: (i) if the payment of the
price can be compelled by way of an action for collection of the price, i.e., payment of the
purchase price in a contract of sale, it is an obligation to pay a sum of money, hence, the rule
on legal tender applies; (ii) on the other hand, if the payment of the price is merely incidental
to the exercise of a right, i.e., payment of redemption price, repurchase price in pacto de retro
sale, payment of price in exercise of right of refusal or option contract, such payment is not
an obligation to pay a sum of money because the right may not be exercised. In the latter, the
rule on legal tender does not apply. Instead, the tender of the price in the form of manager’s
check or cashier’s check is sufficient to preserve the right. If the tender is not accepted, the
remedy is to compel redemption or repurchase by depositing the payment in court; the
remedy is not consignation because there is no obligation to be paid.

43. On fortuitous event and loss: If the obligation is to deliver a determinate thing and thing is lost
by reason of fortuitous event, the debtor’s obligation is extinguished because the loss is
without his fault provided the following requisites concur: (i) at the time of loss, the debtor is
not yet in delay; (ii) the event is either unforeseeable or inevitable; (iii) the event is independent
of the will of the debtor; (iv) the event rendered the normal fulfillment of the obligation

16
 impossible; and (v) the debtor has no participation in, or aggravation of the injury, suffered by
the creditor. If the obligation, on the other hand, is to deliver a generic thing, it cannot be
extinguished by reason of loss of the thing due because the genus of a thing never perishes.

44. Doctrine of unforeseen event in Article 1267: The doctrine is applicable only to obligation to
do and the obligation is extinguished if the following requisites are satisfied: (i) prior to the
fulfillment of the obligation and prior to the debtor incurring delay, an unforeseen event
occurred; (ii) the event is extra-ordinary; (iii) such event rendered the performance of the
obligation to do extremely difficult; and (iv) and such event and its effects are manifestly
beyond the contemplation of the parties.

PROBLEM No. 15:

Dr. No, a dentist, leased a commercial unit in Pergola Mall for two years. The contract was entered
into prior to the pandemic. Several months after the execution of the contract, a world-wide pandemic
occurred brought about by the Covid-19 virus. As a consequence of the pandemic, several lockdowns
were ordered by the government which affected the operations of Dr. No’s dental clinic. Subsequently,
Dr. No was unable to pay monthly rents for seven consecutive months. When the economy re-opened
again, the lessor made a demand upon Dr. No for the payment of the unpaid rentals. Dr. No claimed,
however, that his obligation to pay rentals was already extinguished pursuant to the doctrine of unforeseen
event under Article 1267 of the Civil Code.

Q1: May the pandemic caused by the Covid-19 virus qualify as an unforeseen event that may result into
the extinguishment of obligation under Article 1267 of the Civil Code?

ANSWER: Yes, because the pandemic caused by the Covid-19 virus satisfies the requirements of Article
1267 based on prevailing jurisprudence, as follows: (i) it is an unforeseen event; (ii) it is an extra-ordinary
event; (iii) it may render the performance of an obligation to do extremely difficult; and (iv) the event and
its effects are manifestly beyond the contemplation of the parties.

Q2: Is the obligation of Dr. No to pay rentals extinguished under the doctrine of unforeseen event under
Article 1267 of the Civil Code?

ANSWER: No, because such doctrine is applicable only to an obligation to do. It does not apply to an
obligation to give. The obligation of Dr. No to pay rentals is an obligation to give and not an obligation to
do.

Q3: May the obligation of Dr. No. to pay rentals be considered extinguished by reason of fortuitous event?
ANSWER: No, because the obligation of Dr. No to pay a sum of money in the form of rents is an obligation
to deliver a generic thing. Hence, such obligation may not be extinguished by reason of loss because the
genus of a thing never perishes.

45. Conventional subrogation vs. assignment of credit: (i) CS is a mode of extinguishment; while
AC is not. In other words, in CS, the credit transferred to the third person is no longer the
same obligation of the debtor to the previous creditor, it is a new one; while in AC, the credit
transferred to the third person is the very same obligation of the debtor to the previous
creditor. (ii) In CS, consent of debtor is necessary because it is a contract involving the parties
to the original obligation and the third person; while in AC, the consent of the debtor is not
necessary, because it only a contract between the creditor (assignor) and the third person
(assignee). (iii) in determining whether it is CS or AC, the intention of the parties must be looked
into. If they intended that the transfer of rights to the third person does not become effective
without the debtor’s consent, it is a case of CS; otherwise, it is simply AC.

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 E. CONTRACTS

46. Option vs. Right of First Refusal: (i) in option, there is already a definite offer, what is lacking
is acceptance of the offer; in RFR, only the object is definite while the price and other terms
are still to be fixed in the future; (ii) in option, the period for the exercise of the privilege is
always a definite period; while in RFR, the period may either be definite or indefinite; and (iii)
in case of breach of contract of option, the remedy is to recover damages; in case of violation
of RFR, the contract in violation of such right can be rescinded if the third party acted in bad
faith.

47. Annulment of voidable contract; requisites on the ground of fraud: The requisites for
annulment of contract on the ground of FRAUD: (1) it must have been employed by one
contracting party upon the other; (2) it must have induced the other party to enter into the
contract; (3) it must have been serious; and (4) it must have resulted in damage and injury to
the party seeking annulment.

PROBLEM No. 16: Poole-Blunden v. Union Bank (2017) (J. Leonen case)

Walter Vizmar purchased a foreclosed property of Union Bank, which was a condominium unit in
Makati City. It was advertised as 95-square meter unit and to be sold on "as-is-where-is" basis. Prior to
the auction sale, Walter visited and inspected the unit. Walter placed his bid and won the unit for
P2,650,000. He then entered into a Contract to Sell with UnionBank. This Contract stipulated that Walter
would pay 10% of the purchase price as down payment and that the balance shall be paid over a period
of 15 years in equal monthly instalments, with interest of 15% per annum starting July 7, 2011. He started
occupying the unit sometime in June 2011. By July 20, 2013, he was able to fully pay the purchase price
for the Unit, paying a total amount of P3,257,142.49. In late 2013, Walter decided to construct two (2)
additional bedrooms in the Unit. Upon examining it, he noticed apparent problems in its dimensions. He
took rough measurements of the Unit, which indicated that its floor area was just about 70 square meters,
not 95 square meters, as advertised by Union Bank. Union Bank informed Walter that the Unit was
confirmed to be 95 square meters, inclusive of the terrace and the common areas surrounding it.

Not satisfied with the explanation of Union Bank, Walter filed an action for the rescission of the
contract. He charges Union Bank with fraud in failing to disclose to him that the advertised 95 square
meters was inclusive of common areas. With the vitiation of his consent as to the object of the sale, he
asserts that the Contract to Sell may be voided.

Q: If you were the Court, will you annul the contract? Explain.

ANSWER: Yes, because the consent of the buyer was vitiated through fraud. In order for the contract to
be annulled on the ground of fraud, the following requisites must be satisfied: it must have been employed
by one contracting party upon the other; (2) it must have induced the other party to enter into the contract;
(3) it must have been serious; and (4) it must have resulted in damage and injury to the party seeking
annulment. All said requisites are present in this case.

The unit sold to Walter was deficient in relation to its advertised area. The bank’s false
advertisement was made with the intention of enticing buyers to the sale. Such falsity amounts to fraud
warranting the voiding of the Contract to Sell.

Falsity on its area is attributable to none but to Union Bank. Its reliance on the as -is-where-is
stipulation is misplaced for two (2) reasons. First, a stipulation absolving a seller of liability for hidden
defects can only be invoked by a seller who has no knowledge of hidden defects. The Bank knew that the
Unit's area, as reckoned in accordance with the Condominium Act, was not 95 square meters. Second,
an as-is-where-is stipulation can only pertain to the readily perceptible physical state of the object of
a sale. It cannot encompass matters that require specialized scrutiny, as well as features and traits that

18
are immediately appreciable only by someone with technical competence, such as the area of the condo
unit.

48. Statute of Frauds: A contract in violation of the Statute of Frauds is not void, but merely
unenforceable. However, the defense of the Statute of Frauds applies only to executory
contracts and not to those which have been executed either fully or partially.

PROBLEM No. 17: Heirs of Solidad Alido v. Campano (2019)

Alido owned a parcel of land. In 1978, Campano was able to take possession of the land and the
owner's duplicate of OCT No. F-16558, and paid its realty taxes. Allegedly, Alido had sold the property to
her. In 1996, Alido died. His heirs executed a deed of extrajudicial settlement over the property and
demanded from Campano the surrender of the title. The heirs filed an action before the RTC for the
surrender of the title. The RTC ruled that the purported sale between Alido and Campano was void
because it was an oral sale. On appeal, the CA ruled that an oral sale of real property is not void, but only
unenforceable under the Statute of Frauds. Nevertheless, it elucidated that it was only applicable to
executory contracts and not to partially or completely executed contracts. The CA highlighted that the oral
sale of the subject parcel of land between respondent and Alido had been executed. The appellate court
noted that respondent possessed the owner's duplicate of title, she had paid the realty taxes, and was in
peaceful possession of the land since 1978.

Q: Is the CA correct?

ANSWER: Yes, the CA is correct. While a contract of sale over a parcel of land is required to be in writing
under the Statute of Frauds, failure to comply with said requirement does not render the contract void but
merely unenforceable. In this case, however, the oral contract of sale is both valid and enforceable
because the defense of Statute of Frauds may no longer be invoked because there was already
performance of the contract. It is the rule that the defense of Statute of Frauds applies only to executory
contracts and not to those which have been executed either fully or partially.

49. Two Kinds of Interest: There are two types of interest - monetary interest and compensatory
interest. Interest as a compensation fixed by the parties for the use or forbearance of money
is referred to as monetary interest; while interest that may be imposed by law or by courts
as penalty for damages is referred to as compensatory interest. Right to interest therefore
arises only by virtue of a contract or by virtue of damages for delay or failure to pay the
principal loan on which interest is demanded.

50. Monetary Interest: The interest referred to in Article 1956 of the Civil Code is monetary interest.
Monetary interest under Article 1956 serves as compensation fixed by the parties for the use
or forbearance of money. As can be gleaned from the foregoing provision, payment of
monetary interest is allowed only if: (i) there was an express stipulation for the payment of
interest; and (ii) the agreement for the payment of interest was reduced in writing. The
concurrence of the two conditions is required for the payment of monetary interest. If both
conditions are satisfied, the payment of monetary interest becomes a case of civil obligation
which can be compelled in court. On the other hand, if the requisites are not complied, the
payment of interest is not civil obligation but only a case of natural obligation.

51. Compensatory Interest: On the other hand, compensatory interest (i.e., interest awarded as
damages under Articles 2209 to 2213 of the Civil Code) is that which is "allowed in actions
for breach of contract or tort for the unlawful detention of money already due.” As the
governing provisions indicate, compensatory interest may be imposed by law or by the courts
as penalty or indemnity for damages. The obligation to pay compensatory interest need not
be stipulated in writing because from the moment a debtor incurs in delay in the payment of
a sum of money, the creditor is entitled to the payment of interest as indemnity for damages

19
 arising out of that delay (compensatory). Article 2209 of the Civil Code provides that: "if the
obligation consists in the payment of sum of money, and the debtor incurs in delay, the
indemnity for damages, there being no stipulation to the contrary, shall be the payment of the
interest agreed upon, and in the absence of stipulation, the legal interest, which is six percent
(6%) per annum.”

PROBLEM No. 18: Abella v. Abella (2015) (J. Leonen Case)

The Spouses Abella executed an acknowledgement receipt in favor of Alma Abella, as follows:

“Batan, Aklan
March 22, 1999

This is to acknowledge receipt of the Amount of Five Hundred Thousand (P500,000.00) Pesos from
Mrs. Alma R. Abella, payable within one (1) year from date hereof with interest.
Annie C. Abella (sgd.) Romeo M. Abella (sgd.)”

The CA ruled that the loan could not have earned interest, whether as contractually stipulated
interest or as interest in the concept of actual or compensatory damages. As to the loan's not having
earned stipulated interest, the court anchored its ruling on Article 1956 of the Civil Code, which requires
interest to be stipulated in writing for it to be due. The court noted that while the acknowledgement receipt
showed that interest was to be charged, no particular interest rate was specified.

However, the creditor claimed that the rate of interest is 2.5% per month. She argued that the
acknowledgment receipt fails to show the complete and accurate intention of the contracting parties. She
relied on Article 1371 of the Civil Code, which provides that the contemporaneous and subsequent acts
of the contracting parties shall be considered should there be a need to ascertain their intent. In addition,
she claim that this case falls under the exceptions to the Parol Evidence Rule, as spelled out in Rule 130,
Section 9 of the Revised Rules on Evidence.

Q1: Is the CA correct?

ANSWER: No. Jurisprudence is clear about the applicable interest rate if a written instrument fails to
specify a rate. According to jurisprudence, if the parties failed to specify the rate, what will apply is the
legal rate. In loan or forbearance of money, the applicable legal rate is 12% per annum prior to July 1,
2013 and 6% per annum beginning July 1, 2013.

Q2: Is the Creditor correct?

ANSWER: No, because Article 1956 of the Civil Code, read in light of established jurisprudence, prevents
the application of any interest rate other than that specifically provided for by the parties in their loan
document or, in lieu of it, the legal rate. Here, as the contracting parties failed to make a specific stipulation,
the legal rate must apply.

PROBLEM No. 19: Hun Hyung Park v. Eung Won Choi (2019)

On June 28, 1999, Park, who was engaged in the business of lending money, extended a loan to
Choi in the amount of P1,875,000.00. As payment for the loan, Choi issued PNB Check No. 0077133 in
the same amount dated August 28, 1999 in favor of Park. On October 5, 1999, Park attempted to deposit
the check to his bank account but the same was returned to him dishonored for having been drawn against
a closed account. The agreement did not provide for the payment of interest.

Q: Is Choi liable to pay interest?

20
ANSWER: As to monetary interest, no; as to compensatory interest yes.

As to monetary interest, Choi is not liable to pay it inasmuch as the parties did not execute a
written loan agreement, and consequently, did not stipulate on the imposition of interest. Article 1956 of
the Civil Code, which states that "[n]o interest shall be due unless it has been expressly stipulated in
writing," operates to preclude the imposition and running of monetary interest on the principal. In other
words, no monetary interest having been agreed upon between the parties, none accrues in favor of Park.

As to compensatory interest, Choi becomes liable to pay Park the same because from the moment
a debtor incurs in delay in the payment of a sum of money, the creditor is entitled to the payment of interest
as indemnity for damages arising out of that delay. Under and Article 2209 of the Civil Code and existing
regulations, if the obligation consists in the payment of sum of money, and the debtor incurs in delay, the
indemnity for damages, there being no stipulation to the contrary, shall be the payment of the interest
agreed upon, and in the absence of stipulation, the legal interest, which is six percent (6%) per annum,”
in loan or forbearance of money effective July 1, 2013.

*** ***
52. The case of Lara Crafts & Decors, Inc. v. Midtown Industrial Sales (2019) further modified
the ruling in Eastern Shipping Lines, Inc. v. CA and Nakar v. Gallery Frames.

In Eastern Shipping Lines and Nakar, it was held that when the judgment of the court awarding
a sum of money becomes final and executory, the rate of legal interest applies from such
finality until its satisfaction, this interim period being deemed to be by then an equivalent to a
forbearance of credit.

In Lara Crafts, the Court clarified that if the rate of interest is stipulated, such stipulated interest
shall apply and not the legal interest, provided the stipulated interest is not excessive and
unconscionable. The stipulated interest shall be applied until full payment of the
obligation because that is the law between the parties. The legal interest only applies in
the absence of stipulated interest. This is in accord with Article 2209 of the Civil Code, which
states: “Art 2209. If the obligation consists in the payment of a sum of money, and the debtor
incurs in delay, the indemnity for damages, there being no stipulation to the contrary, shall be
the payment of the interest agreed upon, and in the absence of stipulation, the legal interest,
which is six percent per annum.”

53. As to legal rate for compensatory interest for loan or forbearance of money, the rate is still
12% p.a., for interest accruing until June 30, 2013; but beginning July 1, 2013, the rate of
interest is reduced to 6% p.a. pursuant to a BSP circular.

PROBLEM No. 20: PNB v. Reyes (2016) (J. Leonen case)

Lilia obtained a loan from PNB, without the consent of her husband, Venancio. She also
mortgaged three parcels of land belonging to the conjugal partnership, also without the consent of her
husband. When the loan was not paid, PNB foreclosed the mortgage. Venancion questioned the validity
of the mortgage on the ground that he did not give his consent to the same. The bank argued, however,
that since the loan redounded to the benefit of the family, the validity of the mortgage should be upheld.

Q: Is the Bank correct?

ANSWER: No, the fact that the debt contracted by the wife without the consent of the husband redounded
to benefit of the family will only make such debt chargeable to the conjugal partnership. With respect to
the mortgage of the conjugal properties without the consent of the husband, the same is void. In order for
the encumbrance of a conjugal property to be valid, it must be made with the consent of both spouses or

21
there must be court authorization if the consent of one cannot be obtained; otherwise, the encumbrance
is void even if the debt had redounded to the benefit of the family.

PROBLEM No. 21: Villaluz v. Land Bank (2017)

Paula Agbisit requested her daughter, May Villaluz, to provide her with collateral for the loan of
Milflores Cooperative, of which Agbisit is the Chairperson. Villaluz and her husband executed a special
power of attorney authorizing Agbisit to use their land as collateral. Agbisit, in turn, executed another SPA
authorizing Milfores Cooperative to mortgage the property. Milfores Cooperative applied for a loan with
Land Bank. The loan application was approved and Milfores executed the real estate mortgage contract
on June 21, 1996 but the loan proceeds were only released on June 25, 1996, or four days later. For failure
of Milfores to pay the loan, the mortgage was foreclosed by the Bank. The Spouses Villaluz questioned
the validity of the mortgage for want of consideration. Citing Article 1409(3), which provides that
obligations "whose cause or object did not exist at the time of the transaction" are void ab initio, the
Spouses Villaluz posit that the mortgage was void because the loan was not yet existent when the
mortgage and the promissory note were executed on June 21, 1996. Since the loan was released only on
June 25, 1996, the mortgage executed four days earlier was without valuable consideration.

The trial court upheld the validity of the mortgage. It argued that the fact that the borrower did not
collect from the Bank the consideration of the mortgage on the date it was executed is immaterial. It
explained that: “A contract of loan being a consensual contract, the herein contract of loan was perfected
at the same time the contract of mortgage was executed. The promissory note executed on December
June 21, 1996 is only an evidence of indebtedness and does not indicate lack of consideration of the
mortgage at the time of its execution.”

Q1: Is the trial court correct that the contract of loan was perfected on June 21, 1996, at the same time
with the contract of mortgage was executed?

ANSWER: The trial court is not correct when it ruled that the contract of loan was perfected on June 21,
1996 because a contract of loan is a real contract which can only be perfected upon the delivery of the
object of the contract. In the problem, the contract of loan was perfected only on June 25, 1996 when the
proceeds of the loan were released to the borrower. What may be considered perfected on June 21, 1996
is the accepted promise to deliver something by way of simple loan, which is a consensual contract, but
not the contract of loan itself.

Q2: Is the contention of the Spouses Villaluz tenable?

ANSWER: No, because Article 1409 (3) of the Civil Code must be interpreted as referring to contracts
whose cause or object is impossible of existing at the time of the transaction and must not be literally
construed as referring to object or consideration which "did not exist at the time of the transactio n;"
otherwise, it will defeat the clear intent of Article 1347 of the Civil Code that all things which are not outside
the commerce of men, including future things, may be the object of a contract."

The cause of the contract of mortgage is the loan to be obtained by Milflores Cooperative. Such
consideration is certainly not an impossible one because Land Bank was capable of granting the loan, as
it in fact released one-third of the loan a couple of days later. Although the validity of the Real Estate
Mortgage is dependent upon the validity of the loan, what is essential is that the loan contract intended to
be secured is actually perfected, not at the time of the execution of the mortgage contract vis-a-vis the
loan contract. It may be perfected later. In other words, the security contract - in this case, the Real Estate
Mortgage - is conditioned upon the release of the loan amount. This suspensive condition was satisfied
when Land Bank released the first tranche of the P3,000,000 loan to Milflores Cooperative on June 25,
1996, which consequently gave rise to the Spouses Villaluz's obligations under the Real Estate Mortgage.

22
 54. On defective contracts: A. Rescissible: (i) it is valid, enforceable, therefore obligatory between
the parties until it is rescinded by the court; (ii) the defect cannot be used as defense without
judgment of rescission, hence, cannot be subjected to collateral attack; (iii) the only way to
raise the defect is to file an action for rescission; (iv) In Article 1381, paragraphs (1) and (2),
the contract must not involve disposition or encumbrance of real property of the ward or
absentee without judicial authorization; otherwise, the contract is unenforceable under Article
1403 (1) of the Civil Code; (v) In Article 1381 (3), the contract in fraud of creditor must not be
absolutely simulated; otherwise, the contract is void and inexistent. B. Voidable: (i) it is valid,
enforceable, therefore obligatory between the parties until it is annulled by the court; (ii) the
defect cannot be used as defense without judgment of annulment, hence, cannot be
subjected to collateral attack; (iii) the only way to raise the defect is to file an action for
annulment or to raise it as a counter-claim; (iv) In Article 1390 (1), it is necessary that only one
of the contracting parties must be incapacitated to give consent; if both are incapacitated, the
contract becomes unenforceable under Article 1403 (3). C. Unenforceable: it is valid but
cannot be enforced in court unless the defect is ratified, hence, it is not obligatory; (ii) however,
the defect may be ratified and if ratified, the contract becomes obligatory; (iii) the defect can
only be raised as a matter of defense, hence, the concept of prescription does not apply; (iv)
In Article 1403 (1), if the contract is not authorized by the principal it is generally unenforceable
and the defect is subject to ratification; (v) however, if the contract entered into by the agent
without authority of the principal is the sale of parcel of land of the principal, the contract is
void applying Article 1874 of the Civil Code which requires the authority of the agent to be in
writing, otherwise the sale is void. D. Void and Inexistent: (i) the contract is invalid from the
very beginning, hence, not obligatory; (ii) the defect is permanent and not susceptible of
ratification; (iii) the defect can be raised as a matter of defense only if the contract is still purely
executory; but if the contract is already performed and a contracting party wants to recover
what was delivered, an action to declare the contract void may be filed, with a prayer for
recovery; (iv) the defense or the action is imprescriptible, but the recovery may be barred by
laches; (v) ordinarily, the party to a void contract is entitled to recovery except when the
principle of in pari delicto is applied or when he is guilty of laches; (vi) in pari delicto rule is
applicable only when the contract is void because it is illegal (the object, cause or purpose is
contrary to law, morals, good customs, public order or public policy) and both parties are
equally at fault; (vii) if the rule of in pari delicto is applicable, the court cannot aid any of the
parties and will simply leave them where they are.

F. TORTS OR QUASI-DELICTS

55. Requisites for Employer’s Vicarious Liability Under Article 2180 of the Civil Code: In order for
the vicarious liability of the employer to attach, Article 2180 requires proof of two things: (i)
existence of employer-employee relationship; and (ii) that the employee acted within the scope
of his or her assigned tasks. It is only after proving such requisites that the employer may find
it necessary to interpose the defense of due diligence in the selection and supervision of the
employee.

56. Registered-owner rule: Under the registered owner rule, the registered owner of a motor
vehicle is liable for death or injuries caused by the operation of the vehicle. The principle upon
which this doctrine is based is that in dealing with registered motor vehicles, the public has
the right to assume or presume that the registered owner is the actual owner thereof, for it
would be difficult for the public to enforce the actions that they may have for injuries caused
to them by the vehicles being negligently operated if the public should be required to prove
who the actual owner is. The registered-owner rule only requires the plaintiff to prove that the
defendant is the registered owner of the vehicle.

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PROBLEM No. 22: Caravan Travel & Tours International, Inc. v. Abejar (2016) (J. Leonen case)

Mary was walking along the west-bound lane of Sampaguita Street, United Parañaque Subdivision
IV, Parañaque City when a van, driven by Bautista and registered in the name of Caravan Travel & Tours
International, Inc., hit her. Instead of bringing Mary to the hospital, Bautista left the van parked inside a
nearby subdivision with Mary still in the van. An unidentified civilian came to help and drove Mary to the
hospital. Upon investigation, it was found that the registered owner of the van was Caravan, which
engaged in the business of organizing travels and tours, and that Bautista was its employee assigned to
drive the van as its service driver. Caravan shouldered the hospitalization expenses of Mary, but the latter
died two (2) days after the accident. At the time of her death, she was already 18 years of age.

Abejar, Mary's paternal aunt and the person who raised her since she was nine (9) years old, filed
before the RTC of Paranaque a Complaint for damages against Bautista and Caravan. Both the RTC and
the CA found for Abejar. On appeal to SC, Caravan questioned Abejar’s personality to file the action. It
argued that only the victim herself or her heirs can enforce an action based on culpa aquiliana. Caravan
also contended that Abejar failed to prove that the driver acted within the scope of his assigned tasks
when the accident occurred.

Q1: Is Caravan’s contention that Abejar has no personality to file the action meritorious?

ANSWER: No, because Abejar exercised substitute parental authority over Mary when the latter was still
below 18. Thus, she suffered actual loss and is, therefore, a real party in interest in this case. The fact that
Mary was already emancipated when the accident occurred does not preclude Abejar from recovering
damages for the death of Mary because, in principle, anybody who suffers any damage from culpa
aquiliana, whether a relative or not of the victim, may recover damages from the person responsible
therefor.

Q2: Is Abejar’s failure to prove that Bautista acted within the scope of his assigned tasks when the accident
occurred fatal to her cause?

ANSWER: No, because in cases where the employer is also the registered owner of a vehicle the only
burden of the plaintiff is to prove that the employer is the registered owner of the vehicle. Once the plaintiff
successfully proves ownership, there arises a disputable presumption that the requirements of Article 2180
have been proven. As a consequence, the burden of proof shifts to the defendant to show that no liability
under Article 2180 has arisen.

This disputable presumption, insofar as the registered owner of the vehicle in relation to the
actual driver is concerned, recognizes that between the owner and the victim, it is the former that should
carry the costs of moving forward with the evidence. The victim is, in many cases, a hapless pedestrian
or motorist with hardly any means to uncover the employment relationship of the owner and the driver,
or any act that the owner may have done in relation to that employment.

In this case, Abejar was able to prove that Caravan was the registered owner of the vehicle.

Q3: Is Abejar entitled to recover damages considering that under Article 2206(3), in case of death arising
from crime or quasi-delict, only the spouse, legitimate and illegitimate descendants, and ascendants of
the decease, may recover moral damages?

*** *** ***

ANSWER: Yes, because for the purpose of recovering moral damages under Article 2206(3), persons
exercising substitute parental authority are to be considered “ascendants.” They are intended to
stand in place of a child's parents in order to ensure the well-being and welfare of a child.

24
 Given the policy underlying Articles 216 and 220 of the Family Code as well as the purposes for
awarding moral damages, a person exercising substitute parental authority is rightly considered an
ascendant of the deceased, within the meaning of Article 2206(3) of the Civil Code. Hence, Abejar
is entitled to moral damages.

57. Articles 1170, 20 and 2176 on negligence: (i) In Article 1170, the negligence is called “culpa
contractual. In culpa contractual, the source of obligation is contract and not the negligence.
In culpa contractual, the negligence occurred only during the performance of the obligation.
(ii) In Article 20, there is no contract between the parties but the negligence is contrary to law
or a breach of an existing provision of law. (iii) In Article 2176, the negligence is called “culpa
aquiliana or culpa extra-contractual. In Article 2176, as a rule there must be no contract
between the parties and the negligence is not a breach of an existing provision of law. (iv)
However, the existence of a contract between the parties may not prevent recovery under
culpa aquiliana or quasi-delict when the reason for the breach of the contract is negligence
itself (or “when the act that breaks the contract is also a tort”).

PROBLEM No. 23: Orient Freight International, Inc. v. Keihin-Everett Forwarding Company, Inc.
(2017) (J. Leon case)

ETR Corp. entered into a Trucking Service Agreement with TMM Corp. where the former would
provide services for TMM's trucking requirements. These services were subcontracted by ETR Corp. to
ABC Corp, through their own Trucking Service Agreement. When the shipment arrived in Yokohama,
Japan on May 8, 2002, it was discovered that 10 pallets of the shipment's 218 cartons, worth
US$34,226.14, were missing. ETR Corp. independently investigated the incident. When confronted with
ETR's findings, ABC wrote back on May 15, 2002 to admit that its previous report was erroneous and that
pilferage was apparently proven. TMM Corp. terminated its In-House Brokerage Service Agreement with
ETR Corp, effective July 1, 2002. TMM cited loss of confidence for terminating the contract, stating that
ETR's way of handling the April 17, 2002 incident and its nondisclosure of this incident's relevant facts
amounted to fraud and signified an utter disregard of the rule of law.

ETR demand payment from ABC. When ABC refused to pay, ETR filed a complaint dated October
24, 2002 for damages with Manila RTC, which rendered a decision in favor of ETR. It found that ABC was
negligent in failing to investigate properly the incident and make a factual report to ETR and TMM despite
having enough time to properly investigate the incident. The CA also found ABC to be guilty of quasi-
delict. Both the RTC and the CA applied the doctrine that "the act that breaks the contract may also be a
tort."

ABC filed a Petition for Review on Certiorari under Rule 45 with the Supreme Court, arguing that
the Court of Appeals incorrectly found it negligent under Article 2176 of the Civil Code. As there was a
subsisting Trucking Service Agreement between ABC itself and ETR, ABC avers that there was a pre-
existing contractual relation between them, which would preclude the application of the laws on quasi-
delicts.

Q: Did the RTC and CA correctly rule that the basis of ABC’s liability to ETR is quasi-delict? Is the doctrine
that "the act that breaks the contract may also be a tort" applicable in this case?

ANSWER: No, both the RTC and the CA erred in finding that ABC’s negligence amounted to quasi-delict
because its negligence did not create the vinculum juris or legal relationship with ETR Corp, which would
have otherwise given rise to a quasi-delict. ABC’s duty to ETR existed prior to its negligent act. When ETR
contacted ABC regarding the news report and asked it to investigate the incident, ABC's obligation was
created. Thereafter, ABC was alleged to have performed its obligation negligently, causing damage to
ETR.

25
 The doctrine "the act that breaks the contract may also be a tort," on which the RTC and CA
relied, is inapplicable here. ABC's negligence, arising as it does from its performance of its obligation to
ETR, is dependent on this obligation. Consequently, ABC’s negligence is a case of culpa-contractual under
Article 1170 of the Civil Code – or negligence in the performance of an obligation.

PROBLEM No. 24:

P rode on a taxi, driven by D and owned by O. Because of the recklessness of D, the taxi collided
with another vehicle resulting to serious injuries to P.

Q: Discuss the possible sources of obligations, the person/s liable, nature of liability and possible
defenses.

ANSWER:

1) Breach of contract is one of the sources of obligation here. For breach of contract, only O is
liable to P because D is not a party to the contract of carriage. Hence, under contract, it is not
possible for the driver and the employer to be solidarily liable because only the employer is
liable. If the cause of action is breach of contract, the defense that the employer exercised
due diligence in the selection and supervision of his employee is not applicable.

2) Delict is another source of obligation. Under delict, the driver (D) is primarily liable while the
employer (O) is subsidiarily liable. Hence, under delict, it is not possible for the driver and the
employer to be solidarily liable because only one of them is liable. The subsidiary liability of
the employer will attach only if the employee is convicted and turns out to be insolvent. If the
cause of action is delict, the defense that the employer exercised due diligence in the selection
and supervision of his employee is not applicable.

3) Quasi-delict is another source of obligation because the scope of quasi-delict is broader, in

that it also covers acts or omissions punishable by law, whether the crime was committed
intentionally or negligently. The existence of a contract between the parties does not also
prevent recovery under quasi-delict because in this case, the act that breaks the contract is
also a tort. Under quasi-delict, the driver may be sued alone under Article 2176; or the
employer may be sued alone under Article 2180; or they may be sued jointly and their liability
will be solidary because they are considered joint-tortfeasors. It is only in quasi-delict where
the employee and the employer may be held solidary liable. Since the basis of the employer’s
liability is his presumed negligence in the selection and supervision of his employee, he may
actually prove that he exercised diligence in such selection and supervision.

G. DAMAGES

58. Moral damages in case of death in delict or quasi-delict: (a) Rule: In case of death caused by
delict or quasi-delict, moral damages may be recovered by only the following: spouse,
legitimate and illegitimate descendants and ascendants of the deceased [Art. 2206(3), Civil
Code]. (b) brothers and sisters and other collateral relatives are not allowed to recover
[Sulpicio Lines, Inc. v. Curso (2010)]. (c) However, given the policy underlying Articles 216 and
220 of the Family Code as well as the purposes for awarding moral damages, a person
exercising substitute parental authority is rightly considered an ascendant of the deceased,
within the meaning of Article 2206(3) of the Civil Code. [Caravan Travel & Tours International,
Inc. v. Abejar (2016)]

PROBLEM No. 25: What are the recoverable damages when death occurs as a result of crime or quasi-
delict?

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ANSWER: The following may be recovered:

(i) indemnity for the death of the victim – in the amount of P50,000 under existing
jurisprudence, without need of any evidence or proof of damages;
(ii) indemnity for loss of earning capacity, which is recoverable in addition to indemnity for
the death of the victim in the amount of P50,000;
(iii) (moral damages, which can be recovered in addition to indemnity for the death of the
victim in the amount of P50,000 and loss of earning capacity;
(iv) exemplary damages - when the crime is attended by one or more aggravating
circumstances, the same to be considered separate from fines;
(v) attorney’s fees and expenses of litigation - the actual amount thereof, (but only when a
separate civil action to recover civil liability has been filed or when exemplary damages
are awarded); and
(vi) interest in proper cases. [Torreon v. Aparra (2017)]

59. Loss of earning capacity: Testimonial evidence is allowed to prove loss of earning capacity.
The testimony of the deceased's widow as basis to estimate his earning capacity is allowed
by the Court. The Court also accepted testimony from co-workers of the deceased to establish
his income before his death. With more reason, the employer should be deemed competent
to testify on the compensation that the deceased was receiving. [Torreon v. Aparra (2017)]

60. Formula in computing loss of earning capacity:

Net Earning Capacity = [2/3 x (80 - age at time of death) x (gross annual income
- reasonable and necessary living expenses)]

This is a step-by-step guide to compute an award for loss of earning capacity.

(1) Subtract the age of the deceased from 80.

(2) Multiply the answer in (1) by 2, and divide it by 3 (these operations, are interchangeable).
(3) Multiply 50% to the annual gross income of the deceased.
(4) Multiply the answer in (2) by the answer in (3). This is the loss of earning capacity to be awarded.

When the evidence on record only shows monthly gross income, annual gross income is derived from
multiplying the monthly gross income by 12. When the daily wage is the only information provided during
trial, such amount may be multiplied by 260, or the number of usual workdays in a year, to arrive at annual
gross income.

PROBLEM No. 26: Torreon v. Aparra (2017) (J. Leonen case)

At the time of the victim’s death, he was 48 years old and was earning P15,000.00
monthly. Compute the loss of earning capacity.

ANSWER:

1. First, subtract 48 from 80, which gives 32 years as answer.

2. Next, multiply 32 by 2/3, which results into 21.33 which is the life expectancy.
3. Then, determine his annual gross income by multiplying the monthly income of P15,000 by
12. Hence, the annual gross income is P180,000.00.
4. After getting the annual gross income, get 50% of it. Here it is P90,000.
5. To arrive at the loss of earning capacity, multiply P90,000 by 21.33.
6. Hence, the loss of earning capacity is P1,919,700.

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PROBLEM No. 27: Torreon v. Aparra (2017) (J. Leonen case)

Simolde operated a truck. The official truck driver was Caballes. However, Caballes allowed
Aparra, the truck’s mechanic to drive the vehicle. Due to Aparra’s negligence, the truck fell into the wharf
killing several passengers and injuring others. Vivian and Abella filed criminal and civil action for damages
against Simolde, Caballes and Aparra for the death of her husband, Rodolfo, who was one of the
passengers of the truck.

The trial court found the defendants solidarily liable for the commission of qua si-delict, which
decision was affirmed by the CA. However, the CA deleted the award of damages for Rodolfo’s loss of
earning capacity. The CA concluded that documentary evidence should be presented to substantiate a
claim for loss of earning capacity. In this case, it was the employer who testified on the earning capacity
of Rodolfo.

Q: Is the CA correct?

ANSWER: No. In civil cases, Vivian is only required to establish her claim by a preponderance of evidence.
Allowing testimonial evidence to prove loss of earning capacity is consistent with the nature of civil actions.
The Court has previously accepted a competent witness' testimony to determine the deceased's income.
In one case, the Court used the testimony of the deceased's widow as basis to estimate his earning
capacity. In another case, the Court also accepted testimony from co-workers of the deceased to establish
his income before his death. If co-workers were deemed competent to testify on the compensation that
the deceased was receiving, all the more should an employer be allowed to testify on the amount she was
paying her deceased employee.

61. Disrespect to the dead: Under Article 309 of the Civil Code, any person who shows disrespect
to the dead, or wrongfully interferes with a funeral shall be liable to the family of the deceased
for moral damages.

PROBLEM No. 28: Tabuada v. Tabuada (2018)

Loreta Tabuada died in 1990. She left a parcel of land registered in her name. She was survived
by her son and only heir, Simeon Tabuada. In 1994, Eleonor Tabuada, the sister-in-law of Simeon,
misrepresented herself as the deceased Loreta Tabuada and mortgaged the property without the
knowledge of Simeon and the latter’s wife, Sofia Tabuada. The mortgage was in favor of the Spouses
Certeza. In 1997, Simeon died, leaving Sofia and their children as his heirs. After the death of her husband,
Sofia learned of what Eleanor did. Hence, she filed an action against Eleanor and the Spouses Certeza for
the nullification of the mortgage. The trial court declared the mortgage void on the ground that the
mortgagor was not the absolute owner of the property. The RTC also ruled that moral damages were
proper under Article 309 of the Civil Code based on the showing of disrespect to the dead.

Q: Is the award of moral damages under Article 309 of the Civil Code proper?

ANSWER: No, the RTC committed an error in awarding moral damages based on Article 309 of the Civil
Code. The Civil Code provision under Article 309 on showing "disrespect to the dead" as a ground for the
family of the deceased to recover moral and material damages, being under the title of “Funerals”,
obviously envisions the commission of the disrespect during the period of mourning over the demise
of the deceased or on the occasion of the funeral of the mortal remains of the deceased. Neither
was true herein. Hence, the act of Eleanor Tabuada of fraudulently representing the late Loreta Tabuada
did not amount to disrespect to the dead as basis for the recovery of moral damages.

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62. Right of juridical persons to recover moral damages: (a) General rule: A juridical person,
including the Republic of the Philippines, is generally not entitled to moral damages because,
unlike a natural person, it cannot experience physical suffering or such sentiments as
wounded feelings, serious anxiety, mental anguish or moral shock. A corporation, not having
a nervous system or a human body, does not experience physical suffering, mental anguish,
embarrassment, or wounded feelings [Noelle Whessoe, Inc. v Independent Testing
Consultants, Inc. (2018)]. (b) Exceptions: (i) Article 2219, No. 7 of the Civil Code expressly
authorizes the recovery of moral damages in cases of libel, slander or any other form of
defamation. Article 2219(7) does not qualify whether the plaintiff is a natural or juridical person.
Therefore, a juridical person such as a corporation can validly complain for libel or any other
form of defamation and claim for moral damages [Filipinas Broadcasting Network, Inc. v. Ago
Medical and. Educational Center – Bicol Christian College of Medicine (2005)]; (ii) another
exception would be in cases of violation of Articles 19, 20 and 21 of the Civil Code [Eternal
Gardens Memorial Park Corp. v. Perlas (2020)].

63. In an action for breach of contract of carriage, moral damages may be awarded only in case
(1) an accident results in the death of a passenger; or (2) the carrier is guilty of fraud or bad
faith, pursuant to Article 1764, in relation to Article 2206(3) of the Civil Code, and Article 2220
thereof. [Darines v. Quinones (2017)]

-END-

GOOD LUCK BARRISTERS!!!

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