Civil Law and Practical Exercises
which he is otherwise not lawfully entitled, or any detriment,
Object
Requisites
1) The thing or service must be within the commerce of man;
2) Must be transmissible;
3) Must not be contrary to law, morals, good customs, public
order, or public policy;
4) Must not be impossible (Art 1348);
5) Must be determinate as to its kind or determinable without
the need of a new contract or agreement (Art 1349).
De Belen Vda De Cabalu v. Tabu & Laxamana 2012
Paragraph 2 of Article 1347, characterizes a contract entered into
upon future inheritance as VOID. The law applies when the
following requisites concur:
1) the succession has not yet been opened;
2) the object of the contract forms part of the inheritance; and
3) the promissor has, with respect to the object, an expectancy
of a right which is purely hereditary in nature.
In this case, at the time the deed was executed, Faustina’s will was not
yet probated; the object of the contract, the 9,000 square meter
property, still formed part of the inheritance of his father from the
estate of Faustina; and Domingo had a mere inchoate hereditary
right therein.
Cause
A consideration, in the legal sense of the word, is some right,
interest, bene t, or advantage conferred upon the promisor, to
Reviewer for the 2022 Bar
ii) Those agreed upon in representation of absentees, if
prejudice, loss, or disadvantage su ered or undertaken by the
the latter su er the lesion stated in the preceding
promisee other than to such as he is at the time of consent bound
number; (Art 1381[2])
to su er.
iii) In partition, when any one of the co-heirs received
Requisites
things whose value is less, by at least one-fourth,
1) Must be present at the time the contract was entered into; than the share to which he is entitled. (Art 1098)
2) Must be true;
Cojuangco, Jr. v. Republic 2012 En Banc
3) Must be lawful.
The presumption that a contract has sufficient consideration
Motive distinguished from Cause
cannot be overthrown by the bare uncorroborated and self-serving
assertion of petitioners that it has no consideration. To overcome the
Motive Cause
presumption of consideration, the alleged lack of consideration must
May vary although he enters Always the same be shown by preponderance of evidence.
into the same contract Inadequacy of the consideration, however, does not render a
contract void under Article 1355. While one may posit that the
May be unknown to the other Always known
PCA-Cojuangco Agreement puts PCA and the coconut farmers at a
Di cult to separate from cause Its absence cannot be cured by disadvantage, the facts do not make out a clear case of violation of
presence of motive any law that will necessitate the recall of said contract.
While consideration is usually in the form of money or property, it
Lesion — It is the inadequacy of cause.
need not be monetary. This is clear from Article 1350.
GR: Lesion does NOT invalidate a contract.
EXC:
Sta. Fe Realty Inc., et al. v. Sison 2016
a) When there has also been fraud, mistake or undue in uence;
Gross inadequacy of price does not even a ect the validity of a
b) In cases expressly provided by law:
contract of sale, unless it signi es a defect in the consent or that the
i) Those which are entered into by guardians whenever parties actually intended a donation or some other contract.
the wards whom they represent su er lesion by more Inadequacy of cause will not invalidate a contract unless there has been
than one-fourth of the value of the things which are fraud, mistake or undue influence.
the object thereof; (Art 1381[1])
Petitioners are assailing the deeds of sale for being absolutely
By RGL 121 of 245
Civil Law and Practical Exercises
simulated and for inadequacy of the price. However, these two
grounds are incompatible. If there exists an actual consideration
for transfer evidenced by the alleged act of sale, no matter how
inadequate it be, the transaction could not be a simulated sale.
3 Reformation of instruments
1. Reformation is that remedy in equity by means of which a
written instrument is made or construed so as to express or
conform to the real intention of the parties.
2. An action for reformation is in personam, not in rem, xxx
even when real estate is involved.
3. May prosper only upon the concurrence of the following
requisites:
a) there must have been a meeting of the minds of the
parties to the contact;
b) the instrument does not express the true intention
of the parties; and
c) the failure of the instrument to express the true
intention of the parties is due to mistake, fraud,
inequitable conduct or accident.
4. The onus probandi is upon the party who insists that the
contract should be reformed.
5. The prescriptive period for actions based upon a written
contract and for reformation of an instrument is ten (10)
years under Article 1144.
6. Under Section 1, Rule 64, an action for the reformation of an
instrument is instituted as a special civil action for
declaratory relief. It may be entertained only before the
Reviewer
breach or violation of the law or contract to which it
refers.
When Instrument may be Reformed
1) When a mutual mistake of the parties causes the failure of the
instrument to disclose their real agreement; (Art 1361)
2) If one party was mistaken and the other acted fraudulently or
inequitably in such a way that the instrument does not show
their true intention; (Art 1362)
3) When one party was mistaken and the other knew or believed
that the instrument did not state their real agreement, but
concealed that fact; (Art 1363)
4) When through the ignorance, lack of skill, negligence or bad
faith on the part of the person drafting the instrument or of
the clerk or typist, the instrument does not express the true
intention of the parties; (Art 1364)
5) If two parties agree upon the mortgage or pledge of real or
personal property, but the instrument states that the property
is sold absolutely or with a right of repurchase. (Art 1365)
When Reformation NOT Allowed
1) Simple donations inter vivos wherein no condition is imposed;
2) Wills;
3) When the real agreement is VOID; (Art 1366)
4) When one of the parties has brought an action to enforce the
instrument; (Art 1367)
Sarming v. Dy, et al.
There was a meeting of the minds between the parties to the contract
By RGL
for the 2022 Bar
but the deed did not express the true intention of the parties due to
mistake in the designation of the lot subject of the deed. There is no
dispute as to the intention of the parties to sell the land to Alejandra
Del no but there was a mistake as to the designation of the lot
intended to be sold.
Bentir v. Leanda
Whether the complaint for reformation of instrument has prescribed.
YES. Respondent corporation had ten (10) years from 1968, the
time when the contract of lease was executed, to le an action for
reformation. Sadly, it did so only on May 15, 1992 or twenty-four
(24) years after the cause of action accrued, hence, its cause of action
has become stale, hence, time-barred.
4 Interpretation of contracts
The "interpretation" of a contract is the determination of the
meaning attached to the words written or spoken which make the
contract.
Kasilag v. Rodriguez
The cardinal rule in the interpretation of contracts is to the e ect
that the intention of the contracting parties should always prevail
because their will has the force of law between them.
The terms, clauses and conditions contrary to law, morals and public
order should be separated from the valid and legal contract when
such separation can be made because they are independent of the
valid contract which expresses the will of the contracting parties.
122 of 245
Civil Law and Practical Exercises Reviewer for the 2022 Bar

valid, by means of the restoration of things to their condition

entitled to liquidated damages. Substantial completion of the
at the moment prior to the celebration of said contract.
project equates to achievement of 95% project completion which
Sy v. CA
excuses the contractor from the payment of liquidated damages. 2. It is a relief allowed for the protection of one of the
In order to judge the intention of the parties, their contemporaneous contracting parties and even third persons from all injury and
As expressly stated under Articles 1234 and 1376, and in
and subsequent acts shall be principally considered. damage the contract may cause, or to protect some
jurisprudence, the construction industry's prevailing practice
incompatible and preferent right created by the contract.
may supplement any ambiguities or omissions in the stipulations
of the contract. 3. Rescission implies a contract which, even if initially valid,
Angeles v. Calasang produces a lesion or pecuniary damage to someone that
The Four Kinds of Defective Contracts in decreasing validity justi es its invalidation for reasons of equity.
The contract to sell, being a contract of adhesion, must be construed
against the party causing it. Validity Reason for Defect Rati able 4. The action for rescission is subsidiary; it cannot be instituted
except when the party su ering damage has no other legal
Extrinsic, consisting
Valid until means to obtain reparation for the same. (Art 1383)
Rescissible
rescinded
of economic damage ✘
Century Properties, Inc. v. Babiano, et al 2016 or lesion 5. The acquisition by a third person of the property subject of
The rule is that where the language of a contract is plain and the contract is an obstacle to the action for its rescission
Valid until Intrinsic, as in vitiated
unambiguous, its meaning should be determined without reference Voidable
annulled consent
✔ where it is shown that such third person is in lawful possession
to extrinsic facts or aids. The intention of the parties must be of the subject of the contract and that he did not act in bad
gathered from that language, and from that language alone. faith. (Art 1385)
Lack of authority;
Thus, in the interpretation of contracts, the Court must rst Has no Failure to comply 6. The kinds of rescissible contracts, according to the reason for
determine whether a provision or stipulation therein is ambiguous. Unenforceable e ect for with Statute of ✔ their susceptibility to rescission, are the following:
Absent any ambiguity, the provision on its face will be read as it is now Frauds; Both parties a. first, those which are rescissible because of lesion or
written and treated as the binding law of the parties to the contract. lack capacity prejudice;
Void or No e ect b. second, those which are rescissible on account of
Inexistent at all
Various, see Art 1409 ✘ fraud or bad faith; and
Werr International Corporation v. Highlands Prime 2017
c. third, those which, by special provisions of law, are
Deemed incorporated into every contract are the general provisions 5 Rescissible contracts susceptible to rescission.
on obligations and interpretation of contracts found in the Civil
1. Rescission is a remedy granted by law to the contracting Requisites for Rescission
Code.
parties and even to third persons, to secure reparations for 1) There must be at the beginning either a valid or voidable
In previous cases, we applied Articles 1234 and 1376 in
damages caused to them by a contract, even if this should be contract;
construction agreements to determine whether the project owner is

By RGL 123 of 245

 Civil Law and Practical Exercises
2) But there is an economic prejudice to a party or third person;
3) Requires mutual restitution. (Art 1385)
Enumeration of Rescissible Contracts
ART 1381. The following contracts are rescissible:
1) Those which are entered into by guardians whenever
the wards whom they represent su er lesion by more
than one-fourth of the value of the things which are
the object thereof;
2) Those agreed upon in representation of absentees, if
the latter su er the lesion stated in the preceding
number;
3) Those undertaken in fraud of creditors when the
latter cannot in any other manner collect the claims
due them;
4) Those which refer to things under litigation if they
have been entered into by the defendant without the
knowledge and approval of the litigants or of
competent judicial authority; xxxx
Requisites for an Accion Pauliana to Accrue (Par 3 of Art 1381)
1) That the plainti asking for rescission has a credit prior to
the alienation, although demandable later;
2) That the debtor has made a subsequent contract conveying a
patrimonial bene t to a third person;
3) That the creditor has no other legal remedy to satisfy his
claim, but would bene t by rescission of the conveyance to the
third person;
4) That the act being impugned is fraudulent;
Reviewer
5) That the third person who received the property conveyed, if
by onerous title, has been an accomplice in the fraud.
An accion pauliana presupposes the following:
1) A judgment;
2) the issuance by the trial court of a writ of execution for the
satisfaction of the judgment, and
3) the failure of the sheri to enforce and satisfy the judgment of
the court.
The following successive measures must be taken by a creditor before
he may bring an action for rescission of an allegedly fraudulent sale:
1) exhaust the properties of the debtor through levying by
attachment and execution upon all the property of the debtor,
except such as are exempt from execution;
2) exercise all the rights and actions of the debtor, save those
personal to him (accion subrogatoria); and
3) seek rescission of the contracts executed by the debtor in fraud
of their rights (accion pauliana).
Premature Payments Made in a State of Insolvency (Art 1382)
Two requisites must concur:
1) The debtor-payer must have been insolvent;
2) The debt was not yet due and demandable.
Presumptions of Fraud (Art 1387)
a) In case of gratuitous alienations — when the debtor did
not reserve su cient property to pay all debts contracted
before the donation.
By RGL
for the 2022 Bar
b) In case of onerous alienations — when made by persons
against whom
i) some judgment has been rendered in any instance; or
ii) some writ of attachment has been issued.
The decision or attachment need not refer to the property
alienated, and need not have been obtained by the party
seeking the rescission.
Badges of Fraud
In the early case of Oria v. Mcmicking, the Supreme Court considered
the following instances as badges of fraud:
1. The fact that the consideration of the conveyance is ctitious
or is inadequate.
2. A transfer made by a debtor after suit has begun and while it
is pending against him.
3. A sale upon credit by an insolvent debtor.
4. Evidence of large indebtedness or complete insolvency.
5. The transfer of all or nearly all of his property by a debtor,
especially when he is insolvent or greatly embarrassed
nancially.
6. The fact that the transfer is made between father and son,
when there are present other of the above circumstances.
7. The failure of the vendee to take exclusive possession of all
the property.
Rosencor Development Corporation v. Inquing, et al.
May a contract of sale entered into in violation of a third party's right
124 of 245
Civil Law and Practical Exercises Reviewer for the 2022 Bar

of first refusal be rescinded in order that such third party can exercise like creditors. The status of creditors could be validly accorded the These contracts are binding, unless they are annulled by a
said right? YES. But not in this case. Bonnevies for they had substantial interests that were prejudiced by proper action in court. They are susceptible of ratification.
the sale of the subject property to the petitioner without recognizing
The acquisition by Rosencor of the property subject of the right of Rescission distinguished from Annulment
their right of rst priority under the Contract of Lease.
rst refusal is an obstacle to the action for its rescission where, as in
this case, it was shown that Rosencor is in lawful possession of the Rescission Annulment
subject of the contract and that it did not act in bad faith. (Art 1385)
Ada v. Baylon 2012 Basis is lesion Basis is vitiated consent or
Respondents’ remedy is not an action for the rescission of the Deed incapacity to consent
of Absolute Sale but an action for damages against the heirs of the The rescission of a contract under Article 1381(4) only requires the
spouses Tiangco for the unjusti ed disregard of their right of rst concurrence of the following: Defect is external or intrinsic Defect is intrinsic
refusal.
1) first, the defendant, during the pendency of the case, enters
Subsidiary action Principal action
into a contract which refers to the thing subject of litigation;
and Remedy Sanction
Khe Hong Cheng v. CA
2) second, the said contract was entered into without the
Private interest governs Public interest governs
When did the four (4) year prescriptive period as provided for in knowledge and approval of the litigants or of a competent
Article 1389 for Philam to file its action for rescission of the subject judicial authority. Equity predominates Law predominates
deeds of donation commence to run?
Rescission under Article 1381(4) is not preconditioned upon the
Plainti may be a party or third Plainti must be a party whether
Philam only learned about the unlawful conveyances made by Khe judicial determination as to the ownership of the thing subject of
person bound principally or subsidiarily
Hong Cheng in January 1997. There they found that he no longer litigation.
had any properties in his name. It was only then that respondent There must be damage to Damage to plainti immaterial
Philam's action for rescission of the deeds of donation accrued plainti
6 Voidable contracts
because then it could be said that Philam had exhausted all legal
means to satisfy the trial court's judgment in its favor. ART 1390. The following contracts are voidable or annullable, If plainti indemni ed, cannot Indemnity is no bar to action
even though there may have been no damage to the prosper
contracting parties:
Compatible with the perfect A defect is presupposed
Guzman, Bocaling and Co., Inc. v. Bonnevie 1) Those where ONE of the parties is incapable of validity of contract
The respondent court correctly held that the Contract of Sale was giving consent to a contract;
Rati cation is NOT required to Rati cation required to prevent
not voidable but rescissible. Under Article 1380 to 1381(3) of the 2) Those where the consent is vitiated by mistake,
prevent rescission annulment
Civil Code, a contract otherwise valid may nonetheless be violence, intimidation, undue in uence or fraud.
subsequently rescinded by reason of injury to third persons, Prescriptive Period (Art 1391)

By RGL 125 of 245

 Civil Law and Practical Exercises Reviewer for the 2022 Bar

The action for annulment shall be brought within four years. This ART 1399. When the defect of the contract consists in the c) An agreement made in consideration of
period shall begin: incapacity of one of the parties, the incapacitated person is marriage, other than a mutual promise to marry;
not obliged to make any restitution d) An agreement for the sale of goods, chattels or
Ground From the time things in action, at a price not less than ve
Exception to the exception
hundred pesos, unless the buyer accept and
In cases of intimidation, violence the defect of the consent ceases except insofar as he has been bene ted by the thing or price
receive part of such goods and chattels, or the
or undue in uence received by him.
evidences, or some of them, of such things in
In case of mistake or fraud of discovery of same action or pay at the time some part of the
7 Unenforceable contracts purchase money; xxxx;
Entered into by minors or other the guardianship ceases
Kinds of Unenforceable Contracts e) An agreement for the leasing for a longer
incapacitated persons
a) Unauthorized contracts; period than one year, or for the sale of real
Ratification; Effects property or of an interest therein;
b) Those that fail to comply with the Statute of Frauds;
a) The action to annul is extinguished (Art 1392); f) A representation as to the credit of a third
c) Those where BOTH parties are incapable of giving consent to
person.
b) Cleanses the contract from all its defects from the moment it a contract.
was constituted. (Art 1396) 3) Those where BOTH parties are incapable of
ART 1403. The following contracts are unenforceable, unless giving consent to a contract.
Ratification; Requisites they are rati ed:
General Rules of Application Concerning Statute of Frauds
1) The contract must be voidable; 1) Those entered into in the name of another person by
one 1) Applies only to executory contracts where no performance
2) The person ratifying must know the reason for the contract
has yet been made.
being voidable; a) who has been given no authority or legal
representation, or 2) Cannot apply if the action is neither
3) The cause must not exist or continue to exist anymore at the
time of rati cation; b) who has acted beyond his powers; a) for damages because of the violations of an agreement
nor
4) Must have been made expressly or by an act implying a 2) Those that do not comply with the Statute of
waiver of the action to annul; Frauds as set forth in this number. xxxx: b) for the speci c performance of said agreement.

5) The person ratifying must be the injured party. a) An agreement that by its terms is not to be 3) Exclusive — applies only to the agreements or contracts
performed within a year from the making enumerated above.
There Must be Mutual Restitution, Except
thereof; 4) The defense of the Statute of Frauds may be waived.
b) A special promise to answer for the debt,
default, or miscarriage of another;

By RGL 126 of 245

 Civil Law and Practical Exercises Reviewer for the 2022 Bar

5) A personal defense — a contract infringing it cannot be 8 Void or inexistent contracts parties directly a ected
assailed by third persons. (Art 1408)
Voidable distinguished from Void Contracts Enumeration of Void Contracts
6) Concerns itself with the admissibility of evidence and not its
credibility or weight. Voidable Void ART 1409. The following contracts are inexistent and void
from the beginning:
7) Does not apply if it is claimed that the contract does not
May be rati ed Cannot be rati ed
express the true agreement of the parties. 1) Those whose cause, object or purpose is contrary to
Produces e ects until annulled Generally, e ects are not law, morals, good customs, public order or public
Ratification of Contracts Infringing the Statute of Frauds (Art
produced at all policy;
1405
2) Those which are absolutely simulated or ctitious;
a) By the failure to object to the presentation of oral evidence to Defect is due to incapacity or Ordinarily, public policy is
prove the same, or vitiated consent militated against 3) Those whose cause or object did not exist at the
time of the transaction;
b) By the acceptance of bene t under them.
Valid until annulled Generally, no action required to
4) Those whose object is outside the commerce of
set aside, unless has already been
Rosencor Development Corporation v. Inquing, et al men;
performed
5) Those which contemplate an impossible service;
A right of rst refusal is NOT among those listed as unenforceable
May be cured by prescription Cannot be cured by prescription
under the statute of frauds. 6) Those where the intention of the parties relative to
Defense may be invoked only by Defense may be availed of by the principal object of the contract cannot be
the parties or their successors in anybody whose interest is ascertained;
Carbonell v. Poncio interest and privies directly a ected (Art 1421) 7) Those expressly prohibited or declared void by law.

The Statute of Frauds is applicable only to executory contracts, not Relative or conditional nullity Absolute nullity These contracts cannot be rati ed. Neither can the right to set
to contracts that are totally or partially performed. up the defense of illegality be waived.
Unenforceable distinguished from Void Contracts
Lone Instance Where Recovery Can Be
Unenforceable Void Had Even in the Presence of Pari Delicto
Western Mindanao Lumber Co. v. Medalle
ART 1414. When money is paid or property delivered for an
May be rati ed Cannot be rati ed
An agreement creating an easement of right-of-way is NOT one of illegal purpose, the contract may be repudiated by one of the
those contracts covered by the statute of frauds since it is not a sale of There is a contract but cannot No contract at all parties
real property or of an interest therein. be enforced by a court action a) before the purpose has been accomplished, or

Cannot be assailed by third Can be assailed by anybody b) before any damage has been caused to a third person.

By RGL 127 of 245

 Civil Law and Practical Exercises
In such case, the courts may, if the public interest will thus be
subserved, allow the party repudiating the contract to recover
the money or property.
Contracts Merely Prohibited
1. Those forbidden because of private interests, as opposed to
those that are illegal per se that are forbidden due to public
interests.
2. Recovery is permitted, provided that:
a) The contract is not illegal per se;
b) The prohibition is designed for the protection of the
plainti ; and
c) Public policy would be enhanced by allowing the
recovery.
Marin v. Adil
It is evident from the deed of exchange that the intention of the
parties relative to the lots, which are the objects of the exchange,
cannot be de nitely ascertained. We hold that this circumstance
renders the exchange VOID or inexistent. The instant rescissory
action may be treated as an action to declare void the deed of
exchange.
Razon, Inc. v. PPA
The transfer of the control of petitioner E. Razon, Inc. from
petitioner Enrique Razon to Alfredo “Bejo” Romualdez, which We
have resolved to be null and void, served as the direct link to
petitioner company's obtaining the Management Contract. Being
Reviewer
the direct consequence and result of a previous illegal contract, the
Management Contract itself is null and void as provided in Article
1422 of the Civil Code.
Homena v. Casa
The plainti s’ supposed cause of action rests upon the deed of sale
executed by defendants in their favor wherein the latter sold a
two-hectare portion of the homestead which they were applying for
to the plainti s on the understanding that the actual conveyance of
the said portion to plainti s would be made only after the lapse of
the ve-year period during which, under the Public Land Act, the
homestead owner was prohibited from transferring his rights. The
agreement is clearly illegal and void ab initio; it is intended to
circumvent and violate the law. As parties to a void contract, the
plainti s have no rights which they can enforce and the court can not
lend itself to its enforcement.
Sps Abella v. Sps Abella 2015
The imposition of an unconscionable interest rate is void ab initio
for being "contrary to morals, and the law."
Sps Jonsay, et al. v. Solidbank Bank Corp 2016
An escalation clause in a loan agreement granting the lending bank
authority to unilaterally increase the interest rate without prior
notice to and consent of the borrower is VOID.
By RGL
for the 2022 Bar
Peña v. Delos Santos, et al 2016
The judicial action over the subject lots was still in the appellate
proceedings stage when they were conveyed to Jesus and Rosita's
counsel, Atty. Robiso.
Under Article 1409, contracts which are expressly prohibited or
declared void by law are considered inexistent and void from the
beginning. There is no need to bring a separate action for the
declaration of the subject deeds of conveyance as void.
Guillermo, et al. v. PIA 2017
The Administrative Code of 1987 expressly prohibits the entering
into contracts involving the expenditure of public funds unless two
prior requirements are satis ed. First, there must be an
appropriation law authorizing the expenditure required in the
contract. Second, there must be attached to the contract a
certi cation by the proper accounting o cial and auditor that funds
have been appropriated by law and such funds are available. Failure
to comply with any of these two requirements renders the contract
VOID.
C Natural Obligations
1. Natural obligations, not being based on positive law but
on equity and natural law, do not grant a right of action to
enforce their performance, but after voluntary ful llment by
the obligor, they authorize the retention of what has been
delivered or rendered by reason thereof. (Art 1423)
128 of 245
Civil Law and Practical Exercises
2. Voluntary fulfillment means that the debtor complied with
the same even if he knew that he could not have been legally
forced to do so.
3. Natural Obligations in Wills and Succession:
a. When a testate or intestate heir voluntarily pays a debt of
the decedent exceeding the value of the property which he
received by will or by the law of intestacy from the estate
of the deceased, the payment is valid and cannot be
rescinded by the payer. (Art 1429)
b. When a will is declared void because it has not been
executed in accordance with the formalities required by
law, but one of the intestate heirs, after the settlement of
the debts of the deceased, pays a legacy in compliance with
a clause in the defective will, the payment is e ective and
irrevocable. (Art 1430)
D Estoppel
1. Estoppel is a bar which precludes a person from denying or
asserting anything to the contrary of that which has, in
contemplation of law, been established as the truth, either by
the acts of judicial or legislative o cers or by his own deed or
representation, either expressed or implied.
2. May be in pais or by deed (Art 1433).
3. Estoppel in pais or Equitable Estoppel arises when one,
by his
a. acts,
b. representations or admissions, or
c. by his silence when he ought to speak out,
Reviewer
intentionally or through culpable negligence, induces another
to believe certain facts to exist, and such other rightfully relies
and acts on such belief, so that he will be prejudiced if the
former is permitted to deny the existence of such facts.
4. Estoppel by laches or the unreasonable delay in bringing a
court action requires four elements
a. conduct on the part of the defendant, or of one
under whom he claims, giving rise to the situation of
which complaint is made and for which the complaint
seeks a remedy;
b. delay in asserting the complainant's rights, the
complainant having had knowledge or notice of the
defendant's conduct and having been a orded an
opportunity to institute a suit;
c. lack of knowledge or notice on the part of the
defendant that the complainant would assert the right
on which he bases his suit; and
d. injury or prejudice to the defendant in the event
relief is accorded to the complainant, or the suit is not
held to be barred.
5. Estoppel by deed or Technical Estoppel is a bar which
precludes a party to a deed and his privies from asserting as
against the other and his privies any right or title in derogation
of the deed, or from denying the truth of any material fact
asserted in it.
6. Sale of After-acquired Property. When a person who is
not the owner of a thing sells or alienates and delivers it, and
later the seller or grantor acquires title thereto, such title passes
by operation of law to the buyer or grantee. (Art 1434)
By RGL
for the 2022 Bar
7. Estoppel by Record. Only applies as between the same parties
or their privies and can neither be used against strangers.
Estoppel by record, to the extent that they bind parties, will
also bind their privies; but they can exist only as between
the same parties or those in legal privity with them, and can
be used neither by nor against strangers. (Beltran v. Escudero)
8. Agency by Estoppel. For an agency by estoppel to exist, the
following must be established:
1) the principal manifested a representation of the
agent's authority or knowingly allowed the agent to
assume such authority;
2) the third person, in good faith, relied upon such
representation;
3) relying upon such representation, such third person
has changed his position to his detriment.
An agency by estoppel, which is similar to the doctrine of
apparent authority, requires proof of reliance upon the
representations, and that, in turn, needs proof that the
representations predated the action taken in reliance.
(Litonjua, Jr. v. Eternit Corporation)
E Trusts
1. Trust is the right to the bene cial enjoyment of property, the
legal title to which is vested in another.
It is a fiduciary relationship concerning property which obliges
the person
2. Trusts are either express or implied.
129 of 245
Civil Law and Practical Exercises
a. Express trusts are created by the intention of the trustor
or of the parties.
b. Implied trusts come into being by operation of law. (Art
1441) There are two kinds:
i. Resulting trust — There is an intent to create a
trust but it is not e ective as an express trust.
ii. Constructive trust — No intention to create a
trust is present. i.e.
If property is acquired through mistake or fraud,
the person obtaining it is, by force of law,
considered a trustee of an implied trust for the
benefit of the person from whom the property comes.
(Art 1456)
3. Instances of Implied Trust
a. When property is sold, and the legal estate is granted to
one party but the price is paid by another for the purpose
of having the bene cial interest of the property. (Art
1448) [Resulting Trust]
However, if the person to whom the title is conveyed is a
child, legitimate or illegitimate, of the one paying the price
of the sale, no trust is implied by law, it being disputably
4. How Trust be Proven
presumed that there is a gift in favor of the child.
b. When a donation is made to a person but it appears that
although the legal estate is transmitted to the donee, he
nevertheless is either to have no bene cial interest or only
a part thereof. (Art 1449) [Resulting Trust]
5. Prescription of Trusts
c. If the price of a sale of property is loaned or paid by one
person for the bene t of another and the conveyance is
Reviewer
made to the lender or payor to secure the payment of the
debt. (Art 1450) [Constructive Trust]
d. When land passes by succession to any person and he
causes the legal title to be put in the name of another. (Art
1451) [Resulting Trust]
e. If two or more persons agree to purchase property and by
common consent the legal title is taken in the name of one
of them for the bene t of all. (Art 1452) [Resulting Trust]
f. When property is conveyed to a person in reliance upon
his declared intention to hold it for, or transfer it to
another or the grantor. (Art 1453) [Resulting Trust]
g. If an absolute conveyance of property is made in order to
secure the performance of an obligation of the grantor
toward the grantee. (Art 1454) [Constructive Trust]
h. When any trustee, guardian or other person holding a
duciary relationship uses trust funds for the purchase of
property and causes the conveyance to be made to him or
to a third person. (Art 1455) [Constructive Trust]
i. If property is acquired through mistake or fraud. (Art
1456) [Constructive Trust]
a. No express trusts concerning an immovable or any interest
therein may be proved by parol evidence. (Art 1443)
b. An implied trust may be proved by oral evidence. (Art
1457)
a. Express trusts are IMPRESCRIPTIBLE unless there has
been repudiation of the trust.
By RGL
for the 2022 Bar
The same rule applies for Resulting trusts.
b. Constructive trusts do prescribe.
F Quasi-Contracts
Quasi-contracts are lawful, voluntary, and unilateral acts
which generally require a person to reimburse or compensate
another in accordance with the principle that no one shall be
unjustly enriched or bene ted at the expense of another.
Unjust Enrichment
For the rule on unjust enrichment to apply, two conditions must
concur:
1) A person is unjustly bene ted; and
2) Such bene t is derived at another’s expense or damage.
Included in the Concept of Implied Contracts
Quasi-contracts fall within the concept of implied contracts that
must be included in the claims required to be led with the judicial
settlement of the deceased’s estate under Section 5, Rule 86 of the
Rules of Court. (MBTC v. Absolute Management 2013)
A. Negotiorum Gestio
ART 2144. Whoever voluntarily takes charge of the agency or
management of the business or property of another, without
any power from the latter, is obliged to continue the same
until the termination of the a air and its incidents, or to
require the person concerned to substitute him, if the owner is
in a position to do so. xxxx
Essential Requisites
1) No meeting of the minds;
130 of 245