CIVIL LAW REVIEWER CIVIL LAW 2010 PERSONS & FAMILY RELATIONS SUCCESSION OBLIGATIONS Copyright and all

other relevant rights over this material are owned jointly by the University of the Philippines College of Law, the Faculty Editor and the Stu dent Editorial Team. The ownership of the work belongs to the University of the Philippines College of Law. No part of this book shall be reproduced or distribu ted without the consent of the UP College of Law. All rights are reserved. CONTRACTS PROPERTY LAND TITLES & DEEDS SALES CREDIT TRANSACTIONS AGENCY PARTNERSHIP TORTS & DAMAGES PRIVATE INTERNATIONAL LAW

CIVIL LAW REVIEWER PERSONS & FAMILY RELATIONS Table of Contents Chapter I. Civil Personality..............................3 I. Concept and Class es of Persons..........3 II. Capacity to Act and Restrictions Thereon........... ...............................................5 Chapter II. Citizenship and Dom icile..............8 I. Who are Filipinos ..................................8 II . Domicile ................................................8 Chapter III. Marria ge.........................................9 I. Definition and Nature of Marriag e .........9 II. Requisites of Marriage ..........................9 III. Marriag es Solemnized Abroad............11 IV. Presumption of Marriage.................. ...11 Chapter IV. Void Marriages ...........................13 I. Grounds ...... ........................................13 II. Period to File Action or Raise De fense 15 III. Effects of Nullity ..................................16 Chapter V. Voidable Marriages .....................18 I. Grounds for Annulment (Art. 45, F C) ..18 II. Marriage When One Spouse Absent ..21 III. Effects of Pending Actions /Decree (Art. 49, FC) .................................................22 IV. Vo idable v. Void Marriage ...................23 V. Voidable v. Legal Separation .. ............23 VI. Jurisdiction ..........................................23 Cha pter VI. Legal Separation, Divorce and De Facto Separation ..................... .......................24 I. Grounds for Legal Separation.............24 II. Def enses .............................................25 III. When to File/Try Acti ons .....................25 IV. Effects of Filing Petition for Legal Separation. ...................................................25 V. Effects of Decree for L egal Separation 25 VI. Reconciliation......................................26 VI I. Divorce............................................26 VIII. De Facto Separati on.......................27 Chapter VII. Rights and Obligations Between Husband and Wife..........................................28 I. Obligations of Spouses ( Arts. 68-71, FC) 28 II. Rights of Spouses (Arts. 72-73, FC) ...28 III. Use of Su rname ..................................28 Chapter VIII. Property Relations Betw een Spouses ..........................................................29 I. Gene ral Provisions..............................29 II. Donations by Reason of Marria ge ......30 III. Absolute Community of Property ........ 31 IV. Conjugal Partner ship of Gains ............ 34 V. Separation of Properties During Marriage....... ................................................ 38 VI. Property regime of union s without marriage....................................................... 39 Cha pter IX. The Family and the Family Home ........................................ ................................. 41 I. Family.................................. ................ 41 II. Family Home....................................... 41 Ch apter X. Paternity and Filiation ................ 43 I. Kinds of Filiation...... ............................ 43 II. Impugning Legitimacy (Art. 166) ......... 43 III. Proof of Filiation (Arts. 172 and 175 (1)) 44 IV. Legitimation (Arts. 177 and 182)......... 45 V. Rights of Legitimate and Illegitimate Children (SSS).... ......................................... 45 Chapter XI. Adoption .............. ....................... 46 I. RA 8552: Domestic Adoption Act of 1998 46 II. Adop tion Procedure under RA 8552 IRR (Secs. 10-32) ................................. .............. 47 III. RA 8043: Inter-Country Adoption Act of 1995 49 Chapter XI I. Support ...................................... 51 I. Support................. ............................... 51 II. Who are Obliged to Support Each Other (Ar t. 195)...................................................... 51 III. Properties Answerable for Support (Art. 197-198) ......................................... ............. 52 IV. Order of Support (SDAB) .................... 52 Chapter XII I. Parental Authority.................... 53 I. Parental Authority ............. .................. 53 II. Substitute and Special Parental Authority............. .......................................... 54 III. Suspension or Termination of Parental Authority....................................................... 55 IV. Rights and Duties of Children ............. 55 Chapter XIV. Funerals........... ......................... 56 I. General Guidelines ............................. 56

CIVIL LAW REVIEWER SUCCESSION Table of Contents Chapter I. Concept of Succession................59 I. Definition of Succession ( Art. 774, CC) 59 II. Opening of Succession (Art. 777, CC) 59 III. Kinds of Succe ssion (Art. 778, CC) ....59 IV. Heirs .......................................... ..........60 Chapter II. Testamentary Succession ..........61 I. Concept ....... ........................................61 II. Testamentary Capacity ........... ............61 III. Formalities of Wills ..............................61 IV. Qu alifications of Witnesses to a Notarial Will 62 V. Qualifications of Witnesses t o a Notarial Will 63 VI. Institution of Heirs ...............................63 VII. Applicable Principles of Private International Law ........................ .................63 VIII. Codicils and Incorporation by Reference .............. ......................................64 IX. Revocation of Wills and Testamentar y Dispositions..................................................64 X. Allowance and Disallowance of Wills..65 XI. Substitution of Heirs ........................ ....66 XII. Legitimes.........................................67 XIII. Preteriti on........................................69 XIV. Reserva Troncal .............. ...............69 XV. Disinheritance .................................70 XVI. Le gacies and Devises.....................71 Chapter III. Intestate Succession..... .............74 I. Causes for Legal or Intestate Succession..................... ..............................74 II. The Intestate or Legal Heirs............... .74 III. Fundamental Underlying Principles in Legal or Intestate Succession..... .................74 IV. Relationship (Arts. 963-969, CC) ........75 V. The Right of Representation (Art. 970, CC) 75 VI. Order of Legal or Intestate Succession 76 VII. Concurrence in Legal or Intestate Succession............................ .......................77 VIII. Outline of Intestate Shares .............77 IX. Order of Concurrence in the Case of an Adopted Child (Art, 190, FC) ............ ...........78 Chapter IV. Provisions Common to Testamentary and Intestate Succes sion .....79 I. Accretion .............................................79 II. Ca pacity to Succeed ...........................80 III. Acceptance and Repudiation of Inheritance ...................................................81 IV. Collati on (Arts. 1061-1077, CC)..........81 Chapter V. Partition and Distribution of Es tate .............................................................. 83 I. Concep t of Partition ............................ 83 II. Effects of Partition......... ...................... 84 III. Nullification of Partition ...................... . 84 IV. Important Periods in Partition ............. 85 Chapter VI. Application of the Important Concepts through Sample Computational Problems................ ......................................... 86 I. Institution of Heirs ........... .................... 86 II. Legitimes........................................... .. 86 III. Intestate Succession........................... 87 IV. Accretion .... ......................................... 87 V. Collation ...................... ........................ 88

CIVIL LAW REVIEWER OBLIGATIONS Table of Contents Chapter I. General Provisions.......................91 I. Obligations .......... ................................91 II. Sources of Obligations .................. ......91 Chapter II. Nature and Effect of Obligations93 I. Kinds of Prestations ............................93 II. Breach of Obligation......................... ...94 III. Fortuitous Event (Force Majeure) .......96 IV. Remedies to Creditors ........................96 V. Usurious Transactions and Rules on Interest ...... ...................................................97 Chapter III. Different Kin ds of Obligations ..98 I. Pure and Conditional Obligations .......98 II. Recipro cal Obligations ......................100 III. Obligations with a Period ....... ...........100 IV. Alternative and Facultative Obligations 101 V. Joint and Soli dary Obligations ..........103 Effects of Prejudicial and Beneficial Acts (Art.1 212) ...................................................105 VI. Divisible and In divisible Obligations..106 VII. Oblligations with a Penal Clause ..106 Chapter I V. Extinguishment of Obligations ............................................... ........................107 I. Payment or Performance ..................107 II. Loss or Impossibility..........................109 III. Condonation or Remission of the Debt 109 IV. Confusion or Merger of Rights ..........110 V. Compensation ...................................110 VI. Novation ........................... .................111 Charts: Payment & Performance ................114

CIVIL LAW REVIEWER CONTRACTS Table of Contents Chapter I. General Provisions.....................122 I. Classification of Contr acts.................122 II. Elements of Contracts.......................123 III . Stages of Contracts...........................123 IV. Charactertics of Contrac ts (MARCO) 123 Chapter II. Essential Requisites .................125 I. Consent .............................................125 II. Object .................... ............................127 III. Cause ..................................... ...........127 Chapter III. Forms of Contracts ..................129 I. Rules .. ...............................................129 II. Kinds of Formalities..... ......................129 Chapter IV. Reformation of Contracts........130 Chapte r V. Interpretation of Contracts.......130 Chapter VI. Defective Contracts ..... ............131 I. Rescissible Contracts (Arts. 1380-1389) 131 II. Voidable Cont racts (Arts. 1390-1402) 132 III. Unenforceable Contracts (Arts. 14031408) ...... ....................................................133 IV. Void or Inexistent C ontracts (Arts. 14091422) ...................................................... ....134

CIVIL LAW REVIEWER PROPERTY Table of Contents Chapter I. Definition and Classification of Property............................ .............................137 I. Definition ................................. ..........137 II. Classification .....................................137 Chapte r II. Ownership ..................................144 I. Definition ............ ...............................144 III. Specific Rights under the Civil Code.144 IV. Limitations on Real Right of Ownership 146 Chapter III. Accession.......... ........................147 I. Definition ...................................... .....147 II. General Principles of Accession .......147 III. Kinds of Accession. ...........................147 IV. Principles Governing Each Kind of Accession.. .................................................147 Chapter IV. Quieting of Tit le........................152 I. In General .................................... .....152 II. Purpose .............................................152 III. Natur e: Quasi in Rem........................152 IV. Requisites ...................... ...................152 V. Prescription of Action ........................153 Cha pter V. Co-Ownership............................154 I. Definition .............. .............................154 II. Characteristics ........................... .......154 III. Difference between Co-ownership and Joint Tenancy............... ..............................155 IV. Difference between Co-ownership and Partne rship.................................................155 V. Sources of Co-Owner ship .................155 VI. Rights of Each Co-owner over the Thing or Property Owned in Common .................157 VII. Implication of Co-owners Right over Hi s Ideal Share ..........................................161 VIII. Rules on Co-Ow nership Not Applicable to CPG or ACP.........................161 IX. Special Rul es on Ownership of Different Stories of a House as Differentiated from Provision s of the Condominium Act...........162 X. Extinguishment of Co-Ownership .....16 6 Chapter VI. Possession ...............................168 I. Definition ...... .....................................168 II. Degrees of Possession ............. ........169 III. Classes of Possession ......................169 IV. Cases of Po ssession.........................169 V. What Things May be Possessed ......170 V I. What May Not Be Possessed by Private Persons................................. .....................171 VII. Acquisition of Possession .............171 VIII. E ffects of Possession ...................173 IX. Effects of Possession in the Con cept of Owner ........................................................177 X. Pre sumption in Favor of the Possessorfor Acquisitive Prescription ....178 XI. Posses ion May Be Lost By ...............179 Chapter VII. Usufruct .................... ............... 181 I. Concept............................................. 181 II. Characteristics .................................. 181 III. Usufruct Distigu ished from Lease and Servitude.................................................. .. 181 IV. Classes of Usufruct........................... 182 V. Rights of Usufr uctuary ...................... 184 VI. Rights of the Naked Owner............... 186 VII. Obligations of the Usufructuary .... 187 VIII. Special Cases of Usufruc t ............ 190 IX. Extinguishment of Usufruct............... 192 X. Conditio ns Not Affecting Usufruct..... 194 Chapter VIII. Easement ...................... .......... 196 I. Concept............................................. 196 II. E ssential Features ............................ 196 III. Classification of Servit udes............... 197 IV. General Rules Relating to Servitudes 198 V. Modes of Acquiring Easements ........ 198 VI. Rights and Obligations of Owners of Domina nt and Servient Estates ................. 199 VII. Modes of Extinguishment of Ea sements................................................. 200 VIII. Legal Easemen ts .......................... 202 Chapter IX. Nuisance ......................... .......... 212 I. Definition ........................................... 212 II. Classes ............................................. 212 III. Liability in Cas e of Nuisance............. 213 IV. Regulation of Nuisances ................... 2 14 Chapter X. Modes of Acquiring Ownership ..................................... .................................. 217 I. Mode v. Title ........................ ............. 217 II. Mode ................................................. 217

Chapter XI. Donation ................................... 222 I. Nature ........ ....................................... 222 II. Requisites ..................... .................... 222 III. Kinds ............................................ ..... 222 IV. Who May Give or Receive Donations 223 V. Who May Not Give or Recei ve Donations................................................... 224 VI. Acceptan ce ....................................... 225 VII. Form ....................... ...................... 225 VIII. What May Be Donated ................. 225 IX. E ffect ................................................. 226 X. Revocation and Re duction................ 227 Chapter XII. Lease.................................. ...... 232 I. General Characteristics .................... 232 II. Kinds ....... .......................................... 232 III. Lease of Things ............ .................... 232

CIVIL LAW REVIEWER LAND TITLES and DEEDS Table of Contents Chapter I: Background, Basic Concepts and General Principles.................... ....................239 I. Definitions and Basic Concepts ........239 II. Nature and stages.............................240 III. Purpose of Registration........ .............240 IV. Modes of Acquiring Land Titles.........240 V. Jurisdiction ........................................240 Chapter 2: Torrens Certificate of Ti tle .......241 I. Original Certificate of Title or OCT....241 II. Transfer Certi ficate of Title................241 III. Patents ................................ ..............241 Chapter 3: Original Registration.................242 I. Laws G overning Land Registration...242 II. Effect of Registration..................... ....242 III. Original Registration Proceeding ......242 IV. Attributes of and Li mitation In Certificate of Title and Registered Land (FIIC) ...........247 V. Ju dicial Confirmation of Imperfect or Incomplete Titles........................... .249 Chapter 4: Cadastral Registration Proceedings.............................. ....................251 I. Steps in Cadastral Registration Proceedings ......... ......................................252 Chapter 5: Subsequent Registration.... ......253 I. Two Types of Dealings......................253 II. Necessity and Ef fects of Registration 253 III. Voluntary vs. Involuntary Dealings..253 IV. Regis tration of Voluntary Instruments in General .................................... ..................254 V. Registration of Deeds of Sale and Transfers............ ........................................255 VI. Mortgages and Leases............ ..........256 VII. Powers of Attorney; Trusts ...........257 VIII. Involuntary D ealings .....................257 Chapter 6: System of Registration of Unregister ed Lands ..................................... 261 I. Key Points................ ......................... 261 II. Procedure .................................... ..... 261 Chapter 7: Registration of Public Lands ... 262 I. Classification of L and of the Public Domain ...................................................... 262 II. Nature of Title to Public Lands Conveyed ............................... ................... 262 III. Procedure of Conveying Public Land to a Private Per son ........................................ 262 IV. Director of Lands: Quasi-ju dicial officer 263 V. Modes of Alienating Public Lands:.... 263 VI. Patents .... ..................................... 263 Chapter 8: Remedies of the Aggrieved P arty ....................................................................... 264 Chapter 9: Reconstitution 0f Titles ........... 266 I. Grounds ................ ............................ 266 II. Petitions for Reconstitution .............. . 266 III. Duties of the Land Registration Authority 266 IV. Effects of Fraud, D eceit and Machination in the Reconstitution of Titles 266

CIVIL LAW REVIEWER SALES Table of Contents Chapter I. The Contract of Sale ..................269 I. Definition (Art 1458, C C) ...................269 II. Elements ......................................... ..269 III. Stages ...............................................274 IV. Kinds o f Sale .....................................275 V. Form ........................ ..........................276 VI. Sale Distinguished From Other Contracts....... .............................................276 Chapter II. Obligations of the Seller and Buyer .............................................................27 8 I. Obligations of the Seller ....................278 II. Obligations of the Bu yer....................284 Chapter III. Double Sales ........................... ..286 I. General Rule .....................................286 II. Requisites .. .......................................286 III. Rules Governing Sale of Movables , Immovables and Unregistered Lands ........286 Chapter IV. Risk of Loss........ ......................288 I. General Rule .....................................2 88 II. Exceptions.........................................288 Chapter V. Documen ts of Title....................289 I. In General ............................... ..........289 II. Negotiable Documents of Title..........289 III. Non-Negotiable Documents of Title ..289 Chapter VI. Remedies of the Seller and Buyer ......... ..............................................................291 I. General Rem edies (Art. 1191, CC) ...291 II. Remedies of the Seller......................291 III. Remedies of the Buyer......................295 Chapter VII. Extinguishment of Sale ..........298 I. In General .........................................29 8 II. Conventional Redemption.................298 III. Equitable Mortgage ...... .....................299 IV. Legal Redemption .............................300 C hapter VIII. Philippine Bulk Sales Law (Act 3952) .............................. ................................303 I. Purpose ................................. ............303 II. Coverage...........................................303 III. Duty of Seller.....................................303 IV. Effect of non-complia nce...................304

CIVIL LAW REVIEWER CREDIT TRANSACTIONS Table of Contents Chapter I. General Principles ......................307 I. Types of Credit Trans actions ............307 II. Security ........................................... ..307 III. Bailment ............................................307 Chapter II. Loan (Arts. 1933-1961, CC).......309 I. Definition ............................. ..............309 II. Characteristics of a Loan ..................309 III. Kinds of Loan: In General .................309 IV. Commodatum........................ ............309 V. Obligations of the Bailee in Commodatum ..................... .......................310 VI. Obligations of the Bailor in Commodatum ......... ...................................311 VII. Mutuum or Simple Loan............... .311 VIII. Interests ........................................312 IX. The Usury L aw ..................................312 Chapter III. Deposit .................. ....................314 I. Definition .......................................... .314 II. Kinds of Deposit ................................314 III. Characteristi cs of Deposit .................314 IV. Deposit Distinguished From Mutuum and Com modatum .....................................314 V. Obligations of the Depositar y............314 VI. Obligations of the Depositor..............317 VII. Extingui shment of Deposit (Art. 1995) 317 VIII. Necessary Deposit....................... .317 IX. Judicial Deposit .................................318 Chapter IV. Guara nty ...................................319 I. Definition ....................... ....................319 II. Characteristics ..................................31 9 III. Classification .....................................319 IV. Rules Governi ng Guaranty ...............319 V. Guaranty Distinguished from Others.322 VI. The Guarantor (Arts. 2056-2057)......322 VII. Effects of Guaranty ................. ......322 VIII. Extinguishment of Guaranty .........325 Chapter V. Legal and Jud icial Bonds.........326 Chapter VI. Suretyship.................................3 27 Chapter VII. Pledge, Mortgage, Antichresis .................................. .....................................328 I. Essential Requisites Common to Pledg e and Mortgage (Art. 2085)...........................328 II. Pledge ............ ...................................329 III. Mortgage ........................... ................332 IV. Foreclosure of Mortgage (Art. 2085).334 V. Antichresis.. .......................................336 VI. Chattel Mortgage................. ..............336 Chapter VIII. Concurrence and Preference of Credits........... ................................................ 338 I. General Provisions...... ...................... 338 II. Classification of Credits .................... 33 8 III. Preference of Credits ........................ 338

CIVIL LAW REVIEWER AGENCY Table of Contents Chapter I. Nature, Form, and Kinds of Agency ................................... ....................................341 I. Definition [Art. 1868, CC] .......... ........341 II. Purpose .............................................341 III. Ch aracteristics [CNPPBF].................342 IV. Essential Elements............... .............342 V. Determination of Existence of Agency 342 VI. Agency v Simila r Contracts ...............343 VII. Kinds ...................................... .......344 Chapter II. Obligations of the Agent...........348 I. To Carry Out th e Agency ..................348 III. To Advance the Necessary Funds [Art. 1886, C C]...................................................349 IV. To Act in Accordanc e with Principals Instructions.................................................34 9 V. To Prefer Interest of Principal Over Personal Interest..................... ...................349 VI. To Render Accounts and Deliver Things Received by Vir tue of the Agency..............349 VII. To Be Responsible for Substitutes350 VII I. To Pay Interest .............................350 IX. To Answer for His Neglig ence or Fraud [Art. 1909, CC] ...........................................350 X. Special Obligations of Factor/ Commission Agents ............................... ....350 Chapter III. Liabilities of the Agent .............352 I. Liability to T hird Persons...................352 II. Liability to the Principal .............. .......352 III. Liability of Two or More Agents.........353 Chapter IV. Obligati ons of the Principal ...354 I. To Comply with the obligations contracted by the agent .............................354 II. To Advance the Necessary Sums and Rei mburse the Agent .................................355 III. To Indemnify the Agen t for Damages355 IV. To Pay the Agents Compensation ...356 V. To Be Solidarily Li able ......................356 Chapter V. Extinguishment of Agency......357 Exti nguishment of Agency [EDWARD] ......357 I. Expiration of the period for which it was constituted..................................................357 II. Death, civil interdiction, insanity, insolvency ...................................... ............357 III. Withdrawal of the agent ....................357 IV. Accompl ishment of the object of the agency ............................................ ...........357 V. Revocation ........................................357 VI. Dis solution of the firm/corp. Which entrusted/accepted the agency.................. 358

CIVIL LAW REVIEWER PARTNERSHIP Table of Contents Chapter I. Nature, Creation, Kinds of Partnership .............................. .....................361 I. Essential Features ............................361 I I. Characteristics ..................................362 III. Distinctions ..... ...................................362 IV. Rules to Determine Existence......... ..363 V. How Partnership is Formed ..............363 VI. Partnership Term ...... ........................363 VII. Kinds of Partnerships....................363 Ch apter II. Obligations of the Partnership/Partners Among Themselves 366 CRRAMP-LS ..............................................366 I. Make Contributions as Promi sed ......366 III. Manage the Partnership....................367 IV. Render Full Information.....................368 V. Account for benefits ................... .......368 VI. Reimburse expenses ........................368 VII. Liable for Pa rtnership Contracts ...368 VIII. Solidarily Liable with Partnership.369 Chapter III. Obligations of the Partnership/Partners as to Third Persons.370 LANN ...... ...................................................370 I. Operate Under a Firm N ame (Art. 1815, CC) 370 II. Bound by Partnership Admission......370 III. Bound b y Notice Partner ...................370 IV. Liable for Acts of the Partnership.. ....370 Chapter IV. Rights of Partners ...................371 I. Share in Losses and Profits ..............371 II. Associate Another in His Interest......371 II I. Access to Partnership Books ............371 IV. Obtain Formal Account ....... ..............371 V. Property Rights .................................371 VI. Co nvery Real Property (Art. 1819, CC) 372 Chapter V. Rights of the Partnership ... .....374 I. Acquire Immovables..........................374 II. Preference of Cr editors .....................374 Chapter VI. Dissolution and Winding Up ..375 I. Definitions .........................................375 II. Causes for Dissolu tion ......................375 III. Consequences of Dissolution ...........375 I V. Partners Liability...............................376 Chapter VII. Rights of Pa rtners Upon Dissolution....................................................377 I . Right to Wind Up ...............................377 II. Right to Damages for o r to Continue Business on Wrongful Dissolution .............377 III. Right to Li en or Retention, to Stand in Place of Creditor, to be Indemnified .......... 377 IV. Right of Retiring/Deceased Partner (Art. 1841, CC) ........................ .......................... 377 V. Right of Account (Art. 1842, CC) ...... 378 Ch apter VIII. Rules on Settlement (Art. 1839, CC)................................. ................................ 379 Chapter IX. Limited Partnership ........... ..... 380 I. Definition ........................................... 380 II. Form ing/Amending a Limited Partnership (Art. 1844, CC) ....................... 381 I II. Limited Partner.................................. 382 IV. General Partner .. .............................. 384 V. Dissolution .............................. .......... 384 VI. Settling Accounts for Dissolution ...... 385

CIVIL LAW REVIEWER TORTS & DAMAGES Table of Contents Chapter I. Introduction, Definitions............388 A. Tort and Quasi-Delict ... .....................388 B. Damages ...........................................3 89 Chapter II. Concept of Quasi-Delict............390 A. Elements .............. .............................390 B. Distinguished............................... ......390 Chapter III. Negligence ................................392 A. Concept of Negligence......................392 B. Degrees of Negligence................ ......393 C. Proof of Negligence...........................393 D. Defenses ..... ......................................394 Chapter IV. Causation................. .................396 A. Proximate Cause...............................396 Chapte r V. Persons Liable...........................399 A. The Tortfeasor............. ......................399 B. Vicarious Liability ..............................3 99 C. Specific Liability.................................403 D. Joint and Solida ry Liability ................407 E. Civil Liability Arising From Crime.......... .407 F. Prescription .......................................408 Chapter VI. Tort ious Interference With Contract................................................. ........409 Chapter VII. Torts with Independent Civil Action ................... .........................................410 A. Violation of Civil and Political Rights.410 B. Defamation, Fraud, Physical Injuries 410 Chapter VIII. Human Rela tions Provisions 413 A. Abuse of Rights.................................413 B. A cts Contra Bonus Mores .................413 Other Torts ........................ .......................414 C. Dereliction of Duty.............................41 4 D. Illegal Acts .........................................414 E. Unfair Competi tion ............................414 F. Violation of Human Dignity.............. ..414 Chapter IX. Damages ...................................415 A. Definition a nd Concept......................415 B. Kinds of Damages......................... ....415

CIVIL LAW REVIEWER PRIVATE INTERNATIONAL LAW Table of Contents Chapter I. Introduction.................................427 Chapter II. Jurisdic tion ................................429 I. Bases of Exercise of Judicial Jurisd iction 429 II. Exercise of Jurisdiction .....................429 III. Ways of De aling with Jurisdiction in a Conflicts Problem.................................. .....430 Chapter III. Choice of Law ...........................431 I. Approaches to Choice of Law ...........431 Chapter IV. Characterization .................. .....433 I. Types of Characterization .................433 II. Depecage ........ ..................................433 Chapter V. Renvoi ........................ ................434 I. Definition ...........................................434 II. Ways of Dealing with Renvoi ............434 Chapter VI. Notice and Proof of Foreign Law ................................................................... ....435 I. Proof of Foreign Law.........................435 II. Exceptions to th e Application of Foreign Law 435 Chapter VII. Nationality....................... .........436 I. Determination of Nationality ..............436 II. Procedure for Naturalization .............436 III. Loss of Philippine Citizenship ........... 437 IV. Problems in Applying the Nationality Principle ......................... ............................438 Chapter VIII. Domicile ......................... .........439 I. Domicile ............................................439 II. Com parative Merits and Demerits of Domicile and Nationality ....................... .....440 Chapter IX. Principles on Personal Status and Capacity................. ................................441 I. Definition .............................. .............441 II. Beginning and End of Personality.....441 III. Absence ..... .......................................441 IV. Name............................. ....................442 V. Age of Majority ..................................442 VI. Capacity ............................................442 Chapter X. Family Relations........................443 I. Marriage ............................... .............443 II. Divorce and Separation.....................445 III. Annulme nt and Declaration of Nullity 445 IV. Parental Relations........................ .....446 V. Adoption ............................................446 Chapter XI. Property .................................... 447 I. Controlling LawLex Situs/Le x Rei Sitae 447 II. Exceptions to Lex Situs..................... 447 III. Situs of Certain Properties ................ 447 Chapter XII. Contracts .............. ................... 449 I. Extrinsic Validity of Contracts ........... 449 II. E xtrinsic Validity of Contracts ........... 449 III. Capacity to Enter Into Contr acts....... 449 IV. Choice of Law Issues in Conflicts Contracts Cases .......... .............................. 449 V. Limitation Choice of Law.................. . 450 VI. Applicable Law in the Absence of Effective Choice..................... .................... 450 Chapter XIII. Succession ............................. 451 I. Extrinsic Validity (Arts. 17, 815-817, CC) 451 II. Intrinsic Validity ... .............................. 451 III. Interpretation of Wills ................ ........ 451 IV. Revocation ........................................ 451 V. Prob ate.............................................. 451 VI. Administration of Esta tes .................. 452 VII. Trusts.......................................... .. 452 Chapter XIV. Torts and Crimes ................... 453 I. Torts .......... ........................................ 453 II. Crimes......................... ...................... 454 Chapter XV. Torts and Crimes .................... 455 I. Personal Law of Corporations .......... 455 II. Domicile/Residence of Corpor ations 455 III. Jurisdiction Over Foreign Corporations 455 IV. Right of Foreign Corporations to Bring Suit 456 Chapter XVI. Foreign Judgments ............... 45 7 I. Recognition v. Enforcement.............. 457 II. Bases of Recognition and E nforcement 457 III. Policy of Preclusion Underlying Recognition and Enforcement ................... 457 IV. Requisites for Recognition or Enforcement .......... .................................... 457 V. Procedures for Enforcement ......... .... 457 VI. Effect of Foreign Judgment in the Philippines ..................... ............................ 458

CIVIL LAW REVIEWER TABLE of CONTENTS PERSONS & FAMILY RELATIONS Table of Contents Chapter I. Civil Personality..............................3 I. Concept and Class es of Persons..........3 II. Capacity to Act and Restrictions Thereon........... ...............................................5 Chapter II. Citizenship and Dom icile..............8 I. Who are Filipinos ..................................8 II . Domicile ................................................8 Chapter III. Marria ge.........................................9 I. Definition and Nature of Marriag e .........9 II. Requisites of Marriage ..........................9 III. Marriag es Solemnized Abroad............11 IV. Presumption of Marriage.................. ...11 Chapter IV. Void Marriages ...........................13 I. Grounds ...... ........................................13 II. Period to File Action or Raise De fense 15 III. Effects of Nullity ..................................16 Chapter V. Voidable Marriages .....................18 I. Grounds for Annulment (Art. 45, F C) ..18 II. Marriage When One Spouse Absent ..21 III. Effects of Pending Actions /Decree (Art. 49, FC) .................................................22 IV. Vo idable v. Void Marriage ...................23 V. Voidable v. Legal Separation .. ............23 VI. Jurisdiction ..........................................23 Cha pter VI. Legal Separation, Divorce and De Facto Separation ..................... .......................24 I. Grounds for Legal Separation.............24 II. Def enses .............................................25 III. When to File/Try Acti ons .....................25 IV. Effects of Filing Petition for Legal Separation. ...................................................25 V. Effects of Decree for L egal Separation 25 VI. Reconciliation......................................26 VI I. Divorce............................................26 VIII. De Facto Separati on.......................27 Chapter VII. Rights and Obligations Between Husband and Wife..........................................28 I. Obligations of Spouses ( Arts. 68-71, FC) 28 II. Rights of Spouses (Arts. 72-73, FC) ...28 III. Use of Su rname ..................................28 Chapter VIII. Property Relations Betw een Spouses ..........................................................29 I. Gene ral Provisions..............................29 II. Donations by Reason of Marria ge ......30 III. Absolute Community of Property ........ 31 IV. Conjugal Partner ship of Gains ............ 34 V. Separation of Properties During Marriage....... ................................................ 38 VI. Property regime of union s without marriage....................................................... 39 Cha pter IX. The Family and the Family Home ........................................ ................................. 41 I. Family.................................. ................ 41 II. Family Home....................................... 41 Ch apter X. Paternity and Filiation ................ 43 I. Kinds of Filiation...... ............................ 43 II. Impugning Legitimacy (Art. 166) ......... 43 III. Proof of Filiation (Arts. 172 and 175 (1)) 44 IV. Legitimation (Arts. 177 and 182)......... 45 V. Rights of Legitimate and Illegitimate Children (SSS).... ......................................... 45 Chapter XI. Adoption .............. ....................... 46 I. RA 8552: Domestic Adoption Act of 1998 46 II. Adop tion Procedure under RA 8552 IRR (Secs. 10-32) ................................. .............. 47 III. RA 8043: Inter-Country Adoption Act of 1995 49 Chapter XI I. Support ...................................... 51 I. Support................. ............................... 51 II. Who are Obliged to Support Each Other (Ar t. 195)...................................................... 51 III. Properties Answerable for Support (Art. 197-198) ......................................... ............. 52 IV. Order of Support (SDAB) .................... 52 Chapter XII I. Parental Authority.................... 53 I. Parental Authority ............. .................. 53 II. Substitute and Special Parental Authority............. .......................................... 54 III. Suspension or Termination of Parental Authority....................................................... 55 IV. Rights and Duties of Children ............. 55 Chapter XIV. Funerals...........

......................... 56 I. General Guidelines ............................. 56 2 PERSONS & FAMILY RELATIONS

CIVIL LAW REVIEWER Chapter I. CIVIL PERSONALITY PERSONS & FAMILY RELATIONS PERSONS & FAMILY RELATIONS TEAM Chapter I. Civil Personality I. CONCEPT AND CLASSES OF PERSONS A. NATURAL PERSONS B. JURIDICAL PERSONS CAPACI TY AND RESTRICTIONS THEREON A. PRESUMPTIONS OF CAPACITY B. RESTRICTIONS 1. MINOR ITY 2. INSANITY 3. BEING DEAF-MUTE 4. PRODIGALITY 5. CIVIL INTERDICTION 6. FAMIL Y RELATIONS 7. ABSENCE Prof. Carolina Austria Faculty Editor 3 PERSONS & FAMILY RELATIONS Anisah Azis Karen Torres Lead Writer Dana Crisostomo Jaimmie Hans Nathan Pico Zharmai Garcia Rowena Yang Margie Lim Jiselle Compuesto Mickey Chatto Eden Mopia Faye Celso Mark Oyales Cam ille Umali JC Punongbayan Mary Beley Aboy Bayalan Welga Carrasco Joan Batimana W riters II. CIVIL LAW Kristine Bongcaron Patricia Tobias Subject Editor I. Concept and Classes of Persons ACADEMICS COMMITTEE Kristine Bongcaron Michelle Dy Patrich Leccio Editors-in-Chief Concept of Persons Personality is the quality derived from being a person; it is an attribute of persons. Characteristics 1. It is not a being, but a quality of c ertain beings. 1. It is not a physical element, but a juridical concept. 2. It i s not an object of contract, or of possession, and cannot be impaired by agreeme nt. 2. It is a matter of public interest. Article 37, Civil Code. Juridical capacity, which is the fitness to be the subje ct of legal relations, is inherent in every natural person and is lost only thro ugh death. Capacity to act, which is the power to do acts with legal effect, is acquired and may be lost. PRINTING & DISTRIBUTION Kae Guerrero DESIGN & LAYOUT Pat Hernandez Viktor Fontanilla Rusell Aragones Romualdo Menzon Jr. Rania Joya LECTURES COMMITTEE Michelle Arias Camille Maranan Angela Sandalo Heads Katz Manzano Mary Rose Beley Sam Nuez Krizel Malabanan Arianne Cerezo Marcr ese Banaag Volunteers

MOCK BAR COMMITTEE Lilibeth Perez BAR CANDIDATES WELFARE Dahlia Salamat LOGISTICS Charisse Mendoza SECRETARIAT COMMITTEE Jill Hernandez Head Loraine Mendoza Faye Celso Mary Mendoza Joie Bajo Members Kinds of Juridical Capacity 1. Juridical Capacity: aka as Legal Capacity/Personal ity = Fitness of man to be the subject of legal relations It refers to the aptit ude for the holding and enjoyment of rights. It is inherent in every natural per son and is lost only through death. This attaches to man by the mere fact of his being a man. 2. Capacity to Act: It refers to the power to do acts with legal e ffect. It is conditional and variable. It is acquired and may be lost. It requir es both intelligence and will. Note: Juridical capacity can exist even without c apacity to act; the existence of

CIVIL LAW REVIEWER Chapter I. CIVIL PERSONALITY A. Natural Persons (asked in 99 bar exam) General Rule: Birth determines personality (Art 40). Death extinguishes civil pe rsonality (Art 42). Exception: a conceived child shall be considered born for all purposes that are FAVORABLE to it, provided it be born later (Art 40, 2nd clause ) with the following circumstances: a. From the time it is completely delivered from the mothers womb. b. But if the fetus had an intra-uterine life of less th an seven months, it should survive for at least 24 hours after its complete deli very. (Art. 41, CC) Article 40, Civil Code. Birth determines personality; but the conceived child sh all be considered born for all purposes that are favorable to it, provided it be born later with the conditions specified in the following article. Article 42, Civil Code. extinguished by death. Civil personality is The effect of death upon the rights and obligations of the deceased is determine d by law, by contract and by will. People v. Tirol, (1981) Criminal liability ends with death BUT civil liability ma y be charged against the estate. Article 43, Civil Code. If there is a doubt, as between two or more persons who are called to succeed each other, as to which of them died first, whoever allege s the death of one prior to the other, shall prove the same; in the absence of p roof, it is presumed that they died at the same time and there shall be no trans mission of rights from one to the other. Birth = complete removal of the fetus from the mothers womb; before birth, a fetu s is merely part of the mothers internal organs Personality of Conceived Child 1. Limited = only for purposes FAVORABLE to it 2. Conditional = it depends upon the child being born alive later Period of Conception = the first 120 days of the 3 00 days preceding the birth of the child A conceived child can acquire rights wh ile still in the mothers womb. It can inherit by will or by intestacy. Geluz v CA , (1961) An aborted fetus had conditional personality but never acquired legal ri ghts/civil personality because it was not alive at the time of delivery from the mothers womb. No damages can be claimed in behalf of the unborn child. Article 41, Civil Code For civil purposes, the fetus is considered born if it is alive at the time it is completely delivered from the mothers womb. However, i f the fetus had an intra-uterine life of less than seven months, it is not deeme d born if it dies within twenty-four hours after its complete delivery from the maternal womb. Note: Article 43 provides a statutory presumption when there is doubt on the ord er of death between persons who are called to succeed each other (only). Joaquin v. Navarro, (1948) The statutory presumption of Article 43 was not applied due t o the presence of a credible eyewitness as to who died first. Presumption in the Rules of Court (Rule 123, sec. 69, par. ii) 1. 2. 3. 4. Age Both under 15 Both above 60 One under 15, the other above 60 Bot h over 15 and under 60; different sexes Both over 15 and under 60; same sex One under 15 or over 60, the other between those ages Presumed Survivor Older Younge r One under 15 Male

5. 6. Older One between 15 and 60 Note: Applicable only to two or more persons who perish in the same calamity, an d it is not shown who died first, and there are no particular circumstances from which it can be inferred. PERSONS & FAMILY RELATIONS the latter implies that of the former. The capacity or incapacity of persons dep ends upon the law. Both juridical capacity and capacity to act are not rights bu t qualities of persons; hence, they cannot be renounced. Complete respiration independent life = test/sign of 4 Note: For a fetus that had an intra-uterine life of less than seven months, it i s necessary that it lives for at least 24 hours, for it to be considered born.

CIVIL LAW REVIEWER Chapter I. CIVIL PERSONALITY Article 39, Civil Code. The following circumstances , among others, modify or limit capacity to act: age, insanity, imbecility, the state of being a deaf-mute, penalty, prodigality, family relations, alienage, ab sence, insolvency and trusteeship. The consequences of these circumstances are g overned in this Code, other codes, the Rules of Court, and in special laws. Capa city to act is not limited on account of religious belief or political opinion. A married woman, twenty-one years of age or over, is qualified for all acts of c ivil life, except in cases specified by law. B. Juridical Persons Juridical Persons (Art 44, Civil Code) 1. The State and its Political subdivision s; 2. Other Corporations, Institutions and Entities for public interest or purpo se, created by law; 3. Corporations, Partnerships, and Associations for private interest or purpose to which the law grants a juridical personality. Governing L aws (Art 45, Civil Code) Juridical Person 1. State Governed by Constitution (defines organization and lim its rights vis--vis citizens) Charter creating them Charter creating them its its 5 PERSONS & FAMILY RELATIONS 2. 3. 4. 5. Political Subdivision Public Corporation Private Corporation Partnerships General Rule: Incapacitated persons are not exempt from certain obligations aris ing from his acts or property relations. ________________ 1. Minority Corporation Code, Articles of Incorporation and By-Laws Stipulations of the part ies and suppletorily by the general provisions on partnership of the Civil Code RA 6809 (1989): An act lowering the age of majority from twenty-one to eighteen years. Effects on Contracts a. they cannot give consent to a contract [Art 1327 ( 1), CC] b. a contract where one of the parties is a minor is voidable [Art 1390( 1),CC] c. a contract is unenforceable when both of the parties are minors (incap able of giving consent) [Art 1403(3), CC] d. minority cannot be asserted by the other party in an action for annulment (Art 1397, CC) e. not obliged to make res titution except insofar as he has been benefited (Art 1399, CC) f. minor has no right to demand the thing/price voluntarily returned by him (Art 1426, CC) g. mi nor has no right to recover voluntarily paid sum or delivered thing, if consumed in good faith (Art 1427, CC) h. must pay reasonable amount for necessaries deli vered to him (Art 1489, CC) Rules 1. Juridical persons may acquire and possess property of all kinds, incur o bligations, and bring civil or criminal actions (Art. 46, CC) 2. Upon dissolutio n of corporations or institutions and other entities for public interest, their property and assets shall be disposed of in pursuance of the law or charter crea ting them. (Art. 47, CC) II. Capacity to Act and Restrictions Thereon A. Presumption of Capacity Standard Oil Co. v. Arenas, (1911) Capacity to act is presumed until the contrary is proven, and that it be the reason for the specific act attributed. Proof of restriction: habituality, presence at the time, no other cause B. Restrictions Article 38, Civil Code. Minority, insanity or imbecility, the state of being a d eaf-mute, prodigality and civil interdiction are mere restrictions on capacity t

o act, and do not exempt the incapacitated person from certain obligations, as w hen the latter arise from his acts or from property relations, such as easements . Mercado v. Espiritu, (1918) Estoppel works against minors who misrepresent their ages in a contract and are compelled to comply with its terms. Bambalan v. Maram ba, (1928)

CIVIL LAW REVIEWER Chapter I. CIVIL PERSONALITY Braganza v. Villa Abrille, (1959) Minors are obliged to make restitution insofar as they have been benefited (Art 1399) Effects on Marriage a. May not yet contrac t marriage (Art 5, FC) b. marriages, where one of the parties is below 18, even with the consent of parents/guardians, are VOID (Art 35, FC) 2. Insanity Insanit y includes many forms of mental disease, either inherited or acquired. A person may not be insane but only mentally deficient (idiocy, imbecility, feeblemindedn ess). Effect on Contracts a. incapacity to give consent to a contract [Art 1327(2 ), CC] b. contracts entered into during lucid intervals are valid (Art. 1328, CC ) c. restitution of benefits (Art 1399, CC) Effect on Crimes a. General rule: EXE MPTED from criminal liability b. Exception: acted during lucid interval Effect o n Marriage a. may be annulled if either party was of unsound mind unless the such party after coming to reason, freely cohabited with the other [Art 45(2), FC] b . action for annulment of marriage must be filed by the sane spouse who had no k nowledge of the others insanity; or by any relative/guardian of the insane; or by the insane spouse during a lucid interval or after regaining sanity [Art 47(2), FC] 4. Prodigality Martinez v. Martinez, (1902) A spendthrift or a prodigal is a perso n, who, by excessive drinking, gambling, idleness or debauchery of any kind shal l so spend, waste or lessen his estate as to expose himself or his family to wan t or suffering. The acts of prodigality must show a morbid state of mind. Note: I t is not the circumstance of prodigality, but the fact of being under guardiansh ip that restricts capacity to act. 5. Civil Interdiction a. It is an accessory p enalty imposed upon persons who are sentenced to a principal penalty not lower t han reclusion temporal (article 41, Revised Penal Code). b. offender is deprived of rights of parental authority, or guardianship, of marital authority, of the right to manage his property and of the right to dispose of such (Art 34, RPC) c . for the validity of marriage settlements, the participation of the guardian sh all be indispensible (Art 123, CC) 6. Family Relations a. justifying circumstanc e if acted in defense of person/rights of spouse, ascendants, descendants, broth ers/sisters, and other relatives up th to the 4 civil degree [Art 11(2), RPC] b. mitigating circumstance if acted in the immediate vindication of a grave offens e/felony committed against his spouse, ascendants or relatives of the same civil degree [Art 12(5), RPC] c. incestuous and void marriages: between ascendants an d descendants of any degree; between brothers and sisters, whether full or halfblood. (Art 37, FC) d. donations/grants of gratuitous advantage between spouses during the marriage shall be VOID, except moderate gifts during family occasions (Art 87, FC) 3. State of Being Deaf-Mute a. cannot give consent to a contract if he/she also does not know how to write [Art 1327(2), CC] b. can make a valid WILL, provided: the contents of the same have either been PERSONS & FAMILY RELATIONS When a minor made no active misrepresentation as to his minority and such minori ty is known to the other party, the contract is voidable (Art 1403) as to the mi nor. c. read personally by him or communicated to him by 2 persons (Art 807, CC) cannot be a witness to the execution of a will (Art 820, CC) 6

CIVIL LAW REVIEWER Chapter I. CIVIL PERSONALITY 7. Absence Article 390, Civil Code. After an absence of seven years, it being unknown wheth er or not the absentee still lives, he shall be presumed dead for all purposes, except for those of succession. The absentee shall not be presumed dead for the purpose of opening his succession till after an absence of ten years. If he disa ppeared after the age of seventy-five years, an absence of five years shall be s ufficient in order that his succession may be opened. (n) Art. 391, Civil Code. The following shall be presumed dead for all purposes, including the division of the estate among the heirs: 1. A person on board a vessel lost during a sea voy age, or an aeroplane which is missing, who has not been heard of for four years since the loss of the vessel or aeroplane; 2. A person in the armed forces who h as taken part in war, and has been missing for four years; 3. A person who has b een in danger of death under other circumstances and his existence has not been known for four years. Article 124, FC a. administration and enjoyment of the CPG shall belong to both s pouses jointly b. in case of disagreement, husbands decision shall prevail, subje ct to recourse to the court by the wife for proper remedy c. if one spouse is in capacitated/unable to administer, sole powers of administration may be assumed b y the other spouse. d. General Rule: This power does not include disposition/enc umbrance. Exception: judicial authority or written consent of other spouse PERSONS & FAMILY RELATIONS e. descendants cannot be compelled to testify in a criminal case, against his pa rents and grandparents UNLESS: crime was against the descendant OR by one parent against the other (Art 215, FC) f. spouses cannot sell property to each other, except: absolute separation is agreed upon in the marriage settlements judicial separation of property (Art 1490, CC) 7

CIVIL LAW REVIEWER Chapter II. CITIZENSHIP AND DOMICILE Chapter II. Citizenship and Domicile (asked in 75, 81, 87, 93, 05 and 08 bar exams) I. II. WHO ARE FILIPINO CITIZENS DOMICILE A. REQUISITES OF DOMICILE B. KINDS OF DOMICILE B. Kinds of Domicile 1. Domicile of Origin Domicile of parents of a person at the time he was born. 2 . Domicile of Choice Domicile chosen by a person, changing his domicile of origi n. A 3rd requisite is necessary intention not to return to ones domicile as his p ermanent place. 3. Domicile by Operation of Law (i.e., Article 69, domicile of m inor) Romualdez-Marcos vs. Comelec (1995) A married woman does not lose her domic ile to her husband. 8 PERSONS AND FAMILY RELATIONS I. Who are Filipinos 1. Those who are citizens of the Philippines at the time of the adoption of the 1987 Constitution; 2. Those whose fathers or mothers are citizens of the Philipp ines; 3. Those born before January 17, 1973, of Filipino mothers, who elect Phil ippine citizenship upon reaching the age of majority; and 4. Those who are natur alized in accordance with law. (Art IV, 1, 1987 Philippine Constitution) Note: Th ese have superseded the rules on citizenship enumerated in the Civil Code. Citiz en = owes allegiance to the state and is entitled to its protection II. Domicile For Natural Persons the place of their habitual residence (Art. 50, CC). For Natu ral Persons the place where their legal representation is established, or where t hey exercise their primary functions, unless there is a law or other provision t hat fixes the domicile (Art. 51, CC). Domicile vs. Residence While domicile is pe rmanent (there is intent to remain), residence is temporary and may be changed a nytime (there is no necessary intent to remain). ________________ A. Requisites of Domicile (Callejo v. Vera) 1. Physical Presence 2. Intent to remain permanently manendi) (animus

CIVIL LAW REVIEWER Chapter III. MARRIAGE quasi-delict and is governed by the provisions of this Cha pter. Chapter III. Marriage I. II. DEFINITION AND NATURE OF MARRIAGE REQUISITES OF MARRIAGE A. ESSENTIAL REQ UISITES B. FORMAL REQUISITES III. MARRIAGES SOLEMNIZED ABROAD IV. PRESUMPTION OF MARRIAGE 9 PERSONS AND FAMILY RELATIONS

I. Definition and Nature of Marriage

(asked in 91, 92 and 99 bar exams) Definition of Marriage (Art 1 FC) What Who How Purpose Significance SPECIAL CONTRACT of permanent union Between a MAN and a WOMAN Entered into in accordance with LAW Establishment of CONJUGAL an d FAMILY life FOUNDATION of the family and an INVIOLABLE SOCIAL INSTITUTION whos e nature, consequences and incidents are governed by law and not subject to stip ulations EXCEPT that marriage settlements may fix the property relations during the marriage within the limits provided by this code. EXPENSES or other incidents that directly arose from the contract to marry can b e claimed IF the breach of promise was done in a manner considered as contrary t o morals, good customs or public policy (cost of wedding preparations). (Wassmer v Velez) LOST WAGES arising from voluntary dismissal in anticipation of marriag e can be sued for. (Tanjanco v CA) EXPENSES made for the renovation of an antici pated conjugal home can be sued for. (Piccininni v. Hajus-US Jurisprudence) II. Requisites of Marriage (asked in 76, 82, 89, 90, 99, 02, 04, 07, and 09 bar exams) A. Essential Requisites of Marriage Essential Requisites [LC] 1. Legal Capacity of the contracting parties, who must be a male and a female 2. Consent (of the parties) freely given in the presence of a solemnizing officer. (Art. 2 FC) Legal Capacity Male or female>=18, not unde r any impediments mentioned in Art 37 (incestuous marriage) & Art 38 (marriage a gainst public policy), may contract marriage. (Art 5) Must be Male and Female 1. Jones v Hallahan, (1973): Application for marriage license was denied since marr iage is defined by law as a contract entered into between a man and a woman. 2. Silverio v Republic, (2007): Changing of gender in ones birth certificate was den ied; otherwise, it would result in confusion and would allow marriage between pe rsons of the same sex which is in defiance of the law, as marriage is a union be tween a man and a woman. Note: The best source for citing the requirement (of ma le/female) is still statutory, as provided explicitly in the Family Code. Consen t Freely Given People v Santiago, (51 Phil 68): A marriage entered into by a pers on whose real intent is Breach of Promise to Marry (asked in 09 bar exam) 1. As a general rule breach of promise to marry is not an actionable wrong (Tanjanco v CA, Wassmer v Velez) and cannot give rise to liability for damages in line with the principle of freedom of consent in marriage (Art 2(2) Family Code). (Reyes) 2. However damages may b e claimed based on the principles laid down in Art 19-21 & 2176 of the CC

Art. 19, Civil Code. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith. Art. 20, Civil Code. Every person who, contrary to law, wilfully or negligently causes damage to another shall indemnify the latter for the same. Art. 21, Civil Code. Any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy s hall compensate the latter for the damage. Art. 2176, Civil Code. Whoever by act or omission causes damage to another, there being fault or negligence, is oblig ed to pay for the damage done. Such fault or negligence, if there is no pre-exis ting contractual relation between the parties, is called a

CIVIL LAW REVIEWER Chapter III. MARRIAGE Absence and Requisites Effect Illustration Defect of Essential Absence VOID - marriage entered into by a person <18 (Art 35 (1)) - marriage ent ered into by persons of the same sex (Jones v Hallahan) - marriage contracted th rough mistake of one contracting party as to the identity of the other (Art 35 ( 5)) Defect VOIDABLE - consent of either party was obtained through fraud, force, int imidation or undue influence (Art 45 (3) (4)FC) Effect Absence VOID Illustration B. Formal Requisites of Marriage Formal Requisites [AVC] 1. Authority of Solemnizing Officer 2. A Valid marriage L icense 3. Marriage Ceremony (Art 4 FC) Authority of Solemnizing Officer 1. Who ma y solemnize marriage: (JCSPAMM) a. Incumbent member of the Judiciary within his jurisdiction. (Art 7 FC) b. Priest, Rabbi, Imam or Minister of any Church or Rel igious Sect. Must be: Duly authorized by his church or religious sect Registered with the civil registrar general Acting within the limits of the written author ity granted to him by his church or religious sect. At least one of the contract ing parties belongs to the solemnizing officers church or religious sect. (Art 7 FC) c. Ship Captain or Airplane Chief may solemnize a marriage in articulo morti s between passengers or crew members (Art 7,31 FC) Marriage is void when solemnized by a priest not duly authorized by his Church t o solemnize marriage. (Art 7 FC) Irregularity No effect on validity but party responsible will be liable. lack of valid notification of both parties desiring a ceremony in a remote place was he ld to be only a mere IRREGULARITY (Navarro vs. Domagtoy 1996) Marriage License 1. Marriages Exempt from marriage license requirement (AREC) a. Marriage in Articulo mortis (Art. 27, FC) b. Marriage in Remote and inaccessible places (Art. 28, FC) c. Marriages by Muslims and Ethnic cultural minorities pro vided they are solemnized in accordance with their customs, rites or practices. (Art. 33, FC) d. Marriage by parties who have Cohabited for at least 5 years wit hout any legal impediment. (Art. 34, FC, Ninal v Badayog (2000)) 2. Absence & Ir regularity of Marriage License Effect Absence VOID Irregularity No effect on validity but party responsible wil l be liable. mere IRREGULARITIES in the marriage license, such as a Illustration Issuance of the Civil Registrar of a CERTIFICATE

PERSONS AND FAMILY RELATIONS to avoid prosecution for rape is void for total lack of consent. The accused did not intend to be married. He merely used such marriage to escape criminal liabi lity. d. A Military commander of a unit may solemnize marriages in articulo mortis bet ween persons within the zone of military operation. (Art 7,32 FC) e. Consul-gene ral, consul or vice-consul may solemnize marriages between Filipino citizens abr oad. (Art 7,10 FC) f. Municipal and City Mayors (LGC sec 444 and 455) 2. Marriag e is void when solemnized by any person not legally authorized to perform marria ges unless either or both parties believed in good faith that the solemnizing of ficer had legal authority to do so. (Art 35 (2)) 3. Absence & Irregularity of Au thority of a solemnizing officer 10

CIVIL LAW REVIEWER Absence DUE SEARCH AND INABILITY TO FIND the application of a marriage license means its absence, thus rendering the marriage VOID. (Republic v CA) Before a marriage can be solemnized, a valid marriage license MUST FIRST BE PRESENTED, otherwise the marriage is VOID. (Moreno v Bernabe) Irregularity ty pographical error, do not affect the validity of a marriage. (Alcantara v Alcant ara) Chapter III. MARRIAGE Note: In a marriage in articulo mortis, when one or both parties are unable to s ign the marriage certificate, it shall be sufficient for one of the witnesses to write the name of said party, which shall be attested by the solemnizing office r. (Art 6, par. 2) 3. Places where marriage SHALL be solemnized: (CCO) a. Chambe rs of Judge or an open court b. Church, Chapel or Temple c. Office of the consul general, consul or vice consul (Art. 8, FC) Exception: a. Marriages in articulo mortis b. Marriages in remote places c. Written request from both parties. 3. Things to do at the local civil registrar: a. File an application of marriage license at the proper local civil registrar. (Art. 11, FC) b. Present birth or baptismal certificate. (Art. 12, FC) c. If aged 18-21 years, present parental co nsent. (Art. 14, FC) d. If aged 21-25, present parental advice. (Art. 15, FC) e. If aged 18-25, present certificate of marriage counseling from your priest. (PD 965) f. Pay the required fees. (Art 19, FC) g. If foreigner, present certificat e of legal capacity issued by diplomat or consular officials. (Art. 21, FC) Marr iage Ceremony 1. No prescribed form or religious rite for the solemnization of ma rriage is required. (Art. 6, FC The couples written agreement where they declar e themselves as husband and wife, signed by them before a judge and two capable witnesses, even though it was independently made by them, still counts as a vali d ceremony. (Martinez v Tan, 12 Phil 731) 2. Minimum requirements prescribed by law: (AP-PMS) III. Marriages Solemnized Abroad General Rule Marriages solemnized abroad in accordance with the laws in force in that country shall be valid in the Philippines. (Art 26 FC) Exceptions 1. Marriag e between persons below 18 years old Art. 35(1) 2. Bigamous or polygamous marria ge Art. 35(4) 3. Mistake in identity Art. 35 (5) 4. Marriages void under Article 53 Art. 35 (6) 5. Psychological incapacity Art. 36 6. Incestuous marriages Art. 37 7. Marriage void for reasons of public policy Art. 38 IV. Presumption of Marriage 1. Presumption in favor of a valid marriage ( Art 220 CC) PERSONS AND FAMILY RELATIONS a. Appearance of contracting parties personally before the solemnizing officer ( Art 3 FC) b. Personal declaration that they take each other as husband and wife. (Art 3 FC) c. Presence of at least two witnesses of legal age. (Art 3 FC) d. Th e declaration shall be contained in the Marriage certificate. (Art 6 FC) e. Marr iage certificate shall be Signed by the contracting parties and their witnesses and attested by the solemnizing officer. (Art. 6, FC) 11

CIVIL LAW REVIEWER Chapter III. MARRIAGE 2. The presumption that a man and a woman deporting themselves as husband and wi fe have entered into a lawful contract of marriage is satisfactory if uncontradi cted. (Sec. 3 (aa), Rule 131, ROC) 3. In marriages of exceptional character, the existence of the marriage is presumed, even in the TOTAL ABSENCE of a marriage license. (Vda. De Jacob v CA, 1999) 4. if a marriage certificate is missing, and all means HAVE NOT YET BEEN EXHAUSTED to find it, then the marriage is presumed to exist (Sevilla v Cardenas, 2006) 5. Absence of a marriage certificate is not proof of absence of marriage. To prove the fact of marriage, the following woul d constitute competent evidence: (1) the testimony of witnesses to matrimony; (2 ) the couples public cohabitation; and (3) birth and baptismal certificates of ch ildren born during the union. (Trinidad v CA, 1998) 12 PERSONS AND FAMILY RELATIONS

CIVIL LAW REVIEWER Chapter IV. VOID MARRIAGES Chapter IV. Void Marriages I. II. GROUNDS PERIOD TO FILE ACTION DEFENSE III. EFFECTS OF NULLITY OR RAISE I. Grounds Art. 4(1): The absence of any essential or formal requisites shall render the ma rriage void ab initio, except as stated in Article 35 (a). VOID AB INITIO MARRIA GES: Note: The new Supreme Court Rule on Declaration of absolute nullity of Void Marr iages and annulment of Voidable Marriages (A.M. No. 02-11-10-SC, effective March 15, 2003 and Barcelona vs. CA (2003) provide that expert opinion is not a condi tion sine qua non for proof of psychological incapacity. The root cause may be p roven by the totality of evidence in actual trial. The incapacity must be proven to be existing at the time of the celebration of the marriage. d. Such incapacity must also be shown to be medically or clinically permanent or incurable. e. Suc h illness must be grave enough to bring about the disability of the party to ass ume the essential obligations of marriage. f. The essential marital obligations must be those embraced by Articles 68 up to 71 of the Family Code as regards the husband and wife as well as Articles 220, 221, and 225 of the same Code in rega rd to parents and their children. g. Interpretations given by the National Appel late Matrimonial Tribunal of the Catholic Church in the Philippines, while not c ontrolling or decisive, should be given great respect by our courts. h. The tria l court must order the prosecuting attorney or fiscal and the Solicitor General to appear as counsel for the state. No decision shall be handed down unless the Solicitor General issues a certification. Note: The new Supreme Court Rule on De claration of absolute nullity of Void Marriages and annulment of Voidable Marria ges (A.M. No. 02-11-10-SC, effective March 15, 2003 provide that the appearance of the prosecuting attorney or fiscal and the Solicitor-General is no longer man datory. Santos v. Bedia-Santos, (1995): Laid down 3 characteristics for determin ing psychological incapacity: gravity, antecedent, and incurability. Tsoi v. CA, (1997) Refusal of husband to have sex was interpreted to be PI. A man who can bu t wont is PI c. A. Article 35 (Void from the Beginning) 1. Contracted by any party below eighteen years of age even with the consent of parents or guardians 2. Solemnized by any person not legally authorized to perfo rm marriages unless such marriages were contracted with either or both parties b elieving in good faith that the solemnizing officer had the legal authority to d o so. Note: Ones belief in good faith that the solemnizing officer has the requir ed authority is a mistake of fact, and not of law. 3. Solemnized without license , except in marriages under exceptional circumstances 4. Bigamous or polygamous marriages not falling under Article 41 (Art. 41: subsequent marriage by present spouse who obtained a declaration of presumptive death for absent spouse prior t o the subsequent marriage) 5. There is a mistake as to the identity of the other contracting party 6. Subsequent marriages that are void under Article 53 (Art 5 3: a subsequent marriage is null and void if prior to its celebration, it has no t recorded in the civil registry and registries of property the items in Art. 52 ) B. Article 36 (Psychological Incapacity) Contracted by any party who, at the time of the celebration, was psychologically incapacitated to comply with the essential marital obligations of marriage, eve n if such incapacity becomes manifest only after its solemnization Republic v. M

olina, (1997) a. The burden of proof to show the nullity of the marriage belongs to the plaintiff. b. The root cause of the psychological incapacity must be: (a ) medically or

PERSONS AND FAMILY RELATIONS clinically identified, (b) alleged in the complaint, (c) sufficiently proven by the experts, (d) clearly explained in the decision. 13

CIVIL LAW REVIEWER Chapter IV. VOID MARRIAGES

General Rule Marriage contracted by any person during the subsistence of a previo us marriage is void. Exceptions: The following subsequent marriage of the presen t spouse is valid: 1. Subsequent marriage due to ordinary absence where: a. the prior spouse had been absent for 4 consecutive years; b. the spouse present had a well-founded belief that absent spouse is dead; and c. judicial declaration of presumptive death was secured (no prejudice to the effect of the reappearance o f the absent spouse). 2. Subsequent marriage due to extraordinary absence where: a. the prior spouse had been missing for 2 consecutive years; b. there is dange r of death attendant to the disappearance; c. the spouse present had a well-foun ded belief that the missing person is dead; and d. judicial declaration of presu mptive death was secured (no prejudice to the effect of the reappearance of the absent spouse). Note: Institution of a summary proceeding is not sufficient. The re must also be a summary judgment. (BALANE) Only the deserted spouse can file o r institute an action a summary proceeding for the declaration of presumptive de ath of the absentee (Bienvenido case) There must have been diligent efforts on t he part of the deserted spouse to locate the absent spouse. These diligent effor ts correspond to the requirement of the law for a well-founded belief. Exception to the exception When both parties to the subsequent acted in bad faith (Art. 44 ) Connected Provisions Art. 390, Civil Code. After an absence of 7 years, it being unknown whether or n ot the absentee still lives, he shall be presumed dead for all purposes, except for those of succession. The absentee shall not be presumed dead for the C. Article 37 (Incestuous) 1. Between ascendants and descendants of any degree, legitimate or illegitimate 2. Between brothers and sisters, whether of the full or half blood, legitimate o r illegitimate D. Article 38 (Against Public Policy) 1. Between collateral blood relatives, legitimate or illegitimate, up to the fou rth civil degree. 2. Between step-parents and step-children. Note: Stepbrothers and stepsisters can marry because marriages between them are not among those enu merated in article 38. 3. Between parents-in-law and children-inlaw. 4. Between adopting parent and adopted child. 5. Between the surviving spouse of the adopti ng parent and the adopted child. 6. Between the surviving spouse of the adopted child and the adopter. 7. Between an adopted child and a legitimate child of the adopter. 8. Between adopted children of the same adopter. 9. Between parties wh ere one, with the intention to marry the other, killed that other persons spous e, or his or her own spouse. Relationships outside of Art. 37 and 38 which are n ot impediments to marriage: brother-in-law with sister-in-law, stepbrother with stepsister, guardian with ward, adopted with illegitimate child of the adopter, adopted son of the husband with adopted daughter of the wife, parties who have b een convicted of adultery. PERSONS AND FAMILY RELATIONS Marcos vs. Marcos (2000) Psychological incapacity maybe established by the total ity of the evidence presented. Personal medical examination could be dispensed w ith. Republic vs. San Jose (2007) There is no requirement that the respondent be medically examined first. Antonio v. Reyes, (2006): pathological liar, Molina gui delines met.

E. Article 41 (Bigamous Marriages, Absentee Spouse and Presumptive Death) 14

CIVIL LAW REVIEWER purpose of opening his succession till after an absence of 10 years. If he disappeared after the age of 75 years, an absence of 5 years shall be sufficient in order that his succession may be opened. Art. 391, Civil Code. The following shall be presumed dead for all purposes, including the division o f the estate among the heirs: (SAAD) 1. A person on board a vessel lost during a sea voyage, or an aeroplane which is missing, who has not been heard of for fou r years since the loss of the vessel or aeroplane; 2. A person in the armed forc es who has taken part in war, and has been missing for four years; 3. A person w ho has been in danger of death under other circumstances and his existence has n ot been known for four years. Chapter IV. VOID MARRIAGES

Atienza v. Brillantes, (243 SCRA 32) A judges first marriage contracted in 1965 w as void for not having a marriage license, but the requirement for a judicial de claration of nullity in Art. 40 applies for his subsequent marriage contracted i n 1991. Apiag v. Cantero, (1997) Where both marriages were contracted prior to t he effectivity of the FC, the requirement of Art. 40 does not apply to the secon d marriage where a right is already vested and which the FC cannot have retroact ive effect. Judicial declaration of nullity of a marriage is now an absolute req uirement: a. For the validity of any subsequent marriage b. For the subsequent m arriage not to be considered as bigamous Domingo v. CA, (1993) The judicial decl aration of nullity can be invoked for purposes other than remarriage. Article 40 was interpreted as being a requirement for purposes of remarriage but not limit ed for that purpose. Separation of property is also a valid purpose for filing f or a judicial declaration of nullity. Borja-Manzano v. Sanchez, (2001) Legal sep aration does not severe marital bonds. Cohabitation under Art. 34 merely exempts the spouses from obtaining a marriage license, and is not met when there exists legal impediment to marry during the period of cohabitation.

Note: Although seven years is required for the presumption of death of an absent ee in the Civil Code, Art. 41 of the Family Code makes an exception for the purp ose of remarriage by limiting such requirement to four years. Art. 41 also limit s the required four years in Art. 391 for absence under exceptional circumstance s to only two years.

F. Article 44 (Present spouse contracts marriage in bad faith) who Both spouses of a subsequent marriage acted in bad faith in case where a previou s spouse was an absentee G. Article 53 (Non-Recording) Subsequent marriage of spouses where the requirements of recording under Art. 52 for void marriages shall not have been complied with H. Article 40 Nullity) (Judicial

Declaration of Art. 40, Civil Code. The absolute nullity of a previous marriage may be invoked for purposes of remarriage on the basis solely of a final judgment declaring suc h previous marriage void. II. Period to Defense File Action or Raise Under the Civil Code (superseded by the Family Code), there was no need for a ju dicial declaration of nullity of a previous marriage for a subsequent marriage t o be valid (People v. Mendoza). However, Article 40 of the FC now requires a fin al judgment to declare a previous marriage void for a subsequent marriage to be valid. (Terre v. Terre, Atienza v. Brillantes) Art. 39. The action or defense for the declaration of absolute nullity of a marr iage shall not prescribe. (as amended by R.A. 8533) The phrase "However, in case of marriage celebrated before the effectivity of this Code and falling under Ar ticle 36, such action or defense shall prescribe in ten years after PERSONS AND FAMILY RELATIONS Terre v. Terre, (1998) A lawyer was disbarred for grossly immoral conduct by con vincing the other party that a judicial declaration of nullity was not required and subsequently contracting another marriage while his first marriage was subsi sting. 15

CIVIL LAW REVIEWER Chapter IV. VOID MARRIAGES

III. Effects of Nullity Effects of Termination of Bigamous Marriage (Art. 43 and 44) 1. Children conceive d prior to its termination considered legitimate 2. Property Regime dissolved an d liquidated (party in bad faith shall forfeit his/her share in favor of the com mon children or if there are none, children of the guilty spouse by a previous m arriage, and in case there are none, to the innocent spouse) 3. Donation propter nuptias remains valid, (but if the donee contracted marriage in bad faith, dona tions will be revoked) 4. Insurance benefits innocent spouse may revoke designat ion of guilty party as beneficiary, even if such designation is stipulated as ir revocable 5. Succession Rights Party in bad faith disqualified to inherit from i nnocent spouse, whether testate or intestate 6. Donations - If both parties of s ubsequent marriage acted in bad faith, any donations and testamentary dispositio ns made by one party to the other by reason of marriage will be revoked (Art. 44 ) 3. In the partition, the conjugal dwelling and lot shall be adjudicated to the s pouse with whom majority of the common children remain (Art. 102 and 129) [Art. 50(4)] 4. Presumptive legitimes, computed as of the date of the final judgment, shall be delivered in cash, property or sound securities a. unless the parties, by mutual agreement judicially approved, had already provided for such [Art. 51( 1)] b. the children/guardian/trustee may ask for the enforcement of the judgment [Art. 51(2)] c. the delivery of the presumptive legitimes shall not prejudice t he ultimate successional rights, but the value of the properties already receive d shall be considered as advances on their legitime [Art. 51(3)] 5. Either of th e former spouses may marry again AFTER compliance with the requirements of Artic le 52, otherwise, the subsequent marriage is void (Art. 53) Requirement (Art. 52 ) recording in the appropriate civil registry AND registries of property: a. judg ment of annulment/absolute nullity of marriage b. partition and distribution of the properties of the spouses c. delivery of the childrens presumptive legitimes otherwise, these shall not affect third persons PERSONS AND FAMILY RELATIONS

this Code shall taken effect" has been deleted by Republic Act No. 8533 [Approve d February 23, 1998]). It must be noted that under the new Supreme Court Rule on Declaration of Absolute Nullity of Void Marriages and Annulment of Voidable Mar riages (A.M. No. 02-11-10-SC, effective March 15, 2003, nullity of the marriage can still be collaterally attacked. As to the parties allowed to file the action Enrico v. Heirs of Sps. Medinaceli (2007): Only an aggrieved or injured spouse may file a petition for annulment of voidable marriages or declaration of absolu te nullity of void marriages. Such petition cannot be filed by compulsory or int estate heirs of the spouses or by the State. The Committee is of the belief that they do not have a legal right to file the petition. Compulsory or intestate he irs have only inchoate rights prior to the death of their predecessor, and, henc e, can only question the validity of the marriage of the spouses upon the death of a spouse in a proceeding for the settlement of the estate of the deceased spo use filed in the regular courts. (also reiterated in Carlos vs. Sandoval, 2008) Effects of Other Void Marriages 1. The effects provided for by paragraphs (2), (3 ), (4) and (5) of Article 43 and by Article 44 shall also apply in the proper ca ses to marriages which are declared ab initio or annulled by final judgment unde r Articles 40 and 45 [Art. 50(1)] 2. Final judgment in such cases shall provide

for the liquidation, partition, and distribution of the: a. properties of the sp ouses b. custody and support of the common children c. delivery of their presump tive legitimes unless such matters had been adjudicated in previous judicial pro ceedings [Art. 50(2)] all creditors (of the spouses/property regime) shall be no tified of the proceedings for liquidation [Art. 50(2 and 3)] 16

CIVIL LAW REVIEWER Chapter IV. VOID MARRIAGES Void marriages can be attacked collaterally and do not prescribe De Castro v. As sidao-de Castro, (2008) Validity of marriage was attacked collaterally in an act ion for support for determining legitimacy of the child. PERSONS AND FAMILY RELATIONS 6. Generally, children born or conceived within void marriages are illegitimate. Exception: children conceived or born before the judgment under Article 36 has become final and executory children conceived or born of subsequent marriages un der Article 53 Nial v. Badayog, (2000) Children of first marriage assailed the va lidity of the second marriage contracted by their father without a marriage lice nse and after the latters death. 17

CIVIL LAW REVIEWER Chapter V. VOIDABLE MARRIAGES

Chapter V. Voidable Marriages (asked in 75, 76, 78, 83, 86, 90, 91, 93, 94, 95, 96, 97, 02, 03, 04, 07, and I. GROUNDS FOR ANNULMENT A. EXPLANATION B. WHO MAY FILE, PRESCRIPTION, RATIFICAT ION C. MARRIAGES NOT SUBJECT TO RATIFICATION II. WHEN ONE SPOUSE IS ABSENT A. RE QUIREMENTS FOR SUBSEQUENT MARRIAGE TO BE VALID WHEN PRIOR SPOUSE IS ABSENT B. EF FECT OF REAPPEARANCE OF ABSENT SPOUSE III. EFFECTS OF PENDING ACTION/DECREE IV. VOIDABLE VS. VOID V. VOIDABLE VS. LEGAL SEPARATION VI. JURISDICTION consummating the marriage (impotence; this is different from sterility). S 6. Ei ther party has a serious and incurable sexually-transmissible disease, even if n ot concealed.* 18 PERSONS AND FAMILY RELATIONS TOLENTINO Action to Annul: action in rem, concerns status of parties; res is rel ation bet parties or marriage tie; jurisdiction depends on nationality or domici le not the place of celebration A. Grounds for Annulment explained: 1. Lack of parental consent a. 18<=x<21 w/o parental consent b. Ratified upon fr ee cohabitation upon reaching 21. c. TOLENTINO: parents whose consents were want ing may ratify before 21; this right can be waived; however, the Code Commission believes that no such ratification can be made by the parent. 2. Insanity a. me ntal incapacity or insanity is a vice of consent; insanity (1) of varying degree s, (2) curable being an illness, capable of ratification or convalidation, (3) h as lucid intervals, (4) ground only for annulment in many countries b. can be ra tified by cohabitation after insane is cured c. mere mental weakness is not a gr ound for annulment, but if found grave enough may amount to psychological incapa city. d. intoxication, somnambulism where one had no mental capacity to give con sent is equivalent to insanity e. must EXIST AT THE TIME of the celebration of t he marriage. f. law presumes SANITY, burden of proof on party alleging insanity 3. Fraud a. only those enumerated in Art. 46 FC non-disclosure of previous CONVI CTION by final judgment of a crime involving MORAL TURPITUDE concealment by wife at the time of marriage, that she was pregnant by another man concealment of ST D regardless of nature existing at time of marriage concealment of drug addictio n, habitual alcoholism, homosexuality, lesbianism existing at time of marriage I. Grounds for Annulment (Art. 45, FC) Marriage may be annulled on the ff grounds existing at time of marriage: P I F F I S P 1. One of the parties is 18 or above but below 21, and there is no parent al consent. 2. Either party was of unsound mind (insanity). 3. The consent of ei ther party was obtained through fraud (different from mistake in identity): a. t hrough non-disclosure of a previous conviction of a crime involving moral turpit ude; b. through concealment by the wife of the fact at the time of the marriage that she was pregnant by another man; c. through concealment of a sexually-trans mitted disease, regardless of its nature, existing at the time of marriage; d. t hrough concealment of drug addiction, habitual alcoholism or homosexuality/lesbi anism. (Art.46, FC) 4. The consent of either party was obtained through force, i ntimidation, or undue influence. 5. Either party is physically incapable of I

F F I

CIVIL LAW REVIEWER Chapter V. VOIDABLE MARRIAGES b. No other misrepresentation or deceit of CHARACTER, HEALTH, RANK, FORTUNE OR C HASTITY shall constitute FRAUD c. TOLENTINO: fraud must relate to fact material to the marital relation; PRINCIPLE OF ENUMERATION; no other cases of fraud can b e ground for annulment; INCLUSIO UNIUS EST EXCLUSIO ALTERIUS d. Conviction of Cr ime: requisites are moral turpitude conviction e. Concealment of Pregnancy fraud against very essence of marriage; importance of procreation of children; an ass ault to the integrity of the union by introducing ALIEN BLOOD If husband knew of pregnancy, the marriage cannot be annulled on the ground of concealment. Three (3) months after the celebration of the marriage, a baby was born. Annulment was refused because of advanced stage of pregnancy, which must be patent to the hus band (Buccat v Mangonon) If there was coitus before marriage & wife was pregnant at time of marriage although he may not be the father, marriage cannot be annul led because man knows wife is unchaste. Principle: one cannot go to court with u nclean hands. Prof. Balane: An isolated case and is not doctrinal. f. Marriage c annot be annulled on ground that wife concealed the fact that she had been lewd & corrupt and had illegitimate child (Shrady v Logan) g. Maybe ratified upon coh abitation after knowledge of fraud Buccat v Buccat, 72 Phil. 19 Wife gave birth 3 months after marriage celebration. Husband filed for annulment. Ground: concea lment of non-virginity. Court held that it was unbelievable that wife could have concealed 6 months of pregnancy. Aquino v Delizo, 109 Phil. 21 The Supreme Cour t granted annulment because the wife concealed the fact that she was 4 months pr egnant during the time of the marriage. It argued that since Delizo was naturally plump, Aquino could hardly be expected to know, by mere looking, whether or not she was pregnant at the time of the marriage. Almel or v. RTC, (2008) It is the concealment of homosexuality, and not homosexuality per se, that vitiates the consent of the innocent party. Such concealment presup poses bad faith and intent to defraud the other party in giving consent to the m arriage. Corpuz v. Ochoterena, (2004) In a legal separation or annulment case, t he prosecuting attorney must first rule out collusion as a condition sine qua no n for further proceedings. A certification by the prosecutor that he was present during the hearing and even crossexamined the plaintiff does not suffice to com ply with the mandatory requirement. STD: Art. 45 vs. Art. 46 Art. 46 STD The STD is a type of fraud which is a ground for annulment Must be c oncealed Need not be serious nor incurable It is the concealment that gives rise to the annulment 19 PERSONS AND FAMILY RELATIONS

Art. 45 STD Ground for annulment Does not have to be concealed Must be serious and incurable The STD itself is th e ground for annulment

Effect of Cure to Fraud in Art. 46: Recovery or rehabilitation from STD, drug ad diction, and habitual alcoholism will NOT BAR ACTION for annulment; defect: not the disease, but the FRAUD which VITIATED CONSENT

4. Force, intimidation, undue influence a. FORCE must be one as to prevent party from acting as a free agent; will destroyed by fear/compulsion b. INTIMIDATION must be one as to compel the party by reasonable/wellgrounded fear/evil imminent upon person/properties c. DEGREE OF INTIMIDATION: age, sex, condition of person borne in mind d. A threat to enforce claim thru competent authority, lawful or not, does not vitiate consent e. VIOLENCE or INTIMIDATION annul obligation even if by third person (Art. 1336, CC) f. UNDUE INFLUENCE when improper advantage of his power over the will of

CIVIL LAW REVIEWER Chapter V. VOIDABLE MARRIAGES another, depriving freedom of choice. (Art. 1337, CC) EXAMPLE: confidentiality, family relations, suffering from mental weakness, in financial distress g. Threa t to FILE A CASE OF immorality on bar candidate where he does not marry a girl w ho he has impregnated does not vitiate consent (Ruiz v Atienza) h. Threat or int imidation as no to act as FREE AGENT; threatened of armed demonstrations by brot her is ANNULLABLE (Tiongco v Matig-a) i. Man rapes a girl, marries her & has no intention to live with the girl; marriage is annullable (People v Santiago) j. C ommittee added undue influence, maybe compelled to enter out of REVERENTIAL FEAR e .g., fear of causing distress to parents, grandparents, etc 5. Impotency a. shou ld exist at the time of celebration marriage b. should continue to the time of t rying annulment case c. should appear incurable d. should be unknown to the othe r party e. physical condition: sexual intercourse with a person of the opposite sex is impossible, not mere sterility f. only potent spouse can file action (pri nciple: one cannot come to court with unclean hands) g. must exist at time of ma rriage, must be continuous, must be incurable; thus if removable by operation, N OT ANNULLABLE (Sarao v Guevarra, CA, 40 O.G. 155 Supp. 263) h. both spouses impo tent, marriage cannot be annulled because neither spouse is aggrieved i. impoten cy due to old age, marriage cannot be annulled j. POTENCY PRESUMED; party who al leges impotency has burden of proof (Jimenez v Canizares) k. Although potency is presumed, there is a doctrine in England called TRIENNIAL COHABITATION that if wife remains virgin after 3 yrs, husband presumed impotent & has burden to prove otherwise (Tompkins v Tompkins) l. REFUSAL of wife to be examined DOES NOT PRES UME impotency because Filipino women are inherently shy & bashful; TC must order physical examination because w/o proof of m. n. o. p. impotency, she is presumed potent; to order her to undergo physical exam does no t infringe constitutional rights against self-incriminating (Jimenez v Canizares ) Villanueva vs. CA (2006): Absence of cohabitation is not a ground for annulmen t. NOTE: if wife continues to refuse to undergo physical exam, she can be held f or CONTEMPT & ordered to be confined in jail until she does so RELATIVE IMPOTENC Y: may now be invoked because there are cases where one is impotent with respect to his spouse but not with other men or women. EXAMPLE: penile erection to othe r women possible; unusually large penis can fit with abnormally large vagina 20 PERSONS AND FAMILY RELATIONS 6. Sexually-transmissible disease serious and incurable a. should exist at the t ime of the marriage b. should be found serious c. should appear to be incurable d. Should be unknown to other party e. reason: danger to the health of spouse & offspring/s f. same as incurable impotency g. Ratification or Convalidation of V oidable Marriages: by cohabitation or prescription cannot be ratified or convali dated: prior subsisting marriage; would result in anomalous relationship vitiate d by impotency remains as long as afflicted vitiated by affliction of STD remain s as long as afflicted Affliction of STD is unknown to the other spouse (BALANE) The other spouse must also be free from a similar STD. (BALANE) h. 2 & 3 prescr ibe w/in 5 yrs by Art. 47(5)

CIVIL LAW REVIEWER Chapter V. VOIDABLE MARRIAGES B. Who may File, Prescription, Ratification Ground (Art. 45) Lack of parental consent Who can file (Art. 47) 1. Underage par ty 2. Parent or guardian Insanity 1. Sane spouse with no knowledge of the others insanity 2. Legal guardian of insane party 3. Insane party Prescription (Art. 47 ) 1. 5 years after attaining 21. 2. Before child reaches 21. 1. Any time before the death of either party Ratification (Art. 45) Free cohabitation after attaini ng age of 21. 21 PERSONS AND FAMILY RELATIONS Free cohabitation of insane party after insane party comes to reason Fraud Injured party (defrauded party) Injured party 2. During lucid interval or after regaining sanity, and before death Five years after discovery of fraud Five years after disappearance of force or intimidation Five years after marriage Five years after marriage Force, intimidation, undue influence Impotence STD Healthy party Healthy party Free cohabitation after having full knowledge of fraud Free cohabitation after t he force has ceased or disappeared Deemed ratified when action prescribes Deemed ratified when action prescribes C. Marriages Not Subject Ratification/Convalidation to B. Effect of Reappearance of Absent Spouse: General Rule The subsequent marriage remains valid. Exception It is automatically terminated by the recording of the affidavit of reappearance of the absent spous e. Exception to the Exception If there is a judgment annulling the previous marri age or declaring it void ab initio. (Art. 42, FC) TOLENTINO Status of Subsequent Marriage: generally considered bigamous & void EXCEPT par. 2 of this article; g ood faith w/o falling under par. 2 will render marriage VOID When Voidable: must act in GOOD FAITH and 1. absent spouse not heard from 7 consecutive yrs 2. alth ough absent for less than 7 yrs, generally considered dead 3. presumed to be dea d after 4 yrs when occurrence of death in A391 Judicial Declaration Unnecessary: purpose of validity of marriage, missing spouse need not be judicially declared an absentee, enough required 1. One spouse is incurably impotent (Art. 47 prescription: 5 years) 2. One spous e has an incurable STD (Art. 47 prescription: 5 years) 3. Sane spouse marries an insane spouse w/o knowledge of insanity 4. Prior subsisting marriage II. Marriage When One Spouse Absent A. Requirements for Subsequent Marriage to be Valid When Prior Spouse is Absent (Art. 41, FC): 1. The prior spouse had been absent for 4 consecutive years, or 2 years in cases under Art. 391 CC. 2. The spouse present has a well-founded belief that the abs ent spouse was already dead. 3. The spouse present must institute a summary proc

eeding for the declaration of presumptive death of the absentee, without prejudi ce to the effect of reappearance of the absent spouse. __________

CIVIL LAW REVIEWER Chapter V. VOIDABLE MARRIAGES Prior Voidable Marriage: UNLESS final judgment or dissolved by death, subsequent marriage NULL & VOID Status of Subs Marriage: during subsisting marriage, remar riage is BIGAMOUS & VOID. EXCEPT: 1. absentee four years or for two under specia l circumstances 2. absence gives rise to presumption of death w/c is required to be declared in SUMMARY PROCEEDING to enable to remarry Period of Absence: 1. GE NERALLY, under CC, 7 years required for declaration of presumptive death For REM ARRIAGE, reduced to 4 years by FC 2. EXCEPT in cases, CC 4 years & FC 2 years IF a. ON BOARD VESSEL lost at sea voyage, airplane b. ARMED FORCES in war c. DANGE R OF DEATH under other circumstances, existence not known Good Faith: PERIOD of absence for PRESUMPTIVE DEATH is MANDATORY thus cannot be shortened by good fait h and if be done so will be VOID Burden of Proof: two successive marriages, nd p resumption on validity of 2 marriage and ND burden on party ATTACKING VALIDITY O F 2 MARR. PRESUMPTION in favor of INNOCENCE prevails over PRESUMPTION of ST CONT INUANCE OF LIFE OF 1 SPOUSE & MARITAL RELATIONS. Meaning of Absent spouse 1. Absen t for 4 years having well-founded belief of death 2. period of 4 years reduced t o 2 years in danger of death in A391 CC where: a. on board vessel lost at sea or airplane (includes all kinds of watercraft & aircraft) b. armed forces in war ( all military operations involving armed fighting; does not apply to nurses, doct ors, reporters or cameramen) c. danger of death Difference between Absence in the Civil Code and Family Code Family Code As to period 4 years under normal circumstances; 2 years under speci al circumstances Civil Code Absent for at least 7 years; 4 years under special c ircumstances As to In order to remarry, Declaration of remarriage summary presumptive death p roceeding is is not necessary necessary As to who can institute the action Can b e instituted by The spouses the present spouse, themselves any interested party, and the subsequent spouse Upon reappearance, judicial proceeding is necessary t o declare marriage null and void As to Subsequent effect on marriage is subsequen automatically t marriage termin ated by the recording of an affidavit of reappearance of the absent spouse As to ground Well founded belief Generally believed that the absent to be dead spouse is dead III. Effects of Pending (Art. 49, FC) Actions/Decree (includes earthquakes, fires, explosions, dangerous 1. The court shall provide for the support of the spouses, 2. The custody and su pport of the common children, giving paramount consideration to their moral and material welfare, their choice of parent with whom they wish to remain. 3. The c ourt shall also provide for visitation rights of other parent. PERSONS AND FAMILY RELATIONS period elapsed from time the absentee was last heard not from judicial declarati on. After 7 years, presumptive death arises w/o need for judicial declaration expeditions, landslides, volcanic eruptions) 3. 2-year period counted from event of death presumed 4. Republic v. Bermudez-Lo rino, (2005) The RTC rendered a decision declaring the presumptive death of resp

ondents absent spouse based on Art. 41, FC. The Republic appealed the decision to the CA. Applying Art. 247 FC, the SC ruled that the CA did not have jurisdictio n over the appeal because summary proceedings are immediately final and executor y, and therefore unappealable. 22

CIVIL LAW REVIEWER Chapter V. VOIDABLE MARRIAGES Art. 363 (CC): No child under 7 years shall be separated from the mother unless there is a compelling reason to do so. IV. Voidable v. Void Marriage Voidable Marriage VALID until annulled by court CAN be convalidated by prescript ion or free cohabitation ACP exists unless another system is instituted through marriage settlement Children are LEGITIMATE if conceived before decree of annulm ent Void Marriage INEXISTENT from the beginning CANNOT be convalidated No Commun ity Property, only Coownership General rule: Children are ILLEGITIMATE (Art. 165 , FC) Exception: In void marriages by reason of psychological incapacity (Art. 3 6) or non-partition of properties in a previous marriage (Art. 53), children are considered LEGITIMATE May be attacked DIRECTLY or COLLATERALLY, except for purp ose of remarriage (there must be Judicial Declaration of Nullity) May still be i mpugned after death of parties Nature Convalidation Effect on property Legitimacy of children How to impugn Can only be DIRECTLY (there Annulment Decree) attacked must be Effect of death of parties Can no longer be impugned after death of parties V. Voidable v. Legal Separation Voidable Marriage ground for annulment at the time of marriage terminates marita l bond once final, cannot be set aside to restore marital relation Legal Separat ion causes after the celebration of marriage does not terminate marital bond mar ital relations can resume upon reconciliation VI. Jurisdiction Tamano v. Ortiz, (1998) PD No. 1083 (Code of Muslim Personal Laws of the Philippi nes) does not provide for a situation where the parties were married both in civ il and Muslim rites. Consequently, the sharia courts are not vested with origin al and exclusive jurisdiction when it comes to marriages celebrated under both c ivil and Muslim laws. Hence, the Regional Trial Courts have jurisdiction over su ch cases. PERSONS AND FAMILY RELATIONS Art. 48 (FC): To prevent collusion between the parties, fabrication or suppressi on of evidence, the prosecuting attorney or fiscal shall appear on behalf of the State. 23

CIVIL LAW REVIEWER Chapter VI. LEGAL SEPARATION, DIVORCE, and DE FACTO SEPARATION Chapter VI. Legal Separation, Divorce and De Facto Separation I. GROUNDS FOR LEGAL SEPARATION II. DEFENSES III. WHEN TO FILE/TRY ACTIONS A. PRESCRIPTION B. RECONCILIATION PERIOD C. ATTEMPTS ON RECONCILIATION D. CONFES SION E. COLLUSION IV. EFFECTS OF FILING PETITION FOR LEGAL SEPARATION V. EFFECTS OF DECREE FOR LEGAL SEPARATION VI. RECONCILIATION A. HOW DONE B. EFFECTS OF REC ONCILIATION VII. DIVORCE VIII. DE FACTO SEPARATION c. H 6. Lesbianism or homosexuality of respondent. Same as rules on drug addiction 7. Contracting by respondent of a subsequent bigamous marriage, whether in the Phi lippines of abroad. 8. Sexual infidelity or perversion. a. No conviction is requ ired. 9. Attempt on the life of petitioner by respondent. a. There is no need fo r criminal conviction. Only a preponderance of evidence is required. 10. Abandon ment of petitioner by respondent without justifiable cause for more than one yea r. B I L I. Grounds for Legal Separation

(asked in 75, 76, 79, 80, 82, 89, 94, 96, 97, 02, 03, 06, and 07 bar exams) (Art A P I D H B I L A] Note: The grounds for legal separation are exclusive. V 1. Re peated physical violence or grossly abusive conduct directed against petitioner, a common child, or a child of the petitioner. 2. Physical violence or moral pre ssure to compel petitioner to change religious or political affiliation. 3. Atte mpt of respondent to corrupt or induce petitioner, a common child, or child of p etitioner, to engage in prostitution or connivance in such corruption or inducem ent. 4. Final judgment sentencing respondent to imprisonment of more than 6 year s, even if pardoned (executive pardon, not pardon from offended party). 5. Drug addiction or habitual alcoholism of respondent. a. When it existed from the time of celebration, and concealed from petitioner, can be a ground for annulment of marriage. b. When it occurred only after the marriage, it is only a ground for A

People v. Zapata and Bondoc, 88 Phil 688 (1951) Adultery is not a continuing crim e, but is consummated and exhausted at the moment of carnal union. As such, ever y sexual act is a ground for legal separation. Gandioco v Pearanda, 155 SCRA 725 (1989) In sexual infidelity as a ground for legal separation, there is no need fo r prior conviction for concubinage, because legal separation only requires a pre ponderance of evidence, as opposed to proof beyond reasonable doubt required in concubinage. Lapuz Sy v. Eufemio, 43 SCRA 177 (1972) The death of one party in a legal separation case abates the action. This is because the death of either spo use automatically dissolves the marriage. An action for legal separation is also purely personal between the spouses. Dela Cruz. v. Dela Cruz 22 SCRA 333 Abandon

ment is not mere physical estrangement but also financial and moral desertion. T here must be an absolute cessation of marital relations, duties, and rights with the intention of perpetual separation. A

I D

PERSONS AND FAMILY RELATIONS legal separation, whether concealed or not. Drug addiction or habitual alcoholis m may be supervening. 24

CIVIL LAW REVIEWER Chapter VI. LEGAL SEPARATION, DIVORCE, and DE FACTO SEPARATION II. Defenses Grounds for denying legal separation (Art. 56, FC) [4CMPRD] 1. Condonation by agg rieved party 2. Consent by aggrieved party to the commission of the offense 3. C onnivance between parties in the commission of the offense 4. Mutual guilt or Re crimination between spouses in the commission of any ground for legal separation 5. Collusion between parties to obtain decree of legal separation 6. Prescripti on of action for legal separation (Art. 57: 5 years from occurrence of the cause of action) 7. Reconciliation of parties during pendency of action (Art. 66 par. 1) 8. Death of either party during pendency of action (Lapuz-Sy v Eufemio, supra ) Bugayong v. Ginez, 100 Phil. 616 (1956) Continued cohabitation despite full kn owledge of the spouses infidelity constitutes implied condonation. E. Collusion The court shall assign the prosecuting attorney or fiscal to make sure that ther e is no collusion between the parties, and that evidence is not fabricated or su ppressed (Art. 60, par. 2, FC) IV. Effects of Filing Petition for Legal Separation (LAC) 1. The spouses are entitled to Live separately, but the marital bond shall not b e severed. (Art. 61, par. 1. FC). 2. Administration of Community or Conjugal Pro perty If there is no written agreement between the parties, the court shall desi gnate one of them or a third person to administer the ACP or CPG. (Art. 61, par. 2, FC) 3. Custody of children The court shall give custody of children to one o f them, if there is no written agreement between the spouses. It shall also prov ide for visitation rights of the other spouse. (Art. 62, cf. Art. 49. FC) III. When to File/Try Actions A. Prescription Action prescribes after five years from the occurrence of the cause (Art. 57, FC ) B. Reconciliation Period Action cannot be tried before six months have elapsed from the filing of the pet ition (Art. 58. FC) Note: without prejudice to judicial determination of custody of children, alimony, and support pendente lite V. Effects of Decree Separation (LACIDIMS) for Legal C. Attempts on Reconciliation Action cannot be tried unless the court has attempted to reconcile the spouses, and determined that despite such efforts, reconciliation is highly improbable (A rt. 59, FC) D. Confession No decree of legal separation shall be based upon a stipulation of facts or a co nfession of judgment (Art. 60, par. 1. FC) 1. The spouses can Live separately (Art. 63. FC) 2. The ACP or CPG shall be diss olved and liquidated, and the share of the guilty spouse shall be forfeited in f avor the common children, previous children, or innocent spouse, in that order ( Art. 63. cf. Art. 43, par. 2). 3. Custody of the minor children shall be awarded to the innocent spouse (Art. 63. FC, cf. Art 213) 4. Guilty spouse shall be dis

qualified from Inheriting from innocent spouse by intestate succession. The prov isions in favor of the guilty party in the will of the innocent spouse shall als o be revoked by operation of law. (Art. 63, FC) 5. Donations in favor of the gui lty spouse may be revoked (Art. 64. FC) 6. Innocent spouse may also revoke desig nation of guilty spouse as beneficiary PERSONS AND FAMILY RELATIONS Note: Art. 60 par. 1 applies only if the judgment was based solely on the stipul ation of facts. Thus, if other grounds were used, Art. 60 par. 1 is not applicab le. (BALANE) 25

CIVIL LAW REVIEWER Chapter VI. LEGAL SEPARATION, DIVORCE, and DE FACTO SEPARATION Art. 26(2), Civil Code. Where a marriage between a Filipino citizen and a foreig ner is validly celebrated and a divorce is thereafter validly obtained abroad by the alien spouse capacitating him or her to remarry, the Filipino spouse shall have capacity to remarry under Philippines law. VI. Reconciliation A. How Done Should the spouses reconcile, they should file a corresponding joint manifestati on under oath of such reconciliation. (Art. 65, FC)

B. Effects of Reconciliation 1. Proceedings for legal separation shall be terminated at whatever stage. (Art. 66, FC) 2. If there is a final decree of legal separation, it shall be set asid e. (Art. 66, FC) 3. The separation of property and forfeiture of share of guilty spouse shall subsist, unless the spouses agree to revive their former property regime or to institute another property regime. ( Art. 66 cf. Art. 67, FC) 4. Jo int custody of children is restored. 5. The right to intestate succession by gui lty spouse from innocent spouse is restored. The right to testamentary successio n depends on the will of the innocent spouse. Valid Foreign Divorce a. valid marriage between a Filipino citizen and a foreign er b. divorce is validly obtained by the alien spouse c. alien spouse becomes ca pacitated to remarry Result: the Filipino spouse shall likewise have the capacit y to remarry under Philippine law Van Dorn v. Romillo, 139 SCRA 139 (1985) Befor e the effectivity of the FC, the SC applied Article 15 of the CC, from the forei gners perspective, to decree the validity of a divorce with respect to the Filipi no spouse to prevent the unjust result to the Filipino spouse as the alien spous e is already capacitated to remarry. Quita v. Dandan, 300 SCRA 406 (1998) The ti me of obtaining foreign citizenship is necessary to determine the validity of di vorce obtained by the spouse who applied for foreign citizenship. It must be asc ertained that when that spouse obtained the divorce, he/she was no longer bound by Philippine domestic law Llorente v. CA, 345 SCRA 592 (2000) nd A 2 marriage o btained by a Filipino who is already a US citizen at the time of the nd divorce and the remarriage makes the 2 marriage completely valid. Garcia v. Recio, 366 S CRA 437 (2001) Philippine courts do not take cognizance of foreign laws. The for eign law granting divorce as well as the nature of the divorce granted (w/n it w as absolute) must be proven. Republic vs. Orbecido, (2005) The period of reckoni ng to determine citizenship for the purpose of the application of Art.26 par.2 i s the time of securing a divorce.

VII. Divorce (asked in 87, 90, 96, 97, 99, 02, 06 bar exams) General Rule Divorce is not allowed i he Philippines and even for Filipinos abroad. Exception Foreign and Muslim divorc es. Foreign Divorces (asked in 09 bar exam) Art. 15, Civil Code. Laws relating to family rights and duties, or to the status , condition and legal capacity of the persons are binding upon citizens of the P hilippines, even though living abroad.

The Nationality Theory of Jurisdiction / Nationality Principle applies to person al rights. PERSONS AND FAMILY RELATIONS in an Insurance policy, even if such stipulations are irrevocable (Art. 64. FC, cf. PD 612, sec. 11). 7. Obligation for Mutual support ceases, but the court may order the guilty spouse to support the innocent spouse. (Art. 198, FC) 8. The w ife shall continue to use the Surname of the husband even after the decree for l egal separation. (Art. 372, CC)

Effect: Filipinos living abroad could not obtain a valid divorce even in countri es where divorce is legally permissible. 26

CIVIL LAW REVIEWER Chapter VI. LEGAL SEPARATION, DIVORCE, and DE FACTO SEPARATION 2. Judicial autho rization may be obtained when the consent of one spouse is required by law for a ny transaction of the other (subject to Art. 239), and 3. The separate property of both spouses shall be solidarily liable for the support of the family in the absence of sufficient community property. The spouse present shall be given judi cial authority to administer or encumber any specific separate property of the a bsent spouse and use the fruits thereof to satisfy the latters share. Art. 127. S ame rules as above, but for Conjugal Partnership of Gains Procedural Rules for A rt. 100/127, par. 2: 1. In the case of Art 100/127 par. 2, a verified petition m ay be filed in court, attaching the proposed deed or description of the transact ion and the reason why the other spouses consent has not been secured. (Art. 239) 2. Court shall issue a notice for the initial conference and shall notify the o ther spouse to show cause why petition should not be granted. (Art. 242) 3. If t he petition is not resolved at the initial conference, then the court shall deci de in a summary hearing. (Art. 246) 4. Its decision shall be final and executory . (Art. 247) Muslim Divorces Presidential Decree 1083 (Code of Muslim Personal Laws) 7 forms o f Muslim divorces (Art. 45) (TFKILTZ) a. talaq- repudiation of the wife by the h usband b. ila- vow of continence by the husband c. zihar- injurious assimilation of the wife by the husband d. lian- acts of imprecation e. khul- redemption by th e wife f. tafwid- exercise by the wife of the delegated right to repudiate g. fa skh- judicial decree Grounds for faskh (Art. 52) a. The marriage bond shall be s evered and the spouses may contract another marriage b. The spouses shall lose t heir mutual rights of inheritance c. The custody of children shall be determined in accordance with Article 78 of the code d. The wife shall be entitled to reco ver from the husband her whole dower in case the talaq has been affected after t he consummation of the marriage, or onehalf thereof if effected before its consu mmation e. The husband shall not be discharged from his obligation to give suppo rt in accordance with Article 67 f. The conjugal partnership, if stipulated in t he marriage settlements, shall be dissolved and liquidated. Yasin v. Sharia Dist rict Ct, 241 SCRA 606 (1995) A Muslim divorce dissolves the marital bond and the refore a woman may use her maiden name and surname without any special proceedin g in court. 27 PERSONS AND FAMILY RELATIONS

Perez v. CA, 255 SCRA 661 (1996) Applicability of the tender years presumption o f Art. 213 (No child under 7 years of age shall be separated from the mother) to de facto separation, save for compelling reasons such as neglect, abandonment, unemployment and immorality, habitual drunkenness, drug addiction, maltreatment of child, insanity, communicable disease.

VIII. De Facto Separation Rules applicable to De Facto Separation Art. 100, Family Code. De Facto Separation shall not affect the regime of absolu te community, except that: 1. The spouse who abandons the conjugal home without just cause is not entitled to support,

CIVIL LAW REVIEWER Chapter VI. LEGAL SEPARATION, DIVORCE, and DE FACTO SEPARATION Chapter VII. Rights and Obligations Between Husband and Wife (asked in 75, and 84 bar exams) I. OBLIGATION OF SPOUSES II. RIGHTS OF SPOUSES III. USE OF SURNAME consent (Art. 73 [Omission corrected on Nov. 8, 1968]) 28 PERSONS AND FAMILY RELATIONS III. Use of Surname Married Women: (Art. 370, CC) A married woman may use: a. Her maiden first name and surname and add her husbands surname, or b. Her maiden first name and her h usbands surname or c. Her husbands full name, but prefixing a word indicating that she is his wife, such as Mrs. Yasin v. Sharia District Court, (1995) The woman only has an option and not a duty to use the surname of her husband, as provided for in Art. 370, CC. Moreover, when her husband dies, the woman can revert to h er old name without need for judicial declaration. Widows A widow may use the de ceased husbands surname as though he were still living. (Art. 373, CC) Mistresses The Supreme Court allowed the mistress to use her live-in partners name, since e veryone already knew that she was a mistress, so as to avoid confusion. (Legamia v. IAC (1984)) Divorcees The Supreme Court allowed the mistress to use her live -in partners name, since everyone already knew that she was a mistress, so as to avoid confusion. (Tolentino v. CA (1988)) I. Obligations of Spouses (Arts. 68-71, FC) Live together (cohabitation Art. 68) Exemption: One spouse living abroad or ther e are valid and compelling reasons (Art. 69, Par 2) Exemption to Exemption: Inco mpatibility with the solidarity of the family (Art. 69, Par. 2) Observe mutual l ove, respect, and fidelity Render mutual help and support (Art. 68) Fix the fami ly domicile. In case of disagreement, the court shall decide. (Art. 69, Par. 1) Jointly support the family. (Art. 70) From the conjugal property/income of the f ruits of their separate properties In case of absence/insufficiency, from their separate properties (liable in proportion to their properties) Manage the househ old. (Art. 71)

II. Rights of Spouses (Arts. 72-73, FC) In case the other spouse neglects his or her duties or commit acts which tend to bring danger, dishonor or injury to the family, the aggrieved party may apply t he court for relief. (Art. 72) Injury contemplated is physical, moral, emotional , or psychological, not financial. Either spouse may exercise any legitimate pro fession, without need for consent of the other. The other spouse may only object on valid, serious, and moral grounds. In case of disagreement, the Court shall decide whether o the objection is proper, and o benefit has accrued to the famil y before OR after the objection. If BEFORE, enforce resulting obligation against the community property. obligation against the separate property of the spouse who has not obtained

CIVIL LAW REVIEWER Chapter VIII. PROPERTY RELATIONS BETWEEN SPOUSES Chapter VIII. Property Relations Between Spouses I. GENERAL PROVISIONS II. DONATIONS BY REASON OF MARRIAGE III. ACP A. IN GENERAL B. WHAT CONSTITUTES COMMUNITY PROPERTY C. CHARGES UPON THE ACP D. ADMINISTRATIO N, OWNERSHIP AND DISPOSITION OF THE ACP E. DISSOLUTION OF THE ACP F. LIQUIDATION OF ASSETS AND LIABILITIES IV. CPG A. WHERE IT APPLIES B. HUSBAND AND WIFE PLACE IN COMMON FUND C. EXCLUSIVE PROPERTIES OF THE SPOUSES D. WHAT CONSTITUTES THE C PG E. RULES F. CHARGES UPON CPG G. ADMINISTRATION OF THE CPG H. DISSOLUTION OF T HE CPG I. LIQUIDATION OF ASSETS AND LIABILITIES V. SEPARATION OF PROPERTIES DURI NG MARRIAGE VI. PROPERTY REGIME OF UNIONS WITHOUT MARRIAGE settlement applies to all Filipinos, regardless of the place of the marriage and their residence. Exceptions 1. Where both spouses are aliens 2. As to the extrin sic validity of contracts 3. Contrary stipulation Requirements for Marriage Sett lements (Art. 77, FC) (WiSER) 1. Must be in writing (public or private) 2. Signed by the parties 3. Executed before the celebration of the marriage 4. Must be re gistered in local civil registry to affect third persons (If not registered, wil l not prejudice third persons, ACP will apply) 5. If party needs parental consen t (age 18-21), parent/guardian must be a party to the settlement (Art. 78) 6. If party is under civil interdiction or other disability (not including insanity), court appointed guardian must be a party (Art. 79) General Rule: All modificati ons to the marriage settlement must be made before the marriage is celebrated. ( Art. 76) Exceptions: Legal Separation (Art. 63 (2), FC) o The property regime is dissolved. Revival of the former property regime upon reconciliation if the spo uses agree (Art. 66 (2)) A spouse may petition the court for: o Receivership o J udicial separation of property, or o The authority to be the sole administrator of the conjugal partnership If the other spouse abandons the other without just cause or fails to comply with his or her obligations to the family. (Art. 128) J udicial Dissolution (Arts. 135 and 136) Furthermore: Marriage settlements are co nsidered ACCESSORY to the marriage Stipulations in consideration of future marri age and donations will be void if the marriage does NOT take place. (Art. 81, FC ) 29 PERSONS AND FAMILY RELATIONS

I. General Provisions

(asked in 76, 86, 91, 92, 94, 95, 96, 97 and 05 bar exams) Order to be followed (Art , 75, FC) 1. Marriage settlements before marriage spouses can agree to whatever r egime they want (ACP, CPG, complete separation or any other property regime to b e agreed upon prior to the celebration of the marriage). 2. Family Code If there are no marriage settlements, or if the regime agreed upon is void, the Absolute Community of Property will be followed 3. Local Customs General Rule (Art. 80, FC) Property relations between Filipino spouses are governed by Philippine laws, regardless of the place of marriage and their residence (Nationality Rule- Art 1 5, NCC). Hence The rule that ACP is the default mode of property relations absent any marriage

CIVIL LAW REVIEWER Chapter VIII. PROPERTY RELATIONS BETWEEN SPOUSES DONATIONS PROPTER NUPTIAS May b e made by minors (Art. 78) May include future property If present property is do nated and property is not absolute community, limited to 1/5 (Art. 84) Grounds f or revocation In Art. 86 ORDINARY DONATIONS Cannot be made by minors Cannot incl ude future property No limit to donation of present property provided legitimes are not impaired Grounds for revocation in donation laws II. Donations by Reason of Marriage Requisites of donations propter nuptias: (Art. 82, FC) a) Made before the celebra tion of marriage. b) Made in consideration of the marriage. c) In favor of one o r both spouses. d) The donor must be one of the betrothed or any third person Do nations excluded 1. Ordinary wedding gifts given after the celebration of the mar riage 2. Donations in favor of future spouses made before marriage but not in co nsideration thereof 3. Donations made in favor of persons other than the spouses even if founded on the intended marriage Who may donate 1. Spouses to each other 2. Parents of one or both spouses rd 3. 3 persons to either or both spouses Mor eover, in donations propter nuptias, the marriage is really a consideration but not in the sense of giving birth to the obligation. There can be a valid donatio n even if the marriage never took place. However, the absence of marriage is a g round for the revocation of the donation. (Solis v. Barroso, (1928)) Donations p ropter nuptias are without onerous consideration, marriage being merely the occa sion or motive for the donation, not its cause. Being liberalities, they remain subject to reduction for inofficiousness upon the donors death, if they should in fringe the legitime of a forced heir. (Mateo v. Lagua, (1969)) 30 PERSONS AND FAMILY RELATIONS Rules 1. Before Marriage General Rule: Future spouses cannot donate to each other more than 1/5 of their present property (excess shall be considered void) (Art. 84, FC) Exception: If they are governed by ACP 2. During Marriage General Rule: Spouses cannot donate to each other, directly or indirectly (donations made by spouses to each other during the marriage are void) (Art. 87, FC) Exception: Mod erate gifts on the occasion of any family rejoicing. Matabuena v Cervantes, (197 1) The donation between common-law spouses falls within the provision prohibitin g donations between spouses during marriage. Harding v. Commercial Union, (1918) The prohibition on donations can only be assailed by persons who bear such rela tion to the parties or the property itself, that their rights are being interfer ed with. Here, the insurance company of the donated car cannot assail the validi ty of the donation. In addition, the codal exception of moderate gifts depends on the income class of the spouses and a car could be considered a moderate gift that does not infringe the prohibition of donation between spouses. Sumbad v. CA, (1 999) The donation made by a man to a woman was held valid because no proof was s hown that they were still living in a common-law relationship at the time of the donation. Subject to

Rules to Follow in Donation Propter Nuptias 1. Family Code provisions (Arts. 82-8 7) 2. Ordinary Donation provisions (Art. 83, FC; Title III of Book III of the NC C) 3. Provisions on testamentary succession and the formalities of wills for don ations on future property (Art. 84, par. 2) Distinguished from Ordinary Donation s DONATIONS PROPTER NUPTIAS Does not require express acceptance ORDINARY DONATIONS Express acceptance necessary

Donation of Property Encumbrances

CIVIL LAW REVIEWER Chapter VIII. PROPERTY RELATIONS BETWEEN SPOUSES Supplementary Rules to Follow Co-ownership (Art. 90, FC) Grounds for Revocation of Donation Propter Nuptias (Art. 86, FC) (CAVaLRI) 1. If the marriage is not celebrated or judicially declared void ab initio, except don ations made in settlements. 2. When the marriage takes place without the consent of the parents or guardians, as required by law. 3. When the marriage is annull ed, and the donee acted in bad faith. 4. Upon legal separation, if the donee is the guilty spouse. 5. If there is a resolutory condition, and it is not complied with. 6. When donee has committed an act of ingratitude: (Art. 765, CC) (PCS) a . An offense against person or property of donor, or his wife or children under parental authority. b. An imputation to the donor of any criminal offense, or an y act involving moral turpitude, even if proven, unless the crime is committed a gainst the donee, his wife or children under his authority. c. Refusing to suppo rt the donor, if he/she is legally required to do so. *The action for filing for revocation of donation prescribes. B. What Constitutes Community Property What it consists All the property owned by the spouses at the time of the celebra tion of the marriage or acquired thereafter. (Art. 91, FC) Under the ACP, spouse s cannot exclude specific properties from the regime. What is Excluded (BGM) (Ar t. 92, FC) 1. Properties acquired by a gratuitous title, i.e. donation, inheritan ce by testate and intestate succession, including the fruits of such properties EXCEPT: When it was expressly provided by the donor or testator that the propert y shall form part of the ACP 2. Properties for personal use EXCEPT: Jewelry - th ey form part of the ACP 3. Properties acquired before the marriage, for those wi th legitimate descendants with a former marriage (to protect rights of children by a former marriage) Presumption All properties acquired during the marriage for m part of the ACP, unless it be proven that they are excluded. (Art. 93, FC) III. Absolute Community of Property A. In General (Asked in 98 and 07 bar exams) When it commences At the precise moment of the celeb ration of the marriage (Art. 88, FC). However, if the marriage is celebrated bef ore the Family Code took effect (1988), the default property regime is the Conju gal Partnership of Gains (CPG). Waiver of Rights (Art. 89, FC) General Rule: NOT ALLOWED Exceptions a. When there is judicial separation of property b. When ther e is legal separation C. Charges Upon the ACP (Art. 94, FC) (4 debts, 2 taxes, 2 expenses, support, do nation) (asked in 76 bar exam) 1. Support Spouses Even if not living together except when a spouse leaves conjugal home without just cause Even during pendency of action for legal separation or annulment of marriage Common children Legitimate childr en of previous marriage PERSONS AND FAMILY RELATIONS 1. Are considered valid. 2. In case of foreclosure a. if property value < obliga tion, donee shall not be liable b. if property value > obligation, donee shall b e entitled to the excess (Art. 85, FC) c. When the marriage is dissolved (by death of one of the spouses) d. When the marr iage is annulled

31

CIVIL LAW REVIEWER Chapter VIII. PROPERTY RELATIONS BETWEEN SPOUSES 2. 3. 4. 5. 6. 7. 8. 9. 10. Illegitimate children - follow the provisions on Support and (9) Debts and Oblig ations Contracted During Marriage Either by both spouses or one of them, with th e consent of the other. In (2) and (3), creditors need not prove that the debts benefited the family. Debts Contracted by one Spouse Without Consent of the othe r ACP liable only to the extent that the debt benefited the family. Tax, Liens, Repairs on Community Property Includes both major and minor repairs Taxes and Ex penses for Mere preservation of Separate properties Applies only to separate pro perties by either spouse being used by the family, not those that do not benefit the family. Expenses limited to minor repairs. Expenses for professional, Vocat ional, or Self-Improvement Course of Spouses Ante-nuptial Debts that Benefited t he Family If the ante-nuptial debt did not benefit the family, applicable rule i s (9). Donations by Both Spouses to Common Legitimate Children Purpose: professi onal, vocational courses or activities for selfimprovement Ante-Nuptial Debts no t under (7), Support of Illegitimate Children, Liabilities of Either Spouse Aris ing from Crime or Quasi-Delict Only ff the debtor-spouse has no exclusive proper ty or his or her property is insufficient. The payments by the ACP are deemed ad vances to be deducted from the share of the guilty spouse upon the liquidation o f the absolute community. Expenses of Litigation between Spouses Except when sui t is groundless

presumed that she agreed with the husbands decision. (Art. 96, FC) Except When the other spouse is incapacitated, or unable to participate in the administration ( e.g. when abroad). The powers refer solely to administration; disposition or enc umbrance requires consent of the absent or incapacitated spouse. Homeowners Savi ngs & Loan Bank v. Dailo (2005) In the absence of (court) authority or written co nsent of the other spouse, any disposition or encumbrance of the conjugal proper ty shall be void. Disposition of Property Either spouse may, through a will, disp ose his/her interest in the community property. (Art. 97, FC) However, the will should refer only to his/her own share in the community property Donation of Pro perty General Rule Donation of one spouse without the consent of the other is not allowed (Art. 98, FC) Exceptions a. Moderate donations to charity due to family rejoicing or distress; b. Moderate gifts by each spouse to the other due to fam ily rejoicing. (Note: Whats moderate depends on the socioeconomic status of the f amily) 32 PERSONS AND FAMILY RELATIONS E. Dissolution of ACP ACP terminates upon (Art. 99, FC) 1. Death of either spouse follow rules in Art.

103 2. Legal Separation follow rules in Arts. 63 and 64 3. Annulment or judicial declaration of nullity follow rules in Arts. 50 to 52 4. Judicial separation of property during marriage follow rules in Arts. 134 to 138 Rules on De Facto Sep aration (ART. 100, FC) De facto separation does not affect the ACP; EXCEPT that: 1. Spouse who leaves the conjugal home without just cause shall not be entitled to support. He/She, however, is still required to support the other spouse and t he family. 2. If consent is necessary for transaction but is withheld or otherwi se unobtainable, If community property is insufficient except in (9), spouses are solidarily liab le for the unpaid balance from their separate properties. Gambling losses shall be borne by the losing spouses separate property, winnings shall accrue to the co mmunity property. (Art. 95, FC) D. Administration, Ownership Disposition of ACP and Administration of property Belongs to both spouses jointly. If they disagree the husbands decision prevails. However, the wife has five years from the date of the decision to go to court for recourse. Otherwise, it is

CIVIL LAW REVIEWER Chapter VIII. PROPERTY RELATIONS BETWEEN SPOUSES 3. 4. 5. 6. Abandonment (Art. 101, FC) Present spouse may petition the court for: 1. receiver ship; 2. judicial separation of property; or 3. authority to be the sole adminis trator of the absolute community, subject to precautionary conditions that the c ourt may impose. Spouse is prima facie considered to have abandoned the other sp ouse and the family if: 1. he/she has left for a period of three months, 2. he/s he has failed to inform his/her whereabouts for a period of three months. F. Liquidation of Assets and Liabilities (asked in 89 and 99) Process of liquidation of ACP (Art. 102, FC) 1. Inventory of a ssets of ACP and of spouses, with market values. 2. Obligations are paid with co mmunity property, and separate obligations not charged to ACP paid by respective assets of spouses. a. If obligations exceed the assets of the ACP, nothing is d ivided. Creditors can go after the separate properties of the spouses, which are solidarily liable for the deficiency. 3. Delivery of whatever exclusive propert y. remains in their Rules in Case of Termination of Marriage by Death of One of the Spouses (Art. 10 3, FC) 1. The community property shall be liquidated in the same proceeding for t he settlement of the estate of the deceased spouse. 2. If no such judicial settl ement proceeding is instituted, surviving spouse shall liquidate the community p roperty either judicially or extra-judicially within one year from the death of the deceased spouse. a. If no liquidation is made within the period, any disposi tion or encumbrance involving community property of the terminated marriage shal l be void. b. Non-compliance with liquidation procedures would mean that a subse quently contracted marriage will follow a regime of complete separation of prope rty. Procedure for Liquidation of Community Properties of Two Marriages (Art. 10 4, FC) 1. Determine the capital, fruits, and income of each community upon such p roof as may be considered according to the rules of evidence. 2. In case of doub t as to which community the existing properties belong, they shall be divided be tween two communities in proportion to the capital and duration of each. Onas v. Javillo, (1934) Javillo contracted 2 marriages. SC ruled that each absolute com munity should be considered owner of the parcels of land acquired during its exi stence. Death discontinues ACP. Vda. De Delizo v. Delizo, (1976 In case of doubt as to which community the existing properties belong, the same shall be divided between the different communities in proportion to the capital and duration of each. 4. Balance, or net remainder is divided equally between the spouses, irrespectiv e of how much each brought into the community. 5. If personal obligations of a s pouse exceed his/her separate property, creditor can go after the share of the s pouse on the net remainder of the ACP, without prejudice to PERSONS AND FAMILY RELATIONS authorization may be obtained from the court. Support for family will be taken f rom the ACP. If ACP is insufficient, spouses shall be solidarily liable. If it i s necessary to administer or encumber separate property of spouse who left, spou se present may ask for judicial authority to do this. If ACP is not enough and o ne spouse has no separate property, spouse who has property is liable for suppor t, according to provisions on support. the provisions of law on forfeitures and delivery of presumptive legitimes. 6. A

fter covering all community obligations and obligations of spouses, balance of s eparate properties shall be delivered to respective spouses or their heirs, and they will also divide into two equal shares whatever is left of the community as sets, without prejudice to the provisions of law on forfeitures and delivery of presumptive legitimes. 33

CIVIL LAW REVIEWER Chapter VIII. PROPERTY RELATIONS BETWEEN SPOUSES IV. Conjugal Partnership of Gains (Asked in 79 bar exam) CPG Exists with the mere fact of marriage Predetermined by legislator, the law fixing its conditions. Divided equally between spouses, irr espective of the amount of capital that they bring into marriage No equality bet ween spouses in control, management, and disposition, because the law grants the husband some predominance. No juridical personality At precise moment of celebr ation of marriage By law Not particularly for profit Death, legal separation, an nulment, JDN, judicial separation of property Dissolution of partnership Only up on dissolution Joint; in case of disagreement, the husbands decision shall prevai l, wife has recourse to courts CPG Each spouse retains his/her property; only fr uits part of conjugal property Part of conjugal property Separate properties are returned; net profits divided between spouses or heirs Capital and properties o f spouses kept separate and distinct from benefits; insurmountable obstacle to p resumption of solidarity Exclusive properties will have to be identified and ret urned, and sometimes, identification is difficult. Ordinary partnership Comes in to existence according to agreement between parties Determined by will of partne rs. 34 PERSONS AND FAMILY RELATIONS 1. Existence 2. Purpose, duration, rules 3. Profits and Depends upon respective capitals of partners, or upon their agreement General ru le is that all partners have equal rights in administration, management, and con trol of partnership. Considered a juridical person At the time agreed upon by pa rtners By agreement of parties; subsidiarily, by law For profit Death, insolvenc y, civil interdiction, termination of term, express will of any partner, etc. (A rts 1830-1931) Surviving partners may choose to continue partnership There can b e division of profits without dissolution Same as individual partners, except wh en one or more partners designated as managers. ACP Properties become part of co mmunity property Becomes community property Net remainder of ACP divided equally between spouses or heirs Mutual trust and confidence between spouses; fosters o neness of spouses 4. Equality 5. Personality 6. Commencement 7. Regulation 8. Purpose 9. Causes dissolution for 10. Effect of death of a partner 11. Division of properties 12. Management 1. Property acquired before marriage. 2. Property acquired during marriage 3. Up on dissolution of marriage 4. Basis 5. Liquidation Easier to liquidate because net remainder of community properties are simply div ided between spouses or heirs. A. Where It Applies (Art. 105) 1. For marriages before the implementation of the Family Code. 2. For marriages after the Family Code, if agreed to by the parties through a marriage settlement

. Note: CPG begins at the precise moment the marriage celebrated (Art 107)

CIVIL LAW REVIEWER Chapter VIII. PROPERTY RELATIONS BETWEEN SPOUSES B. Husband and Wife Place in Common Fund (PIPF-EC) (Art. 106) 1. The proceeds, products, fruits, and income of their separate properties; 2. E verything acquired by them within marriage through their own efforts; 3. Everyth ing acquired by them by chance C. Exclusive Properties of the Spouses 1. Art 109 Directly acquired or originally exclusive Property by substitution (OGRE) (1) Property brought into marriage by each spouse as his/her own (2) Property ac quired by either spouse during the marriage by gratuitous title (3) Property acq uired by right of redemption, by barter, or by exchange with property belonging to either spouse (4) Property purchased with exclusive money of either spouse

Moral damages arising from a contract paid from CPG are also awarded to the CPG (Zulueta v. Pan-Am, 1973). Loans contracted during the marriage are conjugal, an d so is any property acquired therefrom (Mendoza v. Reyes, 1983). E. Rules 1. presumption that property is conjugal: all property acquired during the marri age, whether made, contracted, or registered in the name of one spouse, are pres umed conjugal unless the contrary is proven (Art. 116, FC). As a condition sine qua non for the operation of the presumption in favor of the conjugal partnershi p the party who invokes the presumption must first prove that the property was a cquired during the marriage. (Acabal v. Acabal, 2005) "X married to Y" as it app ears in land titles is not conclusive of the conjugal status of the property (Jo cson v. CA, 1989). Exclusive property brought into a second marriage remains exc lusive property of that spouse under CPG regime; ACP is not retroactive for marr iages celebrated under the Civil Code (Francisco v. CA, 1998). 2. property purch ased by installment (paid partly with conjugal funds and partly with exclusive f unds) Art. 118: conjugal property if full ownership was vested during the marria ge CPG shall reimburse the owner-spouse exclusive property if full ownership was vested before the marriage ownerspouse shall reimburse the CPG Exclusive proper ty brought into a second marriage remains exclusive property under CPG regime. A CP is not retroactive for marriages celebrated under the Civil Code (Castillo v. Pasco, 1964). Even if the installment is completed after the marriage, the prop erty is exclusive if 2. Other Separate Property: (CSI) a. Collection of credits belonging to one spou se exclusively but the interests shall belong to the CPG (Art 119) b. Sale of se parate property of a spouse c. Indemnity paid in case of expropriation of separa te property or under an insurance policy covering separate property. Spouses ret ain the ownership, possession, administration and enjoyment of their exclusive p roperties (Art 110, par 1.) Possession by one spouse of the separate property th e other spouse does not affect ownership Transfer of administration of a spouses exclusive property to the other spouse must be made in a public instrument recor ded in the registry of property of the place where the property is located (Art 110, FC) but ownership is not conferred to the administrator spouse (Rodriguez v . de la Cruz, 1907).

D. What Constitutes the CPG (Art. 117)

(asked 75, 76, 78, 85, and 87 bar exams) (OLF-N-HOLC) 1. Acquired by Onerous Title dur ing the Marriage at Expense of Common Fund 2. Acquired through the Labor, Indust ry, Work, Profession of Either or both Spouses 3. Fruits from common property an d net fruits of exclusive property of each spouse PERSONS AND FAMILY RELATIONS 4. Share of either spouse in hidden treasure, whether as finder or owner of prop erty where treasure is found 5. Acquired through occupation such as fishing or h unting 6. Livestock existing at dissolution of partnership in excess of what is brought by either spouse to the marriage 7. Acquired by chance, such as winnings from gambling or betting 35

CIVIL LAW REVIEWER Chapter VIII. PROPERTY RELATIONS BETWEEN SPOUSES ownership was vested in one spouse before the marriage (Lorenzo v. Nicolas, 1952 ). 3. rules on improvement on exclusive property: (Art. 120) accession - if orig inal value is greater than new value (value of land + value of improvements + ne t change in value), then land remains exclusive property of the owner-spouse; su bject to reimbursement of the cost of improvement reverse accession - if origina l value is less than new value, then land becomes conjugal property; subject to the reimbursement of the value of the property of the owner-spouse at the dissol ution of the CPG. Change of ownership takes place at the time when the improveme nts are made (Calimlim-Canullas v. Fortun, 1984). 4. If winning ticket is bought by conjugal funds, prize is conjugal; otherwise, it is exclusive property of sp ouse who owns the ticket. 5. Property belonging to one spouse converted into ano ther kind totally different in nature from its original form during marriage bec omes conjugal in the absence of proof that the expenses of conversion were exclu sively for the account of the original owner-spouse, subject to reimbursement of the value of the original property from the conjugal partnership 6. Money recei ved under the Social Security Act is not conjugal, although the employee-spouse contributes to the SSS with his salaries, but belongs to the designated benefici ary under the Social Security Law. 7. Intellectual property, like copyright or p atent, should, according to Tolentino, citing Planiol and Ripert, be considered separate property of the spouse who produces or invents or discovers it. 8. Busi ness property (e.g. trade-marks, trade names, service marks, business goodwill) are merely accessories to some commercial establishment or product, so that if s uch establishment or product is separate property of one spouse, then the busine ss property is separate property; but all benefits or earnings derived from thes e different kinds of property during the marriage should belong to the conjugal property (Tolentino, id., citing the same authority). F. Charges upon CPG (asked in 87 and 04 bar exams) Art. 121, Family Code. The conjugal partnership shall be liable for: (1) The sup port of the spouse, their common children, and the legitimate children of either spouse; however, the support of illegitimate children shall be governed by the provisions of this Code on Support;* (2) All debts and obligations contracted du ring the marriage by the designated administratorspouse for the benefit of the c onjugal partnership of gains, or by both spouses or by one of them with the cons ent of the other; * (3) Debts and obligations contracted by either spouse withou t the consent of the other to the extent that the family may have benefited; (4) All taxes, liens, charges, and expenses, including major or minor repairs upon the conjugal partnership property; * (5) All taxes and expenses for mere preserv ation made during the marriage upon the separate property of either spouse; (6) Expenses to enable either spouse to commence or complete a professional, vocatio nal, or other activity for self-improvement; * (7) Ante-nuptial debts of either spouse insofar as they have redounded to the benefit of the family; (8) The valu e of what is donated or promised by both spouses in favor of their common legiti mate children for the exclusive purpose of commencing or completing a profession al or vocational course or other activity for selfimprovement;* and (9) Expenses of litigation between the spouses unless the suit is found to groundless.: If t he conjugal partnership is insufficient to cover the foregoing liabilities, the spouses shall be solidarily liable for the unpaid balance with their separate pr operties. 36 PERSONS AND FAMILY RELATIONS * Same as the rule governing ACP Categorization of CPG Charges (Pangalangan notes )

Debts & Obligations (2) Debts incurred: (a) by administratorspouse for the benef it of the family; (b) by both spouses; (c) by one spouse with the consent of the other (3) by one spouse without the consent of the other for the Taxes & Expens es (4) maintenance of CPG properties Support (1) support of spouses and common c hildren (5) mere preservation of all exclusive (6) education of spouses, absolute

CIVIL LAW REVIEWER benefit of the family (7) antenuptial debts for the benefit o f the Family Properties (9) litigation expenses, unless the suit is groundless ( 8) education of common children, only for value of donation Chapter VIII. PROPERTY RELATIONS BETWEEN SPOUSES

Debts incurred in the exercise of a spouses profession are charged on the CPG (Ja vier v. Osmea, 34 PHIL 336). Debts incurred during the marriage are presumed to b e conjugal and thus are charged on the CPG (Cobb-Perez v. Lantin, 23 SCRA 637) L oan contracts signed by both spouses are conjugal, and they are jointly liable f or payment, even if only one spouse signs a subsequent promissory note (DBP v. A dil, 161 SCRA 307). Debts incurred for the benefit of third persons are not char ged on the CPG (Luzon Surety Co. v. De Garcia, 30 SCRA 111). H. Dissolution of the CPG 1. Termination of CPG Art. 126 (cf. Art. 99) (DLAJ) a. Death b. Legal Separation c. Annulment or declaration of nullity d. Judicial separation of property 2. CP G not affected by de facto Separation Art. 128 (cf. Art. 100) 3. Abandonment and Absence (cf. Art. 101) Ayala Investment v. Ching, (1998) The Supreme Court rule d that indirect benefits that might accrue to a husband in signing as a surety o r guarantee agreement not in favor of the family but in favor of his employer co rporation are not benefits that can be considered as giving a direct advantage a ccruing to the family. Hence, the creditors cannot go against the conjugal partn ership property of the husband in satisfying the obligation subject of the suret y agreement. A contrary view would put in peril the conjugal partnership by allo wing it to be given gratuitously as in cases of donation of conjugal partnership property, which is prohibited. G. Administration of the CPG (asked in 75, 77, 02 and 06 bar exams) 1. The administration and enjoyment of the co njugal partnership shall belong to both spouses jointly. In case of disagreement , the husbands decision shall prevail, subject to recourse to the court by the wife for proper remedy, which must be availed of within 5 years from the date of the contract implementing such decision (Art. 124, par.1). Sale by the husband of property belonging to the conjugal partnership without the consent of the wif e when there is no showing that the latter is incapacitated is void ab initio. ( Abalos v. Macatangay, Jr, 2004) 2. Disposition or encumbrance of conjugal proper ty requires: (Art. 124, par. 2) a. The consent or approval by both spouses; OR b . Judicial authority secured in court Donation of CPG must be with the consent o f the other spouse except moderate donations for charity, on occasions of family rejoicing, or family distress (Art 125, cf. Art 98) Mere awareness of a transac tion is NOT consent (Jader-Manalo v. Camaisa, 2002) I. Liquidation of Assets and Liabilities (asked in 87 and 89 bar exams)

1. Procedure (Art. 129) IAR-DRIN-PC a. Prepare an inventory of all properties b. Amounts advanced by CPG in payment of personal debts and obligations shall be c

redited to CPG c. Reimburse each spouse for the use of his/her exclusive funds i n the acquisition of property or for the value of his or her exclusive property, the ownership of which has been vested by law in the conjugal partnership. d. D ebts and obligations of CPG shall be paid out of the conjugal assets, otherwise both spouses are solidarily liable with their exclusive property. e. Remains of the exclusive properties shall be delivered to respective ownerspouses PERSONS AND FAMILY RELATIONS Homeowners Savings & Loan Bank v. Dailo (2005) In the absence of (court) authori ty or written consent of the other spouse, any disposition or encumbrance of the conjugal property shall be void. 37

CIVIL LAW REVIEWER Chapter VIII. PROPERTY RELATIONS BETWEEN SPOUSES f. Indemnify loss or deterioration of movables belonging to either spouse, even due to fortuitous event, used for the benefit of the family g. Net remainder of CPG shall the constitute the profits which shall be divided equally between husband and wife except when: o A different proportion or division was agreed upon in t he marriage settlements o There has been a voluntary waiver or forfeiture of suc h share as provided in the FC h. Presumptive legitimes delivered to common child ren per Art. 51 i. Conjugal dwelling goes to: o Spouse with whom majority of com mon children choose to remain (below 7yrs deemed to have chosen the mother) o Wh oever the court chooses in case of lack of majority 2. Rules Property must be re corded in the registry of property in order to affect third persons dealing with registered property. Spouses are not co-owners of CPG during the marriage and c annot alienate the supposed interest of each in the said properties. The interes t of the spouses in the CPG is only inchoate or a mere expectancy and does not r ipen into title until it appears after the dissolution and liquidation of the pa rtnership that there are net assets. (De Ansaldo v. Sheriff of Manila, 1937) Rul es on liquidation upon death and liquidation of CPG of 2 or more marriages same as in ACP (Art. 103 & 104) Support to surviving spouse & children during liquida tion is charged against the fruits or income of their shares in the properties. (Art. 133) Personal debt acquired during marriage of either spouse is not charge able against community property (Go v. Yamane, 2006) V. Separation Marriage of Properties During 38 PERSONS AND FAMILY RELATIONS Art. 134, Family Code. In the absence of an express declaration in the marriage settlements, the separation of property between spouses during the marriage shal l not take place except by judicial order. Such judicial separation of property may either be voluntary or for sufficient cause.

Judicial separation of property may either be (1) voluntary or (2) for sufficien t cause. A. Sufficient Causes and Grounds for Return to Previous Regime Sufficient Causes for Judicial Separation of Property (Art. 135) (CALASA) (1) Sp ouse of petitioner has been sentenced to a penalty which carries with it civil i nterdiction (2) Spouse of petitioner is judicially declared an absentee (3) Loss of parental authority of the spouse of petitioner has been decreed by the court (4) Spouse of petitioner has abandoned the latter or failed to comply with his or her obligations to the family (5) The spouse granted the power of administrat ion in the marriage settlements has abused that power Grounds for Return to Prev ious Regime (Art. 141) (1) Termination of the civil interdiction (2)

Reappearance absentee spouse of (5) Restoration of parental authority to the spouse previously deprived of it (4 ) When the spouse who left the conjugal home without legal separation resumes co mmon life with the other (3) When the court, being satisfied that the spouse gra nted the power of administration in will not again abuse that power, authorizes the resumption of said administration (6) Reconciliation and resumption of commo n life of the spouse who have separated in facts for at least 1 year (6) At the time of the petition, the spouses have been separated in fact for at least 1 year and reconciliation is highly improbable. (7) When after voluntary dissolution of the ACP or CPG has been judicially decre ed upon the joint petition of the spouses, they agree to the revival of the form er property

CIVIL LAW REVIEWER regime. No voluntary separation of property may thereafter be granted. Chapter VIII. PROPERTY RELATIONS BETWEEN SPOUSES 4. rights previously acquired by creditors are not prejudiced (Art. 140) 39 PERSONS AND FAMILY RELATIONS B. Rules 1. Each spouse shall contribute to the family expenses, in proportion to their i ncome. In case of insufficiency, the market value of their separate properties. (Art. 146 par. 1) 2. Liability of spouses to the creditors of the family shall b e SOLIDARY. (Art. 146, par. 2) Abandonment is defined as the lack of intention t o return to the conjugal home, without justifiable cause (Dela Cruz v. Dela Cruz ) D. Transfer of Administration to the Other Spouse (Art. 142) (GACA) When one spouse. 1. Becomes the guardian of the other. 2. Is judicially declared an absentee. 3. Is sentenced to a penalty which carries with it civil interdict ion. 4. Becomes a fugitive from justice or is in hiding as an accused in a crimi nal case. If the other spouse is not qualified by reason of incompetence, confli ct of interest, or any other just cause, the court shall appoint a suitable pers on to be the administrator. In Re: voluntary dissolution of CPG of spouses Berna s, 14 SCRA 237 A voluntary separation of properties is not perfected by mere con sent but upon the decree of the court approving the same. The petition for volun tary separation of property st was denied because the children of the 1 nd and 2 marriages were not informed; the separation of property may prejudice the right s and shares of the children. Maquilan v. Maquilan, (2007) A compromise agreemen t with judicial recognition is valid, pending petition for declaration of nullit y of marriage. C. Effects of separation between spouses of property 1. ACP or CPG is dissolved and liquidated (Art. 137) 2. Provisions on complete s eparation of property applies after dissolution of ACP/CPG (Art. 138) a. Liabili ty spouses to creditors shall be solidary with their separate properties b. mutu al obligation to support each continues except when there is legal separation 3. Petition and final judgment of separation of property must be filed in the appr opriate registries (Art. 139) VI. Property regime of unions without marriage (asked in 79, 87, 98, 00 and 09 bar exams) Art. 147 When a man and a woman who are capacitated to marry each other, live exclusively with each other as husband and wife without the benefit of marriage or under a void marriage, their wages and salaries shall be owned by them in equal shares a nd the property acquired by both of them through their work or industry shall be governed by the rules on coownership. In the absence of proof to the contrary, properties acquired while they lived together shall be presumed to have been obt ained by their joint efforts, work or industry, and shall be owned by them in eq ual shares. For purposes of this Article, a party who did not participate in the acquisition by the other party of any property shall be deemed to have contribu ted jointly in the acquisition thereof if the formers efforts consisted in the care and maintenance of the family and of the household. Neither party can encum

ber or dispose by acts inter vivos of his or her share in the property acquired during cohabitation and owned in common, without the consent of the other, until after the termination of their cohabitation. When only one of the parties to a void marriage is in good faith, the share of the party in bad faith in the co-ow nership shall be forfeited in favor of their common children. In case of default of or waiver by any or all of the common children or their descendants, each va cant share shall belong to the respective surviving descendants. In the absence of descendants, such share shall belong to the innocent party. In all cases, the forfeiture shall take place upon termination of the cohabitation. (144a) Art. 148 In cases of cohabitation not falling under the preceding Article, only the prope rties acquired by both of the parties through their actual joint contribution of money, property, or industry shall be owned by them in common in proportion to their respective contributions. In the absence of proof to the contrary, their c ontributions and corresponding shares are presumed to be equal. The same rule an d presumption shall apply to joint deposits of money and evidences of credit. If one of the parties is validly married to another, his or her share in the co-ow nership shall accrue to the absolute community or conjugal partnership existing in such valid marriage. If the party who acted in bad faith is not validly marri ed to another, his or her shall be forfeited in the manner provided in the last paragraph of the preceding Article. The foregoing rules on forfeiture shall like wise apply even if both parties are in bad faith.

CIVIL LAW REVIEWER Chapter VIII. PROPERTY RELATIONS BETWEEN SPOUSES Art.147 1. man and woman 2. liv ing together as husband and wife 3. with capacity to marry (Art.5 without any le gal impediment) a. at least 18 years old b. not Art. 37 (incestuous void marriag e) c. not Art. 38 (void marriage by reason of public policy) d. not bigamous 4. other void marriages due to absence of formal requisite Owned in equal shares Re mains exclusive provided there is proof Art.148 1. 2. 3. 4. 5. 6. 7. man and wom an living together as husband and wife NOT capacitated to marry (Art.35(1) under 18 years old) adulterous relationship (e.g. concubinage) bigamous/polygamous ma rriage (Art.35(4)) incestuous marriages under Art.37 Void marriages by reason of public policy under Art.38 40 PERSONS AND FAMILY RELATIONS Applicability Salaries and wages Properties acquired through exclusive funds Properties acquir ed by both through work or industry Separately owned by parties Remains exclusive Owned in common in respective cont ribution proportion to Governed by rules on co-ownership Owned in equal shares since it is presumed to have been acquired through joint efforts if one party did not participate in acq uisition, presumed to have contributed through care and maintenance of family an d household Properties acquired while living together

No presumption of joint acquisition. When there is evidence of joint acquisition but none as to the extent of actual contribution, there is a presumption of equ al sharing If one party is validly married to another his/her share in the co-ow ned properties will accrue to the ACP/CPG of his/her existing valid marriage If the party who acted in bad faith is not validly married to another, his/her shar e shall be forfeited in the same manner as that provided in Art 147 The same rul es on forfeiture shall apply if both parties are in bad faith Forfeiture When only one of the parties is in good faith, the share of the party in bad fai th shall be forfeited: 1. In favor of their common children 2. In case of defaul t of or waiver by any or all of the common children or their descendants, each v acant share shall belong to the respective surviving descendants 3. In the absen ce of such descendants, such share belongs to the innocent party

Yaptinchay v. Torres, (1969) Application of Article 148; there was no proof of a ctual contribution, while there was a subsisting marriage apart from the union w ithout marriage, therefore, the N. Forbes house goes to the CPG of subsisting ma rriage Juaniza v. Jose, (1979) Property acquired by a married party during cohab itation with another not his spouse belongs to the CPG of the marriage, and the other party cannot be held jointly/severally liable for it Villanueva v. CA, (20 04) Transfer of certificate and tax declarations are not sufficient proof of joi nt contribution.

Joaquino v. Reyes (2004) Prohibitions against donations between spouses must lik ewise apply to donations between persons living together in illicit relations;

CIVIL LAW REVIEWER Chapter IX. The FAMILY and the FAMILY HOME Chapter IX. The Family and the Family Home I. FAMILY A. FAMILY RELATIONS B. GENERAL RULE C. EXCEPTIONS FAMILY HOME A. GENER AL RULE B. EXCEPTIONS C. BENEFICIARIES OF THE FAMILY HOME D. REQUISITES FOR CRED ITOR TO AVAIL OF THE RIGHT UNDER ARTICLE 160 stranger takes the case out of the ambit of FC 151. 41 PERSONS AND FAMILY RELATIONS II. Family Home (asked in 94 and 07 bar exam) Dwelling place of a person and his family Guidelines 1. It is deemed constituted from time of actual occupation as a family residence 2. It must be owned by person constituting it 3. It must be permanent 4. Rule a pplies to valid and voidable and even to common-law marriages under Arts.147 and 148 5. It continues despite death of one or more spouses or unmarried head of f amily for 10 years or as long as there is a minor beneficiary (Art.159) 6. Can o nly constitute one family home II. I. Family (asked in 91 bar exam) Basic social institution which public policy cherishes and protects hence, no suit between members of the family shall prosper unless comp romise between parties has failed. A. Family relations include: 1. 2. 3. 4. Between husband and wife Between parents and children Among other as cendants and descendants Among brothers and sisters, full or half blood. A. General Rule The family home is exempt from (EFA): 1. Execution 2. Forced sale 3. Attachment B. General Rule For a suit between members of the same family ired: 1. Earnest efforts towards a compromise e failed 3. Such earnest efforts and the fact he case will be dismissed if it is shown that to prosper, the following are requ have been made 2. Such efforts hav of failure must be alleged Note: T no such efforts were made.

B. Exceptions in the exemption of the family home from execution (Art. 156) 1. Nonpayment of taxes. 2. Debts incurred prior to the constitution of the famil y home. 3. Debts secured by mortgages on the premises before or after such const itution. 4. Debts due to laborers, mechanics, architects, builders, materialmen and others who have rendered service or furnished material for the construction of the building. C. Exceptions (VJLAFF) 1. 2. 3. 4. 5. 6. to the

general rule C. Beneficiaries of the family home (Art. 154) 1. Husband and wife, or an unmarried person who is the head of the family 2. Par ents (may include parent-in-laws), ascendants, descendants, brothers and sisters (legitimate/illegitimate), who are living in the family home and who depend on the head of the family for support Requisites to be a beneficiary (RLD) 1. The re lationship is within enumerated 2. They live in the family home Civil status of persons, Validity of marriage or a legal separation, Any ground for legal separation, Future support, Jurisdiction of courts, Future legitime Ho ntiveros v. RTC, (1999) Whenever a stranger is a party in a case involving famil y members, the requisite showing of earnest efforts to compromise is no longer m andatory, as such inclusion of a those

CIVIL LAW REVIEWER Chapter IX. The FAMILY and the FAMILY HOME 3. They are dependent for legal support on the head of the family Requirements f or the sale, alienation, donation, assignment, or encumbrance of the family home 1. the written consent of the person constituting it, 2. his/her spouse, and 3. majority of the beneficiaries of legal age Note: If there is a conflict, the Cou rt will decide.

Patricio v. Dario III, (2006) WON the grandson of the deceased is a beneficiary according to Art. 154 FC. The beneficiary should satisfy all requisites; he must be dependent on the head of the family. Arriola v. Arriola, (2008) This case in volves half brothers and a second wife; the family home includes the land it is built on. The rule in Art. 159 of the FC regarding the 10 year period is applied , the parties involved must wait. In case of death (ART. 159) - The family home shall continue despite the death of one or both spouses or of the unmarried head of the family for a period of ten years, or as long as there is a minor beneficiary. - The heirs cannot partition the home unless the court finds compelling reasons therefor. D. Requisites for creditor to avail of the right under Article 160 Requisites 1. He must be a judgment creditor; 2. His claim is not among those exc epted under Article155, and 3. He has reasonable grounds to believe that the fam ily home is worth more than the maximum amount fixed in Article 157 Procedure to avail of right under Article 160 1. The creditor must file a motion in the court proceeding where he obtained a favorable for a writ of execution against the fa mily home. 2. There will be a hearing on the motion where the creditor must prov e that the actual value of the family home exceeds the maximum amount fixed by t he FC either at the time of its constitution or as a result of improvements intr oduced thereafter its constitution. 3. If the creditor proves that the actual va lue exceeds the maximum amount the court will order its sale in execution. 4. If the family home is sold for more than the value allowed, the proceeds shall be applied as follows: a. First, the obligation enumerated in Article 155 must be p aid b. Then the judgment in favor of the creditor will be paid, plus all the cos ts of execution c. The excess, if any, shall be delivered PERSONS AND FAMILY RELATIONS Versola v. Mandolaria, (2006) The proof that the house is the family home must b e alleged against creditors; Applied the rule in Art. 160, FC. 42

CIVIL LAW REVIEWER Chapter X. PATERNITY and FILIATION Chapter X. Paternity and Filiation I. II. III. IV. V. KINDS OF FILIATION IMPUGNING LEGITIMACY PROOF OF FILIATION LE GITIMATION RIGHTS OF LEGITIMATE OR ILLEGITIMATE CHILDREN

I. Kinds of Filiation De Castro v. Assidao-De Castro, (2008) Common children born before the annulment are legitimate, and therefore entitled to support from each of the spouses.

(Arts. 163, 164, 165 FC) 1. Natural a. Legitimate b. Illegitimate 2. Legal Ficti on (Adoption) Legitimate Children (asked in 79, 82, 84, 85, 99 and 03 bar exams) Conce ved or born during the marriage of parents May be thru natural means or by artif icial insemination. 1. Natural/Biological Liyao v. Liyao, (2002): A child concei ved or born during a valid marriage is presumed to belong to that marriage, rega rdless of the existence of extramarital relationships. 2. Artificial Inseminatio n (Art. 164) Requisites for children conceived through artificial insemination t o be considered legitimate: a. Artificial insemination made on wife b. Sperm com es any of the following: Husband Donor husband and donor c. In case of donor spe rm, husband and wife must authorize/ratify insemination in a written instrument Executed & signed by husband and wife before the birth of the child. Recorded in the civil registry together with the birth certificate of the child. Illegitima te Children (asked in 80, 82, 83, 84, 90, 93, 99, 00, 07, 08 and 09 bar exams) Those conceived and born outside of a valid marriage. Exceptions: a. Children o f marriages void under Art.36 (psychological incapacity). II. Impugning Legitimacy (Art. 166) A. Grounds Thus the grounds for impugning the legitimacy of a child are: 1. Physical imposs ibility for sexual intercourse within the first 120 days of the 300 days which i mmediately preceded the childs birth due to: 2. Other biological or scientific reasons, except Artificial Insemination. 3. And in case of Artificial Inseminati on, the consent of either parent was vitiated through fraud, violence, mistake, intimidation, or undue influence. Macadangdang v. CA, (1980) Only a proximate se paration between the spouses is not sufficient physical separation as grounds fo r impugning legitimacy. Andal v. Macaraig, (1951) Serious illness of the husband which absolutely prevented him from having sexual intercourse with his wife, li ke if the husband was already in comatose or a vegetable, or sick with syphilis in the tertiary stage so that copulation was not possible. But tuberculosis, eve n in its most crucial stage, does not preclude copulation between the sick husba nd and his wife. Jao v. CA, (1987) Blood-type matching is an acceptable means of impugning legitimacy, covered by Art. 166(2), under "biological or other scient ific reasons." But this is only conclusive of the fact of non-paternity. B. Action for Impugning Legitimacy (Arts. 170 and 171) The action for impugning the legitimacy of a child may be brought within 1, 2, o r 3 years from the knowledge of the birth, or the knowledge of registration of b irth. PERSONS AND FAMILY RELATIONS b. And under Art. 53 (the second marriage of a widow or widower who has not deli vered to his or her children by his or her first marriage the legitime of said c hildren). (SEMPIO-DIY)

43

CIVIL LAW REVIEWER Chapter X. PATERNITY and FILIATION Baluyut v. Baluyut, (1990) Unsigned birth certificates are not evidence of recog nized filiation. Acebedo v. Arquero, (2003) Baptismal certificates are only conc lusive of the sacrament administered, and cannot be used as proof of filiation. Lim v. CA, (1975) Marriage certificates cannot be used as proof of filiation. Ji son v. CA, (1998) Rule 130, Sec. 40 is limited to objects commonly known as fami ly possessions reflective of a familys reputation or tradition regarding pedigr ee like inscriptions on tombstones, monuments, or coffin plates. Eceta v. Eceta (2004) Signature of the father on the birth certificate is considered as an ackn owledgement of paternity and mere presentation of a duly authenticated copy of s uch certificate will successfully establish filiations. Heirs of Rodolfo Baas v. Heirs of Bibiano Baas, (1985) "Su padre [Your father]" ending in a letter is only proof of paternal solicitude and not of actual paternity. Signature on a report card under the entry of "Parent/Guardian" is likewise inconclusive of open admi ssion. De Jesus v. Syquia, (1933) By "open and continuous possession of the stat us of a legitimate child" is meant the enjoyment by the child of the position an d privileges usually attached to the status of a legitimate child, like bearing the paternal surname, treatment by the parents and family of the child as legiti mate, constant attendance to the childs support and education, and giving the c hild the reputation of being a child of his parents. Agustin v. CA, (2005) DNA e vidence can be used as proof of paternity. De Jesus v. Estate of Decedent Juan G amboa Dizon (2001) The due recognition of an illegitimate child in a record of b irth, a will, a statement before a court of record, or in any authentic writing, is If the birth of the child has been concealed or was unknown to the husband, the above periods shall be counted: 1. from the discovery or knowledge of the birth of the child, or 2. from the discovery or knowledge of its registration, 3. whic hever is earlier. Sayson v. CA Legitimacy can only be attacked directly General Rule: Only the husband can impugn the legitimacy of a child. If he does not brin g action within the prescribed periods, he cannot file such action anymore there after, and this is also true with his heirs. Exception: That the heirs of the hu sband may file the action or continue the same if it has already been filed a. I f the husband died before the expiration of the period fixed for bringing his ac tion b. If he should die after the filing of the complaint without having desist ed c. If the child was born after the death of the husband. III. Proof of Filiation (Arts. 172 and 175 (1)) (asked in 85, 95, 05 and 06 bar exams) A. Rules Legitimate or illegitimate children may prove their filiation in the same way an d on the same evidence. General Rule: They may only prove their status using the following pieces of evidence: 1. 2. Their record of birth appearing in the civil registry. An admission of his filiation (legitimate or illegitimate) by his parent or parents in a public doc ument or a private handwritten instrument and signed by said parent or parents. (SEMPIO-DIY) Proof of open and continuous possession of status as legitimate or illegitimate child Any other means stated by the rules of court or special laws 3. 4. PERSONS AND FAMILY RELATIONS 1. Within 1 year if husband or any heirs reside in the same city or municipality where the child was born or his birth was recorded. 2. Within 2 years if the hu sband or all heirs live in the Philippines but do not reside in the same city or

municipality where the childs birth took place or was recorded 3. Within 3 yea rs if the husband or all heirs live outside the Philippines when the childs bir th took place or was recorded in the Philippines Mendoza v. Melia, 17 SCRA 788 Baptismal certificates are given probative value o nly for births before 1930. Birth certificates must be signed by the parents and sworn for it to be admitted as evidence. 44

CIVIL LAW REVIEWER Chapter X. PATERNITY and FILIATION in itself a consummated act of acknowledgement of the child, and no further cour t action is required. Gono-Javier vs. Court of Appeals, (1994) Mere possession o f status as an illegitimate child does not make a recognized illegitimate child but is only a ground for bringing an action to compel judicial recognition by th e assumed parent. Herrera v. Alba, (2005) In assessing the probative value of DN A evidence, therefore, courts should consider, among other things, the following data: a. How the samples were collected, b. How they were handled, c. The possi bility of contamination of the d. e. f. samples, The procedure followed samples, Whether the proper procedures were foll owed tests, and the qualification of conducted the tests. in analyzing the stand ards and in conducting the the analyst who because either or both of them were below eighteen (18) years of age at the time of childs conception may be legitimated. Grounds for impugning legitimation 1. 2. 3. The subsequent marriage of the childs parents is void. The child alleg edly legitimated is not natural. The child is not really the child of the allege d parents. (SEMPIO-DIY) 45 PERSONS AND FAMILY RELATIONS V. Rights of Legitimate and Illegitimate Children (SSS) 1. Surname a. b. Legitimate and legitimated: Surname of father and mother Illegitimate: use s surname of mother but the fathers surname may be used if father has explicitly recognized the child as his (RA 9255, Revilla Law) Legitimate and legitimated: t hose granted in Civil Code Illegitimate: the share of a legitimate child Legitim ate and legitimated: in accordance to provisions in the family code Illegitimate : entitle to support but support will come from separate properties of parent. 2. Succession (asked in 09 bar exams) a. b. a. b. 3. Support Estate of Rogelio Ong v. Diaz, (2007) DNA evidence can still be used even after the death of the parent. B. Action for Claiming Filiation (Arts. 173 and 175 (2)) The child can bring the action during his or her lifetime and even after the dea th of the parents. The action does not prescribe as long as he lives. If the chi ld is a minor, or is incapacitated or insane, his guardian can bring the action in his behalf.

Republic v. Vicencio, (1998) A legitimate childs use of the fathers surname is mandatory. De Asis v. CA, (1999) Obligation to support a legitimate child canno t be waived or compromised. David v. CA, (1995) Parental authority over an illeg itimate child belongs to the mother. Tonog v. CA, (2002) However, this may be te mporarily denied to the mother by reason of her incapacity. Mossesgeld v. CA, (1 998) The father cannot force the use of his surname without first establishing l egitimacy. Under RA 9255, only an acknowledgment by the father is necessary for the use of the fathers surname. Capote v. CA, (2007) An illegitimate child alre ady given the fathers surname without the latters acknowledgment, must revert to using the mothers surname.

IV. Legitimation (Arts. 177 and 182) (asked in 82, 90, 92, 04 08 and 09 bar exams)

"Legitimated" children are illegitimate children who because of the subsequent m arriage of their parents are, by legal fiction, considered legitimate. Requisite s for legitimation 1. 2. The child was conceived and born outside of wedlock. General rule: The par ents, at the time of the childs conception, were not disqualified by any impedi ment to marry each other.

Exception: RA 9858 - Children born to parents who were so disqualified only

CIVIL LAW REVIEWER Chapter XI. ADOPTION Chapter XI. Adoption I. R.A. 8552 A. WHO MAY ADOPT B. WHO MAY BE ADOPTED II. ADOPTION PROCEDURE UNDER RA 8552 IRR A. PRE-ADOPTION SERVICES B. EFFECTS OF ADOPTION C. RESCISSION OF AD OPTION D. EFFECTS OF RESCISSION E. RECTIFICATION OF SIMULATED BIRTHS III. R.A. 8 043: INTER-COUNTRY ADOPTION ACT OF 1995 A. WHO MAY ADOPT B. WHO MAY BE ADOPTED C . WHERE TO FILE APPLICATION D. DOCUMENTS TO SUPPORT APPLICATION E. INTER-COUNTRY ADOPTION BOARD F. TRIAL CUSTODY ADOPTION (Asked in 76, 77, 85, 94, 95, 96, 00, 01, 03, 04, 05, 07, 08 bar exams) LEGITIMATION The law merely makes legal what exists by nature ADOPTION The law m erely creates by fiction a relation which did not in fact exist Generally applie s to strangers Always by judicial decree Husband and wife adopt jointly with exc eptions (RA8552) Creates a rel. only between the child and the adopting parents Persons affected Procedure Who applies Only children natural 2. Aliens a. Possession of the same as the qualifications for Filipinos b. His/h er country has diplomatic relations with the Philippines c. Has been living cont inuously for 3 years (provided that absences not exceeding 60 days per 1 year fo r professional, business, or emergency reasons are allowed) in RP prior to the f iling of application and maintains such residence until the decree is entered d. Has been certified by his/her diplomatic or consular office or any appropriate government agency that he/she has the legal capacity to adopt in his/her country e. His/her government allows the adoptee to enter his/her country as his/her ad optee f. Has submitted all the necessary clearances and such certifications as m ay be required **Items numbers c, d and e may be waived under the following circ umstances: a. Adopter is a former Filipino Citizen who th seeks to adopt a relat ive within the 4 degree of consanguinity or affinity b. One who seeks to adopt t he legitimate or illegitimate child of his/her Filipino spouse c. One who is mar ried to a Filipino Citizen and seeks to adopt jointly with his/her th spouse a r elative within the 4 degree of consanguinity or affinity of the Filipino spouse 3. Guardians With respect to theirs ward after the termination of the guardiansh ip and clearance of his/her accountabilities. Husband and wife shall adopt joint ly; Except 1. if one spouse seeks to adopt the legitimate child of the other Extrajudicial acts of parents Only by both parents Effect Same status and rights with that of a legitimate child not only in relation to t he legitimizing parents but also to other relatives I. RA 8552: Domestic Adoption Act of 1998 A. Who May Adopt (Sec.7) 1. Filipino Citizens a. Of legal age b. In possession of full civil capacity and legal rights c. Of good moral character PERSONS AND FAMILY RELATIONS

d. Has not been convicted of any crime involving moral turpitude e. Emotionally and psychologically capable of caring for children f. At least sixteen (16) year s older than adoptee, except when adopter is biological parent of the adoptee or is the spouse of the adoptees parent g. In a position to support and care for hi s/her children in keeping with the means of the family 46

CIVIL LAW REVIEWER Chapter XI. ADOPTION Missing Child Tri-Media (2) Declaration Abandonment (3) Dec laration Availability Adoption Case Study Report in of of for Application for Ad option Case Study Report Matching Placement Supervised Trial Custody Home Study Report Recommendation and Consent Petition for Adoption Adoption Decree B. Who May Be Adopted (Sec. 8) 1. Any person below 18 years old who has been administratively or judicially dec lared available for adoption 2. The legitimate child of one spouse by the other spouse 3. An illegitimate child by a qualified adopter to improve the childs stat us to that of legitimacy 4. A person of legal age if, prior to the adoption, sai d person has been consistently considered and treated by the adopter(s) as his/h er child since minority 5. A child whose previous adoption has been rescinded 6. A child whose biological or adoptive parent(s) has died, provided that no proce edings shall be initiated within 6 months from the time of death of said parent( s) Consent Necessary for Adoption (Sec. 9) 1. The prospective adoptee if 10 years or older 2. The prospective adoptees biological parents, legal guardian or the g overnment instrumentality or institution that has custody of the child 3. The pr ospective adopters legitimate and adopted children who are ten years or over and, if any, illegitimate children living with them 4. The spouse, if any, of the pe rson adopting or to be adopted. Note: A decree of adoption shall be effective as of the date the original petition was filed. It also applies in case the petiti oner dies before the issuance of the decree of adoption to protect the interest of the adoptee. Child to be Adopted Biological parent signs a Deed of Voluntary Commitment (Resc issible within 6 months) Voluntary Commitment: Declaration of Availability for A doption Involuntary Commitment: (1) Announcement of Adopter Inquiry at DSWD II. Adoption Procedure under RA 8552 IRR (Secs. 10-32) (as discussed in Prof. Elizabeth Pangalangans class) A. Pre-Adoption Services The DSWD shall provide for the following services: 1. Counseling services for th e biological parents, prospective parents, and prospective adoptee 2. Exhaust al l efforts to locate the biological parents, if unknown B. Effects of Adoption (Secs. 16-18) 1. Parental Authority All legal ties between biological parents and adoptee are severed, and the same shall be vested on the adopter, except if the biological p arent is the spouse of the adopter. 2. Legitimacy The adoptee shall be considere d legitimate son/daughter of the adopter for all intents and purposes and shall be entitled to all the rights and obligations provided by law to legitimate chil dren born to them without discrimination of any kind. 3. Succession Adopter and adoptee shall have reciprocal rights of succession without distinction from legi timate filiation, in legal and intestate succession. If adoptee and his/her biol ogical parents had left a will, the law on testamentary succession shall govern. Attendance of DSWD Adoption Fora and Seminars (include counseling) PERSONS AND FAMILY RELATIONS 2. if one of the spouse seeks to adopt his/her illegitimate child provided that other spouse has signified his/her consent 3. if spouses are legally separated f rom each other ** if spouses jointly adopt, parental authority shall be exercise d jointly 47

CIVIL LAW REVIEWER Chapter XI. ADOPTION C. Rescission of Adoption (Sec. 19) Adoption, being in the best interest of the child, shall not be subject to resci ssion by the adopter(s). Adopted may request for rescission, with the assistance of DSWD, if a minor, or over 18 but incapacitated, based on the ff grounds: 1. repeated physical and verbal maltreatment despite having undergone counseling 2. attempt on life of adoptee 3. sexual assault or violence 4. abandonment or fail ure to comply with parental obligations However, the adopter(s) may disinherit t he adopted based on causes as enumerated in Art. 919 of the NCC. rectification exist, and other requirements as determined by the Department. Tam argo v. CA (1992) Where the petition for adoption was granted after the child ha d shot and killed a girl, the Supreme Court did not consider that retroactive ef fect may be given to the decree of adoption so as to impose a liability upon the adopting parents accruing at a time when adopting parents had no actual or phys ically custody over the adopted child. Retroactive effect may perhaps be given t o the granting of the petition for adoption where such is essential to permit th e accrual of some benefit or advantage in favor of the adopted child. In the ins tant case, however, to hold that parental authority had been retroactively lodge d in the adopting parents so as to burden them with liability for a tortuous act that they could not have foreseen and which they could not have prevented would be unfair and unconscionable. Lazatin v. Campos, (1979) Adoption is a juridical Act, proceeding in rem. Because it is artificial, the statutory requirements in order to prove it must be strictly carried out. Petition must be announced in p ublications and only those proclaimed by the court are valid. Adoption is never presumed. Santos v. Aranzanso, (1966) Validity of facts behind a final adoption decree cannot be collaterally attacked without impinging on that courts jurisdict ion. DSWD v. Belen, (1997) Participation of the appropriate government instrumen tality in performing the necessary studies and precautions is important and is i ndispensable to assure the childs welfare. Landingin v. Republic, (2006) Consents for adoption must be written and notarized. Sayson v. CA. (1992) Adopted childr en have a right to represent their adopters in successional interests. (I dont kn ow the basis for this doctrine but according to SCRA and my notes, the decision in this case was: Although an adopted child shall be deemed to be a legitimate ch ild and have the same rights as the latter, these rights do not include the righ t of representation. The relationship created by the adoption is between only th e 48 PERSONS AND FAMILY RELATIONS D. Effects of Rescission (Sec. 20) 1. The parental authority of the adoptees biological parents, if known, OR the legal custody of the DSWD shall be restored if the adoptee is still a minor or i ncapacitated. 2. The reciprocal rights and obligations of the adopters and the a doptee to each other shall be extinguished. 3. The court shall order the Civil R egistrar to cancel the amended certificate of birth of the adoptee and restore h is/her original birth certificate. 4. Successional rights shall revert to its st atus prior to adoption, but only as of the date of judgment of judicial rescissi on. Vested rights acquired prior to judicial rescission shall be respected. E. Rectification of Simulated Births (Sec. 22) A person who has, prior to the effectivity of this Act, simulated the birth of a child shall not be punished for such act: Provided, 1. That the simulation of b irth was made for the best interest of the child and that he/she has been consis tently considered and treated by that person as his/her own son/daughter: 2. Tha t the application for correction of the birth registration and petition for adop

tion shall be filed within five (5) years from the effectivity of this Act and c ompleted thereafter: 3. That such person complies with the procedure for Legal A doption as specified in this Act, which includes the Child and Home Study Report of DSWD to determine if alleged conditions in the application for

CIVIL LAW REVIEWER Chapter XI. ADOPTION adopting parents and the adopted child. It does not extend to the blood relative s of either party.) B. Who May Be Adopted (Sec. 8) 1. Only a legally-free child may be the subject of inter-country adoption. 2. A legally-free child is one who has been voluntarily or involuntarily committed to the DSWD of the Philippines, in accordance with the Child and Youth Welfare Cod e. 3. No child shall be matched to a foreign adoptive family unless it is satisf actorily shown that the child cannot be adopted locally. 4. In order that such c hild may be considered for placement, the following documents must be submitted to the Board: a. Child study b. Birth Certificate / Foundling Certificate c. Dee d of Voluntary Commitment/ Decree of Abandonment/ Death Certificate of parents d . Medical Evaluation / History e. Psychological Evaluation, as necessary f. Rece nt photo of the child 49 PERSONS AND FAMILY RELATIONS III. RA 8043: Inter-Country Adoption Act of 1995 INTER-COUNTRY ADOPTION refers to the socio-legal process of adopting a Filipino child by a foreigner or a Filipino citizen permanently residing abroad where the petition is filed, the supervised trial custody is undertaken, and the decree o f adoption is issued outside the Philippines. A. Who May Adopt (Sec. 9) Any foreign national or a Filipino citizen permanently residing abroad who has t he qualifications and none of the disqualifications under the Act may file an ap plication if he/she: 1. Is at least 27 years of age and at least 16 years older than the child to be adopted, at the time of application unless the adopter is t he parent by nature of the child to be adopted or the spouse of such parent 2. I f married, his/her spouse must jointly file for the adoption 3. Has the capacity to act and assume all rights and responsibilities of parental authority under h is national laws, and has undergone the appropriate counseling from an accredite d counselor in his/her country 4. Has not been convicted of a crime involving mo ral turpitude 5. Is eligible to adopt under his/her national law 6. Is in a posi tion to provide the proper care and support and to give the necessary moral valu es and example to all his children, including the child to be adopted 7. Agrees to uphold the basic rights of the child as embodied under Philippine laws, the U .N. Convention on the Rights of the Child, and to abide by the rules and regulat ions issued to implement the provisions of this Act 8. Comes from a country with whom the Philippines has diplomatic relations and whose government maintains a similarly authorized and accredited agency and that adoption is allowed under hi s/her national laws C. Where to File Application (Sec.10) Application shall be filed with the Philippine Regional Trial Court having juris diction over the child, or with the Inter-Country Adoption Board, through an int ermediate agency, whether governmental or an authorized and accredited agency, i n the country of the prospective adoptive parents. D. Application Should Be Supported By The Following Documents Written And Offici ally Translated In English (Sec. 10) 1. Birth Certificate of applicants 2. Marriage Contract and Divorce decree, if a pplicable 3. Written consent of their biological or adoptive children above 10 y ears of age in the form of sworn statement, 4. Physical, medical and psychologic al evaluation by a duly licensed physician and psychologist 5. Income Tax Return

s or any document showing the financial capability of the applicant 6. Police Cl earance 7. Character reference from the local church/minister, applicants employe r and a member of the immediate community who have known the applicant for at le ast 5 years 8. Recent postcard-sized pictures of the applicant and his immediate family

CIVIL LAW REVIEWER Chapter XI. ADOPTION E. Inter-Country Adoption Board 1. as the central authority in matters relating to inter-country adoption 2. Ens ures that all possibilities for adoption of the child under the Family Code have been exhausted and that inter-country adoption is in the best interest of the c hild 50 PERSONS AND FAMILY RELATIONS F. Trial Custody (Sec. 14) 1. The governmental agency or the authorized and accredited agency in the countr y of the adoptive parents shall be responsible for the trial custody and the car e of the child. It shall also provide for counseling and other related services. 2. The trial custody shall be for a period of 6 months from the time of placeme nt. 3. It starts upon actual physical transfer of the child to the applicant who , as actual custodian, shall exercise substitute parental authority over the per son of the child 4. The adopting parents shall submit to the governmental agency or the authorized and accredited agency, which shall in turn transmit a copy to the Board, a progress report of the childs adjustment. The progress report sha ll be taken into consideration in deciding whether or not to issue the decree of adoption.

CIVIL LAW REVIEWER Chapter XII. SUPPORT Chapter XII. Support (asked in 84, 85, 05, 08 bar exams) I. GENERAL PROVISIONS A. KINDS B. CHARACTERISTICS C. HOW SUPPORT IS GIVEN II. WH O ARE OBLIGED TO SUPPORT EACH OTHER III. PROPERTIES ANSWERABLE FOR SUPPORT IV. O RDER OF SUPPORT A. IF THERE ARE MULTIPLE OBLIGORS B. IF THERE ARE MULTIPLE RECIP IENTS

Unjustified refusal to support ones children or spouse is a sufficient cause for disinheriting a spouse (Art. 921, CC).

I. Support Consists of everything indispensable for sustenance, dwelling, clothing, medical attendance, education and transportation, in keeping with the financial capacit y of the family (Art. 194). The right and duty to support, especially the right to education, subsists even beyond the age of majority (Art. 194). The amount of support is in proportion to the means of the provider and the needs of the rece iver, and can be reduced or increased if such circumstances change (Arts. 201 20 2). The obligation to give support shall be DEMANDABLE from the time the person who has a right to receive the same needs it for maintenance, but it shall not b e PAYABLE except from the date of judicial or extra-judicial demand (Art. 203). When, WITHOUT THE KNOWLEDGE of the person obliged to give support, it is given b y a stranger, the stranger has the right to claim the same from the person oblig ed, unless it appears that he gave it without intention of being reimbursed (Art . 206). When the person obliged to give support UNJUSTLY REFUSES OR FAILS to giv e support when urgently needed, any third person may furnish support to the need y individual, with right of reimbursement from the person obliged to give suppor t. This particularly applies when the father or mother of a minor child unjustly refuses to support or fails to give support to the child when urgently needed ( Art. 207). Future support cannot be the subject matter of a compromise; such are void (Art. 2035, CC). Spouses are jointly responsible for the familys support. Support expenses shall be paid from the CP, or in absence thereof, the income/fruits of their separate properties, or in insufficiency/absence of such, from the separate properties ( Art. 70). ___________ A. Kinds of Support 1. Legal that which is required to be given by law 2. Judicial that which is req uired to be given by court order whether pendente lite or in a final judgment 3. Voluntary or Conventional by agreement

B. Characteristics of Support (PREVIEW) 1. Personal 2. Intransmissible 3. Not subject to waiver or compensation with reg

ard to future support 4. Exempt from attachment or execution, except if support is contractual or given by will. In such cases, any excess legal support can be subject to levy on attachment or execution. 5. Reciprocal on the part of those w ho are by law bound to support each other 6. Variable

C. How Support is Given (Art. 204) 1. Payment of the amount; 2. Accepting the recipient in the home of the provider , unless there is a legal or moral obstacle from doing so.

II. Who are Obliged to Support Each Other (Art. 195) 1. Spouses; 2. Legitimate ascendants and descendants; 3. Parents and their child ren (legitimate and illegitimate) and the children of the latter (legitimate and illegitimate);

PERSONS AND FAMILY RELATIONS Refusal to support children or descendants without justifiable cause is a suffic ient condition for the disinheritance of parents or ascendants, whether legitima te or illegitimate (Art. 920, CC). 51

CIVIL LAW REVIEWER Chapter XII. SUPPORT [NOTE: Both legitimate and illegitimate children are entitled to support.] III. Properties Answerable for Support (Art. 197-198) 1. From the separate property of the obligor. If no separate property, the ACP/C PG (if financially capable) shall advance the support, to be deducted from the o bligors share upon liquidation of such regime. 2. Pending legal separation or ann ulment, support (pendente lite) for spouses and children will come from the ACP/ CPG. After final judgment granting the petition, mutual support obligation betwe en spouses ceases. (But in legal separation court may order guilty spouse to giv e support to innocent spouse.) [NOTE: De facto separation does not affect the AC P, except that the spouse who leaves the conjugal home without just cause shall not be entitled to support (Art. 100).] [NOTE: Tolentino says that the above preference given to a child under parental authority over the spouse should prevail only if the person obliged to support p ays it out of his own separate property. So if the support comes from ACP or CPG , the above rule of preference for the child does not apply.] Pelayo v. Lauron, (1909) Even if the parents-in-law were the ones who called for the physicians ser vices for the childbirth of their daughter-in-law, it is the womans husband who i s bound to pay the fees due to the physician. Lacson v. Lacson, (1968) Man is st ill liable for support in arrears since the mother advanced it from a stranger ( the uncle of the daughters). Lacson v. Lacson, (2006) Acknowledgment of and comm itment to comply with support obligation through a note in his own handwriting i s proof that a demand was made.

IV. Order of Support (SDAB) A. Order of support if there are multiple obligors (2 or more; Art. 199) 1. 2. 3. 4. Spouses Descendants, nearest in degree Ascendants, nearest in degree Brothers and Sisters When two or more are obliged to give support, the payment shall be divided between them IN PROPORTION to their resources; Also, in case of URGENT NEED and by special circumstances, judge may order only one obligor to f urnish support without prejudice to reimbursement from other obligors of the sha re due from them (Art. 200).

PERSONS AND FAMILY RELATIONS 4. Legitimate brothers and sisters, whether of full or half-blood; 5. Illegitima te brothers and sisters, EXCEPT when the need for support of one (of age) is due to a cause imputable to his/her fault or negligence (Art. 196). B. Order of priority if there are multiple recipients (Sempio-Diy) 1. Observe order in Article 199 (SDAB); 2. But if the concurrent obligees are th e spouse and a child subject to parental authority, the child shall be preferred . 52

CIVIL LAW REVIEWER Chapter XIII. PARENTAL AUTHORITY Chapter XIII. Parental Authority I. PARENTAL AUTHORITY GENERAL PROVISIONS A. CUSTODY B. OTHER RIGHTS AND DUTIES I N EXERCISE OF PARENTAL AUTHORITY II. SUBSTITUTE AND SPECIAL PARENTAL AUTHORITY I II. SUSPENSION OR TERMINATION OF PARENTAL AUTHORITY IV. RIGHTS AND DUTIES OF CHI LDREN A. Custody Parental Preference Rule The natural parents, who are of good character and who c an reasonably provide for the child, are ordinarily entitled to custody as again st all persons (Santos v CA, 1995). Who exercises authority in cases of death, a bsence, remarriage, or separation of parents In case one parent is absent or alre ady dead, the present or surviving parent (Art. 212 FC) Remarriage shall not aff ect the parental authority over the children (Art. 212 FC) In case of a void/ann ulled marriage, and there is no agreement bet. spouses, the parent designated by the court (Art. 43 FC par 1; Art. 49 FC). Innocent spouse gets custody of minor children in legal separation (Art. 63 FC par 3). The court shall take into acco unt all relevant considerations, especially the choice of the child over seven y ears of age, unless the parent chosen is unfit (Art. 213 FC par 1). Tender Years Presumption NO child under 7 years of age shall be separated from the mother, un less the court finds compelling reasons to order otherwise. (Art. 213 FC par 2; Gamboa v. CA, 2007) Examples of compelling reasons are: When the mother is insan e; with a communicable disease that might endanger the life or health of the chi ld; is maltreating the child; or has another child by another man who lives with her. (Cervantes v. Fajardo, 1989) [NOTE: Prostitution or infidelity to husband does not make a mother unfit as parent.] I. Parental Authority (asked in 94, 03 and 05 bar exams) (patria potestas): Its the mass of rights and obl igations which parents have in relation to the person and property of their chil dren until their emancipation, and even after this under certain circumstances ( Manresa). Parental authority includes (Art. 209 FC): 1. The caring for and reari ng of children for civic consciousness and efficiency; 2. The development of the moral, mental and physical character and well-being of said children Rules as t o the exercise of parental authority: 1. The father and the mother shall jointly exercise parental authority over the persons of their common children. In case of disagreement, the fathers decision shall prevail, unless there is a judicial order to the contrary (Art. 211 FC) 2. If the child is illegitimate, parental a uthority is with the mother (Art.176 FC; see also Chapter 10). Cases when parent al authority and responsibility may be transferred or renounced: Adoption; Guard ianship; or Commitment of the child in an entity or institution engaged in child care or in a childrens home Characteristics of parental authority: 1. It is a na tural right and duty of the parents (Art. 209 FC) 2. It cannot be renounced, tra nsferred or waived, except in cases authorized by law (Art 210 FC) 3. It is join tly exercised by the father and the mother (Art. 211 FC) B. Other Rights and Duties in Exercise of Parental Authority Rights of Parents upon their children To have them in their custody (Art. 220 FC par 1) To represent them in all matters affecting their interests (Art. 200 FC p ar 6) Demand respect and obedience and impose discipline on them (Art. 200 FC pa r 7&8; see also People v Silvano, 1999) PERSONS AND FAMILY RELATIONS

4. It is purely personal and exercised through agents 5. It is temporary _______ _________ cannot be 53

CIVIL LAW REVIEWER Chapter XIII. PARENTAL AUTHORITY

[NOTE: The same order applies to the appointment of judicial guardian] Special p arental authority exercised by (Art. 218 FC) 1. School, its administrators and te achers, or 2. The individual, entity or institution engaged in child care. Substitute Parental Authority It is exercised in case of death, absence, or in c ase of unsuitability of parents. Special Parental Authority

Duties of Parents upon their children Support and upbringing in accordance to the ir means (Art. 220 par 1) Educate, instruct, and provide them with moral and spi ritual guidance, and love and understanding (Art. 220 par 3 Defend them against unlawful aggression Answer for damages caused by their fault or negligence, and for civil liability for crimes committed by them (Art. 221 FC) Give their lawful inheritance Liability of parents for torts committed by their minor children (A rt. 221 FC; Art. 2180 CC) Parents and other persons exercising parental authority are civilly liable for the torts of their unemancipated children: Provided they are living in their company, and Subject to the appropriate defenses provided b y law, like observing the diligence of a good father of a family to prevent the damage (Libi v. IAC, 1992) If the minor child is, therefore, not living with the parents but has been entrusted to the care of other persons, or is an intern in school, the liability does not apply. This liability of the parents and those e xercising parental authority over the child is solidary and primary and direct, not subsidiary It is exercised concurrently with the parental authority of the parents and rest s on the theory that while the child is in the custody of the person exercising special parental authority, the parents temporarily relinquish parental authorit y over the child to the latter.

St. Marys Academy v. Carpitanos, (2002) The special parental authority and respon sibility applies to all authorized activities, whether inside or outside the pre mises of the school, entity or institution. Liability of those exercising special parental authority over the child (Art. 21 9 FC) 1. They are principally and solidarily liable for damages caused by the act s or missions of the minor child while under their supervision, instruction or c ustody. HOWEVER, this liability is subject to the defense that the person exerci sing parental authority exercised proper diligence. 2. The parents and judicial guardians of the minor or those exercising substitute parental authority over th e minor are subsidiarily liable for said acts and omissions of the minor. Effect s of Parental Authority Upon the Property of the Child (Art. 225 FC) The Father a nd Mother shall jointly exercise legal guardianship over the property of the min or child without court appointment In case of disagreement, the fathers decision shall prevail, unless there is judicial order to the contrary If the market valu e of the property or the annual income of the child exceeds P50,000, the parent is required to furnish a bond of not less than 10% of the value of the childs pro perty or income II. Substitute Authority and

Special Parental (Asked in 2003 bar exam) Substitute parental authority exercised by (in order): 1. The surviving grandparent (Art. 214 FC) 2. Oldest brother or sister, over 21 years old, unless unfit or unqualified (Art. 216 FC par 2). PERSONS AND FAMILY RELATIONS Administer the property of a child for her/his support and education, unless tit le/transfer provides otherwise (Art. 226 FC par 1) Administer the fruits and inc ome (ONLY) of the childrens property primarily to support the child and secondari ly to use for the daily needs of the family (Art. 226 FC par 2) To give or withh old consent on marriage, pre-nuptial, donation propter nuptias, adoption, and em ployment To disinherit them for just cause 3. Childs actual custodian, over 21 years old, unless unfit or unqualified (Art. 216 FC par 3) 54

CIVIL LAW REVIEWER Chapter XIII. PARENTAL AUTHORITY III. Suspension or Parental Authority Termination of

right to grow up as a free individual 55 PERSONS AND FAMILY RELATIONS Grounds for Suspension of Parental Authority (CLEBC; Art. 230-31 FC) 1. Convictio n of parent for crime punished w/ civil interdiction 2. Treats child with excess ive harassment and cruelty 3. Gives corrupting orders, counsel or example 4. Com pels child to beg 5. Subjects or allows acts of lasciviousness Parental Authorit y Permanently Terminates (Art. 228 FC) 1. Upon death of parents 2. Upon death of child 3. Upon emancipation of child 4. If the parents exercising parental author ity has subjected the child or allowed him to be subjected to sexual abuse (Art. 232 FC) Termination of parental authority which can be revived by final judgmen t (Art. 229 FC) 1. Upon adoption of the child; 2. Upon the appointment of a gener al guardian for the child; 3. Upon judicial declaration Duties of Children: Art. 357, NCC obey and honor his parents or guardian respect old relatives and persons holding substitute parental authority exert his utmost for his education and training cooperate with the family in matters for his own good Art. 4, PD603 strive to live an upright and virtuous life love, obey, respe ct his parents and cooperate with them in strengthening the family extend his lo ve to his brothers and sisters exert his utmost to develop his potentials IV. Rights and Duties of Children Art. 356, NCC parental care receive at least elementary education be given moral and civil training by parents or guardian live in an atmosphere conducive to his physical, moral, and intellectual development Art. 3, PD603 to be born well righ t to a wholesome family life right to a well-rounded development right to a bala nced diet, adequate clothing, shelter, proper medical attention, and all basic p hysical requirements of a healthy life raised in an atmosphere of morality and r ectitude education commensurate to his abilities full opportunities for a safe a nd wholesome recreation protection against exploitation and other bad influences right to the care, assistance and protection of the State right to an efficient and honest government

CIVIL LAW REVIEWER Chapter XIV. FUNERALS Chapter XIV. Funerals I. General Guidelines Art. 305, Civil Code. The duty and the right to make arrangements for the funera l of a relative shall be in accordance with the order established for support, u nder Article 294. In case of descendants of the same degree, or of brothers and sisters, the oldest shall be preferred. In case of ascendants, the paternal shal l have a better right. Art. 306, Civil Code. Every funeral shall be in keeping w ith the social position of the deceased. Art. 307, Civil Code. The funeral shall be in accordance with the expressed wishes of the deceased. In the absence of s uch expression, his religious beliefs or affiliation shall determine the funeral rites. In case of doubt, the form of the funeral shall be decided upon by the p erson obliged to make arrangements for the same, after consulting the other memb ers of the family. Art. 308, Civil Code. No human remains shall be retained, int erred, disposed of or exhumed without the consent of the persons mentioned in ar ticles 294 and 305. Art. 309, 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 damages, material and moral. Art. 310, Civil Code. The construc tion of a tombstone or mausoleum shall be deemed a part of the funeral expenses, and shall be chargeable to the conjugal partnership property, if the deceased i s one of the spouses. Guidelines in making funeral arrangements The persons who preferred in the right to make funeral arrangements may waive the right expressly or impliedly in which case the right and duty immediately descend to the person next in the order It must be in keeping with the social position of the deceased. Law shall prevail o ver the will of the persons who have the right to control the burial of deceased exhumation, evidential purpose, disposition of corpse by deceased, mutilation o f corpses and autopsies. Corpses which are to be buried at public expenses may a lso be used for scientific purposes under certain conditions. Expressed wishes o f the deceased is given priority provided that it is not contrary to law and mus t not violate the legal and reglamentary provisions concerning funerals and disp osition of the remains (time, manner, place or ceremony) In the absence of expre ssed wishes, his religious beliefs or affiliation shall determine the funeral ri ghts. In case of doubt, the persons in Art. 199 shall decide. Any person who dis respects the dead or interferes with the funeral shall be liable for material an d moral damages. 56 PERSONS AND FAMILY RELATIONS Duty and Right to make funeral arrangements (in relation to Art. 199 FC) 1. Spous e 2. Descendants in nearest degree 3. Ascendants in nearest degree 4. Brothers a nd sisters 5. Municipal authorities if there are no persons who are bound to sup port or if such persons are without means - end of Persons and Family Relations -

CIVIL LAW REVIEWER TABLE of CONTENTS SUCCESSION Table of Contents Chapter I. Concept of Succession................59 I. Definition of Succession ( Art. 774, CC) 59 II. Opening of Succession (Art. 777, CC) 59 III. Kinds of Succe ssion (Art. 778, CC) ....59 IV. Heirs .......................................... ..........60 Chapter II. Testamentary Succession ..........61 I. Concept ....... ........................................61 II. Testamentary Capacity ........... ............61 III. Formalities of Wills ..............................61 IV. Qu alifications of Witnesses to a Notarial Will 62 V. Qualifications of Witnesses t o a Notarial Will 63 VI. Institution of Heirs ...............................63 VII. Applicable Principles of Private International Law ........................ .................63 VIII. Codicils and Incorporation by Reference .............. ......................................64 IX. Revocation of Wills and Testamentar y Dispositions..................................................64 X. Allowance and Disallowance of Wills..65 XI. Substitution of Heirs ........................ ....66 XII. Legitimes.........................................67 XIII. Preteriti on........................................69 XIV. Reserva Troncal .............. ...............69 XV. Disinheritance .................................70 XVI. Le gacies and Devises.....................71 Chapter III. Intestate Succession..... .............74 I. Causes for Legal or Intestate Succession..................... ..............................74 II. The Intestate or Legal Heirs............... .74 III. Fundamental Underlying Principles in Legal or Intestate Succession..... .................74 IV. Relationship (Arts. 963-969, CC) ........75 V. The Right of Representation (Art. 970, CC) 75 VI. Order of Legal or Intestate Succession 76 VII. Concurrence in Legal or Intestate Succession............................ .......................77 VIII. Outline of Intestate Shares .............77 IX. Order of Concurrence in the Case of an Adopted Child (Art, 190, FC) ............ ...........78 Chapter IV. Provisions Common to Testamentary and Intestate Succes sion .....79 I. Accretion .............................................79 II. Ca pacity to Succeed ...........................80 III. Acceptance and Repudiation of Inheritance ...................................................81 IV. Collati on (Arts. 1061-1077, CC)..........81 Chapter V. Partition and Distribution of Es tate .............................................................. 83 I. Concep t of Partition ............................ 83 II. Effects of Partition......... ...................... 84 III. Nullification of Partition ...................... . 84 IV. Important Periods in Partition ............. 85 Chapter VI. Application of the Important Concepts through Sample Computational Problems................ ......................................... 86 I. Institution of Heirs ........... .................... 86 II. Legitimes........................................... .. 86 III. Intestate Succession........................... 87 IV. Accretion .... ......................................... 87 V. Collation ...................... ........................ 88 58 SUCCESSION

CIVIL LAW REVIEWER Chapter I. CONCEPT OF SUCCESSION Kristine Bongcaron Emil Lunasco Lead Writers Alex Lopez Writer SUCCESSION SUCCESSION TEAM Chapter I. Concept of Succession I. II. III. IV. DEFINITION OF SUCCESSION OPENING OF SUCCESSION KINDS OF SUCCESSI ON KINDS OF HEIRS 59 SUCCESSION CIVIL LAW Kristine Bongcaron Patricia Tobias Subject Editors I. Definition of Succession (Art. 774, CC) It is a mode of acquisition by virtue of which the property, rights and obli gations to the extent of the value of the inheritance, of a person are transmitt ed through his death to another or others either by his will, or by operation of law a process of transmission of property, rights, and obligations not extingui shed by death (Balane) ACADEMICS COMMITTEE Kristine Bongcaron Michelle Dy Patrich Leccio Editors-in-Chief PRINTING & DISTRIBUTION Kae Guerrero DESIGN & LAYOUT Pat Hernandez Viktor Fontanilla Rusell Aragones Romualdo Menzon Jr. Rania Joya II. Opening of Succession (Art. 777, CC) The rights to succession are transmitted from the moment of the death of the dec edent. However, a person may be presumed dead for the purpose of opening his succe ssion (Rules on presumptive death in Arts. 390-391, CC). In this case, successio n is only of provisional character because there is always a chance that the abs entee may still be alive. LECTURES COMMITTEE Michelle Arias Camille Maranan Angela Sandalo Heads Katz Manzano Mary Rose Beley Sam Nuez Krizel Malabanan Arianne Cerezo Marcr ese Banaag Volunteers MOCK BAR COMMITTEE Lilibeth Perez III. Kinds of Succession (Art. 778, CC) Testamentary (Art. 779, CC) - results from the designation of an heir made in a will Legal or intestate (Art. 960, CC) - takes place by operation of law in the absence of a valid will If a person dies without a will or with a void will or o

ne which has subsequently lost its validity; The suspensive condition attached t o the institution of heir does not happen or is not fulfilled or the heir dies b efore the testator or repudiates the inheritance, there being no substitution an d no right of accretion takes place When the heir instituted in incapable of suc ceeding, except in cases provided in this Code. Heir dies before the testator BAR CANDIDATES WELFARE Dahlia Salamat LOGISTICS Charisse Mendoza SECRETARIAT COMMITTEE Jill Hernandez Head Loraine Mendoza Faye Celso Mary Mendoza Joie Bajo Members

CIVIL LAW REVIEWER Chapter I. CONCEPT OF SUCCESSION

Testator repudiates the inheritance Mixed (Art. 780, CC) - effected partly by will and partly by operation of law 60 SUCCESSION IV. Heirs Those who are called to the whole or to an aliquot portion of the inheritance ei ther by will or by operation of law Compulsory Heirs those who succeed by force of law to some portion of the inheritance, in an amount predetermined by law kno wn as the legitime, of which they cannot be deprived by the testator, except by a valid disinheritance. They succeed regardless of a will. Voluntary or Testamen tary Heirs those who are instituted by the testator in his will, to succeed to t he portion of the inheritance of which the testator can freely dispose. They suc ceed by reason of a will. Legal or Intestate Heirs those who succeed to the esta te of the decedent who dies without a valid will, or to the portion of such esta te not disposed of by will. They succeed in the absence of a valid will, althoug h this is not the only ground for intestacy, as can be seen in Chapter III.

CIVIL LAW REVIEWER Chapter II. TESTAMENTARY SUCCESSION Chapter II. Testamentary Succession I. II. III. IV. V. VI. VII. Concept of Testamentary Succession Testamentary Capa city Formalities of Wills Qualifications of Witnesses to a Notarial Will Amendin g a Will Institution of Heirs Applicable Principles of Private International Law VIII. Codicils and Incorporation by Reference IX. Revocation of wills and Testa mentary disposition X. Allowance and Disallowance of wills XI. Substitution of H eirs XII. Legitimes XIII. Preterition XIV. Reserva Troncal XV. Disinheritance XV I. Legacies and Devices disease, injury or other cause. (Art. 799, CC) Soundness of mind is presumed (Ar t. 800, CC) III. Formalities of Wills Kinds of Wills 1. Notarial will- Ordinary or attested will (Arts. 804-808, CC) 2. Holographic will (Arts. 804 and 810, CC) 61 SUCCESSION Common Requirements for Both Kinds of Wills (Art. 804, CC) 1. Every will must be in writing; and 2. Executed in the language known to the testator. ____________ _ Specific Requirements for Notarial Wills (Asked in 75, 86, 90, 93, 07 and 08) 1. In riting (Art. 804, CC) 2. In the language known to the testator (Art. 804, CC) I. Concept Governing Law on Validity with Respect to the Time of Execution Aspect of the Will Formal Validity Governing Law Law in force at the time the will was executed (Art. 795, CC) Law of decedents na tionality at the time of his death (Art. 16 and 2263, CC) Intrinsic Validity 3. SUBSCRIPTION: Subscribed to, at the end (Art. 805, CC) a. By the testator him self; or b. By the testators name written by a representative in his presence and under his express direction. 4. ATTESTATION: Attested and subscribed by 3 or mo re credible witnesses in the presence of the testator and of one another (Art. 8 05, CC). GENERAL RULE The law presumes that every person is of sound mind EXCEPTION If wi thin one month before making a will the testator is known to be insane, the burd en of proof that he had a lucid interval is on the one alleging the validity of the will. II. Testamentary Capacity Requirements (SAP) Testator is of Sound mind at the time of execution (Art. 798, CC) Not under 18 years of Age (Art. 797, CC) Not expressly Prohibited by law to make a will (Art. 796, CC) Soundness of mindRules to remember: It is sufficient that the testator (NPC) o Knew the Nature of the estate to be disposed of; (N) o The Proper objects of his bounty; (P) o Character of the testamentary act (C) ( Art. 799, CC) It is not necessary that the testator be in full possession of all his reasoning faculties, or that his mind be wholly unbroken, unimpaired, or un shattered by

Supervening incapacity will not invalidate the will. Supervening capacity will a lso not validate the will. (Art. 801, CC) The attestation clause shall state the ff: Number of pages; The fact that the testator or his representative under his express direction signed the will and every

CIVIL LAW REVIEWER Chapter II. TESTAMENTARY SUCCESSION

page in the presence of instrumental witnesses That the witnesses signed the wil l and all its pages in the presence of the testator and of one another. would be in contravention of Arts. 805 and 806. _____________ Special Requiremen ts for Notarial Wills 1. Deaf Mute (Art. 807, CC) a. Testator must personally rea d the will; or b. Testator shall personally designate two persons to read the co ntents and communicate it to him in some practicable manner. 2. Blind (Art. 808, CC) a. The will shall be read to the testator twice - By one of the subscribing witnesses and by the notary public acknowledging the will. b. In the case of Ga rcia vs. Vasquez (1970), the court considered a testator suffering from Glaucoma as legally blind. _____________ Requisites for a Holographic Will 1. In writing (Art. 804, CC) 2. In a language known to the testator (Art. 804, CC) 3. Entirely written, dated and signed in the hand of the testator himself (Art. 810, CC) 5. MARGINAL SIGNATURES: Testator or his representative shall write his name, and the witnesses shall sign each and every page except the last page (Art. 805, CC ) Exceptions: When the will consists of only one page Abangan vs. Abangan, (1919 ): When the will consists of only two pages, the first of which contains all dis positions and is signed at the bottom by the testator and the witnesses, and the second page contains only the attestation clause duly signed at the bottom by t he witnesses. In the case of Matias vs. Salud (1957), the use of thumbprint was allowed. Icasiano vs. Icasiano, (1964): The inadvertent failure of one witness t o affix his signature to one page of a testament, due to the simultaneous liftin g of two pages in the course of signing, is not per se sufficient to justify den ial of probate. IV. Qualifications of Notarial Will Witnesses to a

Qualifications (Art. 820, CC) 1. Of sound mind 2. Aged 18 years or over 3. Not bl ind, deaf or dumb 4. Able to read and write Disqualifications (Art. 821, CC) 1. P erson not domiciled in the Philippines 2. Those who have been convicted falsific ation, perjury, or false testimony. of 6. PAGE NUMBERINGS: Numbered correlatively (Art. 805, CC), i.e., Page One of Fiv e pages 7. Acknowledged before a notary public by the testator and the witnesses (Art. 806, CC) In the case of Cruz vs. Villasor (1973) the court ruled that the Notary public cannot be considered a third witness. He cannot acknowledge befor e himself his having signed the will. To allow such would have the effect of hav ing only two attesting witnesses to the will which Interested witness (Art. 823, CC) General Rule Devises or legacies in favor of a spouse, parent or child who also attests to the will as a witness shall be void Exception If there are three othe r competent witnesses, the device or legacy shall be valid and the interested wi tness shall be treated as a mere surplasage

Creditors are not incompetent to be witnesses (Art. 824, CC) Supervening incompe tency shall not prevent the allowance of the will (Art. 822, CC) SUCCESSION

62 Test of Presence: Jaboneta vs. Gustilo, (1906): Not whether they actually saw ea ch other sign, but whether they might have seen each other sign had they chosen to do so considering their mental and physical condition and position with relat ion to each other at the moment of inscription of each signature.

CIVIL LAW REVIEWER Chapter II. TESTAMENTARY SUCCESSION V. Qualifications of Notarial Will Witnesses to a 6. Only the free portion can be disposed of by institution. Notarial Will v. Holographic Will Notarial Will NOTARIAL codicil ONLY Holographic WIll Notarial Codicil; or Hologr aphic Codicil; or Additional dispositions below the signature, dated and signed in the hand of the testator.

Codicil (Art. 825, CC)- it is a supplement or addition to a will, made AFTER the execution and annexed to be taken as part thereof, by which any disposition mad e in the original is explained, added to, or altered. Three principles in institution of heirs 1. Equality of heirs (Art. 846, CC) a. H eirs instituted without designation of shares shall inherit in equal parts b. NO TE: This applies even to institution of full and half-blood siblings. 2. Individ uality of institution (Art. 847, CC) Example: I designate A, B, and the children of C. Unless otherwise stated, if C has two children, the estate will be distri buted in four equal parts. 3. Simultaneity of institution (Art. 849, CC) Example : I designate my brother A and his children. A and his children will inherit at the same time, unless otherwise expressly stated that they will inherit successi vely. Institution based on a false cause (Art. 850, CC) GENERAL RULE EXCEPTION Fa lse cause is If the testator would considered not written not have made the and the institution will institution had he take effect known the false cause, the i nstitution would NOT take effect Example: I designate A to half of the estate ON LY because he is the husband of my daughter. Note that the reliance on the false cause must be clear and unmistakable. Effect of insertion written by another person on the validity of a holographic w ill) When made After the execution, without consent of testator After execution, with consent After execution, validated by testators signature Effect Insertion consi dered not written. Validity cannot be defeated by the malice or caprice of a thi rd person Will is valid, insertion is void. Insertion becomes part of the will. Entire will becomes void because it is not wholly written by the testator. Will is void because it is not written entirely by the testator Contemporaneous to the execution of the will VI. Institution of Heirs (Asked in 94, 05, 06, and 08) Definition (Art. 841, CC) It is an act by virtue of wh ich a testator designates in his will the persons who are to succeed him. Requis ites for a valid institution 1. Testator has capacity to make the institution 2. The institution is made in a will 3. Institution is made personally by the testa tor and is not left to a third person 4. Persons instituted must be identified o r identifiable 5. There must be no preterition of compulsory heirs VII. Applicable Principles International Law of Private

Governing Law As to Time of Execution of Will Aspect of the Will Formal Validity Intrinsic Validity Governing Law Law in force at the time the will was made Law of decedents nationality at the time of his de ath (Art. 16, CC) SUCCESSION A voluntary heir who dies before the testator or proves to be incapacitated tran smits nothing to his heirs (Art. 851, CC) 63

CIVIL LAW REVIEWER Chapter II. TESTAMENTARY SUCCESSION Governing Law as to Place of Execution of Will Testator Place of Execution of Will Philippines Outside of Philippines Filipino the Governing Law Philippine Law (Art. 16, CC) 1. Law of the country in which it is executed (Art. 17, CC); or 2. Philippine Law (Art. 815, CC) 1. Philippine La w; or 2. Law of the country of which testator is a citizen or subject (Art. 817, CC) 1. Law of the place where the will is executed (Art. 17, CC); or 2. Law of the place where the testator resides; or 3. Law of the testators country; or 4. P hilippine Law (Art. 816, CC) made in consideration of each other. Such is prohibited under Art. 819, CC. Proh ibition is applicable only to joint wills executed by Filipinos. 64 SUCCESSION VIII. Codicils and Reference Incorporation by Alien Philippines Outside of Philippines the Codicil (Arts. 825-826, CC) 1. It is a supplement or addition to a will, 2. made after the execution of a will, 3. and annexed to be taken as a part of the will, 4. by which any disposition made in the original will is explained, added to, o r altered. 5. in order that it may be effective, it shall be executed as in the case of a will. Incorporation by Reference; Requisites (Art, 827, CC) 1. The docu ment or paper referred to in the will must be in existence at the time of the ex ecution of the will. 2. The will must clearly describe and identify the same, st ating among other things the number of pages thereof. 3. It must be identified b y clear and satisfactory proof as the document or paper referred to therein; and 4. It must be signed by the testator and the witnesses on each and every page, except in case of voluminous books of account or inventories. Aspects of the Will Governed by the National Law of the Decedent 1. Order of succ ession; 2. Amount of successional rights; 3. Intrinsic validity of testamentary provisions; and 4. Capacity to succeed. Joint Will 1. A single testamentary instr ument, 2. Which contains the wills of two or more persons, 3. Jointly executed b y them, 4. Either for their reciprocal benefit or for the benefit of a third per son. Mutual Wills 1. Executed pursuant to an agreement between two or more person s, 2. Jointly executed by them, 3. Either for their reciprocal benefit or for th e benefit of a third person. Reciprocal Wills 1. Testators name each other as ben eficiaries in their own wills, 2. under similar testamentary plans Note: A will that is both joint and mutual is one executed jointly by two or more persons, th e provisions of which are reciprocal and which shows on its face the devises are IX. Revocation of Wills Testamentary Dispositions and

Modes of Revocation (Art. 830, CC) 1. By implication of law; or 2. By the executi on of a will, codicil or other writing executed as provided in the case of wills ; or 3. By burning, tearing, canceling, or obliterating the will with the intent ion of revoking it, by the testator himself, or by some other person in his pres ence, and by his express direction. Note: The act contemplating revocation must be done at any time before the death of the testator. The right of revocation ca nnot be waived or restricted. (Art. 828, CC)

CIVIL LAW REVIEWER Chapter II. TESTAMENTARY SUCCESSION Law Governing Revocation (Art. 829, CC) Place of Revocation Philippines Testators Domicile Philippines, or some other country Philippines Governing Law Philippine Law extrinsic validity of such wills may be examined. Exceptions: a. Acain vs Diongs on (1987): When the will is intrinsically void, on its face such that to rule on its formal validity would be a futile exercise b. Valera vs. Inserto, (1987): C laimants are all heirs, and they consent, either, expressly or impliedly, to the submission of the question of intrinsic validity to the court. c. Pastor vs. CA , (1983): Probate court may pass upon the title thereto, but such determination is provisional and not conclusive, and is subject to the final decision in a sep arate action to resolve title. Matters to be Proved in Probate 1. Whether the ins trument which is offered for probate is the last will and testament of the deced ent 2. Whether the will has been executed in accordance with the formalities pre scribed by law 3. Whether the testator had testamentary capacity at the time of execution of the will Grounds for Disallowance of Will (Art. 839, CC; Rule 76, S ec 9) (SUM IFF) 1. If the Signature of the testator was procured by fraud; 2. If it was procured by Undue and improper pressure and influence, on the part of the beneficiary or some other person; 3. If the testator acted by Mistake or did no t intend that the instrument he signed should be his will at the time affixing h is signature thereto; 4. If the testator was Insane or otherwise mentally incapa ble of making a will at the time of its execution; 5. If the Formalities require d by law have not been complied with; or 6. If it was executed through Force or under duress, or the influence of fear, or threats. Note: This list on the groun ds for disallowance of will is exclusive. Revocation v. Disallowance Revocation Voluntary Act of the Testator With or Without Cause Disallowance Give n by Judicial Decree Must always be for a legal cause 65 SUCCESSION Foreign Country Outside the Philippines Philippine Law 1. Law of the place where the will was made; or 2. Law of the pla ce in which the testator had his domicile at the time of revocation Doctrine of Dependent Relative Revocation Molo vs. Molo, (1951): The rule that wh ere the act of destruction is connected with the making of another will so as to fairly raise the inference that the testator meant the revocation of the old to depend upon the efficacy of the new disposition intended to be substituted, the revocation will be conditional and dependent upon the efficacy of the new dispo sition; and if for any reason, the new will intended to be made as a substitute is inoperative, the revocation fails and the original will remain in full force. X. Allowance and Disallowance of Wills Probate It is a Special Proceeding required to establish the validity of a will a nd in order to pass real or personal property (Art. 838, CC) Mercado vs. Santos (1938): The probate of a will by the probate court having jurisdiction thereof i s usually considered as conclusive as to its due execution and validity, and is also conclusive that the testator was of sound and disposing mind at the time wh en he executed the will, and was not acting under duress, menace, fraud, or undu e influence, and that the will is genuine and not a forgery. General Rule: In pr obate proceedings, the probate court cannot inquire into the intrinsic validity

of testamentary provisions. Only the

CIVIL LAW REVIEWER May be partial or total Always total, except when the ground of fraud of influence for example affects only certain portions of the will Chapter II. TESTAMENTARY SUCCESSION XI. Substitution of Heirs Definition of Substitution (Art. 857, CC) 1. It is the appointment of another hei r, 2. So that he may enter into the inheritance in default of the heir originall y instituted. Classes of Substitution 1. Simple or Common: The testator may desig nate one or more persons to substitute the heir/s instituted in case the heirs s hould: a. die before him (predecease), b. should not wish to accept the inherita nce (repudiation), or c. should be incapacitated to accept the inheritance (inca pacitated). (Art. 859, CC) 2. Brief or Compendious (Art. 860, CC) a. Brief Two o r more persons were designated by the testator to substitute for only one heir b . Compendious One person is designated to take the place of two or more heirs 3. Reciprocal If the heirs instituted in unequal shares should be reciprocally sub stituted, the substitute shall acquire the share of the heir who dies, renounces , or is incapacitated, unless it clearly appears that the intention of the testa tor was otherwise. If there is more than one substitute, they shall have the sam e share in the substitution as the institution. Example (only 1 substitute): If two heirs are reciprocally substituted, then if one of them dies before the test ator dies, renounces, or turns out to be incapacitated, the other will get his s hare, regardless of whether or not their shares are equal. Example (more than 1 substitute): A is instituted to 1/3, B to 1/6, and C to . If C dies before the te stator, renounces or turns out to be incapacitated, then the other two will get his shares in the same proportion as in the institution. A will get twice as muc h as B (because his share of 1/3 in the institution is twice the size of Bs share of 1/6) Requisites of a Fideicommisary Substitution (Arts. 863-865, CC) 1. A Fiduciary or First Heir instituted is entrusted with the obligation to preserve and to trans mit to a Fideicommissary Substitute or Second Heir the whole or part of the inhe ritance. 2. The substitution must not go beyond one degree from the heir origina lly instituted. 3. The Fiduciary Heir and the Fideicommissary are living at the time of the death of the testator. 4. The fideicommissary substitution must be e xpressly made. 5. The fideicommissary substitution is imposed on the free portio n of the estate and never on the legitime Note: a. Palacios vs. Ramirez (1982): D egree refers to degree of relationship. b. PCIB vs. Escolin (1974): In the absenc e of an obligation on the part of the first heir to preserve the property for th e second heir, there is no fideicommissary substitution. Effects of predecease o f heir/fiduciary or the heir/fideicommisary the first second Legend: T Testator FH First Heir / Fiduciary SH Second Heir / Fideicommissary Su bstitute Situation 1: If the following is the sequence of death of the three par ties: FH SH T, who will inherit? The legal heirs. There is no fideicommissary su bstitution because FH and SH are not living at the time of the testators death. ( Art 863, CC) Situation 2: T SH FH, who will inherit? The SH and his heirs under Art. 866, CC. This is because the SH passes his rights to his own heirs when he dies before FH.

SUCCESSION 4. Fideicommissary If the testator institutes an heir with an obligation to pres erve and to deliver to another the property so inherited. The heir instituted to such condition is called the First Heir or the Fiduciary Heir; the one to recei ve the property is the fideicommissary of the second heir. (Art. 863, CC)

66

CIVIL LAW REVIEWER Chapter II. TESTAMENTARY SUCCESSION

Situation 3: FH T SH, who will inherit? No specific provision in law, but SH inh erits because the T intended him to inherit. XII. Legitimes Definition of Legitime (Art. 886, CC) 1. It is that part of the testators property which he cannot dispose of, 2. Because the law has reserved it for his compulso ry heirs. Classes of Compulsory Heirs (Art. 887, CC) 1. Primary: Those who have p recedence over and exclude other compulsory heirs: Legitimate Children and Legit imate Descendants with respect to their Legitimate Parents and Ascendants 2. Sec ondary: Those who succeed only in the absence of the Primary compulsory heirs: a . Legitimate Parents and Legitimate Ascendants, with respect to their Legitimate Children and Descendants. (They will inherit only in default of legitimate chil dren and their descendants) b. Illegitimate Parents with respect to their Illegi timate Children. (They will inherit only in default of the illegitimate and legi timate children and their respective descendants). Note that other illegitimate ascendants are not included. 3. Concurring: Those who succeed together with the primary or the secondary compulsory heirs: a. Widow or Widower / Surviving Spous e (Legitimate) b. Illegitimate Children and Illegitimate Descendants If the testator is a LEGITIMATE CHILD: 1. LC and descendants 2. In default of No . 1, LP and ascendants 3. SS 4. IC and descendants If the testator is an ILLEGIT IMATE CHILD: 1. LC and descendants 2. ILC and descendants 3. In default of Nos. 1-2. ILP only 4. SS Specific Rules on Legitimes 1. Direct Descending Line a. Rule of Preference betwe en lines (Art 978 and 985, CC) Those in the direct descending line shall exclude those in the direct ascending and collateral lines; and Those in the direct asc ending line shall, in turn, exclude those in the collateral line. b. Rule of Pro ximity (Art 926, CC) The relative nearest in degree excludes the farther one c. Right or representation ad infinitum in case of predecease, incapacity, or disin heritance (Art 972 and 992, CC) For decedents who are Legitimate Children, only the Legitimate Descendants are entitled to right of representation. For decedent s who are Illegitimate Children, both the Legitimate and the Illegitimate Descen dants can represent, only with respect to the decedents illegitimate parents. d. If all the Legitimate Children repudiate their legitime, the next generation of Legitimate Descendants may succeed in their own right. 2. Direct Ascending Line a. Rule of division between lines The father and the mother shall inherit equall y if both living. One succeeds to the entire estate of the child if the other is dead. (Art. 986, CC) In default of the mother and the father, the ascendants ne arest in degree will inherit. (Art. 987) If there are more than one relative of the same degree but of different lines, one half will go to the paternal ascenda nts and the other half to the maternal ascendants. (Art. 987) b. Rule of equal d ivision The relatives who are in the same degree shall inherit in equal shares. (Art 987) 67 SUCCESSION Legend: LC Legitimate Children ILC Illegitimate Children SS Surviving Spouse LP Legitimate Parents ILP Illegitimate Parents

CIVIL LAW REVIEWER Chapter II. TESTAMENTARY SUCCESSION 5 6 1 LC, SS, ILC 2 or more LC, SS, ILC LP alone LP, ILC LP, SS LP, SS, ILC ILC alon e (divided by # of children) (preferred) Same as share of 1 LC share of 1 LC share of 1 LC share of 1 LC 7 8 9 10 11 1/8 12 ILC, SS 1/3 (divided by # of children) 1/3 (divided by # of children) 13 SS alone or if marriage in articulo mortis 1/3 1/3 1/3 1/3 14 15 16 ILP alone ILP, SS Adopter, ILC, SS (adopter) Steps in Determining the Legitime of Compulsory Heirs 1. Determine the gross valu e of the estate at the time of the death of the testator. 2. Determine all debts and charges which are chargeable against the estate. 3. Determine the net value of the estate by deducting all the debts and charges from the gross value of th e estate. 4. Collate or add the value of all donations inter vivos to the net va lue of the estate. 5. Determine the amount of the legitime from the total thus f ound. 6. Impute the value of all donations inter vivos made to strangers against the disposable free portion and restore it to the estate if the donation is ino fficious. 7. Distribute the residue of the estate in accordance with the will of the testator. Note: Please see the Illustrative Integrative Problems in Chapter VI for the application of these steps. Remedy of a Compulsory Heir in case of Impairment of Legitime Extent and Nature of Impairment Total omission of a compulsory heir who is a dir ect descendant or ascendant (preterition) Testamentary dispositions impairing or diminishing the legitime Partial impairment Impairment by inofficious donations Remedy Annulment of institution and reduction of legacies and devises (Art. 854

, CC) Reduction of the disposition insofar as they may be inofficious or excessi ve (Art. 907, CC) Completion of the legitime (Art. 906, CC) Collation reduction of donations (Arts. 771 and 911, CC) SUCCESSION

Summary of Legitimes of Compulsory Heirs (Asked in 82, 85, 86, 97, 99, 03, and 05) Su ving LC & SS Relatives Descendants 1 LC alone (divided by # of children) 2 1 LC, SS 3 LC, SS (divided by # Same as of children) share of 1 LC 4 LC, ILC ILC LP & Ascendants ILP 68

CIVIL LAW REVIEWER Chapter II. TESTAMENTARY SUCCESSION XIII. Preterition (Asked in 88, 99, 00, 01 and 08) A. Concept of Preterition (Art. 854, CC) 1. There mu st be a total omission of one, some or all of the heir/s in the will. 2. 2. The omission must be that of a compulsory heir. 3. 3. The compulsory heir omitted mu st be of the direct line. 4. The omitted compulsory heir must be living at the t ime of the testators death or must at least have been conceived before the testat ors death. B. Effects of Preterition (Art. 854, CC) 1. The institution of the hei r is annulled. 2. Devises and legacies shall remain valid as long as they are no t inofficious. 3. If the omitted compulsory heir should die before the testator, the institution shall be effective, without prejudice to the right of represent ation. Neri vs. Akutin (1941): When there are no devises and legacies, preteriti on will result in the annulment of the will and give rise to intestate successio n. C. Reserva Minima v. Reserva Maxima Situation 1. The prepositus acquired property gratuitously from an ascendant or a brother or sister 2. In his will, he instit utes as his heir his ascendant (who is also a compulsory heir) such that the asc endant receives half of the estate by operation of law as legitime and the other half by testamentary disposition Problem Will the property acquired gratuitiousl y by the prepositus from the source be treated as acquired by the ascendant-heir by operation of law (legitime) and therefore reservable or by testamentary disp osition? Two Views 1. Reserva Maxima: The entire property will be considered acqu ired as legitime and therefore wholly reservable 2. Reserva Minima: One half is reservable, the other half is not subject to reserva troncal (Tolentino, p. 284) ___________ D. Extinguishment of the Reserva (Tolentino, p. 300-305) (LDD-RRP) 1. Loss of the reservable property 2. Death of the reservista 3. Death of all th e relatives within the third degree belonging to the line from which the propert y came 4. Renunciation by the reservatorios 5. Registration of the reservable pr operty under the Torrens system as free 6. Prescription, when the reservista hol ds the property adversely against the reservatorios, as free from reservation XIV. Reserva Troncal (Asked in 79, 82, 85, and 87) A. Concept of Reserva Troncal (Art. 891, CC) Situation 1. A descendant (prepositus) inherits or acquires property from an ascendant (so urce) by gratiutious title or from a brother or sister 2. The same property is i nherited by another ascendant (reservista) or is otherwise acquired by him by op eration of law from the said descendant (prepositus) Then an obligation arises Th e said ascendant (reservista) must reserve the property for the benefit of the r elatives of the deceased descendant within the third civil degree and who belong to the line from which the said property came (reservatorios). ___________ B. R equisites for Reserva Troncal (Chua vs. CFI and Gonzales vs. CFI) 1. That the pr operty was acquired by a descendant (Prepositus) from an ascendant SUCCESSION or from a brother or sister (Source) by gratuitous title, 2. That the Prepositus died without an issue, 3. That the property is inherited by another ascendant ( Reservista) by operation of law, and rd 4. That there are relatives within the 3 degree (Reservatarios) belonging to the line from which said property came. ___ ________ 69

CIVIL LAW REVIEWER Chapter II. TESTAMENTARY SUCCESSION XV. Disinheritance (Asked in 82, 84, 99, 00, and 08) A. 1. 2. 3. Definition of Disinheritance (Art. 915, CC) It is the act by which the testator For just cause Deprives a compulsory he ir of his right to the legitime. 2. 3. 4. 5. B. Requisites of a Valid Disinheritance 1. Heir disinherited must be designated by name or in such a manner as to leave no 6. 7. ________________________________________________________________________________ _ C. Summary of Causes of Disinheritance Grounds for Disinheritance Guilty or Co nvicted of Attempt Against the Life of the Testator, Spouse, Ascendant or Descen dant Accused Testator or Decedent of Crime Punishable by Imprisonment of 6 years or more, and Found Groundless or False Causes testator or decedent to Make a Wi ll or Change one by Fraud, Violence, Intimidation, or Undue Influence Unjustifie d Refusal to Support Testator Convicted of Adultery or Concubinage with Spouse o f Testator or Decedent Maltreatment of testator by Word and Deed Leading a Disho norable or Disgraceful Life Conviction of Crime which carries the penalty of Civ il Interdiction Abandonment of Children or Inducing Children to Live Corrupt and Immoral Life or Against Attempted Virtue Loss of Parental Authority Attempt by One Parent Against the Life of the Other UNLESS there is Reconciliation Between Parents Spouse Has Given Cause for Legal Separation Failure to Report Violent De ath of Decedent Within One Month UNLESS Authorities Have Already Taken Action Fo rce, Violence, Intimidation, or Undue Influence to Prevent Another from Making a Will or Revoking One Already Made or Who Supplants or Alters the Latters Will Fa lsifies or Forges Supposed Will of the Decedent Art, 919, CC: Children and Desce ndants Art. 920, CC: Parents and Ascendants Art. 921, CC: Spouse Art. 1032, CC: Unworthiness 919 * * * * * * * * * * * * * * * * 920 * * * * * 921 * * * * * 103 2 * * * 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 * D. Modes of Revocation 1. Reconciliation (Art 922, CC) 2. Subsequent institution of the disinherited heir 3. Nullity of the will which contains the disinheritan ce. Note: The moment that testator uses one of the acts of unworthiness as a cau se for disinheritance, he thereby submits it to the rules on disinheritance. Thus, reco nciliation renders the disinheritance ineffective. SUCCESSION room for doubt as to who is intended to be disinherited. It must be for a cause designated by law. It must be made in a valid will. It must be made expressly, s tating the cause in the will itself. The cause must be certain and true, and mus t be proved by the interested heir if the person should deny it. It must be unco nditional. It must be total. 70

CIVIL LAW REVIEWER Chapter II. TESTAMENTARY SUCCESSION XVI. Legacies and Devises Legacy and Devise Distinguished LEGACY A gift of personal property given in a will It is bequeathed DEVISE A gif t of real property given in a will It is devised belonged to him The thing bequeathed afterwards becomes his by whatever title Effective Persons Charged With the Duty to Give Legacies and Devises in a Will 1. Compulsor y heir, provided, their legitimes are not impaired (Art. 925, CC) 2. Voluntary h eir 3. Legatee or devisee can be charged with the duty of giving a sub-legacy or subdevisee but only to the extent of the value of the legacy or devise given hi m (Art. 925, CC) 4. The estate represented by the executor or administrator, if no one is charged with this duty to pay or deliver the legacy or devise in the w ill a. If there is an administration proceeding, it constitutes a charge upon th e estate. b. If there is no administration proceeding, it is a charge upon the h eirs. Validity and Effect of Legacy or Devise Legacy or devise of a thing belonging to another (Art. 930, CC) STATUS OF PROPERTY GIVEN BY LEGACY/DEVISE Testator errone ously believed that the property EFFECT ON THE LEGACY/ DEVISE Void STATUS OF PROPERTY GIVEN BY LEGACY/DEVISE The thing already belongs to the legat ee or devisee at the time of the execution of the will (Art. 932, CC) The thing is subject to an encumbrance or interest of another person (Art. 932, CC) Legate e or devisee subsequently alienates the thing (Art. 933,CC) After alienating the thing, the legatee or devisee subsequently reacquires it gratuitously (Art. 933 , CC) After alienating the thing, the legatee or devisee acquires it by onerous title (Art. 933, CC) EFFECT ON THE LEGACY/DEVISE Ineffective Valid only as to the interest or encumbrance Ineffective Ineffective Legatee or devisee can demand reimbursement from the heir or estate SUCCESSION Legacy or devise of thing already belonging to the legatee or devisee 71

CIVIL LAW REVIEWER Chapter II. TESTAMENTARY SUCCESSION OBJECTS OF LEGACY OR DEVISE Thing pledged or mortgaged to secure a debt Credit o r remission or release of a debt EFFECT Estate is obliged to pay the debt Other charges pass to the legatee or de visee Effective only as regards the credit or debt existing at the time of the t estators death Legacy lapses if the testator later brings action against the debt or If generic, comprises all credits/debts existing at time of execution of will Only the pledge is extinguished; the debt remains Shall not be applied to his c redit unless the testator so declares If testator does not really owe the debt, the disposition is void If the order is to pay more that the debt, the excess is not due This is without prejudice to the payment of natural obligations The cho ice is with the heir, or the executor or administrator If the heir, legatee or d evisee dies the right passes to their heirs Once made, the choice is irrevocable Legacy is valid even if there are no things of the same kind in the estate Devi se of indeterminate real property valid only if there are immovable property of the same kind in the estate The choice belongs to the heir, legatee or devisee o r the executor or administrator Lasts until the legatee is of age or beyond the age of majority in order that he may finish some professional, vocational or gen eral course provided he pursues his course diligently If testator did not fix th e amount it is fixed in accordance with the social standing and circumstances of the legatee and the value of the estate Lasts during lifetime of legatee If the testator used to give the legatee a sum of money for support, give the same amo unt unless it is markedly disproportionate to the estate If testator did not fix the amount it is fixed in accordance with the social standing and circumstances of the legatee and the value of the estate Thing pledged by debtor To a creditor Order of payment of a debt

Alternative legacies and devises

Legacy of generic personal property or indeterminate real property Legacy of education

Legacy of support SUCCESSION Different Objects of Legacies and Devises (Art. 934-944,CC) 1. Legacy of a thing pledged or mortgaged to secure a debt (Art 934, CC) 2. Legacy of credit, or remi ssion or release of a debt (Art 935 CC) 3. Legacy to the debtor of thing pledged by him (Art 936, CC) 4. Legacy or devise to a creditor if the testator orders t he payment of a debt (Art 939, CC) 5. Alternative legacies and devises (Art 940, CC) 6. Legacy of generic personal property or indeterminate real property (Art 941, CC) 7. Legacy of education (Art 944, CC) 8. Legacy of support (Art 944, CC) 72

CIVIL LAW REVIEWER Chapter II. TESTAMENTARY SUCCESSION Order of Payment In Case the Estate Is Not Sufficient to Cover All the Legacies and Devises ART. 911 Order of Preference (LIPO) Legitime of compulsory heirs Dona tions Inter vivos Preferential legacies or devises All Other legacies or devises pro rata ART. 950 Order of Preference (RPSESO) Remuneratory legacy/devise Prefe rential legacy/devise Legacy for Support Legacy for Education Legacy/devise of S pecific, determinate thing which forms a part of the estate All Others pro rata Application: When there are no compulsory heirs and the entire estate is distrib uted by the testator as legacies or devises; or When there are compulsory heirs but their legitime has already been provided for by the testator and there are n o donations inter vivos. NOTE: Art. 950, CC governs when the question of reducti on is exclusively among legatees and devisees themselves. Application: When the reduction is necessary to preserve the legitime of compuls ory heirs from impairment whether there are donations inter vivos or not; or Whe n, although, the legitime has been preserved by the testator himself there are d onations inter vivos.

NOTE: Art. 911, CC governs when there is a conflict between compulsory heirs and the devisees and legatees. How Legacy or Devise Delivered (Art. 951, CC) 1. The very thing bequeathed shall be delivered and not its value 2. With all its accessions and accessories 3. In the condition in which it may be upon the death of the testator 4. Legacies of m oney must be paid in cash Ground for Revocation of Legacies and Devises (Art. 95 7, CC) (TALO) 1. Testator Transforms the thing such that it does not retain its o riginal form or denomination 2. Testator Alienates the thing by any title or for any cause. Reacquisition of the thing by the testator does not make the legacy or devise valid, unless it is effected by right of repurchase. 3. Thing is total ly Lost during the lifetime or after the death of the testator 4. Other causes: nullity of will, non-compliance with suspensive condition, sale of the thing to pay the debts of the deceased during the settlement of his estate. SUCCESSION

73

CIVIL LAW REVIEWER Chapter III. INTESTATE SUCCESSION Chapter III. Intestate Succession I. Causes for Legal or Intestate Succession II. The Intestate or Legal Heirs III . Fundamental Underlying Principles in Legal or Intestate Succession IV. Relatio nship V. The right of Representation VI. Order of Legal or Intestate Succession VII. Concurrence in Legal or Intestate Succession VIII. Outline of Intestate Sha res IX. Order of Concurrence in the case of an Adopted Child The Civil Code does not state a definition of legal or intestate succession. Art . 960 only enumerates the instances when legal succession takes place. This enum eration is not exclusive, as there are other instances where intestacy may occur , as listed below. Note: In all cases where there has been an institution of heirs, follow the I.S. R.A.I order: a. If the Institution fails, Substitution occurs. b. If there is no substitute, the right of Representation applies in the direct descending line t o the legitime if the vacancy is caused by predecease, incapacity, or disinherit ance. c. The right of Accretion applies to the free portion when the requisites in Art. 1016 are present. d. If there is no substitute, and the right of Represe ntation or Accretion are not proper, the rules on Intestate succession shall app ly. 74 SUCCESSION II. The Intestate or Legal Heirs 1. Relatives a. Legitimate ascendants b. Illegitimate parents c. Legitimate chil dren d. Illegitimate children e. Surviving Spouse f. Brothers, sisters, nephews and nieces (BSNN) g. Other collateral relatives 2. Surviving spouse 3. State (th rough escheat proceedings) I. Causes for Succession Legal or Intestate 1. If a person dies without a will (Art 960[1]) 2. If a person dies with a void will (Art 960[1]) 3. If a person dies with a will which has subsequently lost it s validity (Art 960[1]) 4. When the will does not institute an heir (Art 960[2]) 5. When the will does not dispose of all the property belonging to the testator . Legal succession shall take place only with respect to the property which the testator has not disposed (Art 960[2]) 6. If the suspensive condition attached t o the institution of the heir does not happen or is not fulfilled (Art 960[3]) 7 . If the heir dies before the testator (Art 960[3]) 8. If the heir repudiates th e inheritance, there being no substitution, and no right of accretion takes plac e (Art 960[3]) 9. When the heir instituted is incapable of succeeding, except in cases provided in the Civil Code (Art 960[4]) 10. Preterition Intestacy may be total or partial depending on whether or not there are legacies or devises (Bala ne, p.426) 11. Upon the expiration of a resolutory term attached to the institut ion of heir (Balane, p.426) 12. Upon fulfillment if a resolutory condition attac hed to the institution of heir, rendering the will ineffective (Balane, p.426)

III. Fundamental Underlying Principles in Legal or Intestate Succession Rule of Preference between Lines 1. Those in the direct descending line shall exc lude those in the direct ascending and collateral lines; 2. Those in the direct ascending line shall, in turn, exclude those in the collateral line. Rule of Pro ximity The relative nearest in degree excludes the farther one. (Art. 962, par.1 CC), saving the right of representation when it properly takes place. Rule of Eq ual Division 1. The relatives who are in the same degree shall inherit in equal s hares. (Arts. 962 par.2, 987 and 1006, CC) 2. Exceptions: (Balane pp.427-428) a. the rule of preference of lines b. the distinction between legitimate and illeg itimate filiation (the ratio under present law is 2:1) (Art 983, in relation to Article 895 as amended by Article 176 FC)

CIVIL LAW REVIEWER Chapter III. INTESTATE SUCCESSION c. Rule of Barrier between the legitimate family and the illegitimate family (the i ron-curtain rule) The illegitimate family cannot inherit by intestate succession from the legitimate family and viceversa. (Art. 992, CC) Rule of Double Share fo r full blood collaterals When full and half-blood brothers or sisters, nephews or nieces, survive, the full blood shall take a portion in the inheritance double that of the half-blood. (Arts. 895 and 983, CC) Note: 1. If one of the legitimat e ascendants, illegitimate parents, legitimate children or illegitimate children survives, the brother, sisters, nephews, and nieces (BSNN) are excluded 2. If o ne of the legitimate ascendants, illegitimate parents, legitimate children, ille gitimate children or surviving spouse survives, the other collateral relatives a nd the state are excluded. 3. If any of the heirs concur in legitimes, then they also concur in intestacy.

V. The Right of Representation (Art. 970, CC) (Asked in 77, 82, 85, 88, 92, 97, and 07) It is a right created by fiction of la irtue of which the representative is raised to the place and degree of the perso n represented; And acquires the rights which the latter would have if he were li ving or if he would have inherited. Important Concepts Representation is only allowed with respect to inheritance con ferred by law (i.e., as to legitimes and intestate shares [ Art 923, CC]), in ca ses of incapacity, disinheritance, and predecease of an heir. There is no repres entation in voluntary succession (by will). (Art 856, CC) There is also no repre sentation in repudiation. Note, however that a renouncer can represent, but cann ot be represented. Representation takes place ad infinitum in the direct descend ing line but never in the direct ascending line. ( Art 972, CC) In the collatera l line, representation takes place only in favor of the children of the brothers or sisters (i.e., nephews and nieces) whether of the full or half-blood (Art. 9 72, CC) and only if they concur with at least one uncle or aunt. In this case, t hey share in the inheritance per stirpes. If the children survive alone, they in herit in their own right and share in equal proportions or per capita. (Art. 975 ) Inheritance per stirpes representative/s shall not what the person they inheri t, if he were living (Art.975, CC) means that the inherit more than represent wo uld or could inherit. IV. Relationship (Arts. 963-969, CC) Number of generations determines proximity. (Art 963) Each generation forms a de gree. (Art 963) A series of degrees forms a line. (Art 964 par.1) A line may eit her be direct or collateral. (Art 964 par.1) A direct line is that constituted b y the series of degrees among ascendants and descendants (ascending and descendi ng). (Art 964 par.2) A collateral line is that constituted by the series of degr ees among persons who are not ascendants or descendants, but who come from a com mon ancestor. (Art 964 par.3) Full blood same father and mother. (Art 967 par.1) Half-blood only one of either parent is the same. (Art 967 par.2)

SUCCESSION

the rule of division by line in the ascending line Article 987 par.2) d. the dis tinction between full-blood and half-blood relationship among brothers and siste rs, as well as nephews and nieces. (Art 1006 and 1008) e. representation

In adoption, the legal filiation is personal and exists only between the adopter and the adopted. The adopted is deemed a legitimate child of the adopter, but s till remains as an intestate heir of his natural parents and other blood relativ es. (Art. 189, FC) 75

CIVIL LAW REVIEWER Chapter III. INTESTATE SUCCESSION

The representative is called to the succession by the law and not by the person represented. The representative does not succeed the person represented but the one whom the person represented would have succeeded. (Art. 971, CC) General Rul e Grandchildren inherit from grandparents by right representation, if proper. must be a legal heir of both the person he is representing and the decedent. Thu s, illegitimate children can represent illegitimate children parents in inherita nce from illegitimate grandparents. (*Rationale: Iron-curtain rule under Art. 99 2, CC) On the other hand, a legitimate child may represent either a legitimate o r illegitimate parent in the inheritance of either a legitimate or illegitimate grandparents. (Arts. 902, 989,990) Representation in Adoption (Asked in 94, 04, an d 07) If the adopting parent should die before the adopted child, the later cannot represent the former in the inheritance of the parents or ascendants of the ado pter. The adopted child is not related to the deceased in that case, because fil iation created by fiction of law is exclusively between the adopter and the adop ted. (TOLENTINO pp. 448-449) 76 SUCCESSION

the of

Exception Whenever all the children repudiate, the grandchildren inherit in their own right because representation is not proper. (Art 969, CC) Right of represen tation in the collateral line is only possible in INTESTATE succession. It canno t take place in testamentary succession. In determining whether or not represent ation is proper, apply the DOUBLE HEIRSHIP TEST (Art. 973, CC): the representati ve

VI. Order of Legal or Intestate Succession (Asked in 77, 78, 97, 98, 99, 00, 06, and 08) Decedent is a Legitimate Child 1 2 3 LC and Legitimate descendants LP and Legiti mate ascendants ILC and Illegitimate descendants SS Legitimate siblings, Nephews , Nieces Legitimate collateral relatives within th the 5 degree State Decedent i s an Illegitimate Child LC and Legitimate descendants ILC and Illegitimate desce ndants ILP Decedent is an Adopted Child LC and Legitimate descendants ILC and Il legitimate descendants LP or ILP and Legitimate ascendants, Adoptive parents SS Siblings, Nephews, Nieces State 4 5 6 7 SS Illegitimate siblings, Nephews, Nieces State

CIVIL LAW REVIEWER Chapter III. INTESTATE SUCCESSION VII. Concurrence in Legal or Intestate Succession INTESTATE HEIRS LC and Legitimate descendants ILC and Descendants LP and Legitim ate ascendants ILP SS Excludes Ascendants, Collaterals and State ILP, Collateral s and State Collaterals and State Collaterals and State Collaterals other than s iblings, nephews and nieces Excluded By No one Concurs With SS and ILC SS LC and LP ILC and SS SS LC, ILC, LP, ILP Siblings Nephews Nieces SS 77 SUCCESSION No one LC LC and ILC No one Siblings, Nephews Nieces th Other collaterals within 5 degree State All other collaterals and State Collateral more remote in degree and State No on e LC, ILC, LP, ILP LC, ILC, LP, ILP and SS Everyone Collaterals in the same degree No one VIII. Outline of Intestate Shares

(Asked in 76, 79, 92, 03, 04, 06, and 08) 1. Legitimate children only a. Divide entire estate equally among all legitimate children (Art. 979, CC) b. Legitimate childr en include an adopted child. 2. Legitimate children and Illegitimate children Di vide entire estate such that each illegitimate child gets of what a legitimate c hild gets (Art. 983, CC and Art. 176, FC) 3. Legitimate children and surviving s pouse a. Divide entire estate equally between the legitimate children and the su rviving spouse, the latter deemed as one child. The same rule holds where there is only one child. b. Children as used in Art. 996 is interpreted to include a sit uation where there is only one child. 4. Legitimate children. Surviving spouse, and Illegitimate children Divide the entire estate such that the surviving spous e is deemed one legitimate child and each illegitimate child getting of what the legitimate child gets (Art. 996, CC and Art. 176, FC) 5. Legitimate parents only Divide the entire estate equally. (Art. 985, CC) 6. L egitimate ascendants only (excluding parents) Divide the entire estate equally b ut with the observance of the rule of division by line (Art. 987, CC) 7. Legitim ate parents and illegitimate children Legitimate parents get of the estate, ille gitimate children get the other (Art. 991,CC) 8. Legitimate parents and survivin g spouse Legitimate parents get of the estate; The surviving spouse gets the oth er (Art. 997,CC) 9. Legitimate parents, surviving spouse and illegitimate childr en Legitimate parents get of the estate; surviving spouse and the illegitimate c hild each get each, the latter to share among themselves if more than one. (Art. 1000, CC) 10. Illegitimate children only Divide the entire estate equally. (Art . 988, CC)

CIVIL LAW REVIEWER Chapter III. INTESTATE SUCCESSION 11. Illegitimate children and surviving spouse Illegitimate children get of the estate; the surviving spouse gets the other . (Art. 998, CC) 12. Surviving spouse only Entire estate goes to the surviving spouse. (Art. 994/995, CC) 13. Survivi ng spouse and illegitimate parents Illegitimate parents get and the spouse gets the other (by analogy with Art. 997, CC) 14. Surviving spouse and legitimate bro thers and sisters, nephews and nieces Surviving spouse gets of the estate, while the rest gets the other with the nephews and nieces inheriting by representatio n if proper. (Art. 1001, CC) 15. Surviving spouse and illegitimate brothers and sisters, nephews and nieces Surviving spouse gets of the estate while the rest g ets the other with the nephews and nieces inheriting by representation, if prope r; Note that all the other relatives should be illegitimate because of the ironcur tain rule. (Art. 994,CC) 16. Illegitimate parents only Entire estate goes to the illegitimate parents. (Art 993, CC) 17. Illegitimate parents and children of an y kind (whether legitimate or illegitimate child) Illegitimate parents are exclu ded and do not inherit; For the rule on the respective shares of the children, s ee numbers 1, 2 or 10, whichever is applicable. 18. Legitimate brothers and sist ers only Divide the entire estate such that full-blood brothers/sisters gets a s hare double the amount of a half-blood brother or sister. (Art. 1004 and 1006, C C) 19. Legitimate brothers and sisters, nephews and nieces Divide the entire est ate observing the 2 is to 1 ratio for full and half blood relationships with res pect to the brothers and sisters, with the nephews and nieces inheriting by repr esentation, if proper. (Art. 1005 & 1008, CC) 20. Nephews and nieces only Divide the entire estate per capita, observing the 2 is to 1 ratio. (Arts. 975 a nd 1008, CC) 21. Other collaterals (Arts. 1009 and 1010) a. Divide entire estate per capita. th b. Collateral relatives must be with the 5 degree of consanguini ty. c. Note: the nearer relative excludes the more remote relatives. 22. State I f there are no other intestate heirs, the State inherits the entire estate throu gh escheat proceedings. (Art. 1011, CC) 78 SUCCESSION IX. Order of Concurrence in the Case of an Adopted Child (Art, 190, FC) (Asked in 79, 86, 04 and 07) SURVIVORS LC, ILC, SS LP or ascendants or ILP Adopter LP or ascendants or ILP or Adopter SS LP or ascendants Adopter ILC or descendants LP or ascendants Adopter SS ILC or descendants Adopter alone Collateral blood relatives SHARE As in the case of ordinary intestate succession 1/3 1/3 1/3 Entire estate As in the case o f ordinary intestate succession

CIVIL LAW REVIEWER Chapter IV. PROVISIONS common to TESTAMENTARY and INTESTATE SUCCESSION Chapter IV. Provisions Common to Testamentary and Intestate Succession I. Accretion II. Capacity to Succeed III. Acceptance or Repudiation of Inheritan ce IV. Collation

There can only be accretion if there is an institution of heirs with respect to specific properties. (Art 1016, CC) Among compulsory heirs, there can only be ac cretion with respect to the free portion. There can be no accretion with respect to the legitimes. (Arts. 1021 and 1018, CC) The heirs to whom the portion goes by the right of accretion take it in the same proportion that they inherit. (Art . 1019, CC) The heirs to whom the inheritance accrues shall succeed to all the r ights and obligations which the heir who renounced or could not receive it would have had. (Art. 1020, CC) In testamentary succession, when the right of accreti on does not take place, the vacant portion of the instituted heirs, if no substi tute has been designated, shall pass to the legal heirs of the testator, who sha ll receive it with the same charges and obligations. (Art 1022, CC) Accretion sh all also take place among devisees, legatees and usufructuaries under the same c onditions established for heirs. (Art 1023, CC)

79 SUCCESSION

I. Accretion A. Definition of Accretion (Art. 1015, CC) It is a right by virtue of which, whe n two or more persons are called to the same inheritance, devise or legacy, the part assigned to one who renounces or cannot receive his share or who died befor e the testator is added or incorporated to that of his co-heirs, co-devisees, or colegatees. Accretion happens when there is repudiation, incapacity, or predece ase of an heir. It is the mechanism where the share of an heir is increased by v acant shares vacated by heirs who cannot inherit for various reasons. (RATIONALE : the decedent intended to give the property to nobody but the co-heirs.)

________________________________________________________________________________ ____ Effect of Predecease, Incapacity, Disinheritance or Repudiation in Testamen tary and Intestate Succession CAUSE OF VACANCY Predecease TESTAMENTARY SUCCESSION LEGITIME FREE PORTION Representa-tion Accretion Intestat e Succession Intestate Succession Representa-tion Intestate Succession Represent a-tion Intestate Succession Intestate Succession Accretion Intestate Succession

Accretion Incapacity Disinheritance Repudiation INTESTATE SUCCESSION Representation Intestate Succession Representation Intestat e Succession Accretion

CIVIL LAW REVIEWER Chapter IV. PROVISIONS common to TESTAMENTARY and INTESTATE SUCCESSION II. Capacity to Succeed A. Requisites for Capacity to Succeed by Will or by Intestacy (Art. 1024 1025, C C) The heir, legatee or devisee must be living or in existence at the moment the succession opens; (Art 1025) and He must not be incapacitated or disqualified b y law to succeed. (Art 1024, par.1) B. Who Are Incapable of Succeeding BASED ON UNDUE INFLUENCE OR INTEREST (Art. 1027, CC) PIGRAP Priest who heard the last con fession of the testator during his last illness, or the minister of the gospel w ho extended spiritual aid to him during the same period; Individuals, associatio ns and corporations not permitted by law to inherit; Guardian with respect to te stamentary dispositions given by a ward in his favor before the final accounts o f the guardianship have been approved, even if the testator should die after the approval thereof; except if the guardian is his ascendant, descendant, brother, sister, or spouse; Relatives of the priest or minister of the gospel within the fourth degree, the church, order, chapter, community, organization, or institut ion to which such priest or minister may belong; Attesting witness to the execut ion of a will, the spouse, parents, or children, or any one claiming under such witness, spouse, parents, or children; Physician, surgeon, nurse, health officer or druggist who took care of the testator during his last illness. BASED ON MOR ALITY OR PUBLIC POLICY (Arts. 739 and 1028, CC) Those made in favor of a person with whom the testator was guilty of adultery or concubinage at the time of the making of the will. Those made in consideration of a crime of which both the tes tator and the beneficiary have been found guilty. Those made in favor of a publi c officer or his spouse, descendants and ascendants, by reason of his public off ice.

BASED ON ACTS OF UNWORTHINESS (Art. 1032, CC) The following are incapable of suc ceeding by reason of unworthiness: a. Parents who have abandoned their children or induced their daughters to lead a corrupt or immoral life, or attempted again st their virtue; b. Any person who has been convicted of an attempt against the life of the testator, his or her spouse, descendants, or ascendants; c. Any pers on who has accused the testator of a crime for which the law prescribes imprison ment for six years or more, if the accusation has been found groundless; d. Any heir of full age who, having knowledge of the violent death of the testator, sho uld fail to report it to an officer of the law within a month, unless the author ities have already taken action; this prohibition shall not apply to cases where in, according to law, there is no obligation to make an accusation; e. Any perso n convicted of adultery or concubinage with the spouse of the testator; f. Any p erson who by fraud, violence, intimidation, or undue influence should cause the testator to make a will or to change one already made; g. Any person who by the same means prevents another from making a will, or from revoking one already mad e, or who supplants, conceals, or alters the latters will; h. Any person who fa lsifies or forges a supposed will of the decedent. 80 SUCCESSION C. Pardon of Acts of Unworthiness EXPRESS Made by the execution of a document or any writing in which the decedent condones the cause of incapacity Cannot be revoked IMPLIED Effected when the te stator makes a will instituting the unworthy heir with knowledge of the cause of incapacity Revoked when the testator revokes the will or the institution

CIVIL LAW REVIEWER Chapter IV. PROVISIONS common to TESTAMENTARY and INTESTATE SUCCESSION III. Acceptance Inheritance and Repudiation of Requisites (Art. 1043, CC) 1. Certainty of death of the decedent 2. Certainty of the right to the inheritance Acceptance vs. Repudiation 1. Acceptance involves th e confirmation of transmission of successional rights, while repudiation renders such transmission ineffective. 2. Repudiation is equivalent to an act of dispos ition and alienation. 3. The publicity required for repudiation is necessary for the protection of other heirs and also of creditors. Forms of Acceptance (Arts. 1049 1050, CC) 1. Express Acceptance one made in a public or private document. ( Art. 1049 par. 1) 2. Tacit Acceptance one resulting from acts by which the inten tion to accept is necessarily implied or from acts which one would have no right to do except in the capacity of an heir. Examples: (Art. 1050, CC) a. when the heir sells, donates or assigns his right b. when the heir demands partition of t he inheritance c. when the heir alienates some objects of the inheritance, etc. 3. Implied acceptance - Within thirty days after the court has issued an order f or the distribution of the estate in accordance with the Rules of Court, the hei rs, devisees and legatees shall signify to the court having jurisdiction whether they accept or repudiate the inheritance; if they do not do so within that time , they are deemed to have accepted the inheritance. (Art 1057, CC) Forms of Repu diation (Art. 1051, CC) 1. in a public instrument acknowledged before a notary pu blic; or Heirs in Two Capacities (Art. 1055, CC) 1. If a person is called to the same inhe ritance as an heir by will and by law and he repudiates the inheritance in his c apacity as a testamentary heir, he will be considered to have also repudiated th e inheritance as a legal heir. 2. If he repudiates it as a legal heir, without h is being a testamentary heir, he may still accept it in the latter capacity. IV. Collation (Arts. 1061-1077, CC) (Asked in 77, 78, 79, and 93) A. Concept of Collation To collate is to bring back or to return to the hereditary mass in fact or by fiction property which came from the estate of the decedent, during his lifetime by donation or other gratuitous title but which the law considers as an advance from the inheritance. (Art 1061 , CC) It is the act by virtue of which, the compulsory heir who concurs with oth er compulsory heirs in the inheritance bring back to the common hereditary mass the property which they may have received from the testator so that a division m ay be effected according to law and the will of the testator. In reducing inoffi cious donations, the last to be donated should be the first to be reduced. RATIO NALE FOR COLLATION: If donations inter vivos will not be collated, then the rule on legitimes shall be circumvented or disregarded. B. Operations Related to Col lation Collation adding to the mass of the hereditary estate the value of the do nation or gratuitous disposition. Imputing or Charging crediting the donation as an advance on the legitime (if the donee is a compulsory heir) or on the free p ortion (if the donee is a stranger). (BALANE p 522) Reduction determining to wha t extent the donation will remain and to what extent it is excessive or inoffici ous. SUCCESSION Characteristics (VIR) (Arts. 1041 1042, 1056, CC) 1. Voluntary and free (Art 1041

, CC) 2. Irrevocable except if there is vitiation of consent or an unknown will appears (Art 1056, CC) 3. Retroactive (Art 1042, CC) 2. in an authentic document equivalent of an indubitable writing or a writing wh ose authenticity is admitted or proved; or 3. by petition presented to the court having jurisdiction over the testamentary or intestate proceeding 81

CIVIL LAW REVIEWER Chapter IV. PROVISIONS common to TESTAMENTARY and INTESTATE SUCCESSION

Restitution returning or the act of payment of the excess to the mass of heredit ary estate.

C. Persons Obliged to Collate GENERAL RULE: Compulsory heirs EXCEPTIONS: when th e testator should have so expressly provided (Art. 1062, CC) when the compulsory heir should have repudiated his inheritance (Art 1062, CC) Grandchildren who su rvive with their uncles, aunts, or first cousins and inherit by right of represe ntation (Art 1064, CC) *Note: Grandchildren may inherit from their grandparent i n their own right, i.e., as heirs next in degree, and not by right of representa tion if their parent repudiates the inheritance of the grandparent, as no living person can be represented except in cases of disinheritance and incapacity. In this case, the grandchildren are not obliged to bring to collation what their pa rent has received gratuitously from their grandparent. D. What to Collate Any pr operty or right received by gratuitous title during the testators lifetime (Art 1 061, CC) All that they may have received from the decedent during his lifetime. (Art 1061, CC) Expenses incurred by the parents in giving their children a profe ssional, vocational or other career shall not be brought to collation unless the parents so provide, or unless they impair the legitime; but when their collatio n is required, the sum which the child would have spent if he had lived in the h ouse and company of his parents shall be deducted therefrom. (Art 1068, CC) Any sums paid by a parent in satisfaction of the debts of his children, election exp enses, fines, and similar expenses shall be brought to collation. (Art 1069, CC) E. Properties Not Subject to Collation Absolutely no collation Expenses for sup port, education (only elementary and secondary), medical attendance, even in ext raordinary illness, apprenticeship, ordinary equipment, or customary gifts. (Art . 1067, CC)

Expenses incurred by parents in giving their children professional, vocational o r other career unless the parents so provide, or unless they impair the legitime . (Art. 1067, CC) Wedding gifts by parents and ascendants, consisting jewelry, c lothing and outfit, except when they exceed 1/10 of the sum disposable by will. (Art. 1070, CC) Neither shall donations to the spouse of the child be brought to collation; but if they have been given by the parent to the spouses jointly, th e child shall be obliged to bring to collation one-half of the thing donated. (A rt. 1066, CC) 82 SUCCESSION Note: Parents are not obliged to bring to collation in the inheritance of their ascendants any property which may have been donated by the latter to their child ren. (Art 1065, CC) Generally not imputable to legitime/ cannot be collected, subject to exceptions

CIVIL LAW REVIEWER Chapter V. PARTITION and DISTRIBUTION of ESTATE Chapter V. Partition and Distribution of Estate I. II. III. IV. The Concept of Partition The Effect of Partition Nullification o f Partition Important Periods in Partition 2. The decedents heirs (Art.1083, CC) 3. A competent court (Art. 1083,CC) 4. A th ird person not an heir designated by the decedent (Art.1081, CC) Who Can Demand Partition 1. Compulsory heir 2. Voluntary heir upon fulfillment of condition if a ny (Art 1084, CC) 3. Legatee or devisee 4. Any person who has acquired interest in the estate When Partition Cannot Be Demanded 1. When expressly Prohibited by t he testator for a period not exceeding 20 years (Art 1083, CC) 2. When the co-he irs Agreed that the estate shall not be divided for a period not exceeding 10 ye ars, renewable for another 10 years 3. When Prohibited by law 4. When to partiti on the estate would render it unserviceable for the use for which it is intended Prohibition to Partition 1. The prohibition to partition for a period not exceed ing 20 years can be imposed on the legitime. 2. If the prohibition to the partit ion is for more than 20 years, the excess is void. 3. Even if a prohibition is i mposed, the heirs by mutual agreement can still make the partition. Effects of I nclusion of Intruder in Partition (Art 1108, CC) 1. Between a true heir and sever al mistaken heirs partition is void. 2. Between several true heirs and a mistake n heir transmission to mistaken heir is void 3. Through error or mistake, share of true heir is allotted to mistaken heir partition shall not be rescinded unles s there is bad faith or fraud on the part of the other persons interested, but t he latter shall be proportionately obliged to pay the true heir of his share. Th e partition with respect to the mistaken heir is void. (Sempio-Dy) Right of Rede mption in Partition Should any of the heirs sell his hereditary rights to a stran ger before the partition, any or all of the co-heirs may be subrogated to the ri ghts of the purchaser by reimbursing him for the price of the sale, provided the y do so within the period of one month from 83 SUCCESSION I. Concept of Partition Separate, Divide, Assign. Partition is the separation, division and assignment o f a thing held in common among those to whom it may belong. The thing itself or its value may be divided. (Art. 1079, CC) Owned in common. Before partition, the whole estate of the decedent is owned in common by the heirs. (Art 1078, CC) Th ing or value may be divided. (Art 1079) Acts deemed partition. Every act which i s intended to put an end to indivision among heirs and legatees or devisees is d eemed a parition, although it should purport to be a sale, an exchange, a compro mise, or any other transaction. (Art 1082, CC)

A void partition may be valid if 1. the will was in fact a partition 2. the benef iciaries of the void will were legal heirs The titles of acquisition or ownershi p of each property shall be delivered to the co-heir to whom said property has b een adjudicated. (Art. 1089 CC) Kinds of Partition 1. Judicial v. Extrajudicial Partition a. Judicial Partition d one by Court pursuant to an Order of Distribution which may or may not be based on a project of partition. b. Extra-judicial partition made by the decedent hims elf by an act inter vivos or by will or by a third person entrusted by the deced

ent or by the heirs themselves. (PARAS) 2. Partition Inter Vivos (Asked in 85) It is one that merely allocates specific items or pieces of property on the basis of the pro-indiviso shares fixed by law or given under the will to heirs or succ essors. (Art. 1080, cc) Who May Effect Partition 1. The Decedent, during his life time by an act inter vivos or by will (Art.1080, CC)

CIVIL LAW REVIEWER Chapter V. PARTITION and DISTRIBUTION of ESTATE

the time they were notified in writing of the sale by the vendor (Art. 1088, CC) Strangers those who are not heirs on the succession.

Effect A partition legally made confers upon each heir the exclusive ownership of the property adjudicated to him (Art 1091, CC) Warranty After the partition has been made, the coheirs shall be reciprocally bound to warrant the title to, and the quality of, each property adjudicated (Art. 1092 CC) The reciprocal obligati on of warranty referred to in the preceding article shall be proportionate to th e respective hereditary shares of the co-heirs; But if any one of them should be insolvent, the other co-heirs shall be liable for his part in the same proporti on, deducting the part corresponding to the one who should be indemnified. Those who pay for the insolvent heir shall have a right of action against him for rei mbursement, should his financial condition improve (Art. 1093 CC) An action to e nforce the warranty among the co-heirs must be brought within ten years from the date the right of action accrues. (Art. 1094 CC) If a credit should be assigned as collectible, the co-heirs shall not be liable for the subsequent insolvency of the debtor of the estate, but only for his insolvency at the time the partiti on is made. (Art 1095, CC) The warranty of the solvency of the debtor can only b e enforced during the five years following the partition. Co-heirs do not warran t bad debts, if so known to, and accepted by the distributee. But if such debts are not assigned to a co-heir, and should be collected, in whole or in part, the amount collected shall be distributed proportionately among the heirs. (Art. 10 95 CC) End of Warranty The obligation of warranty among co-heirs shall cease in t he ff cases: The testator himself has made the partition Unless it appears, or i t may be reasonably presumed, that his intention was otherwise, but the legitime shall always remain unimpaired. III. Nullification of Partition (Asked in 90) Causes for Rescission or Annulment 1. A partition may be rescinded o r annulled for the same causes as contracts. (Art 1097, CC) 2. A partition, judi cial or extra-judicial, may also be rescinded on account of lesion, when any one of the co-heirs received things whose value is less by at least one-fourth, tha n the share to which he is entitled, considering the value of the things at the time they were adjudicated (Art. 1098, CC) This article applies only to cases of partition among-coheirs Lesion is the injury suffered in consequence of inequal ity of situation by one party who does not receive the full equivalent for what she gives in a sale or any commutative contract 3. The partition made by the tes tator cannot be impugned on the ground of lesion, except when the legitime of th e compulsory heirs is thereby prejudiced, or when it appears or may be reasonabl y be presumed, that the intention of the testator was otherwise. (Art. 1099, CC) 4. Preterition of a compulsory heir in the partition (Art 1104, CC): Partition shall not be rescinded unless bad faith or fraud on the part of other heirs is p roved. The culpable heirs shall share in the damages of the prejudiced compulsor y heir proportionately. 5. A partition which includes a person believed to be an heir, but who is not, shall be void only with respect to such person. (Art. 110 5 CC ___________ The action for rescission on account of lesion shall prescribe after four years from the time the partition was made. (Art. 1100, CC) The heir who is sued shall have the option of indemnifying the plaintiff for the loss, or consenting to a new partition

SUCCESSION II. Effects of Partition When its here has rtition, t. 1096, 84 has been so expressly stipulated in the agreement of partition Unless t been bad faith When the eviction is due to a cause subsequent to the pa or has been caused by the fault of the distributee of the property. (Ar CC)

CIVIL LAW REVIEWER Chapter V. PARTITION and DISTRIBUTION of ESTATE

Indemnity may be made: By payment in cash or By the delivery of a thing of the s ame kind and quality as that awarded to the plaintiff. If a new partition is mad e, it shall affect neither those who have not been prejudiced nor those who have not received more than their just share (Art. 1101, CC) An heir who has alienat ed the whole or a considerable part of the real property adjudicated to him cann ot maintain an action for rescission on the ground of lesion, but he shall have a right to be indemnified in cash (Art. 1102, CC) The omission of one or more ob jects or securities of the inheritance shall not cause the rescission of the par tition on the ground of lesion, but the partition shall be completed by the dist ribution of the objects or securities which have been omitted. (Art. 1103, CC) IV. Important Periods in Partition 1 month or less before making a will 20 years 5 years from delivery to the State 1 month Testator, if publicly known to be insane, burden of proof is on the one claiming validity of the will Maximum period testator can prohibit alienation o f dispositions To claim property escheated to the State To report knowledge of v iolent death of decedent lest he be considered unworthy Action for declaration o f incapacity & for recovery of the inheritance, devise or legacy Must signify ac ceptance/repudiation otherwise, deemed accepted Right to repurchase hereditary r ights sold to a stranger by a coheir To enforce warranty of title/quality of pro perty adjudicated to co-heir from the time right of action accrues To enforce wa rranty of solvency of debtor of the estate at the time partition is made Action for rescission of partition on account of lesion

5 years from the time disqualified person took possession 30 days from issuance of order of distribution 1 month form written notice of sale 10 years Difference of Nullity from Rescission Nullity is not the same as Rescission: 1. N ullity - the act is supposed to never have existed 2. Rescission - the act is va lid at the origin though it afterwards became ineffective 5 years partition 4 years partition from form SUCCESSION

85

CIVIL LAW REVIEWER Chapter VI. APPLICATION Chapter VI. Application of the Important Concepts through Sample Computational P roblems I. II. III. IV. II. III. IV. Institution of Heirs Legitimes Intestate Succession The Effect of Partition Nullification of Partition Important Periods in Partiti on property. How will you compute the proportional increase in each heirs shares in order not to exceed the total estate of Mickey (assuming no legitimes were impai red)? Goofys original share: Donalds original share: Minnies original share: 1/3 of 12,00 0 1/4 of 12,000 1/4 of 12,000 4,000 3,000 3,000 TOTAL: 10,000 DEFICIENCY : 2,000 86 SUCCESSION (Based on the lectures of Prof. Danilo L. Concepcion) I. Institution of Heirs Goofys increase = 4,000/10,000 x 2,000 = 800 Donalds increase = 3,000/10,000 x 2,0 00 = 600 Minnies increase = 3,000/10,000 x 2,000 = 600 Total Deficiency = P2000 P 10,000 + P2,000 = P12,000 (the total estate) Goofy gets P4000 + 800 = P 4,800 Do nald gets P3,000 + 600 = P3, 600 Minnie gets P3,000 + 600 = P 3, 600 A. Excess Institution Mickey died testate, leaving a total estate of P12,000. Acc ording to his Will, Goofy gets , Donald gets 1/3 and Minnie gets of the property. How will you compute the proportional reduction from each heirs shares in order not to exceed the total estate of Mickey (assuming no legitime is impaired)? Goofys original share: Donalds original share: Minnies original share: of 12,000 1/ 3 of 12,000 of 12,000 6,000 4,000 3,000 TOTAL: 13,000 EXCESS: 1,000 II. Legitimes A. Legitimes: Concurrence of Legitimate and Illegitimate Children Homer died of h eart attack. His wife, Marge, predeceased him. He had only 1 legitimate child, B art, and 4 illegitimate children, Lisa, Maggie, Wolverine and Cyclops. Homer has a total estate of P120,000. How much is the legitime of each heir? The legitima te child should get of the estate while the illegitimate children get of what th e legitimate child gets. Bart - P60,000 Lisa - P30,000 Maggie - P30,000 Wolverin e - P30,000 Cyclops - P30,000 But this would amount to a total of P180,000. Thus , there must be a reduction of the shares of the illegitimate children. Reductio n = excess / number of illegitimate children Reduction = (180,000 120,000) / 4 = 15,000 P30,000 (share) 15,000 (reduction) = P15,000 Goofys reduction = 6,000/13,000 x 1,000 = 461.53846 Donalds reduction = 4,000/13,0 00 x 1,000 = 307.69231 Minnies reduction = 3,000/13,000 x 1,000 = 230.76923 Total Deduction = P1000 P13,000 P1,000 = P12,000 (the total estate) Goofy gets P6000 P461.53846 Donald gets P4,000 P307.69231 Minnie gets P3,000 P230.76923 _________ __ B. Deficiency in Institution Mickey died testate, leaving a total estate of P1 2,000. According to his Will, Goofy gets 1/3, Donald gets and Minnie gets of the

CIVIL LAW REVIEWER Chapter VI. APPLICATION B. Legitimes: Concurrence of Spouse and Legitimate Children

III. Intestate Succession Anderson Silva died, leaving a total estate of P120,000. He was survived by his wife, Machida, and his three children: Chuck, Quinton, and George. How much legi time is allotted by law to each heir? Legitimate Children get The is divided int o as many legitimate children. Wife gets an amount equal to the share of a legit imate child. Final Answer: Chuck = P20,000 Quinton = P20,000 George = P20,000 Ma chida = P20,000 Free Portion = P40,000 ___________ Hulk Hogan died intestate, wi th a total estate of P70,000. His wife, Sable, his legitimate son, Ultimate Warr ior, and his two illegitimate children, Stone Cold and Undertaker, survived him. How will his estate be divided among these heirs? Applying the law in intestate succession, each heirs will receive the ff: Ultimate Warrior P35,000 Stone Cold P17,500 Undertaker P17,500 Sable P35,000 Since the total shares will exceed P70 ,000, reduction is in order. The share of those who will receive more than their legitimes must be reduced. The spouses share should be reduced first to the amou nt of her legitime (P17,500) (note: the share of the others are equal to their l egitimes) Further reductions shall be made since the amount will still exceed th e net estate. Following the law of legitimes, namely that the legitime of the le gitimate child and the surviving spouse shall be preferred over the illegitimate childrens shares, the reduction will be suffered by the illegitimate children. F inal Answer: Ultimate Warrior P35,000 Stone Cold P8750 Undertaker P8750 Sable 7,500

C. Legitimes: Concurrence of Spouse, Legitimate and Illegitimate Children Princes s toadstool died, survived by her husband, kupa, her legitimate child, mushroom, and by her two illegitimate children, mario and luigi. She has a total estate o f p120,000. How much legitime is allotted by law to each heir? The legitimate ch ild gets . The wife gets of the share of the legitimate child (because there is o nly one legitimate child) The illegitimate children will each get of the share o f the legitimate child. Mushroom P60,000 Kupa P30,000 Mario P30,000 Luigi P30 0 IV. Accretion Goku died testate, leaving an estate of P720. In his will, he instituted his son s to his entire estate. His sons are Vegeta, Napa, Raditz and Freeza. Vegeta, wh o had two children (Trunks and Bulma), predeceased Goku. Napa, who hated But this will yield a total of p150,000. Thus the shares of the illegitimate chi ldren must be reduced. Reduction = excess / number of children illegitimate SUCCESSION Final Answer: Bart = P60,000 Lisa = P15,000 Maggie = P15,000 Cyclops = P15,000 TOTAL = P120,000 ___________ Wolverine = P15,000

Reduction = (150,000 - 120,000)/2 =15,000 P30,000 (share) 15,000 (reduction) =P1 5,000 Final Answer: Mushroom = P60,000 Kupa = P30,000 Mario = P15,000 Luigi = P1 5,000 87

CIVIL LAW REVIEWER Chapter VI. APPLICATION his fathers guts, repudiated his share in the will. Raditz, who likewise has two children (Tenshenhan and Chowzu), was found to be incapacitated to inherit from his father. Lastly, Freeza, the youngest and most beloved son of Goku, has a son , Magneato. Determine Legitime and Free Portion: Heir Vegeta (predeceased) Napa (repudiated) Raditz (incapacitated) Freeza Will 1 80 = legitime:120 free: 60 180 (automatically becomes free portion) 180 = legiti me:120 free: 60 180 = legitime:120 free: 60 P50,000 to Spiderman. In 1982, he made a donation to Robinhood worth P100,000. C ompute for the shares of each heir. Total Estate = Gross Estate Liabilities + Do nations Inter Vivos Total Estate = 90,000 0 + 150,000 = P240,000 Determine the L egitimes: Legitimate Children = of Total Estate Therefore: Spiderman = P60,000 R obinhood = P60,000 Surviving Spouse = amount equal to Legitimate Child Therefore : Sandy = P60,000 Determine their Intestate Shares Heir Spiderman Robinhood Sandy Final Answer 80, 000 (60,000 = legitime) 80,000 ( 60,000 = legitime) 80,000 (60,000 = legitime) 88 SUCCESSION Determine amount received by heirs through representation for the legitimes Heir Vegeta (predeceased) Representation for Legitime Legitime = 120 Trunks: 60 Bulma: 60 Legitime = 120 Tenshenhan: 60 Chowzu: 60 Determine Advances Heir Spiderman Robinhood Sandy Advance 50,000 100,000 Napa (repudiated) Raditz (incapacitated) Freeza Compute: Heir Spiderman Robinhood Computation Legitime: 60,000 50,000 = 10,000 Free Porti on = 20,000 Legitime: 60,000 60,000 = 0 Free Portion: 20,000 20,000 = 0 (20,000 still unaccounted for) Determine if there is accretion: Heir Vegeta (predeceased) Napa (repudiated) Raditz (incapacitated) Freeza Accret ion - 60 -180 -60 + (60 + 60 + 180) or + 300 Sandy COMPUTE: Heir Vegeta (predeceased) Napa (repudiated) Raditz (incapacitated) Freeza Final Answer Trunks: 60 Bulma: 60 0 Tenshenhan: 60 Chowzu: 60 480 Since Robinhoods share has been exhausted but there is still a deficiency of 20,0 00, this 20,000 will be deducted from the free portions of Spiderman and Sandy P ro Rata. Heir Spiderman Computation Legitime Left: 10,000 Free Portion Left = 20,000 10,0 00 = 10,000 0 Legitime: 60,000 Free Portion: 20,000 10,000 = 10,000 Robinhood Sandy V. Collation Sponge Bob died intestate on September 17, 1985. He left an estate of P90,000. H

e was survived by his wife, Sandy, and his two children Spiderman and Robinhood. During Mr. Bobs lifetime, on January 1, 1980, he donated Therefore Heir Spiderman Robinhood Sandy Final Answer 20,000 0 70,000 - end of Succession -

CIVIL LAW REVIEWER TABLE of CONTENTS OBLIGATIONS Table of Contents Chapter I. General Provisions.......................91 I. Obligations .......... ................................91 II. Sources of Obligations .................. ......91 Chapter II. Nature and Effect of Obligations93 I. Kinds of Prestations ............................93 II. Breach of Obligation......................... ...94 III. Fortuitous Event (Force Majeure) .......96 IV. Remedies to Creditors ........................96 V. Usurious Transactions and Rules on Interest ...... ...................................................97 Chapter III. Different Kin ds of Obligations ..98 I. Pure and Conditional Obligations .......98 II. Recipro cal Obligations ......................100 III. Obligations with a Period ....... ...........100 IV. Alternative and Facultative Obligations 101 V. Joint and Soli dary Obligations ..........103 Effects of Prejudicial and Beneficial Acts (Art.1 212) ...................................................105 VI. Divisible and In divisible Obligations..106 VII. Oblligations with a Penal Clause ..106 Chapter I V. Extinguishment of Obligations ............................................... ........................107 I. Payment or Performance ..................107 II. Loss or Impossibility..........................109 III. Condonation or Remission of the Debt 109 IV. Confusion or Merger of Rights ..........110 V. Compensation ...................................110 VI. Novation ........................... .................111 Charts: Payment & Performance ................114 90 OBLIGATIONS

CIVIL LAW REVIEWER Chapter I. GENERAL PROVISIONS Prof. Solomon Lumba Faculty Editor OBLIGATIONS & CONTRACTS OBLIGATIONS & CONTRACTS TEAM Chapter I. General Provisions I. II. OBLIGATIONS SOURCES OF OBLIGATIONS A. LAW B. CONTRACTS C. QUASI-CONTRACTS D. DELICTS E. QUASI-DELICTS Leo Ledesma Lead Writer Krizel Malabanan Ivy Velasco Tin Reyes Frances Domingo Hazel Abenoja Writers 91 OBLIGATIONS CIVIL LAW Kristine Bongcaron Patricia Tobias Subject Editors Article 1156, Civil Code. An obligation is a juridical necessity to give, to do or not to do. I. Obligations ACADEMICS COMMITTEE Kristine Bongcaron Michelle Dy Patrich Leccio Editors-in-Chief PRINTING & DISTRIBUTION Kae Guerrero DESIGN & LAYOUT Pat Hernandez Viktor Fontanilla Rusell Aragones Romualdo Menzon Jr. Rania Joya Elements of an Obligation (De Leon, 2003) 1. ACTIVE SUBJECT (Obligee/Creditor): t he person who has the right or power to demand the prestation. 2. PASSIVE SUBJEC T (Obligor/Debtor): the person bound to the perform the prestation. 3. PRESTATIO N (Object): the conduct required to be observed by the debtor/obligor (to give, to do or not to do). 4. VINCULUM JURIS (Juridical or Legal Tie; Efficient Cause) : that which binds or connects the parties to the obligation. II. Sources of Obligations A. Law Art. 1158, Civil Code. Obligations derived from law are not presumed. Only those expressly determined in this Code or in special laws are demandable, and shall be regulated by the precepts of the law which establishes them; and as to what h as not been foreseen, by the provisions of this Book. LECTURES COMMITTEE Michelle Arias Camille Maranan Angela Sandalo Heads Katz Manzano Mary Rose Beley Sam Nuez Krizel Malabanan Arianne Cerezo Marcr

ese Banaag Volunteers MOCK BAR COMMITTEE Lilibeth Perez BAR CANDIDATES WELFARE Dahlia Salamat B. Contracts Art. 1159. Has the Force of Law Between Parties. Obligations arisin g from contracts have the force of law between the contracting parties and shoul d be complied with in good faith C. Quasi-Contracts Art. 2142, Civil Code. Certain lawful, voluntary and unilateral acts give rise t o the juridical relation of quasi-contract to the end that no one shall be unjus tly enriched or benefited at the expense of another. Lawful Voluntary Distinguis hed from crimes Distinguished from quasi-delict, which are based on fault and ne gligence Distinguished from contract which is based on agreement LOGISTICS Charisse Mendoza SECRETARIAT COMMITTEE Jill Hernandez Head Loraine Mendoza Faye Celso Mary Mendoza Joie Bajo Members Unilateral

CIVIL LAW REVIEWER Chapter I. GENERAL PROVISIONS action (res judicata) if judgment of acquittal con tained a declaration that no negligence can be attributed to the accused and tha t the fact from which civil action might arise did not exist D. Delicts (Acts or omissions punished by law; crimes) Extent of Civil Liability Governed by the Revised Penal Code and the Civil Code, includes: 1. Restitution ; 2. Reparation of damages caused; and 3. Indemnity for consequential damages (A rt. 104, Revised Penal Code). (Tolentino, 1987) Enforcement of Civil Liability 1 . Independent: Criminal and civil action arising from the same offense may be in stituted separately. 2. Suspended: However, after criminal action has been comme nced prosecution for civil action is suspended in whatever stage it may be found , until final judgment in the criminal proceeding is rendered; 3. Impliedly Inst ituted: Civil action is impliedly instituted with the criminal action, when: off ended party expressly waives the civil action or reserves the right to institute a separate civil action; or the law provides for an independent civil action Barredo v. Garcia, (1942): The same negligent act may give rise to an action bas ed on delict or quasidelict and the injured party is free to choose which remedy to enforce. Mendoza vs. Arrieta, (1979): If the civil action is based on quasidelict, there is no need to reserve the right to file a civil action in the crim inal case. Quasi-Delict Private, against individual Criminal intent is not necessary Presen t in any act or omission where fault or negligence intervenes Gives rise to liab ility for damages to the injured party Reparation, compensation or indemnificati on of the injury suffered by the injured party Preponderance of evidence Can be compromised Crimes Public, against the State Criminal necessary liability intent is for crim inal An act can is only punishable when there is a law penalizing it There are crimes from which no civil liability arises Fine or imprisonment or both, to public tr easury Proof of guilt beyond reasonable doubt Can never be compromised Requisites of Liability (DWD) 1. Wrongful act or omission by fault or negligence 2. Damage or injury proven by the person claiming recovery 3. Direct causal con nection between the fault or negligence and the damage or injury Liability for QuasiDelict (Art. 2180, NCC) Primary, can be directly sued by the injured party Liability for Crimes (Art. 103, RPC) Subsidiary, employee must fir st be convicted and sentenced to pay civil indemnity Employer is only liable whe n he is engaged in some kind of business or industry Effect of Acquittal on Civil Actions Barred if based on the very same facts on which the criminal action which ended in acquittal was based if the facts alleged in the civil case has been found to be nonexistent in the criminal No Effect an independent civil action is allowed by law acquittal is due to lack of proof beyond reasonable doubt All employers, whether engaged in some enterprise or not, are liable for acts of employees, eve n household helpers Avoid civil liability by proving exercise of diligence of a good father of a family Subsidiary liability is absolute and cannot be avoided by any proof of diligence OBLIGATIONS Kinds of Quasi-Contracts Negotiorum Gestio: officious or voluntary management of

the property or affairs of another without the knowledge or consent of the latt er. Solutio Indebiti: undue payment. The juridical relation arises when: o a thi ng is received without any right; and o the thing delivered by mistake. Others: See Arts. 2164-2175 (De Leon, 2003) 92 E. Quasi-Delicts (Voluntary acts or omissions with fault or negligence causing d amage to another; not a crime nor a contract)

CIVIL LAW REVIEWER Chapter II. NATURE and EFFECT of OBLIGATIONS Chapter II. Obligations I. II. III. IV. V. Nature and Effect of OBLIGATION TO GIVE Specific Thing Generic Thing Object is designated only by its class/ genus/ spec ies. Debtor can give anything of the same class as long as it is of the same kin d. Can be substituted by any of the same class and same kind. Real Right Vested after delivery A right enforceable against the world Right pertaining to a perso n over a specific thing, without a passive subject individually determined again st whom such right may be personally enforced Limited Generic Thing When the gen eric objects are confined to a particular class. KINDS OF PRESTATIONS BREACH OF OBLIGATIONS FORTUITOUS EVENTS REMEDIES USURIOUS T RANSACTIONS I. Kinds of Prestations KINDS OF PRESTATION 1. TO GIVE: real obligation; to deliver either (1) a specifi c or determinate thing, or (2) a generic or indeterminate thing. 2. TO DO: posit ive personal obligation; includes all kinds of work or services. 3. NOT TO DO: n egative personal obligation; to abstain from doing an act; includes the obligati on not to give. Accessories: those joined to or included with the principal for the latters completion, better use, perfection or enjoyment Accessions: additions to or improvement upon a thing, either naturally or artificially Cannot be substituted. Personal Right Vested before delivery A right enforceable only against the debto r Right of the creditor to demand from the debtor, the fulfillment of a prestati on to give, to do or not to do To Give Specific Thing (Asked in 83, 84, 85 and 86) To Give Generic Thing Duties of the Debtor To preserve or take care of the thing due To deliver the th ing itself To deliver the fruits of the thing To deliver the accessions and acce ssories To pay for damages in case of breach To deliver a thing of the quality i ntended by the parties taking into consideration the purpose of the obligation a nd other circumstances Creditor cannot demand a thing of superior quality neithe r can the debtor deliver a thing of inferior quality To be liable for damages in case of breach To do it To shoulder the cost of having someone else do it To un do what has been poorly done To pay for damages in case of breach Rights of the creditor To compel specific performance To recover damages in case of breach of the obligation, exclusive or in addition to specific performance E ntitlement to fruits and interests from the time the obligation to deliver arise s

To Do To ask for performance of the obligation To ask that the obligation be complied with by a third person at the expense of the debtor To recover damages in case o f breach of obligation

To compel performance To recover damages where personal qualifications of the de btor are involved OBLIGATIONS Particularly designated or physically segregated from all other of the same clas s; identified by individuality. 93

CIVIL LAW REVIEWER Chapter II. NATURE and EFFECT of OBLIGATIONS Not To Do

Not to do what should not be done To shoulder the cost of undoing what should no t have been done To pay for damages in case of breach

II. Breach of Obligation A. Voluntary fraud, negligence, delay or contravention of tenor of the obligatio n B. Involuntary fortuitous event TYPES OF BREACH Substantial Breach Total breach Amounts to NonPerformance; Basis for rescission under Art. 1191 and payment of damages Slight or Casual Breach Partial breach Ob ligation is partially performed; Gives rise to liability for damages only

Effect of Contributory Negligence Reduces or mitigates the recoverable damages, UNLESS, the negligent act or omission of the creditor is the proximate cause of the event which led to the damage or injury complained of. In this case, he cann ot recover. Diligence Required (De Leon, 2003) a. By stipulation: that agreed up on by the parties. b. By law: in the absence of stipulation, that required by la w in the particular case. c. Diligence of a good father of a family: if both the contract and law are silent. Future Negligence: may be waived except in cases w here the nature of the obligation or the public requires another standard of car e (i.e. extraordinary diligence as for a common carrier) Negligence There is no deliberate intention to cause damage Liability may be mit igated Waiver for future negligence may be allowed in certain cases: gross can N EVER be excused in advance; amounts to wanton attitude; rules on fraud shall app ly simple may be excused in certain cases

1. FRAUD (DOLO): deliberate or intentional evasion of the normal fulfillment of an obligation (De Leon, 2003). Future Fraud: Any waiver of action for future fra ud is void (Art. 1171). Past Fraud: can be subject of a valid waiver by the aggr ieved party (De Leon, 2003). Woodhouse vs. Halili, (1953): In order that fraud m ay vitiate consent, it must be the dolo causante and not merely the dolo inciden te, inducement to the making of the contract. The false representation was used by plaintiff to get from defendant a bigger share of net profits. This is just i ncidental to the matter in agreement. Because despite plaintiffs deceit, responde nt would have still entered into the contract.

Fraud There is deliberate intention to cause damage Liability cannot be mitigate d Waiver for future fraud is void 2. NEGLIGENCE or FAULT (CULPA): omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the perso n, of the time and of the place (Art. 1173). Mandarin Villa Inc. v. CA (1996): Test of Negligence: Did the defendant in doing the alleged negligent act use the reasonable care and caution which an ordinary and prudent person would have used in the same situation? If not, then he is gu

ilty of negligence. OBLIGATIONS To ask to undo what should not be done To recover damages, where it would be phy sically or legally impossible to undo what has been undone, because of : o the v ery nature of the act itself; o rights acquired by third persons who acted in go od faith; o when the effects of the acts prohibited are definite in character an d will not cease even if the thing prohibited be undone. 94

CIVIL LAW REVIEWER Chapter II. NATURE and EFFECT of OBLIGATIONS Mora Solvendi Requisites 1. Obligat ion must be liquidated, due and demandable 2. Non-performance by the debtor on p eriod agreed upon 3. Demand, judicial or extra-judicial, by the creditor Effects 1. The debtor is liable for damages 2. The debtor is liable even if the loss is due to fortuitous events 3. For determinate objects, the debtor shall bear the risk of loss Mora Accipiendi Requisites 1. Debtor offers of performance 2. Offer must be in compliance with the prestation 3. Creditor refuses the performance w ithout just cause Effects 1. The responsibility of the debtor is reduced to frau d and gross negligence 2. The debtor is exempted from risk of loss of the thing which is borne by the creditor 3. The expenses incurred by the debtor for the pr eservation of the thing after the mora shall be chargeable to the creditor 4. If the obligation bears interest, the debtor does not have to pay from the time of delay 5. The creditor is liable for damages 6. The debtor may relieve himself o f obligation by consigning the thing

Extent of Damages to be Awarded Good Faith Debtor is liable only for the natural and probable consequences of th e breach of obligation and fortuitous events Culpa Contractual Negligence is merely incidental in the performance of an oblig ation There is always a preexisting contractual relation The source of obligatio n of defendant to pay damages is the breach or non-fulfillment of the contract P roof of the existence of the contract and of its breach or non-fulfillment is su fficient prima facie to warrant recovery Proof of diligence in the selection and supervision of the employees is NOT available as defense Culpa Aquiliana Asked in 83, 84, and 86) Negligence is substantive and independent There may or may not be a pre-existing contractual obligation The source of obli gation is the defendants negligence itself The negligence of the defendant must be proved Proof of diligence in the selection and supervision of the employee is a defense

Culpa Criminal: wrong or negligence in the commission of a crime 3. DELAY or DEFAULT (MORA): failure to perform an obligation on time which const itutes breach of the obligation (De Leon, 2003). Mora Solvendi: delay on the par t of the debtor to fulfill his obligation either to give (Ex re) or to do (Ex pe rsona), (Asked in 83, 84, 85, and 86); No Mora Solvendi in: Negative Obligations bec ause delay is impossible (De Leon, 2003); Natural Obligations (Tolentino, 1987). Mora Accipiendi: delay on the part of the creditor to accept the performance of the obligation Compensatio Morae: delay of the parties in reciprocal obligation s; effect: as if there is no default. Rules on Mora, Delay or Default Unilateral Obligations General Rule: No demand no delay. The mere expiration of th e period fixed by the parties is not enough in order that the debtor may incur i n delay. Reciprocal Obligations General Rule: Delay occurs from the moment one p arty fulfills his undertaking, while the other does not comply or is not ready t o comply in a proper manner with what is incumbent upon him. No delay if neither party performs his undertaking (Art. 1169, par. 2). Exception: different dates for the performance of respective obligations are fixed by the parties

Exceptions 1. the obligation or law provides 2. time is of the essence 3. demand useless 4. debtor acknowledges that he is in default OBLIGATIONS Bad Faith Debtor is liable for all damages which can be reasonably attributed to the non-performance of the obligation. Any waiver or renunciation made in antic ipation of such liability is null and void 95

CIVIL LAW REVIEWER Chapter II. NATURE and EFFECT of OBLIGATIONS III. Fortuitous Event (Force Majeure) IV. Remedies to Creditors Any event which could not be foreseen, or which though foreseen are inevitable ( Art. 1174) A happening independent of the will of the debtor and which makes the normal fulfillment of the obligation impossible (De Leon, 2003). A. Act of God: an accident, due directly or exclusively to natural causes without human interv ention, which by no amount of foresight, pains or care, reasonably to have been expected, cold have been prevented. B. Act of Man: force majeure is a superior o r irresistible force, which is essentially an act of man; Includes unavoidable a ccidents, even if there has been an intervention of human element, provided that no fault or negligence can be imputed to the debtor (Asked in 81, 87 and 88) Liabi lity in case of Fortuitous Event No person shall be responsible for fortuitous e vents, UNLESS: 1. expressly specified by law (Arts. 552(2), 1942, 2147, 2148, 21 59) 2. liability specified by stipulation 3. the nature of the obligations requi res assumption of risk (Art. 1174) 4. when debtor is guilty of concurrent or con tributory negligence 5. debtor has promised to deliver the same thing to two or more persons who do not have the same interests (Art. 1165 par. 3) 6. the thing is lost due to the obligors fraud, negligence, delay or contravention of the teno r of the obligation (Art. 1170) 7. the obligation to deliver a specific thing ar ises from a crime (Art. 1268) 8. the object is a generic thing, i.e. the genus n ever perishes Requisites for Exemption 1. The event must be independent of the d ebtors will (fraud or negligence) Art. 1170, Civil Code. Those who in the performance of their obligations are gui lty of fraud, negligence, or delay and those who in any manner contravene the te nor thereof, are liable for damages. Transmissibility of Rights Art. 1178: Rights acquired by virtue of an obligation are transmissible in character, UNLESS prohibited: 1. by their very nature (i.e . personal obligations) 2. by stipulation of the parties 3. by operation of law (De Leon, 2003) Primary Remedies Arts. 1165-1168: PRESS 1. Specific Performance performance by the debtor of the prestation itself 2. Substituted Performance so meone else performs or something else is performed at the debtors expense 3. Equi valent Performance right to claim damages (in either performance or rescission) 4. Rescission right to rescind or cancel the contract 5. Pursue the Leviable to attach the properties of the debtor, except those exempt by law from execution S ubsidiary Remedies of Creditor General Rule: Contracts are binding only between the parties thereto, and their heirs, assignees, and the estate, UNLESS: Accion Subrogatoria and Accion Pauliana 1. Accion Subrogatoria: right of creditor to ex ercise all of the rights and bring all of the actions which his debtor may have against third persons; Novation by change of debtor (Art. 1291, par.3). OBLIGATIONS 4. CONTRAVENTION OF THE TENOR: violation of the terms and conditions stipulated in the obligation, which must not be due to a fortuitous event or force majeure (De Leon, 2003). In any manner contravenes the tenor means any illicit act, which impairs the strict and faithful fulfillment of the obligation, or every kind of defective performance (Tolentino, 1987). 2. The event must be unforeseeable or inevitable 3. The event renders it impossi ble for debtor to fulfill his obligation in a normal manner 4. The debtor must b e free from any participation in the aggravation of the injury to the creditor ( Tolentino, 1987; De Leon, 2003) 5. It must be the only and sole cause, not merel y a proximate cause. 96

CIVIL LAW REVIEWER Chapter II. NATURE and EFFECT of OBLIGATIONS USURY: stipulation of interest rates higher than the ceiling provided by law. No te: Usury Law (Act No. 2655, as amended) was repealed by Central Bank Circular N o. 905, Dec. 10, 1982. INTEREST 2. Accion Pauliana: Rescission, which involves the right of the creditor to atta ck or impugn by means of a rescissory action any act of the debtor which is in f raud and to the prejudice of his rights as creditor. Requisites: CASAL a. There is a credit in favor of plaintiff prior to alienation b. The debtor has performe d a subsequent contract conveying a patrimonial benefit to third persons c. The creditor has no other legal remedy to satisfy his claim d. The debtors acts are f raudulent to the prejudice of the creditor e. The third person who received the property is an accomplice in the fraud Accion Subrogatoria Not necessary that creditors claim is prior to the acquisitio n of the right by the debtor No need for fraudulent intent No period for prescri ption Accion Pauliana Credit must exist before the fraudulent act Art. 1176, Civil Code. Receipt of the principal without reservation as to the in terest shall give rise to a disputable presumption that the interest has been pa id. Receipt of the latter installment without reservation as to prior installmen ts shall likewise give rise to a disputable presumption that such prior installm ents have been paid. Determination of Interests Eastern Shipping Lines v. CA (1961) Stage 1 For loan or forbearance NOT for loan or of money, goods or forbearance o f money, credit, the interest rate goods or credit, the is 12% interest rate is 6% a) Interest = interest rate stipulated in writing + 12% legal interest, compu ted from date of judicial demand (filing of complaint) b) If there is no stipula ted interest rate, the interest rate is 12% computed from date of default or dem and (judicial or extrajudicial) a) If date of demand is certain, compute from th e date when demand is made (judicial or extra-judicial) Fraudulent intent is required if the contract rescinded is onerous Prescribes in 4 years from the discovery of the fraud 3. Accion Directa (Art. 1729, 1652, 1608, 1893): the right of lessor to go direc tly to a sublessee for unpaid rents of the lessee 4. The right of laborers or pe rsons who furnish materials for a piece of work undertaken by a contractor to go directly to the owner for any unpaid claim due to the contractor 5. The right o f vendor against every possessor whose right is derived from the vendee 6. The r ight of a principal against a substitution appropriated by an agent b) If date of demand is NOT certain, compute from the date of trial court decisi on (judicial demand) Stage 2 Add 12% interest from finality of SC decision until fully paid (equivale nt to a forbearance of credit) OBLIGATIONS Requisites a. Debtor to whom the right of action properly pertains must be indeb ted to the creditor b. The debt is due and demandable c. The creditor must be pr ejudiced by the failure of the debtor to collect his own rd debt from 3 persons either through malice or negligence d. The debtors assets are insufficient (debto r is insolvent) e. The right of action is not purely personal to the debtor Siguan v. Lim, (1999): Petitioner cannot invoke the credit of a different credit

or to justify the rescission of the subject deed of donation, because the only c reditor who may benefit from the rescission is the creditor who brought the acti on; those who are strangers to the action cannot benefit from its effects. V. Usurious Transactions and Rules on Interest 97

CIVIL LAW REVIEWER Chapter III. DIFFERENT KINDS of OBLIGATIONS Chapter III. Different Kinds of Obligations I. II. III. IV. PURE AND CONDITIONAL OBLIGATIONS RECIPROCAL OBLIGATIONS OBLIGATI ONS WITH A PERIOD ALTERNATIVE AND FACULTATIVE OBLIGATIONS V. JOINT AND SOLIDARY OBLIGATIONS VI. DIVISIBLE AND INDIVISIBLE OBLIGATIONS VII. OBLIGATIONS WITH A PE NAL CLAUSE

I. Pure and Conditional Obligations (Asked in 79, 88, 00, 03) Pure Obligation (Art.1179): Effectivity or extinguishment does not depend upon the fulfillment or non-fulfillment of a condition or upon t he expiration of a term or period and characterized by the quality of its being IMMEDIATELY DEMANDABLE. Conditional Obligation (Art.1181): Effectivity is subjec t to the fulfillment or non-fulfillment of a condition, which is characterized t o be a FUTURE and UNCERTAIN event. Effects of Conditions 1. Suspensive Condition : Obligation shall only be effective upon the fulfillment of the condition (Art. 1181). What is acquired by the obligee upon the constitution of the obligation i s mere hope or expectancy, but is protected by law. Before Fulfillment The demandability and acquisition or effectivity of the right s arising from the obligation is suspended. Anything paid by mistake during such time may be recovered. After Fulfillment The obligation arises or becomes effec tive. The obligor can be compelled to comply with what is incumbent upon him. Principle of Retroactivity in Suspensive Conditions Art.1187, par.1: once the co ndition is fulfilled its effects must logically retroact to the moment when the essential elements, which gave birth to the obligation have taken place. The con dition which is imposed is only accidental, not an essential element of the obli gation. Applied only to consensual contracts. No application to real contracts w hich can only be perfected by delivery. To Do/Not To Do In obligations to do or not to do, the court shall determine the retroactive effect of the condition that has been complied with. (Art. 1187, pa r. 2) The power of the court includes the determination whether or not there wil l be any retroactive effects. This rule shall likewise apply in obligations with a resolutory condition (Art. 1190 par. 3) To Give If reciprocal, the fruits and interests shall be deemed to have been mut ually compensated as a matter of justice and convenience (Art. 1187, par. 1) If unilateral, the debtor shall appropriate the fruits and interests received, unle ss from the nature and circumstance it should be inferred that the intention of the persons constituting the same was different.

Doctrine of Constructive Fulfillment of Suspensive Conditions Art. 1186: the con dition shall be deemed fulfilled when the obligor actually prevented the obligee from complying with the condition, and that such prevention must have been volu ntary or willful in character. Applicable to suspensive conditions and not to re solutory conditions. The article can have no application to an external continge ncy which is lawfully within the control of the obligor.

Preservation of Creditors Rights Art.1188, par.1: The creditor may, before the fu lfillment of the condition, bring the appropriate action for the preservation of his rights. However, this does not grant any preference of credit but only allo ws the bringing of the proper action for the preservation of the creditors rights . 2. Resolutory Condition: Obligation becomes demandable immediately after its est ablishment or constitution. The rights are immediately vested to the creditor, b ut always subject to the threat or danger of extinction by the happening of the resolutory condition (Tolentino, 1987). OBLIGATIONS The mere intention of the debtor to prevent, without actually preventing fulfill ment is not sufficient. Constructive fulfillment will not hold when the debtor a cts pursuant to a right. There is constructive fulfilment: a. Intent of the obli gor to prevent fulfilment; and b. Actual prevention of compliance 98

CIVIL LAW REVIEWER Chapter III. DIFFERENT KINDS of OBLIGATIONS needed to make the obligation demand able is that the sale be consummated and the price thereof remitted to the islan ds. There were still other conditions that had to concur to effect the sale, mai nly that of the presence of a buyer, ready, able and willing to purchase the pro perty under the conditions set by the intestate. Before Fulfillment Preservation of creditors rights (Art. 1188, par. 1) also appl ies to obligations with a resolutory condition 3. Potestative Condition Exclusively upon the Creditors Will Exclusively upon the Debtors Will in case of a Suspensive Condition (Art. 1182) Condition and obligation are void because to a llow such condition would be equivalent to sanctioning obligations which are ill usory. It also constitutes a direct contravention of the principle of mutuality of contracts. Exclusively upon the Debtors Will in case of a Resolutory Condition (Art. 1179, par 2) Condition and obligation is valid because in such situation, the position of the debtor is exactly the same as the position of the creditor when the condition is suspensive. It does not render the obligation illusory. Condition obligation valid and is 7. Positive Condition: Obligation shall be extinguished as soon as the time expi res or if it becomes indubitable that the event will not take place (Art.1184) 8 . Negative Condition: Obligation shall be rendered effective from the moment the time indicated has lapsed, or if it has become evident that the event will not occur (Art.1185) When no period has been fixed, the intention of the parties is controlling, and the time shall be that which the parties may have contemplated, taking into account the nature of the obligation (Art 1185, par. 2). 4. Casual Condition: The fulfillment of the condition depends upon chance and/or upon the will of a third person (Art. 1182) 5. Mixed Condition: The fulfillment of the condition depends partly upon the will of a party to the obligation and partly upon chance and/or will of a third person Osmena v. Rama: Defendant executed an endorsement saying that shell pay her debt if the house in which she lives is sold. Such condition depended upon her exclus ive will thus it is void. Hermosa v. Longara: The condition that payment should be made by Hermosa as soon as he receives funds from the sale of his property in Spain is a mixed condition. The condition implies that the obligor already deci ded to sell the house and all that was Effects of Loss, Deterioration, and Improvement in Real Obligations Pending the Condition (Art. 1189) Without Debtors Fault/Act Obligation extinguished With Debtors Fault/Act is Obliga tion is converted into one of indemnity for damages Loss OBLIGATIONS After Fulfillment Whatever may have been paid or delivered by one or both of the parties upon the constitution of the obligation shall have to be returned upon the fulfillment of the condition. There is no return to the status quo. However, when condition is not fulfilled, rights are consolidated and they become absolu te in character 6. Impossible Condition: conditions which are impossible, contrary to good custo

ms, or public policy and those prohibited by law shall annul the obligations whi ch depend upon them (Art. 1183). If pre-existing obligation, only the impossible condition is void, but not the obligation. If divisible obligation, that part w hich is not affected by the impossible or unlawful condition shall be valid. If the condition is not to do an impossible thing, it shall be considered as not ha ving been agreed upon (Art 1183, par. 2). Consequently, it becomes pure and imme diately demandable. If attached to a simple or remuneratory donation (Art. 727), or testamentary disposition (Art. 873), condition is considered as not imposed while the obligation is valid. 99

CIVIL LAW REVIEWER Deterioration Impairment to be borne by the creditor Creditor may choose between bringing an action for rescission of the obligation OR bring ing an action for specific performance with damages in either case. Improvement by the things nature or by time shall inure to the benefit of the creditor Chapter III. DIFFERENT KINDS of OBLIGATIONS shouldered by the first infractor. This shall be determined by the courts. Howev er, if it cannot be determined who was the first infractor, the contract shall b e deemed extinguished and each shall bear his own damages (Art.1192). UP v. Delos Angeles (1970): The injured party may extra-judicially rescind the c ontract on account of the breach of the other party. However, this is without pr ejudice to the option of the other party to resort to the courts in order to det ermine if the rescission made is valid, if not, the party who rescinded the cont ract will be sentenced to pay damages. 100 OBLIGATIONS Improvement Improvement at the debtors expense, the debtor shall ONLY have usufructuary right s

Loss, defined: when the thing perishes; goes out of commerce; disappears in such a way that its existence is unknown or it cannot be recovered Where the other party does not oppose the extra-judicial declaration of rescissi on, such declaration shall produce legal effect. Effect is retroactive therefore invalidating and unmaking the juridical tie between the contracting parties, le aving things in their status before the celebration of the contract. III. Obligations with a Period Period or Term (Asked in 84, 86 and 91): Interval of time, which either suspends de mandability or produces extinguishment. The period must be: future, certain, and possible (Tolentino, 1987). Fortuitous event does not interrupt the running of the period. It only relieves the contracting parties from the fulfillment of the ir respective obligations during the period. Kinds of Period (Art. 1193): 1. Ex die - period with a suspensive effect. Obligation becomes demandable after the l apse of the period. 2. In diem - period with a resolutory effect. Obligation is demandable at once but is extinguished upon the lapse of the period. II. Reciprocal Obligations Obligations which are established from same cause, such that one obligation is c orrelative to the other. It results in mutual relationship between the creditor and the debtor. It is performed simultaneously, so that the performance of one i s conditioned upon the simultaneous fulfillment of the other. Tacit Resolutory C ondition: if one of the parties fail to comply with what is incumbent upon him, there is a right on the part of the other to rescind the obligation. The power t o rescind is given to the injured party (Tolentino, 1987). Rescission of Recipro cal Obligations (Art. 1191, CC) Right to rescind is implied in reciprocal obliga tions thus where one party fails to comply with this obligation under a contact, the other party has the right to either demand the performance or ask for the r esolution of the contract. Based on the breach of faith committed by the person who is supposed to comply with the obligation as compared to the rescission refe rred to in Art. 1308 which involves the damage or lesion, or injury to the econo mic interest of a person. Where both parties have committed a breach of obligati on, the liability will be

Art. 1180, Civil Code. When the debtor binds himself to pay when his means permi t him to do so, the obligation shall be deemed to be one with a period, subject to the provisions of Article 1197. Term/Period Term/Period although it certain May and Condition Distinguished Interval of time which is future and certain Must necessarily come, may not be known when Condition Fact or event which is future and un or may not happen

CIVIL LAW REVIEWER Exerts an influence upon the time of demandability or extingu ishment of an obligation No retroactive effect unless there is an agreement to t he contrary When it is left exclusively to the will of the debtor, the existence of the obligation is not affected Exerts an influence upon the very existence o f the obligation itself Has retroactive effect Chapter III. DIFFERENT KINDS of OBLIGATIONS

Benefit of the Period Presumption: Period in an obligation is presumed to be est ablished for the benefit of both the creditor and debtor, UNLESS: If from the te nor of the obligation or other circumstances, it shall appear that the period ha s been established in favor of either the creditor or debtor (Art. 1196). Period for the Benefit of either Creditor or Debtor Creditor Creditor may demand the fulfillment or performance of the obligation at any time but the obligor cannot compel him to accept payment before the expirat ion of the period Debtor Debtor may oppose any premature demand on the part of t he oblige for the performance of the obligation, of if he so desires, he may ren ounce the benefit of the period by performing his obligation in advance In the cases provided, the obligation becomes immediately due and demandable eve n if the period has not yet expired. The obligation is thus converted into a pur e obligation (Tolentino, 1987). When court may fix period Art. 1197: as general rule, the court is not authorize d to fix a period for the parties (De Leon, 2003). Araneta v. Phil. Sugar Estates, provides: First, the Court shall determine: If t he obligation does not fix a period, but from its nature and circumstances, it c an be inferred that a period was intended If the period is void, such as when it depends upon the will of the debtor If the debtor binds himself when his means permit him to do so. Second, it must decide what period was probably contemplated by the parties. IV. Alternative Obligations Alternative Obligations Several objects are due May be complied with by delivery of one of the objects or by performance of one of the prestations which are alt ernatively due Choice may pertain to debtor, creditor, or third person Loss/impo ssibility of all objects/prestations due to fortuitous event shall extinguish th e obligation. The loss/impossibility of one of the things does not extinguish th e obligation. Culpable loss of any of the objects alternatively and Facultative Facultative Obligations Only one object is due May be complied with by the deliv ery of another object or by the performance of another prestation in substitutio n of that which is due Choice pertains only to the debtor

The only action that can be maintained under Art. 1197 is the action to ask the courts to fix the term within which the debtor must comply with his obligation. The fulfillment of the obligation itself cannot be demanded until after the cour t has fixed the period for compliance, therewith, and such period has arrived. Loss/impossibility of the object/prestation due to fortuitous event is sufficien t to extinguish the obligation

Culpable loss of the object which the debtor OBLIGATIONS When it is left exclusively to the will of the debtor, the very existence of the obligation is affected Art. 1197 does not apply to contract of services and to pure obligations. The co urt, however, to prevent unreasonable interpretations of the immediate demandabi lity of pure obligations, may fix a reasonable time in which the debtor may pay. (Tolentino, 1987) When Debtor Loses Right to Use Period Art.1198: I GIV A LA 1. Debtor becomes Insolvent, unless he gives a guaranty or security for his debt, after obligation is contracted 2. Debtor fails to furnish the Guaranties or secu rities promised 3. Debtor by his own acts Impaired said guaranties or securities after their establishment, and when through a fortuitous event they disappear, unless he immediately gives new one equally satisfactory 4. Debtor Violates any undertaking, in consideration of which the creditor agreed to the period 5. Debt or attempts to Abscond 6. By Law or stipulation 7. Parties stipulate an Accelera tion Clause 101

CIVIL LAW REVIEWER due before the choice is made may give rise to liability on t he part of the debtor may deliver in substitution before the substitution is eff ected does not give rise to any liability on the part of the debtor Chapter III. DIFFERENT KINDS of OBLIGATIONS Effect of Loss of Objects Art. 1204: Debtors Choice All Lost Fortuitous Event Debtor is released from the obligation Debtors Fault Cr editor shall have a right to indemnity for damages based on the value of the las t thing which disappeared or service which become impossible Debtor to deliver t hat which the creditor shall choose from among the remainder without damages Deb tor to deliver that which remains A. Alternative Obligations Several prestations are due but the performance of on e is sufficient (De Leon, 2003). Right of Choice Art. 1200: to the debtor, UNLES S: 1. when it is expressly granted to the creditor 2. when it is expressly grant ed to a third person Limitations to the right of choice 1. impossible prestation s 2. unlawful prestations 3. those which could not have been the object of the o bligation 4. only one prestation practicable (Art. 1202) (De Leon, 2003) When ch oice shall produce effect Art. 1201: Choice shall produce no effect except from the time it has been communicated. The effect of the notice is to limit the obli gation of the object or prestation selected. Notice of selection or choice may b e in any form provided it is sufficient to make the other party know that the se lection has been made. It can be: o oral o in writing o tacit o any other equivo cal means Choice of the debtor when communicated to the creditor does not requir e the latters concurrence. When the choice is rendered impossible through the cre ditors fault, the debtor may bring an action to rescind the contract with damages (Art.1203). Obligation is converted into a simple obligation when: o When the p erson who has the right of choice has communicated his choice (Art. 1201) o When only one prestation is practicable (Art. 1202) Some 102 OBLIGATIONS Debtor to deliver that which he shall choose from among the remainder Debtor to deliver that which remains One Remains Art. 1205: Creditors Choice All Lost Fortuitous Event Debtor is released from the obligation Debtors Fault Cr editor may claim the price/value of any of them with indemnity for damages credi tor may claim any of those subsisting without a right to damages OR price/value of the thing lost with right to damages Creditor may claim the remaining thing w ithout a right to damages OR the price/value of the thing lost with right to dam ages Some Debtor to deliver that which he shall choose from among the remainder One Remains Creditor may claim any of those subsisting without a right to damages OR price/v alue of the thing lost with right to damages B. Facultative Obligation Only one prestation has been agreed upon but the debto r may render another in substitution (De Leon, 2003) Effect of Loss of Substitut e

Before Substitution is Made If due to bad faith or fraud of obligor: obligor is liable After Substitution is Made The loss or deterioration of the substitute on account of the obligors delay, negligence or fraud

CIVIL LAW REVIEWER If due to the negligence of the obligor: obligor is not liabl e obligor is liable because once substitution is made, the obligation is convert ed into a simple one with the substituted thing as the object of the obligation. Chapter III. DIFFERENT KINDS of OBLIGATIONS authorize a creditor to demand anything from his co-debtors 5. Defense of res ju dicata is not extended from one debtor to another Joint Divisible Obligation Art . 1208: Each creditor can demand only for the payment of his proportionate share of the credit, while each debtor can be liable only for the payment of his prop ortionate share of the debit Presumption: Credit or debt shall be presumed to be divided into as many equal shares as there are creditors or debtors. Joint cred itor cannot act in representation of the others, neither can a joint debtor be c ompelled to answer for the liability of others. Joint Indivisible Obligation Art . 1209: no creditor can act in representation of the other; no debtor can be com pelled to answer for the liability of the others. If there are two or more debto rs, the fulfillment of or compliance with the obligation requires the concurrenc e of all the debtors, although each for his own share and for the enforcement of the obligation In case of breach where one of the joint debtors fails to comply with his undertaking, the obligation can no longer be fulfilled or performed. C onsequently, it is converted into one of indemnity for damages. In case of insol vency of one of the debtors, the others shall not be liable for his shares. To h old otherwise would destroy the joint character of the obligation. Joint Divisible Obligations In case of breach of obligation by one of the debtor s, damages due must be borne by him alone Joint Indivisible Obligations In case of breach where one of the joint debtors fails to comply with his undertaking, t he obligation can no longer be fulfilled or performed. Thus action must be conve rted into indemnity for damages. 103 OBLIGATIONS V. Joint and Solidary Obligations A. Joint Obligations One where a concurrence of several creditors, or of several debtors, or of several creditors and debtors, by virtue of which, each of the c reditors has a right to demand, and each of the debtors is bound to render compl iance with his proportionate part of the prestation which constitute the object of the obligation (Obligacion Mancomunada). Presumption: Obligation is presumed joint if there is a concurrence of several creditors, of several debtors, or of several creditors and debtors in one and the same obligation (Art. 1207). Except ions: 1. When the obligation expressly stated that there is solidarity 2. When t he law requires the solidarity 3. When the nature of the obligation requires sol idarity 4. When the nature or condition is imposed upon heirs or legatees, and t he testament expressly makes the charge or condition in solidum 5. When the soli dary responsibility is imputed by a final judgment upon several defendants Princ ipal Effects of Joint Liability 1. Demand by one creditor upon the debtor, produ ces the effects of default only with respect to the creditor who demanded and th e debtor on whom the demand was made, but not with respect to others 2. Interrup tion of prescription by the judicial demand of one creditor upon a debtor, does not benefit the other creditors nor interrupt the prescription as to other debto rs 3. Vices of each obligation arising from the personal defect of a particular debtor or creditor does not affect the obligation or right of the others 4. Inso lvency of a debtor does not increase the responsibility of his co-debtors, nor d oes it

Plurality of Creditors: If one or some of the creditors demands the prestation, the debtor may legally refuse to deliver to them, he can insist that all the cre ditors together receive the thing, and if any of them refuses to join the others

, the debtor may deposit the thing in court by way of consignation (Tolentino, 1 987).

CIVIL LAW REVIEWER Chapter III. DIFFERENT KINDS of OBLIGATIONS B. Solidary Obligation An obligation where there is concurrence of several credi tors, or of several debtors, or of several creditors and several debtors, by vir tue of which, each of the creditors has the right to demand, and each of the deb tors is bound to render, entire compliance with the prestation which constitutes the object of the obligation (Obligacion Solidaria). Indivisibility Refers to the prestation which constitutes the object of the obli gation Solidarity Refers to the legal tie or vinculum, and consequently to the s ubjects or parties of the obligation Plurality of subjects is indispensable When there is liability on the part of the debtors because of the breach, the solida rity among the debtors remains Plurality of subjects is not required In case of breach, obligation is converted into indemnity for damages because the indivisibility of the obligation is term inated

The indivisibility of an obligation does not necessarily give rise to solidarity . Nor does solidarity itself imply indivisibility. (Art. 1211) Kinds of Solidary Obligations 1. Active (solidarity among creditors): Each credi tor has the authority to claim and enforce the rights of all, with the resulting obligation of paying everyone of what belongs to him. Creation of a relationshi p of mutual agency among co-creditors. A solidary creditor cannot assign his rights without the consent of the others. (Art. 1213) Each debtor may pay to any solidary creditor, but if any demand, jud icial or extrajudicial, has been made by one of them, payment must be made to hi m. (Art. 1214) 2. Passive (solidarity among debtors): Each debtor can be made to answer for the others, with the right on the part of the debtor-payor to recove r from the others their respective shares. Creation of a relationship of mutual guaranty among co-debtors The total remission of the debt in favor of a debtor r eleases all the debtors All the debtors are liable for the loss of the thing due , even if such loss is caused by the fault of only one of them and for delay, ev en if it is caused by just one of them The interruption of prescription as to on e debtor affects all the others; but the renunciation by one debtor of prescript ion already had does not prejudice the others 3. Mixed: Solidarity among credito rs and debtors Solidarity is not destroyed by the fact that the obligation of ea ch debtor is subject to different conditions or periods. The creditor can commen ce an action against anyone of the debtors for the compliance with the entire ob ligation minus the portion or share which corresponds to the debtor affected by the condition or period. 104 OBLIGATIONS ________________________________________________________________________________ ____ Effects of Modes of Extinguishment Assignment of Rights in Solidary Obligations The solidary creditor cannot assign his right because it is predicated upon mutu al confidence, UNLESS, the (1) the assignment is to a co-creditor; (2) assignmen t is with consent of co-creditor Compensation & Confusion If it is partial, the rules regarding application of payment shall apply (w/o) prejudice to the right of other creditors who have not caused the confusion or compensation to be reimb ursed to the extent that their rights are diminished or Loss or Impossibility If not debtors fault, the obligation is extinguished If thru debtors OR fortuitous e

vent after delay, the obligation is converted into indemnity for damages but the solidary character of the obligation remains. Novation If prejudicial, the solidary creditor who effected the novation shall r eimburse the others for damages incurred by them; If beneficial and secured by o ne, he shall be liable to the others for the share (obligation & benefits) which Remission If entire obligation, obligation is totally extinguished. If for the b enefit of one of the debtors covering his entire share, he is completely release d from the creditor/s. If for the benefit of one of the debtors and it covers on ly part

CIVIL LAW REVIEWER corresponds to them If by substituting the debtor, the solida ry creditor who effected the novation is liable for the acts of the new debtor i n deficiency or damages If by subrogating a third person in creditors rights, the obligation is not in reality extinguished as the relation between the other cre ditors and the debtor/s is maintained. affected If total, the obligation is exti nguished, what is left is the ensuing liability for reimbursement Chapter III. DIFFERENT KINDS of OBLIGATIONS of his share, his character as a sol idary debtor is not affected. 105 OBLIGATIONS Effects of Prejudicial and Beneficial Acts (Art.1212) 1. Each one of the solidar y creditors may do whatever may be useful or beneficial to the others, but not a nything which may be prejudicial to the latter. 2. As far as the debtors are con cerned, a prejudicial act performed by a solidary creditor is binding. 3. As bet ween the solidary creditors, the creditor who performed such act shall incur the obligation of indemnifying the others for damages. Defenses Available to a Soli dary Debtor (Art. 1222) 1. Those derived from the nature of the obligation 2. Th ose personal to him 3. Those pertaining to his own share 4. Those personally bel onging to other codebtors but only as regards that part of the debt for which th e latter are responsible. Effects Demand Upon a Solidary Debtor The demand made against one of them shall not be a n obstacle to those which may subsequently be directed against the others so lon g as the debt has not been fully collected. (Art. 1216) Payment by a Debtor Full payment made by one of the solidary debtors extinguishes the obligation. (Art. 1217) The creditor may proceed against any one of the solidary debtors or all simultan eously (Art. 1216) A creditors right to proceed against the surety exists indepen dently of his right to proceed against the principal If two or more solidary debtors offer to pay, the creditor may choose which offe r to accept. (Art. 1217) The solidary debtor who made the payment shall have the right to claim from his co-debtors the share which corresponds to them with int erest, UNLESS barred by prescription or illegality. (Art. 1218)

When a solidary debtor pays the entire obligation, the resulting obligation of t he codebtors to reimburse him becomes joint. If payment was made before the debt became due, no interest during the intervening period may be demanded. (Art. 12 17 par. 2) When one of the solidary debtors cannot reimburse his share to the de btor paying the obligation due to insolvency, such share shall be borne by all h is co-debtors, in proportion to the debt of each. (Art. 1217, par. 2) Inchausti v. Yulo, (1914): Debtors obligated themselves solidarily, so creditor can bring its action against any of them. Remission of any part o fthe debt, mad e by the creditor in favor of one of the solidary debtors, inures to the benefit of the rest of them.

CIVIL LAW REVIEWER Chapter III. DIFFERENT KINDS of OBLIGATIONS VI. Divisible and Indivisible Obligations A. Divisible Obligations One which is susceptible of partial performance; that i s, the debtor can legally perform the obligation by parts and the creditor canno t demand a single performance of the entire obligation (Tolentino, 1987). B. Ind ivisible Obligations One which cannot be validly performed in parts (Tolentino, 1987). Divisibility/indivisibility refers to the performance of the prestation a nd not to the thing which is the object thereof. The thing may be divisible, yet the obligation may be indivisible. When the obligation has for its object the e xecution of a certain number of days of work, the accomplishment of work by metr ical units, or analogous things which by their nature are susceptible of partial performance, it shall be divisible (Art.1225, par. 2). When there is plurality of debtors and creditors, the effect of divisibility/indivisibility of the oblig ation depend upon whether the obligation is joint or solidary. A joint indivisib le obligation give rise to indemnity for damages from the time anyone of the deb tors does not comply with is undertaking. (Art. 1224) Effect Creditor cannot be compelled partially to receive the prestation in which the obligation consists; neither may the debtor be required to make the partial payment (Art. 1248), UNLE SS: The obligation expressly stipulates the contrary The different prestations c onstituting the objects of the obligation are subject to different terms and con ditions The obligation is in part liquidated and in part unliquidated 3.

If the principal obligation is void, penal clause shall also be void. However, t he nullity of the penal clause does not carry with it the nullity of the princip al obligation (Art.1230). Purposes of Penalty 1. 2. Funcion coercitiva de garantia - to insure the performance of the obligati on. Funcion liquidatoria - to liquidate the amount of damages to be awarded to t he injured party in case of breach of the principal obligation (compensatory). F unction estrictamente penal - to punish the obligor in case of breach of the pri ncipal obligation (punitive). 106 OBLIGATIONS Effects of Penalty 1. The penalty shall substitute the indemnity for damages and payment of interest in case of non-compliance (Art. 1226), UNLESS: a. b. c. There is a stipulation to the contrary The obligor refuses to pay the p enalty The obligor is guilty of fraud 2. Debtor cannot exempt himself from the performance of the principal obligation by paying the stipulated penalty unless this right has been expressly reserved for him (Art. 1227). 3. Creditor cannot demand the fulfillment of the principal obligation and demanding the satisfaction of the penalty at the same time unless the right has been clearly granted to him (Art. 1227). Tacit or implied grant i s admissible. a. If creditor has chosen fulfillment of the principal obligation and performanc e thereof become impossible without his fault, he may still demand the satisfact ion of the penalty. If there was fault on the part of the debtor, creditor may d emand not only satisfaction of penalty but also the payment of damages. If credi tor chooses to demand the satisfaction of the penalty, he cannot afterwards dema nd the fulfillment of the obligation.

b. c. VII. Oblligations with a Penal Clause Penal Clause: An accessory undertaking to assume greater liability in case of br each (De Leon, 2003). It is attached to an obligation in order to ensure perform ance. The enforcement of the penalty can be demanded by the creditor only when t he non-performance is due to the fault or fraud of the debtor. Proof of Actual Damage Art. 1228: Proof of actual damages is not necessary is ap plicable only to the general rule stated in Art. 1226 and not to the exceptions. The penalty is exactly identical with what is known as liquidated damages in Art. 2226. When Penalty may be Reduced Art. 1229: 1. 2. 3. If the principal obligation has been partly complied with. If the princ ipal obligation has been irregularly complied with. If the penalty is iniquitous or unsconscionable even if there has been no performance.

CIVIL LAW REVIEWER Chapter IV. EXTINGUISHMENT of OBLIGATIONS Chapter IV. Obligations I. II. Extinguishment of singular. There must be full and faithful compliance with the terms of the contr act. B. Payment by Cession (Art. 1255) PAYMENT OR PERFORMANCE LOSS OF THE THING DUE OR IMPOSSIBILITY OF PERFORMANCE III . CONDONATION OR REMISSION OF THE DEBT IV. CONFUSION OR MERGER OF RIGHTS V. COMP ENSATION VI. NOVATION Act whereby a debtor abandons all his property to his creditors, so that the lat ter may apply the proceeds (of its sale) to their credits. OBLIGATIONS C. Dation in payment (Art. 1245) Delivery and transmission of ownership of a thi ng by the debtor to the creditor as an accepted equivalent of the performance of the obligation (dacion en pago). Dation in payment In favor of only one creditor Payment extinguishes the obligat ion to the extent of the value of the thing delivered, unless the parties agree that the obligation be totally extinguished Transfer of ownership of thing alien ated to creditor Payment by cession There are various creditors Extinguishes cre dits only up to the extent of proceeds from sale of assigned property, unless ot herwise agreed upon Only possession and administration with authorization to con vert property to cash with which the debts shall be paid Assignment presupposes insolvency of debtor. Assignment involves all the property of the debtor. 107 I. Payment or Performance Art. 1232, Civil Code. Payment means not only delivery of money but also perform ance, in any manner, of the obligation. See Diagrams of Prof. Labitag at the end section of Obligations. SPECIAL FORMS O F PAYMENT A. Application of Payment (Art. 1252) Designation of the debt to which should be applied a payment made by a debtor who owes several debts to the same creditor Rules on Application 1. Preferential right of debtor - debtor has the r ight to select which of his debts he is paying. 2. The debtor makes the designat ion at the time he makes the payment 3. If not, the creditor makes the applicati on, by so stating in the receipt that he issues, unless there is cause for inval idating the contract. 4. If neither the creditor nor debtor exercises the right to apply, or if the application is not valid, the application is made by operati on of law. 5. If debt produces interest - payment not deemed applied to the prin cipal unless interests are covered. 6. When no application can be inferred from the circumstances of payment, it is applied to: to the most onerous debt of the debtor; or if debts due are of the same nature and burden, to all the debts in p roportion 7. Rules of application of payment may not be invoked by a surety or s olidary guarantor. Reparations Commission vs. Universal Deep Sea Fishing Corp. (1978): Rules on app

lication of payment cannot be made applicable to a person whose obligation as a mere surety is both contingent and Not necessarily in state of financial difficulty Assignment of only some specifi c thing D. Tender of payment and consignation 1. Tender of payment: Manifestation made b y debtor to creditor of his desire to comply with his obligation, with offer of immediate performance Preparatory act to consignation Extrajudicial in character 2. Consignation: Deposit of the object of obligation in a competent court in ac cordance to the rules prescribed by law, whenever the creditor unjustly refuses payment or because of some circumstances which render direct payment to the cred itor impossible or inadvisable. Principal act which constitutes a form of paymen t. Judicial in character.

CIVIL LAW REVIEWER Chapter IV. EXTINGUISHMENT of OBLIGATIONS Effects of Withdrawal by Debtor Arts. 1260- 1261 1. Before approval of the court - Obligation remains in force. Art. 1259, Civil Code. Expenses of consignation, when properly made, shall be ch arged against the creditor. Requisites and Effects Application of Payment Requisites 1. Plurality of debts 2 . Debts are of the same kind 3. Debts are owed to the same creditor and by the s ame debtor 4. All debts must be due 5. Payment made is not sufficient to cover a ll debts Effects Payment of debt designated as to corresponding amount Cession R equisites 1. Plurality of debts 2. Plurality of creditors 3. Partial insolvency of the debtor 4. Abandonment of the totality of the debtors properties for the be nefit of the creditors 5. Acceptance by the creditors Dation Requisites 1. Shoul d not be prejudicial to other creditors 2. Should not constitute a pactum commis sorium Tender and Consignation Requisites 1. There is a debt due 2. consignation is made because of some legal cause 3. previous notice of consignation was give n to those persons interested in the performance of the obligation 4. amount or thing due was placed at the disposal of the court 5. after the consignation has been made, the persons interested were notified thereof Effects Assignment liberates debtor up to the amount of the net proceeds of the sale of his assets Assignment does not vets title to the property in the credito rs, who are only authorized to sell it. Effects Extinguishment of debt from as an equivalent of the performance of the o bligation Effects If accepted by the creditor or declared properly made by the Court: 1. D ebtor is released in same manner as if he had performed the obligation at the ti me of consignation 2. Accrual of interest is suspended from the moment of consig nation. 3. Deterioration or loss of the thing or amount consigned, occurring wit hout the fault of debtor, must be borne by creditor from the moment of deposit 4 . Any increment or increase in the value of the thing after consignation inures to the benefit of the creditor OBLIGATIONS When Tender and Refusal Not Required (Art. 1259) 1. Creditor is absent or unknown , or does not appear at the place of payment 2. Creditor is incapacitated to rec eive the thing due at time of payment 3. Without just cause, creditor refuses to give receipt 4. Two or more persons claim the same right to collect 5. Title of the obligation has been lost 2. After approval of the court or acceptance by the creditor, with the consent o f the latter Obligation remains in force, but guarantors and co-debtors are libe rated. Preference of the creditor over the thing is lost. 3. After approval of t he court or acceptance by the creditor, and without creditors consent Obligation subsists, without change in the liability of guarantors and co-debtors, or the c reditors right of preference. 108

CIVIL LAW REVIEWER Chapter IV. EXTINGUISHMENT of OBLIGATIONS II. Loss or Impossibility (Asked in 83, 84, 85, and 94) A. Loss A thing is lost when it perishes, goes out of commerce or disappears in such a way that its existence is unknown or it cannot be recovered (Art. 1189, par. 2) Effects of Loss Obligation to Deliver a Specific Thing Extinguishment of the obligation if the t hing was destroyed w/o fault of the debtor and before he has incurred delay. Obl igation to Deliver a Generic Thing Loss of a generic thing does not extinguish a n obligation, UNLESS, Delimited generic things: kind or class is limited itself, and the whole class perishes Loss of the thing when in possession of the debtor: Loss was due to the debtors f ault. Burden of explaining the loss of the thing falls upon him, UNLESS, due to a natural calamity: earthquake, flood, storm, etc. Subjective impossibility: Where there is no physical or legal loss, but the thin g belongs to another, the performance by the debtor becomes impossible. The debt or must indemnify the creditor for damages. 109 OBLIGATIONS B. Impossibility of Performance (Arts. 12661267, CC) When prestation becomes leg ally or physically impossible (by fortuitous event or force majeure), the debtor is released.Impossibility must have occurred without fault of debtor, and after the obligation has been constituted. PARTIAL IMPOSSIBILITY 1. Courts shall dete rmine whether it is so important as to extinguish the obligation. 2. If debtor h as performed part of the obligation when impossibility occurred, creditor must p ay the part done as long as he benefits from it. 3. If debtor received full paym ent from creditor, he must return excess amount corresponding to part which was impossible to perform. Doctrine of Unforeseen Events When the service has become so difficult as to be manifestly beyond the contemplation of all the parties, t he obligor may be released in whole or in part (De Leon, 2003). Requisites: 1. E vent could not have been foreseen at the time of the constitution of the contrac t. 2. Event makes performance extremely difficult but not impossible. 3. Event n ot due to any act of the parties. 4. Contract is for future prestation. Action against 3 persons - creditor shall have all the rights of action the debt or may have rd against 3 persons by reason of the loss. Presumption: The loss wa s due to the debtors fault, UNLESS: 1. Law provides that the debtor shall be liab le even if the loss is due to fortuitous events (Arts. 1942, 1979, 2147, 2159) 2 . Obligor is made liable by express stipulation 3. Nature of the obligation requ ires an assumption of risk 4. Fault or negligence concurs with the fortuitous ev ent 5. Loss occurs after delay 6. Debtor has promised to deliver the same thing to two or more different parties 7. Obligation arises from a criminal act 8. Bor rower in commodatum: saves his own things and not the thing of the creditor duri ng a fortuitous event In Reciprocal Obligations Extinguishment of the obligation due to loss of the thing or impossibility of performance affects both the credi tor and debtor; the entire juridical relation is extinguished. Partial loss Art. 1264: Partial loss due to a fortuitous event does not extinguish the obligation ; thing due shall be delivered in its present condition, without any liability o n the part of the debtor, UNLESS, the obligation is extinguished when the part l ost was of such extent as to make the thing useless. rd III. Condonation or Remission of the Debt CONDONATION: An act of liberality, by virtue of which, without receiving any equ

ivalent, creditor renounces the enforcement of the obligation. The obligation is extinguished either in whole or in such part of the same which to remission ref ers.

CIVIL LAW REVIEWER Chapter IV. EXTINGUISHMENT of OBLIGATIONS Requisites 1. Debt must be existing and demandable 2. Renunciation must be gratu itous; without any consideration 3. Debtor must accept the remission Effect Art. 1273: Renunciation of the principal debt shall extinguish the accessory obligat ions, but remission of the latter leaves the principal obligation in force. Pres umptions Arts. 1271, 1272, 1274: Whenever the private document in which the debt is found in the possession of the debtor, it shall be presumed that the credito r delivered it voluntarily, unless contrary is proved. Delivery of a private doc ument evidencing credit, made voluntarily by the creditor to the debtor, implies the renunciation of the action of creditor against the latter. Kinds 1. As to f orm (Art. 1270) Express: made formally; in accordance with forms of ordinary don ations Implied: inferred from the act of the parties 2. As to extent Total: enti re obligation Partial: may refer only to amount of indebtedness, or to an access ory obligation, or to some other aspect of the obligation 3. As to constitution Inter vivos: effective during the lifetime of the creditor Mortis causa: effecti ve upon death of the creditor; must be contained in a will or testament Effects Arts. 1275- 1277: 1. The obligation is extinguished from the time the ch aracters of the debtor and creditor are merged in the same person. 2. In joint o bligations, confusion does not extinguish the obligation except as regards the c orresponding share of the creditor or debtor in whom the two characters concur. 3. In solidary obligations, confusion in one of the solidary debtors extinguishe s the entire obligation. 4. Obligation is not extinguished when confusion takes place in the person of subsidiary debtor (e.g. guarantor), but merger in the per son of the principal debtor shall benefit the former. 110 OBLIGATIONS V. Compensation COMPENSATION: Offsetting of two obligations which are reciprocally extinguished if they are of the same value, or extinguished to the concurrent amount if of di fferent values. (Asked in 80, 81, 98, and 02) Compensation There must always be 2 obligations There are 2 persons who are mutu ally debtors and creditors of each other in 2 separate obligations, each arising from the same cause. Confusion Involves only one obligation There is only one p erson whom the characters of the creditor and debtor meet IV. Confusion or Merger of Rights CONFUSION: The meeting in one person of the qualities of creditor and debtor of the same obligation. Requisites 1. It should take place between principal debtor and creditor 2. It must be complete and definite- Parties must meet all the qua lities of creditor and debtor in the obligation/ in the part affected. Kinds 1. As to extent Total: Debts are of the same amount Partial: Amounts are n ot equal 2. As to origin Legal: takes place by operation of law Conventional: pa rties agree to compensate their mutual obligations even when some requisite in A rt. 1279 is lacking (Art. 1282). Judicial: decreed by court when there is counte rclaim; effective upon final judgment (Art. 1283). Facultative: when it can be c laimed by one of the parties who, however, has the right to object to it.

CIVIL LAW REVIEWER Requisites Each obligor is bound principally, and at the same time a principal creditor of the other Both debts must consist in a sum of mone y, or if the things due are FUNGIBLE, of the same kind & quality Both debts are due Debts are liquidated and demandable There must be no retention or controvers y over either of the debts, rd commenced by 3 persons and communicated in due ti me to the debtor Compensation is not prohibited by law Effects Effects rise from the moment all the requisites concur. Debtor claiming its benefits must prove c ompensation; once proven, effects retroact from the moment when the requisites c oncurred. Both debts are extinguished to the concurrent amount, eventhough the c reditors and debtors are not aware of the compensation. Accessory obligations ar e also extinguished. Chapter IV. EXTINGUISHMENT of OBLIGATIONS 1. 1. VI. Novation NOVATION: Extinguishment of an obligation by the substitution or change of the o bligation by a subsequent one which extinguishes or modifies the first either by changing the object or principal conditions, or by substituting the person of t he debtor, or by subrogating a third person in the rights of the creditor. A jur idical act of dual functionit extinguishes an obligation, and at the same time, i t creates a new one in lieu of the old. (Asked in 78, 88, 94 and 01) Requisites 1. A previous valid obligation 2. Agreement of all the parties to the new obligation 3. Extinguishment of the old obligation 4. Validity of the new obligation Novat ion is not presumed. Express novation: Parties must expressly disclose their int ent to extinguish the old obligation by creating a new one. Implied novation: No specific form is required. There must be incompatibility between the old and ne w obligation or contract. (Asked in 79, 82, 88, and 94) California Bus Line v. State Investment (2003): In the absence of an unequivocal declaration of extinguishment of the pre-existing obligation, only proof of inc ompatibility between the old and new obligation would warrant a novation by impl ication. The restructuring agreement merely provided for a new schedule of payme nts and authority giving Delta to take over management and operations of CBLI in case it fails to pay installments. There was no change in the object of prior o bligations. 2. 2. 111 OBLIGATIONS 3. 3. 4. 5. 4. 6. Compensation is prohibited in: 1. Contracts of depositum 2. Contracts of commoda tum 3. Future support due by gratuitous title 4. Civil liability arising from a penal offense 5. Obligations due to the government 6. Damage caused to the partn ership by a partner ASSIGNMENT OF CREDIT (Art. 1285): No effect and does not bin d the debtor unless and until the latter is notified of the assignment or learns of it.

With Debtors Consent Debtors consent to assignment of credit constitutes a waiver of compensation, unless he reserved his right to compensation. With Debtors Knowl edge Debtor may set up compensation of debts (maturing) before the assignment of credit but not of subsequent ones Without Debtors Knowlege Debtor may setup comp ensation of all credits (maturing) prior to the assignment and also latter ones until he had knowledge of the assignment. Test of Incompatibility Whether or not the old and new obligation can stand toge ther, each one having an independent existence. No incompatibility exists when t hey can stand together. Hence, there is no novation. Incompatibility exists when they cannot stand together. Hence, there is novation. Effects In General If Original Obligation is Void Novation is void if the original oblig ation was void, except when annulment may be claimed only by the If New Obligati on is Void New obligation is void, the old obligation subsists, unless the parti es intended that the former realations Facultative compensation: Compensation which can only be set up at the option of a creditor, when legal compensation cannot take place because some legal requis ites in favor of the creditor are lacking. Creditor may renounce his right to co mpensation, and he himself may set it up.As opposed to conventional compensation , facultative compensation is unilateral and does not depend upon the agreement of the parties. 1. Old obligation is extinguished and replaced by the new one stipulated.

CIVIL LAW REVIEWER debtor, or when ratification validates acts that are voidable. (Art. 1298) 1. Or iginal obligation is void: No novation 2. Original obligation voidable: Effectiv e if contract is ratified before novation shall be extinguished in any event. (A rt. 1297) 1. New obligation void: No novation 2. New obligation voidable: Novati on is effective Chapter IV. EXTINGUISHMENT of OBLIGATIONS Expromision Initiative for change does not emanate from the debtor, and may Even be made without his knowledge. Delega cion Debtor (delegante) offers or initiates the change, and the creditor rd (del egatorio) accepts 3 person (delegado) as consenting to the substitution Requisit es 1. Consent of old debtor, new debtor, and creditor

Accessory obligations are also extinguished, but may subsist only insofar as the y may rd benefit 3 persons who did not give their consent to the novation OR may not be affected upon agreement between the parties. Original or new obligation with suspensive or resolutory condition Art. 1299: If original obligation was subject to a suspensive or resolutory condition, the ne w obligation shall be under the same condition, unless it is otherwise stipulate d. Compatible Conditions Fulfillment of both conditions: new obligation becomes dem andable Fulfillment of condition concerning the original obligation: old obligat ion is revived; new obligation loses force Fulfillment of condition concerning t he new obligation: no novation; requisite of a previous valid and effective obli gation lacking Incompatible Conditions Original obligation is extinguished, whil e new obligation exists Demandability shall be subject to fulfillment/ nonfulfil lment of the condition affecting it

Requisites 1. Consent of the creditor and the new debtor 2. Knowledge or consent of the old debtor is not required Effects 1. Old debtor is released 2. Insolven cy of the new debtor does not revive the old obligation in case the old debtor d id not agree to expromision 3. If with knowledge and consent of old debtor, new debtor can demand reimbursement the entire amount paid and w/ subrogation of cre ditors rights 4. If without knowledge of the old debtor, new debtor can demand re imbursement only up to the extent that the latter has been benefited w/o subroga tion of creditors rights 112 OBLIGATIONS Effects 1. Insolvency of the new debtor revives the obligation of the old debtor if it was anterior and public, and known to the old debtor. 2. New debtor can d emand reimbursement of the entire amount he has paid, from the original debtor. He may compel creditor to subrogate him to all of his rights. 2. Subrogation of a 3 person in the rights of the creditor a. Conventional subro gation: by agreement of the parties; Requisites: the consent of the 3 person, an d of the original parties (Art. 1301). Conventional subrogation Debtors consent is necessary Extinguishes an obligation and gives rise to a new one Assignment of credit Debtors consent is not required Refers to the same right which passes from one person to another, without modify ing or extinguishing the obligation rd

rd OBJECTIVE NOVATION 1. Change of the subject matter 2. Change of causa or conside ration 3. Change of the principal conditions or terms SUBJECTIVE NOVATION 1. Sub stitution of the Debtor: Consent of creditor is an indispensable requirement bot h in expromision and delegacion.

CIVIL LAW REVIEWER Defects/ vices in the old obligation are cured Defects/ vices in the old obligation are not cured Chapter IV. EXTINGUISHMENT of OBLIGATIONS b. Legal subrogation: by operation of law Legal subrogation is not presumed, exc ept in the following circumstances: 1. When creditor pays another creditor who i s preferred, even without the debtors knowledge rd 2. When a 3 person not interes ted in the obligation pays with the express or tacit approval of the debtor 3. W hen, even without the knowledge of the debtor, a person interested in the fulfil lment of the obligation without prejudice to the effects of confusion as to the latters share effects of confusion as to the latters share Effects Total 1. Transfers to the person subrogated the credit with all the rights there to appertaining, either against the debtor or rd 3 persons. 2. Obligation is not extinguished, even if the intention is to pay it. 3. Defenses against the old c reditor are retained, unless waived by the debtor Partial 1. A creditor, to whom partial payment has been made, may exercise his right for the remainder, and sh all be preferred to the person subrogated in his place in virtue of the partial payment. 113 OBLIGATIONS

CIVIL LAW REVIEWER Charts: PAYMENT & PERFORMANCE Charts: Payment & Performance by Professor Eduardo A. Labitag UP College of Law (Asked in 75, 84, 88, 95, and 98) WHO CAN PAY? 1. 2. 3. 4. In GENERAL Debtor or his: Authorized Agent Heir Successor-in- intere st 3rd PERSON Interested in obligation (creditor cannot refuse to accept valid payment) Not in terested in obligation (creditor may refuse to accept payment [1236]) 3rd person (whether or not interested in obligation) does not intend to be reimbursed (123 8) Payment w/ or w/o debtors knowledge Effects: 1. Valid payment; obligation extingu ished 2. Debtor to reimburse fully 3rd person interested in obligation 3. 3rd pe rson subrogated to rights of creditor Payment with debtors consent (express/tacit) Effects: 1. 3rd person is entitled t o full reimbursement 2. Legal subrogation (novation) 3rd person is subrogated/st ep into the shoes of creditor Payment without debtors knowledge or against the will of D Effects: 3rd person ca n only be reimbursed only insofar as payment has been beneficial to debtor(1236, 2nd. par.) burden of proof on 3rd person cannot compel C to subrogate him (1237) Debtor must give consent Effects: 1. Payment is deemed as a donation/offer of donation 2. Donation must b e in proper form (if above P5Th must be in writing In Obligation to Give, if PAYOR has No free disposal & no capacity to alienate Minor who entered contract w/o consen t of parent or guardian Effects: Payment is invalid w/o prejudice to natural obligations Effects: No rig ht to recover fungible thing delivered to creditor who spent or consumed it in g ood faith 114 OBLIGATIONS Legend: G = General Rule 114 = Exception C = Creditor D = Debtor

CIVIL LAW REVIEWER Charts: PAYMENT & PERFORMANCE TO WHOM PAYMENT MAY BE MADE In GENERAL Creditor /person in whose favor obligation was constituted, or His successor in interest, or Any person authorized to received payment (1240) 115 OBLIGATIONS 115 Payment to Incapacitated Creditor (1241) G NOT valid C 1) If C has kept the thing delivered 2) Insofar as payment benefited

Payment to 3rd PERSON (1241, 2nd par.) G VALID if 3rd person proves that it redounded to Cs benefit Exception to proof of benefit: .3rd person acquires Cs rights after payment .C ra tifies payment .Cs conduct leads D to believe that 3rd person had authority to re ceive payment .Assignment of credit without notice to D In Case of ACTIVE SOLIDARITY If no demand is made, D may pay to ANY of solidary creditors If any judicial/extrajudicial demand is made by any one of the creditors who mad e the demand (1214) Effect: No extinguishment If payment is made to a WRONG PARTY Extinguishment if fault or negligence can be imputed to creditor Payment in good faith to person in possession of credit = debtor released (1242) If debtor pays creditor after being judicially ordered to retain debt = payment not valid (1243) Payment made in good faith to any person in possession of credi t Effect: D released (1242)

CIVIL LAW REVIEWER Charts: PAYMENT & PERFORMANCE WHAT IS TO BE PAID? IDENTITY

In GENERAL The very prestation (thing or service Give: 1. Specific thing itself 2. Accessions & accessories 3. If with loss, improvements, deterioration Apply A rt. 1189 Debtor cannot compel C to receive a different specific thing even latte r has same value or more valuable than that due (1244) G: C cannot demand a thing of superior quality; can demand inferior D cannot deliv er a thing of inferior quality Unless quality & circumstances have been stated ( 1246) purpose and other circumstances of obligation considered Obligation to pay sum of money, if D alienates property to C = DACION EN PAGO governed by law on SALES (1245) Identity: The very same act promised to be done or not to be done S ubstitution cannot be done against Cs will (1244, 2nd par.) Obligation to give a GENERIC thing Obligation to DO or NOT to DO Payment of MONEY 1. Payment of domestic obligations in Phil. Currency Exceptions under R.A. 4100; R.A. 8183 Foreign currency if agreed to by parties 2. In case of extraordinary inflation/deflation, basis of payment is value of currency at the time of obliga tion was established (1250) No interest (i.e., for the use of someones money) sha ll be due unless expressly stipulated in writing Payment of INTEREST OBLIGATIONS Obligation to give a SPECIFIC thing 116

CIVIL LAW REVIEWER HOW IS PAYMENT TO BE MADE INTEGRITY In GENERAL 1233 Complete delivery or rendering 1248 C cannot be compelled to rec eived partial prestations; D cannot be compelled to give partial payments Except ions: 1. Contrary stipulation 2. When debt is in part liquidated & in part unliq uidated 3. When there are several subjects/parties are bound under different ter ms/conditions Charts: PAYMENT & PERFORMANCE Effect if C accepts incomplete performance (1235): WAIVER In Case of SUBSTANTIAL PERFORMANCE IN GOOD FAITH (1234) D may recover as if there had been complete fulfillment - Less damages suffered by C PRESUMPTIONS in payment of INTERESTS & INSTALLMENTS INTEREST If principal amount is received w/o reservation as to interest interest is presumed to have been paid (1176; 1253) INSTALLMENTS If a latter installment of a debt is received w/o reservation to prior installments Prior installments are presumed paid (1176, 2nd par.) OBLIGATIONS May be express or implied If C knows the incompleteness/ irregularity of the pay ment, and he still accepts it w/o objection, then obligation is deemed extinguis hed (estoppel) * There must be intent to waive Except if C has no knowledge of t he incompleteness 117

CIVIL LAW REVIEWER Charts: PAYMENT & PERFORMANCE WHERE PAYMENT IS TO BE MADE (ART. 1251) In GENERAL In the place designated in the obligation If no place is designated In GENERAL Extrajudicial expenses required by the payment shall be borne by DEBT OR In any other case Domicile of debtor

Unless otherwise stipulated If D changes his domicile in bad faith or after he has incurred in delay nal expenses shall be borne by D As to JUDICIAL expenses OBLIGATIONS If obligation is to deliver a SPECIFIC thing Place of performance is wherever th e thing was at the moment obligation was constituted Unless there is a contrary express stipulation Expenses Payment of Making 118 Rules of Court shall govern Additio

CIVIL LAW REVIEWER Charts: PAYMENT & PERFORMANCE WHEN PAYMENT IS TO BE MADE? When obligation is due and demandable but D may pay before due date if period is for benefit of D In GENERAL Payment to be made when the creditor makes a demand (judicially/extrajudicially) Exceptions wherein demand of creditor is not neces sary for delay to exist: 1. When obligation/law expressly declares 2. Nature & c ircumstances of the obligation designation of time is controlling motive or estab lishment of contract 3. When demand would be useless 119 OBLIGATIONS WHY SHOULD PAYMENT BE MADE? Because C may compel D to pay, and failure to pay will allow C to satisfy credit from properties of D that are not exempt from execution - end of Obligations -

CIVIL LAW REVIEWER TABLE of CONTENTS CONTRACTS Table of Contents Chapter I. General Provisions.....................122 I. Classification of Contr acts.................122 II. Elements of Contracts.......................123 III . Stages of Contracts...........................123 IV. Charactertics of Contrac ts (MARCO) 123 Chapter II. Essential Requisites .................125 I. Consent .............................................125 II. Object .................... ............................127 III. Cause ..................................... ...........127 Chapter III. Forms of Contracts ..................129 I. Rules .. ...............................................129 II. Kinds of Formalities..... ......................129 Chapter IV. Reformation of Contracts........130 Chapte r V. Interpretation of Contracts.......130 Chapter VI. Defective Contracts ..... ............131 I. Rescissible Contracts (Arts. 1380-1389) 131 II. Voidable Cont racts (Arts. 1390-1402) 132 III. Unenforceable Contracts (Arts. 14031408) ...... ....................................................133 IV. Void or Inexistent C ontracts (Arts. 14091422) ...................................................... ....134 121 CONTRACTS

CIVIL LAW REVIEWER Chapter I. GENERAL PROVISIONS Prof. Solomon Lumba Faculty Editor OBLIGATIONS & CONTRACTS OBLIGATIONS & CONTRACTS TEAM Chapter I. General Provisions I. II. III. IV. CLASSIFICATION ELEMENTS STAGES CHARACTERISTICS Leo Ledesma Lead Writer Krizel Malabanan Ivy Velasco Tin Reyes Frances Domingo Hazel Abenoja Writers Article 1305, Civil Code. A contract is a meeting of minds, between two persons whereby one binds himself, with respect to the other, to give something or to re nder some service. CIVIL LAW Kristine Bongcaron Patricia Tobias Subject Editors I. Classification of Contracts 122 CONTRACTS ACADEMICS COMMITTEE Kristine Bongcaron Michelle Dy Patrich Leccio Editors-in-Chief PRINTING & DISTRIBUTION Kae Guerrero A. To formation: 1. Consensual: consent is enough; e.g. sale 2. Real: consent an d delivery is required; e.g. deposit, pledge 3. Solemn or formal: special formal ities are required for perfection e.g. donation of realty B. To relation to othe r contracts: 1. Principal: may exist alone; e.g. lease 2. Accessory: depends on another contract for its existence; e.g. guaranty 3. Preparatory: a preliminary step towards the celebration of a subsequent contract; e.g. agency C. To nature of vinculum 1. Unilateral: only one party is bound by the prestation; e.g. commo datum 2. Bilateral (synallagmatic): where both parties are bound by reciprocal p restations; e.g. sale D. To fulfillment of prestations 1. Commutative: fulfillme nt is determined in advance 2. Aleatory: fulfillment is determined by chance E. By equivalence of prestations 1. Gratuitous: no correlative prestation is receiv ed by a party 2. Onerous: there is an exchange of correlative prestations 3. Rem uneratory: the prestation is based on services or benefits already received F. B y the time of fulfillment 1. Executed: obligation is fulfilled at the time contr act is entered into 2. Executory: fulfillment does not take place at the time th e contract is made G. To their purpose DESIGN & LAYOUT Pat Hernandez Viktor Fontanilla Rusell Aragones Romualdo Menzon Jr. Rania Joya

LECTURES COMMITTEE Michelle Arias Camille Maranan Angela Sandalo Heads Katz Manzano Mary Rose Beley Sam Nuez Krizel Malabanan Arianne Cerezo Marcr ese Banaag Volunteers MOCK BAR COMMITTEE Lilibeth Perez BAR CANDIDATES WELFARE Dahlia Salamat LOGISTICS Charisse Mendoza SECRETARIAT COMMITTEE Jill Hernandez Head Loraine Mendoza Faye Celso Mary Mendoza Joie Bajo Members

CIVIL LAW REVIEWER Chapter I. GENERAL PROVISIONS 1. Transfer of ownership, e.g. sale 2. Conveyance of Use, e.g. Commodatum dition of Service, e.g. agency H. To their subject matter 1. Things, e.g. deposit 2. Services, e.g. agency I. To their designation 1. Nominate: the ves the contract a special designation or particular name e.g. deposit 2. nate: the contract has no special name 3. Ren sale, law gi Innomi

III. Stages of Contracts A. Preparation, conception or generation: period of negotiation and bargaining, ending at the moment of agreement B. Perfection or birth: the moment when the pa rties come to agree on the terms of the contract C. Consummation or death: the f ulfillment or performance of the terms agreed upon 123 CONTRACTS Article 1305, Civil Code. INNOMINATE CONTRACTS shall be regulated by the stipula tions of the parties, by the general provisions of Titles I and II of [the Civil Code], by the rules governing the most analogous nominate contracts, and by the customs of the place. IV. Charactertics of Contracts (MARCO) A. MUTUALITY The contract must bind both contracting parties; its validity or co mpliance cannot be left to the will of one of them (Art.1308). Taylor v. Uy Teng Piao, 1922: [BUT] a contract may expressly confer upon one par ty the right to cancel the contract because the exercise of that right is a fulf illment of the provisions of the contract itself Classes of Innominate Contracts 1. Do ut des: I give so that you may give 2. Do ut facias: I give so that you may do 3. Facio ut facias: I do so that you may do 4. Facio ut des: I do so that you may give

II. Elements of Contracts A. Essential: Those without which the contract would not exist (consent, object, causa). B. Natural: Those which are derived from the nature of the contract and ordinarily accompany the same-they are presumed to exist unless the contrary is stipulated e.g. warranty in sales C. Accidental: stipulated Common Elements Special Elements Example The release must be binding on both parties. The determination of the performanc e may rd be left to a 3 person, whose decision shall NOT be binding if: It is ev idently inequitable (the courts will decide) The decision had not been made know n to both parties (Art.1309) Those which exist only if B. AUTONOMY The contracting parties may establish such stipulations, clauses, te

rms and conditions as they may deem convenient, provided they are not contrary t o law, morals, good customs, public order, or public policy (Art. 1306). Solemn Real Consensual Consent, subject matter, causa Formality Donationo f pers onal property more than P5K Delivery Loan, pledge None Others C. RELATIVITY Contracts take effect only between parties, their assigns and heir s UNLESS, obligations arising from the contract are not transmissible by their ( 1) nature, (2) by stipulation or (3) by provision of law. The heir is not liable beyond the value of the property he received from the decedent. (Art. 1311) Exc eption: Strangers may enforce the contract in their favor in the ff. cases: 1. S tipulations Pour Autrui If a contract should contain some stipulation in favor of a third person, he may demand its fulfilment provided he communicated his

CIVIL LAW REVIEWER Chapter I. GENERAL PROVISIONS acceptance to the obligor before its revocation. A mere incidental benefit or in terest of a person is not sufficient. The contracting parties must have clearly and deliberately conferred a favour upon a third person (Art.1311). Requisites: a. There must be a stipulation in favor of a third person b. The stipulation mus t be part, not the whole of the contract c. The contracting parties must have cl early and deliberately conferred a favor upon a third person, NOT a mere inciden tal benefit or interest. d. The third person must have communicated his acceptan ce to the obligor before its revocation e. No relation of agency exists between any of the parties and the third person favored Florentino v. Encarnacion, 1977: a. Contracts to perform personal acts which cannot be as well performed by othe rs are discharged by the death of the promissor. Conversely, where the service o r act is of such a character that it may as well be performed by another, or whe re the contract, by its terms, shows that performance by others was contemplated , death does not terminate the contract or excuse nonperformance. b. In this cas e the stipulation is a stipulation pour atrui because the true intent of the par ties is to confer a direct and material benefit upon a third party. Accion Direc ta: Where the statute authorizes the creditor to sue on his debtors contract, e.g . lessor v. sublessee (Art. 1651,1652) (J.B.L. Reyes) 2. Third Person In Possess ion When the third person comes into possession of the object of a contract creat ing real rights (Art 1312) 3. Fraud Where the contract is entered into in order t o defraud a person (Art. 1313) 4. Tortuous Interference Where the third person in duces a contracting party to violate his contract (Art.1314). Requisites: a. Existence of a valid contract b. Knowledge of the third person of the existence of the contract; and c. Interference by third person without lega l justification or excuse D. CONSENSUALITY Contracts are perfected by mere conse nt and from that moment, the parties are bound not only to the fulfillment of wh at has been expressly stipulated but also to all consequences which, according t o their nature, may be in keeping with good faith, usage and law, (Art.1315) EXC EPT real contracts, such as deposit, pledge and commodatum, are not perfected un til the delivery of the object of the obligation. (Tolentino) E. OBLIGATORY FORC E Art. 1159, Civil Code. Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith. Art. 1308, Civil Code. The contract must bind both contracting parties; its validity or compliance cannot be left to the will of one of them. Art. 1315, Civil Code. Contracts are perfected by mere consent, and from that moment the parties are bo und not only to the fulfillment of what has been expressly stipulated but also t o all the consequences which, according to their nature, may be in keeping with good faith, usage and law. Art. 1356, Civil Code. Contracts shall be obligatory, in whatever form they may have been entered into, provided all the essential re quisites for their validity are present. However, when the law requires that a c ontract be in some form in order that it may be valid or enforceable, or that a contract be proved in a certain way, that requirement is absolute and indispensa ble. In such cases, the right of the parties stated in the following article can not be exercised. 124 CONTRACTS

CIVIL LAW REVIEWER Chapter II. ESSENTIAL REQUISITES Chapter II. Essential Requisites I. CONSENT II. OBJECT III. CAUSE I. Consent Requisites: 1. It must be manifested by the concurrence of the offer and accepta nce (Arts. 1319-1326) 2. The contracting parties must possess the necessary lega l capacity (Arts. 1327-1329) 3. It must be intelligent, free, spontaneous, and r eal (not vitiated) (Arts. 1330-1346) A. Concurrence 1. Offer: a unilateral propo sition which one party makes to the other for the celebration of the contract. ( Tolentino) Requisites: a. Definite b. Intentional c. Complete Invitations to mak e offers (advertisements) Business advertisements of things for sale, are NOT de finite offers, just invitations to make an offer, UNLESS the contrary appears (A rt. 1325) Advertisements for bidders are invitations to make proposals, advertis er is NOT bound to accept lowest or highest bid, UNLESS contrary appears; the bi dder is the offeror (Art. 1326). Statements of intention: no contract results ev en if accepted Rosenstock v. Burke, 1924: FACTS: Elser, in a letter, informed Burke that he was in a position and is willing to entertain the purchase of the yacht under some te rms. HELD: The word entertain applied to an act does not mean the resolution to pe rform said act, but simply a position to deliberate for deciding to perform or n ot to perform said act. It was merely a position to deliberate whether or not he would purchase the yacht and invitation to a proposal being made to him, which might be accepted by him or not. 2. Acceptance Requisites: a. Unqualified and Unconditional, i.e. it must conform with all the terms of the offer, otherwise it is a counter-offer (Art. 1319) b. Communicated to the offeror and learned by him (Arts. 1319, 1322). If made thro ugh an agent, the offer is accepted from the time the acceptance is communicated to such agent. c. Express/Implied, but is not presumed OPTION CONTRACT: A prepa ratory contract in which one party grants to the other, for a fixed period, the option to decide whether or not to enter into a principal contract. (Art. 1324) With consideration Offeror cannot unilaterally withdraw his offer Without consid eration Offeror may withdraw by communicating withdrawal to the offeree before a cceptance B. Capacity 1. Incapacitated to Give Consent a. Minors, UNLESS, the minors consen t is operative in contracts: For necessaries (Art.1427) Where the minor actively misrepresents his age (estoppel) Mercado v. Espiritu, 1917: Minors held in esto ppel through active misrepresentation Bambalan v. Maramba, 1928: There is no est oppel if the minority was known. b. Insane or demented persons, UNLESS, they con tract during a lucid interval c. Deaf-mutes who do not know how to read and writ e. CONTRACTS Conformity of the parties to the terms of the contract; the acceptance by one of the offer made by the other. (Manresa) OFFER TERMINATES upon: a. Rejection by the offeree b. Incapacity (death, civil i nterdiction, insanity, or insolvency) of the offeror or offeree before acceptanc e is conveyed c. Counter-offer d. Lapse of the time stated in the offer without acceptance being conveyed e. Revocation of the offer before learning of acceptan ce f. Supervening illegality before acceptance (J.B.L. Reyes)

125

CIVIL LAW REVIEWER Chapter II. ESSENTIAL REQUISITES 2. Disqualified to Contract (Art. 1329): a. Those under Civil interdiction for t ransactions inter vivos (RPC Art. 34) b. Undischarged insolvents (Insolvency Law , Sec.24) c. Husband and wife: cannot donate (Art. 123 FC) to each other, nor se ll if the marriage is under ACP (Art.1490) d. The ff. cannot purchase (Art. 1491 ): The guardian: his wards property The agent: the principals property Executors a nd administrators: property under administration Public officers-state property under their administration Justices, judges, prosecutors, clerks of court, lawye rs-property attached in litigation. e. Members of Ethnic Minorities: their contr acts (excluding sale of personal property or personal service contracts) must be approved by the Governor or his representative. (Public Land Act) Incapacity to Give Consent (Art. 1327) Restrains the exercise of the right to co ntract Based on subjective circumstances of certain persons Voidable Disqualific ation to Contract (Art.1329) Restrains the very right itself Based on public pol icy and morality 2. Intimidation When one of the contracting parties is compelled by a reasonable and wellgrounded fear of an imminent and grave evil upon his person or property , or upon the person or property of his spouse, descendants or ascendants, to gi ve his consent (Art. 1335). Martinez v. HSBC, 1910: The conveyance of several properties by to her husbands c reditors, though reluctant is still consent. She assented to the requirements of the defendants, the civil and criminal actions against them would be dropped. A contract is valid even though one of the parties entered into it against his wi shes and desires, or even against his better judgment. Contracts are also valid even though they are entered into by one of the parties without hope of advantag e or profit. 126 CONTRACTS 3. Violence Irresistible force used to extort consent (J.B.L. Reyes) 4. Undue In fluence When a person takes improper advantage of his power over the will of ano ther, depriving the latter of a reasonable freedom of choice (Art. 1337). Circum stances: a. Relationship of the parties (family, spiritual, confidential etc.) b . That the person unduly influenced was suffering from infirmity (mental weaknes s, ignorance etc.) (Art.1337) 5. Fraud When through insidious words or machinati ons of one of the contracting parties, the other is induced to enter into a cont ract which, without them, he would not have agreed to (Art. 1338). Art. 1339, Civil Code. Failure to disclose facts, when there is a duty to reveal them, as when the parties are bound by confidential relations, constitutes frau d. Art. 1340, Civil Code. The usual exaggerations in trade, when the other party had an opportunity to know the facts, are not in themselves fraudulent. Art. 13 41, Civil Code. A mere expression of an opinion does not signify fraud, unless m ade by an expert and the other party has relied on the formers special knowledg e. Art. 1342, Civil Code. Misrepresentation by a third person does not vitiate c onsent, unless, such misrepresentation has created substantial mistake Void C. Vices of Consent (Art. 1330, CC) (MIVUF) 1. Mistake Inadvertent and excusable disregard of a circumstance material to the contract. (J.B.L. Reyes) In order t hat mistake may invalidate consent, it should refer to the substance of the thin g which is the object of the contract, or to those conditions which have princip ally moved one or both parties to enter into the contract (Art.1331) Mistake of Fact Mistake of Law Mutual Mistake

When one or both contracting parties believe that a fact exists when in reality it does not, or vice versa When one or both parties arrive at an erroneous conclusion on the interpretation of a question of law or the legal effects Must be as to the legal effect of an agreement e parties must have been frustrated Must be mutual Real purpose of th

CIVIL LAW REVIEWER and the same is mutual. Art. 1343, Civil Code. Misrepresentat ion made in good faith is not fraudulent but may constitute error. Chapter II. ESSENTIAL REQUISITES Aleatory contract: where one of the contracting parties assumes the risk that th e thing will never come into existence, e.g. insurance SIMULATION OF CONTRACTS (Art. 13451346): Declaration of a non-existent will made deliberately for the purpose of producing the appearance of a transaction that does not exist, or which is different from the one which actually arose. (J.B.L. Reyes) Absolute No real transaction is intended Fictitious contract Void Relative Real transaction is hidden Disguised contract Bound as to hidden agreement, so long a s it does not prejudice a third person and is not contrary to law, morals, good customs, public order or public policy III. Cause It is the impelling reason for which a party assumes an obligation under a contr act. Requisites: a. Existing b. Licit or Lawful c. True Cause in: Onerous Contracts As to each of the contracting parties is understood to be the undertaking or the promise of the thing or service by the other party Renumerato ry Contracts The service benefit which remunerated Pure Beneficence Mere liberal ity of the benefactor 127 CONTRACTS or is II. Object The thing right or service which is the subject matter of the obligation arising from the contract. Requisites: a. Lawful: Not contrary to law, morals, good cus toms, public order or public policy. b. Actual or possible c. Transmissible: Wit hin the commerce of man d. Determinate or determinable All things or services ma y be the object of contracts, EXCEPT: Things which are outside the commerce of m en Intransmissible rights Future inheritance except in cases authorized by law mpossible things or services Objects which are indeterminable as to their kind, the genus should be expressed In order that a thing, right or service may be the object of a contract, it should be in existence at the moment of the celebratio n of the contract, or at least, it can exist subsequently or in the future. A FU TURE THING may be the object of a contract, such contract may be interpreted as a: Conditional contract: where its efficacy should depend upon the future existe nce of the thing In Villaroel v. Estrada (1940), where a moral obligation is based upon a previou s civil obligation, which has already been barred by the statute of limitations at the time the contract is entered into, it constitutes a sufficient cause or c onsideration to support a contract (Natural Obligation). BUT, In Fisher v. Robb (1939), if the moral obligation arises wholly from ethical consideration, it can not constitute a sufficient cause to support an onerous contract, as when the pr omise is made on the erroneous belief that one was morally responsible for the f ailure of an enterprise (Moral Obligation). Cause Lack Cause Defined Absence or total lack of cause Effect The contract confers no right and has no legal effect Null and Void of Illegality Cause

of Falsity cause of Contrary to law, morals, good customs, public policy and public order Cause is s tated but is untrue Lesion or inadequacy of cause Cause is not proportionate to object Void if it should not be proved that it was founded upon another cause which was true and lawful Shall not invalidate the contract except when

CIVIL LAW REVIEWER a)there is fraud, mistake, undue influence b)when parties int ended a donation Liguez v. CA (1957): In making the donation in question, Lopez was not moved exclusively by the desire to benefit Liguez, but also to secure he r cohabiting with him, so that he could gratify his sexual impulses. The donatio n was an onerous transaction and clearly predicated upon an illicit causa. Chapter II. ESSENTIAL REQUISITES 128 CONTRACTS

CIVIL LAW REVIEWER Chapter III. FORMS OF CONTRACTS Chapter III. Forms of Contracts I. RULES II. KINDS OF FORMALITIES I. Rules Spiritual System of the Spanish Code: The law looks more on the spirit rather th an the form of contracts. 3. Partnership where immovable property or real rights are contributed to the co mmon fund (Arts.1771 and 1773) BF Corporation v. CA, 1998: A contract may be encompassed in several instruments even though every instrument is not signed by the parties since it is sufficien t if the unsigned instruments are clearly identified or referred to and made par t of the signed instruments. Exceptions: When the law requires that a contract be in some form for validity ( Arts. 1357-1358) When the law requires that contract be in some form to be enfor ceable (Statute of Frauds) II. Kinds of Formalities A. Contracts Which Must Appear in Writing: 1. Donation of personal property whos e value exceeds five hundred pesos (Art 748) 2. Sale of a piece of land or any i nterest therein through an agent (Art 1874) 3. Antichresis (Art 2134) 4. Agreeme nts regarding payment of interests in contracts of loans (Art. 2314) B. Contract s Which Must Appear in a Public Document 1. Art. 1358: a. Acts and contracts whi ch have for their object the creation, transmission, modification or extinguishm ent of real rights over immovable property; sales of real property or of an inte rest therein a governed by Articles 1403, No. 2, and 1405; b. The cession, repud iation or renunciation of hereditary rights or of those of the conjugal partners hip of gains; c. The power to administer property, or any other power which has for its object an act appearing or which should appear in a public document, or should prejudice a third person; CONTRACTS Contracts shall be obligatory, in whatever form they may have been entered into, provided all the essential requisites for their validity are present. (Art. 135 6) d. The cession of actions or rights proceeding from an act appearing in a public document. e. All other contracts where the amount involved exceeds five hundred pesos must appear in writing, even a private one. But sales of goods, chattels or things in action are governed by Articles, 1403, No. 2 and 1405. 2. Donation of immovable properties (Art. 749) 129

CIVIL LAW REVIEWER Chapter IV. REFORMATION OF CONTRACTS Chapter V. INTERPRETATION OF CONTRACTS Chapter IV. Reformation of Contracts Reformation of Contracts (Art 1359-1369) REFORMATION: is that remedy in equity b y means of which a written instrument is made or construed so as to express or c onform to the real intention of the parties when some error or mistake has been committed. (J.B.L. Reyes) Requisites (Art 1359): 1. There must be a meeting of t he minds of the contracting parties; 2. Their true intention is not expressed in the instrument; 3. Such failure to express their true intention is due to mista ke, fraud, inequitable conduct, or accident; and 4. There is clear and convincin g proof of mistake, fraud, inequitable conduct, or accident. If the mistake, fraud, inequitable conduct, or accident has prevented the meetin g of the minds of the parties, the proper remedy is not reformation but annulmen t of the contract. (See also Art 1390) Chapter V. Interpretation of Contracts RULES ON DOUBTS (Art. 1378) Principal Objects Doubts where it cannot be known what may have been the intenti on or will of the parties, the contract shall be null and void. Gratuitous Contr acts Absolutely impossible to settle doubts by the rules and only refer to incid ental circumstances the least transmission of rights and interests shall prevail . Onerous Contracts Absolutely impossible to settle doubts by the rules and only refer to incidental circumstances the doubt shall be settled in favor of the gr eatest reciprocity of interests. 130 CONTRACTS Who May Ask for Reformation (Art. 1368): 1. Either party or his successors in in terest, if the mistake was mutual; otherwise, 2. Upon petition of the injured pa rty, or his heirs and assigns. NO REFORMATION in (Art. 1366): 1. Simple donation s inter vivos wherein no condition is imposed; 2. Wills; 3. When the real agreem ent is void. Implied Ratification (Art. 1367): The action to enforce the instrum ent bars subsequent action to reform.

CIVIL LAW REVIEWER Chapter VI. DEFECTIVE CONTRACTS Chapter VI. Defective Contracts I. II. III. IV. RESCISSIBLE VOIDABLE UNENFORCEABLE VOID OR INEXISTENT I. Rescissible Contracts (Arts. 1380-1389) Contracts are entered into to defraud existing creditors When the creditors cann ot in any other manner collect the claims due them What are the rescissible contracts? (Art 1381; see also Art 1382) What makes it defective? 131 CONTRACTS Contracts of guardians When the acts of administration cause LESION or damage to the WARD they represent by more than 25% of the value of the thing Contracts in representation of absentees Contracts refer to things in litigation If entered into by the defendant without the knowledge & approval of the litigants or competent judicial authority Effect on the Contract How to rescind? When the acts of administration cause LESION or damage to the ABSENTEE they repr esent by more than 25% of the value of the thin Valid until rescinded (Art 1380) Direct Action (different from action for rescission under Art 1191) NO rescissi on if: 1. Injured party has other legal means to obtain reparation (Art 1383). 2 . Plaintiff cannot return his part of the obligation (Art 1385 par 1) 3. Object of the contract is in the hands of third person, onerously acquired by him in go od faith (Art 1385 par 2) 4. If the court approves the contracts under Art 1381 par 1 and 2 (Art 1386) In general, by By absentee injured party By ward, or by g uardian ad litem of ward during incapacity of ward in an action against the orig inal guardian Within four years from [re-] gaining capacity Accion Pauliana for Contracts in Fraud of Creditors NO rescission if: 1. Injured party has other legal means to obtain reparation (Art 1383) 2. Plaintiff cannot return his part of the obligation (Art 1385 par 1) 3. Object of the contract is in the hands of third person, onerously acquired by him in good faith (Art 1385 par 2) Who can rescind? By creditor(s) By party litigant When to rescind (Art 1389) Within 4 years from knowledge of domicile of absentee Within 4 years from knowledge of fraudulent contract Within 4 years from knowledge of fraudulent contract

CIVIL LAW REVIEWER Chapter VI. DEFECTIVE CONTRACTS II. Voidable Contracts (Arts. 1390-1402) What makes it defective? (Art 1390) Effect on the Contract How to annul? Incapac ity of one party to the contract Consent vitiated by mistake, violence, intimida tion, undue influence or fraud Valid until annulled by competent court (Art 1390 last par) 1. Directly, by an a ction for annulment 2. Indirectly, by counterclaim asking for positive action of the court to set aside the contract Annulment cannot proceed when: 1. the objec t of the contract is lost through fraud or deceit of the person with right to in stitute proceedings (art 1401 par 1); 2. the right of action is based upon the i ncapacity of any one of the contracting parties and the thing is lost through th e fault or fraud of the plaintiff (Art 1401 par 2) 1. Parties who are obliged pr incipally or subsidiarily 2. Persons who are capable cannot allege the incapacit y of those with whom they contracted 3. Persons who exerted intimidation, violen ce, or undue intimidation, or employed fraud, or caused mistake, cannot base the ir action upon these flaws of the contract Within four years after guardianship of Within four years minors or incapacitated persons 1. After intimidation, viol ence or undue ceases influence ceases 2. From the time of discovery of mistake o r fraud 1. Mutual restitution of the things delivered, along with fruits and pri ce paid with interest (Art 1398) 2. Damages to be paid by party who caused defec t of the contract, by virtue of Article 20 and 21 of the Civil Code 1. Express ( written or oral manifestation) or tacit ratification (acts or conduct) by injure d party, or guardian of incapacitated person. Ratification does not require the conformity of the contracting party who has no right to bring the action for ann ulment (Art 1395) 132 CONTRACTS Who can/cannot annul? (Art 1397) When? (Art 1391) Effect Annulment of How to Cure Defect? (Arts 1392 - 1396)

CIVIL LAW REVIEWER Chapter VI. DEFECTIVE CONTRACTS III. Unenforceable Contracts (Arts. 1403-1408) What are the unenforceable contracts? (Art 1403) Contracts covered by Statute of Frauds which did not comply with the written memorandum requirement (See Art 14 03 par 2) Contract entered into without authority of, or in excess of authority given by o wner Contract where both parties are incapable of giving consent to contract Effect on the Contract How to assail? No effect unless ratified. Cannot be enforced by a proper action in court. Not b y direct action. 1. As a defense, by motion to dismiss the complaint on the grou nd that the contract is unenforceable Not by direct action. 1. As a defense, by motion to dismiss the complaint on the ground that the contract is unenforceable ; 2. Objection to the presentation of oral evidence to prove an oral contract (S ee Art 1405) By party against whom the contract is being enforced; or his privie s. Not by direct action. 1. As a defense, by motion to dismiss the complaint on the ground that the contract is unenforceable 133 CONTRACTS Who can assail? *an unenforceable contract cannot be assailed by third persons ( Art 1408) When? How to Defect? 1403) Cure (Art By person whose name the contract was entered into; By owner of property. By party against whom the contract is being enforced; or his privies; or parents or guardians persons, as it is a personal defense When a party asks the court to enforce the contract 1. Ratification by person wh ose name the contract was entered into 1. Ratification by party 1. By ratification of party against whom against whom t he the contract is being contract is being enforced; or his enforced privies; or parents or 2. By failure to object to the presentation of oral evidence to prove an oral co ntract or by the acceptance of benefits under the contract (Art 1405) guardians The ratification by one party converts the contract into a voidable contract (Ar t 1407)

CIVIL LAW REVIEWER Chapter VI. DEFECTIVE CONTRACTS IV. Void or Inexistent Contracts (Arts. 1409-1422) What makes defective? it Contracts Cause, Object of Purpose is contrary to morals , good customs, public order or public policy (Art 1409 par 1) Contracts express ly prohibited or declared void by law (Art 1409 par 7); contracts which are dire ct results of a previous illegal contract (art 1422) 1.Those whose Cause, Object of Purpose is contrary to morals, good customs, public order or public policy 2 .Those which are absolutely simulated or fictitious 3.Those whose cause or objec t did not exist at the time of the transaction 4.Those whose object is outside t he commerce of men 5.Those which contemplate an impossible service 6.Those where the intention of the parties relative to the principal object of the contract c annot be ascertained 7.Those expressly prohibited or declared void by law Inexis tent contracts, or contracts whose essential elements are absent (Art Art 1409 p ar 2, 3, 4,5) How to assail? Who can assail? When? 1. File for action for declaration of inexistence or nullity of contract 2.As a defense during trial (Art 1409 last par). Such defense not available to third pe rsons not directly affected by contract (Art 1421) 3.In pari delicto applies whe n cause or object of contract constitutes a criminal offense (Art 1411) 1. Innoc ent party Art 1. Any of the parties 1. Any person whose 1411 par 2; Art 1412 2. Any person whose interests are par2) interests are directly directly affected by 2. Less-guilty party, upon affected by the contract the contract Art court disc retion (Art 1421) (1421) 3. Incapacitated person 2. By party for whose who is a party to an protection the illegal contract, upon prohibition of the court discr etion (Art law is designed (Art 1415) 1416) 4. Any person whose interests are di rectly affected by the contract (Art 1421) The action or defense does not prescr ibe (Art 1410) - end of Contracts CONTRACTS Contracts which are inconsistent and void from the beginning (Art 1409) 134

CIVIL LAW REVIEWER TABLE of CONTENTS PROPERTY Table of Contents Chapter I. Definition and Classification of Property............................ .............................137 I. Definition ................................. ..........137 II. Classification .....................................137 Chapte r II. Ownership ..................................144 I. Definition ............ ...............................144 III. Specific Rights under the Civil Code.144 IV. Limitations on Real Right of Ownership 146 Chapter III. Accession.......... ........................147 I. Definition ...................................... .....147 II. General Principles of Accession .......147 III. Kinds of Accession. ...........................147 IV. Principles Governing Each Kind of Accession.. .................................................147 Chapter IV. Quieting of Tit le........................152 I. In General .................................... .....152 II. Purpose .............................................152 III. Natur e: Quasi in Rem........................152 IV. Requisites ...................... ...................152 V. Prescription of Action ........................153 Cha pter V. Co-Ownership............................154 I. Definition .............. .............................154 II. Characteristics ........................... .......154 III. Difference between Co-ownership and Joint Tenancy............... ..............................155 IV. Difference between Co-ownership and Partne rship.................................................155 V. Sources of Co-Owner ship .................155 VI. Rights of Each Co-owner over the Thing or Property Owned in Common .................157 VII. Implication of Co-owners Right over Hi s Ideal Share ..........................................161 VIII. Rules on Co-Ow nership Not Applicable to CPG or ACP.........................161 IX. Special Rul es on Ownership of Different Stories of a House as Differentiated from Provision s of the Condominium Act...........162 X. Extinguishment of Co-Ownership .....16 6 Chapter VI. Possession ...............................168 I. Definition ...... .....................................168 II. Degrees of Possession ............. ........169 III. Classes of Possession ......................169 IV. Cases of Po ssession.........................169 V. What Things May be Possessed ......170 V I. What May Not Be Possessed by Private Persons................................. .....................171 VII. Acquisition of Possession .............171 VIII. E ffects of Possession ...................173 IX. Effects of Possession in the Con cept of Owner ........................................................177 X. Pre sumption in Favor of the Possessorfor Acquisitive Prescription ....178 XI. Posses ion May Be Lost By ...............179 Chapter VII. Usufruct .................... ............... 181 I. Concept............................................. 181 II. Characteristics .................................. 181 III. Usufruct Distigu ished from Lease and Servitude.................................................. .. 181 IV. Classes of Usufruct........................... 182 V. Rights of Usufr uctuary ...................... 184 VI. Rights of the Naked Owner............... 186 VII. Obligations of the Usufructuary .... 187 VIII. Special Cases of Usufruc t ............ 190 IX. Extinguishment of Usufruct............... 192 X. Conditio ns Not Affecting Usufruct..... 194 Chapter VIII. Easement ...................... .......... 196 I. Concept............................................. 196 II. E ssential Features ............................ 196 III. Classification of Servit udes............... 197 IV. General Rules Relating to Servitudes 198 V. Modes of Acquiring Easements ........ 198 VI. Rights and Obligations of Owners of Domina nt and Servient Estates ................. 199 VII. Modes of Extinguishment of Ea sements................................................. 200 VIII. Legal Easemen ts .......................... 202 Chapter IX. Nuisance ......................... .......... 212 I. Definition ........................................... 212 II. Classes ............................................. 212 III. Liability in Cas e of Nuisance............. 213 IV. Regulation of Nuisances ................... 2 14 Chapter X. Modes of Acquiring Ownership .....................................

.................................. 217 I. Mode v. Title ........................ ............. 217 II. Mode ................................................. 217 Chapter XI. Donation ................................... 222 I. Nature ........ ....................................... 222 II. Requisites ..................... .................... 222 III. Kinds ............................................ ..... 222 IV. Who May Give or Receive Donations 223 V. Who May Not Give or Recei ve Donations................................................... 224 VI. Acceptan ce ....................................... 225 VII. Form ....................... ...................... 225 VIII. What May Be Donated ................. 225 IX. E ffect ................................................. 226 X. Revocation and Re duction................ 227 Chapter XII. Lease.................................. ...... 232 I. General Characteristics .................... 232 II. Kinds ....... .......................................... 232 III. Lease of Things ............ .................... 232 136 PROPERTY

CIVIL LAW REVIEWER Chapter I. DEFINITION and CLASSIFICATION of PROPERTY Prof. Solomon Lumba Faculty Editor Michelle Go Lead Writer Erika Esperas Katrina Michelle Mancao Celie Mari Santos Writers PROPERTY PROPERTY TEAM Chapter I. Definition and Classification of Property I. DEFINITION II. CLASSIFICATION A. UNDER THE CIVIL CODE B. BY OWNERSHIP C. OTHE R CLASSIFICATIONS CIVIL LAW Kristine Bongcaron Patricia Tobias Subject Editors I. Definition ACADEMICS COMMITTEE Kristine Bongcaron Michelle Dy Patrich Leccio Editors-in-Chief PRINTING & DISTRIBUTION Kae Guerrero PROPERTY: Mass of things or objects characterized by 1. Utility capacity to sati sfy human wants 2. Individualityand substantivity separate and autonomous existe nce 3. Susceptibility of being appropriated those which cannot be appropriated b ecause of their distance, depth or immensity cannot be considered as things (i.e . stars, ocean) 137 PROPERTY DESIGN & LAYOUT Pat Hernandez Viktor Fontanilla Rusell Aragones Romualdo Menzon Jr. Rania Joya II. Classification A. UNDER THE CIVIL CODE Article 414, Civil Code. All things which are or may be the object of appropriat ion are considered either: 1. Immovable or real property; or 2. Movable or perso nal property. LECTURES COMMITTEE Michelle Arias Camille Maranan Angela Sandalo Heads Katz Manzano Mary Rose Beley Sam Nuez Krizel Malabanan Arianne Cerezo Marcr ese Banaag Volunteers MOCK BAR COMMITTEE Lilibeth Perez BAR CANDIDATES WELFARE

Dahlia Salamat LOGISTICS Charisse Mendoza SECRETARIAT COMMITTEE Jill Hernandez Head Loraine Mendoza Faye Celso Mary Mendoza Joie Bajo Members IMMOVABLES OR REAL PROPERTY Article 415 The following are immovable property: 1. Land, buildings, roads and constructions of all kinds adhered to the soil; 2. Tr ees, plants, and growing fruits, while they are attached to the land or form an integral part of an immovable; 3. Everything attached to an immovable in a fixed manner, in such a way that it cannot be separated therefrom without breaking th e material or deterioration of the object; 4. Statues, reliefs, paintings or oth er objects for use or ornamentation, placed in buildings or on lands by the owne r of the immovable in such a manner that it reveals the intention to attach them permanently to the tenements; 5. Machinery, receptacles, instruments or impleme nts intended by the owner of the tenement for an industry or works which may be carried on in a building or on a piece of land, and which tend directly to meet the needs of the said industry or works; 6. Animal houses, pigeon-houses, beehiv es, fish ponds or breeding places of similar nature, in case their owner has pla ced them or preserves them with the intention to have

CIVIL LAW REVIEWER Chapter I. DEFINITION and CLASSIFICATION of PROPERTY 7. 8. 9. 10. them permanently attached to the land, and forming a permanent part of it; the a nimals in these places are included; Fertilizer actually used on a piece of land ; Mines, quarries, and slag dumps, while the matter thereof forms part of the be d, and waters either running or stagnant; Docks and structures which, though flo ating, are intended by their nature and object to remain at a fixed place on a r iver, lake, or coast; Contracts for public works, and servitudes and other real rights over immovable property. b. However, by special treatment of Act 1508 (Sec. 7, Chattel Mortgage Law), gro wing crops may be subject of a Chattel Mortgage. c. For the purpose of attachmen t: growing crops are to be attached in the same manner as realty. (Rule 59, Sec. 7) 2. Par. 3: Things incorporated a. Res vinta in Roman Law b. Attachment in a f ixed manner: breakage or injury in case of separation will be substantial e.g. we lls, sewers, aqueducts and railways Whether attached by the owner himself or som e other person 3. Par. 7: Fertilizer Actually used means it has been spread over the land. Immovables by Nature Those which cannot be moved from place to place; their intri nsic quality have no utility except in a fixed place (Par. 1 & 8) 1. Par. 1: Lan ds, building, roads and constructions a. Buildings To be considered a building, their adherence to the land must be permanent and substantial. Buildings have be en considered as immovables, despite: Treatment by the parties e.g. they constit ute a separate mortgage on the building and the land (Punzalan v. Lacsamana) Sep arate Ownership i.e. a building on rented land is still considered an immovable. (Tolentino) 2. Par. 8: Mineral deposits and waters a. Mineral Deposits Minerals still deposited in the soil When minerals have been extracted, they become chat tel. b. Slag Dump: dirt and soil taken from a mine and piled upon the surface of the ground. Inside the dump can be found the minerals. c. Waters: those still a ttached to or running thru the soil or the ground. Immovables by Incorporation Th ose which are essentially movables but are attached to an immovable in such a wa y as to be an integral part thereof (Par. 2, 3, 4, 6 & 7) 1. Par. 2: Trees and p lants a. Trees and plants: only immovables when they are attached to the land or form an integral part of an immovable When they have been cut or uprooted, they become movables. 138 PROPERTY Immovables by Destination Those which are essentially movables but by the purpose for which they have been placed in an immovable, partake of the nature of an im movable because of the added utility derived therefrom (Par. 4, 5, 6 & 9) 1. Par . 4: Fixtures and ornaments Requisites: a. Placed by the owner or by the tenant as agent of the owner; b. With intention of attaching them permanently even if a dherence will not involve breakage or injury. Where the improvement or ornaments placed by the lessee are not to pass to the owner at the expiration of the leas e, they remain movables for chattel mortgage purposes. (Davao Sawmill v. Castill o) 2. Par. 3 v. Par. 4 Par. 3 Par. 4 Cannot be separated from Can be separated from immovable without i mmovable without breaking or deterioration breaking or deterioration Must be pla ced by the Need not be placed by the owner, or by his agent, owner expressed or

implied Real property by Real property by incorporation and incorporation destin ation 3. Par. 5: Machinery and equipment a. Immovable characteristic depends upon thei r being destined for use in the industry or work in the tenement; The moment the y are separated, (from the immovable or from the industry or work in which they are

CIVIL LAW REVIEWER Chapter I. DEFINITION and CLASSIFICATION of PROPERTY utilized) they recover their condition as movables. If it is still needed for th e industry but separated from the tenement temporarily, the property continues t o be immovable. b. Requisites for Immovability in Par. 5: Placed by the owner or the tenant as agent of the owner; Adapted to the needs of the industry or work carried on EXCEPT: When estoppel operates Parties to a contract may by agreement treat as personal property that which by nature would be real property, as long as no interest of third parties would be prejudiced. That characterization is e ffective as between the parties. (Makati Leasing v. Wearever) c. EFFECT of Attac hment Machinery become part of the immovable. The installation of machinery and equipment in a mortgaged sugar central for the purpose of carrying out the indus trial functions of the latter and increasing production, constitutes a permanent improvement on said sugar central and subjects said machinery and equipment to the mortgage constituted thereon. (Berkenkotter v. Cu Unjieng) usufruct and lease of real property for a period of 1 year and registered Effect of Enumeration: Art. 415 not absolute 1. Parties may by agreement treat as movab le that which is enumerated by law as immovable, but effective only as to them. The view that parties to a deed of chattel mortgage may agree to consider a hous e as personal property for the purposes of said contract, "is good only insofar as the contracting parties are concerned. It is based, partly, upon the principl e of estoppel" (Evangelista vs. Alto Surety) 2. For purposes of taxation, improv ements on land are commonly taxed as realty, even though for some purposes, they might be considered as personalty. It is a familiar phenomenon to see things cl assified as real property for purposes of taxation, which on general principle, might be considered personal property. (Manila Electric v. Central Bank) 139 PROPERTY MOVABLES OR PERSONAL PROPERTY Article 416, Civil Code. The following things are deemed to be personal property : 1. Those movables susceptible of appropriation which are not included in the p receding article; 2. Real property which by any special provision of law is cons idered as personal property; 3. Forces of nature which are brought under control by science; and 4. In general, all things which can be transported from place t o place without impairment of the real property to which they are fixed. Article 417, Civil Code. The following are also considered as personal property: 1. Obl igations and actions which have for their object movables or demandable sums; an d 2. Shares of stock of agricultural, commercial and industrial entities, althou gh they may have real estate. 4. Par. 6: Animal houses and animals therein a. Requisites: Placed by the owner or the tenant as agent of the owner, with the intention of permanent attachment; Forming a permanent part of the immovable. 5. Par. 9: Docks and fixed floating structures a. A floating house tied to a shore or bank post and used as a reside nce is considered real property, considering that the waters on which it floats are considered immovables. b. But if the floating house makes it a point to jour ney from place to place, it assumes the category of a vessel, and is considered immovable property Immovables by Analogy (Par. 10) Contracts for public works, se rvitudes, other real rights over immovable property e.g. Tests to Determine Movable Character 1. By exclusion everything NOT included in A rticle 415 Parties cannot by agreement treat as immovable that which is legally movable.

CIVIL LAW REVIEWER Chapter I. DEFINITION and CLASSIFICATION of PROPERTY 2. By description an object is immovable if it possesses: a. Ability to change l ocation whether it can be carried from place to place; b. Without substantial in jury to the immovable to which it is attached. The steel towers built by MERALCO are not buildings or constructions since they are removable and merely attached to a square metal frame by means of bolts, which when unscrewed could easily be dismantled and moved from place to place, without breaking the material or caus ing deterioration to the object they are attached. (Board of Assessment Appeals v. Meralco) 3. By special provision of law real property is considered as person al property a. Growing crops under the Chattel Mortgage Law b. Machinery install ed by a lessee not acting as agent of the owner (Davao Sawmill v. Castillo) c. I ntellectual property considered personal property; it consists in the pecuniary benefit which the owner can get by the reproduction or manufacture of his work. 4. By forces of nature e.g. electricity, gas, heat, oxygen If the value of the gain cannot be ascertained, a fine of from 200 to 500 pesos shall be imposed. 2. Robbery and theft can be committed only against personal pr operty. Art. 293. Who are guilty of robbery. Any person who, with intent to gain , shall take any personal property belonging to another, by means of violence or intimidation of any person, or using force upon anything shall be guilty of rob bery. Art. 308. Who are liable for theft. Theft is committed by any person who, with intent to gain but without violence against or intimidation of persons nor force upon things, shall take personal property of another without the latters consent. Form of Contracts Involving Movables and Immovables 1. Subject matter of specific contracts: only real property can be the subject of real mortgage (Art . 2124) and antichresis (Art 2132); only personal property can be the subject of voluntary deposit (Art. 1966), pledge (Art. 2094) and chattel mortgage (Act 150 8) 2. Donations of real property are required to be in a public instrument (Art. 749) but a donation of a movable mat be made orally or in writing (Art. 748) Ac quisitive Prescription 1. Real Property can be acquired by prescription in 30 yea rs (bad faith) and 10 years (good faith). 2. Movables can be acquired by prescri ption in 8 years (bad faith) and 4 years (good faith). Venue 1. Rule 4, Sec. 1: V enue of real actions. Actions affecting title to or possession of real property, or interest therein, shall be commenced and tried in the proper court which has jurisdiction over the area wherein the real property involved, or a portion the reof, is situated. Forcible entry and detainer actions shall be commenced and tr ied in the municipal trial court of the municipality or city wherein the real pr operty involved, or a portion thereof, is situated. 140 PROPERTY IMPORTANCE AND SIGNIFICANCE OF CLASSIFICATION UNDER THE CIVIL CODE Criminal Law 1 . Usurpation of property can take place only with respect to real property. Art. 312. Occupation of real property or usurpation of real rights in property. Any person who, by means of violence against or intimidation of persons, shall take possession of any real property or shall usurp any real rights in property belon ging to another, in addition to the penalty incurred for the acts of violence ex ecuted by him, shall be punished by a fine from 50 to 100 per centum of the gain which he shall have obtained, but not less than 75 pesos.

CIVIL LAW REVIEWER Chapter I. DEFINITION and CLASSIFICATION of PROPERTY 2. Rule 4, Sec. 2: Venue of personal actions. All other actions may be commenced and tried where the plaintiff or any of the principal plaintiffs resides, or wh ere the defendant or any of the principal defendants resides, or in the case of a non-resident defendant where he may be found, at the election of the plaintiff . Governing Law 1. Immovables are governed by the law of the country wherein they are located 2. Movables are governed by the personal laws of the owner which in some cases is the law of his nationality and in other cases, the law of his dom icile. Action for Recovery of Possession 1. Possession of real property may be re covered through accion reivindicatoria, accion publiciana, forcible entry and un lawful detainer. 2. Possession of movable property may be recovered through repl evin. Classifications 1. Administered by the State a. For public usemay be used by every body, even by strangers or aliens, in accordance with its nature but nobody can exercise over it the rights of a private owner. b. For public servicemay be used only by authorized persons but exists for the benefit of all e.g. fortresses, un leased mines and civil buildings c. For development and national wealth includes natural resources such as minerals, coal, oil and forest 2. Administered by Muni cipal Corporations Article 424, Civil Code. Property for public use, in the provinces, cities, and municipalities, consist of the provincial roads, city streets, municipal streets , the squares, fountains, public waters, promenades, and public works for public service paid for by said provinces, cities, or municipalities. 141 PROPERTY B. CLASSIFICATION BY OWNERSHIP Article 419, Civil Code. Property is either of public dominion or of private own ership. Property of public dominion is outside the commerce of man They cannot be the sub ject matter of private contracts, cannot be acquired by prescription and they ar e not subject to attachment and execution nor burdened with a voluntary easement . PROPERTY OF PUBLIC DOMINION Article 420, Civil Code. The following things are property of public dominion: 1 . Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores, roadsteads, and others of s imilar character; 2. Those which belong to the State, without being for public u se, and are intended for some public service or for the development of the natio nal wealth. Public Dominion Public Domain Public Lands As defined by Art. 420, C C Used in Article XII, Section 2, of the 1987 Constitution Public Land Act PRIVATE OWNERSHIP Can be exercised by the State in its private capacity or by pr ivate persons Patrimonal Property of the State Article 421, Civil Code. All other property of the State, which is not of the ch aracter stated in the preceding article, is patrimonial property. Characteristics of Public Dominion 1. Not owned by the State and its subdivisions but pertains to it as territorial sovereign, to hold in trust for the interest of the community. 2. Intended for public use, and not for use by the State as a juridical person 3. Cannot be the subject of appropriation either by the State o r by private persons

1. Owned by the State over which it has the same rights as private individuals i n relation to their own property 2. Subject to the administrative laws and regul ations on the procedure of exercising such rights. 3. Examples: friar lands, esc heated properties and commercial buildings 4. Purpose of Patrimonial Property a. Enables the State to attain its economic ends b. Serves as a means for the Stat es subsistence and preservation c. Enables the State to fulfill its primary missi on 5. Conversion of Property of Public Dominion to Patrimonial Property

CIVIL LAW REVIEWER Chapter I. DEFINITION and CLASSIFICATION of PROPERTY Property of public dominion, when no longer intended for public use or for publi c service, shall form part of the patrimonial property of the State [Art. 422, C ivil Code] 6. Requires a Declaration by the Government through its executive or legislative departments to the effect that it is no longer needed for public use or service. individually property) or collectively (co-owned Patrimonial Property Corporations of Municipal 1. The province or municipality, as a juridical entity, also possesses private p roperty to answer for its economic necessities. 2. Classification of Properties of provinces, cities and municipalities (Salas v. Jarencio) a. Properties acquir ed with their own funds in their private or corporate capacity over which the po litical subdivision has ownership and control b. Properties of public dominion h eld in trust for the States inhabitants are subject to the control and supervisio n of the State 3. A municipal corporation must prove that they acquired the land with their own corporate funds The presumption is that land comes from the State upon the creation of the municipality. All lands in the possession of the munic ipality, EXCEPT for those acquired with its private funds, are deemed to be prop erty of public dominion, held in trust for the State for the benefit of its inha bitants. Congress has paramount power to dispose of lands of public dominion in a municipality, the latter being a subdivision only for purposes of local admini stration. (Salas v. Jarencio) Private Property of Private Persons Article 425, Civil Code. Property of private ownership, besides the patrimonial property of the State, provinces, cities, and municipalities, consists of all pr operty belonging to private persons, either individually or collectively. Private Land converted to Property of Public Dominion through abandonment and re clamation Through the gradual encroachment or erosion by the ebb and flow of the tide, private property may become public IF the owner appears to have ABANDONED the land, and permitted it to be totally destroyed so as to become part of the s hore. The land having disappeared on account of the gradual erosion, and having remained submerged until they were reclaimed by the government, they are public land. (Government v. Cabangis) C. OTHER CLASSIFICATIONS By their physical existence 1. Corporeal All property th e existence of which can be determined by the senses (res qui tangi possunt) 2. Incorporeal a. Things having abstract existence, created by man and representing value. b. Includes rights over incorporeal things, credits, and real rights oth er than ownership over corporeal things. By their autonomy or dependence 1. Princ ipal Those to which other things are considered dependent or subordinated, such as the land on which a house is built. 2. Accessory Those which are dependent up on or subordinated to the principal. They are destined to complete, enhance or o rnament another property.

Refers to all property belonging to private persons, natural or juridical, eithe r PROPERTY Article 424(2), Civil Code. All other property possessed by any of them [the pro vinces, cities, and municipalities] is patrimonial and shall be governed by this Code, without prejudice to the provisions of special laws. CONVERSION Alienable Public Land converted to Private Property through Prescript ion Alienable public land held by a possessor personally/through predecessors-ininterest, openly, continuously and exclusively for 30 years is CONVERTED to priv ate property by the mere lapse or completion of the period. The application for confirmation is mere formality, because land had already been converted, giving rise to a registrable title. (Director of Lands v. IAC) See New Law 142

CIVIL LAW REVIEWER Chapter I. DEFINITION and CLASSIFICATION of PROPERTY By their subsistence after use Article 418, Civil Code. Movable property is either consumable or nonconsumable. To the first class belong those movables which cannot be used in a manner appro priate to their nature without their being consumed; to the second class belong all the others. 2. Specific That which indicates the specie or its nature and the individual, su ch as the white horse of X. Existence in point of time 1. Present Those which exist in actuality, either physical or legal, such as, the erected building. 2. Futur e Those which do not exist in actuality, but whose existence can reasonably be e xpected with more or less probability, such as ungathered fruits. 2. Non-consumable e.g. money in coin Susceptibility to substitution 1. Fungibles T hings which because of their nature or the will of the parties, are capable of b eing substituted by others of the same kind, not having a distinct individuality . 2. Non-Fungibles Things which cannot be substituted for another Consumable v. Fungible: It is the intention of the parties to a contract which determines whet her the object is fungible or nonfungible and not the consumable or nonconsumabl e nature of the thing. By susceptibility to deterioration 1. Deteriorable that de teriorate through use or by time 2. Non-deteriorable By reason of their suscepti bility to division 1. Divisible Those which can be divided physically or juridica lly without injury to their nature. E.g.: piece of land or an inheritance. 2. In divisible Those which cannot be divided without destroying their nature or rende ring impossible the fulfillment of the juridical relation of which they are obje ct. By reason of designation 1. Generic That which indicates its homogenous natur e, but not the individual such as a horse, house, dress, without indicating it. PROPERTY 1. Consumable a. Those whose use according to their nature destroys the substanc e of the thing or causes their loss to the owner. (ex: food) b. Consumable goods cannot be the subject matter of a contract of commodatum unless the purpose of the contract is not the consumption of the object, as when it is merely for exhi bition. 143

CIVIL LAW REVIEWER Chapter II. OWNERSHIP Chapter II. Ownership I. II. III. IV. DEFINITION BUNDLE OF RIGHTS IN OWNERSHIP SPECIFIC RIGHTS OF THE OWNER LIMITATIONS ON THE RIGHTS OWNERSHIP Right to Self Help Article 429, Civil Code. The owner or lawful possessor of a thing has the right to exclude any person from the enjoyment and disposal therof. For this purpose, he may use such force as may be reasonably necessary to repel or prevent an actu al or threatened unlawful physical invasion or usurpation of his property. OF I. Definition Independent right of exclusive enjoyment and control of a thing For the purpose of deriving all advantages required by the reasonable needs of the owner/holder of right and promotion of general welfare A thing pertaining to one person Compl etely subjected to his will In everything not prohibited by public law or the ri ghts of another II. Rights Included in Ownership Art. 428, Civil Code 1. The owner has the right to enjoy and dispose of a thing, without other limitations than those established by law. 2. The owner has also a right of action against the holder and possessor of the thing in order to recov er it. 5 + 1 BUNDLE OF RIGHTS 1. Jus Utendi: Right to enjoy and receive what the property produces 2. Jus Fruendi: Right to receive fruits 3. Jus Abutendi: Righ t to consume a thing by use 1. Jus Disponendi: Right to to alienate, encumber, t ransform or even destroy the thing owned 2. Jus Vindicandi: Right to recover pos session of property based on a claim of ownership 4. Jus Possidendi: Right to po ssess the property (Implied from all the other rights) Right to Enclose or Fence Article 430, Civil Code. Every owner may enclose or fence his land or tenements by means of walls, ditches, live or dead hedges, or by any other means without d etriment to servitudes constituted thereon.

But right is limited by servitudes existing thereon The owner of lower lands cann ot erect works that will impede or prevent such an easement or charge, constitut ed and imposed by the law upon his estate for the benefit of higher lands belong ing to different owners; neither can the latter do anything to increase or exten d the easement. It is true that the Code authorizes every owner to enclose his e state by means of walls, ditches, fences or other device, but this right is limi ted by the easement imposed upon his estate. (Lunod v. Meneses) III. Specific Rights under the Civil Code Specific Rights 1. Right to Self Help 2. Right to Enclose of Fence 3. Right to Re ceive Just Compensation 4. Right to Accession 5. Right to Space and Subsoil 6. R ight to Hidden Treasure 7. Right to Recover Possession Right to Receive Just Compensation (in case of expropriation) Article 435, Civil Code. No person shall be deprived of his property except by c ompetent authority and for public use and always upon payment of just compensati on. Should this requirement be not first complied with, the courts shall protect

and, in a proper case, restore the owner in his possession. PROPERTY

1. Authorizes the lawful possessor to use force, to prevent a threatened lawful invasion or usurpation 2. Requisites a. Lawful possession b. Actual or threatene d unlawful physical invasion or usurpation of his property Must not be a valid e xercise of right or public function c. Force used is reasonably necessary to rep el or prevent the aggression (least damage rule) d. Physical invasion must not h ave succeeded yet, and possession has not been lost Once property is lost, the o wner can no longer use force, but must file action to recover 144

CIVIL LAW REVIEWER Chapter II. OWNERSHIP

Requisites of a Valid Expropriation a. For public use or utility b. Necessity of expropriation: reasonable in view of purpose of the taking c. Just compensation : Market value + consequential damages a. Right of a finder by chance who is not a trespasser/intruder: of treasure b. Right of a usufructuary who finds treasure: of treasure c. Right of State to acq uire things of interest to science or the arts Right to Recover Possession 1. Mov able Property: Replevin for manual delivery of property Prescription of Right: 4 years (GF) or 8 years (BF) 2. Immovable Property a. Accion Reinvindicatoria: Re covery of ownership of real property Including but not limited to possession Pre scription of Action: 30 years b. Accion Publiciana: Recovery of a better right t o possess (de jure) Judgment as to who has the better right of possession Also, actions for ejectment not filed within 1 year must be filed as accion publiciana Prescription: 10 years c. Accion Interdictal: Recovery of actual/physical posse ssion (de facto) FORCIBLE ENTRY: Lawful possessor deprived through FISTS: o FIST S (Force, Intimidation, Strategy, Threats, Stealth) o Prescription: 1 year from dispossession (force, intimidation, threats) or from knowledge of dispossession (strategy, stealth) UNLAWFUL DETAINER: Possessor refused to vacate upon demand b y owner o Legal possession (by permission/tolerance) becomes unlawful upon failu re to vacate o Prescription of action: 1 year from last notice to vacate In case of leases of residential units, the grounds for judicial ejectment are limited to those enumerated in, RA 9653: Rent Control Law of 2009 (See Section on Specia l Laws) 3. Requisites for Recovery [Art. 434, Civil Code] a. Property must be id entified Through a relocation survey and a title properly identifying boundaries and location Right to Accession Article 440, Civil Code. The ownership of property gives the right by accession to everything which is produced thereby, or which is incorporated or attached th ereto, either naturally or artificially. Right to Space and Subsoil 1. Ownership of surface and everything under the prope rty a. Can construct works, make plantings and excavations b. Respecting servitu des and reasonable requirements of aerial navigation c. Easement of lateral and subjacent support 2. Subject to laws and ordinances The doctrine that ownership o f the land extends to the periphery of the universe (Cujus est solum ejus est us que ad coelum, usque ad infernos) is no longer applied in the modern world, in v iew of the doctrine that the air is a public highway. (US v. Causby) Right to Hi dden Treasure Article 438, Civil Code. Hidden treasure belongs to the owner of the land, build ing, or other property on which it is found. Nevertheless, when the discovery is made on the property of another, or of the State or any of its subdivisions, an d by chance, one-half thereof shall be allowed to the finder. If the finder is a trespasser, he shall not be entitled to any share of the treasure. If the thing s found be of interest to science or the arts, the State may acquire them at the ir just price, which shall be divided in conformity with the rule stated. Articl e 439, Civil Code. By treasure is understood, for legal purposes, any hidden and unknown deposit of money, jewelry or other precious objects, the lawful ownersh ip of which does not appear 145 PROPERTY 1. Legal concept of hidden treasure a. Consist of money jewels or other precious

objects b. Hidden and unknown, such that the finding is a real discovery 2. Own er also owns hidden treasure found in the land subject to:

CIVIL LAW REVIEWER Chapter II. OWNERSHIP b. Plaintiff must rely on the strength of his title and not on weakness of defen dants title Right must be founded on positive title and not on lack or insufficie ncy of defendants Ei incumbit probatio qui dicit, non qui negat: He who asserts, not he who denied must prove IV. Limitations Ownership on Real Right of Limitations Provided by Law 1. In General a. Police Power: Property taken with no compensation for general welfare When any property is condemned or seized by co mpetent authority in the interest of health, safety or security, the owner there of shall not be entitled to compensation, unless he can show that such condemnat ion or seizure is unjustified. [Art. 436, Civil Code] Requisites: To justify the exercise of police power, the following must appear: o The interests of the pub lic generally, require such interference (as distinguished from those of a parti cular class) o The means are reasonably necessary for the accomplishment of a pu rpose, and not unduly oppressive b. Taxation: Forced contribution to the operati on of government c. Eminent Domain: Property taken for public use/purpose, but s ubject to due process and payment of just compensation Requisites To justify the exercise of the right of eminent domain, the following requisites must all be p resent: o Private property as the object of the expropriation; o The property is taken by the State or by competent authority; o The purpose of the taking is fo r public use; o The taking must be attended with due process of law; o There is payment of just compensation 2. Specific Limitations a. Legal Servitudes: once requisites are satisfied, the servient owner may ask the Court to declare the existence of an easement Art. 64 4 & 678: Aqueduct Art. 679: Planting of trees Art. 670: Light and View Art. 649 & 652: Right of Way Art. 637: Passage of water from upper to lower tenements Art . 676: Drainage of buildings Art. 684-687: Lateral and subjacent support b. Must not injure the rights of a third person Sic Utere Tuo Ut Alienum Non Laedas The owner of a thing cannot make use thereof in such manner as to injure the rights of a third person. [Art. 431, Civil Code] c. Act in State of Necessity The owner of a thing has no right to prohibit the interference of another with the same, if the interference is necessary to avert an imminent danger and the threatened damage, compared to the damage arising to the owner from the interference, is mu ch greater. The owner may demand from the person benefited, indemnity for the da mage to him. [Art. 432, Civil Code] 146 PROPERTY

CIVIL LAW REVIEWER Chapter III. ACCESSION Industrial fruits are those produced by lands of any kind through cultivation or labor. Civil fruits are the rents of buildings, the pric e of leases of lands and other property and the amount of perpetual or life annu ities or other similar income. TO TO Chapter III. Accession I. II. III. IV. DEFINITION GENERAL PRINCIPLES OF ACCESSION KINDS OF ACCESSION PR INCIPLES APPLICABLE TO EACH A. PRINCIPLES APPLICABLE ACCESSION DISCRETA B. PRINI CPLES APPLICABLE ACCESSION CONTINUA ACCESSION OVER MOVABLES 1. Accession Discreta Natural Article 444, Civil Code. Only such as are manifest or born are considered as nat ural or industrial fruits.. V. I. Definition II. General Principles of Accession 1. Accessory follows the principal: presumption of ownership of both principal a nd accessory 2. No one shall be unjustly enriched at the expense of another: rig ht to acquire but with duty to reimburse 2. Accession Discreta Industrial: Refers to fruits produced by the land through labor and cultivation 3. Accession Discreta Civil: Refers to rentals of a movabl e or an immovable Principles Applicable to Accession Discreta 1. Time of Accrual depending on kind: a. Annuals: from the time seedlings appear on the ground b. P erennials: from the time fruits actually appear on the plants c. Young of animal s: from the time they are in the womb, although unborn beginning of maximum ordi nary period of gestation d. Fowls: from the time of incubation 2. A receiver of fruits has the obligation to pay the expenses incurred by a third person in the production, gathering and preservation. (Art. 443, Civil Code) Exception: Receiv er does not have to pay if fruits are recovered before gathering from a possesso r in bad faith, receiver does NOT have to pay indemnity But if recovered after f ruits have been gathered, receiver must pay since the fruits have been separated from immovable, hence accession principles will not apply Accession Continua ov er Immovables: Accession by Attachment/Incorporation 1. Accession Continua Artifi cial or Industrial: Building, planting or sowing on land owned by another (over immovables) a. GENERAL RULE: Whatever is built, planted or sown on the land of a nother + III. Kinds of Accession 1. Accession Discreta a. Natural b. Industrial c. Civil 2. Accession Continua a. Over Immovables Industrial Natural o Alluvion o Avulsion o Change of Course of River o Formation of Islands b. Over Movables Conjunction and Adjunction Commixt ion and Confusion Specification IV. Principles Governing Each Kind of Accession A. Accession Discreta Accession Discreta: Accession of Fruits Article 441, Civil Code. To the owner belongs: 1. The natural fruits; 2. The ind ustrial fruits; 3. The civil fruits. Article 442, Civil Code. Natural fruits are the spontaneous products of the soil, and the young and other products of anima ls. PROPERTY

ACCESSION: Owner of a thing becomes the owner of everything that it may produce or which may be inseparably united or incorporated thereto, either naturally or artificially a. Spontaneous products of the soil without the intervention of man b. The young of animals Products of animals which can be removed without killing the princip al (e.g. fleece, wool, milk, etc. but not meat, fur, hide) Time of Accrual depen ding on kind: 147

CIVIL LAW REVIEWER Chapter III. ACCESSION improvements or repairs made thereon, belong to the owner of the land subject to the rules on BPS. b. PRESUMPTIONS: All works, sowing and planting are presumed made by the owner All works are presumed made at the owners expense, unless the c ontrary is proved The owner of the principal thing owns the natural, industrial and civil fruits, except when the following persons exist: o Possessor in Good F aith o Usufructuary o Lessee o Antichretic creditor c. Meaning of BAD FAITH Bad faith o On the part of the landowner: Whenever the building, planting SUMMARY OF BUILDER, PLANTER AND SOWER PROVISIONS ART. 447-455 Case 1: Landowner is BPS using material of another Landowner and BPS Good faith Right to acquire the improvements after paying the value of materials . Owner of Material Good faith Limited right of removal if there would be no injury to work construc ted, or without plantings or constructions being destroyed. (Article 447) Right to receive payment for value of materials Good faith Right to receive payment fo r value of materials Absolute right of removal of the work constructed in any ev ent Right to be indemnified for damages Bad faith Lose materials without right t o indemnity Bad faith Acquire BPS after paying its value and paying indemnity for damages (A rticle 447) but subject to OMs right to remove Good faith Right to acquire the im provements without paying indemnity Right to acquire indemnity for damages if th ere are hidden defects known to OM Bad faith Same as though acted in good faith under Article 453 Bad faith Same as though acted in good faith under Article 453

Case 2: BPS builds, plants, or sows on anothers ;and using his own materials Landowner Good faith Landowner has option to: a. Acquire the improvement after p aying indemnity which may be the original cost of improvement OR increase in val ue of the whole brought about by the improvement b. Sell the land to the BP or c ollect rent from sower UNLESS value of land is more than the thing built, plante d or sown or BP shall pay rent fixed by parties or by the court in case of BPS a nd Owner of Material Good faith BPS has right to retain (right of retention) the land until the payment of indemnity NOTE: During this period BPS is not require d to pay rent. PROPERTY or sowing was done with the knowledge and without opposition on his part o On th e part of owner of materials: Allows the use of his materials without protest o On the part of the builder, planter and sower: Knows that he does not have title to the land, nor the right to build thereon OR no permission of the owner of th e materials to pay their value Bad faith leads to liability for damages and the loss of the works or the improvement without reimbursement Bad faith of one part y neutralizes the bad faith of the other 148

CIVIL LAW REVIEWER disagreement. NOTE: Landowner can be forced to choose under p ain of direct contempt or court can choose for him. Good faith Landowner has rig ht to collect damages in any case and option to: a. Acquire improvements without paying indemnity if the improvements are still standing on the land b. Sell the land to BP or collect rent from the sower unless value of the improvements in w hich case there will be a forced lease c. Order demolition of improvements or re storation o0f land to its former condition at the expense of the BPS Landowner m ust pay for necessary expenses for preservation Bad faith Landowner must indemni fy BPS for the improvements and pay damages as if he himself did the BPS Landown er has no option to sell the land and cannot compel BPS to buy the land unless B PS agrees to Bad faith Same as though acted in bad faith under Article 453 Chapter III. ACCESSION Bad faith Pay damages to landowner No right to refuse to buy the land of land BPS lose materials without right to indemnity Recover necessary expenses for preservation

149 Good faith BPS has right to : a. Be indemnified for damages b. Remove all improv ements in any event PROPERTY Bad faith Same as though acted in bad faith under Article 453

Case 3: BPS builds, plants or sows on anothers land with materials owned by third persons Landowner Good faith Right to acquire improvements and pay indemnity to BPS; sub sdiarily liable to OM Has option to: a. Sell land to BP except if the value of t he land is considerably more b. Rent to sower Good faith Right to acquire improv ements and pay indemnity to BPS Has option to: a. Sell land to BP except if the value of the land is considerably more b. Rent to sower Without subsidiarily lia bility for cost of materials Good faith Landowner has right to collect damages i n any case and option to: a. Acquire improvements w/o paying for indemnity; or b . Demolition or restoration; or c. Sell to BP, or to rent to sower Pay necessary expenses to BPS Bad faith Same as when all acted in good faith under Article 45 3 BPS Good faith Right of retention until necessary and useful expenses are paid Pay value of materials to OM Owner of Material Good faith Collect value of mate rial primarily from BPS and subsidiarily liable for landowner if BPS is insolven t Limited right of removal Good faith Right of retention until necessary and useful expenses are paid. BPS without indemnity to OM and collect damages from him Bad faith PS Lose the material without right to indemnity Keep

Must pay for damages to B

Bad faith Recover necessary expenses for preservation of land from landowner unl ess landowner sells land Bad faith Recover value from BPS (as if both are in good faith) If BPS acquires improvement, remove materials if feasible w/o injury No action against landowner but liable to landowner for damages Bad faith Bad faith Same as when all acted in good faith under Article 453 Same as when all acted in good faith under Article 453

CIVIL LAW REVIEWER Chapter III. ACCESSION Bad faith Acquire improvement after paying indemnity and damages to BPS unless l atter decides to remove Subsidiarily liable to OM for value of materials Bad fai th Acquire improvements after indemnity; subsidiarily liable to OM for value of materials Has option to: a. Sell the land to BP except if the value of the land is considerably more b. Rent to sower Good faith Acquire imrovement after paying indemnity; subsidiarily liable to OM Landowner has option to: a. Sell land to B P except if value of land is considerably more b. Rent to sower Bad faith Acquir e improvements and pay indemnity and damages to BPS unless latter decides to rem ove materials Good faith May remove improvements Be indemnified for damages in any event

Good faith Remove materials if possible w/o injury Collect value of materials fr om BPS; subsidiarily from landowner Good faith Collect value of materials primar ily from BPS and subsidiarily from landowner Collect damages from BPS If BPS acq uires improvements, remove materials in any event Bad faith Right of retention until necessary expenses are paid rials to OM and pay him damages 150 PROPERTY Bad faith Right of retention until necessary expenses are paid rials to OM Pay damages to OM Pay value of mate Pay value of mate

Good faith Collect value of materials primarily from BPS and subsidiarily from l andowner Collect damages from BPS If BPS acquires improvements, absolute right o f removal in any event Bad faith No right to indemnity Loses right to mnaterial Good faith Receive indemnity for damages ts in any event Absolute right of removal of improvemen

2. Accession Continua Natural: Land deposits, etc. a. ALLUVIUM: Soil is graduall y deposited on banks adjoining the river REQUISITES o Deposit of soil or sedimen t is gradual and imperceptible o As a result of the action of the currents of th e waters of the river o Land where the accretion takes place is adhacent to the banks of the rivers o Deemed to Exist: When the deposit of the sediment has reac hed a level higher than the highest level of the water during the year EFFECT o Land automatically owned by the riparian owner o BUT does not automatically beco me registered property RATIONALE o To offset the owners loss from possible erosio n due to the current of the river Compensate for the subjection of the land to encumbrances and legal easements b. AVULSION: A portion of land is segregated from one estate by the forceful curre nt of a river, creek or torrent and transferred to another REQUISITES o Segregat ion and transfer of land is sudden and abrupt o Caused by the current of the wat er o Portion of land transported must be known and identifiable OR o Can also ap ply to sudden transfer by other forces of nature such as land transferred from a mountain slope because of an earthquake RESULT: The ownership of the detached p roperty is retained by the owner subject to removal within 2 years from the deta chment o

CIVIL LAW REVIEWER Chapter III. ACCESSION c. CHANGE OF COURSE OF RIVER REQUISITES o Change in the natural course of the water s of the river o Such change causes the abandonment of the river beds Natural Be d: ground covered by its waters during ordinary floods o Such change is sudden o r abrupt RESULTS: o Owners whose lands are occupied by the new course automatica lly become owners of the old bed, in proportion to the area they lost o Owners o f the lands adjoining the old bed are given the right to acquire the same by pay ing the value of the land Not exceeding the value of the land invaded by the new bed (the old property of the owner) o The new bed opened by the river on a priv ate estate shall become of public dominion 151 PROPERTY d. FORMATION OF ISLANDS Belong to the State if: o Formed on the SEAS within the jurisdiction of the Philippines o Formed on LAKES o Formed on NAVIGABLE or FLOAT ABLE RIVERS Capable of affording a channel or passage for ships and vessels Must be sufficient not only to float bancas and light boats, but also bigger watercr aft Deep enough to allow unobstructed movements of ships and vessels TEST: can b e used as a highway of commerce, trade and travel Belong to the Owners of the ne arest margins or banks if o Formed through successive accumulation of alluvial d eposits o On NON-NAVIGABLE and NON-FLOATABLE RIVERS If island is in the middle: divided longitudinally in half.

CIVIL LAW REVIEWER Chapter IV. QUIETING OF TITLE Chapter IV. Quieting of Title I. II. III. IV. IN GENERAL PURPOSE NATURE REQUISITES A. THERE IS A CLOUD ON TITL E TO REAL PROPERTY B. THE PLAINTIFF MUST HAVE LEGAL OR EQUITABLE TITLE TO OR INT EREST IN THE PROPERTY C. PLAINTIFF MUST RETURN THE BENEFITS RECEIVED FROM THE DE FENDANT PRESCRIPTION as defendant. However, unlike suits in rem, a quasi in rem judgment is conclusiv e only between the parties. (Spouses Portic v. Cristobal) Justifications for qui eting of title 1. To prevent future or further litigation on the ownership of the property 2. To protect the true title and possession 3. To protect the real int erest of both parties 4. To determine and make known the precise state of the ti tle for the guidance of all The action to quiet title does not apply 1. To questi ons involving interpretation of documents 2. To mere written or oral assertions of claims a. Unless made in a legal proceeding b. Or asserting that an instrumen t or entry in plaintiffs favor is not what it purports to be 3. To boundary dispu tes 4. To deeds by strangers to the title unless purporting to convey the proper ty of the plaintiff 5. To instruments invalid on their face 6. Where the validit y of the instrument involves a pure question of law V. 152 PROPERTY Article 476, Civil Code. Whenever there is a cloud on title to real property or any interest therein, by reason of any instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but is in truth and in fact i nvalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title, an action may be brought to remove such cloud or to quiet the title. An a ction may also be brought to prevent a cloud from being cast upon title to real property or any interest therein. Article 478, Civil Code. There may also be an action to quiet title or remove a cloud therefrom when the contract, instrument or other obligation has been extinguished or has terminated, or has been barred by extinctive prescription. IV. Requisites REQUISITES OF AN ACTION TO QUIET TITLE 1. There is a CLOUD on title to real prope rty or any interest to real property. 2. The plaintiff must have legal or equita ble title to, or interest in the real property. 3. Plaintiff must return the ben efits received from the defendant. A. There is a CLOUD on title to real property or any interest to real property 1. Cloud on title means a semblance of title, eit her legal or equitable, or a claim or a right in real property, appearing in som e legal form but which is, in fact, invalid or which would be inequitable to enf orce. 2. A cloud exists if: a. There is a claim emerging by reason of: Any instr ument e.g. a contract, or any deed of conveyance, mortgage, assignment, waiver, etc. covering the property concerned Any record, claim, encumbrance e.g. an atta chment, lien, inscription, adverse claim, lis pendens, on a title Any proceeding e.g. an extrajudicial partition of property I. In General 1. Applicable to real property 2. Basis: Equity comes to the aid of the plaintif f who would suffer if the instrument (which appear to be valid but is in reality void, ineffective, voidable or unenforceable) was to be enforced.

II. Purpose 1. To declare: a. The invalidity of a claim on a title b. The invalidity of an i nterest in property 2. To free the plaintiff and all those claiming under him an y hostile claim on the property. III. Nature: Quasi in Rem 1. A suit against a particular person or persons in respect to the res and the j udgment will apply only to the property in dispute. 2. The action to quiet title are characterized as proceedings quasi in rem. Technically, they are neither in rem nor in personam. In an action quasi in rem, an individual is named

CIVIL LAW REVIEWER Chapter IV. QUIETING OF TITLE B. The plaintiff must have legal or equitable title to, or interest in the real property Article 477, Civil Code. The plaintiff must have legal or equitable title to, or interest in the real property which is the subject matter of the action. He nee d not be in possession of said property. 1. Legal title: the party is the registered owner of the property. 2. Equitable title: the person has the beneficial ownership of the property. C. Plaintiff mus t return the benefits received from the defendant Article 479, Civil Code. The plaintiff must return to the defendant all benefits he may have received from the latter, or reimburse him for expenses that may ha ve redounded to the plaintiffs benefit. 2. When the plaintiff is not in possession of the property, the action to quiet title may prescribe. a. 10 yrs. ordinary prescription b. 30 yrs. extraordinary p rescription Article 480, Civil Code. The principles of the general law on the quieting of ti tle are hereby adopted insofar as they are not in conflict with this Code. Artic le 481, Civil Code. The procedure for the quieting of title or the removal of a cloud therefrom shall be governed by such rules of court as the Supreme Court sh all promulgate. NOTE: REQUISITES OF AN ACTION TO PREVENT A CLOUD 1. Plaintiff has a title to a re al property or interest therein 2. Defendant is bent on creating a cloud on the title or interest therein. The danger must not be merely speculative or imaginar y but imminent. 3. Unless the defendant is restrained or stopped, the title or i nterest of the plaintiff will be prejudiced or adversely affected. V. Prescription of Action 1. When plaintiff is in possession of the property the action to quiet title doe s not prescribe. a. The reason is that the owner of the property or right may wa it until his possession is disturbed or his title is PROPERTY b. The claim should appear valid or effective and extraneous evidence is needed to prove their validity or invalidity. Test: Would the owner of the property in an action for ejectment brought by the adverse party be required to offer eviden ce to defeat a recovery? As a general rule, a cloud is not created by mere verba l or parole assertion of ownership or an interest in property. c. Such instrumen t, etc. is, in truth and in fact, invalid, ineffective, voidable, or unenforceab le, or has been extinguished or terminated, or has been barred by extinctive pre scription. d. Such instrument, etc. may be prejudicial to the true owner or poss essor. assailed before taking steps to vindicate his right. b. An action to quiet title to property in ones possession is imprescriptible. The rationale for this rule h as been aptly stated thus: The owner of real property who is in possession thereo f may wait until his possession is invaded or his title is attacked before takin g steps to vindicate his right. A person claiming title to real property, but no t in possession thereof, must act affirmatively and within the time provided by the statute. Possession is a continuing right as is the right to defend such pos session. So it has been determined that an owner of real property in possession has a continuing right to invoke a court of equity to remove a cloud that is a c ontinuing menace to his title. Such a menace is compared to a continuing nuisanc e or trespass which is treated as successive nuisances or trespasses, not barred

by statute until continued without interruption for a length of time sufficient to affect a change of title as a matter of law." (Pingol v. CA) 153

CIVIL LAW REVIEWER Chapter V. CO-OWNERSHIP APPLICABLE TO CPG OR ACP IX. SPECIAL RULES ON OWNERSHIP OF DIFFERENT STORIES OF A HOUSE AS DIFFERENTIATED FROM THE PROVISIONS OF THE CON DOMINIUM ACT X. EXTINGUISHMENT OF CO-OWNERSHIP A. TOTAL DESTRUCTION OF THE THING OR LOSS OF THE PROPERTY CO-OWNED B. MERGER OF ALL INTERESTS IN ONE PERSON C. AC QUISITIVE PRESCRIPTION D. PARTITION OR DIVISION Chapter V. Co-Ownership I. II. DEFINITION CHARACTERTISTICS A. THERE IS A PLURALITY OF OWNERS BUT ONLY ON E REAL RIGHT OR OBJECT OF OWNERSHIP. B. THE RECOGNITION OF IDEAL SHARES OR ALIQU OT DEFINED BUT NOT PHYSICALLY IDENTIFIED C. EACH CO-OWNER HAS ABSOLUTE CONTROL O VER HIS IDEAL SHARE D. MUTUAL RESPECT AMONG CO-OWNERS IN REGARD TO USE, ENJOYMEN T AND PRESERVATION OF THE THINGS AS A WHOLE. III. DIFFERENCE BETWEEN CO-OWNERSHI P AND JOINT TENANCY IV. DIFFERENCE BETWEEN CO-OWNERSHIP AND PARTNERSHIP V. SOURC ES OF CO-OWNERSHIP A. LAW 1. COHABITATION 2. PURCHASE 3. INTESTATE SUCCESSION 4. DONATION 5. CHANCECOMMIXTION IN GOOD FAITH 6. HIDDEN TREASURES 7. EASEMENT OF PA RTY WALL 8. OCCUPATIONHARVESTING AND FISHING 9. CONDOMINIUM LAW B. CONTRACTS 1. B Y AGREEMENT OF 2 OR MORE PERSONS 2. BY UNIVERSAL PARTNERSHIP 3. BY ASSOCIATION A ND SOCIETIES WITH SECRET ARTICLES VI. RIGHTS OF EACH CO-OWNER OVER THE THING OR PROPERTY OWNED IN COMMON A. TO USE THE THING ACCORDING TO THE PURPOSE INTENDED B . TO SHARE IN THE BENEFITS IN PROPORTION TO HIS INTEREST, PROVIDED THE CHARGES A RE BORNE BY EACH IN THE SAME PROPORTION C. TO BRING AN ACTION IN EJECTMENT D. TO COMPEL THE OTHER CO-OWNERS TO CONTRIBUTE TO THE EXPENSES FOR THE PRESERVATION O F THE PROPERTY OWNED IN COMMON AND TO THE PAYMENT OF TAXES E. TO OPPOSE ANY ACT OF ALTERATION F. TO PROTEST AGAINST ACTS OF MAJORITY WHICH ARE SERIOUSLY PREJUDI CIAL TO THE MINORITY G. TO EXERCISE LEGAL REDEMPTION H. TO ASK FOR PARTITION VII . IMPLICATIONS OF CO-OWNERS RIGHT OVER HIS IDEAL SHARE A. RIGHTS OF A CO-OWNER B. EFFECT OF TRANSACTION BY EACH COOWNER VIII. RULES ON CO-OWNERSHIP NOT I. Definition Article 484, Civil Code. There is co-ownership whenever the ownership of an undi vided thing or right belongs to different persons. In default of contracts, or o f special provisions, coownership shall be governed by the provisions of this Ti tle. 154 PROPERTY II. Characteristics A. There is a plurality of owners but only one real right or object of ownership 1. There are at least 2 persons 2. There is unity or material indivision of a s ingle object. B. There are ideal shares defined but not physically identified Article 485, Civil Code. The share of the coowners, in the benefits as well as i n the charges, shall be proportional to their respective interests. Any stipulat ion in a contract to the contrary shall be void. The portions belonging to the c o-owners in the coownership shall be presumed equal, unless the contrary is prov ed. C. Each co-owner has absolute control over his ideal share Every co-owner has ab solute ownership of his undivided interest in the co-owned property and is free to alienate, assign or mortgage his interest except as to purely personal rights . While a coowner has the right to freely sell and dispose of his undivided inte rest, nevertheless, as a co-owner, he cannot alienate the shares of his other co owners nemo dat qui non habet. (Acabal v. Acabal)

CIVIL LAW REVIEWER Chapter V. CO-OWNERSHIP prescription D. Mutual respect among co-owners in regard to use, enjoyment and preservation o f the things as a whole 1. The property or thing held pro-indiviso is impressed with a fiduciary character: each co-owner becomes a trustee for the benefit of h is co-owners and he may not do any act prejudicial to the interest of his co-own ers. 2. Until a judicial division is made, the respective part of each holder ca nnot be determined. The effects of this would be: a. Each co-owner exercises tog ether with the others joint ownership over the pro indiviso property, in additio n to his use and enjoyment of the same b. Each co-owner may enjoy the whole prop erty and use it. Only limitation: a co-owner cannot use or enjoy the property in a manner that shall injure the interest of his other coowners. (Pardell v. Bart olome) IV. Difference between and Partnership Co-ownership Co-ownership III. Difference between and Joint Tenancy Co-Ownership Origin Civil Law Co-ownership Joint Tenancy Common Law Other names Tenancy in Common, Joint ownership, ownership in common, a ll for one, one for all Co-dominium Extent of ownership Every joint tenant owns E ach co-owner owns the whole property undivided thing + own because their rights are ideal part/share of each inseparable Right to dispose of share A joint tenan t may not dispose of his Each co-owner may share/interest without the dispose of his undivided consent of others share without the consent (rationale: he may of others. prejudice the others by alienating his share) Effect of death The owner ship of a joint tenant dies with him, and his surviving joint tenants The share of a co-owner are subrogated to his descends to his heirs rights by virtue of ju s accrescendi (survivorship) Effect of legal disability/incapacity Defense of on e can be Defense against used by all, as prescription is exclusive disability/in capacity to the co-owner with inures to the benefit of disability/incapacity the others for purposes of Partnership Creation By law, fortuitous event, occupancy, succession Only by con tract or contract (no formalities of a contract necessary) Legal personality Par tnership has a distinct Co-ownership has no personality from the legal personali ty partners Purpose Collective enjoyment of Profit or advancement of the propert y pecuniary interest Disposal of share A partner may not Each co-owner may dispo se of his dispose of his undivided share/interest or transfer rd share without t he consent the same to a 3 person of others without the consent of others Mutual representation No mutual representation Generally, a partner (except if there i s a binds other partners special authority for such (there is mutual representat ion) representation) Effect of legal disability/ incapacity/ death Does not diss olve the coDissolves partnership ownership Profit distribution Must be proportio nal to Depends upon the the interest of each costipulation in their owner (not s ubject to contract stipulation) Duration General rule: an agreement to keep the No term limit set by law ownership for more than 10 years is void Attachment Cre ditors of a partner Creditors of a co-owner cannot attach and sell on can attach on the shares execution the shares of of others other partners in the partnersh ip

155 PROPERTY V. Sources of Co-Ownership A. Law 1. Cohabitation: co-ownership between common law spouses The Family Code, in the following provisions, made the rules on coownership apply Article 147: be tween a man and a woman capacitated to marry each other

CIVIL LAW REVIEWER Chapter V. CO-OWNERSHIP Article 148: between a man and a woman not capacitated to marry each other Artic le 90: if matter is not provided in the FC Chapter on ACP, then rules on co-owne rship will apply 2. Purchase creating implied trust: coownership between persons who agree to purchase property Article 1452, Civil Code. 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 benefit of all, a trust is created by force of law in favor of the others in proportion to the interest of each. 3. Intestate succe ssion: co-ownership between the heirs before partition of the estate a. Article 1078, Civil Code. Where there are two or more heirs, the whole estate of the dec edent is, before its partition, owned in common by such heirs, subject to the pa yment of debts of the deceased. b. Intestate Succession (without will) c. For as long as the estate is left undivided the heirs will be considered co-owners of the inheritance. If one of the heirs dies, his heirs will in turn be coowners of the surviving original heirs. 4. Donation: Co-ownership between donees Article 753, Civil Code. When a donation is made to several persons jointly, it is under stood to be in equal shares, and there shall be no right of accretion among them , unless the donor has otherwise provided. 5. Chance/Commixtion in Good Faith: C oownership between owners of 2 things that are mixed by chance or by will of the owners Article 472, Civil Code. If by the will of their owners two things of th e same or different kinds are mixed, or if the mixture occurs by chance, and in the latter case the things are not separable without injury, each owner shall ac quire a right proportional to the part belonging to him, bearing in mind the val ue of the things mixed or confused. 6. Hidden Treasure co-ownership between find er and owner of the land Article 438, Civil Code. Hidden treasure belongs to the owner of the land, building, or other property on which it is found. Nevertheless, when the discovery is made on the property of another, or of the S tate or any of its subdivisions, and by chance, one-half thereof shall be allowe d to the finder. If the finder is a trespasser, he shall not be entitled to any share of the treasure. If the things found be of interest to science or the arts , the State may acquire them at their just price, which shall be divided in conf ormity with the rule stated. 7. Easement of Party Wall co-ownership of part-owne rs of a party wall Article 658, Civil Code. The easement of party wall shall be governed by the provisions of this Title, by the local ordinances and customs in sofar as they do not conflict with the same, and by the rules of co-ownership. 8 . Occupation: Harvesting and Fishing: coownership by two or more persons who hav e seized a res nullius thing 9. Condominium Law: co-ownership of the common area s by holders of units Sec. 6, RA 4726. The Condominium Act. Unless otherwise exp ressly provided in the enabling or master deed or the declaration of restriction s, the incidents of a condominium grant are as follows: (c) Unless otherwise, pr ovided, the common areas are held in common by the holders of units, in equal sh ares, one for each unit. B. Contracts 1. By Agreement of Two or More Persons a. Article 494, Civil Code. No co-owner shall be obliged to remain in the coownersh ip. Each co-owner may demand at any time the partition of the thing owned in com mon, insofar as his share is concerned. Nevertheless, an agreement to keep the t hing undivided for a certain period of time, not exceeding ten years, shall be v alid. This term may be extended by a new agreement. 156 PROPERTY

CIVIL LAW REVIEWER Chapter V. CO-OWNERSHIP A donor or testator may prohibit partition for a period which shall not exceed t wenty years. Neither shall there be any partition when it is prohibited by law. No prescription shall run in favor of a coowner or co-heir against his co-owners or co-heirs so long as he expressly or impliedly recognizes the co-ownership. b . Two or more persons may agree to create a co-ownership c. Note: there is a 10year term limit for ownership by agreement; BUT: Term may be extended by a new a greement 2. By the creation of a Universal Partnership a. Of all present propert y Article 1778, Civil Code. A partnership of all present property is that in whi ch the partners contribute all the property which actually belongs to them to a common fund, with the intention of dividing the same among themselves, as well a s all the profits which they may acquire therewith. Article 1779, Civil Code. In a universal partnership of all present property, the property which belonged to each of the partners at the time of the constitution of the partnership, become s the common property of all the partners, as well as all the profits which they may acquire therewith. A stipulation for the common enjoyment of any other prof its may also be made; but the property which the partners may acquire subsequent ly by inheritance, legacy, or donation cannot be included in such stipulation, e xcept the fruits thereof. b. Of profits Article 1780, Civil Code. A universal pa rtnership of profits comprises all that the partners may acquire by their indust ry or work during the existence of the partnership. Movable or immovable propert y which each of the partners may possess at the time of the celebration of the c ontract shall continue to pertain exclusively to each, only the usufruct passing to the partnership. 3. By Associations and Socie ties with Secret Articles Article 1775, Civil Code. Associations and societies, whose articles are kept secret among the members, and wherein any one of the mem bers may contract in his own name with third persons, shall have no juridical pe rsonality, and shall be governed by the provisions relating to co-ownership. Rights of Each Co-owner over the Thing or Property Owned in Common 1. To use the thing according to the purpose intended (Jus Utendi) 2. To share in the benefit s in proportion to his interest provided the charges are borne by each in the sa me proportion 3. To bring an action in ejectment 4. To compel the other co-owner s to contribute to expense for preservation of the property owned in common and to the payment of taxes 5. To oppose any act of Alteration 6. To protest against acts of majority which are seriously prejudicial to the minority 7. To exercise legal redemption 8. To ask for partition Right use the thing according to the p urpose intended (Jus Utendi) Article 486, Civil Code. Each co-owner may use the thing owned in common, provid ed he does so in accordance with the purpose for which it is intended and in suc h a way as not to injure the interest of the co-ownership or prevent the other c o-owners from using it according to their rights. The purpose of the co-ownershi p may be changed by agreement, express or implied. 1. Limitations on co-owners right: a. Use must be to the purpose for which it is intended. As stipulated in the agreement In the absence of agreement, the purpos e for which it was ordinarily adapted according to its nature. In the absence of the above, the use for which it was previously or formerly devoted. b. Use must be without prejudice to the interest of the co-ownership. PROPERTY VI. Rights of Each Co-owner over the Thing or Property Owned in Common 157

CIVIL LAW REVIEWER Chapter V. CO-OWNERSHIP c. Use must not prevent the other coowners from making use of the property accordin g to their own rights. property owned in common and to the payment of taxes Article 488, Civil Code. Each co-owner shall have a right to compel the other co -owners to contribute to the expenses of preservation of the thing or right owne d in common and to the taxes. Any one of the latter may exempt himself from this obligation by renouncing so much of his undivided interest as may be equivalent to his share of the expenses and taxes. No such waiver shall be made if it is p rejudicial to the co-ownership. Right to share in the benefits in proportion to his interest provided the charge s are borne by each in the same proportion Article 485, Civil Code. The share of the coowners, in the benefits as well as i n the charges, shall be proportional to their respective interests. Any stipulat ion in a contract to the contrary shall be void. The portions belonging to the c o-owners in the coownership shall be presumed equal, unless the contrary is prov ed. Right to bring an action in ejectment Article 487, Civil Code. Any one of the co-owners may bring an action in ejectme nt. 1. Action in Ejectment covers all kinds of action for recovery of possession (re ivindicatoria, publiciana, forcible entry, unlawful detainer) 2. There is no nee d to include all the coowners as co-plaintiffs because the suit is deemed to be instituted for the benefit of all 3. But the action will not prosper if the acti on is brought for the benefit of the plaintiff alone and not for the co-ownershi p 4. Article 487 of the Civil Code, which provides simply that any one of the coowners may bring an action in ejectment, is a categorical and an unqualified auth ority in favor of owner to evict the petitioners from the portions of lot. The r ule is a co-owner may bring an action to exercise and protect the rights of all. When the action is brought by one co-owner for the benefit of all, a favorable decision will benefit them; but an adverse decision cannot prejudice their right s. (Resuena v. CA) Right to compel the other co-owners to contribute to expense for preservation of the 3. Procedure: Repairs for preservation Article 489, Civil Code. Repairs for preservation may be made at the will of one of the co-owners, but he must, if practicable, first notify his co-owners of th e necessity for such repairs. Expenses to improve or embellish the thing shall b e decided upon by a majority as determined in article 492. a. Notify other co-owners, as far as practicable b. However, a co-owner can adva nce expenses for preservation of the property even without prior consent of othe rs. He is entitled to reimbursement for the amount spent for necessary expenses. PROPERTY 2. Changing the purpose of the thing The purpose of the thing may be changed by a n agreement, express or implied, provided that the following will be observed: I t does not cause injury or prejudice to the interest of the co-ownership Any act against the collective interest is an act against ownership. A co-owner cannot devote the community property to his exclusive use It does not prevent the use b

y other co-owners 1. This provision includes only necessary expenses and taxes, and NOT those for mere luxury, embellishment or pleasure a. Expenses for preservation: those which , if not made, would endanger the existence of the thing or reduce its value or productivity b. Not used for the improvement of the thing (what is intended is t he preservation of the thing, not gaining profit from it) 2. Renunciation a. Oth er co-owners have the option not to contribute by renouncing so much of his undi vided interest as may be equivalent to his share of the necessary expenses and t axes Must be express; thus, failure to pay is not a renunciation Requires the co nsent of other coowners because it is a case of dacion en pago (cessation of rig hts) involving expenses and taxes already paid (J.B.L. Reyes) b. A co-owner cann ot renounce his share if it will be prejudicial to another co-owner 158

CIVIL LAW REVIEWER Chapter V. CO-OWNERSHIP 4. Procedure: Embellishment or improvements a. Notify co-owners of improvements and embellishments to be made If no notification is made, the co-owner who advan ced the expenses still has the right to be reimbursed if he proves the necessity of such repairs and the reasonableness of the expense EXCEPTION: If the others can prove that had he notified them, they could have hired the services of anoth er who would charge less than the people with whom the one who advanced contract ed or that they know of a store that sells the needed material at a cheaper pric e o Co-owner only entitled to be reimbursed for the amount that should have been spent had he notified the others, and difference shall be borne by him alone b. Decision by majority must be followed Right to oppose any act of Alteration Article 491, Civil Code. None of the co-owners shall, without the consent of the others, make alterations in the thing owned in common, even though benefits for all would result therefrom. However, if the withholding of the consent by one o r more of the co-owners is clearly prejudicial to the common interest, the court s may afford adequate relief. 4. Alteration v. Administration Alteration More permanent result and relate to t he substance or form of the thing Nature: if the thing does not require any modi fication for its enjoyment, any modification that is made will be considered an alteration Consent: Unanimous consent of all Administration Refers to the enjoym ent of the thing and is of transitory character When the thing in its nature req uires changes, modifications can be considered as acts of simple administration PROPERTY Consent: mere majority is sufficient 159 a. Alteration without consent of all is illegal The one who did the alteration w ill lose whatever he spent in case he is made to demolish the work he has done ( no right to reimbursement) Damages to the non-consenting coowner can also be gra nted by the court b. Note: This is subject to ratification if co-owners decide t o contribute to the expenses by reimbursing the co-owner who made the alteration (effect: benefit of alteration will inure to the coownership) Right to protest against acts of majority which are seriously prejudicial to the minority Article 492(3), Civil Code. Should there be no majority, or should the resolutio n of the majority be seriously prejudicial to those interested in the property o wned in common, the court, at the instance of an interested party, shall order s uch measures as it may deem proper, including the appointment of an administrato r. 1. Alteration: a change which more or less permanently changes the use of a thin g and adversely affecting the condition of the thing or its enjoyment by the oth ers. 2. It involves: a. Change of the thing from the state or essence in which t he others believe it should remain, or b. Withdrawal of the thing from the use t o which they wish to be intended, or c. Any other transformation which prejudice s the condition or substance of the thing or its enjoyment by the others 3. Rule : Any act of alteration requires UNANIMOUS CONSENT OF ALL COWORKERS a. BUT when there is unreasonable withholding of consent: the co-owner may go to court to se ek adequate relief. b. Note: consent may be express or tacit c. Reason for the r ule: alteration is an act of ownership, not of mere administration. 1. Acts of administration a. Acts of management that do not involve alteration o f the property b. Acts which are temporary in character so much so that they do not bind the property for a long time c. Acts that do not create real rights ove r the common property 2. Rule: If there is a disagreement or conflict of opinion

s by and among the co-owners on the matter of administration and better enjoymen t of the common property, the resolution of the co-owners

CIVIL LAW REVIEWER Chapter V. CO-OWNERSHIP Right to exercise legal redemption Article 1620, Civil Code. A co-owner of a thing may exercise the right of redemp tion in case the shares of all the other co-owners or of any of them, are sold t o a third person. If the price of the alienation is grossly excessive, the redem ptioner shall pay only a reasonable one. Should two or more co-owners desire to exercise the right of redemption, they may only do so in proportion to the share they may respectively have in the thing owned in common. Article 1623, Civil Co de. The right of legal preemption or redemption shall not be exercised except wi thin thirty days from the notice in writing by the prospective vendor, or by the vendor, as the case may be. The deed of sale shall not be recorded in the Regis try of Property, unless accompanied by an affidavit of the vendor that he has gi ven written notice thereof to all possible redemptioners. The right of redemptio n of co-owners excludes that of adjoining owners. This right is not applicable to adjacent lands which are separated by brooks, dr ains, ravines, roads and other apparent servitudes for the benefit of other esta tes. If two or more adjoining owners desire to exercise the right of redemption at the same time, the owner of the adjoining land of smaller area shall be prefe rred; and should both lands have the same area, the one who first requested the redemption. b. Urban land Article 1622, Civil Code. Whenever a piece of urban la nd which is so small and so situated that a major portion thereof cannot be used for any practical purpose within a reasonable time, having been bought merely f or speculation, is about to be re-sold, the owner of any adjoining land has a ri ght of pre-emption at a reasonable price. If the re-sale has been perfected, the owner of the adjoining land shall have a right of redemption, also at a reasona ble price. When two or more owners of adjoining lands wish to exercise the right of preemption or redemption, the owner whose intended use of the land in questi on appears best justified shall be preferred. 1. Redemption: Act of reclaiming possession of something by payment of a specifi c price 2. The 30-day redemption period starts from the date of written notifica tion of the sale made by the co-owner. Without such written notice, the 30-day p eriod does not start to run 3. Exceptions: a. Estoppel by laches (inaction) If t here is oral notification and several years have passed (implied waiver) and the re is reliance on the non-action of co-owners b. Estoppel by silence When there is duty to speak 4. Note: The written notification must come from the prospectiv e vendor PROPERTY representing the controlling interest (not majority in number) shall be binding upon all co-owners. 3. Who can be the administrator? He or she may or may not be a coowner, PROVIDED that the co-owners delegated him or her. 4. What can an adm inistrator do? a. PROVIDED there is a unanimous consent of all co-owners, an adm inistrator may compromise on, donate, cede, alienate, mortgage, or encumber the common property b. If the amount of individual contribution is undetermined, the law presumes that they all contributed proportionately (Lavadia v. Cosme) a. The vendor is in a better position to know things involving the property and the sale b. Redemption of the property by a coowner does not vest him sole owner ship over said property. Redemption will inure to the benefit of all co-owners. Redemption is not a mode of termination of relationship. (Mariano v. CA) 5. Othe r cases where right of redemption is given a. Rural land Article 1621, Civil Cod e. The owners of adjoining lands shall also have the right of redemption when a piece of rural land, the area of which does not exceed one hectare, is alienated , unless the grantee does not own any rural land.

160

CIVIL LAW REVIEWER Chapter V. CO-OWNERSHIP Right to ask for partition Article 494, Civil Code. No co-owner shall be obliged to remain in the co-owners hip. Each coowner may demand at any time the partition of the thing owned in com mon, insofar as his share is concerned. Nevertheless, an agreement to keep the t hing undivided for a certain period of time, not exceeding ten years, shall be v alid. This term may be extended by a new agreement. A donor or testator may proh ibit partition for a period which shall not exceed twenty years. Neither shall t here be any partition when it is prohibited by law. No prescription shall run in favor of a co-owner or co-heir against his co-owners or co-heirs so long as he expressly or impliedly recognizes the coownership. 30 days from notification of prospective coowner vendor) 3. To substitute anothe r person in the enjoyment of thing 4. To renounce part of his interest to reimbu rse necessary expenses incurred by another coowner (Article 488) Article 488, Civil Code. Each co-owner shall have a right to compel the other co -owners to contribute to the expenses of preservation of the thing or right owne d in common and to the taxes. Any one of the latter may exempt himself from this obligation by renouncing so much of his undivided interest as may be equivalent to his share of the expenses and taxes. No such waiver shall be made if it is p rejudicial to the co-ownership. 161 PROPERTY 1. Partition: segregation or division of a property in common to those to whom i t belongs 2. Rule: Right to demand partition does not prescribe 3. Exceptions to the rule: a. When indivision within 10 years is stipulated by the co-owners b. When co-ownership is imposed as a condition in a donation or in a last will and testament by the transferor/donor/testator c. When from the nature of the proper ty in common, it cannot be divided (i.e. party wall) d. When partition is genera lly prohibited by law (i.e. ACP, party wall) e. When the partition would render the thing unserviceable or the thing held in common is essentially indivisible If the thing cannot be physically partitioned, they may sell the thing and the coowners may divide the proceeds) f. When acquisitive prescription has set in favo r of a stranger to con-ownership or in favor of a co-owner B. Effect of Transaction by Each Owner 1. Limited to his share in the partition 2. Transferee does not acquire any specific portion of the whole property until partition 3. Creditors of co-owners may intervene in the partition to attack the same if it is prejudicial (Art. 499) Article 499, Civil Code. The partition of a thing owned in common shall not prej udice third persons, who shall retain the rights of mortgage, servitude or any o ther real rights belonging to them before the division was made. Personal rights pertaining to third persons against the co-ownership shall also remain in force , notwithstanding the partition. Note: Creditors cannot ask for rescission even if not notified in the absence of fraud (Art. 497, Civil Code) Article 497, Civil Code. The creditors or assignees of the co-owners may take pa rt in the division of the thing owned in common and object to its being effected without their concurrence. But they cannot impugn any partition already execute d, unless there has been fraud, or in case it was made notwithstanding a formal opposition presented to prevent it, without prejudice to the right of the debtor or assignor to maintain its validity. VIII. Rules on Co-Ownership Applicable to CPG or ACP

Not VII. Implication of Co-owners Right over His Ideal Share A. Rights of a Co-owner 1. To share in fruits and benefits 2. To alienate, mortg age, or encumber and dispose his ideal share (but other co-owners may exercise r ight of legal redemption within These two regimes are governed by the provisions on the Family Code Even void ma rriages and cohabitation of incapacitated persons are governed by Article 50, 14 7, and 148 of the Family Code

CIVIL LAW REVIEWER Chapter V. CO-OWNERSHIP master deed which shall contain, among others, the follo wing: a. Description of the land on which the building or buildings and improvem ents are to be located; Description of the building or buildings, stating the nu mber of storeys and basement, the number of units and their accessories, if any; Description of the common areas and facilities; A statement of the exact nature of the interest acquired or to be acquired by the purchased in the separate uni ts and the common areas of the condominium projects. Where title to or to appurt enant interests in the common areas is to be held by a condominium corporation, a statement to this effect shall be included; A certificate of the registered ow ner of the property, if he is other than those executing the master deed, as wel l as of all registered holders of any lien or encumbrances on the property, that they consent to the registration of the deed; The following plans shall be appe nded to the deed as integral parts thereof: 1. A survey plan of the land include d in the project, unless a survey plan of the same property had previously been filed in said office. 2. A diagrammatic floor plan of the building or buildings each unit, its relative location and approximate dimensions. g. Any reasonable r estriction not contrary to law, morals, or public policy regarding the right of any condominium owner to alienate or dispose off his condominium. The enabling o r master deed may be amended or revoked upon registration of an instrument execu ted by a simple majority of the registered owners of the property: Provided, Tha t in a condominium project exclusively for either residential or commercial use, simple majority shall be on a per unit of ownership basis and that in the case of mixed use, simple majority shall be on a floor area of ownership basis: Provi ded, further, That prior notifications to all registered owners shall be submitt ed to the Housing and Land Use Regulatory Board and the city/municipal engineer for approval before it can be registered. Until registration of a revocation, th e provisions of this Act shall continue to apply to such IX. Special Rules on Ownership of Different Stories of a House as Differentiated from Provisions of the Condominium Act RA 4726. THE CONDOMINIUM ACT Sec. 2. A Condominium is an interest in real proper ty consisting of a separate interests in a unit in a residential, industrial or commercial building or in an industrial estate and an undivided interests in com mon, directly and indirectly, in the land, or the appurtenant interest of their respective units in the common areas. The real right in condominium may be owner ship or any interest in real property recognized by law on property in the Civil Code and other pertinent laws. Sec. 3. As used in this Act, unless the context otherwise requires: b. Unit" means a part of the condominium project intended fo r any type of independent use or ownership, including one or more rooms or space s located in one or more floors (or parts of floors) in a building or buildings and such accessories as may be appended thereto: Provided, that in the case of a n industrial estate wherein the condominium project consists of several building s, plants and factories may, by themselves, be considered separately as individu al units as herein defined. c. "Project" means the entire parcel of real propert y divided or to be divided in condominiums, including all structures thereon. "I ndustrial Estate or Estate" means a certain tract of land which is subdivided an d developed primarily for industrial purposes and which usually includes provisi ons for basic infrastructure facilities and common services such as roads, water , electricity, drainage and waste disposal system. "Common areas" means the enti re project except all units separately granted or held or reserved. "To divide" real property means to divide the ownership thereof or other interests therein b y conveying one or more condominium therein but less than the whole thereof. b. c. d.

162 PROPERTY e. f. d. e. h. f. Sec. 4. The provisions of this Act shall apply to property divided or to be divi ded into condominium only if there shall be recorded in the Register of Deeds of the province or city in which the property lies, and duly annotated in the corr esponding certificate of title of the land, if the latter had been patented or r egistered under either the Land Registration or Cadastral Acts, an enabling or

CIVIL LAW REVIEWER property. d. Sec. 5. Any transfer or conveyance of a unit or an apartment, office or store or other space therein, shall include the transfer or conveyance of the undivided interest in the common areas or in a proper case , the membership or share holdings in the condominium corporation: Provided, how ever, That where the common areas in the condominium project are held by the own ers of separate units as co-owners hereof, no condominium unit therein shall be conveyed or transferred to persons other than Filipino citizens or corporation a t least 60% of the capital stock of which belong to Filipino citizens, except in cases of hereditary succession. Where the common areas in a condominium project are held by a corporation, no transfer or conveyance of a unit shall be valid i f the concomitant transfer of the appurtenant membership or stockholding in the corporation will cause the alien interest in such corporation to exceed the limi ts imposed by existing laws. Sec. 6. Unless otherwise expressly provided in the enabling or master deed or the declaration of restrictions, the incidents of a c ondominium grant are as follows: a. the boundary of the unit granted are the int erior surfaces of the perimeter walls, floors, ceiling, windows and doors thereo f: Provided, that in the case of an industrial estate condominium projects, wher ein whole buildings, plants or factories may be considered as unit defined under section 3 (b) hereof, the boundary of a unit shall include the outer surfaces o f the perimeter walls of said buildings, plants or factories. The following are not part of the unit: bearing walls, columns, floors, roofs, foundations, and ot her common structural elements of the buildings; lobbies, stairways, hall ways a nd other areas of common use, elevator equipment and shafts, central heating, ce ntral refrigeration and central air conditioning equipment, reservoir, tanks, pu mps and other central services and facilities, pipes, ducts, flues, chutes, cond uits wires and other utility installations, wherever located, except the outlets thereof when located within the unit. There shall pass with the unit, as an app urtenant thereof, an exclusive casement for the use of the air space encompasses by the boundaries of the unit as it exists at any particular time and as the un it may lawfully be altered or reconstructed from time to time. Such easement sha ll be automatically terminated in any air space upon destruction of the units as to render it untenantable. Unless otherwise provided, the common areas are held in common by the holders of units, in equal share one for each unit. Chapter V. CO-OWNERSHIP A non-exclusive easement for ingress, egress and support through the common area s in appurtenant to each unit and the common areas are subject to such easement. Each condominium owner shall have the exclusive right to paint, repaint, tile, wax, paper or otherwise refinish and decorate the inner surfaces of the walls, c eilings, floors, windows and doors hounding his own unit: provided, that in the case of an industrial estate condominium unit, such right may be exercised over the external surfaces of the said unit. Each condominium owner shall have the ex clusive right to mortgage, pledge or encumber his condominium and to have the sa me appraised independently of the other condominium owner. Each condominium owne r has also the absolute right to sell or dispose of his condominium unless the m aster deed contains a requirements that the property be first offered to the con dominium owners within a reasonable period of time before the same is offered to outside parties; e. f. 163 PROPERTY g. Sec. 7. Except as provided in the following section, the common areas shall rema

in undivided, and there shall be no judicial partition thereof. Sec. 8. Where se veral persons own condominium in a condominium project, an action may be brought by one or more such person for partition thereof, by sale of the entire project , as if the owners of all the condominium in such project were co-owners of the entire project in the same proportion as their interests in the common areas: Pr ovided, however, that a partition shall be made only upon a showing: a. That thr ee years after damage or destruction to the project which renders a material par t thereof unfit for its use prior thereto, the project had not been rebuilt or r epaired substantially to its state prior to its damage or destruction; or b. Tha t damage or destruction to the project has rendered one half or more of the unit s therein untenantable and that condominium owners holding in aggregate more tha n 30 percent interest in the common areas are opposed to the repair or restorati on of the projects; or c. That project has been in existence in excess of 50 yea rs, that it is obsolete and uneconomical, and that condominium owners holding in aggregate more than 50 percent interest in the common areas are opposed to repa ir or restoration or b. c.

CIVIL LAW REVIEWER remodeling or modernizing of the project; or d. That the proj ect or a material part thereof has been condemned or expropriated and that the p roject is no longer viable, or that the condominium owners holding in aggregate more than 70 percent interest in the common areas are opposed to the continuatio n of the condominium regime after expropriation or condemnation of a material pr oportion thereof; or e. That the condition for such partition by sale set forth in the declaration of restrictions duly registered in accordance with the terms of this Act, have been met. Sec. 9. The owner of a project shall, prior to the c onveyance of any condominium therein, register a declaration of restrictions rel ating to such project, which restrictions shall constitute a lien upon each cond ominium in the project, and shall insure to and bind all condominium owners in t he project. Such liens, unless otherwise provided, may be enforced by any condom inium owner in the project or by the management body of such project. The Regist er of Deeds shall enter and annotate the declaration of restrictions upon the ce rtificate of title covering the land included within the project, if the land is patented or registered under the Land Registration or Cadastral Acts. The decla ration of restrictions shall provide for the management of the project by anyone of the following management bodies: a condominium corporation, an association o f the condominium owners, a board of governors elected by condominium owners, or a management agent elected by the owners or by the board named in the declarati on. It shall also provide for voting majorities quorums, notices, meeting date, and other rules governing such body or bodies. Such declaration of restrictions, among other things, may also provide: a. As to any such management body; 1. For the powers thereof, including power to enforce the provisions of the declaratio ns of restrictions; 2. For maintenance of insurance policies, insuring condomini um owners against loss by fire, casualty, liability, workmens compensation and other insurable risks, and for bonding of the members of any management body; 3. Provisions for maintenance, utility, gardening and other services benefiting th e common areas, for the employment of personnel necessary for the operation of t he building, and legal, accounting and other professional and technical services ; 4. For purchase of materials, supplies and the like needed by the common areas ; 5. Chapter V. CO-OWNERSHIP For payment of taxes and special assessments which would be a lien upon the entire project or common areas, and for discharge of any lie n or encumbrance levied against the entire project or the common areas; 6. For r econstruction of any portion or portions of any damage to or destruction of the project; 7. The manner for delegation of its powers; 8. For entry by its officer s and agents into any unit when necessary in connection with the maintenance or construction for which such body is responsible; 9. For a power of attorney to t he management body to sell the entire project for the benefit of all of the owne rs thereof when partition of the project may be authorized under Section 8 of th is Act, which said power shall be binding upon all of the condominium owners reg ardless of whether they assume the obligations of the restrictions or not. b. Th e manner and procedure for amending such restrictions: Provided, That the vote o f not less than a majority in interest of the owners is obtained. c. For indepen dent audit of the accounts of the management body; For reasonable assessments to meet authorized expenditures, each condominium unit to be assessed separately f or its share of such expenses in proportion (unless otherwise provided) to its o wners fractional interest in any common areas; For the subordination of the lien s securing such assessments to other liens either generally or specifically desc ribed; For conditions, other than those provided for in Sections eight and thirt een of this Act, upon which partition of the project and dissolution of the cond ominium corporation may be made. Such right to partition or dissolution may be c onditioned upon failure of the condominium owners to rebuild within a certain pe riod or upon specified inadequacy of insurance proceeds, or upon specified perce ntage of damage to the building, or upon a decision of an arbitrator, or upon an y other reasonable condition. 164

PROPERTY d. e. f. Sec. 10. Whenever the common areas in a condominium project are held by a condom inium corporation, such corporation shall constitute the management body of the project. The corporate purposes of such a corporation shall be limited to the ho lding of the common areas, either in ownership or any other interest in real pro perty

CIVIL LAW REVIEWER recognized by law, to the management of the project, and to s uch other purposes as may be necessary, incidental or convenient to the accompli shment of said purposes. The articles of incorporation or by-laws of the corpora tion shall not contain any provision contrary to or inconsistent with the provis ions of this Act, the enabling or master deed, or the declaration of restriction s of the project. Membership in a condominium corporation, regardless of whether it is a stock or non-stock corporation, shall not be transferable separately fr om the condominium unit of which it is an appurtenance. When a member or stockho lder ceases to own a unit in the project in which the condominium corporation ow ns or holds the common areas, he shall automatically cease to be a member or sto ckholder of the condominium corporation. Sec. 11. The registration and regulatio n of a condominium corporation shall be vested with the Housing And Land Use Reg ulatory Board (HLURB) and the term of the said corporation shall be coterminous with the duration of the subdivision projects, the provision of the corporation law to the contrary notwithstanding. Sec. 12. The dissolution of the condominium corporation in any manner and any of the causes provided by law shall be govern ed by the provisions of the Title XIV of the Corporation Code. Sec. 13. Until th e enabling or the master deed of the project in which the condominium corporatio n owns or holds the common areas is revoked the corporation shall not be volunta rily dissolved through an action for dissolution under Rule 104 of the Rules of Court except upon a showing: a. The three years after damage or destruction to t he project in which damage or destruction renders a materials part thereof unfit for its use prior thereto, the project has not been rebuilt or repaired substan tially to its state prior to its damage or destruction; or The damage or destruc tion to the project has rendered one half or more of the units therein untenanta ble and that more than 30 percent of the member of the corporation entitled to v ote, if a stock corporation, are opposed to the repair or reconstruction of the project; or That the project has been in existence excess of 50 years, that it i s obsolete and uneconomical and that more than 50 percent of the members of the corporation if non-stock or stockholders representing more than 50 percent of th e capital stock entitled to vote, if a stock corporation, are opposed to the rep air or restoration or remodeling or modernizing of the project; or d. Chapter V. CO-OWNERSHIP That project or material part thereof has been condemned or expropriated and that the project is no longer viable or that the members ho lding in aggregate more than 70 percent interest in the corporation if nonstock, or the stockholders representing more than 70 percent of the capital stock enti tled to vote, if a stock corporation, are opposed to the continuation of the con dominium regime after expropriation or condemnation of a material portion thereo f; or That the conditions for such a dissolution set forth in the declaration of restrictions of the project in which the corporation, are opposed to the contin uation of the condominium regime after expropriation or condemnation of a materi al portion thereof. e. 165 PROPERTY Sec. 14. The condominium corporation may also be dissolved by the affirmative vo te of all the stockholders or members thereof at a general or special meeting du ly called for such purpose: Provided, that all the requirements of Section 62 of the Corporation Law are complied with. xxx Sec. 16. A condominium corporation s hall not, during its existence, sell, exchange, lease or otherwise dispose of th e common areas owned or held by it in the condominium project unless authorized by the affirmative vote of a simple majority of the registered owners: provided, that prior notification to all registered owners are done and provided further, that the condominium corporation may expand or integrate the project with anoth er upon the affirmative vote of a simple majority of the registered owners, subj ect only to the final approval of the HLURB. xxx Sec. 19. Where the enabling or

master deed provides that the land included within a condominium project are to be owned in common by the condominium owners therein the Register of Deeds may a t the request of all the condominium owner and upon surrender of all their condo minium owners copies, cancel the certificate of title of the property and issue a new one in the name of said condominium owners as pro-indiviso co-owners ther eof. xxx Sec. 23. Where, in an action for partition of a condominium corporation on the ground that the project or a material part thereof has been condemned or expropriated, the court finds that the condition provided in this Act or in the declaration have not been met, the court may decree a reorganization of the pro ject declaring which portion or portions of the project shall continue as a b. c.

CIVIL LAW REVIEWER condominium project, the owners thereof, and the respective r ights of the remaining owners and the just compensation, if any, that a condomin ium owner may be entitled to due to deprivation of his property. Upon receipt of a copy of the decree, the Register of Deeds shall enter and annotate the same o n the pertinent certificate of title. Sec. 24. Any deed declaration or plan for a condominium project shall be liberally construed to facilitate the operation o f the project, and its provisions shall be presumed to be independent and severa l. Sec. 25. The building and design standards for condominium projects to be pro mulgated by HLURB shall provide for, among others, accessibility features for di sabled persons pursuant to Batas Pambansa Bilang 344 of 1994. Sec. 26. Whenever real property has been divided into condominiums, each condominium separately ow ned shall be separately assessed, for purposes of real property taxation and oth er tax purposes, to the owners thereof and tax on each such condominium shall co nstitute a lien solely thereon. Sec. 27. All acts or parts of Acts in conflict o n inconsistent with this Act are hereby amended insofar as condominium and its i ncidents are concerned. Chapter V. CO-OWNERSHIP What Does the Housing and Land Use Regulatory Board Do? They hear the complaints of buyers. Important Documents in Condo Ownership 1. Deed of sale 2. Master deed (Sec. 4) 3. Declaration of restrictions (Sec. 9): pertains to how common areas will be governed and who will do the governing a. i.e. how to contribute to comm on area expenses: contribution to maintenance, upkeep, repair of common areas in cluded b. there is an Assessment, which is a lien upon the condo unit 166 PROPERTY X. Extinguishment of Co-Ownership A. Total destruction of thing or loss of the property co-owned Is there still co -ownership if a building is destroyed?Yes, over the land and the debris. B. Merge r of all interests in one person C. Acquisitive Presciption By whom 1. A third pe rson (Art. 1106) 2. A co-owner against the other co-owners Requisites 1. Unequivo cal acts of repudiation of the rights of the other co-owners (you oust the other co-owners) a. Must be shown by clear and convincing evidence b. Must be within the knowledge of the other co-owners c. Must not be a mere refusal to recognize the others as co-owners 2. Open and adverse possession - Not mere silent possess ion Note: there is a presumption that possession of a co-owner is NOT adverse Pr escription only arises and produces all effects when the acts are clearly meant to oust the rights of the other co-owners D. Partition or Division Effects of Pa rtition 1. Confers upon each heir the exclusive ownership of the property adjudic ated to him Concept of Condominium It is an interest in real property consisting of a: 1. SEP ARATE INTEREST in a unit in a a. residential, or b. industrial, or c. commercial building 2. UNDIVIDED INTEREST in common directly or indirectly, a. in the land on which it is located b. in other common areas of the building When Ownership of the Unit is Acquired 1. Ownership is acquired only after the buyer had fully p aid the purchase price. 2. The ownership of the unit is what makes the buyer a s hareholder in the condominium. Note: The condominium law effectively separates t he building from the land (by a master deed) 3. Building is deemed an accessory Amendments Co-ownership in common areas means shared expenses in these areas 1. S ec 4: simple majority of the property 2. Sec 16: common areas may be disposed by affirmative vote of a simple majority of the registered owners

CIVIL LAW REVIEWER Chapter V. CO-OWNERSHIP 2. Co-heirs shall be reciprocally bound to warrant the title to and the quality of each property adjudicated 3. Reciprocal obligation of warranty shall be propo rtionate to the respective hereditary shares of co-heirs 4. An action to enforce warranty must be brought within 10 years from the date the right accrues 5. The co-heirs shall not be liable for the subsequent insolvency of the debtor of the estate Note: Unless partition is effected, each heir cannot claim sole ownershi p over a definite portion of the land and cannot dispose of the same. Heirs beco me the undivided owner of the whole estate each co-owner shall have full ownersh ip if his part even as to fruits and benefits. He may alienate, assign or mortga ge his share. The effect of such act shall be limited to the portion allotted to him during partition. Until said partition though, he cannot alienate a specifi c part of the estate. A co-owner cannot adjudicate to himself a definite portion owned in common until partition by agreement or by a judicial decree. Until the n, they can only sell their successional rights. (Carvaria v. CA) Rights of Owne rs Creditors of Individual Co-

Form: Oral or Written (Statute of Frauds does not operate here because it is not a conveyance of property but a mere segregation or designation of which parts b elong to whom) Rules of Court does not preclude agreements or settlements. Actio n for Partition: a. WON the plaintiff is indeed a co-owner of the property b. HO W will the property be divided between the plaintiff and defendant. Intervention of creditors and assignees: a. The law does not expressly require that there sh ould be a previous notice to the creditors and assignees before a partition can be validly made, but the right of creditors and assignees to take part in the di vision presupposes the duty to notify them. b. If notice is not given, the parti tion will not be binding on them. c. Once notice has been given, it is the duty of creditors and assignees to intervene and make known their stand. i. If they f ail to do this, they cannot question the division made, except in case of fraud. ii. If they formulate a formal question to its being made, they can contest suc h partition mad in spite of their opposition. 167 PROPERTY Article 497, Civil Code. The creditors or assignees of the co-owners may take pa rt in the division of the thing owned in common and object to its being effected without their concurrence. But they cannot impugn any partition already execute d, unless there has been fraud, or in case it was made notwithstanding a formal opposition presented to prevent it, without prejudice to the right of the debtor or assignor to maintain its validity.

Creditors referred to in the provision: All creditors, whether ordinary or prefe rred, who became such during the subsistence of the co-ownership. Rule: The cred itors are allowed to take part in the partition. Reason for the rule: They own p art of the interest of the o-owners who made the assignment or alienation.

Procedure for Partition Governing rule: Rule 69 of the Rules of Court eement by parties or by judicial decree

How: By agr

CIVIL LAW REVIEWER Chapter VI. POSSESSION Chapter VI. Possession I. II. DEFINITION AND CONCEPT DEGREES OF POSSESSION A. MERE HOLDING WITHOUT TITL E WHATSOEVER, AND IN VIOLATION OF THE RIGHT OF THE OWNER B. POSSESSION WITH JURI DICAL TITLE BUT NOT THAT OF OWNERSHIP C. POSSESSION WITH JUST TITLE, BUT NOT FRO M THE TRUE OWNER D. POSSESSION WITH JUST TITLE FROM THE TRUE OWNER III. CLASSES OF POSSESSION A. NATURAL POSSESSION B. CIVIL POSSESSION IV. CASES OF POSSESSION A. POSSESSION IN ONES OWN NAME AND POSSESSION IN THE NAME OF ANOTHER B. POSSESSIO N IN THE CONCEPT OF AN OWNER AND POSSESSION IN THE CONCEPT OF A HOLDER C. POSSES SION IN GOOD FAITH AND POSSESSION IN BAD FAITH V. WHAT THINGS OR RIGHTS MAY BE P OSSESSED VI. WHAT MAY NOT BE POSSESSED BY PRIVATE PERSONS VII. ACQUISITION OF PO SSESSION A. WAYS OF ACQUIRING POSSESSION B. BY WHOM MAY POSSESSION BE ACQUIRED C . WHAT DO NOT AFFECT POSSESSION D. RULES TO SOLVE CONFLICTS OF POSSESSION VIII. EFFECTS OF POSSESSION A. RIGHT TO BE PROTECTED IN HIS POSSESSION B. ENTITLEMENT TO FRUITS C. REIMBURSEMENT FOR EXPENSES D. GOOD FAITH (IN CONCEPT OF OWNER) IS E QUIVALENT TO TITLE IX. EFFECT OF POSSESSION IN THE CONCEPT OF OWNER X. LOSS OF P OSSESSION A. ABANDONMENT B. ASSIGNMENT C. DESTRUCTION OR TOTAL LOSS OF THING OR THING GOES OUT OF COMMERCE D. POSSESSION BY ANOTHER FOR MORE THAN 1 YEAR 2. It is the holding of a thing or a right, whether by material occupation or by the fact that the thing or the right is subjected to the action of our will. (M anresa) 3. It is an independent right apart from ownership. Right of Possession (jus possessionis) Independent right Right to possess (jus p ossidendi) Incident to ownership 4. Possession includes the idea of occupation. It cannot exist without it. (Exce ptions: Art. 537) Essential Requisites of Possession 1. Corpus possessionis: Hold ing (actual or constructive) of a thing or exercise of a right, if right is invo lved. a. General Rule: Possession and cultivation of a portion of a tract under claim of ownership of all is a constructive possession of all, if the remainder is not in adverse possession of another. b. Doctrine of constructive possession applies when the possession is under title calling for the whole. It does not ap ply where possession is without title. Note: Possession in the eyes of law does not mean that a man has to have his feet on every square meter of the ground bef ore it can be said that he is in possession. The general rule is that the posses sion and cultivation of a tract of land under a claim of ownership of all, is a constructive possession of all, if the remainder is not in adverse possession of another. (Ramos v. Director of Lands) 2. Animus possidendi: Intention to posses s a. Animus possidendi is essential in possession. There is no possession if the holder does not want to exercise the rights of a possessor. Animus possidendi i s implied from the acts of the possessor. b. Animus possidendi may be contradict ed and rebutted by evidence to prove that the person who is in possession, does not in fact exercise power or control and does not intend to do so . 168 PROPERTY I. Definition Article 523, Civil Code. Possession is the holding of a thing or the enjoyment o f a right. Concept of Possession 1. To possess, in a grammatical sense, means to have, to ph ysically and actually occupy a thing, with or without right. (Sanchez Roman)

CIVIL LAW REVIEWER Chapter VI. POSSESSION II. Degrees of Possession A. Mere holding or possession without title whatsoever and in violation of the r ight of the owner e.g. possession of a thief or usurper of land Here, both the p ossessor and the public know that the possession is wrongful. B. Possession with juridical title but not that of ownership e.g. possession of a tenant, deposito ry agent, bailee trustee, lessee, antichretic creditor. This possession is peace ably acquired. This degree of possession will never ripen into full ownership as long as there is no repudiation of concept under which property is held. C. Pos session with just title or title sufficient to transfer ownership, but not from the true owner e.g. possession of a vendee from a vendor who pretends to be the owner. This degree of possession ripens into full ownership by lapse of time. D. Possession with a just title from the true owner. This is possession that sprin gs from ownership. Code, cannot and should not become owners. IV. Cases of Possession A. Possession for Oneself, or Possession Exercised in Ones Own Name and Possessio n in the Name of Another. Article 524, Civil Code. Possession may be exercised in ones own name or in tha t of another. Name under which possession may be exercised 1. In ones own name the fact of posse ssion and the right to such possession is found in the same person. 2. In the na me of another the one in actual possession is without any right of his own, but is merely an instrument of another in the exercise of the latters possession. Kin ds of possession in the name of another 1. Necessary arises by operation of law e .g. representatives who exercise possession in behalf of a conceived child, juri dical persons, persons not sui juris and the conjugal partnership 2. Voluntary e ffected through the mutual consent of the parties e.g. agents or administrators appointed by the owner or possessor. Third person may also voluntary exercise po ssession in the name of another, but it does not become effective unless ratifie d by the person in whose name it is exercise. B. Possession in the Concept of an Owner, and Possession in the Concept of a Holder with the Ownership Belonging t o Another Article 525, Civil Code. The possession of things 169 PROPERTY III. Classes of Possession The Old Civil Code had a distinction between natural possession and civil posses sion. This distinction has been abolished by the present Code. A. Natural Posses sion Physical holding of a thing (detention); all retention or enjoyment of a th ing or right. B. Civil Possession Natural possession coupled with the intention of acquiring ownership of the thing or right. The following may be said to have civil possession: a. The owner himself, who holds and enjoys the things belongin g to him. b. The possessor who is not the owner but has the intention to act as such, and is considered as such by others. c. The thief and the usurper who, in spite of their intention and the fact that they are civil possessors according t o the or rights may be had in one of two concepts: either in the concept of owner, or in that of the holder of the thing or right to keep or enjoy it, the ownership p ertaining to another person. 1. Possession in Concept of Holder: One who possess es as a mere holder, not in the concept of owner, acknowledges in another a supe

rior right which he believes to be ownership, whether his belief be right or wro ng. e.g. tenant, usufructuary, borrower in commodatum.

CIVIL LAW REVIEWER Chapter VI. POSSESSION 2. Possession in Concept of Owner: May be exercised by the owner himself or one who claims to be so. When a person claims to be the owner of a thing, whether he believes so or not, acting as an owner, and performing acts of ownership, and h e is or may be considered as the owner by those who witness his exercise of prop rietary rights, then he is in the possession of an owner. This is the kind of po ssession that ripens into ownership under Article 540, when such possession is p ublic, peaceful and uninterrupted (see Art. 1118). Effects of Possession in Conc ept of an Owner a. Converted into ownership by the lapse of time necessary for pr escription b. Possessor can bring all actions necessary to protect his possessio n, availing himself of any action which an owner can bring, except accion revind icatoria which is substituted by accion publiciana. c. He can ask for the inscri ption of possession in the registry of property d. Upon recovering possession fr om one who has unlawfully deprived him of it, he can demand fruits and damages e . He can do on the thing possessed everything that the law authorizes an owner t o do; he can exercise the right of pre-emption and is entitled to the indemnity in case of appropriation. C. Possession in Good Possession in Bad Faith Faith an d

It implies freedom from knowledge and circumstances which ought to put a person on inquiry. The belief of a possessor that he is the owner of the thing must be based upon the title or mode of acquisition, such as a sale, a donation, inherit ance or other means of transmitting ownership; for without this, there can be no real, wellgrounded belief of ones ownership. Error in the application of the law , in the legal solutions that arise from such application, in the appreciation o f legal consequence of certain acts, and in the interpretation of doubtful provi sions or doctrines, may properly serve as basis for good faith. A misconception of the law, no matter how honest cannot have the effect of making one a possesso r in good faith, when he does not hold a title valid in form or a deed sufficien t in terms to transfer property. 170 PROPERTY Article 526, Civil Code. He is deemed a possessor in good faith who is not aware that there exists in his title or mode of acquisition any flaw which invalidate s it. He is deemed a possessor in bad faith who possesses in any case contrary t o the foregoing. Mistake upon a doubtful or difficult question of law may be the basis of good faith. 2. Possessor in bad faith one who knows his title is defective Only personal kno wledge of the flaw in the title or mode of acquisition can make him a possessor in bad faith for bad faith is not transmissible from one person to another. Mist ake upon a doubtful or difficult question of law as a basis of good faith Mistak e or ignorance of the law, by itself, cannot become the basis of good faith. Wha t makes the error or ignorance a basis of good faith is the presence of an appar ent doubt or difficulty in the law. In other words, the law is complex, ambiguous, o r vague such that it is open to two or more interpretations. When the ignorance of the law is gross and inexcusable, as when a person of average intelligence wo uld know the law, such ignorance cannot be the basis of good faith. Otherwise, t he intendment of Article 3 which states that, Ignorance of the law excuses no one

from compliance therewith, will be defeated. 1. Possessor in good faith one who is unaware that there exists a flaw which inv alidates his acquisition of the thing. Good faith consists in the possessors beli ef that the person from whom he received a thing was the owner of the same and c ould convey his title. V. What Things May be Possessed Article 530, Civil Code. Only things and rights which are susceptible of being a ppropriated may be the object of possession. Not all things susceptible of appropriation can be the object of prescription (S ee Art. 1113)

CIVIL LAW REVIEWER Chapter VI. POSSESSION VI. What May Not Be Possessed by Private Persons 1. Res Communes 2. Property of Public Dominion 3. Right under discontinuous appa rent easement tranferee the things which are being transferred 3. By execution of proper acts under legal formalities This mode of acquiring possession refers to juridical ac ts or the acquisition of possession by sufficient title evidenced by the perform ance of required formalities. Examples: Donations Succession Contracts (like a s ale with right to repurchase) Judicial possession Execution of judgments Executi on and registration of public instruments Inscription of possessory information titles The execution of the required formalities is equivalent to delivery of th e property subject thereof. B. By Whom May Possession Be Acquired Article 532, Civil Code. Possession may be acquired by the same person who is to enjoy it, by his legal representative, by his agent, or by any person without a ny power whatever: but in the last case, the possession shall not be considered as acquired until the person in whose name the act of possession was executed ha s ratified the same, without prejudice to the juridical consequences of negotior um gestio in a proper case. and/or nonVII. Acquisition of Possession A. Ways of Acquiring Possession Article 531, Civil Code. Possession is acquired by the material occupation of a thing or the exercise of a right, or by the fact that it is subject to the actio n of our will, or by the proper acts and legal formalities established for acqui ring such right. 171 PROPERTY 1. By material occupation of the thing Material occupation occupation, under this provision, is used in its ordinary meaning or general sense and not in its techn ical meaning under Article 712, which defines occupation as a mode of acquiring ownership. Possession acquired by material occupation is only possession as a fa ct, not the legal right of possession. Constructive delivery is considered as an equivalent of material occupation in two situations where such occupation is es sential to the acquisition of possession: Tradicion brevi manu takes place when one who possess a thing by title other than ownership, continues to possess the same under a new title, that of ownership. Tradicion constitutum possessorium ta kes place when the owner alienates the thing, but continues to posses the same u nder a different title. 2. By subjection to the action of ones will This mode of acquiring possession refers more to the right of possession than to possession a s a fact. The action of our will must be juridical, in the sense that it must be a ccording to law. This includes the following kinds of constructive delivery: Tra dicion symbolica effected by delivering some object or symbol placing the thing under the control of the transferee Tradicion longa manu effected by the transfe ror pointing out to the Possession may be acquired by 1. by the same person 2. by his legal representativ e 3. by his agent 4. by any person without any power whatsoever but subject to r atification, without prejudice to proper case or negotiorum gestio (Arts. 2144, 2149, 2150) 5. qualifiedly, minors and incapacitated persons By the same person E lements of personal acquisition: 1. Must have the capacity to acquire possession

2. Must have the intent to possess 3. The possibility to acquire possession mus t be present.

CIVIL LAW REVIEWER Chapter VI. POSSESSION the advantages of the same shall be liable for obligation s incurred in his interest, and shall reimburse the officious manager for the ne cessary and useful expenses and for the damages which the latter may have suffer ed in the performance of his duties. The same obligation shall be incumbent upon him when the management had for its purpose the prevention of an imminent and m anifest loss, although no benefit may have been derived. By his legal representative Requisites of acquisition through another: 1. That th e representative or agent has the intention to acquire the thing or exercise the right for another, and not for himself 2. That the person for whom the thing ha s been acquired or the right exercised, has the intention of possessing such thi ng or exercising such right Note: Bad faith is personal and intransmissible. Its effects must be therefore, be suffered only by the person who acted in bad fait h; his heir should not be saddled with the consequences Good faith can only bene fit the person who has it; and the good faith of the heir cannot erase the effec ts of bad faith of his predecessor. Article 534, Civil Code. On who succeeds by hereditary title shall not suffer th e consequences of the wrongful possession of the decedent, if it is not shown th at he was aware of the flaws affecting it; but the effects of possession in good faith shall not benefit him except from the date of the death of the decedent. Qualifiedly, persons minors and incapacitated

By any person without any power whatsoever but subject to ratification, without prejudice to proper case or negotiorum gestio (Arts. 2144, 2149, 2150) Article 2144, Civil Code. Whoever voluntarily takes charge of the agency or mana gement of the business or property of another, without any power from the latter , is obliged to continue the same until the termination of the affair and its in cidents, or to require the person concerned to substitute him, if the owner is i n a position to do so. This juridical relation does not arise in either of these instances: 1. When the property or business is not neglected or abandoned; 2. I f in fact the manager has been tacitly authorized by the owner. In the first cas e, the provisions of Articles 1317, 1403, No. 1, and 1404 regarding unauthorized contracts shall govern. In the second case, the rules on agency in Title X of t his Book shall be applicable. Article 2149, Civil Code. The ratification of the management by the owner of the business produces the effects of an express agenc y, even if the business may not have been successful. Article 2150, Civil Code. Although the officious management may not have been expressly ratified, the owne r of the property or business who enjoys Incapacitated all those who do not have the capacity to act (insane, lunatic, de afmutes who cannot read and write, spendthrifts and those under civil interdicti on) Object of possession things only, not rights. Method of acquisition material occupation; acquisition by means for which the incapacitated person has the cap acity, such as acquisition by succession, testate or intestate, or by donations propter nuptias, pure and simple donations C. What Do Not Affect Possession

Article 537, Civil Code. Acts merely tolerated, and those executed clandestinely and without the knowledge of the possessor of a thing, or by violence, do not a ffect possession. 1. Acts merely tolerated Those which by reason of neighborliness or familiarity, the owner of property allows his neighbor or another person to do on the proper ty; Those particular services or benefits which ones property can give to another without material injury or prejudice to the owner, who permits them out of frie ndship or courtesy Acts of little disturbances which a person, in the interest o f neighborliness or friendly relations permits others to do on his property, alt hough continued for a long time, no right will be acquired by prescription Note: Permissive use merely tolerated by the possessor cannot affect possession PROPERTY Article 535, Civil Code. Minors and incapacitated persons may acquire the posses sion of things; but they need the assistance of their legal representatives in o rder to exercise the rights which from the possession arise in their favor. 172

CIVIL LAW REVIEWER Chapter VI. POSSESSION and cannot be the basis of acquisitive prescription. Possession to constitute th e foundation of prescriptive right, must be possession under claim of title, it must be adverse. (Cuaycong v. Benedicto) 2. Acts executed clandestinely and with out the knowledge of the possessor Article 1108, Civil Code. Possession has to be in the concept of an owner, publi c, peaceful and uninterrupted. General Rule Possession cannot be recognized in two different personalities, exce pt in cases of copossession by co-possessors without conflict of claims of inter est. In case of conflicting possession preference is given to 1. Present possesso r or actual possessor 2. If there are two or more possessors, the one longer in possession 3. If the dates of possession are the same, the one who presents a ti tle 4. If all conditions are equal, the thing shall be placed in judicial deposi t pending determination of possession or ownership through proper proceedings Article 536, Civil Code. In no case may possession be acquired through force or intimidation as long as there is a possessor who objects thereto. He who believe s that he has an action or a right to deprive another of the holding of a thing, must invoke the aid of the competent court, if the holder should refuse to deli ver the thing. VIII. Effects of Possession A. Right to be Protected in His Possession In general, every possessor has a rig ht to be respected in his possession; if disturbed therein, possessor has a righ t to be protected in or restored to said possession. Article 539, Civil Code. Every possessor has a right to be respected in his poss ession; and should he be disturbed therein he shall be protected in or restored to said possession by the means established by the laws and the Rules of Court. A possessor deprived of his possession through forcible entry may within ten day s from the filing of the complaint present a motion to secure from the competent court, in the action for forcible entry, a writ of preliminary mandatory injunc tion to restore him in his possession. The court shall decide the motion within thirty (30) days from the filing thereof.

Possession acquired by force, not only when one forcibly takes away the property from another, but also when one occupied the property in the property in the ab sence of another, and repels the latter upon his return. Force may be actual or threatened; and may be employed by the possessor himself, or by another for him, and against any possessor. Effect on Possession: Acts mentioned do not constitu te true possession. They do not interrupt the period of prescription nor affect the rights to the fruits. For all purposes that may be favorable to the true pos sessor, his possession is not considered interrupted. D. Rules to Solve Conflicts of Possession Article 538, Civil Code. Possession as a fact cannot be recognized at the same t

ime in two different personalities except in the cases of copossession. Should a question arise regarding the fact of possession, the present possessor shall be preferred; if there are two possessors, the one longer in possession; if the da tes of the possession are the same, the one who presents a title; and if all the se conditions are equal, the thing shall be placed in judicial deposit pending d etermination of its possession or ownership through proper proceedings. Every possessor includes all kinds of possession, from that of an owner to that of a mere holder, except that which constitutes a crime. Reason for the rule: To p revent anyone from taking the administration of justice into his own hands. Even the owner cannot forcibly eject the possessor, but must resort to the courts. A ctions to Recover Possession 1. Summary proceedings Forcible entry and Unlawful d etainer Article 1674, Civil Code. In ejectment cases where an appeal is taken the remedy granted in Article 539, second paragraph, shall also apply, if the higher court is satisfied that the lessees appeal is PROPERTY 3. Acts of violence as long as the possessor objects thereto (i.e. he files a ca se) 173

CIVIL LAW REVIEWER frivolous or dilatory, or that the lessors appeal is prima f acie meritorious. The period of ten days referred to in said article shall be co unted from the time the appeal is perfected. Chapter VI. POSSESSION It is only the conviction of ownership externally manifested, which generates ow nership. Acts of possessory character done by virtue of a license or mere tolera nce on the part of the real owner are not sufficient and will not confer title b y prescription or adverse possession. The following cannot acquire title by pres cription: 1. Lessees, trustees, pledges, tenants on shares or planters and all t hose who hold in the name or representation of another; 2. Mere holders placed i n possession of the property by the owner, such as agents, employees; 3. Those h olding in a fiduciary character, like receivers, attorneys, depositaries and ant ichretic creditors 4. Co-owner, with regard to common property; Except: When he holds the same adversely against all of them with notice to them the exclusive c laim of ownership Article 542, Civil Code. The possession of real property presumes that of the mo vables therein, so long as it is not shown or proved that they should be exclude d.

Plaintiff may ask for writ of preliminary mandatory injunction within 10 days fr om filing of complaint in forcible entry (Art. 539). The same writ is available in unlawful detainer actions upon appeal. (Art. 1674) Forcible entry and Unlawfu l Detainer Rule 70, Rules of Court gives any person deprived of the possession o f any land or building by force, intimidation, strategy, or stealth at any time within one year after such unlawful deprivation, the action of forcible entry. by force, intimidation, strategy, or stealth includes every situation or condition under which one person can wrongfully enter upon real property and exclude anoth er, who has had prior possession therefrom. 174 PROPERTY 2. Accion Publiciana (based on superior right of possession, no ownership) Actio n for the recovery of possession of real property upon mere allegation and proof of a better title thereto 3. Accion Reinvindicatoria (recovery of possession ba sed on a claim of ownership) An action setting up title and right to possession Not barred by a judgment in an action for forcible entry and unlawful detainer 4 . Action for Replevin (possession ownership for movable property) Lawful Possess or Can Employ Self-help Article 429, Civil Code. The owner or lawful possessor of a thing has the right to exclude any person from the enjoyment and disposal thereof. For this purpose, he may use such force as may be reasonably necessary to repel or prevent an act ual or threatened unlawful physical invasion or usurpation of his property Artic le 540, Civil Code. Only the possession acquired and enjoyed in the concept of o wner can serve as a title for acquiring dominion. Refers to all kinds of possession, whether in concept of owner or not, in good f aith or in bad faith, and in ones own name or anothers in reference to things only, NOT rights. Article 543, Civil Code. Each one of the participants of a thing possessed in co mmon shall be deemed to have exclusively possessed the part which may be allotte d to him upon the division thereof, for the entire period during which the copos

session lasted. Interruption in the possession of the whole or a part of a thing possessed in common shall be to the prejudice of all the possessors. However, i n case of civil interruption, the Rules of Court shall apply. or B. Entitlement to fruits possessor in good faith/bad faith (Art. 544, 549) Article 544, Civil Code. A possessor in good faith is entitled to the fruits rec eived before the possession is legally interrupted. Natural and industrial fruit s are considered received from the time they are gathered or severed. Civil frui ts are deemed to accrue daily and belong to the possessor in good faith in that proportion. To consolidate title by prescription, the possession must be under claim of owne rship, and it must be peaceful, public and uninterrupted

CIVIL LAW REVIEWER Chapter VI. POSSESSION Right of the possessor in good faith Only limited to the fruits of the thing. He must restore the fruits received from the time such good faith ceased. He has no rights to the objects which do not constitute fruits. Legal interruption of pos session in good faith Takes place when an action is filed against himfrom the time he learns of the complaint, from the time he is summoned to the trial. Article 545, Civil Code. If at the time the good faith ceases, there should be a ny natural or industrial fruits, the possessor shall have a right to a part of t he expenses of cultivation, and to a part of the net harvest, both in proportion to the time of the possession. The charges shall be divided on the same basis b y the two possessors. The owner of the thing may, should he so desire, give the possessor in good faith the right to finish the cultivation and gathering of the growing fruits, as an indemnity for his part of the expenses of cultivation and the net proceeds; the possessor in good faith who for any reason whatever shoul d refuse to accept this concession, shall lose the right to be indemnified in an y other manner. Old Civil Code Possessor in GF was reimbursed the entire expense of cultivation incurred by him New Civil Code Proportionate division of expense s of production Article 546, Civil Code. Necessary expenses shall be refunded to every possessor ; but only the possessor in good faith may retain the thing until he has been re imbursed therefor. Useful expenses shall be refunded only to the possessor in go od faith with the same right of retention, the person who has defeated him in th e possession having the option of refunding the amount of the expenses or of pay ing the increase in value which the thing may have acquired by reason thereof. Necessary Expenses 1. Imposed by the thing itself and have no relation to the des ire or purpose of the possessor; hence they are reimbursed, whatever may be the juridical character of the person who advanced them. 2. They are the cost of livi ng for the thing and must be reimbursed to the one who paid them, irrespective of GF or BF. Only a possessor in GF is entitled to retain the thing until he is re imbursed 3. Those imposed for the preservation of the thing. They are not consid ered improvements; they do not increase the value of the thing, but merely preve nt them from becoming useless. Useful Expenses 1. Incurred to give greater utilit y or productivity to the thing 2. e.g. Wall surrounding an estate, an irrigation system, planting in an uncultivated land, a fishpond, an elevator in the buildi ng, electric lighting system 3. They are reimbursed only to the possessor in GF as a compensation or reward for him. Possessor in BF cannot recover such expense s

Charges Those which are incurred, not on the thing itself but because of it. It is borne by the two possessors in proportion to their respective possession. PROPERTY Provision is based on the following reasons of equity 1. The fruits received are generally used for the consumption and livelihood of the possessor, and his life and expenses may have been regulated in view of such fruits 2. The owner has be en negligent in not discovering or contesting the possession of the possessor; i t would be unjust after the possessor has been thus allowed to rely on the effic acy of the title, to require him to return the fruits he has received on the bas is of that title. 3. Between the owner, who has abandoned his property and left it unproductive, and the possessor, who has contributed to the social wealth, by the fruits he has produced, the law leans toward the latter

It includes every presentation required of the possessor by reason of possession of the thing, whether it constitutes a real right or not. e.g. Taxes, contribut ions in favor of the government When fruits are insufficient There should only be reimbursement of expenses; but each possessor should suffer a proportionate reduction due to the insufficiency of the harvest. C. Reimbursement for Expenses Possessor in Good Faith/Bad Faith 175

CIVIL LAW REVIEWER Article 547, Civil Code. If the useful improvements can be re moved without damage to the principal thing, the possessor in good faith may rem ove them, unless the person who recovers the possession exercises the option und er paragraph 2 of the preceding article. Article 548, Civil Code. Expenses for p ure luxury or mere pleasure shall not be refunded to the possessor in good faith ; but he may remove the ornaments with which he has embellished the principal th ing if it suffers no injury thereby, and if his successor in the possession does not prefer to refund the amount expended. Chapter VI. POSSESSION Article 549, Civil Code. The possessor in bad faith shall reimburse the fruits r eceived and those which the legitimate possessor could have received, and shall have a right only to the expenses mentioned in paragraph 1 of Article 546 and in Article 443. The expenses incurred in improvements for pure luxury or mere plea sure shall not be refunded to the possessor in bad faith, but he may remove the objects for which such expenses have been incurred, provided that the thing suff ers no injury thereby, and that the lawful possessor does not prefer to retain t hem by paying the value they may have at the time he enters into possession.. Ar ticle 550, Civil Code. The costs of litigation over the property shall be borne by every possessor. Article 550, Civil Code. Improvements caused by nature or ti me shall always inure to the benefit of the person who has succeeded in recoveri ng possession Expenses for Luxury 1. They do not affect the existence or the substance of the t hing itself, but only the comfort, convenience or enjoyment of the possessor. Th ey are not the subject of reimbursement, because the law does not compensate per sonal whims or caprices. 2. e.g. Opening of a garden, placing fountains and stat ues in it, adorning the ceilings paintings, and the walls with reliefs Useful Expenses Those which increase the income derived from the thing Result: I ncrease in the products, either absolutely, or because of greater facilities for producing them Includes expenses resulting in real benefit or advantage to the thing The resulting utility is essential and absolute, to all who may have the t hing. Expenses for Luxury Those which merely embellished the thing 176 PROPERTY

Includes all the natural accessions referred to by articles 457-465, and all tho se which do not depend upon the will of the possessor. e.g. widening of the stre ets, rising of fountains of fresh or mineral water, increase of foliage of trees Result: Benefit or advantage is only for the convenience of definite possessors Liability for loss or deterioration of property by possessor in bad faith Article 552, Civil Code. A possessor in good faith shall not be liable for the d eterioration or loss of the thing possessed, except in cases in which it is prov ed that he has acted with fraudulent intent or negligence, after the judicial su mmons. A possessor in bad faith shall be liable for deterioration or loss in eve ry case, even if caused by a fortuitous event. The utility is for the possessor or particular persons alone and is therefore ac cidental. Fruits Received

Possessor in GF Entitled to the fruits while possession is in GF and before lega l interruption (544) Entitled to part of the expenses of cultivation, and to a p art of the net harvest, in proportion to the time of the possession. Indemnity m ay be, at the owners option, 1. In money, OR 2. By allowing full cultivation and gathering of the fruits (545) Must share with the legitimate possessor, in propo rtion to the time of the possession (545) Right to reimbursement and retention i n the meantime (546) Possessor in BF Must reimburse the legitimate possessor (549) Pending Fruits Must reimburse the legitimate possessor (549) Charges Necessary Expenses Same as with GF (545) Reimbursement only (546)

CIVIL LAW REVIEWER Right of retention until reimbursed; Owners option to reimburs e him either for expenses or for increase in value which the thing may have acqu ired (546) Useful Expenses Limited right of removal should not damage principal and owner does not exercise option of paying the expenses or increase in value ( 547) Ornamental Expenses Deterioration of Loss Costs of Litigation Limited right of removal (548) No liability unless due to fraud or negligence after becoming in BF (552) Bears cost (550) Chapter VI. POSSESSION No right to reimbursement and no right of removal (547) Limited right of removal (549) Liable in every case (552) Bears cost (550) Article 559, Civil Code. The possession of movable property acquired in good fai th is equivalent to a title. Nevertheless, one who has lost any movable or has b een unlawfully deprived thereof may recover it from the person in possession of the same. If the possessor of a movable lost or which the owner has been unlawfu lly deprived, has acquired it in good faith at a public sale, the owner cannot o btain its return without reimbursing the price paid therefor

Just title that which is legally sufficient to transfer the ownership or the rea l right to which it relates. For the purposes of prescription, there is just tit le when the adverse claimant came into possession of the property through one of the modes recognized by law for the acquisition of ownership or other real righ ts, but the grantor was not the owner or could not transmit any right. (Art. 112 9) Exception

Possessor has actual title which is defeasible only by true owner. Requisites of Title 1. Possession in GF 2. The owner has voluntarily parted with the possessio n of the thing 3. The possession is in the concept of an owner When the owner ca n recover 1. Has lost the thing 2. Has been unlawfully deprived thereof Article 1131, Civil Code. For the purposes of prescription, just title must be p roved; it is never presumed. 3. Possessor may bring all actions necessary to protect his possession except re vindicatoria 4. May employ self help under Art. 429 5. Possessor may ask for ins cription of such real right of possession in the registry of property 6. Has rig ht to the fruits and reimbursement of expenses (assuming he is possessor in good faith) 7. Upon recovery of possession which has unlawfully deprived may demand fruits and damages 8. Generally, he can do on the things possessed everything th at the law IX. Effects of Possession in the Concept of Owner 1. Possession may be lapsed of time ripen into full ownership, subject to certai n exceptions. 2. Presumption of just title and cannot be obliged to show or prov e it (Art. 541); exception (Art. 1131) Article 541, Civil Code. A possessor in the concept of owner has in his favor th e legal presumption that he possesses with a just title and he cannot be obliged to show or prove it. PROPERTY D. Possession of Movable Acquired in Good Faith (in concept of owner) is Equival ent to Title (Art. 559)

Basis: Possession is presumed ownership, unless the contrary is proved. This pre sumption is prima facie and it prevails until contrary is proved. 177

CIVIL LAW REVIEWER Chapter VI. POSSESSION authorizes the owner to do until he is ousted by one who had a better right. 9. Possession in good faith and possession in bad faith (Art. 528) Mistake upon dou btful or difficult question of law as a basis of good faith (Art. 526, par 3) Of non-interruption of possession in favor of present possessor who proves posse ssion at a previous time until the contrary is proved Article 554, Civil Code. A present possessor who shows his possession at some pr evious time, is presumed to have held possession also during the intermediate pe riod, in the absence of proof to the contrary. Article 1120, Civil Code. Possess ion is interrupted for the purposes of prescription, naturally or civilly. Artic le 1121, Civil Code. Possession is naturally interrupted when through any cause it should cease for more than one year. The old possession is not revived if a n ew possession should be exercised by the same adverse claimant. Article 1122, Ci vil Code. If the natural interruption is for only one year or less, the time ela psed shall be counted in favor of the prescription. Article 1123, Civil Code. Ci vil interruption is produced by judicial summons to the possessor. Article 1124, Civil Code. Judicial summons shall be deemed not to have been issued and shall not give rise to interruption: 1. If it should be void for lack of legal solemni ties; 2. If the plaintiff should desist from the complaint or should allow the p roceedings to lapse; 3. If the possessor should be absolved from the complaint. In all these cases, the period of the interruption shall be counted for the pres cription X. Presumption in Possessorfor Prescription Favor of the Acquisitive Of good faith until contrary is proved Article 527, Civil Code. Good faith is always presumed, and upon him who alleges bad faith on the part of a possessor rests the burden of proof. 178 PROPERTY

Presumption is only juris tantum because possession is the outward sign of owner ship. Unless such proof of bad faith is presented, the possessor will be held to be in good faith. So long as the possessor is not actually aware of any defect invalidating his title, he is deemed a possessor in good faith. Of continuity of initial good faith in which possession was commenced of possess ion in good faith does not lose this character except in case and from the momen t possessor became aware or is not unaware of improper or wrongful possession Article 528, Civil Code. Possession acquired in good faith does not lose this ch aracter except in the case and from the moment facts exist which show that the p ossessor is not unaware that he possesses the thing improperly or wrongfully.

Good faith ceases from the date of the summons to appear at the trial Good faith ceases when there is: a. Extraneous evidence b. Suit for recovery of the proper

ty by the true owner Other presumptions with respect to specific properties of property rights 1. Of e xtension of possession of real property to all movables contained therein so lon g as in is not shown that they should be excluded; exceptions. Article 426, Civil Code. Whenever by provision of the law, or an individual decl aration, the expression "immovable things or property," or "movable things or pr operty," is used, it shall be deemed to include, respectively, the things enumer ated in Chapter 1 and Chapter 2. Whenever the word "muebles," or "furniture," is used alone, it shall not be deemed to include money, credits, commercial securi ties, stocks and bonds, jewelry, scientific or artistic collections, books, meda ls, arms, clothing, horses or carriages and their accessories, grains, liquids a nd merchandise, or other things which do not have as their principal Of enjoyment of possession in the same character in which possession was require d until contrary is proved Article 529, Civil Code. It is presumed that possession continues to be enjoyed in the same character in which it was acquired, until the contrary is proved.

CIVIL LAW REVIEWER object the furnishing or ornamenting of a building, except wh ere from the context of the law, or the individual declaration, the contrary cle arly appears. Chapter VI. POSSESSION

2. Non-interruption of possession of hereditary property Article 553, Civil Code. The possession of hereditary property is deemed transmi tted to the heir without interruption and from the moment of the death of the de cedent, in case the inheritance is accepted. One who validly renounces an inheri tance is deemed never to have possessed the same. Article 1078, Civil Code. Wher e there are two or more heirs, the whole estate of the decedent is, before its p artition, owned in common by such heirs, subject to the payment of debts of the deceased.

It is the opposite occupation. It consists of the voluntary renunciation of all the rights which the person may have in a thing, with intent to lose such a thin g. To be effective, it must be necessary that it be made by a possessor in the c oncept of an owner. It must be clearly appear that the spes recuperandi is gone and the animus revertendi is finally given up. B. Assignment, either onerous or gratuitous Complete transmission of ownership r ights to another person, gratuitously or onerously C. Possession by another; if possession has lasted longer than one year; real right of possession not lost af ter 10 years - (Subject to Article 537) Article 537, Civil Code. Acts merely tolerated, and those executed clandestinely and without the knowledge of the possessor of a thing, or by violence, do not a ffect possession. 179 PROPERTY 3. Of just title in favor of possessor in concept of owner Article 541, Civil Code. A possessor in the concept of owner has in his favor th e legal presumption that he possesses with a just title and he cannot be obliged to show or prove it. Article 1141, Civil Code. Real actions over immovables pre scribe after thirty years. This provision is without prejudice to what is establ ished for the acquisition of ownership and other real rights by prescription.

XI. Possesion May Be Lost By Article 555, Civil Code. A possessor may lose his possession: 1. By the abandonm ent of the thing; 2. By an assignment made to another either by onerous or gratu itous title; By the destruction or total loss of the thing, or because it goes o ut of commerce; By the possession of another, subject to the provisions of Artic le 537, if the new possession has lasted longer than one year. But the real righ t of possession is not lost till after the lapse of ten years. Possession that is lost here refers only to possession as a fact (de facto), not the legal right of possession (de jure). It is the possession that the new poss essor acquires. Real right of possession is lost only after 10 years. After one year, the actions for forcible entry and unlawful detainer can no longer be brou ght. But accion publiciana may still be instituted to recover possession de jure

Article 553, Civil Code. One who recovers possession shall not be obliged to pay for improvements which have ceased to exist at the time he takes possession of the thing.

3. 4.

A. Abandonment Includes the giving up possession, and not necessarily of ownersh ip by every possessor. The improvements, having ceased to exist, the lawful possessor or owner cannot b enefit from them; hence he should not pay for them. Necessary expenses are not c onsidered improvements, and even if the object for which they were incurred no l onger exists at the time of entry upon possession, the lawful possessor or owner has to pay for them. Article 557, Civil Code. The possession of immovables and of real rights is not deemed lost, or transferred for purposes of prescription to the prejudice of thi rd persons, except in accordance with

CIVIL LAW REVIEWER the provisions of the Mortgage Law and the Land Registration laws. Chapter VI. POSSESSION

Third parties relying on the Registry of Property are privileged to consider the registered possessors or owners as still such in spite of loss Article 558, Civil Code. Acts relating to possession, executed or agreed to by o ne who possesses a thing belonging to another as a mere holder to enjoy or keep it, in any character, do not bind or prejudice the owner, unless he gave said ho lder express authority to do such acts, or ratifies them subsequently. Article 556, Civil Code. The possession of movables is not deemed lost so long a s they remain under the control of the possessor, even though for the time being he may not know their whereabouts.

Control judicial control or right, or that the thing remains in ones patrimony Article 560, Civil Code. Wild animals are possessed only while they are under on es control; domesticated or tamed animals are considered domestic or tame if th ey retain the habit of returning to the premises of the possessor. Kinds of Animals: 1. Wildthose which live naturally independent of man 2. Domesti catedthose which, being wild by nature, have become accustomed to recognize the a uthority of man. When they observe this custom, they are placed in the same cate gory as domestic and when they lose it, they are considered as wild. 3. Domestic or Tamethose which are bornand reared ordinarily under the control and care of m an; they are under the ownership of man, and do not become res nullius unless th ey are abandoned. PROPERTY Rules for Loss of Movables: 180

CIVIL LAW REVIEWER Chapter VII. USUFRUCT Chapter VII. Usufruct I. CONCEPT II. CHARACTERISTICS III. DISTINGUISHED FROM LEASE AND SERVITUDE IV. C LASSIFICATION V. RIGHTS OF USUFRUCTUARY VI. OBLIGATIONS OF USUFRUCTUARY A. AT TH E BEGINNING OF THE USUFRUCT B. DURING THE USUFRUCT C. AT THE TIME OF THE TERMINA TION OF THE USUFRUCT VII. SPECIAL CASES VIII. EXTINGUISHMENT c. To prevent abuse, which is frequent; To prevent impairment. Exception: In an abnormal usufruct, alteration is allowed 3. Usufruct is extingu ished by the death of the usufructuary a. Natural because a contrary intention m ay prevail III. Usufruct Distiguished from Lease and Servitude Usufruct vs. Lease Basis By the nature of the right By the creator of the right Usufruct Always a r eal right Owner Passive owner who allows the usufructuary to enjoy the thing Gen erally covers all the utility of which the thing is capable May be created by la w, by will of the parties, or by prescription Pays for ordinary repairs and taxe s on the fruits Lease Quasi-real or personal right Need not be an owner Active o wner or lessor who makes the lessee enjoy the thing Generally covers a particula r utility May only be created by the will of the parties Generally not borne by a lessee 181 PROPERTY I. Concept Article 562, Civil Code. Usufruct gives a right to enjoy the property of another with the obligation of preserving its form and substance, unless the title cons tituting it or the law otherwise provides. Objects of Usufruct 1. Independent Rights A servitude which is dependent on the t enement to which it attaches cannot be the object of usufruct 2. Things Non-cons umable things Consumable things, but only as to their value if appraised, or on an equal quantity and quality if they were not appraised 3. Unproductive things e.g. sterile or absolutely unproductive land, or things for mere pleasure, such as promenades, statues or paintings, even if they do not produce any utility. By the cause By the extent of enjoyment By the origin As regards repairs and taxes Usufruct vs. Servitude II. Characteristics Basis

Characteristics 1. It is a real right 2. Of temporary duration 3. To derive all a dvantages from the thing due to normal exploitation Natural Characteristics 1. In cludes only the right to use (jus utendi) and the right to the fruits (jus fruen di) 2. Usufructuary must preserve the form or substance of the thing a. Preserva tion is a natural requisite, not essential because the title constituting it or the law may provide otherwise b. Reason for preserving form and substance To pre vent extraordinary exploitation; As to the object By the extent or enjoyment Usufruct May involve real or personal property Covers all the uses of the thing Servitudes May only involve real property Limited to a particular use Similarities between Usufruct and Servitude Both are real rights, whether registe red or not. 1. Both rights may be registered, provided that the usufruct involve s real property. All easements of course concerns real property. 2. Both may ord inarily be alienated or transmitted in accordance with the formalities set by la w.

CIVIL LAW REVIEWER Chapter VII. USUFRUCT IV. Classes of Usufruct A. By Origin Article 563, Civil Code. Usufruct is constituted by law, by the will of private persons expressed in acts inter vivos or in a last will and testament, and by pr escription. determines necessity. the question of B. By Person Enjoying Right of Usufruct Article 564, Civil Code. Usufruct may be constituted on the whole or a part of t he fruits of the thing, in favor of one more persons, simultaneously or successi vely, and in every case from or to a certain day, purely or conditionally. It ma y also be constituted on a right, provided it is not strictly personal or intran smissible. 2. Legal: as provided by law Usufruct of parents over the property of unemancipa ted children (now limited to the collectively daily needs of the family as per t he Family Code) Article 226, Family Code. The property of the unemancipated child earned or acqu ired with his work or industry or by onerous or gratuitous title shall belong to the child in ownership and shall be devoted exclusively to the latters support and education, unless the title or transfer provides otherwise. The right of th e parents over the fruits and income of the childs property shall be limited pr imarily to the childs support and secondarily to the collective daily needs of the family. Limitations on successive usufruct 1. If usufruct is by donation, ALL donees must be alive. Article 756, Civil Code. The ownership of property may also be donated to one pe rson and the usufruct to another or others, provided all the donees are living a t the time of the donation. 2. Fiduciary or first heir and the second heir must be alive at the time of the death of the testator. Article 863, Civil Code. A fideicommissary substitution by virtue of which the f iduciary or first heir instituted is entrusted with the obligation to preserve a nd to transmit to a second heir the whole or part of the inheritance, shall be v alid and shall take effect, provided such substitution does not go beyond one de gree from the heir originally instituted, and provided further, that the fiducia ry or first heir and the second heir are living at the time of the death of the testator. 3. Mixed: created both by law and the acts of persons Article 565, Civil Code. The rights and obligations of the usufructuary shall be those provided in the title constituting the usufruct; in default of such title , or in case it is deficient, the provisions contained in the two following Chap ters shall be observed. 3. If by testamentary succession, there must be only 2 successive usufructuaries , and both must be alive or at least already conceived at the time of the testat

ors death. Article 869, Civil Code. A provision whereby the testator leaves to a person the whole or part of the inheritance, and to another the usufruct, shall be valid. If he gives the usufruct to various persons, not simultaneously, but successivel y, the provisions of Article 863 shall apply

The rights and duties of the usufructuary provided by law may be modified or eli minated by the parties. The title constituting the usufruct may validly authoriz e the usufructuary to alienate the thing itself held in usufruct. If the usufruc tuary is authorized to alienate the thing in case of necessity, it is the usufru ctuary who C. By Object Article 564, he fruits of vely, and in PROPERTY 1. Voluntary: created by the will of private persons a. By act inter vivos such as contracts and donations By alienation of the usufruct By retention of the usu fruct Where a usufruct is constituted inter vivos and for valuable consideration , the contract is unenforceable unless in writing b. By act mortis causa such as testament 1. Simple: only one usufructuary enjoys the property 2. Multiple: several usufru ctuaries enjoy the property a. Simultaneous: at the same time b. Successive: one after the other 182 of Usufruct Civil Code. Usufruct may be constituted on the whole or a part of t the thing, in favor of one more persons, simultaneously or successi every case from or to a

CIVIL LAW REVIEWER certain day, purely or conditionally. It may also be constitu ted on a right, provided it is not strictly personal or intransmissible. Chapter VII. USUFRUCT 1. Rights a. Must not be strictly personal or intransmissible. b. Usufruct over a real right is by itself a real right. c. Right to receive present or future su pport cannot be the object of the usufruct. 2. Things a. Normal: involves non-co nsummable things where the form and substance are preserved b. Abnormal or irreg ular Article 574, Civil Code. Whenever the usufruct includes things which cannot be u sed without being consumed, the usufructuary shall have the right to make use of them under the obligation of paying their appraised value at the termination of the usufruct, if they were appraised when delivered. In case they were not appr aised, he shall have the right to return at the same quantity and quality, or pa y their current price at the time the usufruct ceases. 2. As to object a. Singular: only on particular property of the owner b. Univers al: pertains to the whole property; Article 598, Civil Code. If the usufruct be constituted on the whole of a patrim ony, and if at the time of its constitution the owner has debts, the provisions of Articles 758 and 759 relating to donations shall be applied, both with respec t to the maintenance of the usufruct and to the obligation of the usufructuary t o pay such debts. The same rule shall be applied in case the owner is obliged, a t the time the usufruct is constituted, to make periodical payments, even if the re should be no known capital. Article 595, Civil Code. The owner may construct any works and make any improvements of which the immovable in usufruct is suscep tible, or make new plantings thereon if it be rural, provided that such acts do not cause a diminution in the value of the usufruct or prejudice the right of th e usufructuary. 183 PROPERTY

In reality, the usufruct is not upon the consumable things themselves which are delivered to the usufructuary, but upon the sum representing their value or upon a quantity of things of the same kind and quality. The usufructuary, in effect, becomes the owner of the things in usufruct, while the grantor becomes a mere c reditor entitled to the return of the value or of the things of the same quantit y and quality (as if converted into a simple loan) A universal usufructuary must pay the debts of the naked owner, if stipulated. I f there are no stipulations, the usufructuary only has to pay when the usufruct has been made in fraud of creditors. Article 758, Civil Code. When the donation imposes upon the donee the obligation to pay the debts of the donor, if the clause does not contain any declaration t o the contrary, the former is understood to be liable to pay only the debts whic h appear to have been previously contracted. In no case shall the donee be respo nsible for the debts exceeding the value of the property donated, unless a contr ary intention clearly appears. Article 759, Civil Code. There being no stipulati on regarding the payment of debts, the donee shall be responsible therefor only when the donation has been made in fraud of creditors. The donation is always pr esumed to be in fraud of creditors, when at the time thereof the donor did not r

eserve sufficient property to pay his debts prior to the donation. D. By the Extent of the Usufruct Article 564, Civil Code. Usufruct may be constituted on the whole or a part of t he fruits of the thing, in favor of one more persons, simultaneously or successi vely, and in every case from or to a certain day, purely or conditionally. It ma y also be constituted on a right, provided it is not strictly personal or intran smissible. E. By the Terms of the Usufruct 1. Pure: no terms or conditions 2. Conditional: either suspensive or resolutory 3. With a term or period a. Ex die: from a certa in day b. In diem: up to a certain day c. Ex die in diem: from a certain day up to a certain day 1. As to the fruits a. Total: all consumed by the usufruct b. Partial: only on c ertain aspects of the usufructs fruits

CIVIL LAW REVIEWER Chapter VII. USUFRUCT which it is found. Nevertheless, when the discovery is mad e on the property of another, or of the State or any of its subdivisions, and by chance, one-half thereof shall be allowed to the finder. If the finder is a tre spasser, he shall not be entitled to any share of the treasure. If the things fo und be of interest to science of the arts, the State may acquire them at their j ust price, which shall be divided in conformity with the rule stated. Fruits pen ding at the beginning of the usufruct Belong to the usufructuary Without need to reimburse the expenses to the owners Fruits pending at the time of termination of the usufruct Belong to the naked owner The owner shall reimburse to the usufr uctuary ordinary cultivation expenses from the proceeds of the fruits (not to ex ceed the value of the fruits) rd Rights of innocent 3 parties should not be prej udiced. V. Rights of Usufructuary A. As to Thing and Its Fruits 1. Right to enjoy the property to the same extent as the owner, but only with respect to its use and the receipt of its fruits. Article 566, Civil Code. The usufructuary shall be entitled to all the natural, industrial and civil fruits of the property in usufruct. With respect to hidden treasure which may be found on the land or tenement, he shall be considered a st ranger.

Usufructuary cannot extract products which do not constitute fruits because he i s bound to preserve the form and substance of the thing. Usufructuary rights may be transferred, assigned or otherwise disposed of by the usufructuary. Not exem pt from execution and can be sold at public auction. 184 PROPERTY 2. As to hidden treasure, usufructuary is considered a stranger without a right to a share, unless he is also the finder of the treasure Article 566, Civil Code. The usufructuary shall be entitled to all the natural, industrial and civil fruits of the property in usufruct. With respect to hidden treasure which may be found on the land or tenement, he shall be considered a st ranger. Article 438, Civil Code. Hidden treasure belongs to the owner of the lan d, building, or other property on which it is found. Nevertheless, when the disc overy is made on the property of another, or of the State or any of its subdivis ions, and by chance, one-half thereof shall be allowed to the finder. If the fin der is a trespasser, he shall not be entitled to any share of the treasure. If t he things found be of interest to science of the arts, the State may acquire the m at their just price, which shall be divided in conformity with the rule stated . Without prejudice to the rd right of 3 persons e.g. if the fruits had been plant ed by a possessor in good faith, the pending crop expenses and charges shall be prorated between said possessor and the usufructuary

Fruits already matured at the time of the termination of the usufruct, which ord inarily would have already been gathered by the usufructuary, may remain ungathe red for no fault imputable to him, but because of malice or an act rd imputable to the naked owner or a 3 person, or even due to force majeure or fortuitous eve nt.

4. Right to civil fruits Article 569, Civil Code. Civil fruits are deemed to accrue daily, and belong to the usufructuary in proportion to the time the usufruct may last. Article 570, C ivil Code. Whenever a usufruct is constituted on the right to receive a rent or periodical pension, whether in money or in fruits, or in the interest on bonds o r securities payable to bearer, each payment due shall be considered as the proc eeds or fruits of such right. Whenever it consists in the enjoyment of benefits accruing from a participation in any industrial or commercial enterprise, the da te of the distribution of which is not fixed, such benefits shall have the same character. 3. Right to fruits pending at the beginning of usufruct Article 567, Civil Code. The usufructuary shall be entitled to all the natural, industrial and civil fruits of the property in usufruct. With respect to hidden treasure which may be found on the land or tenement, he shall be considered a st ranger. Article 438, Civil Code. Hidden treasure belongs to the owner of the lan d, building, or other property on

CIVIL LAW REVIEWER Chapter VII. USUFRUCT In either case they shall be distributed as civil fruits, and shall be applied i n the manner prescribed in the preceding article. 5. Right to enjoy any increase through accessions and servitudes, including prod ucts of hunting and fishing Article 571, Civil Code. The usufructuary shall have the right to enjoy any incr ease which the thing in usufruct may acquire through accession, the servitudes e stablished in its favor, and, in general, all the benefits inherent therein

6. Right to lease the thing Article 572, Civil Code. The usufructuary may personally enjoy the thing in usuf ruct, lease it to another, or alienate his right of usufruct, even by a gratuito us title; but all the contracts he may enter into as such usufructuary shall ter minate upon the expiration of the usufruct, saving leases of rural lands, which shall be considered as subsisting during the agricultural year.

a. Exceptions: Legal usufructs cannot be leased. Caucion juratoria (lease would show that the usufructuary does not need the property badly) b. Effect of the tr ansfer of right: The transfer or lease of the usufruct does NOT terminate the re lation of the usufructuary with the owner Death of the transferee does not termi nate the usufruct but it terminates upon the death of the usufructuary who made the transfer. c. Rules as to Lease The property in usufruct may be leased even w ithout the consent of the owner. The lease should be for the same period as the usufruct. EXCEPT: leases of rural lands continues for the remainder of the agric ultural year A lease executed by the usufructuary before the termination of the usufruct and subsisting after the termination of the usufruct must be respected, but the rents for the remaining period will belong to the owner. o If the usufr uctuary has leased the lands or tenements given in usufruct, and the usufruct sh ould expire before the termination of the lease, he or his heirs and successors shall receive only the proportionate share of the rent that must be paid by the lesse e. (Art. 568, Civil Code) It is the usufructuary and not the naked owner who has the right to choose the tenant. o As corollary to the right of the usufructuary to all the rent, to choose the tenant, and to fix the amount of the rent, she n ecessarily has the right to choose herself as the tenant thereof; and, as long a s the obligations she had assumed towards the owner are fulfilled. (Fabie v. Gut ierrez David) A lease executed by the owner before the creation of the usufruct is not extinguished by such usufruct. 185 PROPERTY d. Limitations on the Right to Lease the Property Usufructuary cannot alienate a thing in usufruct Cannot alienate or dispose of the objects included in the usu fruct Cannot renounce a servitude Cannot mortgage or pledge a thing EXCEPT: When the right of usufruct is converted into the right of ownership o When the thing s are consumable (574); o When the things by their nature are intended for sale, such as the merchandise in a commercial establishment; and o When the things, w hatever their nature, are delivered under appraisal as equivalent to their sale Future crops may be sold but such sale would be void if not ratified by the owne r. The buyers remedy is to recover from the usufructuary. Only voluntary usufruct

can be alienated.

CIVIL LAW REVIEWER Chapter VII. USUFRUCT

The who the who

usufructuary-lessor is liable for the act of the substitute. A usufructuary alienates or leases his right of usufruct shall answer for any damage which things in usufruct may suffer through the fault or negligence of the person substitutes him. (Art. 590, Civil Code)

If the increase in value exceeds the damages, and the improvements are of such n ature that they can be removed without injury to the thing in usufruct, the sett lement of the difference must be agreed upon by the parties. If the improvements cannot be removed without injury, the excess in value accrues to the owner. 7. Right to improve the thing, but improvement inures for the benefit of the nak ed owner Article 579, Civil Code. The usufructuary may make on the property held in usufr uct such useful improvements or expenses for mere pleasure as he may deem proper , provided he does not alter its form or substance; but he shall have no right t o be indemnified therefor. He may, however, remove such improvements, should it be possible to do so without damage to the property. Registration of improvements to rd protect usufructuary against 3 persons B. As to the Legal Right of Usufruct Itself 1. Right to mortgage right of usufru ct Article 572, Civil Code. The usufructuary may personally enjoy the thing in usuf ruct, lease it to another, or alienate his right of usufruct, even by a gratuito us title; but all the contracts he may enter into as such usufructuary shall ter minate upon the expiration of the usufruct, saving leases of rural lands, which shall be considered as subsisting during the agricultural year. 186 PROPERTY

Usufructuary is not entitled to reimbursement. Whenever the usufructuary can rem ove the improvements without injury to the property in usufruct, he has the righ t to do so, and the owner cannot prevent him from doing so even upon payment of their value. This right does not involve an obligation if the usufructuary does not wish to exercise it, he cannot be compelled by the owner to remove the impro vements. This right to remove improvements can be enforced only against the owne r, not against a purchaser in good faith to whom a clean title has been issued. Usufructuary may set off the improvements against any damage to the property

Does not include parental usufruct because of personal and family considerations . 2. Right to alienate the usufruct except in purely personal usufructs or when ti tle constituting it prohibits the same Parental usufruct is inalienable VI. Rights of the Naked Owner 1. At the beginning of the usufruct (see obligations of usufructuary at the begi nning of the usufruct) 2. During the usufruct a. Retains title to the thing or p roperty b. He may alienate the property: he may not alter the form or substance of the thing; nor do anything prejudicial to the usufructuary Article 581, Civil Code. The owner of property the usufruct of which is held by another, may alienate it, but he cannot alter its form or substance, or do anyth ing thereon which may be prejudicial to the usufructuary. Article 580, Civil Code. The usufructuary may set off the improvements he may ha ve made on the property against any damage to the same.

It is necessary that the improvements should have increased the value of the pro perty, and that the damages are imputable to the usufructuary. Increase in value and the amount of damages are set off against each other. If the damages exceed the increase in value, the difference should be paid by the usufructuary as ind emnity. c. He may construct buildings, make improvements and plantings, provided: the usufruct is not impaired Value of

CIVIL LAW REVIEWER Chapter VII. USUFRUCT

Rights of the usufructuary are not prejudiced

Title constituting usufruct excused the making of inventory Title constituting u sufruct already makes an inventory VII. Obligations of the Usufructuary A. At the Beginning of Usufruct or Before Exercising the Usufruct Article 583, Civil Code. The usufructuary, before entering upon the enjoyment of the property, is obliged: 1. To make, after notice to the owner or his legitima te representative, an inventory of all the property, which shall contain an appr aisal of the movables and a description of the condition of the immovables; 2. T o give security, binding himself to fulfill the obligations imposed upon him in accordance with this Chapter. [NOTE: These requirements are NOT conditions precedent to the commencement of th e right of the usufructuary but merely to the entry upon the possession and enjo yment of the property.] To make an inventory Requisites a. Immovables must be des cribed b. Movables appraised because they are easily lost or deteriorated. Concu rrence of the owner in the making of the inventory Expenses for the making of th e inventory are borne by the usufructuary Inventory may be in a private document , except when immovables are involved (a rd public instrument is prescribed to a ffect 3 persons) Failure to make an inventory failure does not affect the rights of the usufructuary to enjoy the property and its fruits. a. A prima facie pres umption arises that the property was received by the usfructuary in good conditi on b. Even if he is already in possession, he may still be required to make an i nventory. Exceptions to the requirement of inventory a. No one will be injured t hereby b. Title of the usufruct excuses the making of the inventory Article 585, Civil Code. The usufructuary, whatever may be the title of the usuf ruct, may be excused from the obligation of making an inventory or of giving sec urity, when no one will be injured thereby. To give a bond for the faithful performance of duties as usufructuary Any kind of sufficient security is allowed, e.g. cash, personal bond, mortgage No bond is r equired in the following a. No prejudice would result (Art. 585) b. Usufruct is reserved by a donor (Art. 584) Gratitude on the donees part demands that the dono r be excused from filing the bond c. Title constituting usufruct excused usufruc tuary d. If usufructuary takes possession under a caucion juratoria (Art. 587) T he security given may be by a personal bond, a pledge, or a mortgage. It is only by way of exception that a caucion juratoria is allowed, and only under the spe cial circumstances: o Proper court petition o Necessity for delivery of furnitur e, implements or house included in the usufruct o Approval of the court o Sworn promise A usufructuary under this can neither alienate his right nor lease the p roperty, for that would mean that he does not need the dwelling or the implement s and furniture. Article 585, Civil Code. The share of the coowners, in the benefits as well as i n the charges, shall be proportional to their respective interests. Any stipulat ion in a contract to the contrary shall be void. The portions belonging to the c o-owners in the coownership shall be presumed equal, unless the contrary is prov ed. Article 584, Civil Code. The provisions of No. 2 of the preceding article sh all not apply to the donor who has reserved the usufruct of the property donated , or to the parents who are usufructuaries of their childrens property, except when the parents contract a second marriage. Article 587, Civil Code. If the usu

fructuary who has not given security claims, by virtue of a promise under oath, the delivery of the furniture necessary for his use, and that he and his family be allowed to 187 PROPERTY

CIVIL LAW REVIEWER live in a house included in the usufruct, the court may grant this petition, after due consideration of the facts of the case. The same rule shall be observed with respect to implements, tools and other movable property n ecessary for an industry or vocation in which he is engaged. If the owner does n ot wish that certain articles be sold because of their artistic worth or because they have a sentimental value, he may demand their delivery to him upon his giv ing security for the payment of the legal interest on their appraised value. Chapter VII. USUFRUCT o o He shall have the ff. options: 1. Receivership of realty, sale of movables, depo sit of securities, or investment of money; or 2. Retention of the property as ad ministrator. Net products less administration expenses fixed by agreement or by the Court, shall be delivered to the usufructuary.

Article 588, Civil Code. After the security has been given by the usufructuary, he shall have a right to all the proceeds and benefits from the day on which, in accordance with the title constituting the usufruct, he should have commenced t o receive them B. During the Usufruct To take care of the thing like a good father of a family Article 589, Civil Code. The usufructuary shall take care of the things given in usufruct as a good father of a family. Article 610, Civil Code. A usufruct is n ot extinguished by bad use of the thing in usufruct; but if the abuse should cau se considerable injury to the owner, the latter may demand that the thing be del ivered to him, binding himself to pay annually to the usufructuary the net proce eds of the same, after deducting the expenses and the compensation which may be allowed him for its administration.

Retroactivity: upon giving the security, the usufructuary will be entitled to al l the benefits accruing since the time when he should have begun to receive them .

Effect of failure to give bond Article 586, Civil Code. Should the usufructuary fail to give security in the ca ses in which he is bound to give it, the owner may demand that the immovables be placed under administration, that the movables be sold, that the public bonds, instruments of credit payable to order or to bearer be converted into registered certificates or deposited in a bank or public institution, and that the capital or sums in cash and the proceeds of the sale of the movable property be investe d in safe securities. The interest on the proceeds of the sale of the movables a nd that on public securities and bonds, and the proceeds of the property placed under administration, shall belong to the usufructuary. Furthermore, the owner m ay, if he so prefers, until the usufructuary gives security or is excused from s o doing, retain in his possession the property in usufruct as administrator, sub ject to the obligation to deliver to the usufructuary the net proceeds thereof, after deducting the sums which may be agreed upon or judicially allowed him for such administration.

1. When damages are caused to the property by the fault or negligence of the usu fructuary, the naked owner need not wait for the termination of the usufruct bef ore bringing the action to recover proper indemnity. 2. The bad use of a thing, which causes considerable injury, entitles the owner to demand the delivery and administration of the thing. 3. The exercise of this remedy does NOT extinguish the usufruct. To undertake ordinary repairs Article 592, Civil Code. The usufructuary is obliged to make the ordinary repair s needed by the thing given in usufruct. By ordinary repairs are understood such as are required by the wear and tear due to the natural use of the thing and ar e indispensable for its preservation. Should the usufructuary fail to make

Right of the naked owner o Potestative right; if he does not wish to exercise it , he may deliver the property to the usufructuary. o Delivery, however, does not mean a renunciation of the right to demand security. PROPERTY

Effect of filing a bond Right of the usufructuary o He may alienate his right over the property which he does not possess in the same form as he holds it, without prejudice to the righ t of the transferee to give the required security. 188

CIVIL LAW REVIEWER them after demand by the owner, the latter may make them at t he expense of the usufructuary. Chapter VII. USUFRUCT 1. Ordinary repairs: a. Deteriorations or defects arise from the natural use of the thing; b. Repairs are necessary for the preservation of the thing. 2. The us ufructuary is bound to pay only for the repairs made during the existence of the usufruct. If the defects existed already at the time the usufruct began, the ob ligation to defray the ordinary repairs falls upon the owner. 3. If the defects are caused by the ordinary use of the thing, the usufructuary may exempt himself from making the repairs by returning to the owner the fruits received during th e time that the defects took place. EXCEPT: When the ordinary repairs are due to defects caused by the fault of the usufructuary 4. If the usufructuary fails to make the repairs even after demand, the owner may make them at the expense of t he usufructuary 2. General Rule: Naked owner must make the extraordinary repairs Usufructuary ob liged to pay legal interest on the amount while usufruct lasts 3. If the extraor dinary repairs are indispensable, and the naked owner fails to undertake them, t he usufructuary may make such repairs Requisites: a. There must be due notificat ion to the naked owner of the urgency if it is not urgent, there is no obligatio n to give notice. b. The naked owner failed to make them c. The repair is needed for preservation The usufructuary who has made the extraordinary repairs necess ary for preservation, is entitled to recover from the owner the increase in valu e which the tenement acquired by reason of such works. Usufructuary may retain u ntil he is paid. 189 PROPERTY To notify owner of need to undertake extraordinary repairs Article 593, Civil Code. Extraordinary repairs shall be at the expense of the ow ner. The usufructuary is obliged to notify the owner when the need for such repa irs is urgent. Article 594, Civil Code. If the owner should make the extraordina ry repairs, he shall have a right to demand of the usufructuary the legal intere st on the amount expended for the time that the usufruct lasts. Should he not ma ke them when they are indispensable for the preservation of the thing, the usufr uctuary may make them; but he shall have a right to demand of the owner, at the termination of the usufruct, the increase in value which the immovable may have acquired by reason of the repairs. To pay for annual charges and taxes on the fruits Article 596, Civil Code. The payment of annual charges and taxes and of those co nsidered as a lien on the fruits, shall be at the expense of the usufructuary fo r all the time that the usufruct lasts. Article 597, Civil Code. The taxes which , during the usufruct, may be imposed directly on the capital, shall be at the e xpense of the owner. If the latter has paid them, the usufructuary shall pay him the proper interest on the sums which may have been paid in that character; and , if the said sums have been advanced by the usufructuary, he shall recover the amount thereof at the termination of the usufruct. Article 612, Civil Code. Upon the termination of the usufruct, the thing in usufruct shall be delivered to th e owner, without prejudice to the right of retention pertaining to the usufructu ary or his heirs for taxes and extraordinary expenses which should be reimbursed . After the delivery has been made, the security or mortgage shall be cancelled. 1. Extraordinary repairs a. Those caused by exceptional circumstances, whether o r not they are necessary for the preservation of the thing; b. Those caused by t he natural use of the thing, but are not necessary for its preservation.

It is well settled that a real tax, being a burden upon the capital, should be p aid by the owner of the land and not by a usufructuary. There is no merit in the contention of distinguishing public lands into alienable and indisposable. All

CIVIL LAW REVIEWER Chapter VII. USUFRUCT interest on bonds or securities payable to bearer, each pa yment due shall be considered as the proceeds or fruits of such right. Whenever it consists in the enjoyment of benefits accruing from a participation in any in dustrial or commercial enterprise, the date of the distribution of which is not fixed, such benefits shall have the same character. In either case they shall be distributed as civil fruits, and shall be applied in the manner prescribed in t he preceding article. properties owned by the government, without any distinction, are exempt from tax ation. (Board of Assessment Appeals of Zamboanga del Sur v. Samar Mining Company , Inc.) To notify owner of any act detrimental to ownership Article 601, Civil Code. The usufructuary shall be obliged to notify the owner o f any act of a third person, of which he may have knowledge, that may be prejudi cial to the rights of ownership, and he shall be liable should he not do so, for damages, as if they had been caused through his own fault. B. Usufruct of property owned in common Article 582, Civil Code. The usufructuary of a part of a thing held in common sh all exercise all the rights pertaining to the owner thereof with respect to the administration and the collection of fruits or interest. Should the co-ownership cease by reason of the division of the thing held in common, the usufruct of th e part allotted to the co-owner shall belong to the usufructuary. 190 PROPERTY To shoulder usufruct the costs of litigation re Article 602, Civil Code. The expenses, costs and liabilities in suits brought wi th regard to the usufruct shall be borne by the usufructuary. To answer for fault or negligence of alienee, lessee or agent of usufructuary Article 590, Civil Code. A usufructuary who alienates or leases his right of usu fruct shall answer for any damage which the things in usufruct may suffer throug h the fault or negligence of the person who substitutes him. (498)

The usufructuary is made liable for the acts of the substitute. While the substi tute answers to the usufructuary, the usufructuary answers to the naked owner. 1. The usufructuary takes the place of the owner as to: a. Management; b. Fruits ; and c. Interest 2. Effect of partition: a. The right of the usufructuary is no t affected by the division of the property in usufruct among the co-owners. b. A fter partition, the usufruct is transferred to the part allotted to the co-owner C. Usufruct constituted on a flock or herd of livestock Article 591, Civil Code. If the usufruct be constituted on a flock or herd of li

vestock, the usufructuary shall be obliged to replace with the young thereof the animals that die each year from natural causes, or are lost due to the rapacity of beasts of prey. If the animals on which the usufruct is constituted should a ll perish, without the fault of the usufructuary, on account of some contagious disease or any other uncommon event, the usufructuary shall fulfill his obligati on by delivering to the owner the remains which may have been saved from the mis fortune. Should the herd or flock perish in part, also by accident and without t he fault of the usufructuary, the usufruct shall continue on the part saved. Sho uld the usufruct be on sterile animals, it shall be considered, with respect to its effects, as though constituted on fungible things. C. At the Time of the Termination of the Usufruct To deliver the thing in usufru ct to the owner in the condition in which he has received it, after undertaking ordinary repairs Exception: abnormal usufruct return the thing of same kind, qua ntity and quality; if with appraised value, must return value appraised VIII. Special Cases of Usufruct A. Usufruct over a pension or periodical income Article 570, Civil Code. Whenever a usufruct is constituted on the right to rece ive a rent or periodical pension, whether in money or in fruits, or in the

CIVIL LAW REVIEWER Chapter VII. USUFRUCT the enforcement of the action he acquires the thing claime d, the usufruct shall be limited to the fruits, the dominion remaining with the owner. 1. On sterile stock: same rules on consumable property govern (i.e. replacement upon termination) 2. On fruitful stock a. Must replace ordinary losses of the st ock with the young if: Some animals die from natural causes Some animals are los t due to rapacity of beasts of prey b. There is no obligation to replace if: The re is a total loss of animals because of some unexpected or unnatural loss (like contagious disease or any other uncommon event, provided the usufructuary has n o fault); If all perish, the usufructuary should deliver the remains to the owne r. There is a partial loss If a part of the stock perishes, the usufruct subsist s on the remainder. 1. The action may be instituted in the usufructuarys name. As the owner of the us ufruct, he is properly deemed a proper party in interest. 2. If the purpose is t he recovery of the property or right, he is still required under 578 to obtain t he naked owners authority. 3. If the purpose is to object to or prevent disturban ces over the property, no special authority from the naked owner is needed. 191 Article 600, Civil Code. The usufructuary of a mortgaged immovable shall not be obliged to pay the debt for the security of which the mortgage was constituted. Should the immovable be attached or sold judicially for the payment of the debt, the owner shall be liable to the usufructuary for whatever the latter may lose by reason thereof. PROPERTY F. Usufruct on mortgaged property D. Usufruct over fruit bearing trees and sprout and woodlands Article 575, Civil Code. The usufructuary of fruitbearing trees and shrubs may m ake use of the dead trunks, and even of those cut off or uprooted by accident, u nder the obligation to replace them with new plants. Article 576, Civil Code. If the owner should make the extraordinary repairs, If in consequence of a calamit y or extraordinary event, the trees or shrubs shall have disappeared in such con siderable number that it would not be possible or it would be too burdensome to replace them, the usufructuary may leave the dead, fallen or uprooted trunks at the disposal of the owner, and demand that the latter remove them and clear the land. 1. When the usufruct is universal and some objects are mortgaged, apply Art. 598 . 2. If the usufructuary mortgaged the usufruct himself, he is liable to pay his own debt. G. Usufruct over an entire patrimony Article 598, Civil Code. If the usufruct be constituted on the whole of a patrim ony, and if at the time of its constitution the owner has debts, the provisions of Articles 758 and 759 relating to donations shall be applied, both with respec t to the maintenance of the usufruct and to the obligation of the usufructuary t o pay such debts The same rule shall be applied in case the owner is obliged, at the time the usufruct is constituted, to make periodical payments, even if ther e should be no known capital. The usufructuary can: 1. Use dead trunks and those cut off or uprooted by accide nt. 2. Make usual cuttings that owner used to do. 3. Cut the trees that are not useful

E. Usufruct on a right of action Article 578, Civil Code. The usufructuary of an action to recover real property or a real right, or any movable property, has the right to bring the action and to oblige the owner thereof to give him the authority for this purpose and to fu rnish him whatever proof he may have. If in consequence of 1. Applies when: a. If the usufruct is a universal one b. And the naked owner Ha s debts or is obliged to make periodical payments (whether or not there be known capital) 2. General rule: the usufructuary is not liable for the owners debts. 3 . Exceptions: a. When it is so stipulated; in which case The usufructuary shall be liable for the debt specified.

CIVIL LAW REVIEWER Chapter VII. USUFRUCT

If there is no specification, he is liable only for debts incurred by the owner before the usufruct was constituted. IX. Extinguishment of Usufruct Article 603, Civil Code. Usufruct is extinguished: 1. By the death of the usufru ctuary, unless a contrary intention clearly appears; 2. By the expiration of the period for which it was constituted, or by the fulfillment of any resolutory co ndition provided in the title creating the usufruct; 3. By merger of the usufruc t and ownership in the same person; 4. By renunciation of the usufructuary; 5. B y the total loss of the thing in usufruct; 6. By the termination of the right of the person constituting the usufruct; 7. By prescription. b. When the usufruct is constituted in fraud of creditors 4. In no case shall th e usufructuary be responsible for debts exceeding the benefits under the usufruc t. (except when the contrary intention appears) H. Usufruct over deteriorable pr operty Article 573, Civil Code. Whenever the usufruct includes things which, without be ing consumed, gradually deteriorate through wear and tear, the usufructuary shal l have the right to make use thereof in accordance with the purpose for which th ey are intended, and shall not be obliged to return them at the termination of t he usufruct except in their condition at that time; but he shall be obliged to i ndemnify the owner for any deterioration they may have suffered by reason of his fraud or negligence. 192 PROPERTY A. Death of usufructuary Exceptions 1. In multiple usufructs: it ends at the deat h of the last survivor Article 611, Civil Code. A usufruct constituted in favor of several persons livi ng at the time of its constitution shall not be extinguished until death of the last survivor. 1. It is sufficient if the usufructuary returns the things in the condition in w hich they may have been found at the time of the expiration of the usufruct desp ite ordinary defects caused by use and deterioration produced by age and time. E XCEPT when caused by the usufructuarys fraud and negligence. 2. If usufructuary d oes not return the things upon the expiration of the usufruct, he should pay an indemnity equivalent to the value of the things at the time of such expiration. a. If simultaneously constituted: all the usufructuaries must be alive (or at le ast conceived) at the time of constitution. b. If successively constituted: If b y virtue of donation all the donees-usufructuaries must be living at the time of the donation; If by will there should only be 2 successive usufructuaries and b oth must have been alive at the time of testators death. 2. If the period is fixe d by reference to the life of another or there is a resolutory condition Death d oes not affect the usufruct and the right is transmitted to the heirs of the usf ructuary until the expiration of the term or the fulfillment of the condition. Article 606, Civil Code. A usufruct granted for the time that may elapse before a third person attains a certain age, shall subsist for the number of years spec ified, even if the third person should die before the period expires, unless suc h usufruct has been expressly granted only in consideration of the existence of such person.

I. Usufruct over consumable property Article 574, Civil Code. Whenever the usufruct includes things which cannot be u sed without being consumed, the usufructuary shall have the right to make use of them under the obligation of paying their appraised value at the termination of the usufruct, if they were appraised when delivered. In case they were not appr aised, he shall have the right to return at the same quantity and quality, or pa y their current price at the time the usufruct ceases.

Abnormal Usufruct If the thing is appraised at delivery, the usufructuary must p ay their appraised value at the termination of the usufruct. If they were not ap praised, he must return the same kind and quality or pay the current price at th e expiration of the usufruct. 3. When a contrary intention clearly appears If the usufructuary dies before the happening of a resolutory condition, the usufruct is extinguished.

CIVIL LAW REVIEWER Chapter VII. USUFRUCT Article 607, Civil Code. If the usufruct is constituted on immovable property of which a building forms part, and the latter should be des troyed in any manner whatsoever, the usufructuary shall have a right to make use of the land and the materials. The same rule shall be applied if the usufruct i s constituted on a building only and the same should be destroyed. But in such a case, if the owner should wish to construct another building, he shall have a r ight to occupy the land and to make use of the materials, being obliged to pay t o the usufructuary, during the continuance of the usufruct, the interest upon th e sum equivalent to the value of the land and of the materials. Article 608, Civ il Code. If the usufructuary shares with the owner the insurance of the tenement given in usufruct, the former shall, in case of loss, continue in the enjoyment of the new building, should one be constructed, or shall receive the interest o n the insurance indemnity if the owner does not wish to rebuild. Should the usuf ructuary have refused to contribute to the insurance, the owner insuring the ten ement alone, the latter shall receive the full amount of the insurance indemnity in case of loss, saving always the right granted to the usufructuary in the pre ceding article.

1 view: usufruct is personal and it CANNOT be extended beyond the lifetime of th e usufructuary. (Sanchez Roman and SC) st B. Expiration of period or fulfillment of resolutory condition imposed on usufru ct by person constituting the usufruct 1. In favor of juridical persons: period cannot exceed 50yrs. Article 605, Civil Code. Usufruct cannot be constituted in favor of a town, corp oration, or association for more than fifty years. If it has been constituted, a nd before the expiration of such period the town is abandoned, or the corporatio n or association is dissolved, the usufruct shall be extinguished by reason ther eof. 193 PROPERTY 2. Time that may elapse before a 3 person attains a certain age, even if the lat ter dies before period expires, unless granted only in consideration of his exis tence Article 606, Civil Code. A usufruct granted for the time that may elapse before a third person attains a certain age, shall subsist for the number of years spec ified, even if the third person should die before the period expires, unless suc h usufruct has been expressly granted only in consideration of the existence of such person. rd See Summary of Arts. 607 and 608 F. Termination of right of person constituting the usufruct Example: usufructs constituted by a vendee a retro terminate upon r edemption G. Prescription Adverse possession against the owner or the usfructuar y. It is not the non-use which extinguishes the usufruct by prescription, but th e use rd by a 3 person. There can be no prescription as long as the usfructuary receives the rents from the lease of the property, or he enjoys the price of the sale of his right. C. Merger of rights of usufruct and naked ownership in one person Illustration: H was the usufructuary of land owned by X. x dies, leaving in his will, the nake

d ownership of the land to H. the usufruct is extinguished because now H is both the naked owner and the usufructuary. D. Renunciation of usufruct 1. Waiver: vo luntary surrender of the rights of the usufructuary, made by him with intent to surrender them 2. Limitations a. Must be express: tacit renunciation is not suff icient b. Does not need the consent of naked owner c. If made in fraud of credit ors, waiver may be rescinded by them through action under Article 1381 (accion p auliana) E. Extinction or loss of property If destroyed property is not insured

CIVIL LAW REVIEWER Chapter VII. USUFRUCT SUMMARY (ARTS. 607 AND 708) EFFECT Art. 607 If destroyed property is not insured If the building forms part of an immovable under Usufruct continues over the la nd and the remaining usufruct materials Usufruct continues over the land and mat erials (plus If usufruct is on the building only interests), if owner does not r ebuild If owner rebuilds, usufructuary must allow owner to occupy the land and t o make use of materials; but the owner must pay interest on the value of both th e land and the materials. Art. 608 If destroyed property is insured before termi nation of the usufruct When insurance premium paid by owner and If owner rebuild s, usufruct subsists on new building If owner does not rebuild interest upon ins urance usufructuary (par. 1) proceeds paid to usufructuary Owner entitled to ins urance money (no interest paid to When the insurance taken by the naked owner on ly because usufructuary refuses to contribute to usufructuary) If he does not re build, usufruct continues over the premium (par. 2) remaining land and/or owner may pay interest on value of both materials and land (607) If owner rebuilds, us ufruct does not continue on new building, but owner must pay interest on value o f land and old materials When insurance taken by usufructuary only depends on va lue of usufructuarys insurable interest Insurance proceeds goes to the usufructua ry No obligation to rebuild Usufruct continues on the land Owner has not share i n insurance proceeds indemnity, each owns the indemnity given to him, the usufru ct being totally extinguished. 3. If usufructuary alone was given the indemnity, he must give it to the naked owner and compel the latter to return either the i nterest or to replace the property. He may even deduct the interest himself, if the naked owner fails to object. B. Bad use of thing in usufruct Article 610, Civil Code. A usufruct is not extinguished by bad use of the thing in usufruct; but if the abuse should cause considerable injury to the owner, the latter may demand that the thing be delivered to him, binding himself to pay an nually to the usufructuary the net proceeds of the same, after deducting the exp enses and the compensation which may be allowed him for its administration. SITUATION 194 PROPERTY X. Conditions Not Affecting Usufruct A. Expropriation of thing in usufruct Article 609, Civil Code. Should the thing in usufruct be expropriated for public use, the owner shall be obliged either to replace it with another thing of the same value and of similar conditions, or to pay the usufructuary the legal inter est on the amount of the indemnity for the whole period of the usufruct. If the owner chooses the latter alternative, he shall give security for the payment of the interest. 3 SITUATIONS 1. If naked owner alone was given the indemnity, he has the option: a. To replace with equivalent thing b. Or to pay to the usufructuary legal inter est on the indemnity requires security given by the naked owner for the payment of the interest 2. If both the naked owner and the usufructuary were separately given Does not extinguish the usufruct but 1. Entitles the owner to demand delivery and administration of the thing.

CIVIL LAW REVIEWER Chapter VII. USUFRUCT 2. The bad use must cause considerable injury not to the thing, but to the owner . C. Destruction if a building over which the usufruct is constituted (Arts. 607 and 608) 195 PROPERTY

CIVIL LAW REVIEWER Chapter VIII. EASEMENT Chapter VIII. Easement I. II. CONCEPT ESSENTIAL FEATURES OF EASEMENTS/REAL III. CLASSIFICATION OF SERVI TUDES IV. GENERAL RULES ON SERVITUDE V. MODES OF ACQUIRING EASEMENTS A. BY TITLE B. BY PRESCRIPTION VI. RIGHTS AND OBLIGATIONS OF OWNERS A. OF DOMINANT ESTATE B . OF SERVIENT ESTATE VII. MODES OF EXTINGUISHMENT OF EASEMENTS VIII. LEGAL EASEM ENTS 3. It is a right constituted over an immovable by nature (land and buildings), n ot over movables. (Article 613) o Immovable: used in its common and not in the l egal sense, meaning only property immovable BY NATURE can have easements. 4. It limits the servient owners right of ownership for the benefit of the dominant est ate. o Right of limited use but no right to possess servient estate. o There exi sts a limitation on ownership: the dominant owner is allowed to enjoy or use par t of the servient estate, or imposes on the owner a restriction as to his enjoym ent of his own property. o Being an abnormal limitation of ownership, it cannot be presumed. 5. It creates a relation between tenements o No transfer of ownersh ip, but a relationship is created, depending on the easement. 6. Generally, it m ay consist in the owner of the dominant estate demanding that the owner of the s ervient estate refrain from doing something (servitus in non faciendo) or that t he latter permit that something be done over the servient property (servitus in patendo), but not in the right to demand that the owner of the servient right to demand that the owner of the servient estate do something (servitus in faciendo ) except if such act is an accessory obligation to a preadial servitude (obligat ion propter rem) o Servient owner merely allows something to be done to his esta te. o EXCEPTIONS: Praedial servitudes a. Right to place beams in an adjoining wa ll to support a structure b. Right to use anothers wall to support a building 7. It is inherent or inseparable from estate to which they actively or passively be long Art. 617, Civil Code. Easements are inseparable from the estate to which they ac tively or passively belong. 196 PROPERTY I. Concept Art. 613, Civil Code. An easement or servitude is an encumbrance imposed upon an immovable for the benefit of another immovable belonging to a different owner. The immovable in favor of which the easement is established is called the domina nt estate; that which is subject thereto, the servient estate. (530)

A real right which burdens a thing with a prestation of determinate servitudes f or the exclusive enjoyment of one who is NOT an owner of a tenement A real right by virtue of which the owner has to ABSTAIN from doing or ALLOW somebody else t o do something to his property for the benefit of another

II. Essential Features 1. It is a real right it gives an action in rem or real action against any posse ssor of the servient estate o Owner of the dominant estate can file a real actio n for enforcement of right to an easement o Action in rem: an action against the

thing itself, instead of against the person. 2. It is a right enjoyed over anot her property (jus in re aliena) it cannot exist in ones property (nulli res sua s ervit) o When a dominant and servient estate have the same owner, an easement is extinguished. Separate ownership is a prerequisite to an easement.

CIVIL LAW REVIEWER Chapter VIII. EASEMENT o o Easements are merely accessory to the tenements, and a quality thereof. They canno t exist without tenements. Easements exist even if they are not expressly stated or annotated as an encumbrance of the titles. b. Voluntary: Created by the will of the owners of the estate through contract * ** There is no such thing as a JUDICIAL EASEMENT. The Courts cannot create easem ents, they can only declare the existence of one, if it exists by virtue of the law or will of the parties. 3. As to its exercise (Article 615) Art. 615, Civil Code. Easements may be continuous or discontinuous, apparent or nonapparent. Continuous easements are those the use of which is or may be incess ant, without the intervention of any act of man. Discontinuous easements are tho se which are used at intervals and depend upon the acts of man. Apparent easemen ts are those which are made known and are continually kept in view by external s igns that reveal the use and enjoyment of the same. 9. It is indivisible Art. 618, Civil Code. Easements are indivisible. If the servient estate is divid ed between two or more persons, the easement is not modified, and each of them m ust bear it on the part which corresponds to him. If it is the dominant estate t hat is divided between two or more persons, each of them may use the easement in its entirety, without changing the place of its use, or making it more burdenso me in any other way. Nonapparent easements are those which show no external indication of their exist ence. (532) 10. It has permanence once it attaches, whether used or not, it continues and ma y be used at anytime o Perpetual: exists as long as property exists, unless it i s extinguished. This classification is important in determining prescription: only continuous an d apparent easements can be created by prescription Continuous: Use is or may be incessant, without the intervention of any man Discontinuous: Used at intervals , and dependent upon the acts of man. 4. As indication of its existence Also imp ortant for purposes of prescription Apparent: Made known and continually kept in view by external signs that reveal the use and enjoyment of the same Non-appare nt: No external indication of their existence 5. By the object or obligation imp osed (Article 616) a. Positive: Imposes upon the owner of the servient estate th e obligation of allowing something to be done, or doing it himself b. Negative: Prohibits the owner of the servient estate from doing something which he could l awfully do if the easement did not exist. o Prescription starts to run from serv ice of notarial prohibition) o e.g. Negative Easement of Light and View: An open ing is made on III. Classification of Servitudes 1. As to recipient of benefits a. Real or Praedial: exists for the benefit of a particular tenement. b. Personal: exists for the benefit of persons without a do minant tenement e.g. usus habitatio (right to reside in a house) and operae serv orum (right to the labor of slaves) in Roman Law 2. As to cause or origin a. Leg al: created by law, whether for public use or for the interest of private person s o Once requisites are satisfied, the owner of the dominant estate may ask the Court to declare that an easement is created. o Example: Natural drainage of wat

ers, Abutment of land, Aqueduct, etc. PROPERTY 8. It is intransmissible it cannot be alienated separately from the tenement aff ected or benefited o Any alienation of the property covered carries with it the servitudes affecting said property. But this affects only the portion of the ten ement with the easement, meaning the portions unaffected can be alienated withou t the servitude. 197

CIVIL LAW REVIEWER Chapter VIII. EASEMENT the wall of the dominant estate, and the easement consists of imposing upon the servient estate the obligation to not build anything that would obstruct the lig ht IV. General Rules Relating to Servitudes 1. Nulli res sua servi: No one can have a servitude over ones own property 2. Ser vitus in faciendo consistere nequit: A servitude cannot consist in doing o Altho ugh some easements seem to impose a positive prestation upon the owner of the se rvient estate, in reality, the primary obligation is still negative. o Illustrat ion: Under Article 680: the owner of a tree whose branches extend over to a neig hboring property is required to cut off the extended branches, but the real esse nce of the easement is the obligation NOT TO ALLOW the branches of the tree to e xtend beyond the land 3. Servitus servitutes esse non potes: There can be no ser vitude over another servitude 4. A servitude must be exercised civiliter in a wa y least burdensome to the owner of the land 5. A servitude must have a perpetual cause The defect may be cured by: a. Deed of recognition by owner of servient estate: By affidavit or a formal deed acknowledging the servitude b. By final judgment: Owner of the dominant estate must file a case in Court to have the easement decl ared by proving its existence through other evidence 2. Existence of an apparent sign considered as title Article 624, Civil Code. The existence of an apparent sign of easement between t wo estates, established or maintained by the owner of both, shall be considered, should either of them be alienated, as a title in order that the easement may c ontinue actively and passively, unless, at the time the ownership of the two est ates is divided, the contrary should be provided in the title of conveyance of e ither of them, or the sign aforesaid should be removed before the execution of t he deed. This provision shall also apply in case of the division of a thing owne d in common by two or more persons. 198 PROPERTY o Illustration: The presence of 4 windows was considered an apparent sign which cr eated a negative easement of light and view (altius non tollendi) i.e. not to bu ild a structure that will cover the windows. (Amor v. Florentino) B. By Prescription Requisites 1. Easement must be continuous and apparent. Althou gh the road had been used for more than 20 years, since an easement of right of way is a discontinuous easement, it CANNOT be acquired by prescription because o f the requirement of continuous or uninterrupted possession. Since the dominant owner cannot be continually and uninterruptedly crossing the servient estate, bu t can do so only at intervals, the easement is necessarily of an intermittent or discontinuous nature. (Ronquillo v. Roco)Sasa 2. Easement must have existed for 10 years. 3. NO NEED for good faith or just title. V. Modes of Acquiring Easements A. By Title juridical act which gives rise to the servitude (e.g. law, donations , contracts or wills) Because the road was voluntarily created as a servitude by the owner, he may clo se it at his pleasure. But while the road is open, he may not capriciously exclu de the owner of the tuba saloon from its use. (North Negros Sugar v. Hidalgo)

1. If easement has been acquired but no proof of existence of easement available , and easement is one that cannot be acquired by prescription Article 623, Civil Code. The absence of a document or proof showing the origin o f an easement which cannot be acquired by prescription may be cured by a deed of recognition by the owner of the servient estate or by a final judgment.

CIVIL LAW REVIEWER Chapter VIII. EASEMENT Encarnacion v. Court of Appeals: The Court granted the mo dification of the easement stating that under the law, the needs of the dominant property ultimately determine the width of the passage. And these needs may var y from time to time. When petitioner started out as a plant nursery operator, he and his family could easily make do with a few pushcarts to tow the plants to t he national highway. But the business grew and with it the need for the use of m odern means of conveyance or transport. Petitioner should not be denied a passag eway wide enough to accomodate his jeepney since that is a reasonable and necess ary aspect of the plant nursery business. VI. Rights and Obligations of Owners of Dominant and Servient Estates A. Of Dominant Estate 1. Right of owner of dominant estate (Limited Jus Utendi: limited by the nature of the easement itself) a. To use the easement and exercis e all rights necessary for it Article 625, Civil Code. Upon the establishment of an easement, all the rights n ecessary for its use are considered granted. Article 626, Civil Code. The owner of the dominant estate cannot use the easement except for the benefit of the imm ovable originally contemplated. Neither can he exercise the easement in any othe r manner than that previously established. 2. Obligations of the owner of dominant estate a. To use the easement for benefi t of immovable and in the manner originally established o Article 626 (supra): R ight to use the easement for the benefit of the immovable originally contemplate d, and in the manner originally established. o If established for a particular p urpose, the easement cannot be used for a different one. However, if established in a general way, without specific purpose, the easement can be used for all th e needs of the dominant estate. b. To notify owner of servient before making rep airs and to make repairs in a manner least inconvenient to servient estate o Art icle 627(2) (supra): Notify the owner of the servient estate before making repai rs and choosing the most convenient time and manner so as to cause the least inc onvenience to the owner of the servient estate. c. Not to alter easement or rend er it more burdensome o Article 627 (supra): Owner of dominant estate may make r epairs at his expense, but cannot alter the easement or make it more burdensome. o Court allowed Central to use the right of way to transport the additional sug ar. This did not make the easement more burdensome nor did it alter it. What is prohibited is extending the road or repairing it or depositing excavations outsi de the 199 PROPERTY o o o Owner of the dominant estate is granted the right to use the principal easement, and all accessory servitudes Example: Easement of drawing water carries with it the easement of right of way to the place where water is drawn. Limitation: Onl y for the original immovable and the original purpose b. To do at his expense, all necessary works for the use and preservation of the easement Article 627, Civil Code. The owner of the dominant estate may make, at his own e xpense, on the servient state any works necessary for the use and preservation o f the servitude, but without altering it or rendering it more burdensome. For th is purpose he shall notify the owner of the servient estate, and shall choose th

e most convenient time and manner so as to cause the least inconvenience to the owner of the servient estate. o Necessity of the works determine extent of such works. c. In a right of way, to ask for change in width of easement sufficient for need s Article 651, Civil Code. The width of the easement of right of way shall be that which is sufficient for the needs of the dominant estate, and may accordingly b e changed from time to time.

CIVIL LAW REVIEWER Chapter VIII. EASEMENT area. But the additional use produced no such effects. (Valderama v. North Negro s) d. To contribute to expenses of works necessary for use and preservation of s ervitude, if there are several dominant estates, unless he renounces his interes t Article 628, Civil Code. Should there be several dominant estates, the owners of all of them shall be obliged to contribute to the expenses referred to in the p receding article, in proportion to the benefits which each may derive from the w ork. Any one who does not wish to contribute may exempt himself by renouncing th e easement for the benefit of the others. If the owner of the servient estate sh ould make use of the easement in any manner whatsoever, he shall also be obliged to contribute to the expenses in the proportion stated, saving an agreement to the contrary. o REQUISITES if change will cause prejudice to the dominant owner nor impair the u se of the servitude: By reason of the place/manner originally assigned, the use of such easement has become VERY INCONVENIENT to the owner The easement should p revent him from making any important works, repairs or improvements thereon Chan ge must be done at his expense He offers another place or manner equally conveni ent In such a way that no injury is caused by the change to the owner of the dom inant estate or to those who may have a right to use the easement 200 PROPERTY B. Of Servient Estate 1. Rights of owner of servient estate a. To retain ownersh ip and use of his property o The owner of the servient estate retains the owners hip of the portion on which the easement is established, and may use the same in such a manner as not to affect the exercise of the easement. (Art. 630, Civil C ode) o Servient owner must respect the use of the servitude, but retains ownersh ip and use of the same, in a manner not affecting the easement. b. To change the place and manner of the use of the easement Article 629, Civil Code. The owner of the servient estate cannot impair, in any manner whatsoever, the use of the servitude Nevertheless, if by reason of the pl ace originally assigned, or of the manner established for the use of the easemen t, the same should become very inconvenient to the owner of the servient estate, or should prevent him from making any important works, repairs or improvements thereon, it may be changed at his expense, provided he offers another place or m anner equally convenient and in such a way that no injury is caused thereby to t he owner of the dominant estate or to those who may have a right to the use of t he easement. c. To use the easement o May use the easement but must also contribute proportio nately to the expenses 2. Obligations of the servient estate a. Not to impair th e use of the easement o The owner of the servient estate cannot impair, in any m anner whatsoever, the use of the servitude. (Art. 629(1), Civil Code) b. To cont ribute proportionately to expenses if he uses the easement o If the owner of the servient estate should make use of the easement in any manner whatsoever, he sh all also be obliged to contribute to the expenses in the proportion stated, savi ng an agreement to the contrary (Art. 628(2), Civil Code) VII. Modes of Easements Extinguishment

of Article 631, Civil Code. Easements are extinguished: 1. By merger in the same pe rson of the ownership of the dominant and servient estates; 2. By nonuser for te n years; with respect to discontinuous easements, this period shall be computed from the day on which they ceased to be used; and, with respect to continuous ea sements, from the day on which an act contrary to the same took place; 3. When e ither or both of the estates fall into such condition that the easement cannot b e used; but it shall revive if the subsequent condition of the estates or either of them should again permit its

CIVIL LAW REVIEWER use, unless when the use becomes possible, sufficient time fo r prescription has elapsed, in accordance with the provisions of the preceding n umber; By the expiration of the term or the fulfillment of the condition, if the easement is temporary or conditional; By the renunciation of the owner of the d ominant estate; By the redemption agreed upon between the owners of the dominant and servient estates. (546a) Chapter VIII. EASEMENT o EXCEPT: If the suspension exceeds 10 years, the easement is deemed extinguished by non-user 4. 5. 6. 4. Expiration of the term or fulfillment of resolutory condition o Applicable on ly to voluntary easements 5. Renunciation of the owner of dominant estate o Must be specific, clear, express (distinguished from non-user) the Modes of Extinguishment 1. Merger: must be absolute, perfect and definite, not me rely temporary o Absolute: Ownership of the property must be absolute, thus not applicable to lease, usufruct, etc. o Perfect: Merger must not be subject to a c ondition o If the merger is temporary, there is at most a suspension of the ease ment, but no extinguishment. 2. By non-user for 10 years o Owner of dominant est ate does not exercise right over easement. o Inaction, not outright renunciation . o Due to voluntary abstention by the dominant owner, and not to a fortuitous e vent o Computation of the period Discontinuous easements: counted from the day t hey ceased to be used Continuous easements: counted from the day an act adverse to the exercise of the easement took place E.g. in an easement of light and view , the erection of works obstructing the servitude would commence the period of p rescription o Use by a co-owner of the dominant estate bars prescription with re spect to the others o Servitudes not yet exercised cannot be extinguished by non -user An easement must have first been used, before it can be extinguished by in action. 3. Extinguishment by impossibility of use o Impossibility referred to mu st render the entire easement unusable for all time. o Impossibility of using th e easement due to the condition of the tenements (e.g. flooding) only suspends t he servitude until it can be used again. 6. Redemption agreed upon between the owners 7. Other causes not mentioned in Ar ticle 631 o Annulment and rescission of the title constituting the voluntary eas ement o Termination of the right of grantor of the voluntary easement o Abandonm ent of the servient estate Owner of the servient estate gives up ownership of th e easement (e.g. the strip of land where the right of way is constituted) in fav or of the dominant estate. The easement is extinguished because ownership is tra nsferred to the dominant owner, who now owns both properties. o Eminent domain T he governments power to expropriate property for public use, subject to the payme nt of just compensation. o Special cause for extinction of legal rights of way; if right of way no longer necessary Art. 655, Civil Code If the right of way gra nted to a surrounded estate ceases to be necessary because its owner has joined it to another abutting on a public road, the owner of the servient estate may de mand that the easement be extinguished, returning what he may have received by w ay of indemnity. The interest on the indemnity shall be deemed to be in payment of rent for the use of the easement. The same rule shall be applied in case a ne w road is opened giving access to the isolated estate. 201 PROPERTY

CIVIL LAW REVIEWER Chapter VIII. EASEMENT

VIII. Legal Easements A. Law governing legal easements 1. For public easements a. Special laws and reg ulations relating thereto (ex: PD 1067 and PD 705) b. By the provisions of Chapt er 2, Title VII, Book II, NCC 2. For private legal easements a. By agreement of the interested parties whenever the law does not prohibit it rd and no injury is suffered by a 3 person b. By the provisions of Chapter 2, title VII, Book II B. Private legal easements provided for by the NCC THOSE ESTABLISHED FOR THE USE O F WATER OR EASEMENTS RELATING TO WATERS 1. Natural drainage of waters Article 637, Civil Code. Lower estates are obliged to receive the waters which n aturally and without the intervention of man descend from the higher estates, as well as the stones or earth which they carry with them. The owner of the lower estate cannot construct works which will impede this easement; neither can the o wner of the higher estate make works which will increase the burden. 2. Easements on lands along riverbanks Article 638, Civil Code. The banks of rivers and streams, even in case they are of private ownership, are subject throughout their entire length and within a zo ne of three meters along their margins, to the easement of public use in the gen eral interest of navigation, floatage, fishing and salvage. Estates adjoining th e banks of navigable or floatable rivers are, furthermore, subject to the easeme nt of towpath for the exclusive service of river navigation and floatage. If it be necessary for such purpose to occupy lands of private ownership, the proper i ndemnity shall first be paid. 3. Abutment of a dam Article 639, Civil Code. Whenever for the diversion or taking of water from a ri ver or brook, or for the use of any other continuous or discontinuous stream, it should be necessary to build a dam, and the person who is to construct it is no t the owner of the banks, or lands which must support it, he may establish the e asement of abutment of a dam, after payment of the proper indemnity. (554) PROPERTY

In both cases, the public highway must substantially meet the needs of the domin ant estate in order that the easement may be extinguished. Right of way ceases t o be necessary: Owner of the of the dominant estate has joined to another abutti ng on a public road A new road is opened giving access to the isolated estate Re quisite: the public highway must substantially meet the needs of the dominant es tate in order that the easement may be extinguished Owner of the servient estate may demand that the easement be extinguished. Owner of the servient estate must return indemnity he received (value of the land) a. REQUISITE: Waters must flow naturally, without the intervention of man b. DUT

IES: o DOMINANT OWNER (Higher Estate) Cannot construct works to increase the bur den e.g. canals draining other lands into the lower estate, works which prevent absorption of water like pavements which make the ground more impervious than it is. May demand that the servient owner allow him to make works necessary to rem ove obstructions impeding natural passage o SERVIENT OWNER (Lower Estate) Cannot make works which would impede the servitude e.g. dams which would block the nat ural flow, walls, ditches that enclose the tenements. Can construct works that h e may deem necessary to prevent damage to himself, so long as he does not cause damage to inferior tenements 202

CIVIL LAW REVIEWER Chapter VIII. EASEMENT o o Easement of abutment of a dam may be established after payment of proper indemni ty REQUISITES: 1) Construction of dam mecessary for the use of any other continu ous or discontinuous stream 2) Person who is to construct the dam is NOT the own er of the banks or lands which must support the dam o 4. Aqueduct Article 642, Civil Code. Any person who may wish to use upon his own estate any water of which he can dispose shall have the right to make it flow through the i ntervening estates, with the obligation to indemnify their owners, as well as th e owners of the lower estates upon which the waters may filter or descend. Artic le 643, Civil Code. One desiring to make use of the right granted in the precedi ng article is obliged: 1. To prove that he can dispose of the water and that it is sufficient for the use for which it is intended; 2. To show that the proposed right of way is the most convenient and the least onerous to third persons; 3. To indemnify the owner of the servient estate in the manner determined by the la ws and regulations. Article 644, Civil Code. The easement of aqueduct for privat e interest cannot be imposed on buildings, courtyards, annexes, or outhouses, or on orchards or gardens already existing. Article 645, Civil Code. The easement of aqueduct does not prevent the owner of the servient estate from closing or fe ncing it, or from building over the aqueduct in such manner as not to cause the latter any damage, or render necessary repairs and cleanings impossible. Article 645, Civil Code. For legal purposes, the easement of aqueduct shall be consider ed as continuous and apparent, even though the flow of the water may not be cont inuous, or its use depends upon the needs of the dominant estate, or upon a sche dule of alternate days or hours. REQUISITES: 1) Dominant owner must prove that: a) He can dispose of the water b) Water is sufficient for the use for which it is intended c) The proposed right of way is the most convenient and the least onerous to third persons 2) Dominant owner must also indemnify the servient estate in the manner determined by laws and regulations 3) Dominant owner cannot impose the easement of aqueduct on buil dings, courtyards, annexes, outhouses, orchards or gardens already existing Exis ting structures cannot be injured to establish the easement. RIGHT OF SERVIENT O WNER: May fence or build over the aqueduct in such a manner as not to cause any damage, or render impossible any necessary repairs and cleanings 203 PROPERTY 5. Stop lock and sluice gate Article 647, Civil Code. One who for the purpose of irrigating or improving his estate, has to construct a stop lock or sluice gate in the bed of the stream fro m which the water is to be taken, may demand that the owners of the banks permit its construction, after payment of damages, including those caused by the new e asement to such owners and to the other irrigators. 6. Stop lock and sluice gate 1. REQUISITES: 1) Can be imposed only for reasons o f public use in favor of a town or village 2) After payment of proper indemnity THE EASEMENT OF RIGHT OF WAY

Article 649, Civil Code. The owner, or any person who by virtue of a real right may cultivate or use any immovable, which is surrounded by other immovables pert aining to other persons and without adequate outlet to a public highway, is enti tled to demand a right of way through the neighboring estates, after payment of the proper indemnity. Should this easement be established in such a manner that its use may be continuous for all the needs of the dominant estate, establishing a permanent passage, the indemnity shall consist of the value of the land occup ied and the amount of the damage caused to the servient estate. o o Any person wishing to use upon his own estate any water can make it flow through intervening estates with obligation to indemnify owners of such estates Conside red as a continuous and apparent easement, even though the flow of water may not be continuous

CIVIL LAW REVIEWER Chapter VIII. EASEMENT In case the right of way is limited to the necessary passage for the cultivation of the estate surrounded by others and for the gathering of its crops through t he servient estate without a permanent way, the indemnity shall consist in the p ayment of the damage caused by such encumbrance. This easement is not compulsory if the isolation of the immovable is due to the proprietors own acts. (564a) 7. RULES FOR ESTABLISHING THE RIGHT OF WAY 1) Must be established at the point L EAST prejudicial to the servient estate Art. 650, Civil Code. The easement of right of way shall be established at the p oint least prejudicial to the servient estate, and, insofar as consistent with t his rule, where the distance from the dominant estate to a public highway may be the shortest. 2. Who may demand: (1) The owner of the dominant estate (2) Any person with the real right to cultivate or use the immovable e.g. a usufructuary BUT a lessee ca nnot demand such easement, because the lessor is the one bound to maintain him i n the enjoyment of the property 3. REQUISITES: (1) Dominant estate is surrounded by other immovables owned by other persons (2) There must absolutely be no acce ss to a public highway (3) Even if there is access, it is difficult or dangerous to use, or grossly insufficient 4. Mere inconvenience in the use of an outlet d oes not render the easement a necessity. 5. An adequate outlet is one that is su fficient for the purpose and needs of the dominant owner, and can be established at a reasonable expense. 6. Does not necessarily have to be by land an outlet t hrough a navigable river if suitable to the needs of the tenement is sufficient. (4) Isolation of the immovable is NOT due to the dominant owners own acts e.g. i f he constructs building to others obstructing the old way (5) Payment of indemn ity o If right of way is permanent and continuous for the needs of the dominant estate = value of the land + amount of damage caused to the servient estate o If right of way is limited to necessary passage for cultivation of the estate and for gathering crops, without permanent way = damage caused by encumbrance. a. Insofar as consistent with the first rule, where the distance from the domina nt estate to a public highway is shortest E.g. as between a longer way without i njury to the servient estates constructions, etc. and a shorter way that would ca use injury b. The criterion of least prejudice to the servient estate must preva il over the criterion of shortest distance although this is a matter of judicial appreciation. While shortest distance may ordinarily imply least prejudice, it is not always so as when there are permanent structures obstructing the shortest distance; while on the other hand, the longest distance may be free of obstruct ions and the easiest or most convenient to pass through. (Quimen v. CA) c. The f act that LGV had other means of egress to the public highway cannot extinguish t he said easement, being voluntary and not compulsory. The free ingress and egres s along Mangyan Road created by the voluntary agreement between the parties is t hus legally demandable with the corresponding duty on the servient estate not to obstruct the same. (La Vista Association v. CA) 204 PROPERTY 2) Width of the easement shall be that which is sufficient for the needs of the dominant estate

CIVIL LAW REVIEWER Chapter VIII. EASEMENT a. Easement may be changed from time to time depending upon the needs of the dom inant tenement b. The width of the easement of right of way shall be that which is sufficient for the needs of the dominant estate, and may accordingly be chang ed from time to time. (Art. 651, CC) 3) Necessary repairs for a permanent right of way shall be made by the DOMINANT OWNER. 4) A proportionate share of taxes sh all be reimbursed by the dominant owner to the proprietor of the servient estate If the right of way is permanent, the necessary repairs shall be made by the ow ner of the dominant estate. A proportionate share of the taxes shall be reimburs ed by said owner to the proprietor of the servient estate (Art. 654, CC) 5) In c ases where the dominant estate needing the right of way is acquired by sale, exc hange or partition and the Estate is surrounded by other estates owned by the ve ndor, exchanger of co-owner a. Vendor, exchanger or co-owner shall grant the rig ht of way WITHOUT INDEMNITY Granting the servitude without indemnity is a tacit condition of the sale, exchange or partition: each party receives something b. D onor (simple donation) must still be indemnified for right of way Grantor receiv es nothing from the grantee, therefore no implied condition as to a right of way is constituted c. If the land of the grantor is the one which becomes isolated, he may demand right of way after paying an indemnity Whenever a piece of land a cquired by sale, exchange or partition, is surrounded by other estates of the ve ndor, exchanger, or coowner, he shall be obliged to grant a right of way without indemnity. In case of a simple donation, the don or shall be indemnified by the donee for the establishment of the right of way. (Art. 652, CC) 8. EXTINGUISHMENT Extinguished in the following circumstances bec ause easement ceases to be necessary: 1) Owner has joined the dominant estate to another abutting the public road 2) A new road is opened giving access to the i solated estate 3) Extinguishment is NOT automatic. The owner of the servient est ate must ask for such extinguishment 4) Indemnity paid to the servient owner mus t be returned: a. If easement is permanent: value of the land must be returned b . If easement is temporary: nothing to be returned 9. SPECIAL RIGHTS OF WAY Righ t of way to carry materials for the construction, repair, improvement, alteratio n or beautification of a building through the estate of another Right of way to raise on anothers land scaffolding or other objects necessary for the work If it be indispensable for the construction, repair, improvement, alteration or beauti fication of a building, to carry materials through the estate of another, or to raise therein scaffolding or other objects necessary for the work, the owner of such estate shall be obliged to permit the act, after receiving payment of the p roper indemnity for the damage caused him. (Art. 656) Right of way for the passa ge of livestock known as animal path, animal trail, watering places, resting pla ces, animal folds (Art. 657) Easements of the right of way for the passage of li vestock known as animal path, animal trail or any other, and those for 205 PROPERTY

CIVIL LAW REVIEWER Chapter VIII. EASEMENT

watering places, resting places and animal folds, shall be governed by the ordin ances and regulations relating thereto, and, in the absence thereof, by the usag es and customs of the place. Without prejudice to rights legally acquired, the a nimal path shall not exceed in any case the width of 75 meters, and the animal t rail that of 37 meters and 50 centimeters. Whenever it is necessary to establish a compulsory easement of the right of way or for a watering place for animals, the provisions of this Section and those of Articles 640 and 641 shall be observ ed. In this case the width shall not exceed 10 meters (ii) In dividing walls of gardens or yards, situated in cities, towns or rural c ommunities (iii) In fences, walls and live hedges dividing rural lands (iv) Ditc hes or drains between two estates b. EXTERIOR SIGNS CONTRARY TO THE EASEMENT OF PARTY WALL (merely illustrative and not exclusive) (i) A window or opening in th e dividing wall of buildings (ii) A lower part of the wall slants or projects ou tward on one side of the wall, while the other side is straight and plumb on its facement (iii) Entire wall is built WITHIN the boundaries of one of the estates (iv) Dividing wall bears the burden of beams, floors and roof frame of only one of the buildings (v) Dividing wall between courtyards, garden or tenements is c onstructed in such a way that the it sheds water upon only one of the estates (v i) Dividing wall has stepping stones which project from the surface of one side only, but not on the other (vii) Lands enclosed by fences or live hedges adjoin others which are not enclosed 206 PROPERTY THE EASEMENT OF PARTY WALL Article 659, Civil Code. The existence of an easement of party wall is presumed, unless there is a title, or exterior sign, or proof to the contrary: 1. In divi ding walls of adjoining buildings up to the point of common elevation; 2. In div iding walls of gardens or yards situated in cities, towns, or in rural communiti es; 3. In fences, walls and live hedges dividing rural lands. PARTY WALL Built b y common agreement by getting land from the adjoining tenements in equal parts O wner may use the wall for his own exclusive benefit WALL OWNED IN COMMON Owned b y adjoining owners from its construction or by subsequent act Co-owner cannot us e the wall for his own exclusive benefit, because he would be impairing the righ ts of his co-owners Each owner can insert beams in the wall to the extent of ent ire thickness 2. OTHERS NOT ENUMERATED in ARTICLE 659 a. Two adjoining tenements surrounded by live hedges of different kinds = the hedge must belong to the owner of the tene ment using the same kind of plants b. For ditches or drains between two estates, whenever the earth or dirt removed to open or clean the ditch is only on one si de thereof 3. CONTRADICTORY SIGNS a. Contradictory external signs are left to th e determination of the Court, but the quality instead of the number of signs mus t prevail. Also, a presumption arising from the object or purpose of the wall is of more force than that arising from a doubtful external sign. b. Title, as an express proof of ownership prevails over an external sign, which merely gives ri se to a presumption Each owner may insert beams but only to the extent of of its thickness

1. DETERMINING THE EXISTENCE OF A PARTY WALL a. PRESUMED in the following situat ions unless there is a TITLE or EXTERIOR SIGN or PROOF to the contrary (i) In di viding walls of adjoining buildings, up to the point of common elevation

CIVIL LAW REVIEWER Chapter VIII. EASEMENT 4. RULES a. Cost of repairs and construction, maintenance of fences, hedges, dit ches and drains shall be borne by ALL the owners of the lands or tenements EXCEP T: if the defects were occasioned only by one owner b. An owner may exempt himse lf from contributing to the expenses by renouncing his part-ownership, UNLESS th e party wall supports a building he owns Renunciation refers not only to the wal l, but also to the land on which it is constructed. c. An owner of a building su pported by a party wall who desires to demolish his building, may also renounce his part ownership of the wall. BUT he must still bear the cost of all the repai rs and work necessary to prevent any damage to the party wall. d. Every owner ma y increase the height of the wall, at his own expense and paying for damages cau sed by the work. He must also pay for: Expenses of maintaining the wall in the p art newly raised, or deepened foundation Indemnity for increased expenses necess ary for the preservation of the wall by reason of the greater height or depth wh ich has been given it Reconstruction expenses in case the party wall cannot bear the increased height. If increased thickness is needed, the owner shall give th e space required from his own land Other owners may acquire part ownership of th e increased height, depth or thickness of the wall, by paying proportionately th e value of the work at the time of the acquisition, and of the land for its incr eased thickness e. Part-owners may use the party wall IN PROPORTION to the right he may have in the co-ownership, without interfering with the common and respec tive uses of the others. E.g. A interest in the wall = payment for expenses = use as in one can insert be ams in the wall up to thickness THE EASEMENT OF LIGHT AND VIEW 1. NATURE OF THE EASEMENT a. POSITIVE: Opening a w indow through a party wall When a part owner of a party wall opens a window ther ein, such act implies the exercise of the right of ownership by the use of the e ntire thickness of the wall = invasion of the right of the other part owners / v iolation of the right to proportional use of the party wall. b. NEGATIVE: Formal prohibition upon the owner of the adjoining land or tenement When a person open s a window on his own building, he does nothing more than exercise an act of own ership on his property. Does not establish an easement Coexistent is the right o f the owner of the adjacent property to build on his own land, even if such stru ctures cover the window If the adjacent owner does not build structures to obstr uct the window, such is considered mere tolerance and NOT a waiver of the right to build. An easement is created only when the owner opens up a window prohibits or restrains the adjacent owner from doing anything, which may tend to cut off or interrupt the light + prescriptive period 2. EASEMENT vs. DIRECT VIEW o Acqui red by the person who opens the window o The following structures cannot be buil t without following the prescribed distances Window, apertures, balconies and ot her projections with a direct view upon or towards an adjoining land must have a distance of 2 METERS between the wall and the contiguous property. 207 PROPERTY

CIVIL LAW REVIEWER Chapter VIII. EASEMENT

For structures with a side or oblique view (at an angle from the boundary line), there should be a distance of 60 centimeters. Measured from: The outer line of the wall if the openings do not project The outer line of the openings if they p roject The dividing line between the two properties in cases of oblique view If distances are not complied with: Windows are considered unlawful openings Owner may be ordered by the Court to close them Even if the adjoining owner does not o bject to the construction of such structures at first, he cannot be held to be i n estoppel, except if 10-year period of acquisitive prescription has passed. Doe s not give rise to prescription Mere opening of the window in violation of the d istances does not give rise to the easement of light and view by prescription

o With iron grating imbedded in the wall With a wire screen But owner of the adjoi ning estate can close the opening if: He acquires part ownership of the party wa ll He constructs a building or raises a wall on his land, unless an easement of light has been acquired If requirements are not complied with, the owner of the adjoining estate may compel the closure of the opening. The action to compel the closing of the opening may prescribe, if the opening is permitted without prote st. BUT prescription of the action to compel the closure of the opening DOES NOT MEAN that the servitude of light and view has been acquired. Period of acquisit ive prescription will only start to run from the time the owner asserting the se rvitude has forbidden the owner of the adjoining tenement from doing something h e could lawfully do. THUS, although the action to compel the closure might have prescribed, the owner of the adjoining estate may still build on his own land a structure which might obstruct the view. OF DRAINAGE OF 208 PROPERTY o o In buildings separated by a public way or alley, not less than 3 meters wide, th e distances required (2 m, 60 cm) do not apply. If an easement is acquired to ha ve direct views, balconies or belvederes, the owner of the servient estate must not build at less than 3 meters from the boundary line of the two tenements. The distances may be stipulated by the parties, but should not be less than what is prescribed by the law (2 meters and 60 cm) THE EASEMENT BUILDINGS Article 674, Civil Code. The owner of a building shall be obliged to construct i

ts roof or covering in such manner that the rain water shall fall on his own lan d or on a street or public place, and not on the land of his neighbor, even thou gh the adjacent land may belong to two or more persons, one of whom is the owner of the roof. Even if it should fall on his own land, the owner shall be obliged to collect the water in such a way as not to cause damage to the adjacent land or tenement. Article 675, Civil Code. The owner of a tenement or a piece of land , subject to the easement of receiving water falling from roofs, may build in su ch manner as to receive the water upon his own roof or give it another outlet in accordance with local ordinances or customs, and in such a way as not to cause any nuisance or damage whatever to the dominant estate. Article 676, Civil Code. Whenever the yard or court of a house is surrounded by other houses, and it is not possible to give an outlet through the house itself to the rain water collec ted thereon, the establishment 3. EXCEPTION TO EASEMENT vs. DIRECT VIEW o Owners of a wall (not a party wall) a djoining a tenement of another can make openings to admit light without complyin g with the distance requirements SO LONG AS: Openings are made at the height of the ceiling joists (horizontal beams) or immediately under the ceiling Size: 30 cm square

CIVIL LAW REVIEWER of an easement of drainage can be demanded, giving an outlet to the water at the point of the contiguous lands or tenements where its egress may be easiest, and establishing a conduit for the drainage in such manner as to cause the least damage to the servient estate, after payment of the property in demnity. Chapter VIII. EASEMENT renounced by stipulation on the part of the adjoining pro prietors. In the absence of regulations, such precautions shall be taken as may be considered necessary, in order to avoid any damage to the neighboring lands o r tenements. Article 679, Civil Code. No trees shall be planted near a tenement or piece of land belonging to another except at the distance authorized by the o rdinances or customs of the place, and, in the absence thereof, at a distance of at least two meters from the dividing line of the estates if tall trees are pla nted and at a distance of at least fifty centimeters if shrubs or small trees ar e planted. Every landowner shall have the right to demand that trees hereafter p lanted at a shorter distance from his land or tenement be uprooted. The provisio ns of this article also apply to trees which have grown spontaneously. Article 6 80, Civil Code. If the branches of any tree should extend over a neighboring est ate, tenement, garden or yard, the owner of the latter shall have the right to d emand that they be cut off insofar as they may spread over his property, and, if it be the roots of a neighboring tree which should penetrate into the land of a nother, the latter may cut them off himself within his property. Art. 681, Civil Code. Fruits naturally falling upon adjacent land belong to the owner of said l and. 1. Regulating the disposal of rain water a. Owner of a building is obliged to co nstruct a roof or covering so as to ensure that the rain water shall fall on his own land, or on a street or public place, and NOT on the land of his neighbor. b. Owner is also obliged to collect the war falling on his own land so as not to cause damage to adjacent tenements 2. Rain water is res nullius, and has no own er. This article merely imposes a limitation on the use of ones property, so that rain water falling thereon may not cause damage. 3. Obligation to collect water (#2) is an exception to the rule requiring lower tenements to receive water flo wing from higher tenements. EASEMENT GIVING AN OUTLET TO THE WATER THROUGH CONTI GUOUS ESTATES o Requisites: a. Yard or court of a house is surrounded by other ho uses b. Water is collected thereon c. Not possible to give an outlet through the house itself d. Establishment of conduit for drainage must be at a point where egress is easiest and where it will cause the least damage to the servient estat e e. After payment of proper indemnity INTERMEDIATE DISTANCES AND WORKS FOR CERT AIN CONSTRUCTIONS AND PLANTINGS Article 677, Civil Code. No constructions can be built or plantings made near fo rtified places or fortresses without compliance with the conditions required in special laws, ordinances, and regulations relating thereto Article 675, Civil Co de. No person shall build any aqueduct, well, sewer, furnace, forge, chimney, st able, depository of corrosive substances, machinery, or factory which by reason of its nature or products is dangerous or noxious, without observing the distanc es prescribed by the regulations and customs of the place, and without making th e necessary protective works, subject, in regard to the manner thereof, to the c onditions prescribed by such regulations. These prohibitions cannot be altered o r 209 PROPERTY 1. SUMMARY CONSTRUCTIONS may be built only after complying with prescribed regul ations (special laws, ordinances, regulations): a. Constructions or plantings ne ar fortified places or fortresses b. Aqueduct, well, sewer, furnace, forge, chim ney, stable, depository of corrosive substances, machinery, factory (with danger ous and noxious substances) Distances must be observed and protective works nece ssary for the conditions must be made c. Trees planted near a tenement or piece

of land In the absence of ordinances or customs of the place: (1) TALL TREES: At a distance of at least 2 meters from the dividing line of the estates (2) SHRUB S/SMALL TREES: At least 50 cm from the dividing line

CIVIL LAW REVIEWER Chapter VIII. EASEMENT

If trees are planted at a shorter distance, landowner may demand that it be upro oted o o 2. Plantings Encroaching on Adjoining Estates a. Branches of any tree extendin g over a neighboring estate, garden, etc. Owner of the adjoining estate has the right to demand that they be cut off insofar as they may spread over his propert y. b. Roots of a neighboring tree which should penetrate into the land of anothe r o Owner may cut the roots off himself within his property, even without notice to the owner of the trees o Roots, by accession are converted into the property of the owner of the land into which they penetrate. o Also, cutting off the roo ts will not give the cutter any benefit, in contrast to cutting off the branches of a tree. o PRESCRIPTION OF ACTION TO CUT: Period only starts to run after the owner of the estate has demanded that the owner of the trees cut off the branch es or roots, and the latter refuses. The fact that the owner does not cut off th e trees only constituted mere tolerance. c. Fruits naturally falling upon adjace nt land belong to the owner of the land o Not by right of occupation but by prin ciple of accession. o Owner of the tree retains ownership: If he picks the fruit s from the branches which invade the neighboring tenement If fruits fall on immo vables for public use (not considered as fruits of these Material impairment depends on the nature and purpose of the tenement e.g. dwell ing house vs. factory Degree of annoyance to be tolerated depends on what is usu al for a specific locality. Article 683, Civil Code. Subject to zoning, health, police and other laws and re gulations, factories and shops may be maintained provided the least possible ann oyance is caused to the neighborhood. EASEMENT OF LATERAL AND SUBJACENT SUPPORT Article 684, Civil Code. No proprietor shall make such excavations upon his land as to deprive any adjacent land or building of sufficient lateral or subjacent support. 210 PROPERTY 1. An owner cannot make such excavations as to deprive any adjacent land or buil ding of sufficient lateral or subjacent support 2. LATERAL SUPPORT a. Limitation on the right to excavate on his own land: one cannot excavate so close to an ad joining estate as to deprive it of natural support and cause it to crumble. b. N ot necessary that the excavation is made on the lot immediately adjoining. It is sufficient if the excavation results in a slide in the plaintiffs property c. An owner who makes excavations can either: Observe a sufficient distance to permit the necessary lateral support of adjoining land Support the latter artificially through walls, etc. 3. SUBJACENT SUPPORT a. Exists when there is severance of o wnership (surface owner vs. substrata owner) as in mines and tunnels. b. The own ers of the rights below the surface are burdened with the easement to refrain fr om removing such sufficient support which will protect the surface from subsiden ce or sinking, and keep it securely at its original level. 4. REMEDIES FOR VIOLA TION a. Action for Damages against the one who made the excavation, whether owne r or contractor, etc.

THE EASEMENT AGAINST NUISANCES Article 682, Civil Code. Every building or piece of land is subject to the easem ent which prohibits the proprietor or possessor from committing nuisance through noise, jarring, offensive odor, smoke, heat, dust, water, glare and other cause s.

CIVIL LAW REVIEWER Chapter VIII. EASEMENT b. Injunction Restraining the owner from excavating so as to deprive the land of natural support Will prohibit merely any excavation which shall cause the plain tiffs land to fall away due to withdrawal of support 5. OTHER RULES: a. Stipulati ons or testamentary provisions allowing excavations that cause danger to adjacen t land or building is VOID. b. Also applicable to future constructions c. Any pr oprietor intending to make any excavation shall notify all owners of adjacent la nds. Notice must sufficiently inform the adjoining owner of the nature and exten t of the proposed excavation, so as to enable the owner to take the necessary pr ecautions to protect his property. No formal notice is necessary if the adjoinin g owner already has actual knowledge of such excavation. But giving notice does not absolve the excavator from the duty to exercise reasonable care to avoid inj ury to neighbors. 211 PROPERTY

CIVIL LAW REVIEWER Chapter IX. NUISANCE Chapter IX. Nuisance I. II. III. IV. DEFINITION CLASSES LIABILITY IN CASE OF NUISANCE REGULATION OF N UISANCE I. Definition To constitute a nuisance there must be an arbitrary or abusive use of property o r disregard of commonly accepted standards set by society. Nuisance v. Trespass Nuisance Use of ones own property in such a manner as to cause injury to the prop erty or right or interest of another, and generally results from the commission of an act beyond the limits of the property affected. Injury is consequential Tr espass Direct infringement of anothers right of property. Injury is immediate Nuisance v. Negligence Nuisance Whether it was unreasonable for the defendant to act as he did in view of the threatened danger or harm to one in plaintiffs position. Liability for the resulting injury to others regardless of the degree of care or skill exercised to avoid such injury. Principles ordinarily apply where the cause of action is f or continuing harm caused by continuing or recurrent acts which cause discomfort or annoyance to plaintiff in the use of his property. Negligence Whether the de fendants use of his property was unreasonable as to plaintiff, without regard to foreseeability of injury. II. Classes Liability is based on a want of proper care Art. 695, Civil Code. Nuisance is either public or private. A public nuisance affects a community or neighborhood or any considerab le number of persons, although the extent of the annoyance, danger or damage upo n individuals may be unequal. A private nuisance is one that is not included in the foregoing definition. Principles ordinarily apply where the cause of action is for harm resulting from one act which created an unreasonable risk of injury. 1. According to Nature (old classification) a. Nuisance per se or at law PROPERTY Article 694, Civil Code. A nuisance is any act, omission, establishment, busines s, condition of property, or anything else which: 1. Injures or endangers the he alth or safety of others; or 2. Annoys or offends the senses; or 3. Shocks, defi es or disregards decency or morality; or 4. Obstructs or interferes with the fre e passage of any public highway or street, or any body of water; or 5. Hinders o r impairs the use of property. Examples as enumerated under CC 1) Injury to health Any business, although itself lawful, which necessarily impregnates large volumes of the atmosphere with disa greeable, unwholesome or offensive matter, may become a nuisance to those occupy ing adjacent property, in case it is so near, and the atmosphere is contaminated

to such an extent as substantially to impair the comfort and enjoyment of adjac ent occupants. 2) Dangerous to safety manufacture, storing or keeping of explosi ves in large quantities in the vicinity of dwelling houses or excavation adjoini ng a public highway 3) Annoyance to senses slaughterhouses and cowhide storage v ats from which emanated vile and offensive odors; noise of animals kept in resid ential neighborhood o To be judged by the effect they are calculated to produce upon ordinary people under normal circumstances, not by their effect upon the ov ersensitive, the fastidious or the sick, nor, on the other hand, by their effect upon those who are abnormally indifferent to such things, or who by long experi ence have learned to endure them without inconvenience. o Inconvenience must be materially interfering with the ordinary comfort, physically, of human existence . 4) Shocking to decency bawdy or disorderly house; building used for either lew dness or of assignation or prostitution 5) Hinders or impairs the use of propert y illegal construction on anothers land 212

CIVIL LAW REVIEWER Chapter IX. NUISANCE o An act, occupation or structure which is a nuisance at all times and under any c ircumstances, regardless of location or surroundings. 3. b. Nuisance per accidens or in fact o One that becomes a nuisance by reason of c ircumstances and surroundings. o It is not a nuisance by its nature but it may b ecome so by reason of the locality, surrounding, or the manner in which it is co nducted, managed, etc. Per se The wrong is established by proof of the mere act. It becomes a nuisance as a matter of law. Per accidens Proof of the act and its consequences. Doctrine of Attractive Nuisance o One who maintains on his premises dangerous in strumentalities or appliances of a character likely to attract children in play, and who fails to exercise ordinary care to prevent children from playing therew ith or resorting thereto, is liable to a child of tender years who is injured th ereby, even if the child is technically a trespasser in the premises. o Basis of liability The attractiveness is an invitation to children. Safeguards to preven t danger must therefore be set up. A swimming pool or water tank is not an attractive nuisance, for while it is att ractive, it cannot be a nuisance, being merely an imitation of the work of natur e. (Hidalgo Enterprises v. Balandan) 213 PROPERTY 2. According to Scope of Injurious Effects o Test: not the number of persons ann oyed but the possibility of annoyance to the public by the invasion of its right s the fact that it is in a public place and annoying to all who come within its sphere. a. Public o The doing of or the failure to do something that injuriously affects the safety, health or morals of the public. o It causes hurt, inconveni ence or injury to the public, generally, or to such part of the public as necess arily comes in contact with it. b. Private o One which violates only private rig hts and produces damages to but one or a few persons. Public Affects the public at large Need not affect the whole community or hurt a nd injure all the public. It is sufficient if it affects the surrounding communi ty generally or if the injury is occasioned to such part of the public as come i n contact with it. Private Affects the individual or a limited number of individ uals only III. Liability in Case of Nuisance o Who are liable Art. 696, Civil Code. Every successive owner or possessor of property who fails or refuses to abate a nuisance in that property started by a former owner or pos sessor is liable therefor in the same manner as the one who created it. o o c. Mixed

Liability of creator of nuisance: He who creates a nuisance is liable for the re sulting damages and his liability continues as long as the nuisance continues. T here must be a breach of some duty on the part of the person sought to be held l iable for damages resulting from a nuisance before an action will lie against hi m. No one is to be held liable for a nuisance which he cannot himself physically abate without legal action against another for that purpose. Where several pers ons, acting independently, cause damage by acts which constitute a nuisance, eac h is liable for the damage which he has caused or for his proportionate share of the entire damage. Liability of transferees: The grantee of land upon which the re exists a nuisance created by his predecessors in title is NOT responsible the refore merely because he becomes the owner of the premises, or merely because he permits it to remain. He shall be liable if he knowingly continues the nuisance . Generally, he is

CIVIL LAW REVIEWER Chapter IX. NUISANCE o not liable for continuing it in its original form, unless he has been notified o f its existence and requested to remove it, or has actual knowledge that it is a nuisance and injurious to the rights of others. Nature of liability: All person s who participate in the creation or maintenance of a nuisance are jointly and s everally liable for the injury done. If 2 or more persons who create or maintain the nuisance act entirely independent of one another, and without any community of interest, concert of action, or common design, each is liable only so far as his acts contribute to the injury. For joint liability, there must be some join t or concurrent act or community of action or duty, or the several wrongful acts done at several times must have concurred in their effects as one single act to produce the injury complained of. Right to recover damages Art. 697, Civil Code. The abatement of a nuisance does not preclude the right of any person injured to recover damages for its past existence. a. Criminal prosecution: Only for a public nuisance, not for a private one. Publ ic nuisances are offenses against the State, and since early times it has been h eld that one who is responsible for this may be proceeded against criminally by indictment. Question of intent is immaterial. Persons liable person is liable fo r the consequence which his act produced b. Civil action: 1) Judgment with abate ment defendant convicted of maintain a nuisance may also be ordered to abate the nuisance 2) Injunction where the injury occasioned by an indictable nuisance is pressing or imminent, so that the public safety is menaced or public rights are obstructed or interfered with, and the special circumstances are such that the ordinary process of the court is not sufficiently prompt or effective to prevent the injury or obstruction, the remedy can be injunction provided the right is c lear and the wrong has not been acquiesced in by the plaintiff. c. Extrajudicial abatement: This right is based upon necessity which must be present to justify its exercise. It must be reasonably and efficiently exercised, means employed mu st not be unduly oppressive on individuals, and no more injury must be done to t he property or rights of individuals than is necessary to accomplish the abateme nt. No right to compensation if property taken or destroyed is a nuisance. 214 PROPERTY o

Abatement and damages are cumulative remedies. o No Prescription Art. 698, Civil Code. Lapse of time cannot legalize any nuisance, whether public or private.

The action to abate a public or private nuisance is NOT extinguished by prescrip tion. (Art. 1143[2]) IV. Regulation of Nuisances A. PUBLIC NUISANCE

2. Who can file an action for abatement Article 700, Civil Code. The district health officer shall take care that one or all of the remedies against a public nuisance are availed of. Article 701, Civi l Code. If a civil action is brought by reason of the maintenance of a public nu isance, such action shall be commenced by the city or municipal mayor. Article 7 02, Civil Code. The district health officer shall determine whether or not abate ment, without judicial proceedings, is the best remedy against a 1. Remedies to abate a nuisance Article 699, Civil Code. The remedies against a public nuisance are: 1. A prosec ution under the Penal Code or any local ordinance: or 2. A civil action; or 2. ( 3) Abatement, without judicial proceedings.

CIVIL LAW REVIEWER public nuisance. Article 703, Civil Code. A private person ma y file an action on account of a public nuisance, if it is specially injurious t o himself. Chapter IX. NUISANCE a. General rule: Individual has no right of action against a public nuisance. Th e abatement proceedings must be instituted in the name of the State or its repre sentatives. b. Except: An individual who has suffered some special damage differ ent from that sustained by the general public, may maintain a suit in equity for an injunction to abate it, or an action for damages which he has sustained. Act ion becomes a tort if an individual has suffered particular harm, in which case the nuisance is treated as a private nuisance with respect to such person. 3. Re quisites of the right of a private individual to abate a public nuisance Article 704, Civil Code. Any private person may abate a public nuisance which is specially injurious to him by removing, or if necessary, by destroying the thin g which constitutes the same, without committing a breach of the peace, or doing unnecessary injury. But it is necessary: 1. That demand be first made upon the owner or possessor of the property to abate the nuisance; 2. That such demand ha s been rejected; 3. That the abatement be approved by the district health office r and executed with the assistance of the local police; and 4. That the value of the destruction does not exceed three thousand pesos. only so much of the objectionable thing as actually causes the nuisance. e. Abat ement must be approved by the district health officer. f. Property must not be d estroyed unless it is absolutely necessary to do so. g. Right must always be exe rcised with the assistance of local police so as not to disturb the public peace . B. PRIVATE NUISANCE Article 706, Civil Code. Any person injured by a private nuisance may abate it b y removing, or if necessary, by destroying the thing which constitutes the nuisa nce, without committing a breach of the peace or doing unnecessary injury. Howev er, it is indispensable that the procedure for extrajudicial abatement of a publ ic nuisance by a private person be followed. Article 707, Civil Code. A private person or a public official extrajudicially abating a nuisance shall be liable f or damages: 1. If he causes unnecessary injury; or 2. If an alleged nuisance is later declared by the courts to be not a real nuisance. a. The right must be exercised only in cases of urgent or extreme necessity. The thing alleged to be a nuisance must be existing at the time that it was alleged to be a nuisance. b. Summary abatement must be resorted to within a reasonable time after knowledge of the nuisance is acquired or should have been acquired by the person entitled to abate. c. Person who has the right to abate must give a reasonable notice of his intention to do so, and allow thereafter a reasonable t ime to enable the other to abate the nuisance himself. d. Means employed must re asonable and for any unnecessary damage or force, the actor will be liable. Righ t to abate is not greater than the necessity of the case and is limited to the r emoval of a. Action for damages: Recovery is limited to the damage occasioned up to the ti me of the commencement of the action. If nuisance continues to the time of trial , then damages shall be computed from that time. If nuisance is permanent, a sin gle action is enough to cover both past and prospective damages. If temporary or recurrent, each repetition of it gives rise to a new cause of action and succes sive actions will lie. b. Defenses to action: 1) Public necessity private intere st must yield to the public good; creation of nuisance amounts to taking of prop erty therefore just compensation must be made. 2) Estoppel one who voluntarily p laces himself in a situation whereby he suffers an injury will not be heard to s ay that his damage is due to a nuisance maintained by another.

PROPERTY Article 705, Civil Code. The remedies against a private nuisance are: 1. A civil action; or 2. Abatement, without judicial proceedings. 215

CIVIL LAW REVIEWER Chapter IX. NUISANCE 3) Non-existence of the nuisance 4) Impossibility of abatement c. Liability of p erson abating: Whoever abates an alleged nuisance and thus destroys or injures p rivate property, or interferes with private rights, whether a public officer or private person, unless he acts under the order of a court having jurisdiction, d oes so at his peril. d. Remedies of property owner: A person whose property is seized or destroyed as a nuisance may resort to the courts to determine w/n it was in fact a nuisance. 1) Action for replevin 2) Enjoin the sale or destruction of the property 3) Act ion for the proceeds of its sale and damages if it has been sold 4) Enjoin priva te parties from proceeding to abate a supposed nuisance 216 PROPERTY

CIVIL LAW REVIEWER Chapter X. MODES of ACQUIRING OWNERSHIP Chapter X. Ownership I. II. Modes of Acquiring II. Mode A. ORIGINAL MODE V. TITLE MODES A. ORIGINAL MODES 1. OCCUPATION 2. INTELLECTUAL CREATION B. DERIVATIVE MODES 1. LAW 2. DONATION 3. SUCCESSION 4. ACQUISITIVE PRESCRIPTION 5. TRADITION Original modes of acquisition are those which produce the acquisition of ownersh ip independent of any preexisting right of another person, hence, free from burd ens or encumbrances. 1. OCCUPATION Article 713, nature which that are the treasure and occupation. Civil Code. Thin gs appropriable by are without an owner, such as animals object of hunting and f ishing, hidden abandoned movables, are acquired by 217 PROPERTY I. Mode v. Title Article 712, Civil Code. Ownership is acquired by occupation and by intellectual creation. Ownership and other real rights over property are acquired and transm itted by law, by donation, by testate and intestate succession, and in consequen ce of certain contracts, by tradition. They may also be acquired by means of pre scription.

Mode is a specific cause which produces dominion and other real rights as a resu lt of the co-existence of special status of things, capacity and intention of pe rsons and fulfillment of the requisites of law. Title is every juridical right w hich gives a means to the acquisition of real rights but in itself is insufficie nt to produce them. Ownership is not transferred by contract merely but by tradi tion or delivery. Contracts only constitute titles or rights to transfer or acqu isition of ownership, while delivery is the mode accomplishing the same. Distinc tions: Mode Title Serves merely to give the occasion for its acquisition or existence M eans Remote cause Means whereby that essence is transmitted Requisites: o Corporeal personal property o Property susceptible of appropriatio n not res communes o Seizure with intent to appropriate o Res nullius (no owner) or res derelict (abandoned property) o Observance of conditions prescribed by l aw Kinds: o Of Animals Wild or feral animals seizure (hunting/fishing) in open s eason by means NOT prohibited Tamed/domesticated animals general rule: belong to

the tamer but upon recovering freedom are susceptible to occupation UNLESS clai med within 20days from seizure by another (ART. 716) Tame/domestic animals not a cquired by occupation EXCEPT when ABANDONED o Of Other Personal Property Abandon ed may be acquired Lost not known to be abandoned (ART. 719) Hidden treasure fin der gets by occupation; landowner gets by accession; EXCEPT in CPG system, share goes to the partnership

Directly and immediately produces a real right Cause Proximate cause Essence of the right which is to be created or transmitted

CIVIL LAW REVIEWER Chapter X. MODES of ACQUIRING OWNERSHIP

Specific rules o Not applicable to ownership of a piece of land The ownership of a piece of land cannot be acquired by occupation. (Article 714, Civil Code) Sta te owns a piece of land which has no owner therefore it cannot be acquired by oc cupation. o Privilege to hunt and fish regulated by special law Article 715, Civ il Code. The right to hunt and to fish is regulated by special laws. Occupation of a swarm of bees or domesticated animals Article 716, Civil Code. The owner of a swarm of bees shall have a right to pursue them to anothers land, indemnifying the possessor of the latter for the damage. If the owner has not pursued the sw arm, or ceases to do so within two consecutive days, the possessor of the land m ay occupy or retain the same. The twenty days to be counted from their occupatio n by another person. This period having expired, they shall pertain to him who h as caught and kept them. Article 560, Civil Code. Wild animals are possessed onl y while they are under ones control; domesticated or tamed animals are consider ed domestic or tame if they retain the habit of returning to the premises of the possessor. o o property shall have the right granted him in article 438 of this Code. Lost mova bles; procedure after finding lost movables Art. 719, CC Whoever finds a movable , which is not treasure, must return it to its previous possessor. If the latter is unknown, the finder shall immediately deposit it with the mayor of the city or municipality where the finding has taken place. The finding shall be publicly announced by the mayor for two consecutive weeks in the way he deems best. If t he movable cannot be kept without deterioration, or without expenses which consi derably diminish its value, it shall be sold at public auction eight days after the publication. Six months from the publication having elapsed without the owne r having appeared, the thing found, or its value, shall be awarded to the finder . The finder and the owner shall be obliged, as the case may be, to reimburse th e expenses. Article 720, CC. If the owner should appear in time, he shall be obl iged to pay, as a reward to the finder, one-tenth of the sum or of the price of the thing found. 218 PROPERTY 2. INTELLECTUAL CREATION Article 721, Civil Code. By intellectual creation, the following persons acquire ownership: 1. The author with regard to his literary, dramatic, historical, leg al, philosophical, scientific or other work 2. The composer; as to his musical c omposition; 3. The painter, sculptor, or other artist, with respect to the produ ct of his art; 4. The scientist or technologist or any other person with regard to his discovery or invention. Article 722, Civil Code. The author and the compo ser, mentioned in Nos. 1 and 2 of the preceding article, shall have the ownershi p of their creations even before the publication of the same. Once their works a re published, their rights are o Pigeons and fish Article 717, Civil Code. Pigeons and fish which from their resp ective breeding places pass to another pertaining to a different owner shall bel ong to the latter, provided they have not been enticed by some artifice or fraud

. Hidden treasure Article 718, Civil Code. He who by chance discovers hidden tre asure in anothers o

CIVIL LAW REVIEWER governed by the Copyright laws. The painter, sculptor or othe r artist shall have dominion over the product of his art even before it is copyr ighted. The scientist or technologist has the ownership of his discovery or inve ntion even before it is patented. Article 723, Civil Code. Letters and other pri vate communications in writing are owned by the person to whom they are addresse d and delivered, but they cannot be published or disseminated without the consen t of the writer or his heirs. However, the court may authorize their publication or dissemination if the public good or the interest of justice so requires. Art icle 724, Civil Code. Special laws govern copyright and patent. Chapter X. MODES of ACQUIRING OWNERSHIP o Statutory copyright

Dual interest in letters (ART. 723): he intellectual property consists in From the viewpoint of the RECIPIENT g was impressed or done, pertains in operty Code of 1997 (RA 8293) is the ent

o From the viewpoint of the SENDER/WRITER t the ideas and thoughts expressed therein. o the paper or material used where the writin ownership to the recipient. Intellectual Pr special law which governs copyright and pat

2. TRADEMARKS, TRADE NAMES and SERVICE MARKS Definitions under the Trademark Law (RA 166): o Trademark - any word, name, symbol, emblem, sign or device or any c ombination thereof adopted and used by a manufacturer or merchant to identify hi s goods and distinguish them from those manufactured, sold or dealt in by others . o Trade-name - individual names and surnames, firm names, tradenames, devices or words used by manufacturers, industrialists, merchants, agriculturists, and o thers to identify their business, vocations or occupations o Service mark - mark used in the sale or advertising of services to identify the services of one per son and distinguish them from the services of others 3. GEOGRAPHIC INDICATIONS o f ORIGIN False designation of origin is punishable under ART. 189 of RPC 4. INDU STRIAL DESIGNS Any composition of lines and colors or any 3-dimensional form, w/ n associated with lines and colors 5. PATENTS An exclusive right to invention gr anted to a patentee, his heirs or assigns for the term thereof Essential element s of an invention to be patentable: o Novelty o Prior art Requisites: o There mu st be an invention o Of a new and useful machine, product/substance of possible advantage to the public o Not previously known or used or described in printed p ublications or in public use or on sale in the Phils. or covered by prior patent o Includes new and original industrial designs o NOT patentable if: Contrary to public order, morals, public health or welfare Abstract idea/principle/theorem 219 PROPERTY

INTELLECTUAL PROPERTY RIGHTS 1. COPYRIGHT and RELATED RIGHTS Copyright o an inta ngible, incorporeal right o granted by statute o to the author or originator of certain literary or artistic productions, o whereby he is invested, for a specif ic period, 30 YRS. renewable for another 30 YRS. 40 YRS for SERIAL publications st from the publication of the 1 volume renewable for 30 YRS. o with the sole an d exclusive privilege of multiplying copies of the same and publishing and selli ng them. Purpose of the law: protect and control the visible thing created and t he intangible estate arising from the privilege of publishing and selling to oth ers copies of the thing produced Kinds o Common law copyright

CIVIL LAW REVIEWER Chapter X. MODES of ACQUIRING OWNERSHIP 6. TOPOGRAPHIES of INTEGRATED CIRCUITS 7. RIGHTS of PERFORMERS, PRODUCERS of SOU ND RECORDINGS and BROADCASTING ORGANIZATIONS 8. PROTECTION of UNDISCLOSED INFORM ATION _______________ o o o o Public Peaceful Uninterrupted Adverse ACQUISITIVE v. EXTINCTIVE Extinctive Prescription Statute of limitation Inaction or neglect of the owner B. DERIVATIVE Derivative modes of acquiring ownership are based on a right previ ously held by another person, and therefore, subject to the same characteristics , powers, burdens, etc. as when held by previous owner. 1. LAW should be interpr eted to apply only to situations where ownership is vested independently of the other modes 2. DONATION see next chapter 3. SUCCESSION MORTIS CAUSA Article 774, Civil Code. Succession is a mode of acquisition by virtue of which the property, rights and obligations to the extent of the value of the inheritan ce, of a person are transmitted through his death to another or others either by his will or by operation of law. Article 776, Civil Code. The inheritance inclu des all the property, rights and obligations of a person which are not extinguis hed by his death Article 777, Civil Code. The rights to the succession are trans mitted from the moment of the death of the decedent. Acquisitive Prescription vests the property and raise a new title in the occupan t Positive action of the possessor

Requisites common to ordinary and extraordinary acquisitive prescription: o Capa city of the acquirer o Capacity of the loser to lose by prescription o Object su sceptible to prescription o Lapse of required time Ordinary acquisitive Movable property 4yrs Immovable 10yrs Extraordinary acquisitive Movable 8yrs Immovable 3 0yrs Additional requirements for ordinary acquisitive prescription: o Good faith o Just title 220 PROPERTY

Elements of Succession: o Transmission of property, rights and obligations to an other o Cause of transmission is the DEATH of the decedent o Procedure of transm ission is by WILL or OPERATION of LAW o ACCEPTANCE of the inheritance by the hei r Rights to the succession are vested as of the MOMENT of DEATH of the decedent 5. TRADITION Requisites: o Pre-existence of right in estate of grantor o Just ca use or title for the transmission o Intention o Capacity o Act of giving it outw ard form, physically, symbolically or legally Kinds: o Real tradition PHYSICALY DELIVERY of the thing; actual transfer of control and possession with intent to pass ownership or real right over the property Movable hand to hand transfer of the thing Immovable material acts performed by grantee

4. (ACQUISITIVE) PRESCRIPTION Mode of acquiring ownership through the lapse of t ime in the manner and under the conditions laid down by law Possession should be : o In the concept of an owner

CIVIL LAW REVIEWER Chapter X. MODES of ACQUIRING OWNERSHIP o Constructive tradition NOT the real or material delivery of the thing that may t ake place in any of the ff: Symbolic delivery delivery of signs or things which represent that which is being transmitted Delivery of public instrument substitu tion of the real delivery of possession by a public writing with delivery of doc ument Traditio longa manu pointing of the thing within sight by grantor to grant ee Traditio brevi manu grantees continuous possession over the thing delivered bu t now under the title of ownership Traditio constitutum possessorium owner remai ns in possession of the thing but in another concept Quasi-tradition delivery of incorporeal things or rights by the grantee of his right with the owners consent Tradition by operation of law 221 PROPERTY

CIVIL LAW REVIEWER Chapter XI. DONATION Chapter XI. Donation I. II. III. IV. V. NATURE REQUISITES KINDS WHO MAY GIVE OR RECEIVE DONATIONS WHO MAY NOT GIVE OR RECEIVE DONATIONS VI. ACCEPTANCE VII. FORM VIII. WHAT MAY BE DO NATED IX. EFFECT X. REVOCATION AND REDUCTION

Irrevocable EXCEPT for the ff grounds: o Subsequent birth of the donors children o Donors failure to comply with imposed conditions o Donees ingratitude o Reductio n of donation by reason of inofficiousness NO OPTION to revoke AT WILL before th e donor dies 2. MORTIS CAUSA Article 728, Civil Code. Donations which are to take effect upon the death of th e donor partake of the nature of testamentary provisions, and shall be governed by the rules established in the Title on Succession. I. Nature BILATERAL contract creating UNILATERAL obligations on the donors part Requires CO NSENT of BOTH donor and donee though it produces obligations only on the side of the DONOR 222 PROPERTY

II. Requisites CONSENT and CAPACITY of the parties ANIMUS DONANDI (intent to donate) DELIVERY o f thing donated FORM as prescribed by law IMPOVERISHMENT of donors patrimony and ENRICHMENT on part of done Becomes effective upon the death of donor Donors death ahead of the donee is a SU SPENSIVE CONDITION for the existence of the donation Characteristics: o Transfer or retains ownership and control of the property while alive o Transfer is revoc able at will before his death o Transfer will be VOID if the transferor should s urvive the transferee INTER VIVOS v. MORTIS CAUSA Inter vivos Mortis causa Must be in the form of a will, with all the formalities for the validity of wills Otherwise, its void and cannot transfer ownership. Eff ective after the death of the donor Acceptance must be made after the death of t he donor, the donation being effective only after the death of donor. Acceptance during the donors lifetime is premature and ineffective because there

III. Kinds A. As to its taking effect 1. INTER VIVOS Article 729, Civil Code. When the donor intends that the donation shall take eff ect during the lifetime of the donor, though the property shall not be delivered till after the donors death, this shall be a donation inter vivos. The fruits of the property from the time of the acceptance of the donation, shall pertain t o the donee, unless the donor provides otherwise. Article 730, Civil Code. The f

ixing of an event or the imposition of a suspensive condition, which may take pl ace beyond the natural expectation of life of the donor, does not destroy the na ture of the act as a donation inter vivos, unless a contrary intention appears. Article 731, Civil Code. When a person donates something, subject to the resolut ory condition of the donors survival, there is a donation inter vivos. As to fo rmalities Executed and accepted with formalities prescribed by CC 748 & 749 As to effectivity Effective during the lifetime of the donor As to acceptance Acceptance must be made during the lifetime of the donor

Take effect independently of the donors death

CIVIL LAW REVIEWER can be no contract regarding future inheritance As to transfe r of ownership for right of disposition Ownership is immediately transferred. De livery of possession is allowed after death Irrevocable may be revoked only for the reasons provided in CC 760, 764, 765 When it is excessive or inofficious, be ing preferred, it is reduced only after the donations mortis causa had been redu ced or exhausted Chapter XI. DONATION

ORDINARY v. PROPTER NUPTIAS Ordinary Propter nuptias Not required May be made by minors (FC 78) May include future property (same rule as wills) If present property is donated and property regime is ACP, limited to 1/5 FC 86 Ownership is transferred after death Express acceptance As to minors As to future property Limit as to donation of pr esent property Grounds for revocation Necessary Cant be made by minors Cannot include future property No limit to donat ion of present property provided legitimes are not impaired Law on donations As to revocation Revocable upon the exclusive will of the donor 223 PROPERTY As to reduction or suppression When it is excessive or inofficious, it is reduced first, or even suppressed ______________ B. As to cause or consideration NATURE of the act, whether its one of disposition or of execution, is CONTROLLING to determine whether the donation is mortis causa or inter vivos. What is impor tant is the TIME of TRANSFER of ownership even if transfer of property donated m ay be subject to a condition or a term. Whether the donation is inter vivos or m ortis causa depends on whether the donor intended to transfer ownership over the properties upon the execution of the deed. (Gestopa v. CA; Austria-Magat v. CA) 3. PROPTER NUPTIAS Article 82, Family Code. W hen the donor intends that the donation shall take ef fect during the lifetime of the donor, though the property shall not be delivere d till after the donors death, this shall be a donation inter vivos. The fruits of the property from the time of the acceptance of the donation, shall pertain to the donee, unless the donor provides otherwise. Article 87, Family Code. Ever y donation or grant of gratuitous advantage, direct or indirect, between the spo uses during the marriage shall be void, except moderate gifts which the spouses may give each other on the occasion of any family rejoicing. The prohibition sha ll also apply to persons living together as husband and wife without a valid mar riage. 1. SIMPLE made out of PURE LIBERALITY or because of the MERITS of the done 2. RE MUNERATORY made for SERVICES already rendered to the donor 3. ONEROUS imposes a BURDEN inferior in value to property donated a. Improper burden EQUAL in value t o property donated b. Sub-modo or modal imposes a prestation upon donee as to ho

w property donated will be applied c. Mixed donations ex: sale for price lower t han value of property A simple or pure donation is one whose cause is pure liberality, while an onerou s donation is one subject to burdens, charges, or future services equal to or mo re in value than the thing donated. (Lagazo v. CA) C. As to effectivity or extinguishment 1. PURE donation is without conditions or periods 2. CONDITIONAL donation is subject to suspensive or resolutory conditio ns 3. WITH A TERM

IV. Who May Give or Receive Donations Requisites o Must be made BEFORE the celebration of marriage o Made in CONSIDERA TION of the marriage o Made in FAVOR of ONE or BOTH of the future spouses Article 735, Civil Code. All persons who may contract and dispose of their prope rty may make a donation. Article 737, Civil Code. The donors capacity shall be determined as of the time of the making of the donation.

CIVIL LAW REVIEWER Article 738, Civil Code. All those who are not specially disq ualified by law therefor may accept donations. Article 741, Civil Code. Minors a nd others who cannot enter into a contract may become donees but acceptance shal l be done through their parents or legal representatives. Article 737, Civil Cod e. Donations made to conceived and unborn children may be accepted by those pers ons who would legally represent them if they were already born. Chapter XI. DONATION sister, or spouse, shall be valid; Any attesting witness to the execution of a will, the spouse, parents, or children, or any one claiming under such witness, spouse, parents, or children; Any physician, surgeon, nurse, health officer or druggist who took care of the testator during his last illnes s; Individuals, associations and corporations not permitted by law to inherit. 4. 5. 6.

V. Who May Donations Not Give or Receive Article 736, Civil Code. All persons who may contract and dispose of their prope rty may make a donation. Article 739, Civil Code. The following donations shall be void: 1. Those made between persons who were guilty of adultery or concubinag e at the time of the donation; 2. Those made between persons found guilty of the same criminal offense, in consideration thereof; 3. Those made to a public offi cer or his wife, descedants and ascendants, by reason of his office.In the case referred to in No. 1, the action for declaration of nullity may be brought by th e spouse of the donor or donee; and the guilt of the donor and donee may be prov ed by preponderance of evidence in the same action. Article 1027, Civil Code. Th e following are incapable of succeeding: 1. The priest who heard the confession of the testator during his last illness, or the minister of the gospel who exten ded spiritual aid to him during the same period; 2. The relatives of such priest or minister of the gospel within the fourth degree, the church, order, chapter, community, organization, or institution to which such priest or minister may be long; 3. A guardian with respect to testamentary dispositions given by a ward in his favor before the final accounts of the guardianship have been approved, eve n if the testator should die after the approval thereof; nevertheless, any provi sion made by the ward in favor of the guardian when the latter is his ascendant, descendant, brother, Article 740, Civil Code. Incapacity to succeed by will shall be applicable to do nations inter vivos. Article 743, Civil Code. Donations made to incapacitated pe rsons shall be void, though simulated under the guise of another contract or thr ough a person who is interposed. Article 744, Civil Code. Donations of the same thing to two or more different donees shall be governed by the provisions concer ning the sale of the same thing to two or more different persons.

A. By reason of public policy (ART. 739) 1. Those made between persons guilty of adultery or concubinage at the time of donation 2. Those made between persons g uilty of the same criminal offense if the donation is made in consideration ther eof 3. Those made to a public officer, his spouse, descendants, and/or ascendant s by reason of the office B. By reason of donees unworthiness (ART. 1032 and 1027 [except (4)]) C. By reason of prejudice to creditors or heirs (voidable) PROPERTY Capacity to donate is required for donations inter vivos and NOT mortis causa o Donors capacity determined as of the TIME of the DONATION. Subsequent incapacity is immaterial Capacity to accept donations ALL persons NOT disqualified by law m ay be donees Article 1032, Civil Code. The following are incapable of succeeding by reason of unworthiness: 1. Parents who have abandoned their children or induced their dau ghters to lead a corrupt or immoral life, or attempted against their virtue; 2. Any person who has been convicted of an attempt against the life of the testator , his or her spouse, descendants, or ascendants; 3. Any person who has accused t he testator of a crime for which the law prescribes imprisonment for six years o r more, if the accusation has been found groundless; 4. Any heir of full age who , having knowledge of the violent death of the testator, should fail to report i t to an officer of the law within a month, unless the authorities have already t aken action; this prohibition shall not apply to cases wherein, according to law , there is no obligation to make an accusation; 224

CIVIL LAW REVIEWER Chapter XI. DONATION VI. Acceptance Donation is perfected upon the DONORS LEARNING of the acceptance Acceptance may b e made during the LIFETIME of BOTH donor and donee B. REAL PROPERTY Article 749, Civil Code. In order that the donation of an immovable may be valid , it must be made in a public document, specifying therein the property donated and the value of the charges which the donee must satisfy. The acceptance may be made in the same deed of donation or in a separate public document, but it shal l not take effect unless it is done during the lifetime of the donor. If the acc eptance is made in a separate instrument, the donor shall be notified thereof in an authentic form, and this step shall be noted in both instruments. A. WHO MAY ACCEPT Article 745, Civil Code. The donee must accept the donation personally, or throu gh an authorized person with a special power for the purpose, or with a general and sufficient power; otherwise, the donation shall be void. Article 747, Civil Code. Persons who accept donations in representation of others who may not do so by themselves, shall be obliged to make the notification and notation of which Article 749 speaks. 225 PROPERTY

Acceptance or consent must be PERSONAL or through a person AUTHORIZED generally or specifically

B. TIME of ACCEPTANCE Article 746, Civil Code. Acceptance must be made during the lifetime of the dono r and of the donee. The donation is perfected only upon the moment the donor kno ws of the donees acceptance. If the acceptance is made in a separate instrument, the donor shall be notified thereof in an authentic form, and this step shall be noted in both instruments. (Lagazo v CA) Must be in PUBLIC INSTRUMENT specifying donated property and burdens assumed by the donee regardless of value Acceptance must be EITHER: o In the SAME INSTRUMEN T OR o In ANOTHER PUBLIC INSTRUMENT notified to the donor in authentic form and noted in both deeds VII. Form A. PERSONAL PROPERTY Article 748 , The donation of a movable may be made orally or in writing. An ora l donation requires the simultaneous delivery of the thing or of the document re presenting the right donated. If the value of the personal property donated exce eds five thousand pesos, the donation and the acceptance shall be made in writin g, otherwise, the donation shall be void. Title to immovable property does not pass from donor to donee by virtue of a dee d of donation until and unless it has been accepted in a public instrument and t he donor duly notified thereof. Where the deed fails to show the acceptance, or

where the formal notice of the acceptance made in a separate instrument is not g iven to the donor or else not noted in the deed of donation and in the separate acceptance, the donation is null and void. (Sumipat v Banga)

Exceptions: o Donations propter nuptias need NO express acceptance o Onerous don ations form governed by the rules of contracts VIII. What May Be Donated A. ALL PRESENT PROPERTY or PART THEREOF of THE DONOR 1. Provided he RESERVES, in full ownership or usufruct, sufficient means for support of himself and all rel atives entitled to be supported by donor at the time of acceptance Article 750, Civil Code. The donations may comprehend all the present property o f the donor, or part thereof, provided he reserves, in full ownership or in usuf ruct, sufficient means for the support of himself,

WITH simultaneous delivery of donated property may be oral UNLESS it exceeds P5k in which case its VOID if NOT in writing WITHOUT simultaneous delivery must be i n WRITING including the ACCEPTANCE regardless of value

CIVIL LAW REVIEWER and of all relatives who, at the time of the acceptance of th e donation, are by law entitled to be supported by the donor. Without such reser vation, the donation shall be reduced in petition of any person affected. Chapter XI. DONATION Donations of future property shall be governed by the provi sions on testamentary succession and the formalities of wills. CC Article 130. T he future spouses may give each other in their marriage settlements as much as o nefifth of their present property, and with respect to their future property, on ly in the event of death, to the extent laid down by the provisions of this Code referring to testamentary succession. 2. Provided that NO PERSON may give or receive by way of donation, more than he may give or receive by will (ART. 752); also, reserves property sufficient to pa y donors debts contracted before donation, otherwise, donation is in FRAUD of cre ditors (ARTS. 759, 1387) Article 752, Civil Code. The provisions of Article 750 notwithstanding, no perso n may give or receive, by way of donation, more than he may give or receive by w ill. The donation shall be inofficious in all that it may exceed this limitation . Article 759, Civil Code. There being no stipulation regarding the payment of d ebts, the donee shall be responsible therefor only when the donation has been ma de in fraud of creditors . The donation is always presumed to be in fraud of cre ditors, when at the time thereof the donor did not reserve sufficient property t o pay his debts prior to the donation. Article 1387, Civil Code. All contracts b y virtue of which the debtor alienates property by gratuitous title are presumed to have been entered into in fraud of creditors, when the donor did not reserve sufficient property to pay all debts contracted before the donation. Alienation s by onerous title are also presumed fraudulent when made by persons against who m some judgment has been issued. The decision or attachment need not refer to th e property alienated, and need not have been obtained by the party seeking the r escission. In addition to these presumptions, the design to defraud creditors ma y be proved in any other manner recognized by the law of evidence. b. Donation propter nuptias by an ascendant consisting of jewelry, furniture or clothing not to exceed 1/10 of disposable portion PROPERTY Article 1070, Civil Code. Wedding gifts by parents and ascendants consisting of jewelry, clothing, and outfit, shall not be reduced as inofficious except insofa r as they may exceed one-tenth of the sum 226 which is disposable by will. B. WHAT MAY NOT BE FUTURE PROPERTY Article 751, Civil Code. comprehend future property. DONATED Donations cannot By future property is understood anything which the donor cannot dispose of at t he time of the donation.

Includes ALL property that belongs to others at the time the donation is made al though it may or may not later belong to the donor

IX. Effect A. IN GENERAL 1. Donee may demand actual delivery of thing donated 2. Donee is S UBROGATED to rights of donor in the property donated Article 754, Civil Code. The donee is subrogated to all the rights and actions w hich in case of eviction would pertain to the donor. The latter, on the other ha nd, is not obliged to warrant the things donated, save when the donation is oner ous, in which case the donor shall be liable for eviction to the concurrence of the burden. The donor shall also be liable for eviction or hidden defects in cas e of bad faith on his part. 3. If donation EXCEEDS the disposable or free portion of his estate, donation is inofficious 4. EXCEPTIONS a. Donations provided for in marriage settlements bet ween future spouses not more than 1/5 of present property FC Article 84. If the future spouses agree upon a regime other than the absolute community of property, they cannot donate to each other in their marriage settl ements more than one-fifth of their present property. Any excess shall be consid ered void. 3. Donor NOT obliged to warrant things donated EXCEPT in onerous donations in wh ich case donor is liable for eviction up to extent of burden (ART. 754)

CIVIL LAW REVIEWER Chapter XI. DONATION third person in violation of what is provided in the preced ing paragraph shall be void, but shall not nullify the donation. 4. Donor is liable for EVICTION or HIDDEN DEFECTS in case of BF on his part (ART . 754) 5. In donation propter nuptias, donor must RELEASE property donated from mortgages and other encumbrances UNLESS the contrary has been stipulated Article 131, Civil Code. The donor by reason of marriage shall release the prope rty donated from mortgages and all other encumbrances upon the same, with the ex ception of easements, unless in the marriage settlements or in the contracts the contrary has been stipulated. 4. Payment of donors debt Article 758, Civil Code. When the donation imposes upon the donee the obligation to pay the debts of the donor, if the clause does not contain any declaration t o the contrary, the former is understood to be liable to pay only the debts whic h appear to have been previously contracted. In no case shall the donee be respo nsible for the debts exceeding the value of the property donated, unless a contr ary intention clearly appears.

Article 753, Civil Code. When a donation is made to several persons jointly, it is understood to be in equal shares, and there shall be no right of accretion am ong them, unless the donor has otherwise provided. The preceding paragraph shall not be applicable to donations made to the husband and wife jointly, between wh om there shall be a right of accretion, if the contrary has not been provided by the donor. 5. Illegal or impossible conditions Article 272, Civil Code. Children who are legitimated by subsequent marriage sha ll enjoy the same rights as legitimate children. Article 1183, Civil Code. Impos sible conditions, those contrary to good customs or public policy and those proh ibited by law shall annul the obligation which depends upon them. If the obligat ion is divisible, that part thereof which is not affected by the impossible or u nlawful condition shall be valid. The condition not to do an impossible thing sh all be considered as not having been agreed upon. B. SPECIAL PROVISIONS 1. Reservation by donor of power to dispose (in whole or i n part) or to encumber property donated Article 755, Civil Code. The right to dispose of some of the things donated, or of some amount which shall be a charge thereon, may be reserved by the donor; bu t if he should die without having made use of this right, the property or amount reserved shall belong to the donee. X. Revocation and Reduction A. DISTINCTIONS Revocation Total, whether the legitime is impaired or not Benefits the donor Red uction Made insofar as the legitime is prejudiced Benefits the donors heirs (exce pt when made on the ground of the appearance of a child) 2. Donation of naked ownership to one donee and usufruct to another Article 756, Civil Code. The ownership of property may also be donated to one pe rson and the usufruct to another or others, provided all the donees are living a t the time of the donation. 3. Conventional reversion in favor of donor or other person Article 757, Civil Code. Reversion may be validly established in favor of only t he donor for any case and circumstances, but not in favor of other persons unles

s they are all living at the time of the donation. Any reversion stipulated by t he donor in favor of a B. CAUSES of REDUCTION 1. Inofficiousness REVOCATION OR Article 752, Civil Code. The provisions of Article 750 notwithstanding, no perso n may give or receive, by way of donation, more than he may give or receive by w ill. PROPERTY 6. Donations to several donees jointly NO right of accretion EXCEPT: a. Donor pr ovides otherwise b. Donation to husband and wife jointly with right of accretion UNLESS donor provides otherwise

If expressly stipulated donee to pay only debts contracted BEFORE the donation U NLESS specified otherwise. But in no case shall donee be responsible for debts e xceeding value of property donated unless clearly intended If theres NO stipulati on donee answerable only for donors debt ONLY in case donation is in fraud of cre ditors 227

CIVIL LAW REVIEWER The donation shall be inofficious in all that it may exceed t his limitation. Article 771, Civil Code. Donations which in accordance with the provisions of Article 752, are inofficious, bearing in mind the estimated net va lue of the donors property at the time of his death, shall be reduced with rega rd to the excess; but this reduction shall not prevent the donations from taking effect during the life of the donor, nor shall it bar the donee from appropriat ing the fruits. For the reduction of donations the provisions of this Chapter an d of Articles 911 and 912 of this Code shall govern. Article 773, Civil Code. If , there being two or more donations, the disposable portion is not sufficient to cover all of them, those of the more recent date shall be suppressed or reduced with regard to the excess. Chapter XI. DONATION o o o birth, adoption or reappearance of the child Donee must return the property or i ts value at the time of the donation Fruits to be returned from the filing of th e action Mortgages by the donee are valid but may be discharged subject to reimb ursement from the donee

Extent of revocation only to the extent of the presumptive legitime of the child Prescription 4yrs C. REVOCATION ONLY 1. Ingratitude Article 765, Civil Code. The donation may also be revoked at the instance of the donor, by reason of ingratitude in the following cases: 1. If the donee should commit some offense against the person, the honor or the property of the donor, or of his wife or children under his parental authority; 2. If the donee imputes to the donor any criminal offense, or any act involving moral turpitude, even t hough he should prove it, unless the crime or the act has been committed against the donee himself, his wife or children under his authority; 2. If he unduly re fuses him support when the donee is legally or morally bound to give support to the donor. 228 PROPERTY

Who may ask for reduction Article 772, Civil Code.Only those who at the time of the donors death have a r ight to the legitime and their heirs and successors in interest may ask for the reduction or inofficious donations. Those referred to in the preceding paragraph cannot renounce their right during the lifetime of the donor, either by express declaration, or by consenting to the donation. The donees, devisees and legatee s, who are not entitled to the legitime and the creditors of the deceased can ne ither ask for the reduction nor avail themselves thereof.

Rule applied if disposable portion not sufficient to cover 2 or more donations ( ART. 773)

2. Subsequent birth, reappearance of child or adoption of minor by donor Article 760, Civil Code. Every donation inter vivos, made by a person having no children or descendants, legitimate or legitimated by subsequent marriage, or il legitimate, may be revoked or reduced as provided in the next article, by the ha ppening of any of these events: 1. If the donor, after the donation, should have legitimate or legitimated or illegitimate children, even though they be posthum ous; 2. If the child of the donor, whom the latter believed to be dead when he m ade the donation, should turn out to be living; 3. If the donor subsequently ado pt a minor child. Applies to all donations EXCEPT: o Mortis causa o Propter nuptias o Onerous Foun ded on moral duty one who received a donation must be grateful to his benefactor Conviction NOT necessary Time to file action for revocation within 1yr from kno wledge of the offense Article 769, Civil Code. The action granted to the donor by reason of ingratitud e cannot be renounced in advance. This action prescribes within one year, to be counted from the time the donor had knowledge of the fact and it was possible fo r him to bring the action.

Who may file donor must bring action himself; NOT transmissible to his heirs

Effects: o Donation is VALID if not exceeding the free part computed as of the Article 770, Civil Code. This action shall not be transmitted to the heirs of th e donor, if the latter did not institute the same, although he could have done s o, and even if he should die before the expiration of one year.

CIVIL LAW REVIEWER Neither can this action be brought against the heir of the do nee, unless upon the latters death the complaint has been filed. Chapter XI. DONATION When the property cannot be returned, it shall be estimated at what it was worth at the time of the donation. Article 764, par. 2, Civil Co de. In this case, the property donated shall be returned to the donor, the alien ations made by the donee and the mortgages imposed thereon by him being void, wi th the limitations established, with regard to third persons, by the Mortgage La w and the Land Registration Laws. Article 767, Civil Code. In the case referred to in the first paragraph of the preceding article, the donor shall have a right to demand from the donee the value of property alienated which he cannot recove r from third persons, or the sum for which the same has been mortgaged.

Effect of revocation on alienations and encumbrances Article 766, Civil Code. Although the donation is revoked on account of ingratit ude, nevertheless, the alienations and mortgages effected before the notation of the complaint for revocation in the Registry of Property shall subsist. Later o nes shall be void. Article 767, , Civil Code.In the case referred to in the firs t paragraph of the preceding article, the donor shall have a right to demand fro m the donee the value of property alienated which he cannot recover from third p ersons, or the sum for which the same has been mortgaged. The value of said prop erty shall be fixed as of the time of the donation. 229 PROPERTY

Effect as to fruits 2. Violation of condition D. Effect of revocation or reduction Article 762, Civil Code. Upon the revocation or reduction of the donation by the birth, appearance or adoption of a child, the property affected shall be return ed or its value if the donee has sold the same. If the property is mortgaged, th e donor may redeem the mortgage, by paying the amount guaranteed, with a right t o recover the same from the donee. Article 768, Civil Code. When the donation is revoked for any of the causes stat ed in Article 760, or by reason of ingratitude, or when it is reduced because it is inofficious, the donee shall not return the fruits except from the filing of the complaint. If the revocation is based upon noncompliance with any of the co nditions imposed in the donation, the donee shall return not only the property b ut also the fruits thereof which he may have received after having failed to ful fill the condition. SUMMARY Limitation: 1) He reserves in full ownership or in usufruct, sufficient means fo r his support and all relatives who are at the time of the acceptance of the don ation are, by law, entitled to be supported Effect of non-reservation: reduction of the donation 2) He reserves sufficient property at the time of the donation for the full settlement of his debts What may be donated (Article 750) All present property of the donor or part thereof

Effect of non-reservation: considered to be a donation in fraud of creditors, an d donee may be liable for damages

CIVIL LAW REVIEWER 1) What may not be donated Future property; those which the d onor cannot dispose of at the time of the donation (Article 751) 2) More than wh at he may give or receive by will (Article 752) If exceeds: inofficious No accre tion one donee does not get the share of the other donees who did not accept (Ar ticle 753) Chapter XI. DONATION Donations made to several persons jointly Donor Who are allowed: All persons who may contract (of legal age) and dispose of thei r property (Article 735) Donors capacity is determined at the time of the making of donation (Article 737) Who are allowed to accept donations: Those who are not specifically disqualified by law (Article 738) Those who are allowed, with qualifications: 1) Minors and others who are incapacitated (see Article 38), provided that their acceptance is done through their parents or legal representatives (Article 741) 2) Conceived and unborn children, provided that the donation is accepted by those who would l egally represent them if they were already born Who may accept (Article 745): 1) Donee personally 2) Authorized person with a special power for the purpose or w ith a general sufficient power He shall be subrogated to all the rights and acti ons that would pertain to the donor in case of eviction (Article 754) No obligat ion to warrant (Article 754) If the donation so states, the donee may be obliged to pay the debts previously contracted by the donor and in no case shall he be responsible for the debts exceeding the value of the thing donated (Article 758) Right to dispose of some of the things donated, or of dome amount which shall b e a charge thereon The property donated may be restored or returned to 1) Donor or his estate; or 2) Another person Donee Exception: those given to husband and wife, except when the donor otherwise prov ides Who are not allowed: 1) Guardians and trustees with respect to the property entrusted to them (Article 736) 2) Made between person who are guilty of adulte ry and concubinage (Article 739) 3) Made between persons found guilty of the sam e criminal offense, in consideration thereof (Article 739) Who are not allowed: 1) Made between person who are guilty of adultery and concubinage (Article 739) 2) Made between persons found guilty of the same criminal offense, in considerat ion thereof (Article 739) 3) Made to a public officer or his wife, descendant an d ascendants, by reason of his office (Article 739) 4) Those who cannot succeed by will (Article 740) 5) Those made to incapacitated persons, although simulated under the guise of another contract (Article 743) When to accept: during the li fetime of the donor or donee (Article 746) 230 PROPERTY Acceptance of the donation What the donee acquires with the thing Obligation of the donor Exception: when the donation is onerous Obligation of the donee Exception: when contrary intention appears

What may be reserved by the donor If the donor dies without exercising this right, the portion reserved shall belo ng to the donee Limitation to (2): the third person whoul be living at the time of the donation Reversion

CIVIL LAW REVIEWER Chapter XI. DONATION REVOCATION/REDUCTION Basis Birth, appearance, adoption Time of Action Within 4 years from birth, legi timation and adoption Transmissibility Transmitted to children and descendants u pon the death of donor May be transmitted to donors heirs and may be exercised ag ainst donees heirs Effect Property returned/ value (if sold)/ redeem mortgage wit h right to recover Property returned, alienations and mortgages void subject to rights of third persons in good faith Property returned, but alienations and mor tgages effected before the notation of the complaint for revocation in the regis try of property subsist Reduced to the extent necessary to provide support Donat ion takes effect on the lifetime of donor. Reduction only upon his death with re gard to the excess Returned for the benefit of the creditor who brought the acti on Liability (Fruits) Fruits returned from the filing of the complaint Non-compliance with condition Within 4 years from non-compliance Fruits received after having failed to fulfill condition returned Ingratitude Failure to reserve sufficient means for support Inofficiousness for being in exc ess of what the donor can give by will At any time, by the donor or relatives entitled o support Within 5 years from th e death of the donor Rescission within 4 years from the perfection of donation/ knowledge of the donation Not transmissible Donee entitled Transmitted to donors heirs Donee entitled Fraud against creditors Transmitted to creditors heirs or successors-in-interest Fruits returned/ if impossible, indemnify creditor for damages PROPERTY Within 1 year after knowledge of the fact Generally not transmitted to heirs of donor/ donee Fruits received from the filing of the complaint returned 231

CIVIL LAW REVIEWER Chapter XII. LEASE Chapter XII. Lease I. II. GENERAL CHARACTERISTICS KINDS A. LEASE OF THINGS B. LEASE OF WORK C. LEAS E OF SERVICES III. LEASE OF THINGS o Lease of consumables which are ACCESSORIES in the lease of an industrial managem ent B. SPECIAL CHARACTERISTICS of LEASE of THINGS Essential purpose is to TRANSMIT t he USE or ENJOYMENT of a thing Consensual Onerous Price is FIXED in relation to the period of use/enjoyment Temporary I. General Characteristics a. Temporary duration b. Onerous c. Price is fixed according to contract duratio n A. Lease of things Involves an obligation on the part of the lessor to deliver t he thing which is the object thereof and the correlative right of the lessee to peaceful and adequate enjoyment thereof for a price certain B. Lease of work or contract of labor (Arts. 1700-1712) C. Lease of services 1. Household service 2. Contract for a piece of work (ARTS. 1713-1731) 3. Lease of services of common c arriers (ARTS. 1732-1763) Lease Only the use or enjoyment of the thing is transferred and only for a deter minate period Lessor need not be the owner of the thing leased Sale Permanent transmission of ownership of the thing sold, unless subject to a resolutory condition Seller must be the owner or at least authorized by the owne r to transfer ownership of the thing at the time it is derived Usufruct Always a real right III. Lease of Things A. CONCEPT Article 1643, Civil Code. In the lease of things, one of the parties binds himse lf to give to another the enjoyment or use of a thing for a price certain, and f or a period which may be definite or indefinite. However, no lease for more than ninety-nine years shall be valid. Lease A real right only by exception (When registered and for more than 1 year) To constitute usufruct, ownership is not required in order to lease an object Le ssor places and maintains the lessee in enjoymentof the thing. Lease may be limi ted to particular uses by the contract Contract of lease must be for a definite period, absent stipulation of such, court must fix such period. Lease Onerous No t essentially personal in character, therefore, the right may be transmitted to the heirs To constitute a usufruct, one must be the owner of the thing. Owner allows the u sufructuary to use and enjoy the property Usufruct includes all possible uses an d manner of enjoyment of the property Usufruct may be for an indefinite period o f time

Subject matter must be WITHIN THE COMMERCE OF MAN General rule: CONSUMMABLE thin gs CANNOT be the subject matter of lease; EXCEPTIONS o Lease of consumable prope rty NOT for purpose of consuming it but for purpose of DISPLAY or ADVERTISING it (lease ad pompam et ostentationem) Consensual contract Commodatum Gratuitous Purely personal in character and consequently, the death o f either the bailor or bailee extinguishes the contract Real contract perfected by the delivery of the object therefor PROPERTY II. Kinds C. LEASE DISTINGUISHED FROM SALE, USUFRUCT, COMMODATUM 232

CIVIL LAW REVIEWER Chapter XII. LEASE D. PERIOD of LEASE nd MAXIMUM period is 99yrs When period is INDEFINITE: o RURAL la

F. SUBLEASE Article 1650 When in the contract of lease of things there is no exp ress prohibition, the lessee may sublet the thing leased, in whole or in part, w ithout prejudice to his responsibility for the performance of the contract towar d the lessor. There are 2 leases and 2 distinct juridical relations: o Between t he LESSOR and LESSEE o Between the SUBLESSOR (lessee) and the SUBLESSEE Sublesse e generally does not have any direct action against the lessor to require compli ance with his or the lessees obligations or vice versa Sublessee is NOT a party t o the contract between the lessor and lessee Obligation of sublessee to lessor Article 1682, Civil Code. The lease of a piece of rural land, when its duration has not been fixed, is understood to have been for all the time necessary for th e gathering of the fruits which the whole estate leased may yield in one year, o r which it may yield once, although two or more years have to elapse for the pur pose. o URBAN land 233 PROPERTY Article 1687, Civil Code. If the period for the lease has not been fixed, it is understood to be from year to year, if the rent agreed upon is annual; from mont h to month, if it is monthly; from week to week, if the rent is weekly; and from day to day, if the rent is to be paid daily. However, even though a monthly ren t is paid, and no period for the lease has been set, the courts may fix a longer term for the lease after the lessee has occupied the premises for over one year . If the rent is weekly, the courts may likewise determine a longer period after the lessee has been in possession for over six months. In case of daily rent, t he courts may also fix a longer period after the lessee has stayed in the place for over one month.

Article 1651, Civil Code. Without prejudice to his obligation toward the subless or, the sublessee is bound to the lessor for all acts which refer to the use and preservation of the thing leased in the manner stipulated between the lessor an d the lessee. E. ASSIGNMENT of LEASE Article 1649, Civil Code. The lessee cannot assign the lease without the consent of the lessor, unless there is a stipulation to the contrary.

For RENTS

General Rule: lessee CANNOT assign the lease WITHOUT the CONSENT of the lessor U NLESS theres a stipulation to the contrary ASSIGNMENT v. SUBLEASE Sublease

Article 1652, Civil Code. The sublessee is subsidiarily liable to the lessor for any rent due from the lessee. However, the sublessee shall not be responsible b eyond the amount of rent due from him, in accordance with the terms of the suble ase, at the time of the extrajudicial demand by the lessor. Payments of rent in advance by the sublessee shall be deemed not to have been made, so far as the le ssors claim is concerned, unless said payments were effected in virtue of the c ustom of the place. Assignment of Lease Transfer to a third person of the rights and obligations ari sing from the lease contract. It is in fact a sale of the lessees rights, and whe n the lessor gives his consent to it, the original lessee is released from his o bligations under the contract. The Express of the lessor is either express or im plied. There is a succession by particular title to one contract of lease. G. RIGHTS and OBLIGATIONS of LESSOR and LESSEE 1. Obligations of LESSOR Article 1654, Civil Code. The lessor is obliged: (1) To deliver the thing which is the object of the contract in such a condition as to render it fit for the us e intended; (2) To make on the same during the lease all the necessary repairs i n order to keep it suitable for the use to which it has been devoted, unless the re is a stipulation to the contrary; (3) To maintain the lessee in the peaceful and adequate enjoyment of the lease for the entire duration of the contract. Merely another contract of lease, where the original lessee becomes in turn a le ssor. Even when the lessor consents to the sublease, the original lease contract still subsists and is binding on the lessee. There is a juxtaposition of two le ases.

CIVIL LAW REVIEWER Article 1661, Civil Code. The lessor cannot alter the form of the thing leased in such a way as to impair the use to which the thing is devot ed under the terms of the lease. Chapter XII. LEASE Article 1667, Civil Code. The lessee is responsible for the d eterioration or loss of the thing leased, unless he proves that it took place wi thout his fault. This burden of proof on the lessee does not apply when the dest ruction is due to earthquake, flood, storm or other natural calamity. 2. Obligations of LESSEE Article 1657, Civil Code. The lessee is obliged: (1) To pay the price of the lea se according to the terms stipulated; (2) To use the thing leased as a diligent father of a family, devoting it to the use stipulated; and in the absence of sti pulation, to that which may be inferred from the nature of the thing leased, acc ording to the custom of the place; (3) To pay expenses for the deed of lease. Ar ticle 1662, Civil Code. If during the lease it should become necessary to make s ome urgent repairs upon the thing leased, which cannot be deferred until the ter mination of the lease, the lessee is obliged to tolerate the work, although it m ay be very annoying to him, and although during the same, he may be deprived of a part of the premises. If the repairs last more than forty days the rent shall be reduced in proportion to the time - including the first forty days - and the part of the property of which the lessee has been deprived. When the work is of such a nature that the portion which the lessee and his family need for their dw elling becomes uninhabitable, he may rescind the contract if the main purpose of the lease is to provide a dwelling place for the lessee. Article 1663, Civil Co de. The lessee is obliged to bring to the knowledge of the proprietor, within th e shortest possible time, every usurpation or untoward act which any third perso n may have committed or may be openly preparing to carry out upon the thing leas ed. He is also obliged to advise the owner, with the same urgency, of the need o f all repairs included in No. 2 of Article 1654. In both cases the lessee shall be liable for the damages which, through his negligence, may be suffered by the proprietor. If the lessor fails to make urgent repairs, the lessee, in order to avoid an imminent danger, may order the repairs at the lessors cost. Article 16 65, Civil Code. The lessee shall return the thing leased, upon the termination o f the lease, as he received it, save what has been lost or impaired by the lapse of time, or by ordinary wear and tear, or from an inevitable cause. Article 166 8, Civil Code. The lessee is liable for any deterioration caused by members of h is household and by guests and visitors. SUMMARY of OBLIGATIONS Lessors Obigations Deliver the thing which is the object of the contract in a con dition fit for the use intended Make on the thing all the necessary repairs in o rder to keep it suitable for the use to which it has been devoted, unless there is a stipulation to the contrary Maintain the lessee in the peaceful and adequat e enjoyment of the lease for the entire duration of the contract. Lessees Obligat ions Pay the price of the lease according to the terms stipulated Use the thing leased as a diligent father of a family, devoting it to the use stipulated, and in the absence of stipulation according to the nature of the thing leased and cu stom of the place. Pay for the expenses for the deed of lease. 234 PROPERTY 3. Right of LESSEE to suspend payment of rentals Article 1658, Civil Code. The lessee may suspend the payment of the rent in case the lessor fails to make the necessary repairs or to maintain the lessee in pea ceful and adequate enjoyment of the property leased. 4. Right to ask for RESCISSION Article 1659, Civil Code. If the lessor or the lessee should not comply with the

obligations set forth in Articles 1654 and 1657, the aggrieved party may ask fo r the rescission of the contract and indemnification for damages, or only the la tter, allowing the contract to remain in force. Article 1660, Civil Code. If a d welling place or any other building intended for human habitation is in such a c ondition that its use brings imminent and serious danger to life or health, the lessee may terminate the lease at once by notifying the lessor, even if at the t ime the contract was perfected the former knew of the dangerous condition or wai ved the right to rescind the lease on account of this condition. 5. LESSOR not obliged to answer for mere rd act of trespass by a 3 person Article 1664, Civil Code. The lessor is not obliged to answer for a mere act of trespass which a third person may cause on the use of the thing leased; but the lessee shall have a direct action against the intruder.

CIVIL LAW REVIEWER Chapter XII. LEASE daily. However, even though a monthly rent is paid, and no pe riod for the lease has been set, the courts may fix a longer term for the lease after the lessee has occupied the premises for over one year. If the rent is wee kly, the courts may likewise determine a longer period after the lessee has been in possession for over six months. In case of daily rent, the courts may also f ix a longer period after the lessee has stayed in the place for over one month. Article 1675, Civil Code. Except in cases stated in Article 1673, the lessee sha ll have a right to make use of the periods established in Articles 1682 and 1687 . H. GROUNDS for EJECTMENT of LESSEE by LESSOR Article 1673 The lessor may judicially eject the lessee for any of the following causes: (1) When the period agreed upon, or that which is fixed for the duratio n of leases under Articles 1682 and 1687, has expired; (2) Lack of payment of th e price stipulated; (3) Violation of any of the conditions agreed upon in the co ntract; (4) When the lessee devotes the thing leased to any use or service not s tipulated which causes the deterioration thereof; or if he does not observe the requirement in No. 2 of Article 1657, as regards the use thereof. The ejectment of tenants of agricultural lands is governed by special laws K. RIGHT of PURCHASER of LEASED LAND Article 1676, Civil Code. The purchaser of a piece of land which is under a leas e that is not recorded in the Registry of Property may terminate the lease, save when there is a stipulation to the contrary in the contract of sale, or when th e purchaser knows of the existence of the lease. If the buyer makes use of this right, the lessee may demand that he be allowed to gather the fruits of the harv est which corresponds to the current agricultural year and that the vendor indem nify him for damages suffered. If the sale is fictitious, for the purpose of ext inguishing the lease, the supposed vendee cannot make use of the right granted i n the first paragraph of this article. The sale is presumed to be fictitious if at the time the supposed vendee demands the termination of the lease, the sale i s not recorded in the Registry of Property. Article 1677, Civil Code. The purcha ser in a sale with the right of redemption cannot make use of the power to eject the lessee until the end of the period for the redemption. 235 PROPERTY I. RIGHT to ASK for PRELIMINARY MANDATORY INJUNCTION in UNLAWFUL DETAINER CASES Article 1674, Civil Code. In ejectment cases where an appeal is taken the remedy granted in Article 539, second paragraph, shall also apply, if the higher court is satisfied that the lessees appeal is frivolous or dilatory, or that the les sors appeal is prima facie meritorious. The period of ten days referred to in s aid article shall be counted from the time the appeal is perfected. Article 539 (2), Civil Code. A possessor deprived of his possession through forcible entry m ay within ten days from the filing of the complaint present a motion to secure f rom the competent court, in the action for forcible entry, a writ of preliminary mandatory injunction to restore him in his possession. The court shall decide t he motion within thirty (30) days from the filing thereof. J. IMPLIED EXTENSION of LEASE Article 1679, Civil Code. If nothing has been stipulated concerning the place an d the time for the payment of the lease, the provisions or Article 1251 shall be observed as regards the place; and with respect to the time, the custom of the place shall be followed. Article 1682, Civil Code. The lease of a piece of rural

land, when its duration has not been fixed, is understood to have been for all the time necessary for the gathering of the fruits which the whole estate leased may yield in one year, or which it may yield once, although two or more years h ave to elapse for the purpose. Article 1687, Civil Code. If the period for the l ease has not been fixed, it is understood to be from year to year, if the rent a greed upon is annual; from month to month, if it is monthly; from week to week, if the rent is weekly; and from day to day, if the rent is to be paid L. USEFUL IMPROVEMENTS in GF MADE by LESSEE Article 1678, Civil Code. If the lessee makes, in good faith, useful improvement s which are suitable to the use for which the lease is intended, without alterin g the form or substance of the property leased, the lessor upon the termination of the lease shall pay the lessee one-half of the value of the improvements at t hat time. Should the lessor refuse to reimburse said amount, the lessee may remo ve the improvements, even though the principal thing may suffer damage thereby. He shall not, however, cause any more impairment upon the property leased than i s necessary. With regard to ornamental expenses, the lessee shall not be entitle d to any reimbursement, but he may remove the ornamental objects, provided no da mage is caused to the principal thing, and the lessor does not choose to retain them by paying their value at the time the lease is extinguished.

CIVIL LAW REVIEWER Chapter XII. LEASE M. SPECIAL PROVISIONS for LEASES of RURAL LANDS Article 1680, Civil Code. The lessee shall have no right to a reduction of the r ent on account of the sterility of the land leased, or by reason of the loss of fruits due to ordinary fortuitous events; but he shall have such right in case o f the loss of more than onehalf of the fruits through extraordinary and unforese en fortuitous events, save always when there is a specific stipulation to the co ntrary. Extraordinary fortuitous events are understood to be: fire, war, pestile nce, unusual flood, locusts, earthquake, or others which are uncommon, and which the contracting parties could not have reasonably foreseen. Article 1681, Civil Code. Neither does the lessee have any right to a reduction of the rent if the fruits are lost after they have been separated from their stalk, root or trunk. Article 1682, Civil Code. The lease of a piece of rural land, when its duration has not been fixed, is understood to have been for all the time necessary for th e gathering of the fruits which the whole estate leased may yield in one year, o r which it may yield once, although two or more years have to elapse for the pur pose. Article 1683, Civil Code. The outgoing lessee shall allow the incoming les see or the lessor the use of the premises and other means necessary for the prep aratory labor for the following year; and, reciprocally, the incoming lessee or the lessor is under obligation to permit the outgoing lessee to do whatever may be necessary for the gathering or harvesting and utilization of the fruits, all in accordance with the custom of the place. Article 1684, Civil Code. Land tenan cy on shares shall be governed by special laws, the stipulations of the parties, the provisions on partnership and by the customs of the place. Article 1685, Ci vil Code. The tenant on shares cannot be ejected except in cases specified by la w. N. SPECIAL PROVISIONS for LEASES of URBAN LANDS Article 1686, Civil Code. In default of a special stipulation, the custom of the place shall be observed with regard to the kind of repairs on urban property fo r which the lessor shall be liable. In case of doubt it is understood that the r epairs are chargeable against him. Article 1687, Civil Code. If the period for t he lease has not been fixed, it is understood to be from year to year, if the re nt agreed upon is annual; from month to month, if it is monthly; from week to we ek, if the rent is weekly; and from day to day, if the rent is to be paid daily. However, even though a monthly rent is paid, and no period for the lease has be en set, the courts may fix a longer term for the lease after the lessee has occu pied the premises for over one year. If the rent is weekly, the courts may likew ise determine a longer period after the lessee has been in possession for over s ix months. In case of daily rent, the courts may also fix a longer period after the lessee has stayed in the place for over one month. Article 1688, Civil Code. When the lessor of a house, or part thereof, used as a dwelling for a family, o r when the lessor of a store, or industrial establishment, also leases the furni ture, the lease of the latter shall be deemed to be for the duration of the leas e of the premises. 236 PROPERTY - end of Property-

CIVIL LAW REVIEWER TABLE of CONTENTS LAND TITLES and DEEDS Table of Contents Chapter I: Background, Basic Concepts and General Principles.................... ....................239 I. Definitions and Basic Concepts ........239 II. Nature and stages.............................240 III. Purpose of Registration........ .............240 IV. Modes of Acquiring Land Titles.........240 V. Jurisdiction ........................................240 Chapter 2: Torrens Certificate of Ti tle .......241 I. Original Certificate of Title or OCT....241 II. Transfer Certi ficate of Title................241 III. Patents ................................ ..............241 Chapter 3: Original Registration.................242 I. Laws G overning Land Registration...242 II. Effect of Registration..................... ....242 III. Original Registration Proceeding ......242 IV. Attributes of and Li mitation In Certificate of Title and Registered Land (FIIC) ...........247 V. Ju dicial Confirmation of Imperfect or Incomplete Titles........................... .249 Chapter 4: Cadastral Registration Proceedings.............................. ....................251 I. Steps in Cadastral Registration Proceedings ......... ......................................252 Chapter 5: Subsequent Registration.... ......253 I. Two Types of Dealings......................253 II. Necessity and Ef fects of Registration 253 III. Voluntary vs. Involuntary Dealings..253 IV. Regis tration of Voluntary Instruments in General .................................... ..................254 V. Registration of Deeds of Sale and Transfers............ ........................................255 VI. Mortgages and Leases............ ..........256 VII. Powers of Attorney; Trusts ...........257 VIII. Involuntary D ealings .....................257 Chapter 6: System of Registration of Unregister ed Lands ..................................... 261 I. Key Points................ ......................... 261 II. Procedure .................................... ..... 261 Chapter 7: Registration of Public Lands ... 262 I. Classification of L and of the Public Domain ...................................................... 262 II. Nature of Title to Public Lands Conveyed ............................... ................... 262 III. Procedure of Conveying Public Land to a Private Per son ........................................ 262 IV. Director of Lands: Quasi-ju dicial officer 263 V. Modes of Alienating Public Lands:.... 263 VI. Patents .... ..................................... 263 Chapter 8: Remedies of the Aggrieved P arty ....................................................................... 264 Chapter 9: Reconstitution 0f Titles ........... 266 I. Grounds ................ ............................ 266 II. Petitions for Reconstitution .............. . 266 III. Duties of the Land Registration Authority 266 IV. Effects of Fraud, D eceit and Machination in the Reconstitution of Titles 266 238 LAND TITLES and DEEDS

CIVIL LAW REVIEWER Chapter 1: BACKGROUND, BASIC CONCEPTS and GENERAL PRINCIPLES * This reviewer is a reproduction of the 2009 edition and was not updated by the 2010 Academics Committee. Kat Aglibot Lead Writer LAND TITLES and DEEDS LAND TITLES and DEEDS TEAM Chapter I: Background, Basic Concepts and General Principles This 1 Chapter will give an overview of the definitions of concepts relating to Land, Titles and Deeds. It also includes a short discussion of what exactly is l and registration. There are FIVE MAJOR LESSONS in this section: I. Definitions o f the Basic Concepts II. Nature of Land Registration III. Purpose of Registratio n IV. Modes of Acquiring Land Titles V. Jurisdiction st CIVIL LAW Kristine Bongcaron Patricia Tobias Subject Editors ACADEMICS COMMITTEE Kristine Bongcaron Michelle Dy Patrich Leccio Editors-in-Chief I. Definitions and Basic Concepts PRINTING & DISTRIBUTION Kae Guerrero DESIGN & LAYOUT Pat Hernandez Viktor Fontanilla Rusell Aragones Romualdo Menzon Jr. Rania Joya LECTURES COMMITTEE Michelle Arias Camille Maranan Angela Sandalo Heads Katz Manzano Mary Rose Beley Sam Nuez Krizel Malabanan Arianne Cerezo Marcr ese Banaag Volunteers B. LAND TITLE Evidence of the right of the owner or the extent of his interest, and by which means he can maintain control, and as a rule assert right to exclus ive possession and enjoyment of property. C. DEED An instrument in writing which any real estate or interest therein is created, alienated, mortgaged or assigne d or by which title to any real estate may be affected in law or equity. Necessa rily includes: 1. 2. 3. 4. 5. 6. The name of the Grantor The name of the Grantee Words of grant Description of property Signatue of grantor Witnesses MOCK BAR COMMITTEE Lilibeth Perez BAR CANDIDATES WELFARE Dahlia Salamat LOGISTICS Charisse Mendoza

SECRETARIAT COMMITTEE Jill Hernandez Head Loraine Mendoza Faye Celso Mary Mendoza Joie Bajo Members D. FEE SIMPLE Absolute title; absolute estate in perpetuity. Land is conferred u pon a man and his heirs absolutely and without any limitation imposed upon the s tate. E. REGISTRATION Process whereby the State provides a public record of the title itself upon which a prospective purchaser or someone else interested may r ely. It is a means to guarantee the title F. RECORDING It is the process whereby Register of Deeds writes information in his Registry Book. This does not guaran tee the title LAND TITLES and DEEDS A. THE TORRENS SYSTEM A system for registration of land under which, upon landow ners application, the court may, after appropriate proceedings, direct the issuan ce of a certificate of title. (Blacks Law Dictionary) 239

CIVIL LAW REVIEWER Chapter 1: BACKGROUND, BASIC CONCEPTS and GENERAL PRINCIPLES farmers; not transf erable except by hereditary succession. II. Nature and stages

Land registration is a proceeding in rem. Roxas vs. Enriquez, (1914): A proceeding in rem, dealing with a tangible res, ma y be instituted and carried to judgment, without personal service. V. Jurisdiction (Asked in 83) PD 1529 Sec. 2 Nature of registration proceedings; jurisdiction of courts. xxx ( Courts of First Instance) Regional Trial Courts shall have exclusive jurisdictio n over all applications for original registration of title to lands, including i mprovements and interests therein, and over all petitions filed after original r egistration of title, with power to hear and determine all questions arising upo n such applications or petitions. xxx BP 129 Sec. 34 Delegated jurisdiction in c adastral and land registration cases. Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts may be assigned by the Supreme Court to hear and determine cadastral or land registration cases covering lots where there is no controversy or opposition, or contested lots the where the value of which does not exceed One hundred thousand pesos (P100,000.00), such value to be ascertained by the affidavit of the claimant or by agreement of the respective claimants if there are more than one, or from the corresponding tax declaration of the real property. Their decisions in these cases shall be appealable in the same manner as decisions of the Regional Trial Courts. (as amended by R.A. No. 7 691) PD 1529 Sec. 2 Nature of registration proceedings; jurisdiction of courts. Judic ial proceedings for the registration of lands throughout the Philippines shall b e in rem and shall be based on the generally accepted principles underlying the Torrens system. xxx

3 Stages: 1. 2. 3. Production & delivery of deed by grantor to grantee without registratio n Deed of conveyance is recorded to bind 3rd persons Registration of title 240 LAND TITLES and DEEDS III. Purpose of Registration 1. 2. 3. 4. Serve as constructive notice Prevent fraudulent claims Protect inter est of strangers to transaction Grey Alba vs. CA, (1910): To establish and certi fy to the ownership of an absolute and indefeasible title to realty, and to simp lify its transfer. 5. SM Prime Holdings vs. Angela Madayag (2009, Nachura): The fundamental purpose of the Land Registration Law (Presidential Decree No. 1529) is to finally settle title to real property in order to preempt any question on the legality of the title except claims that were noted on the certificate itsel f at the time of registration or those that arose subsequent thereto. Consequent ly, once the title is registered under the said law, owners can rest secure on t heir ownership and possession.

IV. Modes of Acquiring Land Titles 1. 2. Title by public grant conveyance of public land by government to a private individual Title by acquisitive prescription open, continuous, exclusive, notor ious possession of a property Title by accretion alluvion Title by reclamation f illing of submerged land by deliberate act and reclaiming title thereto; governm ent Title by voluntary transfer private grant; voluntary execution of deed of co nveyance Title by involuntary alienation no consent from owner of land; forcible acquisition by state (expropriation) Title by descent or devise hereditary succ ession to the estate of deceased owner Title by emancipation patent or grant for purpose of ameliorating sad plight of tenantGENERAL RULE: Land registration proceedings and all petitions after original reg istration of titles are filed with the RTCs of the province or city where the lan d or a portion or it lies. SM Prime Holdings vs. Angela Madayag (2009, Nachura): Presidential Decree (P.D.) No. 1529 eliminated the distinction between the gener al jurisdiction vested in the RTC and the latters limited jurisdiction when actin g merely as a land registration court. Land registration courts, as such, can no w hear and decide even controversial and contentious cases, as well as those inv olving substantial issues. It may, therefore, hear and determine all questions t hat arise from a petition for registration. 3. 4. 5. 6.

EXCEPTIONS: When the case involves o o lots without controversy or opposition co ntested lots where the value does not exceed P100,000.00, in which case, the MTCs have jurisdiction. 7. 8.

CIVIL LAW REVIEWER Chapter 2: TORRENS CERTIFICATE of TITLE such instrument to be filed with the Reg ister of Deeds of the province or city where the land lies, and to be there regi stered like other deeds and conveyance, whereupon a certificate of title shall b e entered as in other cases of registered land, and an owners duplicate issued to the grantee. The deed, grant, patent or instrument of conveyance from the Gov ernment to the grantee shall not take effect as a conveyance or bind the land bu t shall operate only as a contract between the Government and the grantee and as evidence of authority to the Register of Deeds to make registration. It is the act of registration that shall be the operative act to affect and convey the lan d, and in all cases under this Decree, registration shall be made in the office of the Register of Deeds of the province or city where the land lies. The fees f or registration shall be paid by the grantee. After due registration and issuanc e of the certificate of title, such land shall be deemed to be registered land t o all intents and purposes under this Decree. Chapter 2: Torrens Certificate of Title This 2 Chapter will explore the three major kinds of Torrens certificate of titl e. These are: I. Original Certificate of Title II. Transfer Certificate of Title III. Patents nd I. Original Certificate of Title or OCT It is the first certificate of title issued in the name of a registered owner by the Register of Deeds covering a parcel of land which had been registered under the Torrens System, by virtue of judicial or administrative proceedings. 241 LAND TITLES and DEEDS II. Transfer Certificate of Title The subsequent certificate of title pursuant to any deed of transfer or conveyan ce to another person. The Register of Deeds shall make a new certificate of titl e and given him an owners duplicate certificate. The previous certificate (need n ot be an OCT) shall be stamped cancelled. PD 1529 Sec. 43 Transfer Certificate of Title. The subsequent certificate of tit le that may be issued by the Register of Deeds pursuant to any voluntary or invo luntary instrument relating to the same land shall be in like form, entitled "Tr ansfer Certificate of Title", and likewise issued in duplicate. The certificate shall show the number of the next previous certificate covering the same land an d also the fact that it was originally registered, giving the record number, the number of the original certificate of title, and the volume and page of the reg istration book in which the latter is found. NOTE: Patents only involve public lands which are alienated by the Government, p ursuant to the Public Land Act. The patent (even if denominated as deed of conve yance) is not really a conveyance but a contract between the grantee and the Gov ernment and evidence of authority to the Register of Deeds to make registration. The act of registration is the operative act to affect and convey the land. (Pa tents will be discussed more thoroughly in Chapter 7.) GENERAL RULE: A Torrens C ertificate of Title is valid and enforceable against the whole world. (Asked in 0 8) Egao vs. CA, (1989): A Torrens title, once registered, cannot be defeated, ev en by adverse, open and notorious possession. A registered title under the Torre ns system cannot be defeated by prescription. The title, once registered, is not ice to the whole world. All persons must take notice. No one can plead ignorance

of the registration.

III. Patents PD 1529 Sec. 103 Certificates of title pursuant to patents. Whenever public land is by the Government alienated, granted or conveyed to any person, the same sha ll be brought forthwith under the operation of this Decree. It shall be the duty of the official issuing the instrument of alienation, grant, patent or conveyan ce in behalf of the Government to cause

CIVIL LAW REVIEWER Chapter 3: ORIGINAL REGISTRATION Chapter 3: Original Registration This 3 Chapter will first give you everything you need to know about original la nd registration: a summary of pertinent laws, steps in original registration pro ceedings, among others. The chapter discusses FIVE MAJOR LESSONS: I. II. III. IV . Laws Governing Land Registration Effect of Registration Original Registration Proceedings Attributes of and Limitations on Certificates of Title and Registrat ion V. Judicial Confirmation of Imperfect or Incomplete Titles rd II. Effect of Registration Registration does not vest or give title to the land, but merely confirms and th ereafter protects the title already possessed by the owner, making it imprescrip tible by occupation of third parties. It does not give the owner any better titl e than he has. (Asked in 98) Vagalidad vs. Vagalidad, (2006): Registration is not a mode of acquiring ownership. A certificate of title cannot be used to protect a usurper from the true owner or as a shield for the commission of fraud. Camit an and Lopez vs. Fidelity Investment Corp.: (2008,Nachura):Possession of an owne rs duplicate copy of a certificate of title is not necessarily equivalent to owne rship the land covered by it. The certificate by itself does not vest ownership. It is merely an evidence of title over the property.

I. Laws Governing Land Registration 242 LAND TITLES and DEEDS A. PD NO. 1529 The Property Registration Decree covers both ordinary and cadastr al registration proceedings. It supersedes the Land Registration Act and the Cad astral Act. Application of the Land Registration Act, as amended by the Property Registration Decree: (Asked in 89 and 07) B. CA 141 The Public Land Act governs t he procedure for the judicial confirmation of imperfect or incomplete titles. It applies to lands of the public domain which have been declared open to disposit ion or concession and officially delimited and classified. C. RA NO. 8371 The In digenous Peoples Rights Act recognizes the rights of ownership and possession of indigenous cultural communities to their ancestral domains and lands on the bas is of native title, and defines the extent of these lands and domains. It expres sly converts ancestral lands into public agricultural lands, and individuals mem bers of the cultural communicates shall have the option to secure title to their ancestral lands under the CA 141 or PD 1529. NOTE: The IPRA still refers to the Land Registration Act and not the Property Registration Decree, which bolsters the argument that the former was not repealed by the latter. III. Original Registration Proceeding Steps in Original Registration Proceedings: 1. Determine if the land is registra ble 2. Determine if you are qualified to apply 3. Survey the land 4. File the ap plication (survey attached) for land registration with the appropriate court 5. Court sets initial hearing 6. Publication of the initial hearing 7. File an oppo sition to the application 8. Hearing 9. Judgment 10. Issuance of decree A. WHAT LANDS ARE 1. Registrable lands a. Private Lands b. Agricultural Lands 1987 CONSTITUTION Art. XII Sec. 2 xxx With the exception of agricultural lands,

all other natural resources shall not be alienated. xxx Sec 3. Lands of the publ ic domain are classified into agricultural, forest or timber, mineral lands and national parks. Agricultural lands of the public domain may be further classifie d by law according to the uses to which they may be devoted. Alienable lands of the public domain shall be limited to agricultural lands. xxx

REGISTRABLE?

CIVIL LAW REVIEWER Chapter 3: ORIGINAL REGISTRATION alienable lands of the public domain except by lease, for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and not to exceed one thousand hectares in area. xxx

Republic vs. CA and Naguit, (2005): If in the public domain, the land must be cl assified as alienable and disposable. It must be classified as such at the time of filing the application for registration.

2. Non- registrable lands: (Asked in 07) 1987, CONSTITUTION Art. XII Sec. 2 All lands of the public domain, waters, miner als, coal, petroleum, and other mineral oils, all forces of potential energy, fi sheries, forests or timber, wildlife, flora and fauna, and other natural resourc es are owned by the State. xxx Civil Code Art. 420 The following things are prop erty of public dominion: 1. Those intended for public use, such as roads, canals , rivers, torrents, ports and bridges constructed by the State, banks, shores, r oadsteads, and others of similar character; 2. Those which belong to the State, without being for public use, and are intended for some public service or for th e development of the national wealth. Private lands may be owned for as long as the corporation is at least 60% Filipi no. : 1987, CONSTITUTION Art. XII Sec. 2 xxx The State may directly undertake such act ivities, or it may enter into co-production, joint venture, or production-sharin g agreements with Filipino citizens, or corporations or associations at least si xty per centum of whose capital is owned by such citizens. Such agreements may b e for a period not exceeding twenty-five years, and under such terms and conditi ons as may be provided by law. xxx

The following lands cannot be registered: Forest or timberlands Lands for public use: roads, ports and bridges, etc. Lands which are owned by the State for publ ic service or development of national wealth. PD 1529 Sec. 14 Who may apply. The following persons may file in the proper (Cou rt of First Instance) Regional Trial Court an application for registration of ti tle to land, whether personally or through their duly authorized representatives : (1) Those who by themselves or through their predecessors-in-interest have bee n in Open, continuous, exclusive and notorious possession and occupation of alie nable and disposable lands of the public domain under a bona fide claim of owner ship since June 12, 1945, or earlier. (2) Those who have acquired ownership of p rivate lands by Prescription under the provision of existing laws. (3) Those who have acquired ownership of private lands or abandoned river beds by right of Ac cession or accretion under the existing laws. (4) Those who have acquired owners hip of land in any other manner provided for by Law. Where the land is Owned in common, all the coowners shall file the application jointly. Where the land has been sold under Pacto de retro, the vendor a retro may file an application for t he original registration of the land, provided, however, that should the period for redemption expire during the pendency of the registration proceedings and ow nership to the property consolidated in the vendee a retro, the latter shall be substituted for the applicant and may continue the proceedings. A trustee on beh alf of his principal may apply for original registration of any land held in tru st by him, unless prohibited by the instrument creating the trust.

B. WHO MAY APPLY? s: and

Constitutional Requirements Limitations:

Only Filipino Citizen

1987, CONSTITUTION Art. XII Sec. 3 xxx Citizens of the Philippines may lease not more than five hundred hectares, or acquire not more than twelve hectares there of by purchase, homestead, or grant. Xxx

Exceptions: 1. Aliens by way of hereditary succession 2. Natural born citizens w ho have 3. lost their citizenship- limited to 4. 5,000 sq. m. for urban land and 3 hectares for rural land (RA No. 7042 as amended by RA No. 8179) Private corpo rations may not hold alienable lands of the public domain except by lease:

1987, CONSTITUTION Art. XII Sec. 3 xxx Private corporations or associations may not hold LAND TITLES and DEEDS

243 Additional Requirements: (OCEN-PAAL)

CIVIL LAW REVIEWER Chapter 3: ORIGINAL REGISTRATION

Judicial Confirmation of Title: CA 141 vs. PD 1529 Republic vs. Tsai, (2009): CA 141 has been amended many timesAs the law now stands, a mere showing of possessi on and occupation for 30 years or more is not sufficient. Therefore, since the e ffectivity of PD 1073 on 25 January 1977, it must now be shown that possession a nd occupation of a piece of land by the applicant, by himself or through his pre decessors-ininterest, started on 12 June 1945 or earlier. This provision is in t otal conformity with Section 14(1) of PD 1529. BUT take note: There are still so me cases that use CA 141 for judicial confirmation of imperfect title:

signed and sworn to by the applicant/duly authorized person, and if more than on e applicant, it shall be signed and sworn to by and in behalf of each It shall c ontain: a description of the land citizenship and civil status of the applicant if married, the name of the wife or husband if the marriage has been legally dis solved, when and how full names and addresses of all occupants and those of the adjoining owners, if known if not known, it shall state the extent of the search made to find them. 244 LAND TITLES and DEEDS Republic vs. Fabio, (2008): CA 141, also known as the Public Land Act, remains t o this day the existing general law governing the classification and disposition of lands of the public domain, other than timber and mineral lands. C. SURVEY T he survey may be done by a public or private surveyor. When done by a private su rveyor it has to be approved by the Land Management Bureau. PD 239 withdrew the authority of the Land Registration Authority to approve original survey plans. D . APPLICATION PD 1529 Sec. 15 Form and contents. The application for land registration shall b e in writing, signed by the application or the person duly authorized in his beh alf, and sworn to before any officer authorized to administer oaths for the prov ince or city where the application was actually signed. If there is more than on e applicant, the application shall be signed and sworn to by and in behalf of ea ch. The application shall contain a description of the land and shall state the citizenship and civil status of the applicant, whether single or married, and, i f married, the name of the wife or husband, and, if the marriage has been legall y dissolved, when and how the marriage relation terminated. It shall also state the full names and addresses of all occupants of the land and those of the adjoi ning owners, if known, and, if not known, it shall state the extent of the searc h made to find them. Note: It must be accompanied by the original tracing cloth plan, white or blue c opies thereof, the original and copies of the technical description and geodetic engineers certification. Special Cases: PD 1529 Sec. 20 When land applied for borders on road. If the application descri bes the land as bounded by a public or private way or road, it shall state wheth er or not the applicant claims any and what portion of the land within the limit s of the way or road, and whether the applicant desires to have the line of the way or road determined. PD 1529 Sec. 16 Non-resident applicant. If the applicant is not a resident of the Philippines, he shall file with his application an ins trument in due form appointing an agent or representative residing in the Philip

pines, giving his full name and postal address, and shall therein agree that the service of any legal process in the proceedings under or growing out of the app lication made upon his agent or representative shall be of the same legal effect as if made upon the applicant within the Philippines. If the agent or represent ative dies, or leaves the Philippines, the applicant shall forthwith make anothe r appointment for the substitute, and, if he fails to do so the court may dismis s the application.

The application for land registration shall be:

in writing

If the land bounded by a road, the applicant must state in his application if he claims any portion of the land within the limits of the road, or if he likes to have the boundaries determined. If the applicant is a non-resident, he shall ap point an agent or representative who is a Philippine resident.

CIVIL LAW REVIEWER Chapter 3: ORIGINAL REGISTRATION 2. By mailing. (a) Mailing of notice to persons named in the application. The Commissioner of Land Registration shall also, wit hin seven days after publication of said notice in the Official Gazette, as here inbefore provided, cause a copy of the notice of initial hearing to be mailed to every person named in the notice whose address is known. (b) Mailing of notice to the Secretary of Public Highways, the Provincial Governor and the Mayor. If t he applicant requests to have the line of a public way or road determined, the C ommissioner of Land Registration shall cause a copy of said notice of initial he aring to be mailed to the Secretary of Public Highways, to the Provincial Govern or, and to the Mayor of the municipality or city, as the case may be, in which t he land lies. (c) Mailing of notice to the Secretary of Agrarian Reform, the Sol icitor General, the Director of Lands, the Director of Public Works, the Directo r of Forest Development, the Director of Mines and the Director of Fisheries and Aquatic Resources. If the land borders on a river, navigable stream or shore, o r on an arm of the sea where a river or harbor line has been established, or on a lake, or if it otherwise appears from the application or the proceedings that a tenant-farmer or the national government may have a claim adverse to that of t he applicant, notice of the initial hearing shall be given in the same manner to the Secretary of Agrarian Reform, the Solicitor General, the Director of Lands, the Director of Mines and/or the Director of Fisheries and Aquatic Resources, a s may be appropriate. 3. By posting. The Commissioner of Land Registration shall also cause a duly attested copy of the notice of initial hearing to be posted b y the sheriff of the province or city, as the case may be, or by his deputy, in a conspicuous place on each parcel of land included in the application and also in a conspicuous place on the bulletin board of the municipal building of the mu nicipality or city in which the land or portion thereof is situated, fourteen da ys at least before the date of initial hearing. The court may also cause notice to be served to such other persons and in such manner as it may deem proper.

Intestate Estate of Don Mariano San Pedro vs. CA, (1996): A person claiming owne rship of real property must clearly identify the land claimed by him. In re: App lication for Land Registration vs. Republic, (2008, Nachura): An applicant in a land registration case must prove the facts and circumstances evidencing the all eged ownership of the land applied for. General statements which are mere conclu sions of law and not factual proof of possession are unavailing. The deeds in it s favor only proved possession of its predecessors-ininterest as early as 1948. (The law now stands that a mere showing of possession for 30 years is not suffic ient. OCEN possession must be shown to have stated on June 12, 1945 or earlier.) 245 LAND TITLES and DEEDS E. INITIAL HEARING PD 1529 Sec. 23 Notice of initial hearing, publication, etc. The court shall, wi thin five days from filing of the application, issue an order setting the date a nd hour of the initial hearing which shall not be earlier than forty-five days n or later than ninety days from the date of the order. xxx

The court shall issue an order setting the date and hour of the initial hearing within five days from filing of the application. The initial hearing shall be 45 -90 days from the date of the order.

F. PUBLICATION PD 1529 Sec. 23 xxx The public shall be given notice of the initial hearing of t he application for land registration by means of (1) publication; (2) mailing; a nd (3) posting. 1. By publication. Upon receipt of the order of the court settin g the time for initial hearing, the Commissioner of Land Registration shall caus e notice of initial hearing to be published once in the Official Gazette and onc e in a newspaper of general circulation in the Philippines: Provided, however, t hat the publication in the Official Gazette shall be sufficient to confer jurisd iction upon the court. Said notice shall be addressed to all persons appearing t o have an interest in the land involved including the adjoining owners so far as known, and "to all whom it may concern". Said notice shall also require all per sons concerned to appear in court at a certain date and time to show cause why t he prayer of said application shall not be granted. 1. By Publication The Commissioner of Land Registration shall cause it to be pub lished: once in the Official Gazette (sufficient to confer jurisdiction) and onc e in a newspaper of general circulation in the Philippines The notice is address ed to: all persons appearing to have an interest in the land the adjoining owner s so far as known "to all whom it may concern"

CIVIL LAW REVIEWER Chapter 3: ORIGINAL REGISTRATION upon motion of the applicant, no reason to the contrary appearing, order a default to be recorded and require the applicant to present evidence. By the description in the notice "To all Whom It May Concern", all the world are made parties defendant and shall be concluded by the default order. Where an appearance has been entered and an answer filed, a default order shall be entered against persons who did not appear and answer. 3. By Posting CLR shall cause the sheriff or his deputy to post the notice at le ast 14 days before the hearing: in a conspicuous place on each parcel of land in cluded in the application and in a conspicuous place on the bulletin board of th e municipal building of the municipality or city in which the land or portion th ereof is situated. G. OPPOSITION (ASKED IN 89) PD 1529 Sec. 23 Opposition to application in ordinary proceedings. Any person cl aiming an interest, whether named in the notice or not, may appear and file an o pposition on or before the date of initial hearing, or within such further time as may be allowed by the court. The opposition shall state all the objections to the application and shall set forth the interest claimed by the party filing th e same and apply for the remedy desired, and shall be signed and sworn to by him or by some other duly authorized person. If the opposition or the adverse claim of any person covers only a portion of the lot and said portion is not properly delimited on the plan attached to the application, or in case of undivided co-o wnership, conflicting claims of ownership or possession, or overlapping of bound aries, the court may require the parties to submit a subdivision plan duly appro ved by the Director of Lands. PD 1529 Sec 26. Order of default; effect. If no pe rson appears and answers within the time allowed, the court shall, NOTE: If no one appears/files an answer, upon motion, the court shall order a de fault to be recorded. By the description in the notice "To all Whom It May Conce rn", all the world are made parties defendant and shall be concluded by the defa ult order. Where an appearance has been entered and an answer filed, a default o rder shall be entered against persons who did not appear and answer. Director of Lands vs. Agustin, (1921): Absence of opposition does not justify outright regi stration. H. HEARING Proof of Ownership: 1. Municipality of Santiago vs. CA, (19 83): Tax declaration and receipts are not conclusive but have strong probative v alue when accompanied by proof of actual possession. 2. Republic vs. Tayag, (198 4): Payment in one lump sum to cover all past taxes is irregular and affects the v alidity of the applicants claim of ownership 3. Spanish titles are no longer admi ssible. I. JUDGMENT PD 1529 Sec 30. When judgment becomes final; duty to cause issuance of decree. T he judgment rendered in a land registration proceedings becomes final upon the e xpiration of thirty days to be counted from the data of receipt of notice of the judgment. An appeal may be taken from the judgment of the court as in ordinary civil cases. LAND TITLES and DEEDS 2. By Mailing Within 7 days from publication in the OG, the Commissioner of Land Registration shall mail a copy of the notice to: a. every person named in the n otice whose address is known. b. the Secretary of Public Highways, to the Provin cial Governor, and to the Mayor of the municipality or city, in which the land l ies, if the applicant requests to have the line of a public way or road determin ed c. Secretary of Agrarian Reform, the Solicitor General, the Director of Lands , the Director of Mines and/or the Director of Fisheries and Aquatic Resources, (as appropriate) if the land borders on a river, navigable stream or shore, or o n an arm of the sea where a river or harbor line has been established, or on a l ake, or if it otherwise appears from the application or the proceedings that a t enant-farmer or the national government may have a claim adverse to that of the

applicant

Who may file? Any person claiming an interest. When to file? On or before the da te of initial hearing, or within such further time as may be allowed by the cour t. What shall it contain? It shall state all the objections and the interest cla imed by the party the remedy desired. How shall it be made? It shall be signed a nd sworn to by him or by some other duly authorized person. 246

CIVIL LAW REVIEWER After judgment has become final and executory, it shall devol ve upon the court to forthwith issue an order in accordance with Section 39 of t his Decree to the Commissioner for the issuance of the decree of registration an d the corresponding certificate of title in favor of the person adjudged entitle d to registration. Chapter 3: ORIGINAL REGISTRATION PD 1529 Sec 40. Entry of Original Certificate o f Title. Upon receipt by the Register of Deeds of the original and duplicate cop ies of the original certificate of title the same shall be entered in his record book and shall be numbered, dated, signed and sealed by the Register of Deeds w ith the seal of his office. Said certificate of title shall take effect upon the date of entry thereof. The Register of Deeds shall forthwith send notice by mai l to the registered owner that his owners duplicate is ready for delivery to hi m upon payment of legal fees.

Judgment becomes final upon expiration of 30 days from receipt of notice of judg ment. 2. Writ of demolition Gawaran vs. IAC, (1988): This writ is a complement of the writ of possession. J. ISSUANCE OF DECREE

PD 1529 Sec 39. Preparation of decree and Certificate of Title. After the judgme nt directing the registration of title to land has become final, the court shall , within fifteen days from entry of judgment, issue an order directing the Commi ssioner to issue the corresponding decree of registration and certificate of tit le. The clerk of court shall send, within fifteen days from entry of judgment, c ertified copies of the judgment and of the order of the court directing the Comm issioner to issue the corresponding decree of registration and certificate of ti tle, and a certificate stating that the decision has not been amended, reconside red, nor appealed, and has become final. Thereupon, the Commissioner shall cause to be prepared the decree of registration as well as the original and duplicate of the corresponding original certificate of title. The original certificate of title shall be a true copy of the decree of registration. The decree of registr ation shall be signed by the Commissioner, entered and filed in the Land Registr ation Commission. The original of the original certificate of title shall also b e signed by the Commissioner and shall be sent, together with the owners duplic ate certificate, to the Register of Deeds of the city or province where the prop erty is situated for entry in his registration book. Commissioner signs the decree Decree is entered and filed with the LRC OCT and o wners duplicate certificate are sent to the Register of Deeds where property is s ituated. Register of Deeds enters the information in his registration book. Regi ster of Deeds sends notice by mail to owner that his duplicate is ready for deli very upon payment of legal fees.

Gomez vs. CA, (1988): Court retains jurisdiction over the case until after the e xpiration of 1 year from the issuance of the decree of registration. IV. Attributes of and Limitation In Certificate of Title and Registered Land (FI IC) PD 1529 Sec 44. Statutory liens affecting title. Every registered owner receivin g a certificate of title in pursuance of a decree of registration, and every sub sequent purchaser of registered land taking a certificate of title for value and in good faith, shall hold the same free from all encumbrances except those note

d in said certificate and any of the following encumbrances which may be subsist ing, namely: First. Liens, claims or rights arising or existing under the laws a nd Constitution of the Philippines which are not by law required to appear of re cord in the Registry of Deeds in order to be valid against subsequent purchasers or encumbrancers of record. LAND TITLES and DEEDS Forms of Judgment: 1. Writ of possession Vencilao vs. Vano, (1990): The writ may be issued not only against the person defeated in the registration case but als o against any one adversely occupying the land during the proceedings. Bernas vs . Nuevo, (1984): The writ does not lie against a person who entered the land aft er the issuance of the decree and who was not a party in the case. He can only b e proceeded against in a separate action for ejectment or reinvindicatory action .

Preparation of the Decree: Court directs the Land Registration Authority to issu e a decree of registration and certificate of Title within 15 days from entry of judgment. o Appeal reckoned from the Solicitor Generals receipt of the decision o Becomes f inal 15 days from receipt 247

CIVIL LAW REVIEWER Second. Unpaid real estate taxes levied and assessed within t wo years immediately preceding the acquisition of any right over the land by an innocent purchaser for value, without prejudice to the right of the government t o collect taxes payable before that period from the delinquent taxpayer alone. T hird. Any public highway or private way established or recognized by law, or any government irrigation canal or lateral thereof, if the certificate of title doe s not state that the boundaries of such highway or irrigation canal or lateral t hereof have been determined. Fourth. Any disposition of the property or limitati on on the use thereof by virtue of, or pursuant to, Presidential Decree No. 27 o r any other law or regulations on agrarian reform. Chapter 3: ORIGINAL REGISTRATION or an equivalent phrase occurs in this Decree, it shall be deemed to include an innocent lessee, mortgagee, or other encumbranc er for value. Upon the expiration of said period of one year, the decree of regi stration and the certificate of title issued shall become incontrovertible. Any person aggrieved by such decree of registration in any case may pursue his remed y by action for damages against the applicant or any other persons responsible f or the fraud.

A. FREE FROM ENCUMBRANCES LIENS AND 2. 3. 4.

1.

EXCEPT those noted in the certificate and CATH: Liens, claims or rights existing under the laws and Constitution which are not required to appear of record in t he Registry of Deeds Unpaid real estate Taxes levied and assessed within 2 yrs p receding the acquisition of any right over the land Any public Highway or privat e way established or recognized by law, or any government irrigation canal or la teral thereof, if the certificate of title does not state that the boundaries of such have been determined. Any disposition of the property or limitation on the use thereof by virtue of, or pursuant to, Presidential Decree No. 27 or any oth er laws on Agrarian reform.

Prohibitions: Cannot be reopened because of absence, minority, or other disabili ty of any person adversely affected thereby Cannot be reopened where an innocent purchaser for value may be prejudiced (includes an innocent lessee, mortgagee, or other encumbrancer for value.) Arguelles vs. Timbancaya, (1976): The rule on the incontrovertible nature of a certificate of title applies when what is invol ved is the validity of the OCT, not when it concerns that of the TCT.

B. INDEFEASIBLE (ASKED IN08) C. IMPRESCRIPTIBLE PD 1529 Sec 32. Review of decree of registration; Innocent purchaser for value. The decree of registration shall not be reopened or revised by reason of absence , minority, or other disability of any person adversely affected thereby, nor by any proceeding in any court for reversing judgments, subject, however, to the r ight of any person, including the government and the branches thereof, deprived

of land or of any estate or interest therein by such adjudication or confirmatio n of title obtained by actual fraud, to file in the proper Court of First Instan ce a petition for reopening and review of the decree of registration not later t han one year from and after the date of the entry of such decree of registration , but in no case shall such petition be entertained by the court where an innoce nt purchaser for value has acquired the land or an interest therein, whose right s may be prejudiced. Whenever the phrase "innocent purchaser for value" PD 1529 Sec 47. Registered land not subject to prescriptions. No title to registered lan d in derogation of the title of the registered owner shall be acquired by prescr iption or adverse possession.

Barcelona vs. Barcelona, (1956): Prescription is unavailing not only against the registered owner but also against his hereditary successors because the latter merely step into the shoes of the decedent by operation of law and are merely th e continuation of the personality of their predecessor-in-interest. LAND TITLES and DEEDS Ground for reopening and reviewing the decree of registration: actual fraud (Ask ed in 92) Periods: Must be reopened not later than 1 yr from and after the date o f the entry of such decree. (Asked in 90 and 03) Upon the expiration of said perio d of one year, the decree of registration and the certificate of title issued sh all become incontrovertible. The only remedy left is an action for damages. 248

CIVIL LAW REVIEWER Chapter 3: ORIGINAL REGISTRATION D. NOT SUBJECT ATTACK TO COLLATERAL V. Judicial Confirmation of Imperfect or Incomplete Titles CA 141 Sec 57 No title or right to, or equity in, any lands of the public domain may hereafter be acquired by prescription or by adverse possession or occupancy , or under or by virtue of any law in effect prior to American occupation, excep t as expressly provided by laws enacted after said occupation of the Philippines by the United States. PD 1529 Sec 48. Certificate not subject to collateral attack. A certificate of t itle shall not be subject to collateral attack. It cannot be altered, modified, or canceled except in a direct proceeding in accordance with law.

Held: The Velascos have a better right to the land. The instant case is for acci on publiciana, or for recovery of the right to possess. Accion publiciana is als o used to refer to an ejectment suit where the cause of dispossession is not amo ng the grounds for forcible entry and unlawful detainer, or when possession has been lost for more than one year and can no longer be maintained under Rule 70 o f the Rules of Court. The objective of the plaintiffs in accion publiciana is to recover possession only, not ownership. The Velascos were able to establish law ful possession of the land when the Padillas occupied the property. The OCT was issued to the original owners who then sold the land to Artemio. From then on, h e was in continuous possession of the land until his death. It was only in 1987, when the Padillas occupied the property. The argument that the lots are one and the same is a collateral attack on the title over the property which is registe red in the name of Artemio, which cannot be countenanced.

A. PERIOD OF FILING RA No. 9176 extended the period to file an application for j udicial confirmation of imperfect or incomplete title to December 31, 2020. It f urther limited the area applied for to 12 hectares. B. REQUISITES: Filipino citizen He must have, by himself, or thru his predecesso rs in - interest, possessed and occupied an alienable and disposable agricultura l portion of the public domain Such possession and occupation must have been OCE N and in the concept of owner since June 12, 1945 Application filed with proper court

LAND TITLES and DEEDS Spouses Padilla vs. Velasco, et. al, G.R. No. 169956 (2009, Nachura) Facts: Vela sco et al (respondents) are the heirs of Artemio who died, leaving a parcel of l and. He acquired it by virtue of a deed of sale in his favor. The Padilla sps (p etitioners) entered the land as trustees by virtue of a deed of sale executed by a bank in favor of the Solomon sps. Velascos demanded that the Padillas vacate

the property. Padillas cut trees, built a house and harvested crops. Velascos fi led a complaint for accion publiciana before the RTC. Velascos presented deed of sale in favor of Artemio, while Padillas presented deed of sale between bank an d Solomons. The Padillas also argue that the Solomon sps acquired the land in go od faith and for value and that they argue that Lot 2161 (the one they are occup ying) and Lot 76-pt (the lot the Solomon spouses bought) are one and the same.

General Rule: No title or right to, or equity in, any lands of the public domain may be acquired by prescription or by adverse possession or occupancy except as expressly provided by law. The Public Land Act recognizes the concept of owners hip under the civil law. This ownership is based on adverse possession and the r ight of acquisition is governed by the Chapter on judicial confirmation of imper fect or incomplete titles. This applies only to alienable and disposable agricul tural lands of the public domain. Under Sec. 6 of CA 141, the classification of public lands into alienable and disposable forest lands, or mineral lands is the prerogative of the Executive Department. Bracewell vs. CA, (2000): The rule on confirmation of imperfect title does not apply unless and until the land classif ied as, say, forest land, is released in an official proclamation to that effect so that if may form part of the disposable agricultural lands of the public dom ain. 249

CIVIL LAW REVIEWER Chapter 3: ORIGINAL REGISTRATION C. PRIVATE CORPORATIONS Director Of Lands vs. IAC and Acme Plywood and Veneer Co ., (1986): Where at the time the corporation acquired the land, its predecessorin-interest had been in possession and occupation thereof in the manner and for the period prescribed by law as to entitle him to registration in his name, then the proscription against corporation acquiring alienable lands of the public do main does not apply for the land was no longer public land but private property. Since the land is private, the corporation can institute confirmation proceedin gs. LAND TITLES and DEEDS NOTE: MAXIMUM LAND THAT CAN BE APPLIED FOR: 144 hectares In case of foreigner, i t sufficient that he is already Filipino citizen at the time of his application. Corporation who has less than 60% Filipino ownership cannot apply confirmation of imperfect title; can only lease PERSONS COMPETENT TO QUESTION LAND GRANT: Per sons who obtained title from State or thru persons who obtained title from State . 250

CIVIL LAW REVIEWER Chapter 4: CADASTRAL REGISTRATION PROCEEDINGS Chapter 4: Proceedings th Cadastral Registration This 4 Chapter deals with processes involved in Cadastral Registration. Only one lesson is discussed in this Chapter. I. Steps in Cadastral Registration Proceed ings by a licensed Geodetic Engineer duly authorized to conduct the survey under this Section, or shall maliciously interfere with the placing of any monument or rem ove such monument, or shall destroy or remove any notice of survey posted on the land pursuant to law, shall be punished by a fine of not more than one thousand pesos or by imprisonment for not more than one year, or both. PD 1529 Sec 36. P etition for registration. When the lands have been surveyed or plotted, the Dire ctor of Lands, represented by the Solicitor General, shall institute original re gistration proceedings by filing the necessary petition in the Court of First In stance of the place where the land is situated against the holders, claimants, p ossessors, or occupants of such lands or any part thereof, stating in substance that public interest requires that the title to such lands be settled and adjudi cated and praying that such titles be so settled and adjudicated: The petition s hall contain a description of the lands and shall be accompanied by a plan there of, and may contain such other data as may serve to furnish full notice to the o ccupants of the lands and to all persons who may claim any right or interest the rein. Where the land consists of two or more parcels held or occupied by differe nt persons, the plan shall indicate the boundaries or limits of the various parc els as accurately as possible. The parcels shall be known as "lots" and shall on the plan filed in the case be given separate numbers by the Director of Lands, which numbers shall be known as "cadastral lot numbers". The lots situated withi n each municipality shall, as far as practicable, be numbered consecutively begi nning with number "one", and only one series of numbers shall be used for that p urpose in each municipality. However in cities or townsites, a designation of th e landholdings by blocks and lot numbers may be employed instead of the designat ion by cadastral lot numbers. The cadastral number of a lot shall not be changed after final decision has been entered decreasing the registration thereof, exce pt by order of court. Future subdivisions of any lot shall be designated by a le tter or letters of the alphabet added to the cadastral number of the lot to whic h the respective subdivisions pertain. The letter with which a subdivision is de signated shall be known as its "cadastral letter": Provided, however, that the s ubdivisions of cities or townsites may be designated by blocks and lot numbers.

Unlike other kinds of registration, this is compulsory as it is initiated by the government. PD 1529 Sec 35. Cadastral Survey preparatory to filing of petition. (a) When in the opinion of the President of the Philippines public interest so requires that title to any unregistered lands be settled and adjudicated, he may to this end direct and order the Director of Lands to cause to be made a cadastral survey of the lands involved and the plans and technical description thereof prepared in due form. (b) Thereupon, the Director of Lands shall give notice to persons clai ming any interest in the lands as well as to the general public, of the day on w hich such survey will begin, giving as fully and accurately as possible the desc

ription of the lands to be surveyed. Such notice shall be punished once in the O fficial Gazette, and a copy of the notice in English or the national language sh all be posted in a conspicuous place on the bulletin board of the municipal buil ding of the municipality in which the lands or any portion thereof is situated. A copy of the notice shall also be sent to the mayor of such municipality as wel l as to the barangay captain and likewise to the Sangguniang Panlalawigan and th e Sangguniang Bayan concerned. (c) The Geodetic Engineers or other employees of the Bureau of Lands in charge of the survey shall give notice reasonably in adva nce of the date on which the survey of any portion of such lands is to begin, wh ich notice shall be posted in the bulletin board of the municipal building of th e municipality or barrio in which the lands are situated, and shall mark the bou ndaries of the lands by monuments set up in proper places thereon. It shall be l awful for such Geodetic Engineers and other employees to enter upon the lands wh enever necessary for the purposes of such survey or the placing of monuments. (d ) It shall be the duty of every person claiming an interest in the lands to be s urveyed, or in any parcel thereof, to communicate with the Geodetic Engineer upo n his request therefor all information possessed by such person concerning the b oundary lines of any lands to which he claims title or in which he claims any in terest. (e) Any person who shall willfully obstruct the making of any survey und ertaken by the Bureau of Lands or 251 LAND TITLES and DEEDS

CIVIL LAW REVIEWER Chapter 4: CADASTRAL REGISTRATION PROCEEDINGS I. Steps in Cadastral Proceedings Registration LAND TITLES and DEEDS 1. Determination of the President that public interest requires title to unregis tered lands be settled 2. Director of lands shall make a cadastral survey 3. Dir ector of Lands gives notice to interested persons 4. Publication of notice 5. A copy of the notice shall also be sent to the mayor and the sanggunian 6. Geodeti c engineers/ Bureau of Land employees shall notify (re: survey) by posting at th e municipal building 7. Interested persons should communicate with the geodetic engineer if he requests for any information about the land 8. Actual survey/ plotting of the land 9. Director of Lands represented by Solic itor General shall institute original registration proceedings 10. Publication, mailing posting 11. Hearing 12. Decision 13. Issuance of the decree and certific ate of title NOTE: In voluntary registration proceedings, there is no res judica ta when the applicant fails to prove his title. In cadastral registration, if th e applicant cannot prove that he is entitled to the land, the land becomes publi c land. There is res judicata. 252

CIVIL LAW REVIEWER Chapter 5: SUBSEQUENT REGISTRATION Chapter 5: Subsequent Registration This 5 Chapter tackles the subsequent registration pursuant to dealings such as conveyances or transfers. These dealings may be voluntary (sale, lease etc.) or involuntary (writs, orders etc.) There are EIGHT MAJOR LESSONS in this chapter: I. II. Two Types of Dealings The Necessity and Effects of Registration III. Volu ntary vs. Involuntary Dealings IV. Registration of Voluntary Instruments in Gene ral V. Registration of Deeds of Sale and Transfers VI. Mortgages and Leases VII. Powers of Attorney, Trusts VIII. Involuntary Dealings th NOTE: The deed, mortgage, lease, or other voluntary instrument, except a will sh all ONLY operate as: 1. A contract between the parties and 2. Evidence of author ity to the Register of Deeds to make registration. The act of registration shall be the operative act to convey or affect the land insofar as third persons are concerned. A forged deed is an absolute nullity and conveys no title. (Asked in 8 5, 89, 00 and 05) EXCEPTION: If there is good faith, a TCT has already been issued to the purchaser, the latter being an innocent purchaser for value according to Sec. 39, PD 1529, then the title is good. PD 1529 Sec 52. Constructive notice upon registration. Every conveyance, mortgag e, lease, lien, attachment, order, judgment, instrument or entry affecting regis tered land shall, if registered, filed or entered in the office of the Register of Deeds for the province or city where the land to which it relates lies, be co nstructive notice to all persons from the time of such registering, filing or en tering. 253 LAND TITLES and DEEDS I. Two Types of Dealings A. VOLUNTARY DEALINGS Deeds, instruments, documents which are the results of fre e and voluntary acts of parties thereto. B. INVOLUNTARY DEALINGS Writ, order, or process issued by the court of record affecting registered land, also other ins truments which are not willful acts of the registered owner, executed without hi s knowledge or consent.

Every entry affecting registered land shall, if registered, filed or entered in the office of the Register of Deeds be constructive notice to all persons from t he time of registering. III. Voluntary vs. Involuntary Dealings VOLUNTARY DEALINGS Sale, mortgage, lease, patent, powers of attorney, trusts Pre sentation of the owners duplicate certificate of title is required to notify; mer e entry insufficient An innocent purchaser for value of registered land becomes the registered owner the moment he presents and files a duly notarized and valid deed of sale and the same is entered in the day book and at the same time he su rrenders or presents the owners duplicate certificate of title INVOLUNTARY DEALIN GS Attachment, injunction, mandamus, levy on execution, notice of lis pendens En try in the day book is sufficient notice to all persons II. Necessity and Effects of Registration PD 1529 Sec 51. Conveyance and other dealings by registered owner. An owner of r

egistered land may convey, mortgage, lease, charge or otherwise deal with the sa me in accordance with existing laws. He may use such forms of deeds, mortgages, leases or other voluntary instruments as are sufficient in law. But no deed, mor tgage, lease, or other voluntary instrument, except a will purporting to convey or affect registered land shall take effect as a conveyance or bind the land, bu t shall operate only as a contract between the parties and as evidence of author ity to the Register of Deeds to make registration. The act of registration shall be the operative act to convey or affect the land insofar as third persons are concerned, and in all cases under this Decree, the registration shall be made in the office of the Register of Deeds for the province or city where the land lie s. Lenin vs. Bass, (1952): Entry thereof in the day book of the ROD is sufficient n otice to all persons even if the owners duplicate certificate of title is not pre sented to the ROD.

CIVIL LAW REVIEWER VOLUNTARY DEALINGS covering the land sold and pays the regist ration fees. (Asked in 98) Villasor vs. Camon, (1951): It is necessary to registe r the deed or instrument in the entry book and a memorandum thereof shall also b e made in the owners duplicate certificate and its original Spouses Labayen vs. L eonardo Serafica, (2008, Nachura): At the time of the filing of the petition for cancellation of encumbrance, the lease contract already lost its efficacy. Thus , there is no basis to save its annotation on defendants title. The fact that the cancellation of the lease contract was forged is of no moment, for there was no violation of a right. INVOLUNTARY DEALINGS Chapter 5: SUBSEQUENT REGISTRATION

Quiniano vs. CA, (1971): When a person buys land from one whose rights over the land is evidenced only by a deed of sale and an annotation in the certificate of title but no TCT. Dir. Of Lands vs. Reyes, (1976): Entry in the day book is sufficient notice to a ll persons of an adverse claim without the same being annotated at the back of t he certificate of title IV. Registration of Voluntary Instruments in General PD 1529 Sec 54. Dealings less than ownership, how registered. No new certificate shall be entered or issued pursuant to any instrument which does not divest the ownership or title from the owner or from the transferee of the registered owne rs. All interests in registered land less than ownership shall be registered by filing with the Register of Deeds the instrument which creates or transfers or c laims such interests and by a brief memorandum thereof made by the Register of D eeds upon the certificate of title, and signed by him. A similar memorandum shal l also be made on the owners duplicate. The cancellation or extinguishment of s uch interests shall be registered in the same manner. PD 1529 Sec 55. Grantees name, nationality, etc., to be stated. Every deed or other voluntary instrument presented for registration shall contain or have endorsed upon it the full name, nationality, residence and postal address of the grantee or other person acquir ing or claiming an interest under such instrument, and every deed shall also sta te whether the grantee is married or unmarried, and if married, the name in full of the husband or wife. If the grantee is a corporation or association, the ins trument must contain a recital to show that such corporation or association is l egally qualified to acquire private lands. Any change in the residence or postal address of such person shall be endorsed by the Register of Deeds on the origin al copy of the corresponding certificate of title, upon receiving a sworn statem ent of such change. All names and addresses shall also be entered on all certifi cates. Notices and processed issued in relation to registered land in pursuance of this Decree may be served upon any person in interest by mailing the same to the addresses given, and shall be binding, whether such person resides within or without the Philippines, but the court may, in its discretion, require further or other notice to be given in any case, if in its opinion the interest of justi ce so requires. PD 1529 Sec 56. Primary Entry Book; fees; certified copies. Each Register of Deeds shall keep a primary entry book in which, upon payment of the entry fee, he shall General Rule: Campillo vs. PNB. (1969): A person dealing with registered propert y need not go beyond, but only has to rely on, the title. (Asked in 86 and 04) He is charged with notice only of such burdens and claims which are annotated on th e title, for registration is the operative act that binds the property. (Asked i n 84 and 04) When should a purchaser investigate? Banks are required to exercise m ore care and prudence in dealing with registered lands for their business is one affected with public interest. The general rule does not apply. Leung Yee vs. S trong Machinery, (1918): When party concerned has actual knowledge of facts and

circumstances that would impel a reasonably cautious man to make inquiry. Jamoc vs. CA, (1991): When purchaser is in bad faith; e.g. he had full knowledge of a previous sale. LAND TITLES and DEEDS AFP Mutual Benefit Association vs. Santiago, (2008, Nachura): Entry of the attac hment in the books is sufficient notice to all persons. Hence, the fact that the deed of sale was already annotated is of no moment with regard to third persons . The preference created by the levy on attachment is not diminished by the subs equent registration of the deed of sale. 254

CIVIL LAW REVIEWER enter, in the order of their reception, all instruments inclu ding copies of writs and processes filed with him relating to registered land. H e shall, as a preliminary process in registration, note in such book the date, h our and minute of reception of all instruments, in the order in which they were received. They shall be regarded as registered from the time so noted, and the m emorandum of each instrument, when made on the certificate of title to which it refers, shall bear the same date: Provided, that the national government as well as the provincial and city governments shall be exempt from the payment of such fees in advance in order to be entitled to entry and registration. Every deed o r other instrument, whether voluntary or involuntary, so filed with the Register of Deeds shall be numbered and indexed and endorsed with a reference to the pro per certificate of title. All records and papers relative to registered land in the office of the Register of Deeds shall be open to the public in the same mann er as court records, subject to such reasonable regulations as the Register of D eeds, under the direction of the Commissioner of Land Registration, may prescrib e. All deeds and voluntary instruments shall be presented with their respective copies and shall be attested and sealed by the Register of Deeds, endorsed with the file number, and copies may be delivered to the person presenting them. Cert ified copies of all instruments filed and registered may also be obtained from t he Register of Deeds upon payment of the prescribed fees Chapter 5: SUBSEQUENT REGISTRATION

unwarranted and confers no right on the purchaser RA 456 prohibits registration of documents affecting real property which is delinquent in the payment of real estate taxes. Further, if evidence of such payment is not presented with 15 days form the date of entry of said document in the primary entry book of the regist er of deeds the entry shall be deemed cancelled. Pay fees and DST (government is exempt) The instruments are regarded as registered from the time ROD enters the m in his book. V. Registration of Deeds of Sale and Transfers 255 LAND TITLES and DEEDS PD 1529 Sec 57. Procedure in registration of conveyances. An owner desiring to c onvey his registered land in fee simple shall execute and register a deed of con veyance in a form sufficient in law. The Register of Deeds shall thereafter make out in the registration book a new certificate of title to the grantee and shal l prepare and deliver to him an owners duplicate certificate. The Register of D eeds shall note upon the original and duplicate certificate the date of transfer , the volume and page of the registration book in which the new certificate is r egistered and a reference by number to the last preceding certificate. The origi nal and the owners duplicate of the grantors certificate shall be stamped "can celed". The deed of conveyance shall be filled and indorsed with the number and the place of registration of the certificate of title of the land conveyed. PD 1 529 Sec 58. Procedure where conveyance involves portion of land. If a deed or co nveyance is for a part only of the land described in a certificate of title, the Register of Deeds shall not enter any transfer certificate to the grantee until a plan of such land showing all the portions or lots into which it has been sub divided and the corresponding technical descriptions shall have been verified an d approved pursuant to Section 50 of this Decree. Meanwhile, such deed may only be annotated by way of memorandum upon the grantors certificate of title, origi nal and duplicate, said memorandum to serve as a notice to third persons of the fact that certain unsegregated portion of the land described therein has been co

nveyed, and every certificate with such memorandum shall be effectual for the pu rpose of showing the grantees title to the portion conveyed to him, pending the actual issuance of the corresponding certificate in his name. A. PROCESS OF REGISTRATION: 1. File instrument creating or transferring interest and certificate of title with Register of Deeds together with: a. Owners duplica te b. Payment of fees & documentary stamp tax c. Evidence of full payment of rea l estate tax d. Document of transfer 1 copy additional for city/provincial asses sor 2. Register of Deeds shall make a memorandum on the certificate of title, si gned by him 3. TCT shall then be issued. NOTE: If the grantee is a corporation o r association, it must show that it is qualified to acquire private lands. PNB v s. Fernandez, (1935): The issuance of a new transfer certificate without present ation of an owners duplicate is

CIVIL LAW REVIEWER Upon the approval of the plan and technical descriptions, the original of the plan, together with a certified copy of the technical descripti ons shall be filed with the Register of Deeds for annotation in the correspondin g certificate of title and thereupon said officer shall issue a new certificate of title to the grantee for the portion conveyed, and at the same time cancel th e grantors certificate partially with respect only to said portion conveyed, or , if the grantor so desires, his certificate may be canceled totally and a new o ne issued to him describing therein the remaining portion: Provided, however, th at pending approval of said plan, no further registration or annotation of any s ubsequent deed or other voluntary instrument involving the unsegregated portion conveyed shall be effected by the Register of Deeds, except where such unsegrega ted portion was purchased from the Government or any of its instrumentalities. I f the land has been subdivided into several lots, designated by numbers or lette rs, the Register of Deeds may, if desired by the grantor, instead of canceling t he latters certificate and issuing a new one to the same for the remaining unco nveyed lots, enter on said certificate and on its owners duplicate a memorandum of such deed of conveyance and of the issuance of the transfer certificate to t he grantee for the lot or lots thus conveyed, and that the grantors certificate is canceled as to such lot or lots. PD 1529 Sec 59. Carry over of encumbrances. If, at the time of any transfer, subsisting encumbrances or annotations appear in the registration book, they shall be carried over and stated in the new certi ficate or certificates; except so far as they may be simultaneously released or discharged. Chapter 5: SUBSEQUENT REGISTRATION

That plan with the certified copy of the technical descriptions shall be filed w ith the Register of Deeds for annotation in the TCT. Register of Deeds hall issu e a TCT and cancel the grantors certificate partially OR it may be canceled tot ally and a new one issued describing therein the remaining portion C. IF THERE ARE SUBSISTING ENCUMBRANCES AND ANNOTATIONS They shall be carried ov er in the new certificate or certificates; except when they have been simultaneo usly discharged. VI. Mortgages and Leases PD 1529 Sec 60. Mortgage or lease of registered land. Mortgage and leases shall be registered in the manner provided in Section 54 of this Decree. The owner of registered land may mortgage or lease it by executing the deed in a form suffici ent in law. Such deed of mortgage or lease and all instruments which assign, ext end, discharge or otherwise deal with the mortgage or lease shall be registered, and shall take effect upon the title only from time of registration. No mortgag ees or lessees duplicate certificate of title shall hereafter be issued by the Registers of Deeds, and those issued prior to the effectivity of this Decree ar e hereby deemed canceled and the holders thereof shall immediately surrender the same to the Register of Deeds concerned. PD 1529 Sec 61. Registration. Upon pre sentation for registration of the deed of mortgage or lease together with the ow ners duplicate, the Register of Deeds shall enter upon the original of the cert ificate of title and also upon the owners duplicate certificate a memorandum th ereof, the date and time of filing and the file number assigned to the deed, and shall sign the said memorandum. He shall also note on the deed the date and tim e of filing and a reference to the volume and page of the registration book in w hich it is registered 256 LAND TITLES and DEEDS A. IF ENTIRE PROPERTY IS SUBJECT Owner executes and registers the deed which mus

t be sufficient in form. A new certificate of title is issued and Register of De eds prepares and delivers to grantee his owners duplicate certificate Register of Deeds notes upon the OCT and the duplicate certificate the date of transfer, the volume and page of the registration book where the new certificate is regist ered The original and the owners duplicate of the grantors certificate shall b e stamped "canceled". The deed of conveyance shall be filed and indorsed with th e number and the place of registration of the certificate of title of the land c onveyed. B. IF ONLY A PORTION OF PROPERTY IS SUBJECT Include a plan which shows all the portions already subdivided with verified and approved technical descrip tions.

Mortgage and leases shall be registered in the manner provided for in Section 54 . When a deed of mortgage or lease is presented, ROD will enter upon the OCT and upon the owners duplicate a memorandum thereof and shall sign.

CIVIL LAW REVIEWER Chapter 5: SUBSEQUENT REGISTRATION VII. Powers of Attorney; Trusts PD 1529 Sec 64. Power of attorney. Any person may, by power of attorney, convey or otherwise deal with registered land and the same shall be registered with the Register of Deeds of the province or city where the land lies. Any instrument r evoking such power of attorney shall be registered in like manner. PD 1529 Sec 6 5. Trusts in registered land. If a deed or other instrument is filed in order to transfer registered land in trust, or upon any equitable condition or limitatio n expressed therein, or to create or declare a trust or other equitable interest s in such land without transfer, the particulars of the trust, condition, limita tion or other equitable interest shall not be entered on the certificate; but on ly a memorandum thereof shall be entered by the words "in trust", or "upon condi tion", or other apt words, and by a reference by number to the instrument author izing or creating the same. A similar memorandum shall be made upon the original instrument creating or declaring the trust or other equitable interest with a r eference by number to the certificate of title to which it relates and to the vo lume and page in the registration book in which it is registered. PD 1529 Sec 66 . Trust with power of sale, etc., how expressed. If the instrument creating or d eclaring a trust or other equitable interest contains an express power to sell, mortgage or deal with the land in any manner, such power shall be stated in the certificate of title by the words "with power to sell", or "power to mortgage", or by apt words of description in case of other powers. No instrument which tran sfers, mortgages or in any way deals with registered land in trust shall be regi stered, unless the enabling power thereto is expressly conferred in the trust in strument, or unless a final judgment or order of a court of competent jurisdicti on has construed the instrument in favor of the power, in which case a certified copy of such judgment or order may be registered.

To transfer registered land in trust without transfer, the particulars of the tr ust shall not be entered on the certificate. Only a memorandum shall be entered by the words "in trust", or "upon condition". Power must be expressly conferred in the trust instrument. If implied of constructive trust, person claiming such must execute a sworn statement. But such claim doesnt affect the title of a purch aser for value and in good faith before its registration. VIII. Involuntary Dealings PD 1529 Sec 69. Attachments. An attachment, or a copy of any writ, order or proc ess issued by a court of record, intended to create or preserve any lien, status , right, or attachment upon registered land, shall be filed and registered in th e Registry of Deeds for the province or city in which the land lies, and, in add ition to the particulars required in such papers for registration, shall contain a reference to the number of the certificate of title to be affected and the re gistered owner or owners thereof, and also if the attachment, order, process or lien is not claimed on all the land in any certificate of title a description su fficiently accurate for identification of the land or interest intended to be af fected. A restraining order, injunction or mandamus issued by the court shall be entered and registered on the certificate of title affected, free of charge. PD 1529 Sec 68. Implied, trusts, how established. Whoever claims an interest in registered land by reason of any implied or constructive trust shall file for re

gistration with the Register of Deeds a sworn statement thereof containing a des cription of the land, the name of the registered owner and a reference to the nu mber of the certificate of title. Such claim shall not affect the title of a pur chaser for value and in good faith before its registration.

Powers of attorney and revocations shall be registered with the Register of Deed s of the province or city where the land lies. 1. REGISTRATION OF ATTACHMENT/ OTHER LIENS a. Copy of writ in order to preserve any lien, right or attachment upon registered land may be filed with Register of Deeds where land lies, containing number of certificate of title of land to be affected or description of land b. Register of Deeds to index attachment in name s of both plaintiff & defendant or name of person whom property is held or in wh ose name stands in the records c. If duplicate of certificate of title is not pr esented: LAND TITLES and DEEDS A. ATTACHMENT - a writ issued at the institution or during progress of an action commanding the sheriff to attach the property, rights, credits or effects of th e defendant to satisfy demands of the plaintiff Kinds: a. Preliminary b. Garnish ment c. Levy on execution 257

CIVIL LAW REVIEWER Chapter 5: SUBSEQUENT REGISTRATION Register of Deeds shall within 36 hours send notice to registered owner by mail stating that there has been registration & requesting him to produce duplicate s o that memorandum be made If owner neglects or refuses Register of Deeds shall r eport matter to court. Court after notice shall enter an order to owner to surre nder certificate at time & place to be named therein. d. Although notice of atta chment is not noted in duplicate, notation in book of entry of Register of Deeds produces effect of registration already 2. EFFECT OF REGISTRATION ATTACHMENT: a . Creates real right b. Has priority over execution sale c. But between 2 attach ments d. one that is earlier in registration is preferred 3. DUTY OF REGISTER OF DEEDS Ministerial but may refuse registration in following circumstances: 1. Ti tle to land is not in the name of defendant 2. No evidence is submitted to show that he has present or possible future interest in land Exception: If petitioner is an heir DELINQUENCY OF

PD 1529 Sec 74. Enforcement of liens on registered land. Whenever registered lan d is solved on execution, or taken or sold for taxes or for any assessment or to enforce a lien of any character, or for any costs and charges incident to such liens, any execution or copy of execution, any officers return, or any deed, de mand, certificate, or affidavit, or other instrument made in the course of the p roceedings to enforce such liens and required by law to be recorded, shall be fi led with the Register of Deeds of the province or city where the land lies and r egistered in the registration book, and a memorandum made upon the proper certif icate of title in each case as lien or encumbrance. B. EXECUTION AND TAX SALES 1. EXECUTION SALE a. To enforce a lien of any description on registered land, an y execution or affidavit to enforce such lien shall be filed with Register of De eds where land lies b. Register in registration book & memorandum upon proper ce rtificate of title as adverse claim or as an encumbrance c. To determine prefere ntial rights between 2 liens: priority of registration of attachment 2. TAX SALE a. Sale of land for collection of delinquent taxes and penalties due the Govern ment 3. PROCEDURE OF REGISTRATION OF TAX SALE a. Officers return shall be submitted to Register of Deeds together with duplicate title b. Register in registration boo k c. Memorandum shall be entered in certificate as an adverse claim or encumbran ce d. After period of redemption has expired & no redemption (2 years from regis tration of auction sale) cancellation of title & issuance of new one e. Before c ancellation, notice shall be sent to registered owner: to surrender title & f. s how cause why it shall not be cancelled NOTE: Actual knowledge is equivalent to registration. LAND TITLES and DEEDS b. In personam (all persons interested shall be notified so that they are given opportunity to be heard) c. Notice to be given to delinquent tax payer at last k nown address d. Publication of notice must also be made in English, Spanish & lo cal dialect & posted in a public & conspicuous place in place wherein property i s situated & at main entrance of provincial building e. Sale cannot affect right s of other lien holders unless given right to defend their rights: due process m ust be strictly observed f. Tax lien superior to attachment g. No need to regist

er tax lien because it is automatically registered once the tax accrues h. But s ale of registered land to foreclose a tax lien need to be registered. 258

CIVIL LAW REVIEWER Chapter 5: SUBSEQUENT REGISTRATION C. NOTICE OF LIS PENDENS PD 1529 Sec 76. Notice of lis pendens. No action to recover possession of real e state, or to quiet title thereto, or to remove clouds upon the title thereof, or for partition, or other proceedings of any kind in court directly affecting the title to land or the use or occupation thereof or the buildings thereon, and no judgment, and no proceeding to vacate or reverse any judgment, shall have any e ffect upon registered land as against persons other than the parties thereto, un less a memorandum or notice stating the institution of such action or proceeding and the court wherein the same is pending, as well as the date of the instituti on thereof, together with a reference to the number of the certificate of title, and an adequate description of the land affected and the registered owner there of, shall have been filed and registered. Section 77. Cancellation of lis penden s. Before final judgment, a notice of lis pendens may be canceled upon order of the court, after proper showing that the notice is for the purpose of molesting the adverse party, or that it is not necessary to protect the rights of the part y who caused it to be registered. It may also be canceled by the Register of Dee ds upon verified petition of the party who caused the registration thereof. At a ny time after final judgment in favor of the defendant, or other disposition of the action such as to terminate finally all rights of the plaintiff in and to th e land and/or buildings involved, in any case in which a memorandum or notice of lis pendens has been registered as provided in the preceding section, the notic e of lis pendens shall be deemed canceled upon the registration of a certificate of the clerk of court in which the action or proceeding was pending stating the manner of disposal thereof. PD 1529 Sec 77. Cancellation of lis pendens. Before final judgment, a notice of lis pendens may be canceled upon order of the court , after proper showing that the notice is for the purpose of molesting the adver se party, or that it is not necessary to protect the rights of the party who cau sed it to be registered. It may also be canceled by the Register of Deeds upon v erified petition of the party who caused the registration thereof. At any time a fter final judgment in favor of the defendant, or other disposition of the actio n such as to terminate finally all rights of the plaintiff in and to the land an d/or buildings involved, in any case in which a memorandum or notice of lis pend ens has been registered as provided in the preceding section, the notice of lis pendens shall be deemed canceled upon the registration of a certificate of the c lerk of court in which the action or proceeding was pending stating the manner o f disposal thereof. 1. PURPOSE: Keep subject matter within the power of the court until the entry of final judgment. It therefore creates merely a contingency & not a lien. 2. EFFE CT OF REGISTRATION a. Impossibility of alienating the property in dispute during the pendency of the suit may be alienated but purchaser is subject to final out come of pending suit b. Register of Deeds duty bound to carry over notice of lis pendens on all new titles to be issued 3. CANCELLATION OF LIS PENDENS a. Before final judgment court may order cancellation after showing that notice if only f or purpose of molesting an adverse party or it is not necessary to protect right s of party who caused it to be registered b. Register of Deeds may also cancel b y verified petition of party who caused such registration c. Deemed cancelled wh en certificate of clerk of court stating manner of disposal of proceeding is reg istered 3. OTHER PARTIES WHO NEED TO REGISTER a. Assignee in involuntary proceed ing for insolvency o Duty of the officer serving notice to file copy of notice t o Register of Deeds where the property of debtor lies o Assignee elected or appo inted by court shall be entitled to entry of new certificate of registered land upon presentment of copy of assignment with bankrupts certificate of title (dupli cate) o New certificate shall not that it is entered to him as assignee or trust ee in insolvency proceedings b. Government in eminent domain o Copy of judgment file in Register of Deeds which states description of property, certificate numb

er, interest expropriated, nature of public use o Memorandum shall be made or ne w certificate of title shall be issued D. ADVERSE CLAIM Section 70. Adverse claim. Whoever claims any part or interest in registered lan d adverse to the registered owner, arising subsequent to the date of the origina l registration, may, if no other provision is made in this 259 LAND TITLES and DEEDS

CIVIL LAW REVIEWER Decree for registering the same, make a statement in writing setting forth fully his alleged right or interest, and how or under whom acquire d, a reference to the number of the certificate of title of the registered owner , the name of the registered owner, and a description of the land in which the r ight or interest is claimed. The statement shall be signed and sworn to, and sha ll state the adverse claimants residence, and a place at which all notices may be served upon him. This statement shall be entitled to registration as an adver se claim on the certificate of title. The adverse claim shall be effective for a period of thirty days from the date of registration. After the lapse of said pe riod, the annotation of adverse claim may be canceled upon filing of a verified petition therefor by the party in interest: Provided, however, that after cancel lation, no second adverse claim based on the same ground shall be registered by the same claimant. Before the lapse of thirty days aforesaid, any party in inter est may file a petition in the Court of First Instance where the land is situate d for the cancellation of the adverse claim, and the court shall grant a speedy hearing upon the question of the validity of such adverse claim, and shall rende r judgment as may be just and equitable. If the adverse claim is adjudged to be invalid, the registration thereof shall be ordered canceled. If, in any case, th e court, after notice and hearing, shall find that the adverse claim thus regist ered was frivolous, it may fine the claimant in an amount not less than one thou sand pesos nor more than five thousand pesos, in its discretion. Before the laps e of thirty days, the claimant may withdraw his adverse claim by filing with the Register of Deeds a sworn petition to that effect. Chapter 5: SUBSEQUENT REGISTRATION e. his residence or the place to which all notices may be served upon him. NOTE: Non-compliance with the above requisites renders the adverse claim nonregistrab le and ineffective. 260 LAND TITLES and DEEDS When a person claims any part or interest in registe 1. WHEN IS A CLAIM ADVERSE? red land adverse to the registered owner, after date of the original registratio n. 2. DURATION OF AN ADVERSE CLAIM 30 days from the date of registration. After that the annotation of adverse claim may be cancelled upon filing of a verified petition by the party in interest. When cancelled no second adverse claim based on the same ground may be registered by the same claimant. (Asked in 98) 3. REQUI SITES The adverse claimant must give a statement signed and sworn before a notar y public, the ff in writing: a. his alleged right or interest b. how and under w hom such alleged right or interest is acquired c. the description of the land in which the right or interest is claimed and d. the number of the certificate of title

CIVIL LAW REVIEWER Chapter 6: SYSTEM of REGISTRATION of UNREGISTERED LANDS Chapter 6: System of Registration of Unregistered Lands This 6 chapter will discuss the process of registration of unregistered lands. T here are TWO MAJOR LESSON is included in this Chapter. I. II. Key Points in the Registration of Unregistered Lands Procedure in the Registration of Unregistered Lands th I. Key Points (a) The Register of Deeds for each province or city shall keep a Primary Entry B ook and a Registration Book. The Primary Entry Book shall contain, among other p articulars, the entry number, the names of the parties, the nature of the docume nt, the date, hour and minute it was presented and received. The recording of th e deed and other instruments relating to unregistered lands shall be effected by any of annotation on the space provided therefor in the Registration Book, afte r the same shall have been entered in the Primary Entry Book. (b) If, on the fac e of the instrument, it appears that it is sufficient in law, the Register of De eds shall forthwith record the instrument in the manner provided herein. In case the Register of Deeds refuses its administration to record, said official shall advise the party in interest in writing of the ground or grounds for his refusa l, and the latter may appeal the matter to the Commissioner of Land Registration in accordance with the provisions of Section 117 of this Decree. It shall be un derstood that any recording made under this section shall be without prejudice t o a third party with a better right. (c) After recording on the Record Book, the Register of Deeds shall endorse among other things, upon the original of the re corded instruments, the file number and the date as well as the hour and minute when the document was received for recording as shown in the Primary Entry Book, returning to the registrant or person in interest the duplicate of the instrume nt, with appropriate annotation, certifying that he has recorded the instrument after reserving one copy thereof to be furnished the provincial or city assessor as required by existing law. (d) Tax sale, attachment and levy, notice of lis p endens, adverse claim and other instruments in the nature of involuntary dealing s with respect to unregistered lands, if made in the form sufficient in law, sha ll likewise be admissible to record under this section. (e) For the services to be rendered by the Register of Deeds under this section, he shall collect the sa me amount of fees prescribed for similar services for the registration of deeds or instruments concerning registered lands. LAND TITLES and DEEDS PD 1529 Sec 113. Recording of instruments relating to unregistered lands. No dee d, conveyance, mortgage, lease, or other voluntary instrument affecting land not registered under the Torrens system shall be valid, except as between the parti es thereto, unless such instrument shall have been recorded in the manner herein prescribed in the office of the Register of Deeds for the province or city wher e the land lies. A. The system of registration for unregistered land is under the torrens system. B. Before: covers voluntary dealings, now includes involuntary dealings C. Effe ct if prospective; binds 3rd persons after registration but yields to better rig hts of 3rd person prior to registration (limited effect to 3rd parties) reason: no strict investigation involved D. Subsequent dealings also valid if recorded E . Register of deeds keeps day book & a register; index system is also kept

II. Procedure A. Presentment of instrument dealing in unregistered land B. If found in order r egistered C. If found defective registration is refused writing his reason for r efusal 261

CIVIL LAW REVIEWER Chapter 7: REGISTRATION of PUBLIC LANDS Chapter 7: Registration of Public Lands This 7 Chapter will discuss the process of registration of public lands. It incl udes also the different modes of alienating public lands. There are SIX MAJOR LE SSONS in this chapter: I. Classification of Land of the Public Domain II. Nature of Public Lands III. Procedure IV. Role of Director of Lands V. Modes of Aliena ting Public Lands VI. Patents th

agricultural land to fishponds does not change character of land. Now: restricte d meaning; fishponds has distinct category; cannot be alienated but maybe leased from government Republic vs. Imperial, (2000): The classification of public lan ds is a function of the executive branch of government. PUBLIC LANDS I. Classification of Land of the Public Domain Inalienable Alienable 262 Lands of the Public Domain Public Agricultural Land LAND TITLES and DEEDS A. UNDER THE CONSTITUTION 1. Agricultural- only type of land that is alienable 2 . Forest or timber 3. Mineral lands 4. National Park B. UNDER THE PUBLIC LAND AC T 1. Alienable/disposable a. Agricultural b. Residential, commercial, industrial c. Educational, charitable d. Town sites and for public and quasipublic uses 2. Timber lands inalienable 3. Mineral lands inalienable NOTE: If patent of title is issued for inalienable lands, such patent or title is void ab initio Not subj ect to acquisitive prescription; even if in possession for long time, will not r ipen into ownership. EXCEPT: mineral lands and forest lands acquired before inau guration of Commonwealth in November 15, 1935; vested rights which are protected is exclusive prerogative of executive & not by judiciary Anyone who applies for confirmation of imperfect title has burden of proof to overcome the presumption that the land sought to be registered forms part of public domain (Regalian doc trine) Before, fishponds are included in the definition of agriculture, conversi on of II. Nature of Title to Public Lands Conveyed Indefeasible and Conclusive In absence of registration, title to public land is not perfected and therefore not Indefeasible In case of 2 titles obtained on sam e date, the one procured through the decree of registration is superior than pat ent issued by director of lands 2 titles procured by one person one from homeste ad patent, one from judicial decree & sold to 2 different persons, the one who b ought it for value and in good faith & one who register first shall have prefere nce III. Procedure of Conveying Public Land to a Private Person

A. Official issuing instrument of conveyance to issue instrument B. File instrum ent with Register of Deeds C. Instrument to be entered in books and owners duplic ate to be issued D. Instrument only contract between Government and private pers on and does not take effect as conveyance if unregistered, it is registration wh ich is operative act of conveying land; evidence of authority for Register of De eds to register E. Fees to be paid by grantee

CIVIL LAW REVIEWER Chapter 7: REGISTRATION of PUBLIC LANDS F. After issuance of certificate of title, land is deemed registered land within th e purview of the Torrens system IV. Director officer A. of Lands: Quasi-judicial 3. government system, of distribution of public lands may arise & this must be avoi ded EXCEPT: Annullable on ground of fraud, may be reopened even after 1 year bec ause registration does not shield bad faith Court in exercise of equity jurisdic tion may direct reconveyance even without ordering cancellation of title B. Findings of fact conclusive on higher court with absence of fraud, mistake other than error of judgment; but not with regards to finding of law. Empowered to al ienate and dispose lands. V. Modes of Alienating Public Lands: A. Homestead settlement B. Sale C. Confirmation of Imperfect or incomplete title , supra. 1. Judicial legalization 2. Administrative legalization NOTE: Lease is not included since lease does not transfer ownership Free-title grant: free dist ribution of public lands to encourage people to cultivate: government furnishes the applicant with tolls plus cash allowance to enable him to cultivate C. AIM OF HOMESTEAD PATENT 1. Benevolent intention of government to distribute d isposable agricultural land to destitute citizens for their home and cultivation 2. As a matter of public policy, may be repurchased even if after 5 years provi ded not for profit 3. Right of repurchase not allowed if sold within family & no t for cultivating or living but for speculation purpose D. RESTRICTIONS 1. Canno t be alienated within 5 years after approval of application for patent 2. Cannot be liable for satisfaction of debt within 5 years after approval of patent appl ication 3. Subject to repurchase of heirs within 5 years after alienation when a llowed already 4. No corporation, partnership, association may acquire unless so lely for commercial, industrial, educational, religious or charitable purpose or right of way subject to consent of grantee & approval of Secretary of Natural r esources EXCEPTIONS: 1. Action for partition because it is not a conveyance 2. Alienation s or encumbrances made in favor of the government NOTE: Erring homesteader not b arred by pari delicto Pari delicto rule does not apply in void contract Violatio n of prohibitions results in void contract Action to recover does not prescribe If the homesteader dies, heirs succeed him in this application Legal restriction in disposition by nonChristians (Cultural Minorities) Conveyance is valid if ab le to read and can understand language where deed is written Otherwise, not vali d unless approved by Commission on National Integration Safeguard is to protect them against fraud/deceit

263 LAND TITLES and DEEDS VI. Patents A. WHEN IS GOVERNMENT GRANT DEEMED ACQUIRED BY OPERATION OF LAW 1. Deed of conve yance issued by government patent/grant 2. Registered with Register of Deeds man datory: operative act to convey & transfer title 3. Actual physical possession, open & continuous NOTE: Land ceased to be part of public domain & now ownership vests to the grant ee Any further grant by Government on same land is null & void Upon registration , title is indefeasible B. TITLE ISSUED PURSUANT TO REGISTRATION OF PATENT 1. Indefeasible when register ed, deemed incorporated with Torrens system; 1 year after issuance of patent 2. May not be opened one year after entry by Land Registration Authority; otherwise , confusion, uncertainty & confusion on

CIVIL LAW REVIEWER Chapter 8: REMEDIES of the AGGRIEVED PARTY Chapter 8: Remedies of the Aggrieved Party The remedies listed here are: I. II. III. IV. V. VI. VII. Motion For New Trial A ppeal Relief from Judgment Petition for Review Action for Reconveyance Damages A ction for Compensation from the Assurance Fund VIII. Annulment of Judgment IX. R eversion X. Criminal Action Motion for New Trial Grounds: Fraud, accident, mistake, excusable negligence Newly discovered eviden ce Awarded excessive damages, or insufficiency of evidence, or that the decision is against law 15 days from notice appealable to the CA or to the SC in the sam e manner as in ordinary actions 60 days after petitioner learns of judgment, but not more than 6 months after judgment was entered Grounds: Fraud, accident, mis take, excusable negligence Requisites: Walstrom vs. Mapa,, (1990): petitioner mu st have an estate or interest in the land he must show actual fraud petition mus t be filed within one year form the issuance of the decree by LRA property has n ot yet passed to an innocent purchaser for value. Grounds: extrinsic fraud, void decision for want of due process lack of jurisdiction Calalang vs. Register of Deeds (1992): Under the Torrens system of registration, the Torrens still become s indefeasible and incontrovertible one year form the issuance of the final decr ee and is generally conclusive evidence of the ownership Iglesia ni Cristo vs. C FI, (1983): This applies as well to title acquired through homestead or free pat ents before issuance of decree, or within/after 1 year from entry if based on im plied trust, 10 years; if based on expressed trust and void contract, imprescrip tible if based on fraud, 4 years from the discovery it is not available if the p roperty has already been transferred to an innocent purchaser for value. Esconde vs. Barlongay, (1987): It does not reopen proceedings but a mere transfer of th e land from registered owner to the rightful owner Huang vs. CA,1994: It is avai lable in case of fraud thereby creating a constructive trust between parties Chi ng vs. CA, 1990: It can be availed of when reconveyance is no longer possible as when the land has been transferred to an innocent purchaser for value 264 LAND TITLES and DEEDS Appeal Relief from Judgment Petition for Review Action for Reconveyance Damages

CIVIL LAW REVIEWER Action for Compensation from the Assurance 1 Fund Chapter 8: REMEDIES of the AGGRIEVED PARTY Requisites: A person sustains loss or damage or is deprived by any estate or interest in land On account of bringing of land under the Torrens system Through (FEMOM) fraud, error, mistake, omission , or misdescription in the certificate of entry in the registration book Without negligence on his part And is barred from bringing an action for recovery of th e land. The action has not prescribed. It must be instituted within 6 years from the time the right to bring such action first occurred--> date of issue of the certificate of title Against whom filed: against the Register of Deeds and the N ational Treasurer if FEMOM is caused by court personnel, Register of Deeds, his deputy or other employees of the Registry If other those above mentioned: the Re gister of Deeds, the National Treasurer and other person or persons, as co-defen dants. Grounds: extrinsic fraud and lack of jurisdiction. Galicia vs. Marquez (2 007): Ordinary remedies of appeal, motion for new trial etc should no longer be available. If based on extrinsic fraud, file 4 within years from discovery. If b ased on lack of jurisdiction, before it is barred by laches or estoppel Institut ed by the government, thru Solgen in all cases where lands of public domain are held in violation of the Constitution or were fraudulently conveyed. Indefeasibi lity of title, prescription, laches, and estoppel do not bar reversion suits. Pe rjury, Forgery, Others involving fraud Annulment of Judgment Reversion 265 LAND TITLES and DEEDS Criminal Action 1 Upon registration, there shall be paid to the Register of Deeds of 1% of the ass essed value of the real estate on the basis of the last assessment for taxation purposes, as contribution to the Assurance Fund.

CIVIL LAW REVIEWER Chapter 9: RECONSTITUTION of TITLES Chapter 9: Reconstitution 0f Titles (Asked in 96) I. Grounds II. Petitions For Reconstitution III. Duties of the Land Registration Authority IV. Effects of Fraud in the Reconstitution

I. Grounds A. LOSS B. DESTRUCTION II. Petitions for Reconstitution 1. 2. 3. B. WHAT DOES IT CONTAIN? A statement, among other things: 1. That no deed or oth er instrument affecting the property had been presented for registration. If the re is, include its particulars. 2. That the owners duplicate certificate or coo wners duplicate is in due form; 3. That the certificate of title is not the sub ject of litigation or investigation, administrative or judicial, regarding its g enuineness or due execution or issuance; 4. That the certificate of title was in full force and effect at the time it was lost or destroyed; 5. That the certifi cate of title is covered by a tax declaration regularly issued by the Assessors Office; and 6. That real estate taxes have been fully paid up to at least two ( 2) years prior to the filing of the petition for reconstitution. NOTE: The procedure relative to administrative reconstitution of lost or destroy ed certificate prescribed in said Act may be availed of only in case of substant ial loss or destruction of land titles due to fire, flood or other force majeure as determined by the Administrator of the Land Registration Authority: Provided , that the number of certificates of titles lost/damaged should be at least 10 % of the total number in the possession of the Office of the Register of Deeds, a nd that the number of certificates of titles lost or damaged be less than 500. III. Duties of Authority the Land Registration A. Keep a true, complete and faithful inventory of all books, titles, cash and p roperty of the Register of Deeds. B. Produce three image copies in whatever mean s the original can be produced. C. Surrender the owners duplicate to ROD and prep are and deliver a new owners duplicate to the registered owner. D. Issue rules an d regulations E. Review, revise decisions of the reconstituting officer of the R egister of Deeds. IV. Effects of Fraud, Deceit and Machination in the Reconstitution of Titles A. A reconstituted title obtained by means of fraud, deceit or other machination is void ab initio as against the party obtaining the same and all persons havin g knowledge thereof. B. Any person who by means of fraud, deceit or other machin ation obtains or attempts to obtain a reconstituted title shall be subject to cr

iminal prosecution C. Any public officer or employee who knowingly approves or a ssists in securing a decision allowing reconstitution in favor of any person not entitled thereto shall be subject to criminal prosecution. C. WHAT IF IT IS SUBSEQUENTLY FOUND BUT IT IS NOT IN THE NAME OF THE SAME PERSON IN WHOSE FAVOR THE - end of Land titles and Deeds LAND TITLES and DEEDS A. WHO MAY FILE? Registered owner His assigns Other persons, both natural and ju ridical, having an interest in the property RECONSTITUTED CERTIFICATE OF TITLE HAS BEEN ISSUED? The ROD or party concerned s hould notify the proper RTC. After which, shall order the cancellation of the re constituted certificate of title and render, with respect to the memoranda of ne w liens and encumbrances, if any, made in the reconstituted certificate of title , after its reconstitution, such judgment as justice and equity may require: Pro vided, however, That if the reconstituted certificate of title has been cancelle d by virtue of any deed or instrument, whether voluntary or involuntary, or by a n order of the court, and a new certificate of title has been issued, the proced ure prescribed above, with respect to the memorandum of new liens and encumbranc es made on the reconstituted certificate of title, after its reconstitution, sha ll be followed with respect to the new certificate of title, and to such new lie ns and encumbrances, if any, as may have been on the latter, after the issuance thereof. 266

CIVIL LAW REVIEWER TABLE of CONTENTS SALES Table of Contents Chapter I. The Contract of Sale ..................269 I. Definition (Art 1458, C C) ...................269 II. Elements ......................................... ..269 III. Stages ...............................................274 IV. Kinds o f Sale .....................................275 V. Form ........................ ..........................276 VI. Sale Distinguished From Other Contracts....... .............................................276 Chapter II. Obligations of the Seller and Buyer .............................................................27 8 I. Obligations of the Seller ....................278 II. Obligations of the Bu yer....................284 Chapter III. Double Sales ........................... ..286 I. General Rule .....................................286 II. Requisites .. .......................................286 III. Rules Governing Sale of Movables , Immovables and Unregistered Lands ........286 Chapter IV. Risk of Loss........ ......................288 I. General Rule .....................................2 88 II. Exceptions.........................................288 Chapter V. Documen ts of Title....................289 I. In General ............................... ..........289 II. Negotiable Documents of Title..........289 III. Non-Negotiable Documents of Title ..289 Chapter VI. Remedies of the Seller and Buyer ......... ..............................................................291 I. General Rem edies (Art. 1191, CC) ...291 II. Remedies of the Seller......................291 III. Remedies of the Buyer......................295 Chapter VII. Extinguishment of Sale ..........298 I. In General .........................................29 8 II. Conventional Redemption.................298 III. Equitable Mortgage ...... .....................299 IV. Legal Redemption .............................300 C hapter VIII. Philippine Bulk Sales Law (Act 3952) .............................. ................................303 I. Purpose ................................. ............303 II. Coverage...........................................303 III. Duty of Seller.....................................303 IV. Effect of non-complia nce...................304 268 SALES

CIVIL LAW REVIEWER Chapter I. The CONTRACT of SALE Prof. Roberto N. Dio Faculty Editor SALES SALES TEAM Chapter I. The Contract of Sale I. II. DEFINITION ELEMENTS A. CONSENT B. SUBJECT MATTER C. PRICE III. STAGES A. PREPARATION/NEGOTIATION B. PERFECTION C. CONSUMMATION IV. KINDS A. ABSOLUTE B. C ONDITIONAL V. FORM VI. SALE DISTINGUISHED FROM OTHER CONTRACTS A. DONATION B. BA RTER C. CONTRACT FOR A PIECE OF WORK D. LEASE OF THINGS E. AGENCY TO BUY AND SEL L F. DACION EN PAGO G. CONTRACT TO SELL H. BILATERAL PROMISE TO BUY AND SELL Jaim Mari M. Crisostomo Lead Writer Jessa Mary Ann C. Cedeo Eva Marie Guttierez Kristoffer Gabriel L. Mad rid Ros Jean Nonato Writers CIVIL LAW Kristine Bongcaron Patricia Tobias Subject Editors ACADEMICS COMMITTEE Kristine Bongcaron Michelle Dy Patrich Leccio Editors-in-Chief PRINTING & DISTRIBUTION Kae Guerrero 269 SALES DESIGN & LAYOUT Pat Hernandez Viktor Fontanilla Rusell Aragones Romualdo Menzon Jr. Rania Joya I. Definition (Art 1458, CC) Contract where one of the parties (Seller) obligates himself to: hip of and to deliver a determinate thing; Transfer owners

LECTURES COMMITTEE Michelle Arias Camille Maranan Angela Sandalo Heads Katz Manzano Mary Rose Beley Sam Nuez Krizel Malabanan Arianne Cerezo Marcr ese Banaag Volunteers and the other (Buyer) to pay a price certain in money or its equivalent. II. Elements The case of (Coronel v CA, 1996) enumerates the 3 elements of a valid contract o f sale namely: Consent Subject matter Price _______ A. CONSENT Meeting of minds upon the thing which is the object of the contract and the price. (Art 1475, CC) Requisites 1. Capacity 2. Offer and acceptance 3. No vitiation MOCK BAR COMMITTEE

Lilibeth Perez BAR CANDIDATES WELFARE Dahlia Salamat LOGISTICS Charisse Mendoza SECRETARIAT COMMITTEE Jill Hernandez Head Loraine Mendoza Faye Celso Mary Mendoza Joie Bajo Members

CIVIL LAW REVIEWER Chapter I. The CONTRACT of SALE CAPACITY All persons who have capacity to enter into obligations may enter into a contract of sale (Art 1489, CC) Kinds of Incapacity 1. Absolute Incapacity (MIn D-CI) (Art. 1327, CC) a. Minors b. Insane or Demented c. Deaf-mutes who do not k now how to write d. Civil Interdiction e. Judicially-declared Incompetents(Art. 39) Prodigals Imbeciles Absence & presumption of death Persons not of unsound mi nd but by reason of age, disease, weak mind, and other similar causes, cannot ta ke care of themselves and manage their property without outside aid (Easy prey f or deceit and exploitation) 2. Relative Incapacity a. Husband and Wife (Art 1490 , CC) (Asked in 75, 76, 00, 02, 06) General Rule: Cannot sell property to each ot her Exceptions: 1. Separation of property in marriage settlement, OR 2. Judicial separation of property. b. Alienage (Art. 39, CC) Aliens disqualified to purchas e acquire property. c. Rationale: Guardianship is a trust of the highest order, and the trustee can not be allowed to have any inducement o neglect his wards interest. (Phil Trust Co v Roldan, 1956) Executors and Administrators Property of estate under administrati on their d. Public Officers and Employees Property of State/any of its subdivisions/GOCC, the administration of which was entrusted to them. e. Lawyers Property or rights in litigation in which they take part because of their profession Rationale: Law yer may have undue influence over client. Greed may get the better of the sentim ents of loyalty and disinterestedness. (Valencia v Cabanting, 1991) Prohibition is definite and permanent, cannot be cured by ratification. (Rubias v Batiller, 1973) Exceptions: An assignment to a lawyer by his client of an interest in the property does not violate Art 1491, where A judgment has been rendered and has b ecome final; and In case of contingency fee arrangements. The interest of the la wyer maybe annotated as an adverse claim on the property awarded to his client ( Director of Lands v Ababa, 1979) f. Justices, Judges, prosecuting attorneys, cle rks Property or rights in litigation or levied upon on execution Rationale: to pr event fraud and to surround their profession with prestige Prohibition applies o nly on sales or assignment during the pendency of litigation involving the prope rty. (Macariola v Asuncion, 1963) Effects of Incapacity 1. Absolute Incapacity If both parties are incapacitated: UNENFORCABLE (Art. 1403 (3)) 270 SALES or Exception: if acquisition is through hereditary succession c. Trusteeship (Art. 39) 3. Specific Incapacity (Art. 1491, CC) (AGEPLJ) a. Agents Property whose administ ration or sale was entrusted to them Exception: principal gives consent. b. Guar dian Cannot purchase property of person under his guardianship

CIVIL LAW REVIEWER Chapter I. The CONTRACT of SALE

If only 1 party is incapacitated: VOIDABLE -If necessaries are sold and delivere d to an incapacitated person: must pay a reasonable price therefore. (Art 1489, CC) Necessaries those which are indispensable for sustenance, dwelling, clothing, medical attendance, education and transportation. (Art 194, Family Code)

the provisions of law governing the form of contracts. (Art. 1475, CC) A private instrument signed by the defendant reciting that he bought from the plaintiff a property at a specific address for a specific price to be paid as soon as a bil l of sale is signed is not a mere draft but a perfected agreement and hence, obl igatory, even if there was no statement as to area or price per meter. (Goyena v . Tambunting, 1902) 2. Relative Incapacity Sale between spouses is VOID. Rationale: (as provided in the case of Medina v CIR, 1961) rd To protect 3 persons who may have contracted with the spouse To avoid undue advantage of the dominant spouse over the weaker spouse. To avoid indirect prohibition against donations between spouses. Such pr ohibition shall likewise apply to common law spouses. (CalimlimCanulas v Fortun, 1984) BUT if already sold to a third person who relied on the title of his imme diate seller, reconveyance to the seller spouse is no longer available (Cruz v C A, 1997) 3. Specific Incapacity Contracts expressly prohibited by law are void a nd cannot be ratified. Neither can the right to set-up the defense of illegality be waived. (Art. 1409 (7), CC) Sales entered into by guardians, administrators, and agents (specific incapacities) in violation of Art. 1491 may be ratified by means of and in the form of a new contract when the cause of nullity has ceased to exist. Ratification is valid only from date of execution of the new contract and does not retroact. Those entered into by public officer/employees, justices and judges, and lawyers also in violation of Art. 1491 are inexistent and void from the beginning. (Rubias v Batiller, 1973). OFFER AND ACCEPTANCE Form and Offer Offer must be certain as to the object and price (Art. 1319, CC) B usiness advertisements of things for sale are not offers but mere invitations to make an offer Exception: If otherwise provided (Art. 1325, CC) Advertisements f or bidders are simply invitations to make proposals (Asked in 80) Advertiser not bound to accept the highest or lowest bid Exception: Unless the contrary appear s (Art. 1326, CC) Form of Acceptance unconditional Qualified acceptance = counter -offer (Art. 1319, CC) May be express or implied (Art. 1320, CC) Acceptance must be in accordance with the terms and conditions of the offer. There is no meetin g of the minds if the offer lapsed even though the offeree later on was willing to accept the terms and conditions of the offer. (Beaumont vs. Prieto, 1916) 271 SALES MUST NOT BE VITIATED A contract where consent is given through mistake, violence , intimidation, undue influence, or fraud is voidable. (Art. 1330, 1390 (2), CC) There is fraud where through insidious words or machinations of one of contract ing parties, the other is induced to enter into a contract which, without them, he would not have agreed to. (Art. 1338, CC) _______ In General The contract of sale is perfected at the moment there is meeting of th

e minds upon the thing which is the object of the contract and upon the price. rom that moment, the parties may reciprocally demand performance, subject to

B. SUBJECT MATTER Requisites 1. Licit 2. Existing, future or contingent 3. Determ inate or determinable

CIVIL LAW REVIEWER Chapter I. The CONTRACT of SALE act is considered as thing does existence obligation to pay the or of emptio rei speratae since cter of the contract. come into existence: the price even if the contr not actually not made and there is no came into price In case of doubt the presumption is in fav it is more in keeping with the commutative chara

MUST BE LICIT (ART. 1459) The thing is licit when 1. Within the commerce of man ( Art 1347, CC) Example of properties that are not within the commerce of man: a. Those belonging to the State or its political subdivisions intended for public u se or public service. (Art 420, CC). b. Church c. Narcotics or dangerous drugs e xcept upon prescription (RA 6425, the dangerous drugs act of 1972) 2. Rights are also licit when not intransmissible (Art 1347, CC) Sale of future inheritance i s void. (Art. 1347, CC) 1. The rights to succession are transmitted from the mome nt of the death of the decedent (Art. 777, CC). Thus, one cannot sell or promise to sell what he expects to inherit from a living person. (Rivero v. Serrano, 19 50) 2. -Heir may sell his hereditary rights (which have accrued). When the subje ct matter is illicit, the contract of sale is void (Art. 1409 (7)) EXISTING, FUT URE, CONTINGENT The goods which form the subject of a contract of sale may be ei ther 1. existing goods owned or possessed by the seller; 2. goods to be manufactu red, raised, acquired by the seller, also called future goods; 3. whose acquisitio n of the seller depends upon a contingency which may or may not happen. (Art 146 2, CC) 4. Things having potential existence may be the object of a contract of s ale. (Art 1461, CC) Sale of MERE hope or expectancy Valid BUT subject to condition that the thing wi ll come into existence Example: Next catch of a fisherman. Emptio Rei Speratei Val id Parties make the contract depend upon the existence of a thing, If the thing does not Sale of VAIN hope or expectancy Void Example: Sale of a falsified raffl e ticket which will never win. DETERMINATE OR DETERMINABLE A thing is determinate when it is particularly desig nated or physically segregated from all others of the same class. (Art 1460, CC) A thing is determinable when it is capable of being made determinate at the tim e the contract was entered into without the necessity of a new or further agreem ent between the parties. (Art 1460, CC) Failure to state the exact location of t he land does not make the subject matter indeterminate, so long as it can be loc ated. (Camacho v C,A 2007) The fact that the exact area of subject land in the c ontract of sale is subject to the result of a survey does not render the subject matter indeterminate. (Heirs of Juan San Andres v. Rodriguez (2000)) Particular Kinds 1. Future Goods Sale of future goods or those goods which are to be manufa ctured, raised, or acquired by seller after the perfection of the sale is valid (Art 1462, CC). Future goods are those capable of future existence. 2. Sale of Und ivided Interest or Share a. Sole owner of a thing may sell an undivided interest therein. (Art 1463,CC) Ex., a fraction ( or half) or percentage (50%), or my shar e in the property. b. The sale of an undivided share in a specific mass of fungib le goods makes the buyer a co-owner of the entire mass in proportion to the amou nt he bought. (Art 1464,CC) c. Co-owner cannot sell more than his share (Yturral de v CA, 1972) (Asked in 01, 02) 3. Sale of Things in Litigation a. Sale of thin gs under litigation entered into by defendant, without the approval of the litig ants or the court is rescissible. (Art 1381 (4)) b. NO RESCISSION where the thin g is rd legally in the possession of 3 persons who did not act in bad faith (Art 1385 (2)) 272 SALES Emptio Spei Void Parties intend the contract to exist at all events ave to pay Buyer will h

CIVIL LAW REVIEWER Chapter I. The CONTRACT of SALE 4. Things Subject to Resolutory Condition Sale of things subject to a resolutory condition, i.e. things acquired under legal or conventional right of redemption , or subject to reserva troncal, may be the object of a contract of sale. (Asked in 99) (Art 1465, CC) 5. Quantity of Subject Matter not determinate The fact th at the quantity is not determinate shall not be an obstacle to the existence of the contract provided it is possible to determine the same, without the need of new contract. (Art. 1349, CC) _______ 2. But if thing or part thereof has been delivered and appropriated by the buyer , he must pay a reasonable price therefore. a. What is reasonable price? A quest ion of fact dependent on circumstances. (Art 1474, CC) b. In the case of Philipp ine Free Press v CA (2005), the court held that the price was reasonable based o n factual determination predicated on offered evidence (Companys Balance Sheet sh owed the book value or fair market value of its shares) IN MONEY OR ITS EQUIVALENT Example of equivalent: Letters of credit If price is pa rtly in money and partly in another thing: Determine manifest intention of the p arties to see whether it was barter or sale. (Art 1468,CC) If intention does not clearly appear, it shall be considered a barter if the value of the thing excee d the amount of money or its equivalent.(Art 1468,CC) C. PRICE Requisites (Ce-MoRe) 1. Certain or ascertainable at the time of perfecti on 2. In Money or its equivalent 3. Real CERTAIN OR ASCERTAINABLE AT THE TIME OF PERFECTION Price considered certain in the following cases 1. Fixed by agreement of the parties a. Fixing of price cannot be left to discretion of one of the pa rties b. BUT if such is accepted by the other, sale is perfected. (Art 1473, CC) 2. Determination is left to the judgment of a specified person a. If unable or unwilling: Sale is inefficacious UNLESS parties subsequently agree about the pri ce. b. If in bad faith/by mistake: Courts may fix price rd c. If 3 person is pre vented from fixing price by fault of seller or buyer: Innocent party may avail o f remedies. 3. It be so in reference to another thing, or when the price fixed i s that which the thing have on a definite day, or in a particular exchange or ma rket, OR when the amount fixed is above or below the price on such day, exchange or market. (Art 1472, CC) If price cannot be determined (Asked in 76) 1. Sale is inefficacious (Art. 1474, CC) 273 SALES

REAL Meaning of Real When buyer has an intention to pay and the seller has an exp ectation to receive the price 1. If simulated: Sale is VOID; BUT act may be show n to have been a donation or some other act or contract. (Art 1471, CC) 2. In La bagala vs. Santiago (2001), Petitioner admittedly did not pay any centavo for th e property. Hence, the sale is void. If Price is false (real consideration is no t the same as that stated in the contract) 1. Sale is void 2. UNLESS proved to be founded on another true and lawful price (Art 1353, CC) _______ Gross Inadequac y of Price 1. General Rule: Does not affect a contract of sale. (Art 1470,CC) The stipulation in a contract of sale which states that the consideration is P1 and other valuable considerations does not make the contract void. Gross inadequacy o f price does not affect the contract of sale except that it may indicate a defec t in consent. (Bagnas v. C.A., 1989)

CIVIL LAW REVIEWER Chapter I. The CONTRACT of SALE 2. Exceptions: a. It may indicate a defect in consent such as fraud, mistake, or undue influence b. It may indicate that the contract was in reality a donation or some other act or contract c. Inadequacy would make the contract of sale resc issible where a contract was entered into by the guardian of a ward or a represe ntative of an absentee, without the courts approval, and the owner suffers lesion by more than of the value of the thing sold. (Art 1381 (1) (2), CC) Manner of P ayment Disagreement on the manner of payment is tantamount to a failure to agree on the price. (Toyota Shaw vs. CA, 1995)

agreed period, at a fixed price. (De la Cavada vs. Diaz, 1918) An option is not of itself a purchase, but merely secures the privilege to buy. A consideration f or an optional contract is just as important as the consideration for any other kind of contract. If there was no consideration for the option, then it cannot b e enforced any more that any other contract where no consideration exists. (Bavi era) b. Difference from Sale: SALE Bilateral OPTION CONTRACT Unilateral: gives a right to buy or to sell, but imposes no obligation on the part of the option-holder, aside from the considera tion for the offer Sale of right to purchase III. Stages A. Negotiation/Preparation From the time the parties indicate interest in the co ntract up to the time said contract is perfected 1. Offer a. General Rule: Offer may be withdrawn at any time without even communicating such withdrawal to the interested buyer. b. Exception: When the offerer has allowed the offeree a certa in period to accept, the offer may be withdrawn at any time before acceptance by communicating such withdrawal. (Art 1324, CC) c. Exception to the exception: Ca nnot be withdrawn within the period if offer is founded upon a consideration. (A rt 1324 and 1479, CC) Sale of property 274 SALES c. 2. Option Contract (Asked in 75, 77, 80, 93, 02) a. Definition An accepted unila teral promise to buy or sell supported by a consideration distinct from the pric e (Art 1479, CC) An optional contract is a privilege existing in one person, for which he had paid a consideration, which gives him the right to buy, for exampl e, certain merchandise or certain specified property, if he chooses, at any time within the Right of first refusal (Asked in 93, 96, 98, 02, 08) As to enforceability Equato rial Realty Development vs. Mayfair, (1996): If the right to the first offer is embodied in the contract, it should be executed according to the terms stipulate d. The right should be enforced according to the law on contracts and not on the panoramic and indefinite rule on human relations. This juridical relation is no t amorphous nor is it merely preparatory. When the grantee fails to exercise the right Paranaque Kings vs. CA, (1997): Only after the grantee st fails to exerci se its right of 1 priority under the same terms and conditions within the period agreed upon, could the grantor validly offer to sell the property rd to a 3 per

son under the same terms as offered to the lation of the right Rosencor Devt. Corp. ation of a right of first refusal is valid ct of an action for specific performance. erson may be rescinded, he

grantee. As to the effects of the vio Vs. Inquing (2001): A sale made in viol but rescissible, and may be the subje However, before the sale to the rd 3 p

CIVIL LAW REVIEWER Chapter I. The CONTRACT of SALE

must have been actually or constructively aware of the st right of 1 refusal at the time he bought it. The sanction for the enforcement of the right of first re fusal against third persons is based on Art. 19 of NCC, as no real right was cre ated on the property. Option Money vs. Earnest Money (Limson vs. Ca, 2001) OPTION MONEY Separate and distinct consideration from the purchase price Given w hen sale is not yet perfected When given, the wouldbe-buyer is not required to b uy, but may even forfeit it depending on the terms of the option Grantee of opti on is still undecided whether or not to buy or sell the property (Baviera) EARNE ST MONEY Part of purchase price (Art 1482, CC) Given only when there is already a sale When given, the buyer is bound to pay the balance

Difference from sale: ST SALE RIGHT OF 1 REFUSAL Bilateral Unilateral Price and other Price and other ter ms are yet to terms of payment be agreed upon are certain the thing to be sold m ust be determinate Buyer manifests his earnest desire to buy the property _______ C. Consummation

Distinction from Option Contract RIGHT OF 1 ST OPTION CONTRACT Separate consideration is necessary Grantee has the right to buy or sell REFUSAL a separate No need for consideration No right to buy or sell, only a st right to match the 1 offer to buy should the grantor decide to sell IV. Kinds of Sale (Asked in 97, 00) A. Absolute Sale Sale is not subject to any condition whatsoev er; title passes to the buyer upon delivery of thing sold B. Conditional Sale Co ntract is subject to certain conditions (usually the payment of the purchase pri ce); title will only pass once the conditions have been fulfilled In some cases, the Court makes finer distinctions between a conditional sale and a contract to sell: a. Contract to sell- The fulfilment of the suspensive condition, which is the full payment of the price, will not automatically transfer ownership to the buyer although the property may have been previously delivered to him. b. Condi tional Sale: The fulfilment of the suspensive condition renders the sale absolut e and affects the sellers title thereto such that if there was previous delivery of the property, the sellers ownership or title the property is automatically tra

nsferred to the buyer. (Ursal vs. CA, 2005) _______ B. Perfection (Asked in 88 and 91) When Perfected 1. Contract of sale is a consensual contract, hence perfected at the moment of the meeting of the minds o f the parties as to the object of the contract and the price. (Art 1475,CC) 2. I t is the proof of all the essential elements of the contract of sale, and not th e mere giving of earnest money, which establishes the existence of a perfected s ale. (Platinum Plans Phils. vs. Cucueco, 2006) Effect of Perfection From the mome nt of the perfection of the contract of sale, the parties may reciprocally deman d performance, subject to the provisions of the Statute of Frauds. (Art 1475,CC) Earnest Money Definition- paid in advance of the purchase price agreed upon by t he parties in a contract of sale, given by the buyer to the seller, to bind the latter to the bargain. (Asked in 93, 02) SALES Begins when the parties perform their respective undertakings under the sale. It culminates in the extinguishment of the sale. (See obligations of seller and bu yer, Chapter II) 275

CIVIL LAW REVIEWER Chapter I. The CONTRACT of SALE V. Form General rule: No form required as to validity since sale is perfected by consent of the parties. The sale may be (Art.1483,CC): 1. Written 2. Oral 3. Partly wri tten and partly oral 4. Inferred from the conduct of the parties Exceptions: 1. Statute of Frauds (Art,1403 (2),CC) a. Contract or some memorandum thereof must be in writing and subscribed by the party or his agent, otherwise contract is un enforceable. Unless ratified by failure to object to oral evidence or acceptance of benefits under the contract b. What are under the Statute of Frauds: Sale of goods, chattels, or things in action at a price not less than P500 Sale not to be performed within 1 year Sale of real property or an interest therein (Art 135 8, CC) c. Applies only to executory contracts, not to contracts either totally o r partially performed. (Iigo v. Estate of Maloto, 1967) 2. Sale of realty by an a gent Agents authority must be in writing, otherwise the sale is void (Art.1874, C C) 3. Sale of large cattle To be valid, transfer of large cattle must be registe red with the municipal treasurer (Sec.529, Revised Administrative Code) Electron ic Commerce Act (RA 8792) 1. Electronic documents have the legal effect, validit y or enforceability of any other document or legal writing 2. As long as electro nic document maintains its integrity and reliability and is capable of being dis played to the person to whom it is to be presented, containing the electronic si gnature of the person sending it. (Sec 7, 8 of RA 8792) VI. Sale Distinguished Contracts A. DONATION SALE Onerous Perfected consent From Other by mere DONATION Gratuitous Must comply with the formalities required by law. (Art 745, CC) When the price of the contract of sale is simulated, the sale may be void but th e act may be shown to have been in reality a donation or some other contract. (A rt.1471.CC) B. BARTER SALE Consideration is price in money or its equivalent BARTER Consideration anot her thing is 276 SALES Barter is a contract where one of the parties binds himself to give one thing in consideration of the others promise to give another thing (Art.1638, CC) If cons ideration consists partly in money and partly in another thing, the intention of the parties determines whether the contract is one of sale or barter: If manife st intention is not clear: Barter when the value of thing is more than the amoun t of money or its equivalent, otherwise, sale. (Art.1468) C. CONTRACT FOR A PIEC E OF WORK SALE Goods are manufactured or procured in the ordinary course of business For t he general market, whether on hand or not CONTRACT FOR A PIECE OF WORK Goods are

manufactured for customer upon his special order Specifically for customer The fact that the object were made by the seller only when customers placed thei r orders, does not alter the nature of the contract of sale, for it only accepte d such orders as called for the employment of such materials as it ordinarily ma nufactured or was in a position habitually to manufacture such. (Celestino Co & Co vs. Collector, 1956) When each product or system executed is always UNIQUE an d could not mass-produce the product because of its very nature, such is a

CIVIL LAW REVIEWER Chapter I. The CONTRACT of SALE SALE Consideration Buyer: thing Seller: price Ti tle passes to the buyer BILATERAL PROMISE TO BUY AND SELL Consideration is the p romise made by the other (Baviera) No transfer of title contract for a piece of work. (Commissioner vs. Engineering Equipment and Supply Co., 1975) D. LEASE OF THINGS SALE No pre-existing debt Creates an obligation DACION EN PAGO Pre-existing debt Extinguishes the obligation (mode of payment) Price is value of the thing given Price is more freely agreed upon, fixed by the parties There is a novation of the contract of loan into a contract of sale when the cre ditor agrees to accept a thing in payment of the debt. Hence, if the thing given in payment turns out to belong to another, the creditors remedy should be govern ed by the law on sales, not loan. (Baviera) E. CONTRACT TO SELL (Asked in 97, 01 , 03) Contract of Sale Ownership is transferred upon delivery Non-payment is resolutor y condition a Contract to Sell Ownership is only transferred upon full payment o f price Full payment is a positive suspensive condition, hence non payment would not give rise to the obligation to transfer ownership Contract to sell No perfe cted sale yet A subsequent buyer is presumed to be a buyer in good faith 277 SALES Conditional Contract of Sale Sale is already perfected A subsequent buyer is pre sumed to be a buyer in bad faith NOTE: Contract to Sell is an executory contract, while a Contract of Sale is a c onsummated contract. F. BILATERAL PROMISE TO BUY AND SELL (Asked in 80, 91) A pr omise to buy and sell a determinate thing for a price certain is reciprocally de mandable. (Art 479, CC) Like a sale, the thing must be determinate and the price certain.

CIVIL LAW REVIEWER Chapter II. OBLIGATIONS of the SELLER and BUYER Chapter II. Obligations of the Seller and Buyer I. OBLIGATIONS OF THE SELLER A. TO TRANSFER OWNERSHIP B. TO WARRANT AGAINST EVIC TION AND HIDDEN DEFECTS C. TO PRESERVE THE THING D. TO PAY FOR THE EXPENSES FOR THE EXECUTION AND REGISTRATION OF THE DEED OF SALE OBLIGATIONS OF THE BUYER A. T O ACCEPT DELIVERY B. TO PAY THE PRICE OF THE THING SOLD

Sellers residence b. In case of specific goods, which the parties knew to be at some other place w hen the contract was perfected, that place is the place of delivery c. If goods are at the time of sale possessed by a third person, then there is no delivery u ntil he acknowledges to the buyer that he holds the goods for buyer. II. I. Obligations of the Seller 4. When to Deliver Absent a stipulation as to time, delivery must be made within a reasonable time; demand or tender of delivery shall be made at a reasonable h our. Ways of Effecting Delivery 1. Actual Delivery a. When deemed made: when the thing sold is placed in the control and possession of the vendee (Art. 1497) b. Not always essential to passing of title (Art. 1475) c. Parties may agree when a nd on what conditions the ownership in the subject of the contract shall pass to the buyer (example: Art 1478 where ownership will only pass after full payment of the price) 2. Constructive Delivery a. Execution of public instrument (Art 14 98, par. 1) General rule: produces the same legal effects of actual delivery. Ex ceptions: The intention of the parties is otherwise. At the time of execution, t he subject matter was not subject to the control of the seller which must subsis t for a reasonable length of time after execution. (Pasagui v Villablanca, 68 SC RA 18) Control over thing sold must be such that seller is capable of physically t ransferring it to buyer b. Symbolic Delivery Delivery of keys of the place or de positary where the movable is stored or kept. (Art 1498, CC) Unless otherwise ag reed, when symbolic delivery has been made, the seller is not obliged to remove tenants to place the buyer in actual A. To transfer ownership (Asked in 84, 98, 99, 03) Obligation to transfer owners hip and to deliver is really implied in every contract of sale (Arts. 1458-1459) Transfer of ownership requires delivery (Art. 1495) General Concepts 1. Delivery comprises 2 obligations in Art. 1495: a. Actual duty to deliver b. Transfer of ownership can only be accomplished via delivery 2. What to Deliver a. Thing sold (Art. 1495) b. Fruits (Art. 1164 & 1537) c. Accessions and accessories (Art. 11 66 & 1537) Improvements by seller at his expense grants him a usufructuary right . No indemnification But he may remove it to the extent that there is no damage (Art. 1538) 3. Where to Deliver a. A hierarchy is followed (STOR): Stipulation U sage of trade Sellers place of business (office) SALES Obligations of the Seller (TWPP) 1. Transfer ownership 2. Warrant against evictio n and hidden defects 3. Preserve the thing 4. Pay for the expensed for the execu tion and registration of the deed of sale

278

CIVIL LAW REVIEWER Chapter II. OBLIGATIONS of the SELLER and BUYER possession of the property as he has already complied with his obligation to tra nsfer ownership of and deliver the thing sold. (Power Commercial and Industrial Corp. v. CA, 1997; Sabio v. The International Corporate Bank, Inc., 2001) c. Tra dition Longa Manu (Long Hand) Delivery of thing by mere agreement. Example: Sell er points to the property without actually transferring physical possession ther eof. When an employer assigned all its rights and title to all surplus property salvaged by the contractor, tradition longa manu takes place. Delivery is upon t he moment a thing is salvaged. (Board of Liquidators v. Floro, 1960) F.A.S.: Free Alongside Seller bears the expenses of transportation until he delive rs the goods alongside a vessel at a named port. d. Tradition Brevi Manu (Short Hand) MOVABLE is delivered when the buyer had the thing already in his possession before the sale took place, not as owner but as lessee, borrower, or depositary. e. Tradition Constitutum Possessorium Seller c ontinues to be in possession of the property sold, by virtue of a lease contract agreement with the vendee. f. Delivery to a Common Carrier General Rule: Delive ry to the courier or carrier tantamount to delivery to buyer. Exceptions Seller reserved title by the form of the bill of lading, with intent to remain the owne r, not merely for the purpose of securing payment, OR Contrary intent appears in the contract (i.e. seller is required to deliver goods to buyer at the point of destination) F.O.B.: Free on Board When seller bears the expenses of transportati on up to the F.O.B. point. C.I.F.: Cost, Insurance, Freight Price quoted includes the costs of the goods, insurance, and freight charges on the goods up to the po int of destination. Completeness of Delivery 1. When may the seller refuse to deliver: a. No payment yet or no period for payment has been fixed in the contract (Art.1524); b. The b uyer loses the right to make use of the term, as when: He becomes insolvent UNLE SS he gives a guaranty or security for the debt; He does not does not furnish th e seller the guaranties or securities he promised; He impairs the guaranties or securities or they disappear fortuitously UNLESS he immediately gives new ones e qually satisfactory; He violates any undertaking, in consideration of which the seller agreed to the period; He attempts to abscond. (Art.1536) 2. Rules on Sale s of Goods a. When Quantity less than expected Buyer may reject all Buyer accept s with knowledge of sellers inability to deliver the rest buyer pays at contract price Buyer has used or disposed prior to knowing sellers inability to deliver th e rest buyer pays fair value b. Quantity more than expected If divisible, buyer may reject excess If indivisible, buyer may reject all c. Quality different or d ifferent goods If divisible, buyer may accept the goods compliant with contract and reject those that are not If indivisible, buyer may reject all (Art. 1522) d . Sale of specific mass of goods In the sale of fungibles where the measure or w eight has not been agreed upon nor is there a fixed rate based upon a measuremen t, the subject matter of the sale is a determinate object the specific mass; sel ler is merely required to deliver such mass even if actual quantity falls short of parties estimate (Art. 1480) 279 SALES

CIVIL LAW REVIEWER Chapter II. OBLIGATIONS of the SELLER and BUYER e. Delivery by installments By default, buyer is not bound to accept delivery of goods by instalments In a contract of delivery by installment to be paid for vi a installment as well, delay or breach may not necessarily mean breach of the en tire contract; depending on the circumstances, breach may be severable and the a ggrieved party is entitled to damages and not rescission. (Art. 1583) 3. Rules o n Sales of Immovables a. Sale at a fixed rate per unit of measure Seller bound t o deliver entire land If the area is less than that stated, buyer may rescind or demand a proportionate reduction in price If a part of the land is not of the q uality stated in the contract, buyer may rescind or demand a proportionate reduc tion in price Buyer may only avail of rescission if the area deficiency is 10% o r more of total area or if the inferior value of the part of the land exceeds 10 % of the price agreed upon. (Art. 1539) If the area turns out to be greater than that stated, buyer may accept area included and reject the excess or accept all and pay a proportionate increase in price (Art. 1540) b. Sale for lump sum Foll ows the same rule as the sale of a specific mass which is explained above There is no change in price even if area or number turns out to be greater or lesser t han that stated (Art. 1542) Exception: when the excess or deficiency is no longe r reasonable; in Asian v Jalandoni, 1923, 644 sq m was found to be unreasonable. Exception to the exception: when buyer expressly assumes risk on actual area of the land. (Garcia v Veloso, 1941) If the price per unit or measure is not provi ded for in the contract, then the rules of lump sum sale should prevail. (Sta. A na v Hernandez, 1966) Effect of Delivery 1. Delivery, generally, results in transfer of ownership from seller to buyer. 2. As such, it also transfers the risk of loss of the thing sol d to the buyer. 3. Acceptance is not a condition for the completeness of deliver y; even with such refusal of acceptance, delivery will be deemed completed and p roduce its legal effects. 4. By default, expenses of and incidental to putting t he goods into a deliverable state must be borne by seller. (Art. 1521) When delivery does not transfer title 1. Sale on approval, trial, or satisfaction General Rule: Title remains with the seller Exceptions: a. Buyer signifies his approval or acceptance to the seller or does any other act adopting the transact ion b. Retains the goods without giving notice of rejection after the time fixed has expired, if no time has been fixed, after the expiration of a reasonable ti me (Art 1502, CC) Difference between sale on approval and sale on return Sale on Approval Ownership does not pass upon delivery Sale on Return Ownership passes upon delivery, but buyer may revest ownership in the seller by returning or tendering the goods within the time fixed in the contract Depends on the will of the buyer Subject to a resolutory condition Risk of loss remains with the bu yer 280 SALES Depends on the character or quality of goods Subject to a suspensive condition R isk of loss remains with the seller 2. Express Reservation If it was stipulated that ownership in the thing shall no t pass to the purchaser until he has fully paid the price. (Art 1478, CC) 3. Imp lied Reservation The following are instances when there is an implied reservatio n of ownership a. Goods are shipped, but by the bill of lading goods are deliver able to the seller or his agent, or to the order of the seller or his agent

CIVIL LAW REVIEWER Chapter II. OBLIGATIONS of the SELLER and BUYER b. Bill of lading is retained by the seller or his agent. c. When the seller of the goods draws on the buyer for the price and transmits the bill of exchange an d bill of lading to the buyer, and the latter does not honor the bill of exchang e by returning the bill of lading to the seller. 4. When sale not valid eg. When the thing sold is a public property 5. When Seller is not the owner (Asked in 7 7, 78, 86, 87) General Rule: Ownership is not acquired by the buyer. One cannot give what one does not have. (Art 1505, CC) Exceptions: (RE-ROM) a. Seller has a Right to transfer ownership Seller need not be the owner of the thing at the ti me of perfection of the contract It is sufficient that seller has a right to tra nsfer ownership thereof at the time it is delivered (Art. 1459) One who sells so mething he does not own yet is bound by the sale when he acquires the thing late r (Bucton vs Gabar, 55 SCRA 469) b. Estoppel: Owner is by his conduct precluded from denying the sellers authority to sell. (Art. 1434) c. Registered land bought in good faith General rule: Buyer need not go beyond the Torrens title Exceptio n: When he has actual knowledge of facts and circumstances that would impel a re asonably cautious man to make further inquiry d. Order of courts Statutory Sale In execution sale, the buyer merely steps into the shoes of the judgment debtor (Rule 39, sec. 33, ROC) e. When goods are purchased in Merchants store, Fair, or Market (Art 1505, CC) The policy of the law has always been that where the right s and interest of the vendor clash with that of an innocent buyer for value, the latter must be protected. (Sun Brothers and Co. V. Velasco, (1958) 6. Sale by person having a voidable title a. True owner may recover the thing wh en provided the ff. requisites concur: Subject matter is movable Owner has eithe r lost the thing or has been unlawfully deprived. (Art 559, CC) b. Reimbursement is necessary before owner can recover when: Buyer acted in good faith Acquired at a public auction (Art 559, CC) c. Recovery no longer possible when: Buyer in good faith Acquired it at a merchants store, fair or market. (Art 1506, CC) _____ _____ B. To warrant against eviction & hidden defects (Art. 1495; 1547) Warranti es A statement or representation made by the seller contemporaneously and as part of the contract of sale, having reference to the character, quality, or title o f the goods, and by which he promises or undertakes to ensure that certain facts are or shall be as he then represents. Effects of Warranties 1. Natural tendency is to induce buyer to purchase the subject matter 2. Buyer purchases subject ma tter relying thereon 3. Seller liable for damages in case of breach Effects of W aivers Only applicable to waiver of warranty against eviction (see the following section) parties may increase or decrease warranty against eviction but the effe ct depends on good/bad faith of the seller 1. Seller in bad faith and there is w arranty against eviction null and void 2. buyer without knowledge of a particula r risk, made general renunciation of warranty not waiver but merely limits liabi lity of seller in case of eviction (pay value of subject matter at time of evict ion) 3. buyer with knowledge of risk of eviction assumed its consequences and ma de a waiver vendor not liable 4. waiver to a specific case of eviction wipes out warranty as to that specific risk but not as to eviction caused by other reason s 281 SALES

CIVIL LAW REVIEWER Chapter II. OBLIGATIONS of the SELLER and BUYER Express Warranty Concealment of facts does not necessarily amount to false representation False Representation W hen concealment of facts comes with an active misstatement of fact or a partial statement of fact such that withholding of that unsaid portion makes that which is stated absolutely false However, buyer who fails to inspect condition of prop erty despite ample opportunity to do so and no opposition on the part of seller cannot later on allege false representation. (Phil Mftg Co. v Go Jucco, 1926) Th is is because buyers duty to inspect remains despite false representation by the seller. Buyer has the duty to exercise due diligence. Condition v. Warranty Condition Pertains to and affects the existence of the obligation Non-happening does not amount to breach of contract Must be stipulated May attach to either to the sellers duty to deliver thing or some other circumstance Warranty Goes into the performance of an obligation and may, in itself, be an obligation Non-fulfil lment constitutes breach of contract Stipulation or operation of law Always rela tes to the subject matter or the sellers obligations as to the subject matter

If seller has promised that the condition should happen or be performed, the buy er may treat the nonperformance of the condition as a breach of warranty. (Art.1 545) 282 SALES Form 1. Express Warranty (APIR) For there to be express warranty, the following r equisites must concur: a. An affirmation of fact or any promise relating to the thing sold; b. The natural tendency of such affirmation or promise is to induce the buyer to buy; c. The buyer buys the thing relying thereon. (Art. 1546) d. Ma de before the sale not upon delivery or any other point An express warranty can be made by and also be binding on the seller even in the sale of a second hand a rticle. (Moles v. IAC, 1989) Express Warranty What is specifically represented as true in said document canno t be considered as mere dealers talk. (Moles v. IAC, 1989) Dealers or Traders Tal k Affirmation of the value of the thing or statement of the sellers opinion only is not a warranty unless: - The seller made it as an expert; - It was relied upo n by the buyer. (Art.1546) Ordinarily, what does not appear on the face of the w ritten instrument (Moles v. IAC, 1989) 2. Implied Warranty a. Implied Warranty of Title b. Implied Warranty against Enc umbrance / Non-Apparent Servitudes c. Implied Warranty against Hidden Defects (A rt. 1547) Implied warranty as to Merchantable Quality and Fitness of Goods Impli ed warranty against Redhibitory Defect in the Sale of Animals (Art. 1572) Qualit y and Fitness of Goods in Sale by Sample or Description d. Other Warranties Impl ied Warranty of Title 1. Implied warranty arises by operation of law and need not be stipulated in the contract of sale. 2. Warranty of Sellers Right to Sell: sel ler warrants his right to sell at the time the ownership is to pass. Inapplicabl e to a sheriff, auctioneer, mortgagee, pledgee, or other person professing to se ll by virtue of authority in fact or law. (Art. 1547) 3. Warranty against Evicti on: seller warrants that buyer, from the time ownership passes, shall have and e njoy legal and peaceful possession of the thing. Its requisites are: a. Buyer is deprived of the whole or a part of the thing sold;

CIVIL LAW REVIEWER Chapter II. OBLIGATIONS of the SELLER and BUYER b. Eviction is by final judgment c. Final judgment based on a right prior to the sale or an act imputable to the vendor d. Seller is summoned and made codefenda nt in the suit for eviction at the instance of the buyer. (Power Commercial and Industrial Corp. v. CA, 1997) Implied Warranty against Encumbrance / Non-Apparen t Servitudes Requisites for breach: 1. Thing sold is an immovable 2. Burden or se rvitude encumbering the thing sold is a. Non-apparent to the naked eye b. Not me ntioned in the agreement c. Of such nature that it must be presumed that the buy er would not have bought it had he been aware thereof d. Not recorded in the Reg istry of Property unless there is an express warranty that the thing is free fro m all burdens and encumbrances (Art.1560) Implied warranty against Hidden Defect s Requisites for breach: 1. The defect renders the thing sold unfit for the use f or which it was intended OR diminishes its fitness for such use to such an exten t that had the buyer been aware thereof, he would not have bought it or would ha ve paid a lower price; 2. The defect is not patent or visible; 3. The buyer is n ot an expert who, by reason of his trade or profession, should have known the de fect 4. The seller is aware of the hidden fault or defect, OR even he is not awa re thereof, if there is no stipulation to the contrary (Arts.1561 &1566) Implied warranty as to Merchantable Quality and Fitness of Goods Merchantable Quality: 1 . Where the goods are brought by description from a seller who deals in goods of that description (Art.1562) 2. In a sale by sample, if the seller is a dealer i n goods of that kind and the defect is not apparent on reasonable examination of the sample (Art.1566) Fitness for a particular purpose: Where the buyer express ly or impliedly makes known to the seller the particular purpose for which the g oods are acquired AND it appears that the buyer relies on the (Art.1562(1)) sellers skill or judgment Other Warranties 1. Warranty in Sale of Consumer Goods Consumer goods goods prima rily for personal, family, household or agricultural purposes, which shall inclu de but not limited to food, drugs, cosmetics, and devices : (Sec.4(q), RA 7493 C onsumer Act of the Phil) Kinds: a. Full warranty- if the written warranty meets th e minimum standards b. Limited warranty- if the written warranty does not meet th e minimum standards (Sec.6(c), RA7394) Minimum standard for warranties that the warrantor shall: a. Remedy such consumer product within a reasonable time and wi thout charge in case of a defect, malfunction or failure to conform to such writ ten warranty; b. Permit the consumer to elect whether to ask for a refund or rep lacement without charge of such product or part, as the case may be, where after reasonable number of attempts to remedy the defect or malfunction, the product continues to have the defect or to malfunction The warrantor will not be require d to perform the above duties if he can show that the defect, malfunction or fai lure to conform to a SALES Implied warranty against Redhibitory Defect in the Sale of Animals (Art. 1572) Re dhibitory defect- a hidden defect of animals of such nature that expert knowledg e is not sufficient to discover it, even in case a professional inspection has b een made No warranty in case of (Art. 1574): a. Animals sold at fairs or public

auctions b. Livestock sold as condemned The following sales are void (Art. 1575) : a. Sale of animals suffering from contagious diseases b. Sale of animals unfit for the purpose for which they are acquired as stated in the contract Veterinar ian liable if he fails to discover or disclose the hidden defect through ignoran ce or bad faith (Art 1576) Seller liable if animal dies within 3 days after its purchase due to a disease that existed at the time of sale. (Art 1578) 283

CIVIL LAW REVIEWER Chapter II. OBLIGATIONS of the SELLER and BUYER written warranty was caused by damage due to unreasonable use thereof. (Sec.68(d ), RA 7394) 2. Warranty in sale of Subdivision Lot or Condominium Units The owne r or developer shall be answerable and liable for the facilities, improvements, infrastructures or other forms of development represented or promised in brochur es, advertisements and other sales propaganda disseminated by the owner or devel oper or his agents and the same shall form part of the sales warranties enforcea ble against said owner or developer, jointly and severally. (Sec.19, PD 957: The Subdivision and Condominium Buyers Protective Decree) __________ C. To preserve the thing, pending delivery, with proper diligence (Art. 1163) Duration: From th e perfection of sale until delivery (Art 1480) Default standard of care: Diligen ce of a good father of a family General rule: seller is liable for loss or deter ioration (Art. 1174) Exception: fortuitous event (Art. 1174) Exception to except ion: seller is still liable for fortuitous event if 1. Law provides for it (e.g. delay or promising to deliver the same thing to 2 or more persons with differen t interests Art. 1165) 2. By stipulation 3. Nature of obligation requires assump tion of risk Fungibles sold for a price fixed according to weight, number or mea sure: duty to preserve begins only after the things are weighed, counted or meas ured except when seller is already in delay. __________ D. To pay for the expens es for the execution and registration of the deed of sale (Art. 1487) General ru le: The seller has the duty to pay for the expenses for the execution and regist ration of the deed of sale Exception: if there is a stipulation to the contrary (Art. 1487) Expenses incurr ed subsequent to the transfer of title are to be borne by the buyer, unless caus ed by the fault of the seller II. Obligations of the Buyer Obligations of the Buyer 1. To Accept delivery 2. To Pay the price of the thing s old Pertinent Rules 1. In a contract of sale, the seller is not required to deliv er the thing sold until the price is paid nor is the buyer required to pay the p rice before the thing is delivered in the absence of an agreement to the contrar y (Art 1524) 2. If stipulated, then the buyer is bound to accept delivery and to pay the price at the time and place designated 3. If there is no stipulation as to the time and place of payment and delivery, the buyer is bound to pay at the time and place of delivery 4. In the absence also of stipulation, as to the pla ce of delivery, it shall be made wherever the thing might be at the moment the c ontract was perfected (Art. 1521) 5. If only the time for delivery of the thing sold has been fixed in the contract, the vendee is required to pay even before t he thing is delivered to him. First Obligation: accept delivery 1. Form a. Expres s: buyer intimates acceptance b. Implied: Goods delivered to the buyer and he do es any act in relation to them that is inconsistent with the ownership of the se ller. After the lapse of a reasonable time, the buyer retains the goods without intimating to the seller that he has rejected them. (Art.1585) 2. Manner Right o f Inspection: reasonable opportunity to examine the goods upon delivery. If ther e is a stipulation that delivery is preconditioned on payment, then buyer has no right of inspection until he has paid. (Art.1584) Exception: in case such right of inspection is permitted by agreement or usage trade. 284 SALES

CIVIL LAW REVIEWER Chapter II. OBLIGATIONS of the SELLER and BUYER 3. Effect of Refusal to accept a. If buyer refuses to accept goods, having the r ight to do so, he is not bound to return them to the seller; it being sufficient that he notifies the seller of his refusal to accept If he voluntarily constitu tes himself a depositary of the goods, he shall be liable as such. (Art.1587) b. Unjust refusal to accept still results to transfer of ownership; title to the g oods passes to the buyer from the moment they are placed at his disposal, except if ownership has been reserved by the seller (Art.1588) Second Obligation: pay the price of the thing sold (Art. 1582) 1. Payment of interest Buyer is liable fo r interest when: (SFD) a. Interest is stipulated; b. Thing sold produces fruits or income; c. Buyer is in default - interest accrues from the time of judicial o r extrajudicial demand for payment 2. Suspension of payments Buyer may suspend p ayment when: a. his ownership or possession of the thing is disturbed or b. he h as reasonable grounds to fear such disturbance by a vindicatory action or a fore closure of mortgage Exceptions: buyer cannot suspend payment when: a. seller giv es security for the return of the price in a proper case b. it has been stipulat ed that, notwithstanding any such contingency, the buyer shall be bound to pay ( Art. 1590) Suspension may continue until the seller has caused the disturbance o r danger to cease A mere act of trespass shall not authorize the suspension of t he payment. (Art.1590) 3. Sale of real property In the sale of immovable propert y, buyer may pay even beyond the expiration of the period agreed upon, as long a s no demand for rescission of the contract has been made upon him either judicia lly or by a notarial act, despite a stipulation providing for ipso jure rescissi on (Art.1592) (Asked in 88, 00) After demand, court may not grant him a

new term (Heirs of Escanlar, et.al. v. CA, 1997) R.A. 6552 (Maceda Law) applies to sale or financing of real estate on installment (Rillo v. Court of Appeals,19 97) Buyer is awarded a grace period of 1 month per year of installments paid or 60 days, whichever is higher, within which he may pay without additional interes t o may be used once every 5 years of the life of the contract or any of its ext ensions If contract is to be cancelled, seller must first: o 30 day notice of ca ncellation, and o refund cash surrender value to buyer; amount is equivalent to 50% of total payments made including deposits, options and down-payments plus 5% for every year in excess of 5 years of the life of the contract or any of its e xtensions 285 SALES

CIVIL LAW REVIEWER Chapter III. DOUBLE SALES Chapter III. Double Sales (Asked in 77, 87, 89, 98, 01, 04) I. General Rule II. Requisites III. Rules governing sale of movables, immovables and unregistered lands IV. Purchaser in good faith both registration in its ordinary and strict sense and cancellation, annotation, and even marginal notes. (Cheng v. Genato, 1998) NOTE: Pencilled entries on the title are not considered registration (AFPMBAI v. Court of Appeals, 1999). C. S ale by Virtue of Execution and Attachment Art. 1544 does NOT apply to the sale o f unregistered land at an execution sale because a buyer of unregistered land at a execution sale only steps into the shoes of the judgment debtor, and merely a cquires the latters interest in the property sold as of the time the property w as levied upon. (Carumba v. CA, 1970) I. General Rule Prior tempore, potior jure (he who is first in time is preferred in right) applies . II. Requisites Requisites (Cheng v Genato, 1998) 1. 2 or more valid sales; 2. Same subject matt er; 3. 2 or more buyers with conflicting interests at odds over the rightful own ership of the thing sold; 4. Same seller III. Rules Governing Sale of Movables, Immovables and Unregistered Lands A. Sale of Movables Ownership shall be transferred to the person who may have fi rst taken possession in good faith. B. Immovables 1. Ownership belongs to the pe rson who: a. In good faith first recorded in the Registry of Property; OR b. If there is no inscription, ownership passes to the person who in good faith was fi rst in possession; OR c. In the absence thereof, to the person who presents the oldest title, PROVIDED there is good faith. NOTE: good faith is required all the time. NOTE: a. Oldest Title any public document showing acquisition of the land i n good faith. To constitute title, the transmission of ownership must appear in a public document [Art. 1358 (1)] b. Examples: Deed of Sale, Deed of Donation, Dee d of Trust 2. Registration includes any entry made in the Primary Entry Book of the registry, including D. Sale of Unregistered Land 1. Instrument or deeds establishing, transmitting, acknowledging, modifying or extinguishing rights with respect to lands not regis tered under the Land Registration Act or the Spanish Mortgage Law, are required to be registered in the Registry of Property rd to prejudice 3 persons, although such registration is understood to be w/o rd prejudice to a 3 party with a bette r right. (PD 1528 Sec 113) 2. Art. 1544 applies to unregistered land subject to a conventional sale (because of Art. 1358) but NOT to unregistered land subject t o judicial sale. E. Purchaser in good faith (Asked in 76, 86, 08) 1. General Cha racteristics a. One who buys the property of another, without notice that some o ther person has a right to or interest in such property, and who pays a full and fair price for the sale, at the time of the purchase or before he has notice of the claim/interest of some other person in the property. (Agricultural and Home Extension Development Group v CA, 1992) b. A buyer could not have failed to kno w or discover that the land sold to him was in adverse possession; hence he is d eemed to have acted in bad faith. (Heirs of Ramon Duran v Uy, 344 SCRA 238) 286

SALES

CIVIL LAW REVIEWER Chapter III. DOUBLE SALES 2. Presumption Gen Rule: As a rule, he who asserts the status of a purchaser in good faith and for value, has the burden of proving such assertion. This onus pr obandi cannot be discharged by mere invocation of the legal presumption of good faith, i.e., that everyone is presumed to act in good faith (Mathay v CA, 295 SC RA 556) When buyer is presumed to be in bad faith: a. Annotation of adverse clai m: Places any subsequent buyer of the registered land in bad faith. (Balatbat v CA, 261 SCRA 128) b. Annotation of Lis Pendens: Buyer cannot be considered an in nocent purchaser for value where it ignored the lis pendens on the title. Lis Pendens Annotation of Adverse Claim may be cancelled only in one instance, i .e., after the claim is adjudged invalid or unmeritorious by the Court 287 SALES maybe cancelled even before the action is finally terminated for causes which ma y not be attributable to the claimant Both are intended to protect the interest of a claimant by posing as notices and caution to those said with the property t hat same is subject to a claim. NOTE: The two are not contradictory or repugnant to istence of one automatically nullify the other, and should be considered unnecessary or superfluous, it endens (A. Doronila Resources Development Inc v CA, one another; nor does the ex if any of the registrations would be the notice of lis p 1988)

CIVIL LAW REVIEWER Chapter IV. RISK of LOSS Chapter IV. Risk of Loss I. II. GENERAL RULE EXCEPTION I. General Rule Res perit domino: Owner bears risk of loss livery Ownership is not transferred until de

II. Exceptions 1. Contrary stipulation 2. An obligation to deliver a generic thing is not extin guished by loss. (Art 1263, CC) 3. Risk of loss of specific things is subject to the ff: a. When loss occurs before perfection, such loss is borne by seller b. When loss occurs at time of perfection, loss must have occurred before the contr act was entered into, without the knowledge of both parties TOTAL LOSS PARTIAL LOSS (Or loss which results in substantial change in characte r) Buyer may withdraw from the contract OR Buy the remainder at a proportionate price 288 SALES Contract ineffective. is Because there can be no contract without an object c. When loss occurs after perfection but before delivery Seller bears risk of loss Buyer does not bear risk of loss until goods are delivered to him

CIVIL LAW REVIEWER Chapter V. DOCUMENTS of TITLE Chapter V. Documents of Title I. IN GENERAL II. NEGOTIABLE DOCUMENTS OF TITLE III. NON-NEGOTIABLE DOCUMENTS OF TITLE I. In General Who may negotiate it? (Art.1512,CC) 1. Owner 2. Person to whom the possession or custody of the document has been entrusted by the owner a. If bailee undertakes to deliver the goods to such person b. If document is in such form that it may b e negotiated by delivery A person to whom a document has been negotiated acquire s 1. Rights of the vendor 2. Rights of the original consignee A person who negoti ates a document of title warrants 1. Genuineness of document 2. Legal right to ne gotiate or transfer 3. No knowledge of fact which would impair the validity or w orth of the document 4. Right to transfer the title to the goods and merchantabi lity or fitness for a particular purpose, whenever such warranties would have be en implied had the contract been transfer the goods without a document He does n ot warrant that 1. Common carrier will fulfill its obligation to deliver the gods 2. Previous indorsers will fulfill their obligation (Art. 1516-1517, CC) Goods in the hands of the carrier covered by a negotiable document cannot be attached or levied upon, UNLESS 1. Document is first surrendered to the carrier; or 2. Imp ounded by the court; or 3. Its negotiation is enjoined. (Art. 15191520,CC) Definition A document used in the ordinary course of business in the sale or tran sfer of goods, as proof of the possession or control of the goods, or authorizin g or purporting to authorize the possessor of the document to transfer or receiv e, either by endorsement or by delivery, goods represented by such document. (Ar t. 1636) Examples: bill of lading, quedan, warehouse receipts, trust receipts Pu rpose 1. Evidence of possession or control of goods described therein 2. Medium o f transferring title and possession over the goods described therein without hav ing to effect actual delivery thereof (Villanueva) 3. The custody of a negotiabl e warehouse receipts issued to the order of the owner, or to bearer, is a repres entation of title upon which bona fide purchasers for value are entitled to rely , despite breaches of trust or violations of agreement on the part of the appare nt owner. (Siy Cong Bieng vs. HSBC, 56 Phil 598) 289 SALES II. Negotiable Documents of Title Definition Document of title which states that the goods referred to therein will be delivered to the bearer, or to the order of any person named in such documen t (Art. 1508, CC). TERMS OF THE DOCUMENT Goods are deliverable to bearer Endorsed in blank by the p erson to whose order the goods were deliverable Goods are deliverable to the ord er of a specified person HOW NEGOTIATED By delivery of the document to another III. Non-Negotiable Documents of Title Goods described in a non-negotiable document of title are deliverable only to a specified person Carrier will not deliver the goods to any holder of the documen t or to whom such document may have been endorsed by the consignee Must present the deed of sale or donation in his favor

By indorsement of such person (Art. 1509,CC)

CIVIL LAW REVIEWER Chapter V. DOCUMENTS of TITLE

Negotiation [negotiable document of title] VS. Transfer [non-negotiable document of title]: Transfer The assignment of rights of the consignee of a non-negotiable document of title to another; or Document of title was ordered sold or assigned, without indorsement. Negotiation (Art. 1508) Delivery of a negotiable document of title to another if by the terms thereof, the goods are deliverable to bearer, or when the document was endorsed in blank by the person to whose order the goods are deliverable. I n a negotiable document of title, the buyer may acquire a better title. Transferee does not acquire a better title than his transferor 290 SALES

CIVIL LAW REVIEWER Chapter VI. REMEDIES of the SELLER and BUYER Chapter VI. Remedies of the Seller and Buyer I. GENERAL REMEDIES A. SPECIFIC PERFORMANCE B. RESCISSION C. DAMAGES II. REMEDIE S OF THE SELLER A. IN THE SALE OF MOVABLES 1. EXTRAJUDICIAL REMEDIES 2. JUDICIAL REMEDIES B. IN THE SALE OF IMMOVABLES 1. RESCISSION FOR ANTICIPATORY BREACH 2. SPECIFIC PERFORMANCE WITH DAMAGES 3. RESCISSION WITH DAMAGES 4. MACEDA LAW III. REMEDIES OF THE BUYER A. FOR BREACH OF OBLIGATION TO PRESERVE B. FOR BREACH OF O BLIGATION TO DELIVER C. FOR BREACH OF WARRANTY a. Possessory lien over the goods Right to retain possession of goods until payme nt or tender of the whole price, or unless he agrees to sell on credit (15261529 , 1503, 1535) When available: Goods are sold without stipulation as to credit Go ods are sold on credit, but term of credit has expired Buyer becomes INSOLVENT W hen lost: Seller delivers goods to carrier or other bailee for transmission to t he buyer under a straight or nonnegotiable bill of lading Buyer/his agent lawful ly obtains possession of goods Seller waives it Not lost in remainder of goods w hen only partial delivery is made (unless such is symbolic delivery of the whole ) Not lost by mere fact that seller obtained a judgment for the price When reviv ed: Goods are returned by the buyer in a wrongful repudiation of the contract b. Right of stoppage in transitu An extension of the lien for the price; entitles u npaid seller to resume possession of the goods while they are in transit before the goods come in possession of the vendee (1530-1532, 1535, 1636[2]) Available when: INSOLVENT Vendee becomes 291 SALES I. General Remedies (Art. 1191, CC) The following remedies arise from the bilateral nature of the contract of sale: 1. Specific performance (Asked in 02) 2. Rescission (Asked in 03, 08) General ru le is that rescission of a contract will not be permitted for a slight or casual breach, but only for such substantial and fundamental breach as would defeat th e very object of the parties in making the agreement. (Song Fo & Co. vs. Hawaiia n-Philippine Co., (1925)) 3. Damages Neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with what is incumb ent upon him (Art 1169, CC) Prescriptive periods 1. 10 years if based on written contract 2. 6 years if based on oral contract II. Remedies of the Seller A. In the Sale of Movables 1. Extrajudicial or Self-Help Remedies [NOTE: No need to resort to the courts; as long as possession of the goods has not yet passed to the buyer] When are goods in transit? From time of delivery to the carrier or other bailee by the seller, for the purpose of transmission to the buyer, until the buyer or his agent takes such delivery from the carrier. Even when goods have reached the ir ultimate destination, if buyer rejects them and carrier retains possession

CIVIL LAW REVIEWER Chapter VI. REMEDIES of the SELLER and BUYER

To terminate transit by delivery to a middleman, delivery must be to keep, not t o transport. When are goods no longer in transit? Buyer obtained delivery of the goods before such have reached their ultimate destination Goods have arrived at ultimate des tination, but carrier refuses to deliver Carrier enters into a new contract with the buyer upon arrival of the goods at their ultimate destination How exercised ? By obtaining actual possession of the goods By giving notice of his claim to t he carrier/other bailee who has possession of the goods Carrier must redeliver g oods to seller, or according to his instructions Carrier not obliged to redelive r until the negotiable document of title, if any, has been surrendered for cance llation Sellers right to stoppage in transitu not affected even if buyer has sold or disposed of the goods; Unless the seller assented c. Special right of resale Available to unpaid seller who has a right of lien or who has stopped the goods in transitu (1533) Purpose: For seller to liquidate his damages He must do so wi thin a reasonable time and in such manner as to obtain the best price possible. Resale = fair sale if in accordance with established business practices, with no attempt to take advantage of the original buyer. Resale may be in a private or public sale, but seller cannot buy indirectly or directly. For resale to be vali d, buyer need not be notified of an intention to resell or the time and place of the resale. Effects: Seller is no longer liable to the original buyer upon the contract of s ale or for any profit made by the resale Buyer at resale acquires good title as against the original owner In case resale is at a loss, seller entitled to recov er the difference from the original buyer Seller may recover damages from origin al buyer for breach of contract d. Special right to rescind: RETURN of the title over the undelivered goods to the seller, and right to recover DAMAGES for brea ch of contract (1534) Available to unpaid seller who has a right of lien or who has stopped the goods in transitu When available: Seller expressly reserved righ t to rescind in case buyer defaults Buyer has been in default in payment for an unreasonable time Transfer of title shall not be held to have been rescinded by the unpaid seller until he manifests by notice to the buyer or some other overt act an intention to rescind. 2. Judicial Remedies of an unpaid seller a. Action for the price or specific performance (1595) Conditions: the goods has passed to the buyer Price is payable on a certain day, irrespective of delivery of the goo ds Buyer can set up the defense that seller could not or did not intend to deliv er the goods Seller was notified by the buyer of his repudiation of the contract after the seller has completed the manufacture of the goods/had procured the go ods to be delivered and the goods could not readily be resold for a reasonable p rice b. Action for damages for nonacceptance, if buyer wrongfully neglects or re fuses to accept and pay for the goods (1596) 292 SALES

CIVIL LAW REVIEWER Chapter VI. REMEDIES of the SELLER and BUYER c. Rescission by giving the buyer notice of the election to rescind (1597) Under th is rule, rescission would bar an action on the contract because it means cancell ation of the contractual obligations between the parties. (Baviera) d. Special rule for sale of movables by instalments Recto Law (1484, 1485) (Aske d in 99) Applies in cases of: Sale of movables in installment Levy Hermanos vs. G ervacio, (1939): The rule is intended to apply to sales of movables, the price o f which is payable in 2 or more installments, but not to straight-term sales whe re the price is payable in full, after making a down payment because the law aim s to protect improvident buyers who may be tempted to buy beyond their means. Le ase of personal property with option to buy When lessor has deprived the lessee of the possession or enjoyment of the thing (Ex. When lessor files a complaint f or replevin against lessee) SALES Measure of damages: Estimated loss directly and naturally resulting in the ordin ary course of events from the buyers breach Where there is available market for g oods: Difference between the contract price and the market price at the time the goods ought to have been accepted or if no time was fixed, at the time of refus al to accept If the resale was made with diligence, resale price is evidence of market value, taking into account whether or not the goods could be readily sold Where labor/expense was necessary for seller to fulfill his obligation: Labor p erformed and expenses made by seller before receiving notice of buyers repudiatio n or countermand Profit that the seller would have made if sale had been fully p erformed

Also applies when seller assigns his credit to someone else Alternative Remedies of the unpaid seller under Recto Law Specific Performance C ancellation of sale: If vendee fails to pay 2 or more installments When the sell er cancels the sale by repossessing the property sold, he is barred from exactin g payment for its price. Foreclosure of Chattel Mortgage: If vendee fails to pay 2 or more installments If seller chooses this remedy, he shall have no further action to recover any unpaid balance, and any stipulation to the contrary shall be void Motors vs. Sapinoso, (1970): What Art 1484 (3) prohibits is further actio n against the purchaser to recover any unpaid balance of the price; and although this Court has construed the word action to mean any judicial or extrajudicial proc eeding by virtue of which the vendor may lawfully be enabled to exact recovery o f the supposed unsatisfied balance of the purchase price from the purchaser or h is privy, there is no occasion at this stage to apply the restrictive provision o f the said article because there has not yet been a foreclosure sale resulting i n a deficiency. The payment of the sum of P1,250 of Sapinoso was a voluntary act on his part and did not result from a further action instituted by Northern Motor s. Bachrach Motor Co., Inc. v. Millan, (1935): Purpose of the law is to remedy t he abuses committed in foreclosure of chattel mortgages. It prevents mortgagees from seizing the mortgaged property, buying it at foreclosure sale for a low pri ce and then bringing the suit against the mortgagor for a deficiency judgment. T he almost invariable result of this procedure was that the mortgagor found himse lf minus 293

CIVIL LAW REVIEWER Chapter VI. REMEDIES of the SELLER and BUYER the property and still owing practically the full amount of his original indebte dness. Nonato vs. IAC (1985): Remedies are ALTERNATIVE, not cumulative, i.e. exe rcise of one bars exercise of the others NOTE: Unpaid Seller (1525): e. When the w hole of the price has not been paid or tendered; f. When a bill of exchange or o ther negotiable instrument has been received as conditional payment, and the con dition on which it was received has been broken by reason of the dishonor of the instrument, the insolvency of the buyer, or otherwise. _________ B. In the Sale of Immovables 1. Rescission for Anticipatory Breach (1591) a. Available when se ller has reasonable grounds to fear the loss of the immovable property sold and its price b. Example: Buyer destroys the building sold, there being no security therefor, and buyer becomes insolvent c. Court has no discretion to compel the s eller to wait for the expiration of the period to pay, or to grant the buyer mor e time to pay 2. Specific Performance + Damages (1191) a. Seller may choose betw een specific performance and rescission, with damages in either case b. Court ha s discretion, for a just cause, to give the buyer more time to pay even if the s eller chooses rescission 3. Rescission + Damages (1191) a. If seller chose speci fic performance, and such becomes impossible, he may still avail of rescission b . If absolute sale, seller must make a demand for rescission Judicially, OR By a notarial act c. Necessary even if automatic rescission is stipulated d. Effect of lack of demand: Buyer can still pay e. Effect of demand: Court may not grant buyer a new term 4. Maceda Law: Sale of Residential Realty on Installments (Asked in 77, 89, 99, 00) RA 6552: An Act To Provide Protection for Buyers of Real Estate on Installme nt Payments DOES not apply to: a. Industrial lots b. Commercial buildings c. Sal e to tenants under Reform Code (RA 3844) Agricultural Imposes ADDITIONAL REQUIREMENTS FOR A VALID RESCISSION: a. If buyer has paid at least 2 years of installments: GRN Grace period: 1 month per year of installment payments made. BUT buyer may only avail of it only once in every 5 years Refund of Cash Surrender Value (CSV): 50% of total amount paid + st 5% for every year after the 1 5 years of installments BUT not greater than 90% of total amount pai d Notice of cancellation of demand for rescission by notarial act, effective 30 days from the buyers receipt thereof and upon full payment of CSV b. If buyer has paid less than 2 years: GN Grace period: at least 60 days Notice of cancellatio n or demand for rescission by notarial act, effective 30 days upon receipt there of c. Down payments, deposits, or options on the contract shall be included in t he total number of installments made 294 SALES d. Seller may go to court for judicial rescission in lieu of a notarial act of r escission e. During the grace period, buyer shall have the right: To sell or ass ign his rights, to be evidenced in a notarial instrument To update his account T o pay in advance any installment, or the full unpaid balance of the price, witho ut any interest

CIVIL LAW REVIEWER Chapter VI. REMEDIES of the SELLER and BUYER deficiency from goods of the same k ind and quality, UNLESS a contrary intent appears. III. Remedies of the Buyer General rule: Courts will refuse to decree specific performance with respect to chattels, because damages are a sufficient remedy Exception: Buyer is entitled t o the specific thing which to him has special value and which he cannot readily obtain in the market OR where damages would not furnish a complete and adequate remedy (Baviera) _________ A. Remedy for breach of obligation to preserve If thi ng is lost 1. Without fault of seller: No breach; Obligation is extinguished 2. T hrough fault of seller (or through fortuitous event, if seller is liable): Damag es A thing is lost when it 1. Perishes 2. Goes out of commerce 3. Disappears in s uch a way that its existence is unknown or it cannot be recovered If thing deter iorates Without fault of seller No breach Impairment shall be borne by buyer Through fau lt of seller Rescission + damages Or Specific performance + damages Real Estate (1539-1543) 1. If at the rate of a certain price per unit of measure or number: Less (in area or quality) than what was agreed upon: Proportional reduction of p rice OR Rescission, if: Lack in area is at least 1/10 of what is stated, or infe rior value of thing sold exceeds 1/10 of price Buyer would not have bought the p roperty has he been aware of the inferior quality or smaller area More Reject th e excess OR Accept the whole and pay at contract rate [NOTE: Also applies to judicial sales (1541)] 2. If for a lump sum: Everything is within boundaries, even if less or more than stated area No remedy Rudolf Lietz, Inc. v. CA, (2005): Where both the area and the boundaries of the immovable are declared, the area covered within the boundaries of the immovable prevails over the stated area. Not everything is within boundaries Proportional reduction in price OR Rescission 295 SALES _________ B. Remedy for breach of obligation to deliver Delivery of wrong quanti ty (1522) Goods are less than what was contracted Reject the goods OR Accept and pay At co ntract rate if buyer accepts knowing that seller wont perform in full At fair val ue: If goods were used before knowing that seller wont be able to perform in full More Reject the excess (Or the whole, if indivisible) OR Accept the whole and p ay at contract rate Prescriptive period: 6 months, counted from date of delivery _________ C. Remedy for breach of warranty Express Warranty 1. Prescriptive period: Period specified in express warranty OR 4 years, if no period is specified (following the genera l rule on rescission of contracts) 2. Remedies: a. Accept goods + demand diminut ion/extinction of price b. Accept goods + damages c. Refuse to accept goods + da mages d. Rescind (Refuse to accept or return or offer to return) + recover price paid 3. Rescission not available when buyer: a. Knew of breach of warranty when he accepted the goods without protest Art. 1464. Civil Code. In the sale of an undivided share of a specific mass of f ungible goods, if the mass contains less than the number, weight, or measure bou ght, the buyer becomes the owner of the whole mass and the seller is bound to ma ke good the

CIVIL LAW REVIEWER Chapter VI. REMEDIES of the SELLER and BUYER b. Fails to notify the seller about election to rescind within a reasonable peri od of time c. Fails to return or offer to return the goods to the seller in subs tantially a good condition as they were when delivered, unless deterioration was due to breach of warranty 4. Measure of damages: Difference between value of go ods at time of delivery and the value they would have had if they had answered t o the warranty 5. Effects of rescission: a. Buyer no longer liable for price Ent itled to return of any part of price paid, concurrently with or immediately afte r an offer to return the goods b. If seller refuses to accept offer to return go ods: buyer deemed bailee for seller and has right of lien to secure payment of p art of price paid c. If property sold for nonpayment of taxes due and not made known to the buyer bef ore the sale: seller liable d. Judgment debtor also responsible for eviction in judicial sales, unless it is otherwise decreed in the judgment 2. If there is wa iver of warranty: a. Seller acted in bad faith: Waiver is void, seller liable fo r eviction b. Buyer made waiver without knowledge of risks of eviction: Seller l iable only for the value of thing sold at time of eviction c. Buyer made waiver with knowledge of risks: Seller not liable, buyer assumed the consequences Impli ed warranty against encumbrances (1560) 1. Rescission: Within 1 year from executi on of deed of sale OR 2. Damages: Within 1 year from execution of deed of sale o r discovery of the burden or servitude Implied warranty against hidden defects ( 1567-1571) 1. If thing is not lost: a. Withdraw from contract (accion redhibitori a) + damages b. Demand a proportionate reduction of the price (accion quanti min oris) + damages 2. If thing is lost: Due to hidden fault If seller aware of defect, buyer may demand: - Return of pri ce Refund of expenses of contract - Damages If seller not aware of defect: Buyer may demand price and expenses BUT NOT damages Due to fortuitous event or fault of buyer Demand: - Price paid minus value of thing when it was lost - Damages, i f seller acted in bad fait 296 SALES Implied warranty (1555,1556) TOTAL EVICTION Enforce liability for eviction - Demand from seller: VICED Value of thing sold at time of eviction Income or fruits, if he has been ordered to de liver them to the party who won the eviction suit Costs of eviction suit and in a proper case, suit against seller for warranty Expenses of the contract, if buy er has paid them Damages and interests, and ornamental expenses, IF sale was mad e in bad faith against eviction PARTIAL EVICTION Enforce liability (demand VICED) OR Rescind If he would not hav e bought the thing sold without the part lost BUT he must return the thing witho ut other encumbrances than those which it had when he acquired it 1. Rules: a. Buyer need not appeal from decision to hold seller liable for evict ion b. When adverse possession commenced before sale, but prescription period co mpleted after transfer: seller is not liable Prescriptive period: 6 months from delivery Implied warranty against redhibitory

defects of animals 1. Remedies a. Withdraw from contract + damages b. Demand a p roportionate reduction of the price + damages

CIVIL LAW REVIEWER Chapter VI. REMEDIES of the SELLER and BUYER 2. If sale is rescinded: a. Buyer must return animal in condition in which it wa s sold and delivered b. Buyer shall be liable for injury due to his negligence. 3. Prescriptive period: 40 days from delivery Warranty in sale of consumer goods (RA 7394, Sec.68) If implied warranty accompanies express warranty, both will be of equal duration. EXPRESS WARRANTY 1. Demand repair within 30 days Extendible for causes beyond th e control of the warrantor 2. Demand refund of price minus amount directly attri butable to the use of the consumer prior to the discovery of the nonconformity I MPLIED WARRANTY 1. Retain the goods and recover damages OR 2. Reject the goods, cancel contract and recover from seller so much of the purchase price as has bee n paid + damages 297 SALES

CIVIL LAW REVIEWER Chapter VII. EXTINGUISHMENT of SALE Chapter VII. Extinguishment of Sale I. II. III. IV. IN GENERAL CONVENTIONAL REDEMPTION EQUITABLE MORTGAGE LEGAL REDE MPTION I. In General 4. Co-owners of an immovable, if they sold their interests to the same person, m ay only redeem their respective shares a. Vendee cannot be compelled to agree to a partial redemption b. If the co-owners sold their interest to the same person who previously bought the share of a co-owner subject to a right of redemption, then the latter may be compelled to redeem the whole property From whom to rede em 1. Vendee a retro 2. His heirs, assigns or agents 3. Subsequent purchaser of p roperty, even if the right to redeem was not mentioned in the subsequent contrac t; except if registered land, where the right to redeem must be annotated in the title 4. If several heirs, then the right of redemption can be exercised agains t each heir for his share of the property How exercised 1. Returning the ff. to t he buyer: (PEN) a. Price of the sale; b. Expenses of the contract and other legi timate payments made by reason of the sale; c. Necessary and useful expenses mad e on the thing sold 2. Complying with any other stipulation agreed upon, if any. NOTE: 1. BPI Family Savings Bank, Inc. v. Veloso, (2004): The general rule in r edemption is that it is not sufficient that a person offering to redeem manifest s his desire to do so. The statement of intention must be accompanied by an actu al and simultaneous tender of payment for the full amount of the repurchase pric e. 2. Paez v. Magno, (1949):Tender of payment is enough (i.e., consignation is n ot necessary), if made on time, as a basis for action against the buyer to compe l him to resell. But that tender does not in itself relieve the buyer from his o bligation to pay the price when redemption is allowed by the court. Effect of re demption 1. The seller shall receive the thing free from all charges or mortgages constituted by the buyer BUT he shall respect leases executed by the buyer in g ood faith and in accordance with local custom. 2. If there are growing fruits at the time of sale II. Conventional Redemption Definition 1. Vendor reserves the right to repurchase the thing sold, with the ob ligation to comply with the provisions of Article 1616 and other stipulations wh ich may have been agreed upon. (Art 1601,CC) 2. Available when the seller reserv es the right to repurchase the thing sold in the same instrument of sale as one of the stipulations of the contract (Villarica v CA, 1968) Period (Asked in 77) G eneral Rule: Follow period stipulated in contract, but should not exceed 10 year s. 1. If no period stipulated, then it shall be four years from the execution of the contract 2. But vendor may still exercise the right to repurchase within th irty days from the time final judgment was rendered in a civil action on the bas is that the contract was a true sale with right to repurchase By whom exercised 1 . Vendor 2. His heirs, assigns or agents 3. Creditor, if he has exhausted the pr operty of the vendor SALES Generally, extinguished by the same causes as all other obligations (Arts.1600 & 1231) (P3 3 PLAN-C -R ) 1. Payment/performance 2. Prescription 3. Loss of thing due 4. Annulment a. Novation 5. Condonation/remission 6. Confusion/merger 7. Com pensation 8. Rescission 9. Resolutory condition fulfilled 10. Redemption (Conven tional or Legal)

298

CIVIL LAW REVIEWER Chapter VII. EXTINGUISHMENT of SALE and at the time of redemption: no reimbursement or prorating if the buyer did no t pay indemnity at the time of sale 3. If there were no growing fruits at the ti me of sale, but some exist at the time of redemption: fruits prorated (buyer ent itled to part corresponding to time he possessed the land in the last year, coun ted from the anniversary of the date of sale) Effect of non-redemption Ownership is consolidated in the buyer BUT the consolidation shall not be recorded in the Registry of property w/o a judicial order, after the vendor has been duly heard. Right to Redeem vs. Option to Purchase (Villanueva) Right to Redeem Not a separate contract but part of a main contract of sale, and cannot exist unless reserved at the time of the perfection of the main contract of sale Does not need its separate consideration to be valid and effective Opti on to Purchase Generally a principal contract and may be created independent of another contract the realty taxes having been paid by them, the contracts which purported to be p acto de retro transactions are presumed to be equitable mortgages, whether regis tered or not, there being no third parties involved. Legaspi v. Spouses Ong, (20 05): A pactum commissorium is a stipulation enabling the mortgagee to acquire ow nership of the mortgaged properties without need of foreclosure proceedings whic h is a nullity being contrary to the provisions of Article 2088 of the Civil Cod e. The inclusion of such stipulation in the deed shows the intention to mortgage rather than to sell. A pactum commissorium is contrary to the nature of a true pacto de retro sale since ownership of the property sold is immediately transfer red to the vendee a retro upon execution of the sale, subject only to the repurc hase of a vendor a retro within the stipulated period. 299 SALES Must have a consideration separate and distinct from the purchase price to be va lid and effective (Arts. 1324 and 1479) The period of the option contract may be beyond the 10-year period May be exercised by notice of its exercise to the off eror Sale with right to repurchase Right to repurchase the thing sold granted to the vendor in a separate instrument from the deed of sale Equitable mortgage When any of the cases in Art. 1602 arise The maximum period for the exercise of the right to repurchase cannot exceed 10 years Requires in addition a tender of payment of the amount required by law, in cluding consignment thereof if tender of payment cannot be made effectively on t he buyer III. Equitable Mortgage (Asked in 79, 80, 82, 84, 86, 89, 91, 05) Definition Molina v. CA, (2003): An equ itable mortgage is defined as one which, although lacking in some formality, or form or words, or other requisites demanded by a statute, nevertheless reveals t he intention of the parties to charge real property as security for a debt, and contains nothing impossible or contrary to law. Tan v. Valdehueza, (2003): The V aldehuezas having remained in possession of the land and Presumption that a contract is an equitable mortgage arises when (5P-R) 1. Price unusually inadequate; 2. Possession retained by the seller as lessee or otherwis e; 3. Period of redemption extended (or granted anew) upon or after the expirati on of the right to repurchase; 4. Part of the purchase price retained by the sel

ler; 5. Payment of taxes on the thing sold borne by the seller; 6. Any other cas e where it may be fairly inferred that the Real intention of the parties is for the transaction to secure a debt or other obligation. For the presumption of an equitable mortgage to arise under Art. 1602, 2 requisites must concur (Molina v. CA, 2003) 1. That the parties entered into a contract denominated as a contract of sale, and 2. That their intention was to secure an existing debt by way of a mortgage.

CIVIL LAW REVIEWER Chapter VII. EXTINGUISHMENT of SALE In case of doubt, a contract purporting to be a sale with right to repurchase sh all be construed as an equitable mortgage (Art. 1603) Rationale behind provision on equitable mortgage 1. Circumvention of usury law 2. Circumvention of prohibit ion against pactum commissorium creditor cannot appropriate the things given by way of pledge or mortgage since remedy here is foreclosure. Remedies of apparent vendor 1. If the instrument does not reflect the true agreement, the remedy is r eformation 2. If decreed to be an equitable mortgage, then any money, fruits or other benefit to be received by the buyer as rent or otherwise considered as int erest. 3. If decreed as a true sale with right to purchase- seller may redeem w/ in 30 days from finality of judgment, even if the period for redemption has expi red. Period to Redeem To whom granted a. Co-owner (Art 1620) b. Adjoining owner of Rural Land (Article 1621) c. Adjoining owner of urban land (Art. 1622) Period 30 days from notice In writing - By the seller - Of the actual execution and delivery of the deed o f sale Doromal v. CA: Actual knowledge of the sale is immaterial Conejero v. CA: the law did not provide for a particular mode of written notice, thus any compl iance with written notice should suffice, including the giving of a copy of the de ed of sale 30 days from the date the assignee demands payment from debtor IV. Legal Redemption Definition Right to be subrogated: a. upon the same terms and conditions stipulat ed in the contract, b. in the place of one who acquires a thing by purchase or d ation in payment, or by any other transaction whereby ownership is transmitted b y onerous title (Art 1619, CC) Applies to transfers of ownership by onerous titl e where subrogation is possible. Hence, it cannot apply to barter or to transfer by gratuitous title or hereditary succession. Applies to sales with pacto de re tro (BAVIERA citing MANRESA)

Manner 1. a formal offer to redeem or 2. filing of an action in court together wi th the consignation of the redemption price within the reglementary period Debtor in case a credit or incorporeal right in litigation is sold (Art.1634) Ap plicant or his widow or legal heirs in case of sale of homestead (Sec.119, Publi c Land Act) Taxpayer in case of tax sale (Sec. 215, NIRC) Judgment debtor, succe ssorin- interest, or creditor with subsequent lien, in case of execution sale (Ru le 39, Sec.27, ROC) Debtor-mortgagor, successors-in- interest, judicial/judgment creditor, any person having a lien on the property, in case of extrajudicial fo reclosure of mortgage (Act No. 3135. Sec. 6. ) Debtor-mortgagor in case of judic ial foreclosure of real estate mortgage IF the mortgagee is a bank or a banking institution. (The General Banking Law of 2000) 300 SALES 5 yrs. from conveyance date of 1 year from forfeiture

date of 1 year from the date of registration of the certificate of sale 1 year from the date of the sale 90 days from finality of judgment

CIVIL LAW REVIEWER Agricultural lessee w/o knowledge of sale of landholding (Agr arian Land Reform Code, Sec.12) 2 years from the registration of the sale Chapter VII. EXTINGUISHMENT of SALE Order of preference if two or more wish to exercise the right: a. Owner with sma ller land area b. If same land area, then the one who first requested the redemp tion Ortega v. Orcine, (1971): What constitutes rural or urban is to be determined f rom the character of the community or vicinity in which it is found, and NOT fro m the nature of the land itself nor the purpose to which it is devoted 3. Redemp tion by adjoining land-owners of urban land (applies only to small portions of u rban land) (Art. 1621) Right of Pre-emption Owner of any adjoining land has a right of preemption at a reasonable price when: -Urban land is so small and so situated that a major port ion of it cannot be used for any practical purpose w/in a reasonable time; -Was bought merely for speculation; -Was resold Arises before sale No rescission beca use no sale exists yet The action is directed against prospective seller Right o f Redemption If the resale has been perfected, the owner of the adjoining land s hall have a right of redemption, also at a reasonable price Priority if 2 or mor e adjoining owners want to redeem: owner whose intended use of the land appears to be best justified Arises after sale There can be rescission of the original s ale Action is directed against buyer Instances of Legal Redemption 1. Redemption by Co-owners (Art. 1621) A co-owner o f a thing may exercise the right of redemption in case the shares of all the coowners or any of them are sold to a third person a. Third person refers to all pe rsons who are not heirs of the vendor, by will or intestate succession b. The ri ght is available not only to original co-owners, but to those who had later acqu ired the share of the co-owner c. But the right of redemption may be exercised b y a co-owner only when part of the community property is sold to a stranger. Whe n the portion is sold to another co-owner, the right does not arise because a ne w participant is not added to the co-ownership (Fernandez v. Taun) If the price of the alienation is grossly excessive, the redemptioner shall pay only a reason able one Should two or more co-owners desire to exercise the right, they may als o do so in proportion to the share they may respectively have in the thing owned in common Rationale: Public Policy, since ownership is a hindrance to developme nt and administration of property (BAVIERA) cothe the 301 SALES 4. Redemption of Credit Available when it is sold while in litigation (From the time the complaint is answered) NOT available when the assignment in favor of: a . Co-heir/co-owner of right assigned b. Creditor in payment of his credit c. Pos sessor of a tenement or piece of land which is subject to the right assigned How exercised: reimburse the assignee for the: a. Price paid b. Judicial expenses i ncurred c. Interest on the price from date of payment 2. Redemption by Adjoining Land-owners of rural land (Art. 1621) The ff. Requisi tes must concur: a. A piece of rural land is alienated b. Area does not exceed o ne hectare When not applicable: a. The grantee does not own any rural land b. Ad jacent lands are separated by brooks, drains, roads and other apparent servitude s for the benefit of other estates

CIVIL LAW REVIEWER Chapter VII. EXTINGUISHMENT of SALE the sale up to the time of redemption -Any a ssessment or taxes which the purchaser may have paid 5. Under the Public Land Act Coverage: a. Every conveyance of land acquired unde r a free patent or homestead b. The ownership of the land must have been transfe rred to another. If the transaction is a mere promise to sell, there is no right yet to redeem c. This refers to conveyances made after the prohibited 5 years f rom the issuance of the patent or grant Period: a. Within 5 years from the date of conveyance b. If pacto de retro sale, the period to redeem cannot be less tha n 5 years Who may redeem: a. Gen Rule: Applicant, widow, or heirs b. Exception: land is sold to another member of the family of the applicant, or his direct des cendant or heir c. From whom: Subsequent purchasers 7. Under the Agrarian Land Reform Code Lessees right of pre-emption a. The agric ultural lessee shall have the preferential right to buy under the same reasonabl e terms and conditions, in case the lessor decides to hold the landholding b. Co nditions: The landholding must be preempted by the DAR When two or more lessees, each shall have preferential right only to the extent of the area cultivated by him c. Period: 180 days from notice in writing Lessees right of redemption a. S ec. 12 RA 3844: In case landholding is rd sold to 3 person without the knowledge of the lessee, the latter shall have the right to redeem the same at a reasonab le price and consideration b. Period: within 180 days from notice in writing 302 SALES 6. Redemption in Execution Sales Who may redeem Foreclosure and In extra judicial foreclosure -Debtor -Successor in interest -Judicial or judgme nt creditor of said debtor -Junior encumbrancer In execution sales -Judgment deb tor -Successor in interest -Creditor having a lien on the property sold by attac hment, judgment or mortgage on the property subsequent to the judgment Extra jud icial foreclosure - within 1 year from the date of the sale Execution sale - wit hin 12 months after the sale If land is mortgaged in favor of a bank - within 1 year after the sale (not available in case of a corporate mortgagor) -Amount of the purchase -Interest at 1% per month from the time of Period to redeem Amount of redemption

CIVIL LAW REVIEWER Chapter VIII. PHILIPPINE BULK SALES LAW Chapter VIII. Philippine Bulk Sales Law (Act 3952) I. II. III. IV. PURPOSE COVERAGE DUTY OF SELLER EFFECT OF NON-COMPLIANCE III. Duty of Seller 1. Sworn statement of list of creditors Contents: o Names + addresses of all cre ditors o Amount of indebtedness due or owing When delivered: Before any part of the purchase price is received, or any promissory note or evidence of indebtedne ss therefor Delivered to: o Buyer, mortgagee or agent o If corporation: presiden t, vicepresident, treasurer or secretary o If partnership firm: a member thereof 2. Pro-rata application of the purchase or mortgage money to the payment of lis ted creditors 3. Inventory of the goods, wares, merchandise, provisions or mater ials When made: at least 10 days before sale or mortgage Contents: Quantity Cost price of each article (as far as possible) 4. Notice to listed creditors When m ade: at least 10 days before transfer of possession How: personally or by regist ered mail Contents: Price, terms and conditions of sale, transfer, mortgage or a ssignment 5. Consideration for the sale, transfer, mortgage or assignment Must n ot be nominal I. Purpose Purpose (Villanueva) To compel the seller in bulk to execute and deliver a verifi ed list of his creditors to his buyer, and notice of intended sale to be sent in advance to said creditors and to use the proceeds to cover payment of outstandi ng liabilities To protect creditor of merchant stores The Law is constitutional as a valid exercise of police power of the State. (Liwanag v. Menghraj, (1941)) 303 SALES II. Coverage The Law covers all transactions, whether done in good faith or not, that fall wi thin the description of what is bulk sale (Villanueva) Transactions Covered Applies to sales and transfers in bulk, including any sale, transfer, mortgage or assig nment of: 1. A stock of goods, wares, merchandise, provisions or materials NOT i n the ordinary course of trade and the regular prosecution of the business of th e seller, transferor, mortgagor, or assignor 2. All, or substantially all, of th e business or trade theretofore conducted by the seller, transferor, mortgagor, or assignor 3. All, or substantially all, of the fixtures and equipment used in and about the business of the seller, transferor, mortgagor, or assignor When no t applicable 1. Written waiver by vendor, transferor, mortgagor or assignor, as s hown by verified statements 2. To executors, administrators, receivers, assignee s in insolvency, or public officers, acting under judicial process.

CIVIL LAW REVIEWER Chapter VIII. PHILIPPINE BULK SALES LAW IV. Effect of non-compliance On Transaction Itself If the purchase or mortgage money is not applied pro-rata t o the bona fide claims of listed creditors: Sale, transfer or mortgage shall be FRAUDULENT and VOID. On Seller, Assignor Mortgagor, Transferor or Violation Failure to comply with the obligation to prepare and deliver the sworn statement listing his creditors and the application pro-rata of the proceeds to the creditors. (Sec 4) Sanction criminal liability Section 7: Transfer by any person, firm or corporati on as owner of any stock of goods, wares, merchandise, provisions or materials, i n bulk of title to the same without consideration or for a nominal consideration only, subjects him to criminal liability 304 SALES On Buyer, Mortgagee, Transferee or Assignee The Law imposes no direct obligation, thus a buyer in bulk sale cannot be deemed to be subject to the criminal liabil ity under the Law [NOTE: Criminal liability: 6 months to 5 years imprisonment, o r fine of P5K or less, or both.] - end of Sales -

CIVIL LAW REVIEWER TABLE of CONTENTS CREDIT TRANSACTIONS Table of Contents Chapter I. General Principles ......................307 I. Types of Credit Trans actions ............307 II. Security ........................................... ..307 III. Bailment ............................................307 Chapter II. Loan (Arts. 1933-1961, CC).......309 I. Definition ............................. ..............309 II. Characteristics of a Loan ..................309 III. Kinds of Loan: In General .................309 IV. Commodatum........................ ............309 V. Obligations of the Bailee in Commodatum ..................... .......................310 VI. Obligations of the Bailor in Commodatum ......... ...................................311 VII. Mutuum or Simple Loan............... .311 VIII. Interests ........................................312 IX. The Usury L aw ..................................312 Chapter III. Deposit .................. ....................314 I. Definition .......................................... .314 II. Kinds of Deposit ................................314 III. Characteristi cs of Deposit .................314 IV. Deposit Distinguished From Mutuum and Com modatum .....................................314 V. Obligations of the Depositar y............314 VI. Obligations of the Depositor..............317 VII. Extingui shment of Deposit (Art. 1995) 317 VIII. Necessary Deposit....................... .317 IX. Judicial Deposit .................................318 Chapter IV. Guara nty ...................................319 I. Definition ....................... ....................319 II. Characteristics ..................................31 9 III. Classification .....................................319 IV. Rules Governi ng Guaranty ...............319 V. Guaranty Distinguished from Others.322 VI. The Guarantor (Arts. 2056-2057)......322 VII. Effects of Guaranty ................. ......322 VIII. Extinguishment of Guaranty .........325 Chapter V. Legal and Jud icial Bonds.........326 Chapter VI. Suretyship.................................3 27 Chapter VII. Pledge, Mortgage, Antichresis .................................. .....................................328 I. Essential Requisites Common to Pledg e and Mortgage (Art. 2085)...........................328 II. Pledge ............ ...................................329 III. Mortgage ........................... ................332 IV. Foreclosure of Mortgage (Art. 2085).334 V. Antichresis.. .......................................336 VI. Chattel Mortgage................. ..............336 Chapter VIII. Concurrence and Preference of Credits........... ................................................ 338 I. General Provisions...... ...................... 338 II. Classification of Credits .................... 33 8 III. Preference of Credits ........................ 338 306 CREDIT TRANSACTIONS

CIVIL LAW REVIEWER Chapter I. GENERAL PRINCIPLES Prof. Roberto N. Dio Faculty Editor CREDIT TRANSACTIONS CREDIT TRANSACTIONS TEAM Chapter I. General Principles I. TYPES OF CREDIT TRANSACTIONS II. SECURITY III. BAILMENT Katrina Elena Guerrero Lead Writer Diana Gervacio Patricia Andrea Hernandez Mark Luciano Ixara Maroto W riters CIVIL LAW Kristine Bongcaron Patricia Tobias Subject Editors CREDIT TRANSACTIONS - include all transactions involving the purchase or loan of goods, services or money in the present with a promise to pay or deliver in the future (contract of security) I. Types of Credit Transactions ACADEMICS COMMITTEE Kristine Bongcaron Michelle Dy Patrich Leccio Editors-in-Chief Secured transactions or contracts of real security Those supported by collateral or an encumbrance of property Unsecured transactions or contracts of personal s ecurity Those the fulfillment of which by the principal debtor is secured or sup ported only by a promise to pay or the personal commitment of another such as a guarantor or surety PRINTING & DISTRIBUTION Kae Guerrero DESIGN & LAYOUT Pat Hernandez Viktor Fontanilla Rusell Aragones Romualdo Menzon Jr. Rania Joya 307 CREDIT TRANSACTIONS II. Security SECURITY - something given, deposited or serving as a means to ensure the fulfil lment or enforcement of an obligation or of protecting some interest in property . 2 TYPES OF SECURITY 1. Personal Security as when an individual becomes a suret y or a guarantor 2. Real Security - as when a mortgage, pledge, antichresis, cha rge or lien or other device used to have property held, out of which the person to be made secure can be compensated for loss. Thus, a secured creditor is one w ho holds a security from his debtor for payment of the latters debts. LECTURES COMMITTEE Michelle Arias Camille Maranan Angela Sandalo

Heads Katz Manzano Mary Rose Beley Sam Nuez Krizel Malabanan Arianne Cerezo Marcr ese Banaag Volunteers MOCK BAR COMMITTEE Lilibeth Perez BAR CANDIDATES WELFARE Dahlia Salamat LOGISTICS Charisse Mendoza III. Bailment BAILMENT - the delivery of property of one person to another in trust for a spec ific purpose, with a contract, express or implied, that the trust shall be faith fully executed and the property returned or duly accounted for when the special purpose is accomplished or kept until the bailor reclaims it. [NOTE: The word bai lment comes from the French word bailer, meaning to deliver] SECRETARIAT COMMITTEE Jill Hernandez Head Loraine Mendoza Faye Celso Mary Mendoza Joie Bajo Members

CIVIL LAW REVIEWER Chapter I. GENERAL PRINCIPLES PARTIES IN BAILMENT 1. Bailor the giver, the party who delivers possession/custo dy of the thing bailed 2. Bailee the recipient, the party who receives the posse ssion/custody of the thing delivered KINDS OF CONTRACTUAL BAILMENT (With Referen ce to Compensation) 1. Those for the sole benefit of the bailor, e.g. gratuitous deposit (Art.1965) and mandatum, i.e., where the mandatory or person to whom th e property is delivered undertakes to do some act with respect to the same 2. Th ose for the sole benefit of the bailee, e.g. commodatum and gratuitous simple lo an or mutuum (Art.1933) 3. Those for the benefit of both parties, e.g. deposit f or a compensation, involuntary deposit, pledge and bailments for hire a. Hire of things for the temporary use of the hirer (i.e. lease, Arts.1642-1643) b. Hire of service for work or labor upon the goods delivered (i.e. contract for piece o f work, Art.1713) c. Hire for carriage of goods for goods delivered to be carrie d from place to place by a common carrier (Art.1732) or private person d. Hire o f custody for storage of goods delivered (Arts.1507-1520, Warehouse Receipts Law ) 308 CREDIT TRANSACTIONS Contract where one of the parties (Seller) obligates himself to: hip of and to deliver a determinate thing; Transfer owners

and the other (Buyer) to pay a price certain in money or its equivalent.

CIVIL LAW REVIEWER Chapter II. LOAN Borrower must return the same thing loaned (Art.1933) May invol ve real or personal property (Art.1937) Loan for use or temporary possession (Ar t.1935) Bailor may demand the return of the thing loaned before the expiration o f the term in case of urgent need (Art.1946) Bailor suffers the loss of the subj ect matter since he is the owner (Art.1942; Art.1174) Borrower need only pay the same amount of the same kind and quality Refers only to personal property Loan for consumption Chapter II. Loan (Arts. 1933-1961, CC) I. II. III. IV. V. DEFINITION CHARACTERISTICS OF A LOAN KINDS OF LOAN: IN GENERA L COMMODATUM OBLIGATIONS OF THE BAILEE IN COMMODATUM VI. OBLIGATIONS OF THE THE BAILOR IN COMMODATUM VII. MUTUUM OR SIMPLE LOAN VIII. INTERESTS IX. THE USURY LA W Lender may not demand its return before the lapse of the term agreed upon I. Definition II. Characteristics of a Loan Real contract 1. delivery is essential for perfection of the contract of loan. 2 . An accepted promise to loan, is nevertheless binding on the parties, it being a consensual contract. Unilateral contract 1. creates obligations on only one pa rty, i.e., the borrower 2. In a contract of loan, the cause is, as to the borrow er, the acquisition of the thing, and as to the lender, the right to demand its return or its equivalent. (Monte de Piedad v. Javier) GENERAL RULE: If the subject of the contract is a consumable thing, such as mone y, the contract would be a mutuum. EXCEPTION: Consumable goods may be the subjec t of commodatum if the purpose of the contract is not the consumption of the obj ect, as when it is merely for exhibition. (Art.1936) [Producers v. CA, 397 SCRA 6 51] IV. Commodatum 2 KINDS OF COMMODATUM 1. Ordinary commodatum - See Art.1933 2. Precarium one whe reby the bailor may demand the thing loaned at will; exists in cases where: a. n either the duration of the contract nor the use to which the thing loaned should be devoted has been stipulated b. if the use of the thing is merely tolerated b y the owner (Art 1947) GENERAL RULE: In a commodatum, the right to use is limite d to the thing loaned, and not to its fruits EXCEPTION: When there is stipulatio n to the contrary (Art.1940). In cases where there is such a stipulation, enjoym ent of the fruits must III. Kinds of Loan: In General Commodatum Ordinarily involves something not consumable* (Art.1936) Ownership of the thing loaned is retained by lender (Art.1933) Essentially gratuitous (Art.1 933) Mutuum Involves money or other consumable thing Ownership is transferred to the borrower Maybe gratuitous or it maybe onerous, i .e. with stipulated interest CREDIT TRANSACTIONS LOAN - a contract by which one of the parties delivers to another, either someth ing not consumable so that the latter may use the same for a certain time and re turn it, in which case the contract is called commodatum; or money or other cons umable thing, upon the condition that the same amount of the same kind and quali

ty shall be paid, in which case the contract is simply called a loan or mutuum. (Art.1933) Not purely personal in character Borrower suffers the loss even if caused exclusively by a fortuitous event and h e is not, therefore, discharged from his duty to pay Purely personal in characte r A thing is consumable when it is used in a manner appropriate to its purpose or nature. (Art 418) 309

CIVIL LAW REVIEWER Chapter II. LOAN be incidental to the use of the thing itself. Otherwise, if the use of the fruit s is the main cause, the contract may be one of usufruct. (Art.562) What is the effect of an accepted promise to deliver by way of commodatum or mutuum? It is b inding upon the parties, but the contract of loan shall not be perfected until d elivery of the contract. (Art.1934) Who may be bailor in commodatum? 1. Anyone. The bailor in commodatum need not be the owner of the thing loaned. (Art.1938) 2 . But the bailee himself may not lend nor lease the thing loaned to him to a thi rd person (Art 1939(2)) _______ GENERAL RULE: Commodatum is purely personal in c haracter (Art.1939) such that: 1. Death of either party extinguishes the contrac t 2. Bailee can neither lend nor lease the thing lent to him to a third person E XCEPTION: Members of the bailees household may make use of the thing loaned 6. Solidary obligation where there are 2 or more bailees to whom a thing was loa ned in the same contract (Art.1945) _______ GENERAL RULE: Bailee is not liable f or loss or damage due to a fortuitous event (Art.1174), since the bailor retains ownership of the thing EXCEPTION: Bailee is liable even for loss due to a fortu itous event when: (Art 1942) 1. He devotes the thing to any purpose different fr om that for which it was loaned 2. He keeps it longer than the period stipulated , or after the accomplishment of the use for which the commodatum has been const ituted 3. The thing loaned has been delivered with appraisal of its value, unles s there is stipulation exempting the bailee from responsibility in case of a for tuitous event 4. He lends or leases the thing to a third person who is a not a m ember of his household 5. Being able to save either the thing borrowed or his ow n thing, he chose to save the latter. _______ GENERAL RULE: Bailee deterioration of thing loaned. is liable for 310 CREDIT TRANSACTIONS EXCEPTION TO EXCEPTION: Bailees household may NOT use it when: 1. There is stipul ation to the contrary, or 2. The nature of the thing forbids such use EXCEPTION: The deterioration of the thing is due only to the use thereof and wit hout his fault (Art.1943) _______ GENERAL RULE: Bailee has no right of retention of the thing loaned, on the ground that the bailor owes him something. EXCEPTIO N: Bailee has a right of retention for damages for known hidden flaws mentioned in Art 1951. (Art.1944) REQUISITES FOR THE APPLICATION OF ART.1951 1. There is a flaw or defect in the thing loaned 2. The flaw or defect is hidden 3. The bailo r is aware thereof 4. He does not advise the bailee of the same 5. The bailee su ffers damages by reason of said flaw or defect V. Obligations of Commodatum the Bailee in OBLIGATIONS OF THE BAILEE 1. Obligation to pay for the ordinary expenses for the use and preservation of the thing loaned (Art.1941) 2. Obligation to take good care of the thing with the diligence of a good father of a family (Art.1163) 3. Liability for loss, even if loss through fortuitous event, in certain circumstan ces (Art.1942) 4. Liability for deterioration of thing loaned, except under cert ain circumstances (Art.1943) 5. Obligation to return the thing upon expiration o f term or upon demand in case of urgent need

CIVIL LAW REVIEWER Chapter II. LOAN VI. Obligations of Commodatum the Bailor in VII. Mutuum or Simple Loan A mutuum or simple loan is a contract by which a person (creditor) delivers to a nother (debtor) money or other consumable thing with the understanding that the same amount of the same kind and quality shall be paid. (Art.1953) MUTUUM AND LE ASE DISTINGUISED MUTUUM Object is money or any consumable (fungible) thing Thing loaned becomes p roperty of debtor Relationship created is that of creditor and debtor LEASE Obje ct may be any thing, whether movable or immovable, fungible or non-fungible Owne r does not lose his right of ownership Relationship created is that of landlord and tenant or lessor and lessee (Tolentino v. Gonzales, 50 Phil 558) 1. To allow the bailee the use of the thing loaned for the duration of period st ipulated or until the accomplishment of the purpose for which commodatum was con stituted. EXCEPTIONS: a. Urgent need during which time the commodatum is suspend ed (Art.1946) b. Precarium (Art.1947) If duration of the contract has not been s tipulated If use or purpose of the thing has not been stipulated If use of thing is merely tolerated by the bailor c. Bailee commits an act of ingratitude speci fied in Art. 765 (Art.1948): Commission of offenses against the person, the hono r, or the property of the bailor, or of his wife or children under his parental authority Imputing to the bailor any criminal offense, or any act involving mora l turpitude, even though he should prove it, unless the crime or the act has bee n committed against the bailee himself, his wife, or children under his authorit y Undue refusal to give the bailor support when the bailee is legally or morally bound to [NOTE: Article 765 is applicable, because like donation, commodatum is essentially gratuitous. (Art.1933, par.2)] 2. To refund extraordinary expenses for the preservation of the thing loaned provided bailor is notified before the expenses were incurred. (Art.1949) EXCEPTION: Urgent need hence no notice is nec essary. 3. To refund 50% of the extraordinary expenses arising from actual use o f bailee of the thing loaned (Art.1949) EXCEPTION: Contrary stipulation 4. To pa y damages to bailee for known hidden flaws in the thing loaned. [NOTE: Bailor ha s no right of abandonment; he cannot exempt himself from payment of expenses to bailee by abandoning the thing to the latter. (art. 1952)] MUTUUM AND COMMODATUM DISTINGUISHED FROM BARTER 1. In mutuum, subject matter is money or any other fungible things; in barter, non-fungible (non-consumable) thi ngs. 2. In commodatum, the bailee is bound to return the identical thing borrowe d when the time has expired or the purpose has been served. In barter, the equiv alent thing is given in return for what has been received. 3. Mutuum may be grat uitous and commodatum is always gratuitous. Barter on the other hand is an onero us contract. It is really a mutual sale. [NOTE: BARTER contract where by one of the parties binds himself to give one thing in consideration of the others promis e to give another thing. (Art.1968)] CONSUMABLE AND FUNGIBLE DISTINGUISHED Wheth er a thing is consumable or not depends on its nature and whether it is fungible or not depends on the intention of the parties. Example: Wine is consumable by nature, but it may be non-fungible if the intention is merely for display or exh ibition. [NOTE: Fixed, savings, and current deposits of money in banks and simil ar institutions shall be governed by the provisions concerning simple loan. (Art .1980)]

311 CREDIT TRANSACTIONS

CIVIL LAW REVIEWER Chapter II. LOAN VIII. Interests INTEREST is the compensation allowed by law or fixed by the parties for the loan or forbearance of money, goods or credits KINDS OF INTEREST 1. Simple interest Paid for the principal at a certain rate fixed or stipulated by the parties. 2. Compound Interest that which is imposed upon interest due and unpaid. 3. Legal I nterest that which the law directs to be charged in the absence of any agreement as to the rate between the parties. 4. Lawful Interest that which the laws allo w or do not prohibit 5. Unlawful or Usurious Interest paid or stipulated to be p aid beyond the maximum fixed by law. However, by virtue of CB Circular 905, usur y has become legally inexistent. When is compound interest allowed? 1. When there is an express written stipulation to that effect (Art.1959) 2. Upon judicial dem and. HOWEVER, debtor is not liable to pay compound interest even after judicial demand when there is no stipulation for payment of interest. (Art.2212) REQUISIT ES FOR INTEREST TO BE CHARGEABLE 1. Must be expressly stipulated 2. Agreement mu st be in writing (Art.1956) 3. Must be lawful EXCEPTIONS TO REQUISITE OF EXPRESS STIPULATION 1. The debtor in delay is liable to pay legal interest (6% or 12%) as indemnity for damages (Art.2209) 2. Interest accruing from unpaid interest In terest demanded shall earn interest from the time it is judicially demanded (Art .2212) or where there is an express stipulation (Art.1959) RULES FOR AWARD OF IN TEREST IN THE CONCEPT OF ACTUAL & COMPENSATORY DAMAGES (Eastern Shipping Lines v . CA, 234 SCRA 78) 1. When obligation is breached consists in the payment of a s um of money, i.e., a loan or forbearance of money, the interest due should be th at which may have been stipulated in writing. Furthermore, the interest due shal l itself earn legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 12% per annum to be computed from default, i.e., from judi cial or extrajudicial demand under and subject to the provisions of Art.1169. 2. When an obligation, not constituting a loan or forbearance of money, is breache d, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudg ed on unliquidated claims or damages except when or until the demand can be esta blished with reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the cla im is made judicially or extrajudicially (Art. 1169) but when such certainty can not be so reasonably established at the time the demand is made, the interest sh all begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascerta ined). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged. 3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether t he case falls under paragraph 1 or paragraph 2, above, shall be 12% per annum fr om such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit. 312 CREDIT TRANSACTIONS IX. The Usury Law THE USURY LAW (Act No.2566) is an act fixing rates of interests upon loans and d eclaring the effect of receiving or taking usurious rates and for other purposes . (Arevalo v. Dimayuga 49 Phil 894) CB Circular No. 905 abolished interest rate ceilings. Conversely, with the promulgation of such circular, usury has become le

gally inexistent as the parties can now legally agree on any interest that may be charged on the loan. ELEMENTS OF USURY 1. A loan or forbearance of money 2. An understanding between parties that the loan shall and may be returned

CIVIL LAW REVIEWER Chapter II. LOAN [NOTE: The case of Chua vs. Timan involving promissory notes NOT credit cards tr ansactions, which stated that the said 3% interest per month is unconscionable, was cited in this case.] CREDIT TRANSACTIONS 3. An unlawful intent to take more than the legal rate for the use of money or i ts equivalent 4. The taking or agreeing to take for the use of the loan of somet hing in excess of what is allowed by law MACALINAO v BPI (Sept 2009): Regarding the credit card interest rate, We are of the opinion that the interest rate and p enalty charge of 3 percent per month should be equitably reduced to 2 percent pe r month or 24 percent per annum we had affirmed in a plethora of cases that stipu lated interest rates of 3 percent per month and higher are excessive, iniquitous , unconscionable and exorbitant. Such stipulations are void for being contrary t o morals, if not against the law. While the Bangko Sentral ng Pilipinas C.B. Cir cular No. 905-82 dated Jan. 1, 1983 effectively removed the ceiling on interest rates for both secured and unsecured loans, regardless of maturity, nothing in t he said circular could possibly be read as granting carte blanche authority to l enders to raise interest rates to levels which would either enslave their borrow ers or lead to a hemorrhaging of their assets. 313

CIVIL LAW REVIEWER Chapter III. DEPOSIT Chapter III. Deposit I. II. III. IV. DEFINITION KINDS OF DEPOSIT CHARACTERISTICS OF DEPOSIT DEPOSIT D ISTINGUISHED FROM MUTUUM AND COMMODATUM V. OBLIGATIONS OF THE DEPOSITARY VI. OBL IGATIONS OF THE DEPOSITOR VII. EXTINGUISHMENT OF DEPOSIT VIII. NECESSARY DEPOSIT IX. JUDICIAL DEPOSIT Contract of deposit is generally gratuitous. (Art.1965), subject to the followin g exceptions: 1. There is a contrary stipulation 2. Depository is in the busines s of storing goods 3. Property saved from destruction during calamity without ow ners knowledge; just compensation should be given the depository. (Art.1996[2] an d Art.1997, par.2) Only movable things may be the object of a deposit (Art.1966) if the deposit is either voluntary (Art.1968) or necessary (Art.1995). HOWEVER, a judicial deposit may cover movable as well as immovable property, its purpose being to protect the rights of parties to the suit. I. Definition DEPOSIT is constituted from the moment a person other, with the obligation of safely keeping it e safekeeping of the thing delivered is not the t, there is no deposit but some other contract. receives a thing belonging to an and of returning the same. If th principal purpose of the contrac (Art.1962)

IV. Deposit Distinguished From Mutuum and Commodatum DEPOSIT AND MUTUUMDISTINGUISHED DEPOSIT Principal purpose safekeeping MUTUUM Principal purpose is consumption of the subject matter Lender must wait until expiration of the period granted to t he debtor Only money or any other fungible thing may be the object II. Kinds of Deposit Judicial takes place when an attachment or seizure of property in litigation is ordered (Arts.2005-2008) Extrajudicial (Art. 1967) 1. Voluntary- delivery is mad e by the will of the depositor or by two or more persons each of whom believes h imself entitled to the thing deposited; 2. Necessary- made in compliance with a legal obligation, or on the occasion of any calamity, or by travelers in hotels and inns (Arts.1996-2004) or by travelers with common carriers (Arts.1734-1735) is 314 CREDIT TRANSACTIONS Depositor can demand return of subject matter at will Both movable and immovable may be the object DEPOSIT AND DISTINGUISHED DEPOSIT Principal purpose safekeeping May be gratuitous COMMODATUM is III. Characteristics of Deposit Characteristics 1. Real Contract because it is perfected by the delivery of the s ubject matter. 2. Principal purpose of the contract of deposit is the safekeepin

g of the thing delivered. 3. If gratuitous, it is unilateral because only the de pository has an obligation. If onerous, it is bilateral. The principal purpose i s safekeeping of the thing delivered, so that if it is only an accessory or seco ndary obligation, deposit is not constituted but some other contract. In extrajudicial deposit, only movable (corporeal) things may be the object. But for judicial deposits, object may be movable or immovable. COMMODATUM Principal purpose is transfer of use Always and essentially gratuitou s Both movable and immovable may be the object. V. Obligations of the Depositary OBLIGATIONS 1. Depositary is obliged to keep the thing safely and to return it w hen required, even though a specified term may have been stipulated in the contr act. (Art.1972) 2. Depositary is liable if the loss occurs through his fault or negligence. (Art.1972

CIVIL LAW REVIEWER Chapter III. DEPOSIT in rel. to Art.1163) Loss of thing while in the depositarys possession raises a p resumption of fault. (Art.1265) Required degree of care is greater if the deposi t is for compensation than when it is gratuitous. 3. Depositary is not allowed t o deposit the thing with a third person. (Art.1973) EXCEPTION: There is a contra ry stipulation NOTE: Depositary is liable for the loss of the thing deposited if : a. He transfers the deposit with a third person without authority although the re is no negligence on his part and the third person; b. He deposits the thing w ith a third person who is manifestly careless or unfit although authorized, even in the absence of negligence; or c. The thing is lost through the negligence of his employees whether the latter are manifestly careless or not. EXEMPTION FROM LIABILITY: Depositary is not responsible for loss of thing without negligence o f the third person with whom he was allowed to deposit the thing if such third p erson is not manifestly careless or unfit. 4. Depositary is obliged not to change way of deposit. He may change the way or manner of deposit only if there are cir cumstances indicating that the depositor would consent to the change and notice is given to depositor. HOWEVER, notice is not required if delay will cause dange r. (Art.1974) 5. If thing deposited should earn interest, the depositary is unde r obligation (1) to collect the interest as it becomes due and (2) to take such steps as may be necessary to preserve its value and the rights corresponding to it. The depositary is bound to collect not only the interest but also the capita l itself when due. (Art.1975) 6. Depositary has the obligation not to commingle things deposited if so stipulated, even if they are of the same kind and quality . (Article 1976) GENERAL RULE: The depositary is permitted to commingle grain or other articles of the same kind and quality. EXCEPTION: When there is a stipula tion to the contrary EFFECT OF COMMINGLING: a. The various depositors of the mingled goods shall own the entire mass in common b. Each depositor shall be entitled to such portion of the entire as the amount deposited by him bears the whole. 7. Depositary is und er obligation not to make use of the thing deposited; otherwise he shall be liab le for damages. (Art.1977) EXCEPTIONS: a. Express permission of the depositor b. Preservation of the thing deposited required its use 8. Depositary is liable fo r loss of the thing through a fortuitous event: a. If it is so stipulated; b. If he uses the thing without the depositors permission; c. If he delays its return; d. If he allows others to use it, even though he himself may have been authoriz ed to use the same (Art.1979) 9. Where thing deposited is delivered closed and s ealed, depositary has obligation to: a. Return the thing deposited when delivere d closed and sealed b. Pay for damages should seal or lock be broken through his fault, which is presumed unless proven otherwise c. Keep secret of the deposit when the seal or lock is broken, with or without his fault (Art.1982) 10. Deposi tary is obliged to return the products, accessories and accessions of the thing deposited. (Art.1983) 11. Depositary is obliged to pay interest on sums converte d to personal use. (Art.1983) 12. Depositary who receives the thing in deposit c annot require that the depositor prove his ownership over the thing (Art. 1984) 13. Where the thing appears to be stolen and the depositary knows the true owner , he must advise the true owner about the deposit. If the owner, in spite of suc h information, does not claim it within the period of one month, the depositary is 315 CREDIT TRANSACTIONS

CIVIL LAW REVIEWER Chapter III. DEPOSIT relieved from liability. (Art.1984, pars.2 and 3) If the depositary has reasonab le grounds to believe that the thing has not been lawfully acquired by the depos itor, he may return the same. (Art.1984, par.4) RIGHT OF TWO OR MORE DEPOSITORS (Art.1985) 1. Where the thing is divisible and depositors not solidary each one of the depositors can demand only his share proportionate thereto. 2. Where the thing is not divisible or the obligation is solidary rules on active solidarity must apply a. Each one of the depositors may do whatever may be useful to the ot hers but not anything which may be prejudicial to the latter. (Art.1212) b. The depositary may return the thing to any one of the solidary depositors UNLESS a d emand for its return has been made by one of them in which case delivery should be made to him. (Art. 1214) 3. Where there is a stipulation of return to one of the depositors, the depositary is bound to return it only to the person designat ed although he has not made any demand for its return. PERSONS TO WHOM RETURN MU ST BE MADE 1. The depositary is obliged to return the thing deposited, when requ ired, to: a. The depositor; b. To his heirs or successors; or c. To the person w ho may have been designated in the contract. (Art.1972) 2. If the depositor was incapacitated at the time of making the deposit, the property must be returned t o: a. His guardian or administrator; b. To the person who made the deposit; c. T o the depositor himself should he acquire capacity. (Art.1970) 3. Even if the de positor had capacity at the time of making the deposit but he subsequently loses his capacity during the deposit, the thing must be returned to his legal repres entative. (Art.1986) PLACE OF RETURN (Art.1987) 1. At the place agreed upon by t he parties 2. In the absence of stipulation, at the place where the thing deposi ted might be even if it should not be the same place where the original deposit was made, provided that there was no malice on the part of the depositary TIME OF RETURN (Art.1988) 1. G ENERAL RULE: The thing deposited must be returned to the depositor upon demand, even though a specified period or time for such return may have been fixed. 2. E XCEPTIONS: a. When the thing is judicially attached while in the depositarys poss ession b. When notified of the opposition of a third person to the return or the removal of the thing deposited RIGHT OF THE DEPOSITARY TO RETURN THE THING (Art .1989) 1. GENERAL RULE: The depositary may return the thing deposited notwithsta nding that a period has been fixed for the deposit if: a. The deposit is gratuit ous; b. The reason is justifiable. [NOTE: If the depositor refuses to receive th e thing, the depositary may deposit the thing at the disposal of the judicial au thority.] 2. EXCEPTION: When the deposit is for a valuable consideration, the de positary has no right to return the thing before the expiration of the time desi gnated even if he should suffer inconvenience as a consequence. Is the depositar y liable for loss by force majeure or government order? The depositary is not li able in cases of loss by force majeure or by government order. HOWEVER, he has t he duty to deliver to the depositor money or another thing he receives in place of the thing. (Art.1990) ALIENATION IN GOOD FAITH BY DEPOSITARYS HEIR When aliena tion is done in GOOD FAITH, the heir is obliged to: 1. Return the value of the t hing deposited 2. Assign the right to collect from the buyer. NOTE: The heir doe s not need to pay the actual price of the thing deposited. When alienation is do ne in BAD FAITH, the heir must: 1. Be liable for damages; 2. Pay the actual pric e of the thing deposited. 316 CREDIT TRANSACTIONS

CIVIL LAW REVIEWER Chapter III. DEPOSIT DEPOSITARYS RIGHT OF RETENTION The depositary may retain the thing in pledge unti l the full payment of what may be due him by reason of the deposit. (Art.1994) N OTE: This is an example of a pledge created by operation of law. (Art.2121) VI. Obligations of the Depositor 1. Depositor is obliged to reimburse the depositary for expenses incurred for pr eservation if deposit is gratuitous. (Art.1992) 2. Depositor is obliged to pay l osses incurred due to character of thing deposited. (Art. 1993) GENERAL RULE: Th e depositary must be reimbursed for loss suffered by him because of the characte r of the thing deposited. EXCEPTIONS: 1. Depositor was not aware of the danger; 2. Depositor was not expected to know the dangerous character of the thing; 3. D epositor notified the depositary of such dangerous character; 4. Depositary was aware of the danger without advice from the depositor. deficiency, the rules on voluntary deposit e.g. Arts. 538, 586 and 2104 2. It ta kes place on the occasion of any calamity, such as fire, storm, flood, pillage, shipwreck, or other similar events. There must be a causal relation between the calamity and the constitution of the deposit. In this case the deposit is govern ed by the rules on voluntary deposit and Art. 2168 3. Made by passengers with co mmon carriers. (Art.1754) 4. Made by travelers in hotels or inns. (Art. 1998) DE POSITS BY TRAVELLERS IN HOTELS AND INNS Before keepers of hotels or inns may be held responsible as depositaries with regard to the effects of their guests, the following must concur: 1. They have been previously informed about the effects brought by the guests; and 2. The latter have taken the precautions prescribed r egarding their safekeeping. EXTENT OF LIABILITY UNDER ART.1998 1. Liability in h otel rooms which come under the term baggage or articles such as clothing as are o rdinarily used by travelers 2. Include those lost or damages in hotel annexes su ch as vehicles in the hotels garage. 2. In the following cases, the hotel- keeper is liable WHEN HOTEL-KEEPER LIABLE Regardless of the amount of care exercised 1 . The loss or injury to personal property is caused by his servants or employees as well as by strangers (Art. 2000). 2. The loss is caused by the act of a thie f or robber done without the use of arms and irresistible force. (Art. 2001) WHE N HOTEL-KEEPER NOT LIABLE 1. The loss or injury is cause by force majeure, like flood, fire, (Art.2000) theft or robbery by a stranger - not the hotel-keepers se rvant or employee with the use of firearms or irresistible force (Art.2001) EXCE PTION: Hotel- keeper is guilty of fault or negligence in failing to provide agai nst the loss or injury from his cause. (Arts.1170 and 1174) 2. The loss is due t o the acts of the guests, his family, servants, visitors (Art.2002) 3. The loss arises from the character of the things brought into the hotel (Ibid.) 317 CREDIT TRANSACTIONS VII. Extinguishment of Deposit (Art. 1995) A deposit is extinguished: 1. Upon the loss or deterioration of the thing deposi ted; 2. Upon the death of the depositary, ONLY in gratuitous deposits; 3. By oth er modes provided in the Civil Code, e.g. novation, merger, etc. (See Art.1231) EFFECT OF DEATH OF DEPOSITOR OR DEPOSITARY (Art. 1995) 1. Where deposit gratuito us death of either of the depositor or depositary extinguishes the deposit (pers onal in nature). By the word extinguished, the law really means that the depositar y is not obliged to continue with the contract of deposit. 2. (2) Where deposit for compensation not extinguished by the death of either party. VIII. Necessary Deposit

KINDS OF NECESSARY DEPOSITS 1. It is made in compliance with a legal obligation, in which case it is governed by the law establishing it, and in case of

CIVIL LAW REVIEWER Chapter III. DEPOSIT [NOTE: The hotel-keeper cannot free himself from responsibility by posting notic es to the effect that he is not liable for the articles brought by the guest. Su ch kind of stipulation shall be VOID. (Art. 2003)] TRIPLE-V FOOD SERVICES v. FIL IPINO MERCHANTS INSURANCE COMPANY: Regarding the legal deposit of a vehicle that was stolen while parked with Saisaki restaurant, the depositary may not exempt i tself from responsibility or loss or damage of the thing deposited with it, by e xclusionary stipulation. Such stipulations are void for being contrary to law. HO TEL-KEEPERS RIGHT TO RETENTION The hotel-keeper has a right to retain the things brought into the hotel by the guest, as a security for credits on account of (a) lodging, and (b) supplies usually furnished to hotel guests. NOTE: The right of retention recognized in this article is in the nature of a pledge created by op eration of law. DEPOSITARY OF SEQUESTERED PROPERTY A person appointed by the court (Art. 2007) w ith the obligations: 1. To take care of the property with the diligence of a goo d father of the family. (Art. 2008) 2. To continue in his responsibility until t he litigation is ended or the court so orders. (Art. 2007) APPLICABLE LAW The la w on judicial deposit is remedial or procedural in nature. Hence, the Rules of C ourt are applicable. (Art. 2009) 318 CREDIT TRANSACTIONS IX. Judicial Deposit JUDICIAL DEPOSIT - Judicial deposit takes place when an attachment or seizure of property in litigation is ordered by a court. (Art. 2005) NATURE AND PURPOSE It is auxiliary to a case pending in court. The purpose is to maintain the status quo during pendency of the litigation or to insure the right of the parties to t he property in case of a favorable judgment. EXTRAJUDICIAL AND JUDICIAL DEPOSITS DISTINGUISHED EXTRAJUDICIAL (Voluntary) deposit made by free will of the depositor. Object mus t be movable property Purpose is safekeeping of the thing deposited JUDICIAL Con stituted by virtue of a court order Generally gratuitous Depositary is obliged to return the thing deposited upon de mand made by the depositor Object may be either movable or immovable property Purpose is to secure or prote ct the owners right; to maintain status quo during pendency of case Always onerou s Thing shall be delivered only upon order of the court

CIVIL LAW REVIEWER Chapter IV. GUARANTY Chapter IV. Guaranty I. DEFINITION II. CHARACTERISTICS III. CLASSIFICATION IV. RULES GOVERNING GUARAN TY V. GUARANTY DISTIGUISHED FROM OTHERS VI. THE GUARANTOR VII. EFFECTS OF GUARAN TY VIII. EXTINGUISHMENT OF GUARANTY I. Definition GUARANTY is a contract whereby a person, called the guarantor, binds himself to the creditor to fulfill the obligation of the principal debtor in case the latte r should fail to do so. (Art. 2047) While a surety undertakes to pay if the prin cipal does not pay, the guarantor only binds himself to pay if the principal can not pay (See benefit of excussion, 2058). II. Characteristics 1. Accessory dependent for its existence upon the principal obligation guarantee d by it; 2. Subsidiary and conditional takes effect only when the principal debt or fails in his obligation 3. Unilateral a. It gives rise only to a duty on the part of the guarantor in relation to the creditor and not vice versa b. It may b e entered into even without the intervention of the principal debtor. 4. Guarant or must be a person distinct from the debtor a person cannot be the personal gua rantor of himself IV. Rules Governing Guaranty 1. A guaranty is generally gratuitous (2048) a. General Rule: Guaranty is gratui tous b. Exception: When there is a stipulation to the contrary 2. On the cause o f a guaranty contract SEVERINO v SEVERINO: A guarantor or surety is bound by the same consideration that makes the contract effective between the principal parti es thereto. a. Presence of cause which supports principal obligation: Cause of th e contract is the same cause which supports the obligation as to the principal d ebtor. The consideration which supports the obligation as to the principal debto r is a sufficient consideration to support the obligation of a guarantor or sure ty. b. Absence of direct consideration or benefit to guarantor: Guaranty or sure ty agreement is regarded valid despite the absence of any direct consideration r eceived by the guarantor or surety, such consideration need not pass directly to the guarantor or surety; a consideration moving to the principal will suffice.a III. Classification CLASSIFICATION OF GUARANTY 1. Guaranty in the broad sense: a. Personal guaranty is the credit given by the person who guarantees the fulfillment of the principa l obligation; or b. Real guaranty is property, movable, or immovable Real mortga ge (2124) or antichresis (2132) guaranty is immovable Chattel mortgage (2140) or pledge (2093) guaranty is movable 2. As to its origin: a. Conventional constitu ted by agreement of the parties (2051[1]) b. Legal imposed by virtue of a provis ion CREDIT TRANSACTIONS of law Judicial required by a court to guarantee the eventual right of one of th e parties in a case. 3. As to consideration: a. Gratuitous guarantor does not re ceive any price or remuneration for acting as such (2048) b. Onerous one where t he guarantor receives valuable consideration for his guaranty 4. As to person gu aranteed: a. Single constituted solely to guarantee or secure performance by the debtor of the principal obligation; b. Double or sub-guaranty constituted to se cure the fulfillment by the guarantor of a prior guaranty 5. As to its scope and

extent: a. Definite where the guaranty is limited to the principal obligation o nly, or to a specific portion thereof; b. Indefinite or simple where the guarant y included all the accessory obligations of the principal, e.g. costs, including judicial costs. c. 319

CIVIL LAW REVIEWER Chapter IV. GUARANTY 3. A married woman who is a guarantor binds only her separate property, generall y (2049) Exceptions: a. With her husbands consent, bind the community or conjugal partnership property b. Without husbands consent, in cases provided by law, such as when the guaranty has redounded to the benefit of the family. 4. A guaranty need not be undertaken with the knowledge of the debtor (2050) a. Guaranty is un ilateral exists for the benefit of the creditor and not for the benefit of the p rincipal debtor b. Creditor has every right to take all possible measures to sec ure payment of his credit guaranty can be constituted even against the will of t he principal debtor However, as regards payment made by a third person: a. Payme nt without the knowledge or against the will of the debtor: Guarantor can recove r only insofar as the payment has been beneficial to the debtor Guarantor cannot compel the creditor to subrogate him in his rights b. Payment with knowledge or consent of the debtor: Subrogated to all the rights which the creditor had agai nst the debtor 5. The guaranty must be founded on a valid principal obligation ( 2052[1]) Guaranty is an accessory contract: It is an indispensable condition for its existence that there must be a principal obligation. Hence, if the principa l obligation is void, it is also void. 6. A guaranty may secure the performance of a voidable, unenforceable, and natural obligation (2052[2]) A guaranty may se cure the performance of a: a. Voidable contract such contract is binding, unless it is annulled by a proper court action b. Unenforceable contract because such contract is not void c. Natural obligation the creditor may proceed against the guarantor although he has no right of action against the pri ncipal debtor for the reason that the latters obligation is not civilly enforceab le. When the debtor himself offers a guaranty for his natural obligation, he imp liedly recognizes his liability, thereby transforming the obligation from a natu ral into a civil one. 7. A guaranty may secure a future debt (2053) Continuing G uaranty or Suretyship: DIO v. CA: Under the Civil Code, a guaranty may be given to secure even future debts, the amount of which may not known at the time the gua ranty is executed. This is the basis for contracts denominated as continuing gua ranty or suretyship. Future debts, even if the amount is not yet known, may be gu aranteed but there can be no claim against the guarantor until the amount of the debt is ascertained or fixed and demandable Rationale: A subsidiary. contract o f guaranty is 320 CREDIT TRANSACTIONS a. To secure the payment of a loan at maturity surety binds himself to guarantee the punctual payment of a loan at maturity and all other obligations of indebte dness which may become due or owing to the principal by the borrower. b. To secu re payment of any debt to be subsequently incurred a guaranty shall be construed as continuing when by the terms thereof it is evident that the object is to giv e a standing credit to the principal debtor to be used from time to time either indefinitely or until a certain period, especially if the right to recall the gu aranty is expressly reserved. c. To secure existing unliquidated debts refers to debts existing at the time of the constitution of the guaranty but the amount t hereof is unknown and not to debts not yet incurred and existing at that time. d . The surety agreement itself is valid and binding even before the principal obl igation intended to be secured thereby is born, any more than there would be in saying that obligations which are subject to a condition

CIVIL LAW REVIEWER Chapter IV. GUARANTY precedent are valid and binding before the occurrence of the condition precedent . A continuing guaranty is one which is not limited to a single transaction, but w hich contemplates a future course of dealing, covering a series of transactions, generally for an indefinite time or until revoked. It is prospective in its ope ration and is generally intended to provide security with respect to future tran sactions within certain limits, and contemplates a succession of liabilities, fo r which, as they accrue, the guarantor becomes liable. A continuing guaranty is one which covers all transactions, including those arising in the future, which are within the description or contemplation of the contract, of guaranty, until the expiration or termination thereof. A guaranty shall be construed as continui ng when by the terms thereof it is evident that the object is to give a standing credit to the principal debtor to be used from time to time either indefinitely or until a certain period, especially if the right to recall the guaranty is ex pressly reserved. Where the contract of guaranty states that the same is to secu re advances to be made "from time to time" the guaranty will be construed to be a continuing one. more than the total amount stipulated in the bond. Interest runs from: Filing of the complaint (upon judicial demand); or The time demand was made upon the sure ty until the principal obligation is fully paid (upon extrajudicial demand) Rati onale: Surety is made to pay, not by reason of the contract, but by reason of hi s failure to pay when demanded and for having compelled the creditor to resort t o the courts to obtain payment. b. Penalty may be provided a surety may be held liable for the penalty provided for in a bond for violation of the condition the rein. Principals liability guarantors obligations may exceed 321 CREDIT TRANSACTIONS 8. A guaranty may secure the performance of a conditional obligation (2053) a. P rincipal obligation subject to a suspensive condition the guarantor is liable on ly after the fulfillment of the condition. b. Principal obligation subject to a resolutory condition the happening of the condition extinguishes both the princi pal obligation and the guaranty 9. A guarantors liability cannot exceed the princ ipal obligation (2054) General Rule: Guaranty is a subsidiary and accessory cont ract guarantor cannot bind himself for more than the principal debtor and even i f he does, his liability shall be reduced to the limits of that of the debtor. B ut the guarantor may bind himself for less than that of the principal. Exception s: a. Interest, judicial costs, and attorneys fees as part of damages may be reco vered creditors suing on a suretyship bond may recover from the surety as part o f their damages, interest at the legal rate, judicial costs, and attorneys fees w hen appropriate, even without stipulation and even if the surety would thereby b ecome liable to pay The amount specified in a surety bond as the suretys obligation does not limit th e extent of the damages that may be recovered from the principal, the latters lia bility being governed by theobligations he assumed under his contract 10. The ex istence of a guaranty is not presumed (2055) Guaranty requires the expression of consent on the part of the guarantor to be bound. It cannot be presumed because of the existence of a contract or principal obligation. Rationale: a. There be assurance that the guarantor had the true intention to bind himself; b. To make certain that on making it, the guarantor proceeded with consciousness of what he was doing. 11. Contract of guaranty is covered by the Statute of Frauds (See Ar t. 1403(2(a)) Guaranty must not only be expressed but must so be reduced into wr iting. Hence, it shall be unenforceable by action, unless the same or some note

or memorandum thereof be in writing, and subscribed by the party charged, or by his agent; evidence, therefore, of the agreement cannot be received without the writing, or a secondary evidence of

CIVIL LAW REVIEWER Chapter IV. GUARANTY its contents. However, It need not appear in a public document V. Guaranty Distinguished from Others GUARANTY DISTINGUISHED FROM WARRANTY Guaranty Guaranty is a contract by which a person is bound to another for the fu lfillment of a promise or engagement of a third party Warranty Warranty is an un dertaking that the title, quality, or quantity of the subject matter of a contra ct is what is has been represented to be, and relates to some agreement made ord inarily by the party who makes the warranty The subsequent loss of integrity or property or supervening incapacity of the gu arantor would not operate to exonerate the guarantor of the eventual liability h e has contracted, and the contract of guaranty continues. The creditor can merel y demand another guarantor with the proper qualifications except that the credit or may waive such remedy if he chooses and hold the guarantor to his bargain. Se lection of Guarantor: 1. Specified person stipulated as guarantor: Substitution of guarantor may not be demanded Reason: The selection of the guarantor is: a. T erm of the agreement; b. As a party, the creditor is, therefore, bound thereby. 2. Guarantor selected by the principal debtor: Debtor answers for the integrity, capacity, and solvency of the guarantor. 3. Guarantor personally designated by the creditor: Responsibility of the selection should fall upon the creditor beca use he considered the guarantor to have the qualifications for the purpose. GUARANTY DISTINGUISHED FROM SURETYSHIP Guaranty Guarantors liability depends upon an independent agreement to pay the ob ligation Guarantors engagement is a collateral undertaking Guarantor is subsidiar ily liable i.e. only obliged to pay if the principal cannot pay Guarantor not bo und to take notice of default of his principal Guarantor often discharged by the mere indulgence of the creditor and is usually not liable unless notified of th e principals default Suretyship Surety assumes liability as a regular party to th e undertaking Surety is promissor an original 322 CREDIT TRANSACTIONS Surety is primarily liable i.e. bound to pay if the principal does not pay Suret y ordinarily held to know every default of his principal Surety not discharged e ither by the mere indulgence of the creditor or by want of notice of default of the principal VII. Effects of Guaranty EFFECTS OF GUARANTY BETWEEN THE GUARANTOR AND THE CREDITOR 1. The guarantor has the right to benefit from excussion/ exhaustion (2058) Exceptions to the benefit of excussion (2059) a. As provided in Art. 2059: If the guarantor has expressly renounced it; waiver is valid but it must be made in express terms. If he has b ound himself solidarily with the debtor, the liability assumed is that of a sure ty. The guarantor becomes primarily liable as a solidary co- debtor. In effect, he renounces in the contract itself the benefit of exhaustion. In case of insolv ency of the debtor guarantor guarantees the solvency of the debtor. If the debto r becomes insolvent, the liability of the guarantor as the debtor cannot fulfill his obligation When he (debtor) has absconded, VI. The Guarantor (Arts. 2056-2057) Qualifications: 1. He possesses integrity; 2. He has capacity to bind himself; 3 . He has sufficient property to answer for the obligation which he guarantees. E xception: requirements The creditor waives the

The qualifications above need only be present at the time of the perfection of t he contract.

CIVIL LAW REVIEWER Chapter IV. GUARANTY

or cannot be sued within the Philippines the creditor is not required to go afte r a debtor who is hiding or cannot be sued in our courts, and to incur the delay s and expenses incident thereto. The exception is when the debtor has left a man ager or representative; If it may be presumed that an execution on the property of the principal debtor would not result in the satisfaction of the obligation i f such judicial action including execution b would not satisfy the obligation, t he guarantor can no longer require the creditor to resort to all such remedies a gainst the debtor as the same would be but a useless formality. It is not necess ary that the debtor be judicially declared insolvent. the debt If he is a judicial bondsman and subsurety (2084) d. Where a pledge or mortgage has been given by him as a special security e. If he fails to interpose it as a defense before judgment is rendered against him. c. 2. The creditor has the right to secure a judgment against the guarantor prior to the excussion Gen eral rule: An ordinary personal guarantor (NOT a pledgor or mortgagor), may dema nd exhaustion of all the property of the debtor before he can be compelled to pa y. Exception: The creditor may, prior thereto, secure a judgment against the gua rantor, who shall be entitled, however, to a deferment of the execution of said judgment against him, until after the properties of the principal debtor shall h ave been exhausted, to satisfy the latters obligation. 3. The creditor has the du ty to make prior demand for payment from the guarantor (2060) a. The demand is t o be made only after judgment on the debt b. Joining the guarantor in the suit a gainst the principal debtor is not the demand intended by law. Actual demand has to be made. 4. The guarantor has the duty to set up the benefit of excussion (2 As soon as he is required to pay, guarantor must also point out to the cred 060) itor available property (not in litigation or encumbered) of the debtor within t he Philippines. 5. The creditor has the duty to resort to all legal remedies (20 61) a. After the guarantor has fulfilled the conditions required for making use of the benefit of exhaustion, it becomes the duty of the creditor to: b. Exhaust all the property of the debtor pointed out by the guarantor; c. If he fails to do so, he shall suffer the loss but only to the extent of the value of the said property, for the insolvency of the debtor LUZON STEEL CORP. v SIA: The surety in the present case bound itself "jointly and severally" (in solidum) with the defendant; and excussion (previous exhaustion of the property of the debtor) shall not take place "if he (the guarantor) has b ound himself solidarily with the debtor". b. If he does not comply with Art. 2060 : In order that the guarantor may make use of the benefit of excussion, he must: Set it up against the creditor upon the latters demand for payment from him; Poi nt out to the creditor: o Available property of the debtor the guarantor should facilitate the realization of the excussion since he is the most interested in i ts benefit. o Within the Philippine territory excussion of property located abro ad would be a lengthy and extremely difficult proceeding and would not conform w ith the purpose of the guaranty to provide the creditor with the means of obtain ing the fulfillment of the obligation. o Sufficient to cover the amount of CREDIT TRANSACTIONS SOUTHERN MOTORS, INC. v BARBOSA: The right of guarantorsto demand exhaustion of th e property of the principal debtor, exists only when a pledge or a mortgage has not been given as special security for the payment of the principal obligation. 323

CIVIL LAW REVIEWER Chapter IV. GUARANTY 6. The creditor has the duty to notify the guarantor in the action against the d ebtor (2062) Under this article, notice to the guarantor is mandatory in the act ion against the principal debtor. The guarantor, however, is not duty bound to a ppear in the case, and his nonappearance shall not constitute default, w/ its co nsequential effect. Rationale: The purpose of notification is to give the guaran tor the opportunity to allege and substantiate whatever defenses he may have aga inst the principal obligation, and chances to set up such defenses as are afford ed him by law if he so desires 7. A compromise shall not prejudice the person no t party to it (2063) a. A compromise between creditor and principal debtor benef its the guarantor but does not prejudice him. b. A compromise between guarantor and the creditor benefits but does not prejudice the principal debtor. 8. Co-gua rantors are entitled to the benefit of division (2065) The benefit of division a pplies only when there are several guarantors and one debtor for a single debt. Except when solidarity has been stipulated among the co-guarantors, a co- guaran tor is liable only to the extent of his share in the obligation as divided among all the coguarantors. EFFECTS OF GUARANTY BETWEEN THE DEBTOR AND THE GUARANTOR 1. The guarantor has the right to be subrogated to the rights of the creditor (2 067) A guarantor who pays the debt is entitled to every remedy which the credito r has against the principal debtor, to enforce every security and all means of p ayments; to stand in the place of the creditor not only through the medium of th e contract, but even by means of the securities entered into w/out the knowledge of the surety; having the right to have those securities transferred to him tho ugh there was no stipulation for it, and to avail himself of all securities agai nst the debtor The need to enforce the provisions on indemnity in Article 2066 f orms the basis for the subrogation clause of Article 2067. The assumption, however, is that the gua rantor who is subrogated to the rights of the creditor, has the right to be reim bursed for his answering for the obligation of the debtor. Absent this right of reimbursement, subrogation will not be proper. 2. The guarantor has the duty to notify the debtor before paying the creditor (2068). Should payment be made with out notifying the debtor, and supposing the debtor has already made a prior paym ent, the debtor would be justified in putting up the defense that the obligation has already been extinguished by the time the guarantor made the payment. In th is case, the guarantor will lose the right of reimbursement and consequently the right of subrogation as well. 3. The guarantor cannot make payment before the o bligation has become due (2069). General rule: Since a contract of guaranty is o nly subsidiary, the guarantor cannot be liable for the obligation before the per iod on which the debtors liability will accrue. Any payment made by the guarantor before the obligation is due cannot be indemnified by the debtor. Exception: Pr ior consent or subsequent ratification by the debtor 4. The guarantor may procee d against the debtor even before payment has been made (2071) General rule: Guar antor has no cause of action against the debtor until after the former has paid the obligation. Exceptions: a. When he is sued for the payment; b. In case of in solvency of the principal debtor; c. When the debtor has bound himself to reliev e him from the guaranty within a specified period, and this period has expired; d. When the debt has become demandable, by reason of the expiration of the perio d for payment; e. After the lapse of 10 years, when the principal obligation has no fixed period 324 CREDIT TRANSACTIONS

CIVIL LAW REVIEWER Chapter IV. GUARANTY for its maturity, unless it be of such nature that it cannot be extinguished exc ept within a period longer than 10 years; f. If there are reasonable grounds to fear that the principal debtor intends to abscond; g. If the principal debtor is in imminent danger of becoming insolvent. Rationale: To enable the guarantor to take measures for the protection of his interest in view of the probability tha t he would be called upon to pay the debt. As such, he may, in the alternative, obtain release from the guaranty; or demand security that shall protect him from any proceedings by the creditor; and against the insolvency of the debtor. EEFE CTS OF GUARANTY AS BETWEEN COGUARANTORS Requisites for the applicability of Art. 2073: 1. Payment has already been made by one guarantor; 2. The payment was mad e because a. Of the insolvency of the debtor, or b. By judicial demand 3. The pa ying guarantor seeks to be indemnified only to the extent of his proportionate s hare in the total obligation. For purposes of proportionate reimbursement, the o ther guarantors may interpose such defenses against the paying guarantor as are available to the debtor against the creditor, except those that are personal to the debtor. released (2078). 4. A guarantor is also released if the creditor, without the gu arantors consent, extends the time within which the debtor may perform his obliga tion (2079). This is to protect the interest of the guarantor should the debtor be insolvent during the period of extension and deprive the guarantor of his rig ht to reimbursement. 5. If through the fault of the creditor the guarantors are precluded from being subrogated to the formers rights, the latter are released fr om the obligation. (2080) 325 CREDIT TRANSACTIONS VIII. Extinguishment of Guaranty 1. Once the obligation of the debtor is extinguished in any manner provided in t he Civil Code, the obligation of the guarantor is also extinguished (2076). Howe ver, there may be instances when, after the extinguishment of the guarantors obli gation (as in the case of a release from the guaranty), the obligation of the de btor still subsists. 2. Although the guarantor generally has to make payment in money, any other thing of value, if accepted by the creditor, is valid payment a nd therefore releases the guarantor (2077). 3. If one guarantor is released, the release would benefit the co-guarantors to the extent of the proportionate shar e of the guarantor

CIVIL LAW REVIEWER Chapter V. LEGAL AND JUDICIAL BONDS Chapter V. Legal and Judicial Bonds Bond an undertaking that is sufficiently secured, and not cash or currency. Bond sman a surety offered in virtue of a provision of law or a judicial order. Quali fications of personal bondsman (2082 in relation to Art. 2056): 1. He possesses integrity; 2. He has capacity to bind himself; 3. He has sufficient property to answer for the obligation which he guarantees. PLEDGE OR MORTGAGE IN LIEU OF BON D (2083) Guaranty or suretyship is a personal security. Pledge or mortgage is a property or real security. If the person required to give a legal or judicial bo nd should not be able to do so, a pledge or mortgage sufficient to cover the obl igation shall be admitted in lieu thereof. BONDSMAN NOT ENTITLED TO EXCUSSION (2 084) A judicial bondsman and the sub-surety are not entitled to the benefit of e xcussion. Reason: They are not mere guarantors, but sureties whose liability is primary and solidary. Effect of negligence of creditor: Mere negligence on the p art of the creditor in collecting from the debtor will not relieve the surety fr om liability. 326 CREDIT TRANSACTIONS

CIVIL LAW REVIEWER Chapter VI. SURETYSHIP Chapter VI. Suretyship SURETYSHIP is a relation which exists where one person (principal) has undertake n an obligation and another person (surety) is also under a direct and primary o bligation or other duty to the obligee, who is entitled to but one performance, and as between the two who are bound, the second, rather than the first should p erform. If a person binds himself solidarily with the principal debtor, the cont ract is called suretyship and the guarantor is called a surety. NOTE: Surety is not entitled to notice of principals default 5. Prior demand by t he creditor upon principal not required. Surety is not exonerated by neglect of creditor to sue principal. STRICTISSIMI JURIS RULE APPLICABLE ONLY TO ACCOMMODAT ION SURETY Reason: An accommodation surety acts without motive of pecuniary gain and hence, should be protected against unjust pecuniary impoverishment by impos ing on the principal, duties akin to those of a fiduciary. This rule will apply only after it has been definitely ascertained that the contract is one of surety ship or guaranty. NATURE OF SURETYS UNDERTAKING 1. Liability is contractual and accessory but direc t 2. Liability is limited by terms of contract 3. Liability arises only if princ ipal debtor is held liable a. In the absence of collusion, the surety is bound b y a judgment against the principal event though he was not a party to the procee dings; b. The creditor may sue, separately or together, the principal debtor and the surety; c. A demand or notice of default is not required to fix the suretys liability d. Exception: Where required by the provisions of the contract of sure tyship e. A surety bond is void where there is not principal debtor because such an undertaking presupposes that the obligation is to be enforceable against som eone else besides the surety, and the latter can always claim that it was never his intention to be the sole person obligated thereby. NOTE: Surety is not entit led to exhaustion 4. Undertaking is to creditor, not to debtor The surety makes no covenant or agreement with the principal that it will fulfill the obligation guaranteed for the benefit of the principal. The suretys undertaking is that the principal shall fulfill his obligation and that the surety shall be relieved of liability when the obligation secured is performed. Exception: provided. Unless otherwise expressly CREDIT TRANSACTIONS STRICTISSIMI JURIS RULE NOT APPLICABLE TO COMPENSATED SURETIES Reasons: 1. Compe nsated corporate sureties are business association organized for the purpose of assuming classified risks in large numbers, for profit and on an impersonal basi s. 2. They are secured from all possible loss by adequate counter-bonds or indem nity agreements. 3. Such corporations are in fact insurers and in determining th eir rights and liabilities, the rules peculiar to suretyship do not apply. 327

CIVIL LAW REVIEWER Chapter VII. PLEDGE, MORTGAGE, ANTICHRESIS Chapter VII. Antichresis I. Pledge, Mortgage, collect. MANILA SURETY V VELAYO: The accessory character is of the essence of pl edge and mortgage. As stated in Art 2085 CC, an essential requisite of these con tracts is that they be constituted to secure the fulfillment of a principal obli gation 2. Creditor cannot appropriate to himself the thing nor can he dispose of the same as owner. PROHIBITION AGAINST PACTUM COMMISSORIUM (Art. 2088) 1. Stipu lation is null and void: Stipulation where thing or mortgaged shall automaticall y become the property of the creditor in the event of nonpayment of the debt wit hin the term fixed. 2. Requisites of pactum commissorium: a. Pledge or mortgage. b. A stipulation for an automatic appropriation by the creditor of the property in the event of nonpayment. 3. Effect on security contract: Nullity of the stip ulation does not affect validity and efficacy of the principal contract. IMPORTA NT POINTS 1. Debtor-owner bears the risk of loss of the property. 2. Pledge or m ortgage is indivisible (2089, 2090). Exceptions: a. Where each of several things guarantees a determinate portion of the credit. b. Where only a portion of loan was released. c. Where there was failure of consideration. 3. Rule that real pr operty, consisting of several lots should be sold separately, applies to sales i n execution, and not to foreclosure of mortgages. 4. The mere embodiment of a re al estate mortgage and a chattel mortgage in one document does not have the effe ct of fusing both securities into an indivisible whole. UY TONG v CA: The 2 elem ents for pactum commissorium to exist: (1) that there should be a pledge or mort gage wherein a property is pledged or mortgaged by way of security for the payme nt of the principal obligation; (2) that there should be a stipulation ESSENTIAL REQUISITES COMMON TO PLEDGE AND MORTGAGE II. PLEDGE III. MORTGAGE IV. FORECLOSURE OF MORTGAGE V. ANTICHRESIS VI. CHATTEL MORTGAGE I. Essential Requisites Common Pledge and Mortgage (Art. 2085) to IMPORTANT POINTS 1. Future property cannot be pledged or mortgaged. 2. Pledge or mortgage executed by one who is not the owner of the property pledged or mortga ged is without legal existence and registration cannot validate it. 3. Mortgage of a conjugal property by one of the spouses is valid only as to of the entire p roperty. 4. In case of property covered by Torrens title, a mortgagee has the ri ght to rely upon what appears in the certificate of title and does not have to i nquire further. 5. Pledgor or mortgagor has free disposal of property. 6. Thing pledged or mortgaged may be alienated. 7. Creditor not required to sue to enforc e his credit. 8. Pledgor or mortgagor may be a third person. RIGHT OF CREDITOR W HERE DEBTOR FAILS TO COMPLY WITH HIS OBLIGATION 1. Creditor is merely entitled t o move for the sale of the thing pledged or mortgaged with the formalities requi red by law in order to CREDIT TRANSACTIONS ESSENTIAL REQUISITES COMMON TO PLEDGE AND MORTGAGE (Art. 2085) 1. Constituted to secure the fulfillment of a principal obligation. 2. Pledgor or mortgagor must

be the absolute owner of the thing pledged or mortgaged. 3. The persons constitu ting the pledge or mortgage have the free disposal of their property, and in the absence thereof, that they be legally authorized for the purpose. 4. Cannot exi st without a valid obligation. 5. Debtor retains the ownership of the thing give n as a security. 6. When the principal obligation becomes due, the thing pledged or mortgaged may be alienated for the payment to the creditor. 328

CIVIL LAW REVIEWER Chapter VII. PLEDGE, MORTGAGE, ANTICHRESIS for an automatic appropriation by the creditor of the thing pledged or mortgaged in the event of non-payment of the principal obligation within the stipulated p eriod. 5. Pledge or mortgage may secure all kinds of obligation, be they pure or subject to suspensive or resolutory conditions (2091). 6. A promise to constitu te pledge or mortgage creates no real right, only a personal right binding upon the parties, only right of action to compel the fulfillment of the promise but t here is no pledge or mortgage yet (2092). 7. Under the RPC, estafa is committed by a person who, pretending to be the owner of any real property, shall convey, sell, encumber or mortgage the same knowing that the real property is encumbered and shall dispose of the same as unencumbered. It is essential that fraud or de ceit be practiced upon the vendee at the time of the sale. mortgage becomes unenforceable to the extent of such failure. Where the indebted ness actually owing to the holder of the mortgage is less than the sum named in the mortgage, the mortgage cannot be enforced for more than the actual sum due. The rule of indivisibility of the mortgage as outlined by Article 2089 above-quo ted presupposes several heirs of the debtor or creditor which does not obtain in this case. Hence, the rule of indivisibility of a mortgage cannot apply. BELO v s. PNB: From Art. 2089 is excepted the case in w/c, there being several things g iven in mortgage or pledge, each one of them guarantees only a determinate porti on of the credit. The debtor, in this case, shall have a right to the extinguish ment of the pledge or mortgage as the portion of the debt for w/c each thing is specially answerable is satisfied. From the wordings of the law, indivisibility arises only when there is a debt, that is, there is a debtorcreditor relationshi p. CHARACTERISTICS 1. Real Perfected by delivery. 2. Accessory Has no independen t existence of its own. 3. Unilateral Creates obligation solely on the part of t he creditor to return the thing subject upon the fulfillment of the principal ob ligation. 4. Subsidiary Obligation incurred does not arise until the fulfillment of the principal obligation. CAUSE OR CONSIDERATION 1. Principal obligation In so far as the pledgor is concerned. 2. Compensation stipulated for the pledge or mere liberality of the pledgor If pledgor is not the debtor. PROVISIONS APPLICA BLE ONLY TO PLEDGE 1. Transfer of possession to the creditor or to third person by common agreement is essential in pledge (2093). a. Actual delivery is importa nt. b. Constructive or symbolic delivery of the key to the warehouse is sufficie nt to show that the depositary appointed by common consent of the parties was le gally placed in possession. 2. All movables within the commerce of man may be pl edged as long as they are II. Pledge PLEDGE is a contract by virtue of which the debtor delivers to the creditor or t o a third person a movable or document evidencing incorporeal rights for the pur pose of securing the fulfillment of a principal obligation with the understandin g that when the obligation is fulfilled, the thing delivered shall be returned w ith all its fruits and accessions. (Art.2085 in rel to 2093) KINDS 1. Voluntary or conventional Created by agreement of parties. 2. Legal Created by operation o f law. CENTRAL BANK vs. CA: The consideration of the accessory contract of real estate mortgage is the same as that of the principal contract. For the debtor, t he consideration of his obligation to pay is the existence of a debt. Thus, in t he accessory contract of real estate mortgage, the consideration of the debtor i n furnishing the mortgage is the existence of a valid, voidable, or unenforceabl e debt (Art. 2086, in relation to Art. 2052, of the Civil Code). It is not neces sary that any consideration should pass at the time of the execution of the cont ract of real mortgage. It may either be a prior or subsequent matter. But when t he consideration is subsequent to the mortgage, the mortgage can take effect onl y when the debt secured by it is created as a binding contract to pay. And, when there is partial failure of consideration, the

329 CREDIT TRANSACTIONS

CIVIL LAW REVIEWER Chapter VII. PLEDGE, MORTGAGE, ANTICHRESIS RIGHTS AND DUTIES OF CREDITOR IN A PLEDGE 1. Shall take care of the thing pledge d with the diligence of a good father of a family (2099). 2. Has right to reimbu rsement of the expenses made for preserving the thing. Shall be liable for loss or deterioration of the thing by reason of fraud, negligence, delay or violation of the terms of the contract, but not for fortuitous events (2099). 3. May brin g actions pertaining to the owner of the thing in order to recover it from, or d efend it against, a 3rd person (2103). 4. Cannot use the thing without the autho rity of the owner. If he uses the thing without authority, or if he misuses the thing when he was authorized to use it, the owner may ask that it be judicially or extrajudicially deposited (2104). 5. May use the thing if necessary for its p reservation (2104). 6. May either claim another thing in pledge or demand immedi ate payment of the principal obligation if he is deceived on the substance or qu ality of the thing (2109). THE PLEDGEE 1. Cannot deposit the thing pledged with a 3rd person, unless there is a contrary stipulation (2100). 2. Is responsible f or the acts of his agents or employees with respect to the thing pledged PNB vs. ATENDIDO: according to law, a pledgee cannot become the owner of, nor ap propriate to himself, the thing given in pledge. If by the contract of pledge th e pledgor continues to be the owner of the thing pledged during the pendency of the obligation, it stands to reason that in case of loss of the property, the lo ss should be borne by the pledgor. 3. Subject to the right of the pledge under a rticle 2108, pledgor is allowed to substitute the thing which is in danger of de struction or impairment without any fault on the part of the pledgee with anothe r thing of the same kind and quality (2107). 4. May require that the thing be de posited with a 3rd person, if through the negligence or willful act of the pledg ee the thing is in danger of being lost or impaired (2106). EXTINGUISHMENT OF A PLEDGE 1. Ways to extinguish a pledge: a. Payment of the debt. b. Sale of the th ing pledged at public auction. c. Thing pledged is returned by the pledgee to th e pledgor or owner (2110). d. Written statement by the pledgee that he renounces or abandons the pledge.For CREDIT TRANSACTIONS susceptible of possession (2094). 3. Incorporeal rights may be pledged. The inst ruments representing the pledged rights shall be delivered to the creditor; if t hey be negotiable instruments, they must be indorsed (2095). 4. Pledge shall tak e effect against 3rd persons only if the following appear in a public instrument : a. Description of the thing pledged. b. Date of the pledge (2096). 5. The thin g pledged may be alienated by the pledgor or owner only with the consent of the pledgee. Ownership of the thing pledged is transmitted to the vendee or transfer ee as soon as the pledgee consents to the alienation, but the latter shall conti nue to have possession (2097). 6. Pledge gives the creditor the right to retain the thing in his possession or in that of a third person to whom it has been del ivered, until the debt is paid (2098). 7. Special Laws apply to pawnshops and es tablishments engaged in making loans secured by pledges. Provisions of the Civil Code shall apply subsidiarily to them. (2100). 3. Has no right to use the thing or to appropriate its fruits without au thority from the owner (2104) 4. May cause the public sale of the thing pledged if, without fault on his part, there is danger of destruction, impairment or dim unition in value of the thing. The proceeds of the auction shall be a security f or the principal obligation (2108). RIGHTS AND DUTIES OF THE PLEDGOR 1. Takes re sponsibility for the flaws of the thing pledged (2101 in relation to Art. 1951). 2. Cannot ask for the return of the thing against the will of the creditor, unl ess and until he has paid the debt and its interest, with expenses in proper cas es (2105). YULIONGSIU vs. PNB: There is authority supporting the proposition tha

t the pledgee can temporarily entrust the physical possession of the chattels pl edged to the pledgor without invalidating the pledge. In such a case, the pledgo r is regarded as holding the pledged property merely as trustee for the pledgee. The type of delivery will depend upon the nature and the peculiar circumstances of each case. 330

CIVIL LAW REVIEWER Chapter VII. PLEDGE, MORTGAGE, ANTICHRESIS this purpose, neither the acceptance by the pledgor or owner nor the return of t he thing pledged is necessary, and the pledgee becomes a depositary (2111). 2. P resumptions: a. If, subsequent to the perfection of the pledge, the thing is fou nd in the possession of the pledgor or owner, there is prima facie presumption t hat the thing has been returned by the pledge (2110). b. If the thing is in the possession of a 3rd person who received it from the pledgor or owner after the c onstitution of the pledge, there is prima facie presumption that the thing has b een returned by the pledge (2110). REQUIREMENTS IN SALE OF THE THING PLEDGED BY A CREDITOR, IF CREDIT IS NOT PAID ON TIME (Art 2112) 1. Debt is due and unpaid. 2. Sale must be at a public auction. 3. Notice to the pledgor and owner, stating the amount due. 4. Sale must be made with the intervention of a notary public. 5. If at the first auction the thing is not sold, a second one with the same for malities shall be held. 6. If at the second auction, there is no sale either, th e creditor may appropriate the thing pledged but he shall give an acquittance (r elease) for his entire claim. EFFECT OF THE SALE OF THE THING PLEDGED (Art 2115) 1. Extinguishes the principal obligation, whether the price of the sale is more or less than the amount due. 2. if the price is more than amount due, the debto r is not entitled to the excess unless the contrary is provided. 3. If the price of the sale is less, neither is the creditor entitled to recover the deficiency . A contrary stipulation is void. MANILA BANKING v TEODORO: In case of doubt as to whether a transaction is a pledge or a dation in payment, the presumption is in favor of pledge, the latter being the lesser transmission of rights and inter ests (as earlier established in Lopez v. Court of Appeals) LEGAL PLEDGES (Articl e 2121) 1. Necessary expenses shall be refunded to every possessor, but only a p ossessor in good faith may retain the thing until he has been reimbursed. 2. 3. 4. 5. Useful expenses shall be refunded only to the possessor in good faith with the s ame right of retention, the person who has defeated him in the possession having the option of refunding the amount of the expenses or of paying the increase in value which the thing may have acquired and by reason thereof (Art. 546) He who has executed work upon a movable has a right to retain it by way of pledge unti l he is paid. This is called the mechanics lien. (Art. 1731) 3) The agent may ret ain the things which are the objects of agency until the principal effects the r eimbursement and pays the indemnity. This is called the agents lien. (Art. 1914) 4) The laborers wages shall be a lien on the goods manufactured or the work done. (Art. 1707) PAWNSHOP REGULATION ACT PD 114 SEC 9: Loans granted by pawnshops shall not be le ss than 30% of the value of the security offered, UNLESS the pawner manifests in writing the desire to borrow a lesser amount. SEC 10: a. Interests not to excee d usury law b. Pawn broker prohibited from dividing the pawn offered to collect greater interest c. Pawn broker prohibited from requiring additional charge for safekeeping / insurance d. Maximum service charge: Php5 to not more than 1% of t he principal loan SEC 13: Pawner who fails to pay his obligation on the date it falls due may WITHIN 90 DAYS from the date of the maturity of the obligation, RE DEEM the pawn by payment of the principal debt and interest CREDIT TRANSACTIONS NOTE: 1. In legal pledges, the remainder of the price of the sale shall be deliv

ered to the obligor. 2. Public auction of legal pledges may only be executed aft er demand of the amount for which the thing is retained. It shall take place wit hin one month after the demand, otherwise the pledgor may demand the return of t he thing pledged, provided s/he is able to show that the creditor did not cause the public sale without justifiable grounds. (Article 2122) 331

CIVIL LAW REVIEWER Chapter VII. PLEDGE, MORTGAGE, ANTICHRESIS SEC 15: Requisites of public auction of pawned articles a. Public auction must b e held at the place of business of the pawn shop, or within the municipality or city where it is located b. Must be under the control and direction of a license d auctioneer c. Prior publication one week before the sale as a security for a debt. a. lien created through equitable mortgage ought not t o be defeated by requiring compliance with formalities necessary to the validity of a voluntary real estate mortgage. Ex.: Pacto de retro b. ovisions governing equitable mortgage: Arts. 1365, 1450, 1454, 1602, 1603, 1604 and 1607. PRINCIPLE OF INDIVISIBILITY OF PLEDGE / MORTGAGE (ART. 2089 TO 2090) DAYRIT v CA: A mortg age directly and immediately subjects the property upon which it is imposed. It is indivisible even though the debt may be divided, and such indivisibility is l ikewise unaffected by the fact that the debtors are not solidarity liable. Cent ral Bank v CA: Where only a portion of the loan is released, the mortgage become s enforceable only as to the proportionate value of the loan Indivisibility appl ies only as to pledgors/mortgagors who are themselves debtors in the principal o bligation, and not to accommodation pledgors / mortgagors "When several things a re pledged or mortgaged, each thing for a determinate portion of the debt, the p ledges or mortgage, are considered separate from each other. But when the severa l things are given to secure the same debt in its entirety, all of them are liab le for the debt, and the creditor does not have to divide his action by distribu ting the debt among the various things pledged or mortgaged. Even when only a pa rt of the debt remains unpaid, all the things are still liable for such balance. " (Tolentino) ESSENTIAL REQUISITES 1. Constituted to secure the fulfillment of a principal obligation. 2. Mortgagor must be the absolute owner of the thing mort gaged. 3. The persons constituting the mortgage have free disposal of the proper ty; in the absence thereof, they should be legally authorized for the purpose. ( Article 2085) 4. Cannot exist without a valid obligation. (Art. 2086 cf 2052) 5. When the principal obligation becomes due, the thing in which the mortgage cons ists may be alienated for payment to the creditor. (Art. 2087) III. Mortgage MORTGAGE is a contract whereby the debtor secures to the creditor the fulfillmen t of a principal obligation, immediately making immovable property or real right s over immovable property answerable to the principal obligation in case it is n ot complied with at the time stipulated. OBJECTS OF REAL MORTGAGE (Art. 2124) 1. Immovables 2. Alienable real rights over immovables. Future property cannot be object of mortgage; however, a stipulation subjecting to the mortgage improvemen ts which the mortgagor may subsequently acquire, install or use in connection wi th real property already mortgaged belonging to the mortgagor is valid. KINDS 1. Voluntary constituted by the will of the owner of the property on which it is c reated 2. Legal required by law to be executed in favor of certain persons: a. P ersons in whose favor the law establishes a mortgage have no other right than to demand the execution and recording of the document in which the mortgage is for malized (Article 2125) b. The bondsman who is to be offered in virtue of a provi sion of law or of a judicial order shall have the qualifications prescribed in A rt 2056 (integrity, capacity to bind himself, and sufficient property to answer the obligation), an in other laws (Article 2082) c. If the person bound to give a bond should not be able to do so, a pledge or mortgage considered sufficient t o recover his obligation shall be admitted in lieu thereof (Article 2083) 3. Equ itable One which, although lacking the proper formalities of a mortgage, shows t he intention of the parties to make the property 332 CREDIT TRANSACTIONS

CIVIL LAW REVIEWER Chapter VII. PLEDGE, MORTGAGE, ANTICHRESIS 6. Must appear in a public document duly recorded in the Registry of Property, t o be validly constituted. (Art. 2125) In a legal mortgage, the persons in whose favor the law establishes a mortgage have the right to demand the execution and recording of a document formalizing the mortgage. (Art. 2125, par. 2) EFFECTS 1. Creates real rights, a lien inseparable from the property mortgaged, enforceabl e against the whole world. 2. Creates merely an encumbrance. LAWS GOVERNING MORT GAGE 1. New Civil Code. 2. PD 1952. 3. Revised Administrative Code. 4. RA 4882, regarding aliens mortgagees 5. Act 3135, as amended 6. Property Registration Dec ree 7. General Banking Act of 2000 when the obligation becomes DUE, including indemnity from insurance, and / or am ount received from expropriation for public use (Art. 2127) a. Applies only when the accessions and accessories subsequently introduced belongs to the mortgagor . b. To exclude them, there must be an express stipulation, or the fruits must b e collected before the obligation becomes due. c. Third persons who introduce im provements upon the mortgaged property may remove them at any time Registration ministerial act by which deed, contract or instrument is sought to be inscribed in the office of the Register of Deeds and annotated at the back of the certific ate of title covering the land subject of the deed, title, or contract SAMANILLA v CAJUCOM: A mortgage, whether registered or not, is binding between the partie s, registration being necessary only to make the same valid against third person s (Art. 2125, CC). Registration only operates as a notice of the mortgage to oth ers, but neither adds to its validity nor convert an invalid mortgage into a val id one between the parties. In Gurbax Singh Pabla vs. Reyes, SC ruled that "if t he purpose of registration is merely to give notice, the questions regarding the effect or invalidity of instruments are expected to be decided after, not befor e, registration. It must follow as a necessary consequence that registration mus t first be allowed and validity or effect litigated afterwards". INCIDENTS OF RE GISTRATION OF MORTGAGE 1. Mortgagee is entitled to registration of mortgage as a matter of right. 2. Proceedings for registration do not determine validity of t he mortgage or its effect 3. Registration is without prejudice to better rights of third parties. 4. Mortgage deed, once duly registered, forms part of the reco rds for the registration of the mortgaged property. 5. Mortgage by a surviving s pouse of his/her undivided share in the conjugal property can be registered. becoming EFFECTS OF A MORTGAGE 1. It creates a real right, a lien inseparable from the pr operty mortgaged 2. If a person is the first mortgagee over a property sold in a n auction sale by the second mortgagee, the only right left to him is to collect his mortgage credit from the proceeds of the sale (by virtue of merger of right s, Art 1275). 3. The first mortgagee has superior rights over junior mortgagees / attaching creditors IMPORTANT POINTS 1. As a general rule, the mortgagor retai ns possession of the property. He may deliver said property to the mortgagee wit hout altering the nature of the contract of mortgage. 2. It is not an essential requisite that the principal of the credit bears interest, or that the interest as compensation for the use of the principal and the enjoyment of its fruits be in the form of a certain percentage thereof. 3. Mortgage creates an encumbrance over the property, but ownership of the property is not parted with. It merely r estricts the mortgagors jus disponendi over the property. The mortgagor may still sell the property, and any stipulation to the contrary is void (Art. 2130) 4. M ortgage extends to the natural accessions, to the improvements of growing fruits and the rents or income NOT YET RECEIVED 333 CREDIT TRANSACTIONS

CIVIL LAW REVIEWER Chapter VII. PLEDGE, MORTGAGE, ANTICHRESIS EFFECT OF INVALIDITY OF MORTGAGE ON THE PRINCIPAL OBLIGATION 1. Principal obliga tion remains valid. 2. Mortgage deed remains evidence of a personal obligation. MOJICA v CA: Mortgages given to secure future advancements are valid and legal c ontracts; that the amounts named as consideration in said contract do not limit the amount for which the mortgage may stand as security if from the four corners of the instrument the intent to secure future and other indebtedness can be gat hered. A mortgage given to secure advancements is a continuing security and is n ot discharged by repayment of the amount named in the mortgage, until the full a mount of the advancements are paid (as established earlier in Lim Julian v. Lute ro).

IV. Foreclosure of Mortgage (Art. 2085) FORECLOSURE OF MORTGAGE It is the remedy available to the mortgagee by which he subjects the mortgaged property to the satisfaction of the obligation secured by the mortgage. In General: An action for foreclosure of a mortgage is limited to the amount mentioned in the mortgage, EXCEPT when the mortgage contract intends to secure future loans or advancements BLANKET mortgage / DRAGNET mortgage that subsumes all debts of past or future origin Mortgage may be used as a continuing security which secures future advancements and is not discharged by the repayment of the amount in the mortgage Alienation or assignment of mortgage credit is va lid even if it is not registered case of chattel mortgage) property involved or a portion thereof is situated. If the court finds the complaint to be wellfounded, it shall order the mortgagor t o pay the amount due with interest and other charges within a period of not less than 90 days nor more than 120 days from the entry of judgment. If the mortgago r fails to pay at the time directed, the court, upon motion, shall order the pro perty to be sold to the highest bidder at a public auction. Upon confirmation of the sale by the court, also upon motion, it shall operate to divest the rights of all parties to the action and to vest their rights to the purchaser subject t o such rights of redemption as may be allowed by law. Before the confirmation, t he court retains control of the proceedings Execution of judgment subject to APP EAL but not annulment The foreclosure of the property is completed only when the sheriffs certificate is executed, acknowledged and recorded

NATURE OF JUDICIAL FORECLOSURE PROCEEDINGS: 1. Quasi in rem action. Hence, juris diction may be acquired through publication. 2. Foreclosure is only the result o r incident of the failure to pay debt. 3. Survives death of mortgagor. EXTRAJUDI CIAL FORECLOSURE(Act No. 3135) 1. Applies to mortgages where the authority to fo reclose is granted to the mortgagee. 2. Authority is not extinguished by death o f mortgagor or mortgagee. This is an agency coupled with interest. 3. Public sal e should be made after proper notice to the public, otherwise it is a jurisdicti onal defect which could render the sale voidable. 4. There is no need to notify the mortgagor. Proper notice consists of: a. posting notice in three public plac es and / or b. publication in newspaper of general

ACCELERATION CLAUSE, or the stipulation stating that on the occasion of the mort gagors default, the whole sum remaining unpaid automatically becomes due and dema ndable, is ALLOWED KINDS OF FORECLOSURE 1. Judicial Foreclosure 2. Extrajudicial Foreclosure JUDICIAL FORECLOSURE Rule 68, ROC: May be availed of by bringing an action in the proper court which has jurisdiction over the area wherein the rea l or personal (in CREDIT TRANSACTIONS The proceeds of the sale shall be applied to the payment of the: a. Costs of the sale; b. Amount due the mortgagee; c. Claims of junior encumbrancers or persons holding subsequent mortgages in the order of their priority; and d. Balance, if any shall be paid to the mortgagor. 334

CIVIL LAW REVIEWER Chapter VII. PLEDGE, MORTGAGE, ANTICHRESIS 5. 6. 7. 8. 9. circulation purpose of notice is to obtain the best bid for the foreclosed prope rty Surplus proceeds of foreclosure sale belong to the mortgagor. Debtor (who mu st be a NATURAL PERSON) has the right to redeem the property sold within 1 year from and after the date of sale. a. If the mortgagee is a bank and the debtor is a juridical person, then there is no right of redemption. However, it may redee m the property BEFORE the registration of the TCT to the buyer, which is similar to the equity of redemption. The TCT must be registered within THREE MONTHS aft er the foreclosure. b. The mortgagor can only legally transfer the right to rede em and the use of the property during the period of redemption. Remedy of party aggrieved by foreclosure is a petition to set aside sale and cancellation of wri t of possession. However, if the mortgagee is a bank, the mortgagor is required to post a bond equal to the value of the mortgagees claim. Republication is of th e notice of sale necessary for validity of postponed extrajudicial sale In forec losure of real estate mortgage under Act 3135, the buyer at auction may petition the land registration court for a writ of possession pending the one-year perio d of redemption of the foreclosedproperty. c. by it is referred to as deficiency judgment. 3. Action for recovery of deficiency m ay be filed even during redemption period. 4. Action to recover prescribes after 10 years from the time the right of action accrues. EFFECT OF INADEQUACY OF PRI CE IN FORECLOSURE SALE 1. Where there is right to redeem, inadequacy of price is immaterial because the judgment debtor may redeem the property. Exception: Wher e the price is so inadequate as to shock the conscience of the court, taking int o consideration the peculiar circumstances. 2. Property may be sold for less tha n its fair market value, upon the theory that the lesser the price the easier it is for the owner to redeem. 3. The value of the mortgaged property has no beari ng on the bid price at the public auction, provided that the public auction was regularly and honestly conducted. WAIVER OF SECURITY BY CREDITOR 1. Mortgagee ma y waive right to foreclose his mortgage and maintain a personal action for recov ery of the indebtedness. 2. Mortgagee cannot have both remedies. REDEMPTION 1. I t is a transaction by which the mortgagor reacquires the property which may have passed under the mortgage or divests the property of the lien which the mortgag e may have created 2. Kinds: a. Equity of redemption: in judicial foreclosure of real estate mortgage under the ROC, it is the right of the mortgagor to redeem the mortgaged property by paying the secured debt within the 120 day period from entry of judgment or after the foreclosure sale, but before the sale of the mor tgaged property or confirmation of sale formal offer to redeem preserves the rig ht of redemption, e.g., by filing an action to enforce the right to redeem b. Ri ght of redemption: in extrajudicial foreclosure of real estate mortgage, the rig ht of the mortgagor to redeem the property within a certain period after it was sold for the satisfaction of the debt. For natural persons one year from the reg istration of the TCT 335 CREDIT TRANSACTIONS Nature of power of foreclosure extrajudicial sale: 1. Conferred for mortgagees pr otection. 2. An ancillary stipulation. 3. A prerogative of the mortgagee.

Note: a. Both should be distinguished from execution sale governed by Rule 39, R OC. b. Foreclosure retroacts to the date of registration of mortgage. c. A stipu lation of upset price, or the minimum price at which the property shall be sold to become operative in the event of a foreclosure sale at public auction, is nul l and void. RIGHT OF MORTGAGEE TO RECOVER DEFICIENCY 1. Mortgagee is entitled to recover deficiency. 2. If the deficiency is embodied in a judgment,

CIVIL LAW REVIEWER Chapter VII. PLEDGE, MORTGAGE, ANTICHRESIS

For juridical persons three months from the foreclosure Formal offer to redeem m ust be with tender of redemption price to preserve right of redemption NOTE: There is no right of redemption in pledge and chattel mortgage. MEDIDA v C A: The rule up to now is that the right of a purchaser at a foreclosure sale is merely inchoate until after the period of redemption has expired without the rig ht being exercised. The title to land sold under mortgage foreclosure remains, i n the mortgagor or his grantee until the expiration of the redemption period and conveyance by the masters deed OBLIGATIONS OF ANTICHRETIC CREDITOR 1. to pay taxes and charges on the estate, i ncluding necessary expenses. Creditor may avoid said obligation by: a. compellin g debtor to reacquire enjoyment of the property b. by stipulation to the contrar y 2. to apply all the fruits, after receiving them, to the payment of interest, if owing, and thereafter to the principal 3. to render an account of the fruits to the debtor 4. to bear the expenses necessary for its preservation and repair REMEDIES OF CREDITOR IN CASE OF NONPAYMENT OF DEBT 1. action for specific perfor mance 2. Petition for the sale of the real property as in a foreclosure of mortg ages under Rule 68 of the Rules of Court a. The parties, however, may agree on a n extrajudicial foreclosure in the same manner as they are allowed in contracts of mortgage and pledge (Tavera v. El Hogar Filipino, Inc. 68 Phil 712) b. A stip ulation authorizing the antichretic creditor to appropriate the property upon th e non-payment of the debt within the agreed period is void (Art. 2088) V. Antichresis ANTICHRESIS is a contract whereby the creditor acquires the right to receive the fruits of an immovable of the debtor, with the obligation to apply then to the payment of the interest, if owing, and thereafter to the principal of the credit (Art 2132) CHARACTERISTICS 1. Accessory contract it secures the performance of a principal obligation 2. formal contract it must be in a specified form to be v alid (Art. 2134) SPECIAL REQUISITES: 1. it can cover only the fruits of an immov able property 2. delivery of the immovable is necessary for the creditor to rece ive the fruits and not that the contract shall be binding 3. amount of principal and interest must be specified in writing 4. express agreement that debtor will give possession of the property to creditor and that the latter will apply the fruits to the interest, if any, then to the principal of his credit 5. NOTE: The obligation to pay interest is not of the essence of the contract of antichresis ; there being nothing in the Code to show that antichresis is only applicable to securing the payment of interest-bearing loans. On the contrary, antichresis is susceptible of guaranteeing all kinds of obligations, pure or conditional 336 CREDIT TRANSACTIONS VI. Chattel Mortgage CHATTEL MORTGAGE is a contract by virtue of which a personal property is recorde d in the Chattel Mortgage Register as security for the performance of an obligat ion. If the movable, instead of being recorded, is delivered to the creditor, it is pledge and not chattel mortgage. LAWS GOVERNING CHATTEL MORTGAGE 1. Chattel Mortgage Law (Act.1508, as amended). 2. New Civil Code. 3. Revised Administrativ e Code. 4. Revised Penal Code. 5. Ship Mortgage Decree of 1978 (PD 1521) governs mortgage of vessels of domestic ownership. AFFIDAVIT OF GOOD FAITH An oath in a contract of chattel mortgage wherein the parties "severally swear that the mort gage is made for the purpose of securing the obligation specified in the conditi

ons thereof and for no other purposes

CIVIL LAW REVIEWER Chapter VII. PLEDGE, MORTGAGE, ANTICHRESIS and that the same is a just and valid obligation and one not entered into for th e purpose of fraud. EFFECT OF REGISTRATION 1. Creates real rights. 2. Adds nothi ng to mortgage. Note: Registration of assignment of mortgage is not required. RI GHT OF REDEMPTION OF MORTGAGE 1. When the condition of a chattel mortgage is bro ken, the following may exercise redemption: a. Mortgagor. b. Person holding a su bsequent mortgage. c. Subsequent attaching creditor. 2. An attaching creditor wh o so redeems shall be subrogated to the rights of the mortgagee and entitled to foreclose the mortgage in the same manner as a mortgagee. 3. Redemption is made by paying or delivering to the mortgagee the amount due on such mortgage and the costs and expenses incurred by such breach of condition before the sale. FORECL OSURE OF CHATTEL MORTGAGE 1. Public sale. 2. Private sale There is nothing illeg al, immoral or against public order in an agreement for the private sale of the personal properties covered by chattel mortgage. PERIOD TO FORECLOSE 1. After 30 days from the time of the condition is broken. 2. The 30-day period is the mini mum period after violation of the mortgage condition for the creditor to cause t he sale at public auction with at least 10 days notice to the mortgagor and post ing of public notice of time, place, and purpose of such sale, and is a period o f grace for the mortgagor, to discharge the obligation. 3. After the sale at pub lic auction, the right of redemption is no longer available to the mortgagor. CI VIL ACTION TO RECOVER CREDIT 1. Independent action to recover debt is not requir ed. 2. However, mortgage lien is deemed abandoned by obtaining a personal judgme nt. RIGHT OF MORTGAGEE TO RECOVER DEFICIENCY 1. Where mortgage foreclosed: Creditor may maintain action for deficiency although the Chattel Mortgage Law is silent o n this point, because a chattel mortgage is given only as a security and not as payment of the debt. 2. Where mortgage constituted as security for purchase of p ersonal property payable in installments: No deficiency judgment can be asked an d any contrary agreement shall be void. 3. Where mortgaged property subsequently attached and sold: Mortgagee is entitled to deficiency judgment in an action fo r specific performance. APPLICATION OF PROCEEDS OF SALE 1. Costs and expenses of keeping and sale. 2. Payment of the obligation. 3. Claims of persons holding su bsequent mortgages in their order. 4. Balance, if any, shall be paid to the mort gagor, or person holding rights under him. 337 CREDIT TRANSACTIONS

CIVIL LAW REVIEWER Chapter VIII. PHILIPPINE BULK SALES LAW Chapter VIII. Concurrence Preference of Credits I. GENERAL PROVISIONS II. CLASSIFICATION OF CREDITS III. PREFERENCE OF CREDITS and 5. Property held by the insolvent debtor as a trustee of an express or implied t rust, shall be excluded from the insolvency proceedings II. Classification of Credits 1. Special preferred credits. (Art. 2241 and 2242, CC) a. Considered as mortgage s or pledges of real or personal property or liens within the purview of legal p rovisions governing insolvency. b. Taxes due to the State shall first be satisfi ed. 2. Ordinary preferred credits (Art. 2244) Preferred in the order given by la w. 3. Common credits (Art. 2245) Credits of any other kind or class, or by any o ther right or title not comprised in Arts. 2241- 2244 shall enjoy no preference. CONCURRENCE OF CREDIT implies possession by two or more creditors of equal right or privileges over the same property or all of the property of a debtor. PREFER ENCE OF CREDIT is the right held by a creditor to be preferred in the payment of his claim above other out of the debtors assets. I. General Provisions 1. The debtor is liable with all his property, present and future, for the fulfi llment of his obligations, subjects to exemptions provided by law. Exempted prop erty: a. Present property: Family home. (Arts. 152, 153 and 155, CC) Right to re ceive support, as well as money or property obtained by such support, shall not be levied upon on attachment or execution. (Art. 205, CC) Sec. 13, Rule 39, ROC. Sec 118, Public Land Act. (CA 141, as amended) b. Future property: A debtor who obtains a discharge from his debts on account of insolvency, is not liable for the unsatisfied claims of his creditors with said property. (Sec. 68 and 69, Ins olvency Law, Act 1956) c. Property in custodia legis and of public dominion. 2. Insolvency shall be governed by the Insolvency Law. (Act 1956, as amended) 3. Ex emption of conjugal property or absolute community or property, provided that: a . Partnership or community subsists. b. Obligations of the insolvent spouse have not redounded to the benefit of the family. 4. If there is co-ownership, and on e of the coowners is the insolvent debtor, his undivided share or interest in th e property shall be possessed by the assignee in insolvency proceedings because it is part of his assets. III. Preference of Credits 1. Credits which enjoy preference with respect to specific movables exclude all others to the extent of the value of the personal property to which the preferen ce refers. 2. If there are 2 or more credits with respect to the same specific m ovable property, they shall be satisfied pro rata, after the payment of duties, taxes and fees due the State or any subdivision thereof 3. Those credits which e njoy preference in relation to specific real property or real rights exclude all others to the extent of the value of the immovable or real right to which the p reference refers. 4. If there are 2 or more credits with respect to the same spe cific real property or real rights, they shall be satisfied pro rata, after the payment of the taxes and assessment of the taxes and assessments upon the immova ble property or real right. 5. The excess, if any, after the payment of the cred its which enjoy preference with respect to specific property, real or personal, shall be added to the free property which the debtor may have, for the payment o

f other credits. 6. Those credits which do not enjoy any preference with respect to specific property, and those which enjoy preference, as to the amount not pa id, shall be satisfied according to the following rules: a. Order established by Art 2244 b. Common credits referred to in Art 2245 shall be paid pro rata regar dless of dates 338 CREDIT TRANSACTIONS -end of Credit Transactions -

CIVIL LAW REVIEWER TABLE of CONTENTS AGENCY Table of Contents Chapter I. Nature, Form, and Kinds of Agency ................................... ....................................341 I. Definition [Art. 1868, CC] .......... ........341 II. Purpose .............................................341 III. Ch aracteristics [CNPPBF].................342 IV. Essential Elements............... .............342 V. Determination of Existence of Agency 342 VI. Agency v Simila r Contracts ...............343 VII. Kinds ...................................... .......344 Chapter II. Obligations of the Agent...........348 I. To Carry Out th e Agency ..................348 III. To Advance the Necessary Funds [Art. 1886, C C]...................................................349 IV. To Act in Accordanc e with Principals Instructions.................................................34 9 V. To Prefer Interest of Principal Over Personal Interest..................... ...................349 VI. To Render Accounts and Deliver Things Received by Vir tue of the Agency..............349 VII. To Be Responsible for Substitutes350 VII I. To Pay Interest .............................350 IX. To Answer for His Neglig ence or Fraud [Art. 1909, CC] ...........................................350 X. Special Obligations of Factor/ Commission Agents ............................... ....350 Chapter III. Liabilities of the Agent .............352 I. Liability to T hird Persons...................352 II. Liability to the Principal .............. .......352 III. Liability of Two or More Agents.........353 Chapter IV. Obligati ons of the Principal ...354 I. To Comply with the obligations contracted by the agent .............................354 II. To Advance the Necessary Sums and Rei mburse the Agent .................................355 III. To Indemnify the Agen t for Damages355 IV. To Pay the Agents Compensation ...356 V. To Be Solidarily Li able ......................356 Chapter V. Extinguishment of Agency......357 Exti nguishment of Agency [EDWARD] ......357 I. Expiration of the period for which it was constituted..................................................357 II. Death, civil interdiction, insanity, insolvency ...................................... ............357 III. Withdrawal of the agent ....................357 IV. Accompl ishment of the object of the agency ............................................ ...........357 V. Revocation ........................................357 VI. Dis solution of the firm/corp. Which entrusted/accepted the agency.................. 358 340 AGENCY

CIVIL LAW REVIEWER Chapter I. NATURE, FORM, and KINDS of AGENCY Prof. Roberto N. Dio Faculty Editor AGENCY & PARTNERSHIP AGENCY & PARTNERSHIP TEAM Chapter I. Nature, Form, and Kinds of Agency I. II. III. IV. V. VI. VII. DEFINITION PURPOSE CHARACTERISTICS ESSENTIAL ELEMENT S DETERMINATION OF EXISTENCE AGENCY V SIMILAR CONTRACTS KINDS Genevieve E. Jusi Lead Writer Joyce Anne C. Roldan Writer CIVIL LAW Kristine Bongcaron Patricia Tobias Subject Editors I. Definition [Art. 1868, CC] ACADEMICS COMMITTEE Kristine Bongcaron Michelle Dy Patrich Leccio Editors-in-Chief PRINTING & DISTRIBUTION Kae Guerrero By the contract of agency, 1. a person (agent) binds himself 2. to render some s ervice or to do something in representation or on behalf of another (principal), 3. with the consent or authority of the latter. DESIGN & LAYOUT Pat Hernandez Viktor Fontanilla Rusell Aragones Romualdo Menzon Jr. Rania Joya II. Purpose The purpose of agency is to extend the principals personality. The personality of the principal is extended through the facility of the agent. In so doing, the a gent, by legal fiction, becomes the principal, authorized to perform all acts wh ich the latter would have him do. The relationship can only be effected with the consent of the principal, which must not, in any way, be compelled by law or by any court. (Litonjua, Jr. v. Eternit Corp.) What acts may be authorized 1. Gene ral Rule: What a man may do in person, he may do thru another. 2. Exceptions a. P ersonal acts b. Criminal acts c. Unlawful acts Theory of Imputed knoweldge 1. Ge neral Rule: For knowledge of agent to be imputed to the principal, there must be : a. Actual notice to the agent; b. The notice must pertain to a matter of fact and not of law; and c. The fact must be within the scope of the agents authority. 2. Exceptions a. Agents interests are adverse to those of the principal; b. Agents duty is not to disclose information; c. 3rd person claiming the benefit of the rule colludes with agent to defraud principal. Michelle Arias Camille Maranan Angela Sandalo Heads Katz Manzano Mary Rose Beley Sam Nuez Krizel Malabanan Arianne Cerezo Marcr ese Banaag Volunteers

MOCK BAR COMMITTEE Lilibeth Perez BAR CANDIDATES WELFARE Dahlia Salamat LOGISTICS Charisse Mendoza SECRETARIAT COMMITTEE Jill Hernandez Head Loraine Mendoza Faye Celso Mary Mendoza Joie Bajo Members AGENCY LECTURES COMMITTEE 341

CIVIL LAW REVIEWER Chapter I. NATURE, FORM, and KINDS of AGENCY NoteThe theory of imputed knowledge ascribes the knowledge of the agent, to the p rincipal, not the other way around. The knowledge of the principal cant be impute d to its agent. (Sunace Internatl Mgt. Services v. NLRC, 2006) public into believing that the relationship or the authority exists. The princip al is bound by the acts of his agent with the apparent authority which he knowin gly permits the agent to assume, or which he holds the agent out to the public a s possessing. The question in every case is whether the principal has by his vol untary act placed the agent in such a situation that a person of ordinary pruden ce, conversant with business usages and the nature of the particular business, i s justified in presuming that such agent has authority to perform the particular act in question. (Professional Services Inc. vs. Agana, G.R. No. 126297) One wh o clothes another with apparent authority as his agent, and holds him out to the public as such, cannot be permitted to deny the authority of such person to act as his agent, to the prejudice of innocent third parties dealing with such pers on in good faith. (Macke v Camps, 1907) Capacity of the parties The principal mu st be capacitated to give consent. The agent must have the capacity to enter int o contracts although he/she may not have the capacity to enter into the particul ar contract subject of the agency However, as between the principal and the agen t, the agent can set up his incapacity provided he is not estopped. [Paras, Civi l Code of the Philippines Annotated] III. Characteristics [CNPPBF] 1. Consensual: perfected by mere consent 2. Nominate: has its own name 3. Prepar atory: purpose is the execution of a juridical act in relation to a third person 4. Principal: can stand by itself without need of another contract 5. Bilateral : gives rise to reciprocal rights and obligations 6. Fiduciary: since it is base d on trust and confidence IV. Essential Elements Essential Elements [CORS] (Rallos v Felix Go Chan, 1978) 1. Consent, express or implied, of the parties to establish the relationship 2. Object is the execution of a juridical act in relation to a third person 3. Agent acts as a Representat ive and not for himself 4. Agent acts within the Scope of his authority Intent t o establish agency essential General Rule 1. On the part of the principal there m ust be an intention to appoint or an intention naturally inferable from his word s or actions; and 2. On the part of the agent, there must be an intention infera ble from words or deeds to accept the appointment and act on it. Exception 1. Age ncy by estoppel; and 2. Agency by operation of law Agency by Estoppel 1. The prin cipal manifested a representation of the agents authority or knowlingly allowed t he agent to assume such authority; 2. The third person, in good faith, relied up on such representation; 3. Relying upon such representation, such third person h as changed his position to his detriment. (Litonjua vs. Eternit Corporation, G.R . No. 144806) Apparent Authority It imposes liability, not as the result of the r eality of a contractual relationship, but rather because of the actions of a pri ncipal or an employer in somehow misleading the 342 AGENCY V. Determination of Existence of Agency Designation by partiesis not controlling. Fact of existence If relations that con stitute agency exist, there is agency regardless of whether or not the parties u nderstood the exact nature of the relation. No presumption of existence 1. Gener al Rule: Agency must exist as a fact. 2. Exceptions: a. When agency arises ipso jure b. To prevent unjust enrichment Intention of the parties to create The natur

e of the contract depends on the intention of the parties as gathered from

CIVIL LAW REVIEWER Chapter I. NATURE, FORM, and KINDS of AGENCY their words and actions circumstances of the case. and the As between principal and 3rd person, however, agency may exist without the expre ss consent of the agent. Keeler Rule (Harry Keeler Electric v Rodriguez, 1922) 1 . Against the principal, the third party has the obligation to determine existen ce and scope of agency and has the burden of proof in case the principal denies it 2. Against the agent, the third person deals with him at his own peril. A thi rd person may require the presentation of the POA or the principals instructions as regards the agency (Art. 1902) 3. The person dealing with the agent must also act with ordinary prudence and reasonable diligence. If he knows or has good re ason to believe that the agent is exceeding his authority, he cannot claim prote ction. 3. Subagents Agents of the agent can be controlled by the principal The employees of contractor are not employees of employer of contractor the the the the Lease of Service Agency 1. Basis Basis is representation 2. Purpose Execution of a juridical act in relation to a third person 3. Authorized Acts The agent is destined to execute juridical acts (creation, modification or extinction of relations with third parties) 4. Discr etion Agent exercises discretionary powers. 5. Parties 3 parties: Principal, age nt and the 3rd person with whom the agent contracts Lease of Service Basis is employment Execution a piece of work or rendering of service Lease of services contemplate only material acts. VI. Agency v Similar Contracts Partnership 1. An agent acts not for himself, but for his principal; a partner c an act for himself, for his firm, and for his partners 2. Parity of Standing Tes t A partnership generally presupposes a parity of standing between the partners, in which each party has an equal proprietary interest in the capital or property contributes & where each party exercises equal rights in the conduct of the bus iness. (Sevilla v CA, 1988) Independent Contractor (IC) Agency 1. Control The agent acts under the control and instruction of the principal. Lessor ordinarily performs only ministerial functions. 2 parties: Lessor and les see. 343 AGENCY Lease of Property Agency 1. Control The agent acts under the control and instruction of the principal. 2. Things involved Agency may involve things other than property 3. Binding power Agent can bind the principal

Lease of Property Lessee controlled lessor is by not the Lease of property only involves property IC The IC is authorized to do the work according to his own method, without being s ubject to the other partys control, except insofar as the result of the work is c oncerned Lessee cannot the lessor bind Agency to Sell v Sale Agency to Sell 1. Ownership of goods Agent receives the goods as the goods of the principal 2. Payment Agent delivers proceeds of the sale to the principal Sale Buyer receives goods as owner the 2. Liability for tort Principal is liable for torts committed by the agent withi n the scope of his authority. Employer not liable for torts committed by the independent contractor. Buyer pays the price

CIVIL LAW REVIEWER 3. Return of goods Generally, the agent can return the goods in case he is unable to sell them to a third person 4. Discretion Agent exercise s discretionary powers. 5. Parties Agent in dealing with thing received is bound to act according to the instructions of his principal; Chapter I. NATURE, FORM, and KINDS of AGENCY generally, buyer cannot return the goods bought VII. Kinds As to Manner of Creation 1. Express a. Agent has been actually authorized by the principal b. Agency may be oral or in writing, unless the law requires a specif ic form. [Art. 1869, CC] 2. Implied a. On the part of the principal: From his ac ts his silence or lack of action; his failure to repudiate the agency knowing th at another person is acting on his behalf without authority [Art. 1869, CC] b. O n the part of the agent: from his acts which carry out the agency; from his sile nce or inaction according to the circumstances [Art. 1870, CC] Acceptance of the Agency Between persons who are present Principal delivers his power of attorney to the agent; and Agent receives it without objection [Art. 1871, CC] Between pe rsons who are absent: General Rule: Acceptance cannot be implied from the silenc e of the agent Exceptions i. when the principal transmits his POA to the agent, who receives it without any objection; ii. when the principal entrusts to him by letter or telegram a POA with respect to the business in which he is habitually engaged as an agent, and he did not reply to the letter [Art. 1872, CC] c. Agen cy by estoppel If a person specially informs another or states by public adverti sement that he has given a power of attorney to a third person, the latter becom es a duly authorized agent, even if previously there was never a meeting of mind s between them. The power shall continue to be in full force until the notice is rescinded in the same manner in which it was given. [Art. 1869, CC] Lessor ordinarily performs only ministerial functions. Buyer can deal with the t hing as he pleases, being the owner. Agency to Buy v Sale Agency to Buy 1. Ownership of goods The agent acquires ownership in behalf of the principal 2. Changes in price Generally, any change in the price should be borne by the prin cipal 3. Payment The agent pays the purchase price in behalf of the principal Sale The buyer acquires ownership for himself. Buyer cannot adjust the price already agreed upon. Buyer pays the price 344 AGENCY Guardianship Agency 1. Person represented Agent represents a capacitated person 2. Source of authori ty Agent is appointed by the principal and can be removed by the latter. 3. Cont rol The agent acts under the control of the principal. 4. Discretion Agent exerc ises discretionary powers. 5. Binding power Agent can make the principal persona lly liable. Guardianship A guardian represents an incapacitated person. Guardian is appointed by the cour t or by law. Guardian is not subject to the directions of the ward but must act for the benef it of the latter. Lessor ordinarily performs only ministerial functions. Guardia n has no power to impose personal liability on the ward.

CIVIL LAW REVIEWER Chapter I. NATURE, FORM, and KINDS of AGENCY d. In Litonjua, Jr. v. Eternit Corp. (2006), the following must be present for a gency by estoppels to exist: the principal manifested a representation of the ag ents authority or knowingly allowed the agent to assume such authority; the third person, in good faith, relied upon such representation; relying upon such repre sentation, such third person has changed his position to his detriment. As to Fo rmalities General Rule Agency may be oral or in writing [Art. 1869, CC] Exception s a. When the law requires a specific form [Art. 1869, CC] b. Sale of a piece of land or any interest therein When a sale of a piece of land or any interest there in is through an agent, the authority of the latter shall be in writing; otherwi se, the sale shall be void. [Art. 1874, CC] It is not necessary that the real pr operty to be sold be precisely described in the written authority of the agent. It is sufficient if the authority is so expressed as to determine without doubt the limits of the agents authority. [Jimenez v Rabot, 1918] As to Cause or Consid eration Agency may be onerouse or gratuitous a. General RuleAgency is presumed to be for compensation [Art. 1875, CC] b. ExceptionThere is proof to the contrary [A rt. 1875, CC] As to Extent of Business Covered 1. Universal A universal agent is one authorized to do all acts for his principal which can lawfully be delegated to an agent. [Siasat v. IAC (1985)] 2. General It comprises all the business of t he principal [Art. 1876, CC] 3. Special It comprises one or more specific transac tions [Art. 1876, CC] General Agency 1. Scope of authority All acts connected with the business or employment in whic h he is engaged. Special Agency As to Authority Conferred 1. Agency may be couched in general or specific terms a. Couched in general terms [Art. 1877, CC] If couched in general terms, it compr ises only acts of administration, EVEN IF: the principal states that he withhold s no power; or he states that the agent may execute such acts as he may consider appropriate; or the agency should authorize a general and unlimited management b. Couched in specific termsauthorizing only the performance of specific act/acts 2. Power of Attorney Definition Written authorization to an agent to perform spe cified acts in behalf of his principal which acts, when performed, shall have bi nding effect on the principal [2 Am. Jur. 30] Purpose Not to define the agents aut hority, but to evidence such authority to 3rd parties AGENCY Specific acts in pursuance of particular instructions or with restrictions neces sarily implied from the act to be done. 2. Nature of service authorized Involves continuity of No continuity of service. service. 3. Extent to which agent may b ind principal May bind his principal by Cannot bind his principal an act within the scope of in a manner beyond or his authority although it outside the specifi c acts may be contrary to the which he is authorized to latters special perform. instructions. 4. Termination of authority Apparent authority does Duty imposed u pon the not terminate by the mere 3rd party to inquire revocation of his authori ty makes termination of the without notice to the 3rd relationship as between pa rty. the principal and agent effective as to such 3rd party, unless the agency h as been entrusted for the purpose of contracting with such 3rd party. 5. Constru ction of principals instructions Merely advisory in nature. Strictly construed as they limit the agents authority. 345

CIVIL LAW REVIEWER Chapter I. NATURE, FORM, and KINDS of AGENCY Interpretation General Rule: Power of Attorney should be strictly construed Excep tion: When strict construction will destroy the very purpose of the power Specia l Power of Attorney A special power of attorney is an authority granted by the pr incipal to the agent where the act for which it is drawn is expressly mentioned. [Strong v. Repide, 1906] A special power can be included in a general power of attorney, either by giving authority for all acts of a particular character or b y specifying therein the act/transaction for which a special power is needed. [T olentino] 3. When special powers are necessary [Art. 1878, CC] (PNC-WIG-LLB-PORI RS): a. to make such Payments as are not usually considered acts of administrati on b. to effect Novations which put an end to obligations already in existence a t the time the agency was constituted a. Compromise, to submit questions to arbi tration, to renounce the right to appeal from a judgment, to waive objections to the venue of an action or to abandon a prescription already acquired b. to Waiv e any obligation gratuitously c. to enter into any contract by which the ownersh ip of an Immovable is transmitted or acquired either gratuitously or for a valua ble consideration d. to make Gifts, except customary ones for charity or those m ade to employees in the business managed by the agent; e. to Loan or borrow mone y, unless the latter act be urgent and indispensable for the preservation of the things which are under administration f. to Lease any real property to another person for more than one year g. to Bind the principal to render some service wi thout compensation h. to bind the principal in a contract of Partnership i. to O bligate the principal as a guarantor or surety j. to create or convey Real right s over immovable property k. to accept or repudiate an Inheritance l. to Ratify or recognize obligations contracted before the agency m. any other act of Strict dominion Note a. Art. 1878 refers to the nature of the authorization, not to its form. Eve n if a document is titled as a general power of attorney, the requirement of spe cial power of attorney is met if there is a clear mandate from the principal spe cifically authorizing the performance of the act (Bravo-Guerrero v Bravo, 2005) b. What SPA to sell/mortgage does not include [Art. 1879, CC] A special power to sell excludes the power to mortgage; Special power to mortgage does not include the power to sell. c. A special power to compromise does not authorize submissi on to arbitration. [Art. 1880, CC] d. The power to legally compel the payment of debts owing to the principal is an express grant of the right to bring suit for the collection of such debts. (Germann & Co v Donaldson, 1901) e. A power of at torney to loan and borrow money and to mortgage the principals property does not ca rry with it or imply that that the agent has a legal right to make the principal liable for the personal debts of the agent. (BPI v De Coster, 1925) f. Unless t he contrary appears, the authority of an agent must be presumed to include all t he necessary and usual means of carrying the agency into effect. (Macke v Camps, 1907) g. If agent is empowered to borrow moneythe agent may be the lender at the current rate of interest. h. If agent is empowered to lend money at interestthe agent cannot borrow the money without the consent of the principal i. Effect of lack of SPA where one is required It is neither accurate not correct to conclude that the absence of SPA (where one is required by law) renders the contract ente red into by virtue of said SPA void. The contract is merely unenforceable. (Dung o v Lopena, 1962, citing Art. 1403(1), CC) As to Nature and Effects 1. Ostensibl e or Representativeagent acts in the name and representation of the principal 2. Simple or Commissionagent acts in his own name but for the principals account 3. A gency by Estoppelthere is no agency, and the alleged agent seemed to have 346 AGENCY

CIVIL LAW REVIEWER Chapter I. NATURE, FORM, and KINDS of AGENCY apparent or ostensible, but authority to represent another Apparent Authority Though not actually granted, principal knowingly permits or holds out the agent as possessing the necessary powers to act in a certain way. not real, Agency by Estoppel Where the principal, by his acts or omission, permits his agent to exercise powe rs not granted to him, even though the principal may have no notice or knowledge of the conduct of the agent. Implied Agency Principal alone is liable. Agency by Estoppel If caused by the principal, he is responsible. If caused by the agent, he is res ponsible. Provided, rd 3 person in good faith. 4. When the principal ratifies the acts of the agent a. Conditions for ratificat ion (CaP-DECK) i. The principal must have Capacity and Power to ratify ii. The a ct must be Done in behalf of the principal iii. He must ratify the acts in its E ntirety iv. The act must be Capable of ratification v. He must have had Knowledg e of material facts. b. Effects of ratification i. With respect to the agent: It relieves the agent from liability. He may also recover compensation ii. With re spect to the principal: He assumes responsibility for the unauthorized act, as f ully as if the agent had acted under original authority; but he is not liable fo r acts outside the authority approved by his ratification. iii. With respect to 3rd persons: They are bound by ratification. They cannot question agents authorit y. Ratification Rests on intention Affects the entire transaction from the beginning. The substa nce of ratification is confirmation of unauthorized acts or conduct after it has been done. Estoppel Rests on prejudice Affects only relevant parts of the transaction. 3. Agent may still be sued even if principal is undisclosed and contract involve d things belonging to the principal. Even if the principal is undisclosed and the contract involved things belonging to the principal, the third person who contr acted with the agent has a right of action not only against the principal but al so against the agent, when the rights and obligations which are the subject matt er of the litigation cannot be legally and juridically determined without hearin g both of them. In such case, the agent being a necessary party to the full and complete determination of the case which originated from his act should be inclu ded in the case as defendant. [Beaumont v Prieto, 1921] The substance of estoppel is the principals inducement to another to act to his p rejudice. AGENCY As to Kinds of Principal 1. Principal may be: a. Disclosed b. Partially disclose dthird persons are unaware of principals identity c. Undisclosedagent acts in his o wn name 2. General Rule [Art. 1883, CC] If the principal is undisclosed (agent a

cts in his own name): a. the agent is the one directly bound in favor of the per son with whom he has contracted, as if the transaction were his own b. the princ ipal has no right of action against the persons with whom the agent has contract ed; neither have such persons against the principal. Exception [Art. 1883, CC] a . When the contract involves things belonging to the principal b. Exception qual ified by National Bank v Agudelo, 1933 For the principal to be bound by the act o f an agent who contracted in his [agents] own name, it is not sufficient that the contract involved things belonging to the principal. The agent should also have acted within his scope of authority. [National Bank v Agudelo, 1933; Rural Bank of Bombon v CA, 1992] 347

CIVIL LAW REVIEWER Chapter II. OBLIGATIONS of the AGENT Chapter II. Obligations of the Agent I. II. TO CARRY OUT THE AGENCY TO ACT WITHIN THE SCOPE OF HIS AUTHORITY III. TO ADVANCE NECESSARY FUNDS IV. TO ACT IN ACCORDANCE WITH INSTRUCTIONS V. TO PREFER PRINCIPALS INTEREST OVER PERSONAL INTEREST VI. NOT TO LOAN TO HIMSELF WITHOUT PRI NCIPALS CONSENT VII. TO RENDER ACCOUNT AND DELIVER THINGS RECEIVED BY VIRTUE OF A GENCY VIII. TO BE RESPONSIBLE FOR SUBSTITUTES IX. TO PAY INTEREST X. TO ANSWER F OR HIS FRAUD/NEGLIGENCE XI. SPECIAL OBLIGATIONS OF FACTOR/COMMISSION AGENTS II. To Act Within the Scope of His Authority [Art. 1881, CC] Authority is the power of the agent to affect the legal relations of his princip al by acts done in accordance with the principals manifestations of consent. When agent acting within the scope of his authority 1. When he is performing acts whi ch are conducive to the accomplishment of the purpose of the agency [Art. 1881, CC] 2. If the agency has been performed in a manner more advantageous to the pri ncipal than that specified by him [Art. 1882, CC] 3. Insofar as third persons, w hen the agents act is within the terms of the power of attorney, as written, even if the agent has in fact exceeded the limits of his authority according to an u nderstanding between the principal and the agent. [Art. 1900, CC] Note: rd 1. A 3 person with whom the agent wishes to contract on behalf of the principal may r equire the presentation of a power of attorney or the principals instructions [Ar t. 1902, CC] 2. The scope of the agents authority is what appears in the written terms of the power of attorney. While third persons are bound to inquire into th e extent or scope of the agents authority, they are not required to go beyond the terms of the written power of attorney. [Siredy Enterprises, Inc. v CA, 2002] E ffect when agent acts within the scope of his authority 1. General Rule The agent who acts as such is not personally liable to the party with whom he contracts 2. Exceptions a. If he expressly bound himself [Art. 1897, CC] b. If he exceeds the limits of his authority without giving such party sufficient notice of his powe rs [Art. 1897, CC] c. If he acted in his own name; except if the contract involv es things belonging to the principal [Art. 1883, CC] I. To Carry Out the Agency Obligation to carry out the agency he accepted [Art. 1884, CC] 1. The agent is bo und by his acceptance to carry out the agency own 2. He shall be liable for dama ges that the principal may suffer due to his nonperformance [Art. 1884, CC] Exce ption: An agent shall not carry out an agency if its execution would manifestly result in loss or damages to the principal. [Art. 1888, CC] Obligation to finish business began on principals death [Art. 1884, CC] The agent must finish the busi ness already begun on the death of the principal, should delay entail any danger Obligation should he decline the agency [Art. 1885, CC] 1. He is bound to observ e the diligence of a good father of a family in the custody and preservation of the goods forwarded to him by the owner until the latter should appoint an agent or take charge of the goods 2. However, the owner must act as soon as practicab le either by appointing an agent or by taking charge of the property Obligation to continue agency should he withdraw [Art. 1929, CC] The agent, even if he shoul d withdraw from the agency for a valid reason, must continue to act until the pr incipal has had reasonable opportunity to take the necessary steps to meet the s ituation. 348 AGENCY

CIVIL LAW REVIEWER Chapter II. OBLIGATIONS of the AGENT III. To Advance the Necessary Funds [Art. 1886, CC] General Rule The agent is bound to advance necessary funds, should there be a sti pulation to do so. Exception When the principal is insolvent V. To Prefer Interest of Principal Over Personal Interest Rule in case of conflict of interest 1. General Rule The agent shall be liable fo r damages if, there being a conflict between his interests and those of the prin cipal, he should prefer his own. [Art. 1889, CC] 2. Exceptions a. The principal w aives the benefit of the rule, provided he does so with full knowledge of the fa cts. b. The interests of the agent are superior, ex., agency coupled with an int erest. Agent prohibited from purchasing property of principal 1. General Rule The agent cannot acquire by purchase, even at a public or judicial auction, either i n person or through the mediation of another property whose administration or sa le may have been entrusted to them. 2. Exception The principal has consented to t he purchase. [Art. 1491(2), CC] IV. To Act in Accordance with Principals Instructions Obligation to act in accordance with principals instructions In the execution of t he agency, the agent shall act in accordance with the instructions of the princi pal. [Art. 1887, CC] Obligation in the absence of instructions Agent shall do all that a good father of a family would do, as required by the nature of the busin ess [Art. 1887, CC] When private orders and instructions not binding to third pe rsons Private or secret orders and instructions of the principal do not prejudice third persons who have relied upon the power of attorney or instructions shown them. [Art. 1902, CC] Effect when agent acts in accordance with principals orders Principal cannot set up the ignorance of the agent as to circumstances whereof h e himself was, or ought to have been aware [Art. 1899, CC] Authority v Instructi ons Authority The sum total of the powers committed or permitted to the agent Relates to the s ubject (biz/transaction) with which the agent is empowered to deal or act. Limit s of authority to operate vs those who have/are charged with knowledge of them. 349 AGENCY VI. To Render Accounts and Deliver Things Received by Virtue of the Agency Obligation to account and deliver [Art. 1891, CC] Every agent is bound to: 1. ren der an account of his transactions; and 2. deliver to the principal whatever he may have received by virtue of the agency, even though it may not be owing to th e principal. Effect of failure to comply If he fails to do so or uses the money/p roperty for his own use, the agent is liable for estafa [Art. 315, RPC] Contrary stipulation void Every stipulation exempting the agent from the obligation to re nder an account shall be void [Art. 1891, CC] When not applicable (LIM) 1. A righ t of Lien exists in favor of the agent. 2. The agent or broker Informed the prin cipal of the gift or bonus or profit he received from the vendee, and the princi pal did not object. Instructions Only a private rule of guidance to the agent Refers to the manner or mode of age nts action with respect to matters within the permitted scope of action. Binding only on the principal and agent

CIVIL LAW REVIEWER Chapter II. OBLIGATIONS of the AGENT 3. If the agent or broker acted only as a Middleman with the task of merely brin ging together the vendor and vendee (Domingo v Domingo) 2. VII. To Be Responsible for Substitutes The agent shall be responsible for the acts of his substitute: 1. when he was no t given the power to appoint one; or 2. when he was given such power, but withou t designating the person, and the person appointed was notoriously incompetent o r insolvent. The agent may appoint a substitute if the principal has not prohibi ted him from doing so. All acts of the substitute appointed against the prohibit ion of the principal shall be void Principal may also bring an action against th e substitute with respect to the obligations which the latter has contracted und er the substitution. [Art. 1893, CC] 4. 3. VIII. To Pay Interest The agent owes interest on: 1. the sums he has applied to his own use from the d ay on which he did so 2. those which he owes after the extinguishment of the age ncy 5. IX. To Answer for His Negligence or Fraud [Art. 1909, CC] The agent is responsible not only for fraud, but also for negligence Liability s hall be judged with more or less rigor by the courts, according to whether the a gency was or was not for a compensation 6. X. Special Obligations Commission Agents of Factor/ Definition one whose business is to receive & sell goods for a commission, and is entrusted by the principal with its possession [Mechem on Agency] Obligations o f a commission agent 1. For goods received [Art. 1903, CC] a. He shall be respon sible for the goods received by him in the terms and conditions and as described in the consignment b. To avoid liability, he should make a written statement of the damage and dete rioration suffered by the same upon receiving them When handling goods of the sa me kind and mark with different owners [Art. 1904, CC] He should distinguish the goods by countermarks, and designate the merchandise respectively belonging to e ach principal. Not to sell on credit without express consent [Art. 1905, CC] The commission agent cannot, without the express or implied consent of the principal , sell on credit. Should he do so: a. the principal may demand from him payment in cash b. but the commission agent shall be entitled to any interest or benefit , which may result from such sale To inform the principal of sale made on credit , if authorized to do so [Art. 1906, CC] a. Should the commission agent, with aut hority of the principal, sell on credit, he shall so inform the principal, with a statement of the names of the buyers b. Should he fail to do so, the sale shal

l be deemed to have been made for cash insofar as the principal is concerned. To indemnify principal for damages for failure to collect the credits of his princ ipal when they fall due [Art. 1908, CC] General Rule: The commission agent who do es not collect the credits of his principal at the time when they become due and demandable shall be liable for damages Exception If he proves that he exercised due diligence for that purpose When he receives a guarantee commission (del cre dere commission) [Art. 1907, CC] a. Bear the risk of collection b. Pay the princi pal the proceeds of the sale on the same terms agreed upon with the purchaser 350 AGENCY Ordinary Agent v Commission Agent Ordinary Agent Commission Agent Acts for and in behalf of the principal. Need not have possession of the goods o f the principal. Acts in his own name or in that his principal. Must be in posse ssion of the goods of the principal.

CIVIL LAW REVIEWER Chapter II. OBLIGATIONS of the AGENT Broker v Commission Agent (Pacific Commercial v Yatco, 1939) Broker Commission A gent Has no custody or possession of the thing he disposes; merely acts as an interme diary between the sellers and the buyer. Maintains no relation with the thing wh ich he purchases or sells. Engaged in the purchase and sale, for a principal, of personal property which has to be placed in his possession and disposal. Has a relation with the principal (buyers or sellers) and the property which is the ob ject of the transaction. 351 AGENCY

CIVIL LAW REVIEWER Chapter III. LIABILITIES of the AGENT Chapter III. Liabilities of the Agent I. LIABILITITY TO THIRD PERSONS II. LIABILITY TO THE PRINCIPAL III. LIABILITY OF TWO OR MORE AGENTS 2. the two contracts are incompatible with each other 3. the agent acted in bad faith 4. agent shall be liable for damages to third person whose contract must b e rejected II. Liability to the Principal I. Liability to Third Persons Agent is liable for damages 1. Due to non-performance of agency The agent is liabl e for the damages which, thru his non-performance, the principal may suffer [Art . 1884, CC] 2. For preferring personal interest to that of principal The agent sh all be liable for damages if, there being a conflict between his interests and t hose of the principal, he should prefer his own. [Art. 1889, CC] 3. Damages due to his withdrawal [Art. 1928, CC] The agent must indemnify the principal for any damage that the principal may suffer by reason of the withdrawal of the agent; E xception: The agent should base his withdrawal upon the impossibility of continu ing the performance of the agency without grave detriment to himself. Liability of agent for acts of substitute under Art. 1892, CC The agent shall be responsibl e for the acts of the substitute: 1. when he was not given the power to appoint one; or 2. when he was given such power, but without designating the person, and the person appointed was notoriously incompetent or insolvent. Principal may br ing an action against the substitute with respect to the obligations which he ha s contracted under the substitution. [Art 1893, CC] All acts of the substitute a ppointed against the prohibition of the principal is void. [Art 1893, CC] Respon sibility for fraud or negligence The agent is responsible not only for fraud, but also for negligence, which shall be judged with more or less rigor by the court s, according to whether the agency was or was not for compensation. [Art. 1909, CC] Agent not personally liable as a general rule General Rule An agent who acts as such is not personally liable to the party with whom contracts [Art. 1897, CC ] Exceptions 1. When he acts in his own name, except when the contract involves things belonging to the principal [Art. 1883, CC] 2. If he expressly binds himse lf [Art. 1897, CC] 3. If he exceeds the limits of his authority without giving s uch party sufficient notice of his powers [Art. 1897, CC] NoteWhen an agent contr acts in his own name and without the express authority of his principal, the obl igation so contracted by him is personal and is not binding on his principal. [P NB v. Agudelo] BUT Third persons cannot set up the fact that the agent has excee ded his powers if the principal has ratified, or has signified his willingness t o ratify the agents acts [Art. 1901, CC] 4. Under Art. 1898, CC a. Agent contracts in the name of the principal; b. He exceeds the scope of his authority; c. The party with whom he contracted with is aware of the limits of his powers; AND d. The agent undertook to secure the principals ratification. Note Under Art. 1898, C C, the contract shall be void if the principal does not ratify the contract and the party with whom the agent has contracted is aware of the limits of the power s granted by the principal. Agent liable for damages to third persons under Art. 1916 & 1917, CC 1. When two persons contract with regard to the same thing, one of them with the agent and the other with the principal; 352 AGENCY

CIVIL LAW REVIEWER Chapter III. LIABILITIES of the AGENT Interest under Art. 1896, CC The agent owes interest on: 1. the sums he has appli ed to his own use from the day on which he did so 2. those which he owes after t he extinguishment of the agency a. If he converted for personal use, his liabili ty is without prejudice to a criminal action that may be brought against him. b. If for the sum he owes after extinguishment, demand is not necessary because th e agent is required to deliver to the principal whatever he may have received by virtue of the agency. [Art 1891, CC] Liablity of Commission Agents 1. For any d amage or deterioration of the goods in the terms and conditions and as described in the consignment Exception: Upon receiving the goods, the agent makes a writt en statement of the damage and deterioration suffered [Art 1903, CC] 2. For comm ingling goods belonging to different owners [Art 1904, CC] 3. For selling on cre dit without the express or implied consent of the principal [Art 1905, CC] 353 AGENCY III. Liability of Two or More Agents Liability is joint as a general rule [Art. 1894, CC] General Rule: Responsibilit y of two or more agents, even though they have been appointed simultaneously, is joint Exception: Solidarity is expressly stipulated Liability of two or more ag ents [Art. 1895, CC] If solidarity has been agreed upon, each of the agents is re sponsible for: 1. the non-fulfillment of agency; and 2. for the fault or neglige nce of his fellows agents, except: When the fellow agents acted beyond the scope of their authority in case of fault or negligence.

CIVIL LAW REVIEWER Chapter IV. OBLIGATIONS of the PRINCIPAL Chapter IV. Obligations of the Principal I. TO COMPLY WITH THE OBLIGATIONS CONTRACTED BY THE AGENT II. TO ADVANCE NECESSA RY SUMS AND REIMBURSE THE AGENT III. TO INDEMNIFY AGENT FOR DAMAGES IV. TO PAY T HE AGENTS COMPENSATION V. BE SOLIDARILY LIABLE General Rule: THE ACT OF THE AGENT IS THE ACT OF THE PRINCIPAL Principal is bound by the acts of his agent. He has an obligation to deal fairly and in good faith with his agent SPECIFIC OBLIGATIONS OF THE PRINCIPAL [CARICS] 3. 4. 5. 6. 7. to Comply with the obligations contracted by the agent To Advance necessaty sums and Reimburse the agent To Indemnify agent for damages To pay th e agents Compensation be Solidarily liable 3. When an agent acts in his own name, but the contract involves things belongin g to the principal, the contract must be considered as entered into between the principal and the third person. [Art. 1883, CC; Sy-Juco and Viardo v Sy-Juco, 19 20] 4. The principal is solidarily liable with the agent who has exceeded his au thority if the former allowed the latter to act as though he had full power. [Ar t. 1911, CC] 5. If two persons contract simultaneously with agent & principal fo r the same thing: a. Contract of prior date prevails b. If applicable, follow th e rule on double sales in Art. 1544, CC. [Art. 1916, CC] Liability of Principal for Tort of Agent [Art. 1910, CC] The principal is civilly liable to third person s for torts of an agent if he commit such in the course and within the scope of the agency. Agents negligence or disobedience to the principal does not relieve h im from liability, even if he had no knowledge about the tort. Agent and princip al are solidarily liable to third persons. Liability of Joint Principals: Solida ry [Art 1915] Each principal may be sued by the agent for the entire amount due, not just for proportionate shares. Any of the principals may revoke the agency I. To Comply with the contracted by the agent obligations 354 AGENCY Obligations principal is bound to comply with 1. obligations which the agent may have contracted within the scope of his authority [Art. 1910, CC] Note: Principa l is directly liable to creditor for debt incurred by agent acting within the sc ope of his authority. That the agent also bound himself personally does not reli eve principal from liability if the debt was incurred for his benefit. [Tuason v . Orozco] 2. obligations which the agent may have contracted beyond the scope of his authority but were ratified expressly or tacitly by the principal [Art. 191 0, CC] Note: Conditions for ratification (CaP-DECK) a. The principal must have C apacity and Power to ratify. b. The act must be Done in behalf of the principal c. He must ratify the acts in its Entirety d. The act must be Capable of ratific ation e. He must have had Knowledge of material facts. Requisites of Solidary Liability: a. Two or more principals b. All principals co ncurred in the appointment of the same agent c. Agent was appointed for a common undertaking Rules on Double Sale by Principal and Agent [Art. 1916-1917] Genera l Rule: 1. When two persons contract with regard to the same thing, one of them with the agent and the other with the principal 2. two contracts are incompatibl e with each other 3. the agent acted in good faith 4. the principal shall be lia ble for damages to the third person whose contract must be rejected In case of d

ouble sale, which contracts are incompatible with each other, that of PRIOR

CIVIL LAW REVIEWER Chapter IV. OBLIGATIONS of the PRINCIPAL DATE shall be preferred, without prejudice to Art 1544. Art. 1544 provides that: a. If the same movable property is sold to different persons, ownership is tran sferred to whoever first took possession in good faith. b. If it be immovable, o wnership belongs to the person who in good faith first recorded it in the Regist ry of Property. c. If there is no inscription, ownership shall belong to the per son who, in good faith was first in possession; and in the absence of such, to t he one who presents the oldest title, provided there is good faith. Principal no t liable in the following cases 1. Void or inexistent contracts under Art. 1409, CC 2. Sale of a piece of land or any interest therein & the authority of the age nt is not in writing [Art. 1874, CC] 3. Acts of the substitute appointed against the prohibition of the principal [Art. 1892, CC] 4. Art. 1898, CC Requisites: a . agent contracts in the name of the principal b. he exceeds the scope of the hi s authority c. the principal does not ratify the contract d. the party with whom the agent contracted is aware of the limits of the powers granted by the princi pal; and i. the agent did not undertake to secure the principals ratification 5. Agent has no authority or acted beyond the scope of his authority [Arts. 1403(1) ; 1910, CC; Dungo v Lopena, 1962] 6. When the agent acts in his own name, person s with whom the agent has contracted have no right of action against the princip al, except when the contract involves things belonging to the principal. [Art. 1 883, CC] 7. Unenforceable contracts under Art. 1403, CC Obligation to reimburse [Art. 1912, CC] 1. Should the agent have advanced sums, t he principal must reimburse him even if the business or undertaking was not succ essful, provided the agent is free from all fault. 2. The reimbursement shall in clude interest on the sums advanced, from the day on which the advance was made. Exceptions to obligation to reimburse [Art.1918] (FCKS) 1. When the expenses we re due to the Fault of the agent; 2. If the agent acted in Contravention of the principals instructions, unless the latter should wish to avail himself of the benefits derived from the contract; 3. When the agent incurred them with Knowled ge that an unfavorable result would ensue, if the principal was not aware thereo f; 4. When it was Stipulated that the expenses would be borne by the agent, or t hat the latter would be allowed only a certain sum. Note: Under Art. 1236(2), CC : whoever pays for another may demand from the debtor what he has paid, except th at if he paid without the knowledge or against the will of the debtor, he can re cover only insofar as the payment has been beneficial to the debtor. Agents right to retain in pledge object of agency should principal fail to reimburse him 1. T he agent may retain in pledge the things which are the object of the agency unti l the principal: a. effects the reimbursement set forth in Art. 1912, CC; and b. pays indemnity set forth in Art. 1913, CC 2. But agent is not entitled to the e xcess in case the thing was sold to satisfy his claim, and the proceeds are more than his claim [Arts. 2115, 2121, CC]. Also he must possess the thing lawfully in his capacity as agent [2 C.J.S. 457] 355 AGENCY III. To Indemnify the Agent for Damages Obligation to pay indemnity for damages [Art. 1913, CC] The principal must indemn ify the agent for all the damages which the execution of the agency may have cau sed the latter, without fault or negligence on his part. II. To Advance the Necessary Sums and Reimburse the Agent Obligation to advance sums [Art. 1912, CC] The principal must advance to the agen t, should the latter so request, the sums necessary for the execution of the age ncy.

CIVIL LAW REVIEWER Chapter IV. OBLIGATIONS of the PRINCIPAL The agents has the right to retain in pledge the object of the agency should prin cipal fail to pay the indemnity set forth in Art. 1913, CC. act as though he had full powers. [Art. 1911, CC] With person who appointed an a gent with him for a common transaction If two or more persons have appointed an a gent for a common transaction or undertaking, they shall be solidarily liable to the agent for all the consequences of the agency. [Art. 1915, CC] IV. To Pay the Agents Compensation Agency is presumed to be for a compensation, unless there is proof to the contra ry. [Art. 1875, CC] General Rule on Commission The agent must be the efficient pr ocuring cause in order to be entitled to compensation [Inland Realty v. Court of Appeals]. His efforts must have resulted in finding a ready, able and willing b uyer of the goods. But for equity purposes, commission may be granted if the age nt, even if he is not the procuring cause, nonetheless took diligent steps to br ing back the parties which led to the consummation of the sale [Prats v. Court o f Appeals] Compensation of Brokers Since the brokers only job is to bring together the parties to a transaction, it follows that if the broker does not succeed in bringing the mind of the purchaser and the vendor to an agreement with referenc e to the terms of a sale, he is not entitled to a commission. [Rocha v Prats, 19 22] Doctrine of Procuring Cause When a party is not the efficient procuring cause in bringing about a sale, he is not entitled to the stipulated brokers commissio n. [Inland Realty v CA, 1997] If the principal breaks off from negotiations with a buyer brought by the agent in order to deliberately deal later with the buyer personally, this is evident bad faith. In such case, justice demands compensati on for the agent. [Infante v Cunanan, 1953] 356 AGENCY V. To Be Solidarily Liable With agent, if agent acted beyond scope of authority and principal allowed him t o act as though he had full powers Even when the agent has exceeded his authority , the principal is solidarily liable with the agent if the former allowed the la tter to

CIVIL LAW REVIEWER Chapter V. EXTINGUISHMENT of AGENCY Chapter V. Extinguishment of Agency I. EXPIRATION OF THE PERIOD FOR WHICH IT WAS CONSTITUTED II. DEATH, CIVIL INTERD ICTION, INSANITY, INSOLVENCY III. WITHDRAWAL OF THE AGENT IV. ACCOMPLISHMENT OF THE OBJECT OF THE AGENCY V. REVOCATION VI. DISSOLUTION OF THE FIRM/CORPORATION W HICH ENTRUSTED/ACCEPTED THE AGENCY contracted with him in good faith. [Art. 1931, CC] 3. Agent must finish business already begun on the death of the principal, should delay entail any danger. [A rt. 1884, CC] Obligation of heirs of agent upon agents death [Art. 1932, CC] 1. Th ey must notify the principal of the agents death 2. They should adopt such measur es as the circumstances may demand in the interest of the principal in the meant ime. 3. The law does not impose a duty on the principals heirs to notify the agen t of the principals death. [Rallos vs Felix Go Chan] Extinguishment of Agency [EDWARD] 1. Expiration of the period for which it was constituted 2. Death, civil interdi ction, insanity, insolvency 3. Withdrawal of the agent 4. Accomplishment of the object of the agency 5. Revocation 6. Dissolution of the firm/corp. Which entrus ted/accepted the agency III. Withdrawal of the agent 1. General Rule: Agent may withdraw from the agency by giving due notice to the principal [Art. 1928, CC] But: If the principal should suffer any damage by reas on of the withdrawal, the agent must indemnify him; Exception: If the agent base d his withdrawal upon the impossibility of continuing performance of the agency without grave detriment to himself. [Art. 1928, CC] 2. The agent, even if he sho uld withdraw from the agency for a valid reason, must continue to act until the principal has had reasonable opportunity to take the necessary steps to meet the situation. [Art. 1929, CC] I. Expiration of the period for which it was constituted If created for fixed period, expiration of the period extinguishes agency even i f the purpose was not accomplished If no time is specified, Art. 1197 shall appl y. The courts may fix the period as under the circumstances have been probably co ntemplated by the parties. Period may be implied from terms of agreement, purpose of agency, and the circumstances of the parties 357 AGENCY II. Death, civil insolvency interdiction, insanity, IV. Accomplishment of the object of the agency Between principal and agent, the fulfilment of the purpose for which agency was created ipso facto terminates agency even if it be expressly made irrevocable. I f the purpose has not been accomplished, the agency continues indefinitely for a s long as the intent to continue is manifested through words or actions of the p arties Death extinguishes agency General Rule: Death extinguishes agency Exceptions: 1.

Agency coupled with an interest a. Interest common to principal and agent; or r d b. Interest of a 3 person who has accepted the stipulation in his favor. [Art. 1930, CC] 2. Anything done by the agent, without knowledge of the death of the principal or of any other cause which extinguishes the agency, is valid and full y effective with rd respect to 3 persons who may have V. Revocation Principal may revoke the agency at will as a general rule General Rule: The princ ipal may revoke the agency at will, and compel the agent to return the document evidencing the agency. Such

CIVIL LAW REVIEWER Chapter V. EXTINGUISHMENT of AGENCY revocation may be express or implied. [Art. 1920, CC] Exceptions: 1. The right o f the principal to terminate the authority of his agent is absolute and unrestri cted, except only that he may not do so in bad faith [Danon v Brimo, 1921] 2. Ag ency is coupled with an interest [Art. 1927, CC] a. A bilateral contract depends upon it b. It is the means of fulfilling an obligation already contracted; c. P artner is appointed manager of a partnership in the contract of partnership and his removal from the management is unjustifiable. Note: 1. Powers of attorney fa lling under 1927 cannot be revoked at the pleasure of the principal, but may be revoked for a just cause, such as when the attorney-in-fact betrays the interest of the principal. (Coleongco v Claparols, 1964) 2. A mere statement in the powe r of attorney that it is coupled with an interest is not enough. In what does su ch interest consist must be stated in the power of attorney. (Del Rosario v Abad , 1958) 3. Irrevocability of the contract cannot affect 3rd persons and is oblig atory only on the principal who executed the agency. (New Manila Lumber v Republ ic, 1960) Revocation may be express or implied 1. Expressprincipal clearly and di rectly makes a cancellation of the authority of the agent in writing or orally 2 . Implied a. The appointment of a new agent for the same business or transaction revokes the previous agency from the day on which notice thereof was given to th e former agent, without prejudice to the provisions Art. 1921 and Art. 1922, CC [Art. 1923, CC] b. The agency is revoked if the principal directly manages the b usiness entrusted to the agent, dealing directly with third persons. [Art. 1924, CC] c. A general power of attorney is revoked by a special one granted to anoth er agent, as regards the special matter involved in the latter [Art. 1926, CC] d. I n all three cases, there is implied revocation only where the new appointment is incompatible with the previous one. When revocation makes principal liable for damages 1. If there is a period stipulated in the agency contract, the agent may still revoke the agents authority at will; but principal will be liable for dama ges. 2. No period fixed: principal liable if the agent can prove the former acte d in bad faith. Effect of revocation with respect to 3 persons [Arts. 1921-1922, CC] Agency to contract with specific persons rd Wont prejudice 3 persons until notice is given them. Notice must be personal. rd Agency to contract with general public Wont prejudice those in good faith & w/o k nowledge. Notice must be published (Arts. 1873, 1922). 358 AGENCY Revocation in case of solidary principals [Art. 1925, CC] When two or more princi pals have granted a power of attorney for a common transaction, any one of them may revoke the same without the consent of others. Notice of Revocation as again st third persons 1. If agent had general powers: Revocation DOES NOT prejudice th ird persons who acted in good faith and without knowledge of the revocation Noti ce of revocation in a newspaper of general circulation is a sufficient warning t o third persons 2. If agency is for the purpose of contracting specified persons : to prejudice persons specified, they must be given actual notice. VI. Dissolution of the firm/corp. Which entrusted/accepted the agency - end of Agency -

CIVIL LAW REVIEWER TABLE of CONTENTS PARTNERSHIP Table of Contents Chapter I. Nature, Creation, Kinds of Partnership .............................. .....................361 I. Essential Features ............................361 I I. Characteristics ..................................362 III. Distinctions ..... ...................................362 IV. Rules to Determine Existence......... ..363 V. How Partnership is Formed ..............363 VI. Partnership Term ...... ........................363 VII. Kinds of Partnerships....................363 Ch apter II. Obligations of the Partnership/Partners Among Themselves 366 CRRAMP-LS ..............................................366 I. Make Contributions as Promi sed ......366 III. Manage the Partnership....................367 IV. Render Full Information.....................368 V. Account for benefits ................... .......368 VI. Reimburse expenses ........................368 VII. Liable for Pa rtnership Contracts ...368 VIII. Solidarily Liable with Partnership.369 Chapter III. Obligations of the Partnership/Partners as to Third Persons.370 LANN ...... ...................................................370 I. Operate Under a Firm N ame (Art. 1815, CC) 370 II. Bound by Partnership Admission......370 III. Bound b y Notice Partner ...................370 IV. Liable for Acts of the Partnership.. ....370 Chapter IV. Rights of Partners ...................371 I. Share in Losses and Profits ..............371 II. Associate Another in His Interest......371 II I. Access to Partnership Books ............371 IV. Obtain Formal Account ....... ..............371 V. Property Rights .................................371 VI. Co nvery Real Property (Art. 1819, CC) 372 Chapter V. Rights of the Partnership ... .....374 I. Acquire Immovables..........................374 II. Preference of Cr editors .....................374 Chapter VI. Dissolution and Winding Up ..375 I. Definitions .........................................375 II. Causes for Dissolu tion ......................375 III. Consequences of Dissolution ...........375 I V. Partners Liability...............................376 Chapter VII. Rights of Pa rtners Upon Dissolution....................................................377 I . Right to Wind Up ...............................377 II. Right to Damages for o r to Continue Business on Wrongful Dissolution .............377 III. Right to Li en or Retention, to Stand in Place of Creditor, to be Indemnified .......... 377 IV. Right of Retiring/Deceased Partner (Art. 1841, CC) ........................ .......................... 377 V. Right of Account (Art. 1842, CC) ...... 378 Ch apter VIII. Rules on Settlement (Art. 1839, CC)................................. ................................ 379 Chapter IX. Limited Partnership ........... ..... 380 I. Definition ........................................... 380 II. Form ing/Amending a Limited Partnership (Art. 1844, CC) ....................... 381 I II. Limited Partner.................................. 382 IV. General Partner .. .............................. 384 V. Dissolution .............................. .......... 384 VI. Settling Accounts for Dissolution ...... 385 360 PARTNERSHIP

CIVIL LAW REVIEWER Chapter I. NATURE, FORM, and KINDS of AGENCY Prof. Roberto N. Dio Faculty Editor AGENCY & PARTNERSHIP AGENCY & PARTNERSHIP TEAM Chapter I. Nature, Creation, Kinds of Partnership I. ESSENTIAL FEATURES II. CHARACTERISTICS III. DISTINCTIONS IV. RULES TO DETERMI NE EXISTENCE V. HOW PARTNERSHIP IS FORMED VI. PARTNERSHIP TERM VII. CLASSES OF P ARTNERS VIII.KINDS OF PARTNERSHIPS Genevieve E. Jusi Lead Writer Joyce Anne C. Roldan Writer CIVIL LAW Kristine Bongcaron Patricia Tobias Subject Editors ACADEMICS COMMITTEE Kristine Bongcaron Michelle Dy Patrich Leccio Editors-in-Chief PRINTING & DISTRIBUTION Kae Guerrero DESIGN & LAYOUT Pat Hernandez Viktor Fontanilla Rusell Aragones Romualdo Menzon Jr. Rania Joya Art. 1767. By the contract of partnership two or more persons bind themselves to contribute money, property, or industry to a common fund, with the intention of dividing the profits among themselves. Two or more persons may also form a part nership for the exercise of a profession. (1665a) I. Essential Features LECTURES COMMITTEE Michelle Arias Camille Maranan Angela Sandalo Heads Katz Manzano Mary Rose Beley Sam Nuez Krizel Malabanan Arianne Cerezo Marcr ese Banaag Volunteers MOCK BAR COMMITTEE Lilibeth Perez BAR CANDIDATES WELFARE Dahlia Salamat LOGISTICS Charisse Mendoza SECRETARIAT COMMITTEE Jill Hernandez Head Loraine Mendoza Faye Celso Mary Mendoza Joie Bajo Members

1. A mutual contribution of money, property, or industry to a common fund; 2. Wi th the intention of dividing profits among themselves Note: The object must be f or profit and not merely for common enjoyment; otherwise only a co-ownership has been formed. 3. The parties must have legal capacity. Exception: corporation ca nnot become a partner on grounds of public policy. 4. It has a separate juridica l personality (Art. 1768, CC) apart from the separate personality of each of the member. Note: Associations and societies, whose articles are kept secret among the members, and wherein any one of the members may contract in his own name wit h third persons, shall have no juridical personality, and shall be governed by t he provisions relating to co-ownership. (Art. 1775, CC) Although not a juridical entity, it may still be sued by third persons under the common name it uses. (S ec. 15, Rule 3, Rules of Court) 361 PARTNERSHIP

CIVIL LAW REVIEWER Chapter I. NATURE, FORM, and KINDS of AGENCY Partnership Based on delectus perso nam* May be established for any period of time stipulated May be dissolved at an ytime by the will of any or all partners Governed by the Civil Code Corporation Not based on delectus personam May not be formed for a period exceeding 50 years May be dissolved only with the consent of the state Governed by the Corporation Code 5. Has a lawful object (Art. 1770, CC) a. A partnership must have a lawful objec t or purpose, and must be established for the common benefit or interest of the partners. Note: When an unlawful partnership is dissolved by a judicial decree, the profits shall be confiscated in favor of the State, without prejudice to the provisions of the Penal Code governing the confiscation of the instruments and effects of a crime II. Characteristics 1. 2. 3. 4. Fiduciary Nominate designated by a specific name Consensual perfecte d by mere consent Bilateral/Multilateral entered into between two or more person s 5. Principal - existence does not depend on another contract 6. Onerous money, property or industry must be contributed 1. Preparatory other contracts essenti al in the carrying out of its purposes can be entered into *Delectus personam: the right of partners to exercise their choice and preferenc e as to the admission of any new members to the partnership, and as to the perso ns to be so admitted, if any. Partnership Always created by a contract Co-owners hip General, created by law, may exist even without a contract Has no juridical personality Creation Juridical Personality III. Distinctions Partnership Created by mere agreement of the parties; May be organized by only t wo persons Juridical personality commences from the moment of execution of the c ontract of partnership May exercise any power authorized by the partners as long as it is not contrary to law, etc. If no agreement as to mgt. - every partner i s an agent of the partnership A partner as such may sue a copartner who mismanag es Has no right of succession The partners are liable personally and subsidiaril y for partnership debts Corporation Created by operation of law Purpose Has a separate, distinct juridical personality Realization of profits No limitat ion upon the duration is set by law Requires at least 5 incorporators; Personality commences from SECs issuance of th e certificate of incorporation Can exercise such powers expressly granted by law or incident to its existence Transfer of Interests Power to do business is vested in the board of directors/ trustees Suit against the board/director who mismanages must be brought in the corp.s name Has right of succession The stockholders are liable to the extent of the shares subscribed b y them Power to act with Third Persons Dissolution

Need unanimous consent of partners to make assignee of interest a partner A part ner may bind the partnership Death or incapacity of a partner dissolves the part nership There is mutual agency Representation A co-owner cant represent the coownership Death or incapacity of a co-owner does not dissolve the co-ownership There is no mutual agency PARTNERSHIP Duration Common enjoyment of a thing or right An agreement to keep the thing undivided, n ot exceeding ten years, shall be valid. (Art. 494, CC) A co-owner can dispose of his share without the consent of the others 362

CIVIL LAW REVIEWER Chapter I. NATURE, FORM, and KINDS of AGENCY Profits Partnership Must be stipulated upon Co-ownership Must always depend upon proportionate shares and any stipulation to the contrary is void. in the Securities and Exchange Commission (SEC). (Art. 1772, CC) ii. FAILURE to comply with this requirement shall NOT affect the liability of the partnership a nd the members to third persons. VI. Partnership Term Commencement of the partnership 1. General Rule: A partnership begins from the mo ment of the execution of the contract 2. Exception: When otherwise agreed upon b y the parties (Art. 1784, CC) A Partnership may either be for 1. Fixed term or pa rticular undertaking 2. at will Extension of Life of Partnership 1. By express r enewal of the agreement 2. By implied renewalRequisites: a. A partnership is for a fixed term or particular undertaking b. It is continued after the termination of such term or particular undertaking without any express agreemen Note: Prima facie evidence of continuation a. Continuation of the business by the partners wi thout any settlement or liquidation of the partnership affairs (1785) b. Effect: The rights and duties of the partners remain the same as they were at such term ination, so far as is consistent with a partnership at will (1785) IV. Rules to Determine Existence Art. 1769. In determining whether a partnership exists, these rules shall apply: 1. General Rule: Persons who are not partners to each other are not partners as to third persons Exception: partnership by estoppel. 2. Co-ownership or co-poss ession and sharing of gross returns DO NOT establish a partnership 3. Prima faci e evidence of partnership: receipt of a share of the business profits Except if received in payment as: a. A debt by instalment or otherwise; b. As wages to an employee or rent to a landlord; c. An annuity to a widow or representative of a deceased partner; d. As Interest on a loan, though the amount of payment vary wi th the profits of the business; and e. As the consideration for the sale of good will of a business or other property by instalment or otherwise. 363 PARTNERSHIP VII. Kinds of Partnerships V. How Partnership is Formed 1. Form of Contract General Rule: The contract may constituted in any form (Art. 1771, CC) As to legality of existence 1. De jure has complied with all the nece ssary requisites for lawful establishment (Arts. 1772, 1773, CC) 2. De facto fai led to comply with the requisites As to its object 1. Universal (Art. 1777, CC) a. As to all present property (Art. 1778, CC) Partners contribute all their prope rties to a common fund with the intention of dividing them among themselves as w ell as all the profits they may acquire Includes all properties which belonged t o each partner at the time of the be Exceptions a. Where immovable property or real rights are contributed (Art. 1771 , CC) i. The contract must appear in a public instrument (1771) ii. It must have an inventory of such immovable property signed by the parties and attached to t he instrument (1773) b. Where the capital is at least P3,000, in money or proper ty i. The contract must appear in a public instrument which must be recorded

CIVIL LAW REVIEWER Chapter I. NATURE, FORM, and KINDS of AGENCY constitution of the partnership Partners may stipulate that all may enjoy all ot her profits made except those properties which may be acquired subsequently thro ugh inheritance, legacy or donation b. As to profits (Art. 1780, CC) Partners con tribute all that they may acquire by their industry or work during the existence of the partnership Does not include properties which each partner may possess a t the time of the celebration of the contract Articles of Universal Partnership I f the Articles of a universal partnership do not state its nature, it only const itutes a universal partnership of profits. (Art. 1781, CC) Persons prohibited to enter into a universal partnershipThose persons who are prohibited from giving d onation (Art. 133 and 739, CC): a. Between husband and wife b. Those guilty of a dultery or concubinage c. Those guilty of a criminal offense, if the partnership was entered into in consideration of the same d. A person and a public officer (or his wife, descendants, ascendants) by reason of his office 2. Particular (Ar t. 1783, CC) The object may be determinate things, their use or fruits, or specif ic undertaking or the exercise of a profession or vocation. 364 PARTNERSHIP

CIVIL LAW REVIEWER Chapter I. NATURE, FORM, and KINDS of AGENCY c. As to partners liability 1. General 2. Limited General All partners are general partners liable for partnership obligations pro rata with all their property after exhaustion of partnership assets Limited For med by two or more partners, with one or more general partners and one or more l imited partners On the faith of the misrepresentation, rd the 3 person gave credit to the actual /apparent partnership. d. The person representing or consenting to the represent ation is liable: as an actual member if a partnership liability results pro rata with other persons when no partnership liability results (Art. 1825, CC) 2. No real partnership is created by estoppel. It rd is only insofar as 3 persons are involved and for the purpose of protecting them that the principal of estoppel i s recognized. 3. As to liability resulting from the representation: a. when all the members consent, partnership obligation results b. if not all consent, only a joint obligation of the one representing and of those who consented results No te: Corporation by estoppel All persons are liable as general partners (Sec. 21, Corp. Code). A de facto partnership is created. Industrialist Partner v Capitalist Partner Industrialist Capitalist Partner Part ner Contribution Contributes his Contributes industry money or property Prohibit ion to Cannot engage Cannot engage in in any business engage in other for himsel f the same or business similar enterprise Profits Receives a just Shares in and equitable profits share according to agreement thereon; if none, pro rata to his contribution Losses Exempted as to 1. stipulation losses as as to losses betwee n partners but it 2. if none, is liable to 3rd the persons without agreement pre judice to as to profits reimbursement from the 3. if none, capitalist pro rata t o partners contribution Partnership by Estoppel 1. Requisites of Partner By Estop pel: a. The person represents himself as a partner of an existing partnership or o f two or more persons not actual partners, or consents to another representing h im as a partner of an existing partnership or of two or more persons not actual partners b. Third person relied on the misrepresentation, unaware of the decepti on. 365 PARTNERSHIP

CIVIL LAW REVIEWER Chapter II. OBLIGATIONS of the PARTNERSHIP Chapter II. Obligations of the Partnership/Partners Among Themselves I. MAKE THE CONTRIBUTIONS AS PROMISED II. PAY DAMAGES III. MANAGE THE PARTNERSHI P IV. RENDER FULL INFORMATION V. ACCOUNT BENEFITS VI. REIMBURSE EXPENSES VII. LI ABILITY FOR PARTNERSHIP CONTRACTS VIII. SOLIDARY LIABILITY WITH PARTNERSHIP iii. if they were contributed to be sold But in the absence of stipulation, the risk of things brought and appraised in the inventory, shall also be borne by th e partnership, and in such case the claim shall be limited to the value at which they were appraised. When promised contribution is goods (Art. 1787, CC) 1. Appr aisal must be made in a manner prescribed in the contract of partnership 2. In t he absence of stipulation a. Made by experts chosen by the partners b. Made by e xperts chosen by the partners When promised contribution is immovable property (A rt. 1771-1773, CC) 1. An inventory of the property is signed by the parties, and attached to the public instrument 2. The public instrument must be filed with t he SEC if the capital is more than P3,000.00. When promised contribution is a su m of money Sanctions: 1. Partner becomes the firms debtor for interest and damage s from the time of his failure to contribute or from time of conversion (Art. 17 88, CC) 2. When money or property has been received by a partner for a specific purpose and he later misappropriated it, such partner is guilty of estafa. (Liwa nag v CA, 2008) Bring to partnership capital credit received Equal contribution by general partners: capitalist partners shall contribute equal shares to the ca pital of the partnership (Art. 1790, CC). Obligation of capitalist partner to co ntribute additional capital 1. To contribute additional capital in case of immin ent loss, requisites: a. There is an imminent loss of the business b. There is a need to contribute additional capital to save the venture c. Capitalist partner refuses deliberately to contribute an additional share d. There is no agreement to the contrary 2. If refused to contribute: the partner must sell his interest in the partnership to the other partners (Art. 1791, CC) 3. Industrial partner is exempted from contributing. CRRAMP-LS 1. 2. 3. 4. 5. 6. 7. Make Contributions as promised Render full information Acco unt benefits Manage the partnership Pay damages Liability for partnership contra cts Solidary liability with partnership I. Make Contributions as Promised A partner is a debtor: for whatever he had promised to contribute thereto (Art. 1786, CC) When promised contribution is property: in general 1. Partner is a war rantor in case of eviction with regard to specific and determinate things he may have contributed (Art. 1786, CC) Note: If breached Partnership may recover indem nity from contributing partner. 2. Liable for fruits from the time they should h ave been delivered without need of any demand (Art. 1786, CC) 3. Other duties of contributing partners: a. to preserve the property with the diligence of a good father of a family (Art. 1163, CC) b. to indemnify the partnership for damages caused to it by delay in contribution of property (Art. 1170, CC) 4. Risk of los s of things contributed (Art. 1795, CC) a. Borne by the partner who owns them If they are not fungible, so that only their use and fruits may be for the common b enefit b. Borne by the partnership If the things contributed are: i. fungible; ii . cannot be kept without deteriorating; 366 PARTNERSHIP

CIVIL LAW REVIEWER Chapter II. OBLIGATIONS of the PARTNERSHIP Obligation of managing partner who is also a creditor of the same partnership de btor 1. Requisites: a. 2 separate credits, both demandable, b. one credit is owe d to the partnership, c. the other to the collecting partner whos a managing part ner. 2. Managing partner should: a. If issued receipt for own account only apply the sum to the 2 credits in proportion to their amounts b. Issued receipt for p artnerships account apply whole sum to partnerships credit (Art. 1792, CC) When th e partner who has received, in whole or in part, his share of a partnership cred it Partner shall give to the partnership what he received if: 1. a debtor made a partial payment of his debt to the partnership 2. a partner received his share o f the credit and the others havent 3. the debtor later becomes insolvent, (Art. 1 793, CC). 4. Cf. 1792: in 1793 theres only 1 debt where the partnership is the cr editor 2. Right to manage may either be: a. exercised by all the partners, or b. limite d to a certain number of partners called managing partners If a specific person has been appointed as manager (Art. 1800, CC) 1. If right is conferred in the art icles of partnership a. Manager may execute all acts of administration despite t he opposition of other partners unless he is in bad faith b. Power is irrevocabl e without just or lawful cause. Note: The vote of the controlling interest of th e partners is necessary for revocation. 2. If power is granted after constitutio n of partnership, it may be revoked at anytime If two or more partners are appoi nted as managers 1. Without specification of their duties or without a stipulatio n of how each one will act-- (Art. 1801, CC) a. Each one may separately execute all acts of administration b. If opposed, decision of majority prevails c. In ca se of a tie, the matter is to be decided by the controlling interest. 2. If ther e is a stipulation that managers must act jointly (Art. 1802, CC) a. The concurr ence of all managers is necessary for validity of the acts b. Their absence or d isability cannot be alleged as a defense unless there is imminent danger or grav e or irreparable injury to the partnership. If the manner of management has not been agreed upon (Art. 1803, CC) 1. All partners are considered agents and the ac t of anyone bind the partnership without prejudice to Art. 1801 2. To make impor tant alterations in the immovable property of the partnership, even if useful, n eed the consent of all the partners If refusal to give consent is manifestly pre judicial to the partnership, the courts intervention may be sought Every partner is considered an agent (Art. 1818, CC) General Rule: Every partner is considered an agent of the partnership for the purpose of its business and any act of the a gent for apparently II. Pay Damages Liability for damages due to partners fault The damages cannot be compensated wit h the profits and benefits he may have earned for the partnership by his industr y (Art. 1794, CC). Mitigation of liability The courts may equitably lessen his r esponsibility if through his extraordinary efforts in other activities unusual p rofits have been realized (Art. 1794, CC) Before a partner may sue another for a lleged fraudulent management and resultant damages, a liquidation must first be effect to determine the extent of the damage. Without liquidation of partnership affairs, partner cannot claim damages. (Soncuya v. De Luna) 367 PARTNERSHIP III. Manage the Partnership General Rules 1. Right of management is primarily governed by agreement of the p artners as provided in the articles of partnership (Art. 1800, CC)

CIVIL LAW REVIEWER Chapter II. OBLIGATIONS of the PARTNERSHIP carrying on the usual business of the partnership binds the partnership. Excepti on: If the partner has no authority to act; AND the third person dealing with hi m knew that the partner had no authority VI. Reimburse expenses The partnership is responsible to every partner for: 1. Amounts disbursed on beh alf of the partnership plus interest from the time the expense is made 2. Obliga tions contracted in good faith in the interest of the business 3. Risks in conse quence of management If the acts are not for carrying out the business of the partnership(Art. 1818, C C) General Rule: Acts of the partner not apparently for carrying out the busines s of the partnership do not bind the partnership. Exceptions: When authorized by other partners; OR other partners have abandoned the business Acts not usual in the business of partnership (Art. 1818, CC) [ADD-CRES] 1. Assign the partnership property in trust for creditors or on the assignees promise to pay the debts o f the partnership; 2. Dispose of the good-will of the business; 3. Do any other act which would make it impossible to carry on the ordinary business of a partne rship; 4. Confess a judgment; 5. Renounce a claim of the partnership. 6. Enter i nto a compromise concerning a partnership claim or liability; 7. Submit a partne rship claim or liability to arbitration; VII. Liable for Partnership Contracts Liability of partnership and partners for partnership contracts-- (Art. 1816, CC ) 1. All partners shall be liable pro rata with all their property but The privat e property of the partners cannot be seized for satisfaction of partnership debt s until all the partnership assets have been exhausted 2. For the contracts whic h may be entered into: a. in the name and for the account of the partnership b. under its signature and c. by a person authorized to act for the partnership. Th e exemption of an industrial partner from paying losses relates exclusively to t he settlement of the partnership affairs among the partners themselves, and not to the partners rd subsidiary liability to 3 persons (La Compania Maritima v Muno z, 1907). While the liability of the partners is joint in transactions entered i nto by the partnership, a rd 3 person who transacted with the partnership can ho ld partners solidarily liable for the whole rd obligation if the 3 persons case f alls under Arts. 1822-1823 (Muasque v. CA, 1985) However, any party may enter int o a separate obligation to perform a partnership contract. (Art. 1816, CC) Stipu lation against pro-rata liability void 1. General Rule: Stipulation against pro r ata liability is void 2. Exception:such stipulation is valid among the partners (Art. 1817, CC) Art. 1817 vs. 1799 it is permissible to stipulate among partners that a capitalist partner will be exempted from liability in excess of the origi nal capital contributed; but wont be exempted insofar as his capital is concerned (Paras). 368 PARTNERSHIP IV. Render Full Information Duty to give information: 1. On demand, to give true and full information of all things affecting the partnership to any partner or their legal representatives (Art. 1806, CC). 2. Voluntary disclosure of material facts within his knowledge relating to/affecting partnership affairs (Art. 1821, CC). V. Account for benefits Duty to account (Art. 1807, CC) Every partner must: 1. Account to the partnership for any benefit; AND 2. Hold as trustee for it any profits derived by him witho

ut the consent of the other partners from any transaction connected with the for mation, conduct or liquidation of the partnership

CIVIL LAW REVIEWER Chapter II. OBLIGATIONS of the PARTNERSHIP Liability of a newly-admitted partner 1. Obligations contracted before his admiss ion: liable only up to his share in the partnership property unless theres a cont rary stipulation (Art. 1826, CC). 2. Obligations contracted after admission: lia ble as an ordinary original partner Liability of outgoing partner 1. When he give s notice of his retirement or withdrawal, hes freed from liability on contracts e ntered into thereafter but still liable on existing incomplete contracts 2. He i s liable for goods sold and delivered after his retirement/withdrawal if the sal e was pursuant to a contract made before such retirement/withdrawal The liability of partners under the Workmens Compensation Act also solidary. If t heir responsibility was merely joint and one became insolvent, the amount awarde d would only be partially satisfied, which is contrary to the laws purpose (Liwan ag v. Workmens Compensation Commission, 1959) VIII. Solidarily Liable with Partnership The partnership and the partner are solidarily liable in the following cases 1. V icarious liability, requisites: a. the partner committed a wrongful act/omission ; b. he acted in the ordinary course of the partnership business or with the aut hority of the co-partners even if the act wasnt connected with the partnership bu siness; rd c. loss/injury is caused to a 3 person by the wrongful act/omission; rd d. 3 person is not a partner (Art. 1822, CC); 2. Misappropriation of one part ner (Art. 1824, CC) a. partner acts within the scope of his apparent authority b . when partner in the course of business, receives money or property and the sam e is misapplied by the partner while in the custody of the said partner. Excepti ons are without prejudice to the guilty partner being liable to the other partne rs, but as far as third partners are concerned, the partnership is answerable. L iability for money misappropriated covers 1. Interest 2. Damages Extent of liabil ity firm is liable to the same extent as the partner (Art. 1822, CC) and all part ners are solidarily liable with the firm (Art. 1824, CC) 369 PARTNERSHIP

CIVIL LAW REVIEWER Chapter III. OBLIGATIONS as to THIRD PERSONS Chapter III. Obligations of the Partnership/Partners as to Third Persons I. II. III. IV. OPERATE UNDER A FIRM NAME BOUND BY PARTNERSHIP ADMISSION BOUND B Y NOTICE TO PARTNER LIABLE FOR ACTS OF THE PARTNERSHIP III. Bound by Notice Partner Notice to the partner relating partnership affairs Knowledge acquired by a partn er who is acting in a particular matter (acting partner), acquired while he was still a partner or then present in his mind Knowledge of a partner who reasonabl y could and should have communicated it to the acting partner (Art. 1821, CC) Ex ception: In case of fraud on the partnership, committed by or with the consent o f the partner (Art. 1821)

LANN 1. 2. 3. 4. Liable for acts of the Partnership Bound by partnership Admission Op erate under a Firm name Bound by Notice to partner IV. Liable for Acts of the Partnership I. Operate Under a Firm Name (Art. 1815, CC) All partners, including the industrial partner, are liable pro rata with their o wn properties after partnership properties have been exhausted (Art. 1816, CC) 1. General Rule: liability is joint 2. However, liability is solidary in the follo wing: a. Wrongful acts and omissions causing loss to a non-partner. b. Conversio n or misappropriation of funds committed in the usual course of business or cons ented to by all partners Any stipulation against this liability is void as again st third persons but valid among the partners (Art. 1817, CC) An industrial part ner is liable to third persons but as between the partners, he is not liable for losses (Art. 1797, CC) Partners are individually liable after partnership asset s are exhausted The firm name may or may not include the name of one or more of the partners. Pe rsons, not being members of the partnership, who include their names in the firm name, are liable as partners (Art. 1825, CC) Use of deceased partners name in la w firm permissible as long as its indicated in the firms communications that the pa rtner is deceased (Rule 3.02, CPR) Limited partners surname shall not appear in t he firm name unless 1. It is also the surname of a general partner 2. Before the limited partner became such, the business had been carried on under a name in wh ich his surname appeared (Art. 1846, CC) 370 PARTNERSHIP II. Bound by Partnership Admission Requisites to be admissible against the partnership 1. it must be connected with partnership affairs 2. it is within the scope of the partners authority (Art. 182 0, CC) 3. it is made during the firms existence Exception: when a partner admissi ons for himself only purporting to act for the partnership makes without Contracts for which partners are liable pro rata with their individual property 1 . those entered into in the name and account of the partnership 2. entered into under its signature 3. entered into by a person authorized to act for the partne rship Exception: partner may enter into a separate obligation to perform a partn ership contract. Admission by a former partner not admissible in evidence against the partnership

. (Congco vs. Trillana, 1909)

CIVIL LAW REVIEWER Chapter IV. RIGHTS of PARTNERS Chapter IV. Rights of Partners I. II. III. IV. V. VI. SHARE IN LOSSES AND PROFITS ASSOCIATE ANOTHER IN HIS SHAR E ACCESS PARTNERSHIP BOOKS OBTAIN FORMAL ACCOUNT PROPERTY RIGHTS CONVEY REAL PRO PERTY Stipulation excluding one or more partners from any share in the profits or loss es is void. (Art. 1799, CC) II. Associate Every partner ate shall not her partners, 1804, CC) Another in His Interest may associate another person with him in his share, but the associ be admitted into the partnership without the consent of all the ot even if the partner having an associate should be a manager. (Art.

BASCOP 1. Access to partnership Books 2. Associate another in his share 3. Share in losses and profits 4. Convey real property 5. Obtain formal account 6. Prope rty rights III. Access to Partnership Books Partnership books: open to inspection of all the partners at a reasonable hour ( Art. 1805, CC). The books shall be kept at: 1. The place agreed upon 2. If witho ut agreement, at principal place of business (Art. 1805, CC) Reasonable hours on business days throughout the year, not merely during some arbitrary period of a few days chosen by the managing partners (Pardo v. Lumber Co., 1924) I. Share in Losses and Profits The distribution shall be in conformity with the agreement. (Art. 1797, CC) PROFITS According to agreement 1. Share of capitalist partner is in proportion t o his capital contribution 2. Share of purely industrial partner is not fixed as may be just and equitable under the circumstances LOSSES According to agreeme nt 1. If sharing of profits is stipulated - apply to sharing of losses 2.If no p rofit sharing stipulated losses shall be borne according to capital contribution With agreement Without agreement IV. Obtain Formal Account Any partner shall have the right to a formal account as to partnership affairs 1. If he is wrongfully excluded from the business/possession of the property by hi s co-partners 2. If the right exists by agreement 3. When the partner derives an y profit as provided in Art. 1807 4. Whenever other circumstances render it just and reasonable (Art. 1809, CC) The right of a partner to demand an accounting e xists as long as the partnership exists. The prescription period begins to run o nly upon the dissolution when the final accounting is done (Fue Leung v. IAC,198 9). 371 PARTNERSHIP 3.Purely industrial partner not liable for losses If the partners agreed to entrust to a third person the designation of the share in profits and losses (Art. 1798, CC) Designation may only be impugned if manife stly inequitable Even if manifestly inequitable, the designation cannot be impug

ned in the following instances: a. The aggrieved partner has already begun to ex ecute the decision b. If he has not impugned within three months from the time h e had knowledge of it V. Property Rights Property rights (Art. 1810, CC) 1. In the specific partnership property 2. In the partnership, and 3. To participate in the management

CIVIL LAW REVIEWER Chapter IV. RIGHTS of PARTNERS Partnership property capital vs. partnership Capital With a constant value Includes only the actual capital contributed and promised to the partnership Property Value varies, in accordance with market value Includes the contribution and all property later acquired on the partnerships account Partners are co-owners of specific partnership property: the incidents are 1. A p artner has an equal right with his copartners to possess specific property for p artnership purposes if excluded from this, can seek a formal accounting (Art. 18 09, CC) or judicial dissolution (Art. 1831, CC) 2. A partners right in specific p roperty cant be assigned except when all partners assign their rights in that pro perty 3. A partners right in specific property is not subject to attachment/execu tion except on a claim against the partnership 4. A partners right in specific pr operty is not subject to support payment (Art.1811, CC) Property used by the par tnership: a partner may 1. contribute only the use of property 2. allow partnersh ip to use his separate property 3. hold the title to partnership property in his own name without having it belong to him Property acquired by a partner with pa rtnership funds General Rule: partnership property Exceptions: 1. contrary intent ion appears 2. property was acquired after dissolution but before winding up Par tners interest in the partnership his share in the profits and surplus (Art. 1812, CC). This may be assigned, attached, subject to payment of support as there was already a liquidation of the partnership affairs. The assignee is only entitled to the profits assigned. Conveyance of partners entire interest It does not disso lve the partnership (Art. 1813, CC) Rights of the transferee or assignee To receive in accordance with his contract the profits accruing to the assigning partner To avail of the usual remedies pro vided by law in the event of fraud in the management To receive the assignors int erest in case of dissolution; may require an account from the date only of the l ast account agreed to by all the partners. What cannot do assignees Interfere in management; the Require any information or account Inspect any of partnership books. the Enforcement of a judgment vs. a debtorpartners interest (Art. 1814, CC) The judgme nt creditor may: 1. Apply for an order charging the partners interest with paymen

t of the unsatisfied amount of the final judgment with interest 2. Have a receiv er appointed 3. Have the court make an order as the circumstances render it nece ssary Redemption A partner or more may redeem the interest charged at any time be fore the foreclosure with: 1. their separate property 2. with partnership proper ty, with the consent of all partners whose interests are not charged/sold (Art. 1814, CC) 372 PARTNERSHIP VI. Convery Real Property (Art. 1819, CC) Title in partnership name: Any partner may convey under partnership name Conveya nce passes title but partnership can recover unless: 1. The partner who sold it was carrying on in the usual way the business of the partnership hence binding t he partnership; or 2. Buyer had no knowledge of the lack of authority of the sel ler Title in partnership name: Conveyance in partners name Conveyance does not pass title but only equitable interest. Provided that: The p artner who sold it was carrying on in the usual way the business of the partners hip hence binding the partnership

CIVIL LAW REVIEWER Title in the name of one or more but not all the partners and the record does not disclose the right of the partnership The partners in whom the title stands may convey Title in the name of one or more or all partners or in third person in trust for the partnership Conveyance in partners name or in partners name Title in the names of all the partners Conveyance by all partners C onveyance passes title but partnership can recover unless: 1. he partner who sol d it was carrying on in the usual way the business of the partnership hence bind ing the partnership; or 2. 3. Buyer had no knowledge of the lack of authority of the seller Conveyance does not pass title but only equitable interest. Provided that: The partner who sold it was carrying on in the usual way the business of the partnership hence binding the partnership Chapter IV. RIGHTS of PARTNERS Passes all their rights in such property 373 PARTNERSHIP

CIVIL LAW REVIEWER Chapter V. RIGHTS of the PARTNERSHIP Chapter V. Rights of the Partnership I. II. ACQUIRE IMMOVABLES PREFERENCE OF CREDITORS I. Acquire Immovables An immovable property or any interest therein may be acquired in the partnership name, and title so acquired can only be conveyed in the partnership name (Art. 1774, CC). Cf Art. 1819: see table

II. Preference of Creditors Preference: partnership creditors preferred to creditors of individual partners (Art. 1827, CC). Remedy of private creditors of partners: seek the attachment/pu blic sale of the shares 374 PARTNERSHIP

CIVIL LAW REVIEWER Chapter VI. DISSOLUTION and WINDING UP Chapter VI. Dissolution and Winding Up I. II. III. IV. DEFINITIONS CAUSES FOR DISSOLUTION CONSEQUENCES OF DISSOLUTION P ARTNERS LIABILITY enjoyment of which has been transferred to the partnership 3. death of a partner 4. insolvency of any partner or the partnership 5. civil interdiction of any pa rtner Judicial 1. Decree of court upon application (Art. 1831, CC) a. application by partner (grounds) insanity of any partner incapacity of any partner to perfo rm his part of the contract partner guilty of conduct prejudicial to the partner ship business wilfull breach of agreement by any partner business can only be ca rried out with loss b. application by purchaser of partnership interest may be a llowed in the following cases: termination of term or undertaking partnership is at will and interest of partnership is assigned I. Definitions Dissolution (Art. 1828, CC) Change in the partners relation caused by any partner ceasing to be associated in the carrying on of the business Winding Up (JBL Reye s) Process of liquidation of partnership affairs, between dissolution and termina tion Termination (JBL Reyes) When all the affairs of the partnership are liquidat ed and the partnership is definitely ended. It is the final settlement of accoun ts of the partnership Effect of dissolution Partnership continues until winding u p is completed (Art. 1829, CC). Effect of dissolution on the partners 1. they can not evade prior obligations 2. Generally, they are spared from new obligations t o which they didnt consent, unless these are essential for the winding up (Testat e Estate of Mota v. Serra, 1925) III. Consequences of Dissolution Except as necessary for winding up, dissolution terminates all authority of the partners to act for the partnership (Art. 1832, CC) Partnership is not bound by any act of a partner when 1. dissolution is not by the act, insolvency or death o f a partner 2. dissolution is by such act, insolvency or death and the partners acting have knowledge thereof 3. acts not connected with winding up Partnership is not bound with respect to third persons (Art. 1834, CC) 1. business becomes un lawful 2. partner dealing with third party becomes insolvent 3. partner has no a uthority to wind up Partner can bind the partnership even after dissolution (Art . 1834, CC) 1. acts appropriate to winding up 2. third person is in good faith an d without knowledge of dissolution: a. third person who extended credit to the p artnership b. third person who knew the existence of the partnership 375 PARTNERSHIP II. Causes for Dissolution Voluntary 1. without violation of the agreement between the partners (Art. 1830, CC) a. termination of the term or particular undertaking b. express will of any partner in good faith, when the partnership is at will c. express will of all pa rtners who have not assigned their interests or suffered them to be charged d. b ona fide expulsion of any partner in accordance with the agreement 2. in contrav ention of the agreement, by express will of one partner effects partner is liabl e for damages; other partners may continue the business Involuntary (Grounds) 1. business becomes unlawful 2. specific thing promised perishes before delivery to the partnership, the use and

CIVIL LAW REVIEWER Chapter VI. DISSOLUTION and WINDING UP IV. Partners Liability If partner transacts business with third persons notwithstanding death or insolv ency of a co-partner, liability shall be satisfied out of partnership assets alo ne if 1. Partner was unknown as partner to third person 2. Partner is unknown and inactive in partnership affairs A partner still has existing liabilities to the partnership at the time of the dissolution (Art. 1835, CC) 1. Dissolution does n ot discharge a partner 2. Discharged only by agreement among partner, creditor a nd the person or partnership continuing the business 3. In case of death: Indivi dual property is liable for obligation of the partnership incurred while he was a partner, subject to prior payments of individual debts. Liability of partner o r partnership continuing the business (Art. 1840,CC) 1. Contemplates seven situat ions: a. When any partner is admitted into an existing partnership b. When any p artner retires and assigns his rights in partnership property to two or more par tners or third persons c. When all but one partner retire and assign their right s to the remaining partner d. Any partner retires or dies without any assignment of his right in partnership property e. All the partners or their representativ es assign their rights in partnership property to one or more third persons who promise to pay the debts and who continue the business of the dissolved partners hip f. Any partner wrongfully causes a dissolution g. When a partner is expelled 2. When applicable: a partnership is dissolved due to change in membership but the remaining partners continue the business without liquidation. 3. Effect: unp aid old creditors of the dissolved partnership automatically become creditors of the new partnership. 4. New partners liability: satisfied out of partnership pro perty only, unless with a contrary stipulation 5. Not only the retiring partners but also the new partnership itself which cont inued the business of the dissolved one, are liable for the debts of the prior p artnership. A rd withdrawing partner remains liable to a 3 party creditor of the old partnership (Singsong vs. Isabela Sawmill, 1979). 376 PARTNERSHIP

CIVIL LAW REVIEWER Chapter VII. RIGHTS of PARTNERS upon DISSOLUTION Chapter VII. Dissolution I. II. Rights of Partners Upon RIGHT TO WIND UP RIGHT TO DAMAGES FOR/TO CONTINUE BUSINESS ON WRONGFUL DISSOLUTI ON III. RIGHT TO LIEN OR RETENTION, TO STAND IN PLACE OF CREDITOR, TO BE INDEMNI FIED IV. RIGHT OF RETIRING/DECEASED PARTNER V. RIGHT TO ACCOUNT I. Right to Wind Up Who has the right to wind up? 1. By agreement 2. If there is no agreement a. Part ners who have not wrongfully dissolved the partnership b. The legal representati ve of the last surviving partner, not insolvent Any partner, his legal represent ative or his assignee, upon cause shown, may obtain winding up by the court. A partner who has caused the dissolution wrongfully shall have the right to 1. If the business is not continued a. Each partner may have the partnership property applied to the payment of the firms debt b. Surplus is applied to payment in cash of the net amount owed to the respective partners subject to payment of damages 2. If the business is continued a. the right as against his co-partners and all claiming through them in respect of their interests in the partnership, b. to ha ve the value of his interest in the partnership, less any damage caused to his c o-partners by the dissolution, ascertained and paid to him in cash, or the payme nt secured by a bond approved by the court, c. to be released from all existing liabilities of the partnership; but in ascertaining the value of the partners i nterest the value of the good-will of the business shall not be considered. II. Right to Damages for or to Continue Business on Wrongful Dissolution General Rule 1. Each partner may have the partnership property applied to the pay ment of the firms debt 2. Surplus is applied to payment in cash of the net amount owed to the respective partners Each partner who has not caused dissolution wro ngfully shall have the right, as against each partner who has caused the dissolu tion wrongfully, to damages for breach of the agreement. The partners who have n ot caused the dissolution wrongfully, if they all desire to continue the busines s in the same name either by themselves or jointly with others, may do so, durin g the agreed term for the partnership and for that purpose may possess the partn ership property, provided a. they secure the payment by bond approved by the cou rt, or b. pay any partner who has caused the dissolution wrongfully, the value o f his interest in the partnership at the dissolution, less any damages recoverab le c. In like manner indemnify him against all present or future partnership lia bilities. III. Right to Lien or Retention, to Stand in Place of Creditor, to be Indemnifie d Where a partnership contract is rescinded on the ground of the fraud or misrepre sentation of one of the parties thereto, the party entitled to rescind is, witho ut prejudice to any other right, entitled: a. To a lien on, or right of retentio n of, the surplus of the partnership property after satisfying the partnership l iabilities to third persons for any sum of money paid by him for the purchase of an interest in the partnership and for any capital or advances contributed by h im; b. To stand, after all liabilities to third persons have been satisfied, in the place of the creditors of the partnership for any payments made by him in re spect of the partnership liabilities; and c. To be indemnified by the person gui

lty of the fraud or making the representation against all debts and liabilities of the partnership. 377 PARTNERSHIP

IV. Right of Retiring/Deceased Partner (Art. 1841, CC) Factual Situation 1. any partner retires or dies, and 2. the business is continue d without any settlement of accounts as between him or

CIVIL LAW REVIEWER Chapter VII. RIGHTS of PARTNERS upon DISSOLUTION his estate and the person or partnership continuing the business Rights 1. he or his legal representative as against such person or partnership may have the valu e of his interest at the date of dissolution ascertained 2. either: a. receive a s an ordinary creditor an amount equal to the value of his interest in the disso lved partnership with interest; or, b. at his option or at the option of his leg al representative, receive in lieu of interest, the profits attributable to the use of his right in the property of the dissolved partnership; The provision sha ll not apply if there is an agreement between the parties. V. Right of Account (Art. 1842, CC) The right to an account of his interest shall accrue to any partner, or his lega l representative as against 1. the winding up partners or the surviving partners or 2. the person or partnership continuing the business, When right accrues At th e date of dissolution, in the absence of any agreement to the contrary. 378 PARTNERSHIP

CIVIL LAW REVIEWER Chapter VIII. RULES on SETTLEMENT Chapter VIII. 1839, CC) Rules on Settlement (Art. The rules for distribution will not apply if there is a contrary agreement betwe en the partners. Rule of preference in the payment of partnership liabilities 1. those owed to creditors other than partners 2. those owed to partners other than capital and profits 3. those owed to partners in respect of capital 4. those ow ed to partners in respect of profits When assets are insufficient to satisfy lia bilities 1. If refuses to contribute a petition in court may be filed for its enf orcement. 2. If partner is dead contribution may be enforced against his private property through the administrator Doctrine of Marshalling of Assets If there ar e claims over both partnership assets and partners individual properties, both in custody of the court for distribution: 1. Partnership creditors are preferred w ith regard to partnership property 2. Individual creditors are preferred with re spect to individual properties of partners. 3. Anything left from either goes to the other. Order in case of insolvency of a partner or his estate (in case of d eath) 1. Separate creditors 2. Partnership creditors 3. Partners who gave contrib utions Liquidation needed The business profits cant be determined by taking into a ccount the result of 1 transaction instead of all the transactions had, thus the need for a general liquidation before a partner may claim a specific sum as his share of the profits (Sison v. McQuaid, 1953). No return of shares without diss olution and liquidation Because the firms outside creditors have preference over t he firms assets and the firms property cant be diminished to their prejudice (Magdu sa v. Albaran, 1962). 379 PARTNERSHIP

CIVIL LAW REVIEWER Chapter IX. LIMITED PARTNERSHIP Chapter IX. Limited Partnership I. DEFINITION II. FORMING/AMENDING A LIMITED PARTNERSHIP III. LIMITED PARTNER A. CONTRIBUTION B. LIABILITIES OF A LIMITED PARTNER 1. TO THE PARTNERSHIP 2. AS TR USTEE FOR THE PARTNERSHIP 3. LIABILITIES TO PARTNERSHIP CREDITORS AND OTHER PART NERS i. CONTRIBUTES SERVICES ii. SURNAME IN FIRM NAME iii. FALSE STATEMENT iv. C ONTROL OF BUSINESS v. PROHIBITED TRANSACTIONS vi. NON-COMPLIANCE WITH REQUISITES FOR FORMATION 4. LIABILITIES TO SEPARATE CREDITORS C. RIGHTS OF LIMITED PARTNER S 1. COMMON RIGHTS OF LIMITED AND GENERAL PARTNERS 2. LOAN MONEY AND TRANSACT BU SINESS 3. RETURN OF CONTRIBUTION 4. SHARE OF PROFITS 5. ASSIGN INTERESTS 6. EFFE CT OF DEATH OF A LIMITED PARTNER 7. PERSON ERRONEOUSLY BELIEVING HES A LIMITED PA RTNER IV. GENERAL PARTNER V. DISSOLUTION VI. SETTLING OF ACCOUNTS AFTER DISSOLUT ION Characteristics 1. Complied with the statutory requirement of form (Art. 1844 CC) 2. The business is controlled by one or more general partners who are personall y liable to creditors (Arts. 1848, 1850 CC) 3. One or more limited partners cont ribute to the capital and share in the profits but do not manage the business 4. The limited partners are not personally liable for obligations beyond their con tribution (Arts. 1845, 1848, 1856 CC) 5. Obligations or debts are paid out of pa rtnership assets and the general partners separate assets 6. Limited partners may get back their capital contributions subject to conditions prescribed by law (A rts. 1844, 1857 CC) Advantages of limited partnerships 1. For general partners: s ecure capital from others while retaining control and supervision of the busines s 2. For limited partners: share in the profits without the risk of personal lia bility General Partner Personally liable for partnership obligations If manner of mgt. not agreed upon, all general partners have an equal right in business mgt Cash, property or industry Proper party to proceedings by/against partnership Limited Partner Only to the extent of his capital contributions No participation in mana gement Extent of liability 380 PARTNERSHIP Right to participate in management Contribution I. Definition Limited Partnership 1. formed by two or more persons; 2. in accordance with the requirements of law; and 3. composed of one or more general partners and one or more limited partners (Art. 1843, CC). Limited partners are not bound by partner ships obligations (Art. 1843, CC). the Proper party to proceedings by or against the partnership Name in firm name Name may appear in firm name Cash or property only, not industry Not proper party to proceedings by/against p

artnership unless: 1. he is also a general partner 2. where the object of the pr oceedings is to enforce a limited partners right against or liability to the pa rtnership Name must appear in firm name

CIVIL LAW REVIEWER General Partner Prohibited Limited Partner No prohibition Dis soluti on and Winding Up Chapter IX. LIMITED PARTNERSHIP General Partnership Rules governing are Art. 182 8-1842 Limited Partnership Rules governing are Art. 1860-1863 Prohibition to engage in other business Effect of retirement death insanity or i nsolvency Assignability of interest in partnership Dissolves the partnership Not assignable Different effect; rights transferred to legal rep. Assignable II. Forming/Amending a Partnership (Art. 1844, CC) Limited Creation General Partnership May be constituted in any form, except where immovable prope rty or real rights are contributed, a public instrument shall be necessary Limited Partnership Partners must: (1) Sign and swear to a certificate which sha ll state the items enumerated in Art. 1844 and (2) File for record the certifica te in the Office of the Securities and Exchange Commission 1/more general partne rs and 1/more limited partners Name must include the word Limited (SEC Memo Circ. #14-00) Two or more persons desiring to form a partnership shall 1. Sign and swear to a c ertificate which shall state the following items enumerated in Art. 1844 2. File for record the certificate in the Office of Securities and Exchange Commission A limited partnership is formed if there has been substantial compliance in good faith with Art. 1844 When the cert. of partnership may be amended (CSAAG CFCTM) 1. Change in partnership name or in the amount/character of contribution of any limited partner 2. Substitution of a limited partner 3. Additional limited partn er is admitted 4. Admission of a general partner 5. General partner retires, die s, becomes insolvent or insane, or under civil interdiction and the business is continued: a. Under a right so to do stated in the certificate, or b. With the c onsent of all members 6. Change in the character of business 7. False/erroneous statement in the cert. 8. Change in the time as stated in the cert. for the diss olution of the partnership or return of a contribution 9. Time is fixed for diss olution or return of a contribution 10. The Members want to change a statement i n the cert. to make it more accurate (Art. 1864, CC) Requirements to amend 1. Mus t be in writing, under oath, and set forth clearly the change desired 2. Signed and sworn to by all the members, including the new members and assigning members 3. The cert., as amended, must be filed in the SEC (Art. 1865, CC) Compos ition Only general partners Every partnership shall operate under a firm name, which may or may not include the name of one or more of the partners. The surname of a limited partner shall not appear in the partnership name unless : (1) It is also the surname of a general partner, or (2) Prior to the time when the limited partner became such, the business has been carried on under a name in which his surname appeared.

PARTNERSHIP Firm name Must contain the word Company (SEC Memo Circ. #14-00) unless its a professional par tnership 381

CIVIL LAW REVIEWER Chapter IX. LIMITED PARTNERSHIP When the certificate shall be cancelled 1. When the partnership is dissolved 2. W hen all limited partners cease to be such (Art. 1864, CC) Requirements to cancel 1. Must be in writing 2. Signed by all the members 3. Filed with the SEC; if can cellation is courtordered, a certified copy of the order shall also be filed (Ar t.1865, CC) III. Limited Partner Who may be limited partners 1. A partnership no 2. A general partnership may be c hanged into a limited one, and a partner in the former general partnership may b e a limited partner in the limited partnership formed. Contribution May be cash o r property, but not services. Liabilities of a Limited Partner General rule: He i s not liable as a general partner. His liability is limited to the extent of his contribution to the partnership. Liabilities to the partnership (Art. 1858, CC) 1. Difference between his actual contribution and that stated in the certificate as having been made 2. Unpaid contributions which he agreed to make at specifie d future time and on the conditions stated in the certificate Liabilities as Tru stee for the Partnership 1. Specific property which he committed but did not con tribute, or which he contributed but was wrongfully returned to him 2. Money or property wrongfully paid or conveyed to him Liabilities of a limited partner can be waived or compromised only by the consent of all the members. However, this too shall not affect the right of the creditor who: a. Extended credit; or b. Wh ose claim arose after the filing and before a cancellation or amendment of the c ertificate. Even if a limited partner rightfully received back his contribution to capital, he remains liable to the partnership for any sum necessary to discha rge the liabilities of the partnership to creditors who: a. Extended credit or

b. Whose claims arose before such return. Liabilities to partnership creditors a nd other partners 1. Contributes services (Art. 1845, CC); Effect a. The limited partner: o Will be considered an industrial and general partner; or o If the cer tificate states that hes a limited partner, he will be a general partner and limi ted partner at the same time. b. He divests himself of the privilege of limited liability and will be exposed to all the liabilities of a general partner. 2. Su rname in firm name (Art.1846, CC) General rule: the surname of a limited partner shall not appear in the partnership name If used in firm name, he is liable as a general partner to creditors who did not know that he is not a general partner . 3. False statement (Art. 1847, CC) If a person suffers loss by reliance on the false statement in the certificate, he may hold liable any party to the certifi cate who knew the statement to be false: a. At the time he signed the certificat e, or b. Subsequently but within a sufficient time before the reliance to enable him to amend or cancel the certificate 4. Control of business (Art. 1848, CC) a . He becomes liable as a general partner without acquiring the rights of one. b. Control here contemplates active participation in the business and not just hav ing the option to exercise control. 5. Prohibited Transactions (Art. 1854, CC) a . Prohibited transactions of limited partners: Receiving or holding as collatera l security any partnership property Receiving any payment, conveyance, or releas e from liability rd if it will prejudice the rights of 3 persons b. If prohibite d acts are performed Presumption of fraud on the creditors. But the law does not absolutely prohibit the taking as collateral security of the property, as the p rohibitions are modified by the requirement of sufficient assets to discharge th e partnership obligations. 382 PARTNERSHIP

CIVIL LAW REVIEWER Chapter IX. LIMITED PARTNERSHIP 6. Non-compliance with requisites for formation (Art. 1844 par.2, CC) If there i s no substantial compliance: The partnership becomes a general rd partnership wi th respect to 3 persons The members are liable as general partners. Liabilities to separate creditors 1. Right of creditors of a limited partner to petition a co urt of competent jurisdiction to: a. Charge the interest of the indebted limited partner with the payment of the unsatisfied amount of the claim b. Appoint a re ceiver to preserve the interest c. Make all other orders as the circumstances wo uld require 2. The interest may be redeemed with the separate property of any ge neral partner but not with partnership property. (Art. 1862, CC) This is differe nt from the rule in general partnership where the interest can also be redeemed with partnership property. (Art. 1814, CC) Rights of Limited Partners 1. Common r ights of limited and general partners (Art. 1851, CC) a. Demand that partnership books be kept at the principal place of business b. Inspect and copy any of the books c. Demand true and full info of all things affecting the partnership d. D emand a formal account whenever circumstances render it just and reasonable e. R esort to the court for the dissolution and winding up of the business f. Receive a share of the profits or other compensation by way of income g. Demand the ret urn of his contribution provided assets are more than the liabilities 2. Loan mo ney and transact business (Art. 1854, CC) a. Limited partner allowed to loan mon ey, transact business because the relationship between the limited partner and p artnership is not based on trust and confidence. There is no conflict of interes ts. b. Unless he is also a general partner, he is entitled to a pro rata share o f the partnership assets together with the general creditors. 3. Return of contribution (Art.1857,CC) a. Conditions for return: All liabilitie s to non-partner creditors had been paid, or there are sufficient assets to sati sfy them, or All members consent, unless the limited partner desiring the return has lawfully demanded the return of his contribution, or The certificate had be en cancelled or amended as to reflect the withdrawal or reduction of contributio n. b. When return may be demanded: On the dissolution of the partnership On the arrival of the date specified in the certificate On the lapse of 6 months from n otice in writing to all other members if no time is specified c. General rule: r eturn of contribution is in cash, except: if there is a statement to that effect in the certificate or all partners consent d. Dissolution, upon petition of lim ited partner: When he rightfully but unsuccessfully demands the return of his co ntribution The other liabilities of the partnership have not been paid pr proper ty is insufficient for payment and the limited partner would otherwise be entitl ed to the return of his contribution e. In case of several limited partners: Mem bers may agree to give priority to one or more limited partners, and This must b e stated in the certificate of partnership. The preference covers o Return of co ntributions; o Compensation; and o Other matters where some benefit is granted ( Art. 1855, CC). f. In the absence of such statement, all the limited partners sh all stand upon equal footing. 4. Share of profits (Art. 1856, CC) When the asset s exceed liabilities (except those to limited and general partners), a limited p artner may recover his share in the profits or compensation by way of income sti pulated in the certificate. 5. Assign interests (Art. 1859, CC) a. A limited par tners interest is assignable. 383 PARTNERSHIP

CIVIL LAW REVIEWER Chapter IX. LIMITED PARTNERSHIP b. Substituted limited partner: a person admitted to all the rights of a limited partner who has died or assigned his interest in a partnership He has all the r ights and powers of a limited partner Subject to all restrictions and liabilitie s of his assignor except: o those he was ignorant of when he became a limited pa rtner and could not be ascertained in the certificate c. An assignee who does no t become a substituted limited partner has: No right to require any information or account of partnership transactions No right to inspect partnership books Onl y entitled to receive the assignors share of the profits or other compensation by way of income Only entitled to the return of the assignors contribution d. The a ssignee shall have the right to become a substituted limited partner if All the members consent, or The assignor is empowered in the articles of partnership, an d he gave the assignee the right to be a substituted limited partner. In either case, it is still required that the certificate be amended (Art. 1865, CC) and r egistered with the SEC. e. That the assignee has become a substituted limited pa rtner does not relieve the assignor from liabilities to the partnership under Ar t. 1858, as a trustee, or for false statement in the certificate. 6. Effect of d eath of a limited partner (Art. 1861, CC) a. Rights of executors or administrato rs: All the rights of a limited partner for the purpose of settling the estate I f the deceased had assigned his interest in the partnership, the executor or adm inistrator may constitute the assignee a substituted limited partner if the dece ased was empowered to do so b. The deceased limited partners estate is liable for all the deceaseds obligations and liabilities to the partnership as a limited pa rtner 7. Person erroneously believing he is a limited partner (Art. 1852, CC) a. A per son who has contributed capital erroneously believing that he has become a limit ed partner: Does not become a general partner, or Become bound by the obligation s of the partnership, if: o he exercises the rights of a limited partner o on as certaining his mistake he promptly renounces his interest in the profits of the business IV. General Partner A general partner shall have all the rights and powers and is subject to all the restrictions and liabilities of a partner in a partnership without limited part ners. General partners cannot, without the written consent or written ratificati on of all limited partners, do the ff. (ACAP-ACA) 1. Any act in contravention of the certificate 2. Confess judgment 3. Any act which would make it impossible to carry on the partnership business 4. Possess partnership property, or assign th eir rights in specific partnership property for other than a partnership purpose 5. Admit a person as a general partner 6. Continue the business with partnershi p property on the death, retirement, insanity, civil interdiction or insolvency of a general partner, unless the power is granted in the certificate 7. Admit a person as a limited partner, unless the right is granted in the certificate (Art . 1850, CC) 384 PARTNERSHIP V. Dissolution When a limited partnership may be dissolved 1. The misconduct of a general partne r 2. Fraud on the limited partner by the general partner 3. The retirement, deat h, insolvency, insanity, or civil interdiction of a general partner, except: if the business is continued by the remaining general partners a. Under a right sta ted in the certification b. When all members consented to the continuation (Art. 1860, CC) 4. When all the limited partners ceased to be such (Art. 1864, CC)

CIVIL LAW REVIEWER Chapter IX. LIMITED PARTNERSHIP 5. End of the term for which it was to exist (Art. 1844, CC) 6. By mutual consen t of the partners before the end of the firms original term 7. When the limited p artner demanded the return of his contribution but was unjustifiably denied (Art . 1857, CC) 8. The causes in Arts. 1830 and 1831. If dissolved by expiration of the fixed term, the notice of dissolution need not be given since the papers fil ed in the SEC are notice to the world. If dissolved by express will of the partn ers, the certificate should be cancelled, and dissolution is not effected until there has been compliance with this requirement. VI. Settling Accounts for Dissolution Order of priority in the payment of liabilities (Art. 1863, CC) 1. Those owed to creditors, in the order of priority provided by law (Arts. 2236-2251, CC), excep t those to limited partners on account of their contribution and to general part ners 2. Those to limited partners in respect to their share of the profits and o ther compensation by way of income in their contributions 3. Those to limited pa rtners in respect of their capital contributions 4. Those to general partners ot her than for capital and profits 5. Those to general partners in respect to prof its 6. Those to general partners in respect to capital General partners have the duty and power to wind up the partnerships affairs If there is no agreement, the limited partners shall share in the partnership assets and profits in proportion to the respective amounts of their claims (Art. 1863, CC) 385 PARTNERSHIP - end of Partnership -

CIVIL LAW REVIEWER TABLE of CONTENTS TORTS & DAMAGES Table of Contents Chapter I. Introduction, Definitions............388 A. Tort and Quasi-Delict ... .....................388 B. Damages ...........................................3 89 Chapter II. Concept of Quasi-Delict............390 A. Elements .............. .............................390 B. Distinguished............................... ......390 Chapter III. Negligence ................................392 A. Concept of Negligence......................392 B. Degrees of Negligence................ ......393 C. Proof of Negligence...........................393 D. Defenses ..... ......................................394 Chapter IV. Causation................. .................396 A. Proximate Cause...............................396 Chapte r V. Persons Liable...........................399 A. The Tortfeasor............. ......................399 B. Vicarious Liability ..............................3 99 C. Specific Liability.................................403 D. Joint and Solida ry Liability ................407 E. Civil Liability Arising From Crime.......... .407 F. Prescription .......................................408 Chapter VI. Tort ious Interference With Contract................................................. ........409 Chapter VII. Torts with Independent Civil Action ................... .........................................410 A. Violation of Civil and Political Rights.410 B. Defamation, Fraud, Physical Injuries 410 Chapter VIII. Human Rela tions Provisions 413 A. Abuse of Rights.................................413 B. A cts Contra Bonus Mores .................413 Other Torts ........................ .......................414 C. Dereliction of Duty.............................41 4 D. Illegal Acts .........................................414 E. Unfair Competi tion ............................414 F. Violation of Human Dignity.............. ..414 Chapter IX. Damages ...................................415 A. Definition a nd Concept......................415 B. Kinds of Damages......................... ....415 387 TORTS & DAMAGES

CIVIL LAW REVIEWER Chapter I. INTRODUCTION, DEFINITIONS Prof. Gwen Grecia-De Vera Faculty Editor TORTS & DAMAGES TORTS & DAMAGES TEAM Chapter I. Introduction, Definitions A. B. Tort and Quasi-Delict Damages Ana Patricia Ruiz Tobias Lead Writer Darwin Angeles Ron Michael Garcia Jena de Mesa Juan Antonio Oposa Wr iters A. Tort and Quasi-Delict 1. Tort Essentially, "tort" consists in the violation of a right given or the om ission of a duty imposed by law. Tort is a breach of a legal duty. (Naguiat vs. NLRC, 1997) A tort is civil wrong, other than breach of contract, for which a co urt of law will afford a remedy in the form of an action for damages. [Prosser, Handbook of the Law of Torts] CIVIL LAW Kristine Bongcaron Patricia Tobias Subject Editors

ACADEMICS COMMITTEE Kristine Bongcaron Michelle Dy Patrich Leccio Editors-in-Chief PRINTING & DISTRIBUTION Kae Guerrero Elements: A legal duty Breach Causation Damage 2. Quasi-Delict Art. 2176. Whoever by act or omission causes damage to another, there being faul t or negligence, is obliged to pay for the damage done. Such fault or negligence , if there is no pre-existing contractual relation between the parties, is calle d a quasi-delict and is governed by the provisions of the Civil Code Chapter on quasi-delicts. DESIGN & LAYOUT Pat Hernandez Viktor Fontanilla Rusell Aragones Romualdo Menzon Jr. Rania Joya LECTURES COMMITTEE Michelle Arias Camille Maranan Angela Sandalo Heads Katz Manzano Mary Rose Beley Sam Nuez Krizel Malabanan Arianne Cerezo Marcr ese Banaag Volunteers MOCK BAR COMMITTEE Lilibeth Perez BAR CANDIDATES WELFARE Dahlia Salamat Barredo vs. Garcia (1952): A quasi-delict or "culpa aquiliana" is a separate leg

al institution under the Civil Code, entirely independent from a delict or crime . A concurrence of scope in regard to negligent acts does not destroy the distin ction between the civil liability arising from a crime and the responsibility fo r cuasi- delitos or culpa extra-contractual. The same negligent act causing dama ges may produce civil liability arising from a crime under article 100 of the Re vised Penal Code, or create an action for cuasi-delito or culpa extra-contractua l. Elcano vs. Hill (1977): Article 2176, where it refers to "fault or negligence, covers not only acts "not punishable by law" but also acts criminal in characte r, whether intentional and voluntary or negligent. [There is also the other view which states otherwise. To make it balanced you should include the other view] 388 TORTS & DAMAGES LOGISTICS Charisse Mendoza SECRETARIAT COMMITTEE Jill Hernandez Head Loraine Mendoza Faye Celso Mary Mendoza Joie Bajo Members

CIVIL LAW REVIEWER Chapter I. INTRODUCTION, DEFINITIONS B. Damages 1. Damage, Damages, Injury Custodio v. CA (1996): (Damage vs. Injury) Injury is the illegal invasion of a legal right. Damage is the loss, hurt, or harm which r esults from the injury. Damages are the recompense or compensation awarded for t he damage suffered. People vs. Ballesteros (1998): Damages may be defined as the pecuniary compensation, recompense or satisfaction for an injury sustained or a s otherwise expressed, the pecuniary consequences which the law imposes for the breach of some duty or the violation of some right. 2. Damnum Absque Injuria Cus todio vs. CA (1996): To warrant damages there must be a right of action for a le gal wrong inflicted by the defendant and damage resulting to plaintiff. Mere fac t that plaintiff suffered loss does not give rise to a right to recover damages. Proper exercise of a lawful right cannot constitute a legal wrong. 389 TORTS & DAMAGES

CIVIL LAW REVIEWER Chapter II. CONCEPT of QUASI-DELICT Chapter II. Concept of Quasi-Delict A. B. Elements Distinguished 1. Quasi-Delict vs. Delict 2. Quasi-Delict vs. Brea ch of Contract create two kinds of civil liabilities against the accused and, where provided by law, his employer. Civil liability is not extinguished by acquittal where the a cquittal is based on reasonable doubt. However, the offended party cannot recove r damages under both types of liability. (Asked in the 1990 and 2003 bar exams) II. Quasi-Delict vs. Breach of Contract Cangco vs. Manila Railroad (1918): The f ield of non- contractual obligation is much broader than that of contractual obl igations. These two fields are concentric: the mere fact that a person is bound to another by contract does not relieve him from extra-contractual liability to such person. When such a contractual relation exists the obligor may break the c ontract under such conditions that the same act constitutes the source of an ext ra-contractual obligation, had no contract existed between the parties. Air Fran ce vs. Carrascoso (1966): The act that breaks the contract of carriage may also be a tort. Far East v. CA (1995): The doctrine that a quasi-delict can be the cau se for breaching a contract that might thereby permit the application of applica ble principles on tort even where there is a pre-existing contract between the p laintiff and the defendant can aptly govern only where the act or omission compl ained of would constitute an actionable tort independently of the contract. Wher e, without a pre-existing contract between two parties, an act or omission can n onetheless amount to an actionable tort by itself, the fact that the parties are contractually bound is no bar to the application of quasi-delict provisions. A. Elements Act or omission amounting to fault or negligence Damage or injury is caused to a nother Causal connection between damage done and act/omission. (Art. 2176) There is no pre-existing contractual relations 1 between the parties In order that liability under Article 2176 of the Civil Code will arise the foll owing requisites must exist: a. There must be damage or prejudice which must be proven by the party claiming it; b. There must be an unlawful act or omission am ounting to fault or negligence; and c. There must be a direct causal connection between the damage or prejudice and the act or omission. (Manresa; Taylor vs. Ma nila Electric Co.; Jarencio, Torts and Damages) B. Distinguished I. Quasi-Delict vs. Delict Delict public interest RPC punishes and corrects the act Punishes only when ther e is a penal law covering the act Subsidiary liability of employer ERs defense is that employees resources must first be exhausted 390 TORTS & DAMAGES Quasi-Delict private concern CC repairs the damage by indemnification includes a ll acts in which "any kind of fault or negligence intervenes." solidary liabilit y of employer ERs defense is that accused observed due diligence of a good father of a family (Barredo vs. Garcia) Padilla vs. CA (1997): The extinction of the civil action b y reason of acquittal in the criminal case refers exclusively to civil liability ex delicto founded on Article 100 of the Revised Penal Code. The same punishabl e act or omission can 1

However, the court has held that there can be a tort even where there is a pre-e xisting contract between the parties. (Far East vs. CA, infra)

CIVIL LAW REVIEWER Chapter II. CONCEPT of QUASI-DELICT Vinculum Juris CONTRACT Contract QUASI DELICT Negligent act/ omission (culpa, imprudence) Preponderance of eviden ce Exercise of diligence of good father of a family in the selection and supervi sion of employees No pre-existing contract [not necessarily] Victim. Prove the f f.: 1. damage 2.negligence 3. causal connection between negligence and damage do ne Proof Needed Defense available Preponderance of evidence Exercise of extraordinary diligence (in contract of ca rriage), Force Majeure There is pre-existing contract Contractual party. Prove t he ff: 1. existence of a contract 2. breach DELICT Act committed by means of dolo (deliberate, malicious, in bad faith) Proo f beyond reasonable doubt Pre-existing contract Burden of proof No pre-existing contract Prosecution. Accused is presumed innocent until the con trary is proved. (Asked in the 2003 bar exams) 391 TORTS & DAMAGES

CIVIL LAW REVIEWER Chapter III. NEGLIGENCE Chapter III. Negligence A. 1. 2. CONCEPT OF NEGLIGENCE DEFINITION; ELEMENTS STANDARD OF CONDUCT i. SPECI AL CASES a. CHILDREN b. EXPERTS/PROFESSIONALS c. INSANITY ii. EMERGENCY RULE DEG REES OF NEGLIGENCE PROOF OF NEGLIGENCE BURDEN OF PROOF PRESUMPTIONS RES IPSA LOQ UITUR DEFENSES PLAINTIFFS NEGLIGENCE CONTRIBUTORY NEGLIGENCE FORTUITOUS EVENT A SSUMPTION OF RISK DUE DILIGENCE PRESCRIPTION DOUBLE RECOVERY situation? If not, then he is negligent. Negligence in a given case is not deter mined by reference to the personal judgment of the actor in the situation before him, but is determined in the light of human experience the facts involved in t he particular case. i. Special cases a) Children Taylor vs. Manila Railroad (1910) Children must be expected to act u pon childlike instincts and impulses and others chargeable with a duty of care a nd caution toward them must take precautions accordingly. If they leave exposed to the observation of children anything which would be tempting to them, and whi ch they in their immature judgment might naturally suppose they were at liberty to play with, they should expect that liberty to be taken. (But the child in thi s case was still negligent because of his experience). Jarco v. CA (1999): The r ule, therefore, is that a child under nine years of age must be conclusively pre sumed incapable of contributory negligence as a matter of law. The presumption o f lack of discernment or incapacity for negligence in the case of a child over n ine but under fifteen years of age is a rebuttable one. Ylarde vs. Aquino (1988) : The degree of care required to be exercised must vary with the capacity of the person endangered to care for himself. A minor should not be held to the same d egree of care as an adult, but his conduct should be judged according to the ave rage conduct of persons of his age and experience: that degree of care ordinaril y exercised by children of the same age, capacity, discretion, knowledge and exp erience under the same or similar circumstances. b) Experts/Professionals Culion vs. Philippine(1930): When a person holds himself out as being competent to do things requiring professional skill, he will be held liable for negligence if he fails to exhibit the care and skill of one ordinarily skilled in the particular work which he attempts to do. B. C. 1. 2. 3. D. 1. 2. 3. 4. 5. 6. 7. A. Concept of Negligence 1. Definition; Elements Art. 1173. The fault or negligence of the obligor consists in the omission of th at diligence which is required by the nature of the obligation and corresponds w ith the circumstances of the persons, of the time and of the place. When neglige nce shows bad faith, the provisions of Articles 1171 and 2201, paragraph 2, shal l apply. If the law or contract does not state the diligence which is to be obse rved in the performance, that which is expected of a good father of a family sha ll be required. 392 TORTS & DAMAGES Elements: Legal duty Breach Causation Damage Layugan vs. IAC (1988): Negligence is the omission to do something which a reasonable man, guided by those consider ations which ordinarily regulate the conduct of human affairs, would do, or the doing of something which a prudent and reasonable man would not do. 2. Standard of Conduct Picart vs. Smith (1918): Test: Did the defendant in doing the alleged negligent act use that reasonable care and caution which an ordinarily prudent man would have used in the same

CIVIL LAW REVIEWER Chapter III. NEGLIGENCE Cruz vs. CA (1997): Whether or not a physician has committed an "inexcusable lac k of precaution" in the treatment of his patient is to be determined according t o the standard of care observed by other members of the profession in good stand ing under similar circumstances bearing in mind the advanced state of the profes sion at the time of treatment or the present state of medical science. c) Insani ty Art. 2180. Guardians are liable for damages caused by the minors or incapacitated persons who are under their authority and live in their company Art. 2182. If th e minor or insane person causing damage has no parents or guardian, the minor or insane person shall be answerable with his own property in an action against hi m where a guardian ad litem shall be appointed. Marinduque vs. Workmens (1956): "Notorious" negligence, is the same thing as "g ross" negligence: pursuing a course of conduct which would naturally and probabl y result in injury, or utter disregard of consequences. Benguet vs. CA (1999): A cting or omitting to act in a situation where there is duty to act, not inadvert ently but willfully and intentionally, with a conscious indifference to conseque nces in so far as other persons may be affected. C. Proof of Negligence 1. Burden of Proof (ROC) Rule 131, Sec. 3(c and d) (c) That a person intends the ordinary consequences of his voluntary act; (d) That a person takes ordinary care of his concerns: US vs. Baggay (1911): A lunatic or insane person who, in spite of his irresponsi bility on account of the deplorable condition of his deranged mind, is still rea sonably and justly liable with his property for the consequences of his acts. ii . Emergency Rule Valenzuela vs. CA (1996): An individual who suddenly finds hims elf in a situation of danger and is required to act without much time to conside r the best means that may be adopted to avoid the impending danger, is not guilt y of negligence if he fails to undertake what subsequently and upon reflection m ay appear to be a better solution, unless the emergency was brought by his own n egligence. 2. Presumptions Art. 2184. In motor vehicle mishaps, the owner is solidarily liable with his dri ver, if the former, who was in the vehicle, could have, by the use of due dilige nce, prevented the misfortune. It is disputable presumed that the driver was neg ligent, if he had been found guilty of reckless driving or violating traffic reg ulations at least twice within the next preceding two months. Art. 2185. Unless there is proof to the contrary, it is presumed that a person driving a motor veh icle has been negligent if at the time of the mishap, he was violating any traff ic regulation. Art. 2188. There is prima facie presumption of negligence if the death or injury results from his possession of dangerous weapons or substances, such as firearms and poison, except when the use or possession thereof is indisp ensable in his occupation or business. Art. 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of the preceding article (calamity, act of p ublic enemy in war, act of owner of the goods, character of the goods, order of competent public authority), if the goods are lost destroyed or deteriorated, co mmon carriers are presumed to have been at fault or to have acted negligently, u nless they prove that they observed extraordinary diligence as required under Ar t. 1733. 393 TORTS & DAMAGES

B. Degrees of Negligence Art. 2231. In quasi-delicts, exemplary damages may be granted if the defendant a cted with gross negligence. 3. Res Ipsa Loquitur Amedo vs Rio (1952): Gross negligence is a want of even a s light care or diligence; an entire want of care that raises the presumption that the person at fault is conscious of the probable consequence thereof, and is in different or worse, to the danger or injury to persons or property. Layugan vs. IAC 1988): Res ipsa loquitur (The thing speaks for itself): Where the thing whic h causes injury is shown to be under the management of the defendant, and the ac cident is such as in the ordinary course of things does

CIVIL LAW REVIEWER Chapter III. NEGLIGENCE not happen if those who have the management use proper care, it affords reasonab le evidence, in the absence of an explanation by the defendant, that the acciden t arose from want of care. Ramos vs. CA (1999): The injury itself, taken togethe r with the circumstances raises the presumption of negligence that the defendant must meet with an explanation. Elements: The accident is such that it would not have happened in the ordinary course of events without the negligence of someon e; The defendant exercises control and management. There is no contributory negl igence on the part of the plaintiff. DM Consunji vs. CA (2001): The res ipsa loq uitur doctrine is based in part upon the theory that the defendant in charge of the instrumentality which causes the injury either knows the cause of the accide nt or has the best opportunity of ascertaining it and that the plaintiff has no such knowledge, and therefore is compelled to allege negligence in general terms and to rely upon the proof of the happening of the accident in order to establi sh negligence. (NOTE: For the res ipsa loquitur doctrine to apply, it must appea r that the injured party had no knowledge as to the cause of the accident, or th at the party to be charged with negligence has superior knowledge or opportunity for explanation of the accident.) Bernardo vs. Legaspi (1914): Both of the parties contributed to the proximate ca use; hence, they cannot recover from one another. 2. Contributory Negligence Art. 2214. In quasi-delicts, the contributory negligence of the plaintiff shall reduce the damages that he may recover. Genobiagon vs. CA (1989): The alleged contributory negligence of the victim, if any, does not exonerate the accused in criminal cases committed through reckless imprudence, since one cannot allege the negligence of another to evade the effe cts of his own negligence. Rakes vs. Atlantic (1907): If so, the disobedience of the plaintiff in placing himself in danger contributed in some degree to the in jury as a proximate, although not as its primary cause. (Supreme Court in this c ase cited numerous foreign precedents, mostly leaning towards the doctrine that contributory negligence on the part of the plaintiff did not exonerate defendant from liability, but it led to the reduction of damages awarded to the plantiff. ) 3. Fortuitous Event Art. 1174. Except in cases expressly specified by the law, or when it is otherwi se declared by stipulation, or when the nature of the obligation requires the as sumption of risk, no person shall be seen responsible for those events which, co uld not foreseen, or which, though foreseen, were inevitable. 394 TORTS & DAMAGES D. Defenses 1. Plaintiffs Negligence Art. 2179. When the plaintiffs own negligence was the immediate and proximate cau se of his injury, he cannot recover damages. But if his negligence was only cont ributory, the immediate and proximate cause of the injury being the defendants la ck of due care, the plaintiff may recover damages, but the courts shall mitigate the damages to be awarded. Manila Electric vs. Remonquillo (1956): Even if Manila Electric is negligent, in order that it may be held liable, its negligence must be the proximate and dire ct cause of the accident. Juntilla vs. Fontanar (1985): The elements of caso fortuito are: 1. the cause of the unforeseen and unexpected occurrence, or of the failure of the debtor to co mply with his obligation, must be independent of the human will; 2. It must be i

mpossible to foresee the event or if it can be foreseen, it must be impossible t o avoid; 3. The occurrence must be such as to render it impossible for the debto r to fulfill his obligation in a normal manner; 4. The obligor must be free from any participation in the aggravation of the injury resulting to the creditor. H ernandez vs. COA (1984): The robbery that happened to him cannot be said to be t he result of his imprudence and negligence. This was undoubtedly a fortuitous ev ent covered by the said provisions, something that could not have

CIVIL LAW REVIEWER Chapter III. NEGLIGENCE been reasonably foreseen although it could have happened. 4. Assumption of Risk Afialda vs. Hisole (1958): It is the caretakers business to try to prevent the animal from causing injury or damage to anyone, including himself. It was a risk he voluntarily assumed. Exception: Ilocos Norte vs. CA (1989): A person is excu sed from the force of the rule (volenti non fit injuria), that when he voluntari ly assents to a known danger he must abide by the consequences, if an emergency is found to exist or if the life or property of another is in peril or when he s eeks to rescue his endangered property. 5. Due Diligence MMTC vs. CA (1998): Due diligence in the supervision of employees, on the other hand, includes the form ulation of suitable rules and regulations for the guidance of employees and the issuance of proper instructions intended for the protection of the public and pe rsons with whom the employer has relations through his or its employees and the imposition of necessary disciplinary measures upon employees in case of breach o r as may be warranted to ensure the performance of acts indispensable to the bus iness of and beneficial to their employer. 6. Prescription 4 years for QD 1 year for defamation 395 TORTS & DAMAGES Kramer vs. CA (1989): It is clear that the prescriptive period must be counted f rom the time of the commission of an act or omission violative of the right of t he plaintiff, which is the time when the cause of action arises. Allied Banking vs. CA (1989): Relations Back Doctrine (footnote 17 of Allied Banking case): Tha t principle of law by which an act done at one time is considered by a fiction o f law to have been done at some antecedent period. 7. Double Recovery Art. 2177. Responsibility for fault or negligence under the preceding article is entirely separate and distinct from the civil liability arising from negligence under the Penal Code. But the plaintiff cannot recover damages twice for the sa me act or omission of the defendant.

CIVIL LAW REVIEWER Chapter IV. CAUSATION Chapter IV. Causation A. PROXIMATE CAUSE 1. DEFINITION 2. DISTINGUISHED FROM OTHER KINDS i. REMOTE ii. CONCURRENT 3. TESTS TO DETERMINE THE PROXIMATE CAUSE 4. EFFICIENT INTERVENING C AUSE 5. LAST CLEAR CHANCE 2. Distinguished from Other Kinds i. Remote A. Proximate Cause 1. Definition Bataclan vs. Medina (1960): that acting first and producing the in jury, either immediately or by setting other events in motion, all constituting a natural and continuous chain of events, each having a close causal connection with its immediate predecessor, the final event in the chain immediately effecti ng the injury as a natural and probable result of the cause which first acted, u nder such circumstances that the person responsible for the first event should, as an ordinarily prudent and negligent person, have reasonable ground to expect at the moment of his act or default that an injury to some person might probably result therefrom. Lambert v. Heirs of Ray Castillon (2005): Proximate cause is d efined as that which, in the natural and continuous sequence unbroken by any eff icient, intervening cause, produces the injury, and without which the result wou ld not have occurred. Pilipinas Bank vs. CA (1994): ...and from which it ought t o have been foreseen or reasonably anticipated by a person of ordinary care that the injury complained of or some similar injury, would result therefrom as a na tural and probable consequence. (NOTE: Same definition as in the Bataclan case, except that the SC added the element of FORESEEABILITY.) Quezon City vs. Dacara (2005): Proximate cause is determined from the facts of each case, upon a combin ed consideration of logic, common sense, policy or precedent. Manila Electric Co. v. Remonquillo (1956): A prior and remote cause cannot be ma de the basis of an action if such remote cause did nothing more than furnish the condition or give rise to the occasion by which the injury was made possible, i f there intervened between such prior or remote cause and the injury, a distinct , successive, unrelated and efficient cause of the injury, even though such inju ry would not have happened but for such condition or occasion. If no danger exis ted in the condition except because of the independent cause, such condition was not the proximate cause. And if an independent negligent act or defective condi tion sets into operation the circumstances which result in injury because of the prior defective condition, such act or condition is the proximate cause. ii. Co ncurrent Far Eastern vs. CA (1998): Where the concurrent or successive acts of 2 or more persons, although done independently, constitute in combination the pro ximate cause of the injury to the rd 3 person, either shall be responsible for t he whole injury. 3. Tests to determine the proximate cause Cause in fact: The fi rst step is to determine whether the defendants conduct, in point of fact, was a factor in causing plaintiffs damage. Effectiveness of the cause; but for rule: whet her such negligent conduct is a cause without which the injury would not have ta ken place (sine qua non rule) or is the efficient cause which set in motion the chain of circumstances leading to the injury. (Bataclan v. Medina) 1. Substantia l factor test under Restatement: If the actors conduct is a substantial factor in bringing about harm to another, the fact that the actor neither foresees nor sh ould have foreseen the harm or the manner in which it occurred, does not prevent him from being liable. (Philippine Rabit v. IAC) 2. Foreseeability test: Antici pation of consequence is a necessary element in determining not only whether a 396 TORTS & DAMAGES

CIVIL LAW REVIEWER Chapter IV. CAUSATION particular act or omission was negligent, but also whether the injury complained of was proximately caused by such act or omission. 3. Natural and probable cons equence test: A natural consequence of an act is the consequence which ordinaril y follows it. A probable consequence is one that is more likely to follow than f ail to follow its supposed cause but it need not be one which necessarily follow such cause. 4. Ordinary and natural or direct consequence test: if negligence i s a cause in fact of the injury , the liability of the wrongdoer extends to all the injurious consequences. 5. Hindsight test: A party guilty of negligence or o mission of duty is responsible for all the consequences which a prudent and expe rienced party, fully acquainted with all the circumstances which in fact exist, whether they could have been ascertained by reasonable diligence, or not, would have thought at the time of the negligent act as reasonably possible to follow, if they had been suggested to his mind. 6. Orbit of the risk test: If the forese eable risk to plaintiff created a duty which the defendant breached, liability i s imposed for any resulting injury within the orbit or scope of such injury. It is not the unusual nature of the act resulting in injury to plaintiff that is th e test of foreseeability, but whether the result of the act is within the ambit of the hazards covered by the duty imposed upon the defendant. 4. Efficient Inte rvening Cause Teague vs. Fernandez (1973): The test is not in the number of inte rvening causes, but in their character and in the natural and probable connectio n between the wrong done and the injurious consequence. 5. Last Clear Chance Als o known as: "doctrine of discovered peril or doctrine of supervening negligence. Elements: 1) Plaintiffs own negligence put himself in a dangerous situation 2) De fendant saw/discovered, by exercising reasonable care, perilous position of plai ntiff 3) In due time to avoid injuring him 4) Despite notice and imminent peril, defendant failed to employ care to avoid injury 5) Injury of plaintiff resulted . Doctrine covers successive acts negligence: Primary negligence of the defendan t contributory negligence of the plaintiff subsequent negligence of the defendan t failing to avoid the injury to the plaintiff of in The doctrine cannot be extended into the field of joint tortfeasors as a test of whether only one of them should be held liable to the injured person by reason of his discovery of the latters peril, and it cannot be invoked as between defend ants concurrently negligent. As against third persons, a negligent actor cannot defend by pleading that another had negligently failed to take action which coul d have avoided the injury. Picart vs. Smith (1918): If both parties are found to be negligent; but, their negligence are not contemporaneous, the person who has the last fair chance to avoid the impending harm and fails to do so is chargeab le with the consequences, without reference to the prior negligence of the other party. Bustamante vs. CA (1991): The doctrine of last clear chance, as enunciat ed in Anuran v. Buno, applies in a suit between the owners and drivers of collid ing vehicles. It does not arise where a passenger demands responsibility from th e carrier to enforce its contractual obligations. It will be inequitable to exem pt the negligent driver of the jeepney and its owners on the ground that the oth er driver was likewise guilty of negligence Phoenix vs. IAC (1987): Doctrine of last clear chance does not seem to have a role to play in a jurisdiction where t he common law concept of contributory negligence as an absolute bar to recovery by the plaintiff, has itself been rejected, as it has been in 2179 of CC (NOTE: Interpretation of 2179: It is not just the relative location in the continuum of time of the negligence of both parties but also the weighing 397 TORTS & DAMAGES

CIVIL LAW REVIEWER Chapter IV. CAUSATION and assessing of other factors such as the nature of the negligent act/omission and the character and gravity of the risks created by such for the rest of the c ommunity. a) If plaintiff IS the proximate cause: NO RECOVERY can be made. b) If plaintiff is NOT the proximate cause: Recovery can be made but such will be mit igated. c) If negligence of parties are equal in degree, then each bears his own loss.) Pantranco vs. Baesa (1989): Last clear chance applies only if the person who allegedly had the last opportunity to avert the accident was aware of the e xistence of peril or should, with exercise of due care, have been aware of it. O ng vs. Metropolitan (1958): Last clear chance does not apply where the party cha rged is required to act instantaneously, and if the injury cannot be avoided by the application of all means at hand after the peril is or should have been disc overed. Emergency rule: McKee v. IAC (1992): One who suddenly finds himself in a place of danger, and is required to act without time to consider the best means that may be adopted to avoid the impending danger, is not guilty of negligence, if he fails to adopt what subsequently and upon reflection may appear to have b een a better method, unless the emergency in which he finds himself is brought a bout by his own negligence. Consolidated Bank vs. CA (2003): This is a case of c ulpa contractual where neither contributory negligence nor last clear chance wil l exonerate defendant from liability. (NOTE: This means that Last Clear Chance i s not a defense in culpa contractual.) 398 TORTS & DAMAGES

CIVIL LAW REVIEWER Chapter V. PERSONS LIABLE Chapter V. Persons Liable A. B. THE TORTFEASOR VICARIOUS LIABILITY 1. PARENTS 2. GUARDIANS 3. TEACHERS AND HEADS OF INSTITUTIONS 4. OWNERS AND MANAGERS OF ESTABLISHMENTS 5. EMPLOYERS 6. STATE SPECIFIC LIABILITY 1. Possessor of Animals 2. Things Thrown or Falling fro m a Building 3. Death/Injuries in the Course of Employment 4. Product Liability 5. Inference with Contractual Relations 6. Liability of Local Government Units J OINT AND SOLIDARY LIABILITY CIVIL LIABILITY ARISING FROM CRIME PRESCRIPTION

Were the liability subsidiary and not primary and solidary, the defense of due d iligence would not be available Basis of Liability Arises by virtue of a presumption juris tantum of negligence on the part of the persons made responsible under the article, derived from thei r failure to exercise due care and vigilance over the acts of the subordinates t o prevent them from causing damage. The non-performance of certain duties of pre caution and prudence imposed upon the persons who become responsible by civil bo nd uniting the actor to them. Underlying Basis of Vicarious Liability of parents : Tamargo v. CA (1992): The basis of this vicarious, although primary, liability is, as in Article 2176, fault or negligence, which is presumed from that which accompanied the causative act or omission. The presumption is merely prima facie and may therefore be rebutted 2 Requisites According to Chironi: 1. The duty of supervision 2. The possibility of making supervision effective C. D. E. F. A. The Tortfeasor Worcester vs. Ocampo (1958): (Refers to) All the persons who command, instigate, promote, encourage, advise, countenance, cooperate in, aid or abet the commissi on of a tort, or who approve of it after it is done, if done for their benefit. Each joint tortfeasor is not only individually liable for the tort in which he p articipates, but is also jointly liable with his tortfeasors. such B. Vicarious Liability Art. 2180, par 1. The obligation imposed by Article 2176 is demandable not only for ones own acts or omissions, but also for those of persons for whom one is res ponsible. Art. 2180, par 8. The responsibility treated of in this article shall cease when the persons herein mentioned prove that they observed all the diligen ce of a good father of a family to prevent damage. Art. 2181. Whoever pays for t he damage caused by his dependents or employees may recover from the latter what he has paid or delivered in satisfaction of the claim. Bonus paterfamilias. The relationship of pater familias (good father of the famil y) is the basis of civil law liability, particularly for an employer. It is a def ense for all instances of vicarious liability based on Art. 2180. (Most frequent ly asked topic in Torts, 1975-2003) Liability of Author Article does not exempt the author who are the only ones liable if there are no persons who will be held liable if there are no person having authority over him or if due diligence of the persons having authority over him. He may be sued alone or with the person r esponsible for him. Strict Interpretation The liability under this article canno t be extended to those persons not enumerated because this is an extraordinary r

esponsibility created by way of exception to the rule that no NOTE: Common defense: exercise of the diligence of a good father of a family. ception: common carriersextraordinary diligence. TORTS & DAMAGES Respondeat superior It means nothing more than look to the man higher up, (usually the employer or person under whose control the tortfeasor was under) which is a manifestation of vicarious liability. 399 Ex

CIVIL LAW REVIEWER Chapter V. PERSONS LIABLE person can be liable for the acts or omissions of another. parents had exercised all the diligence of a good father of a family to prevent the damage 1. Parents Based on the presumption of failure on their part to properly exercise their par ental authority for the good education of their children and exert adequate vigi lance over them. Imposed only when children are living with the parents If there is just cause for separation, the responsibility ceases. The responsibility of the father and mother is not simultaneous but alternate. When Responsibility Cea ses When parent is not in the position to exercise authority and supervision ove r the child Illegitimate Children Responsibility is with the mother whom the law vests parental authority Exconde vs. Capuno (1957): The civil liability which t he law imposes upon the father and, in case of his death or incapacity, the moth er, for any damages that may be caused by the minor children who live with them, is obvious. This is a necessary consequence of the parental authority they exer cise over them which imposes upon the parents the duty of supporting them, keep ing them in their company, educating them in proportion to their means, while, on the other hand, gives them the right to correct and punish them in moderatio n. Tamargo vs. CA (1992): The basis of parental authority for the torts of a mi nor child is the relationship existing between the parents and the minor child l iving with them and over whom, the law presumes, the parents exercise supervisio n and control. To hold that parental authority had been retroactively lodged in the adoptive parents so as to burden them with the liability for a tortious act that they could not have foreseen and prevented would be unfair. Parental liabil ity is, in other words, anchored upon parental authority coupled with presumed p arental dereliction in the discharge of the duties accompanying such authority. The parental dereliction is, of course, only presumed and the presumption can be overturned under Article 2180 of the Civil Code by proof that the (NOTE: Art 2180, par 2 of the Civil Code which holds the father liable for damag es has been modified by the Family Code and PD 603. Art. 211 of the FC declares joint parental authority of the mother and father over common children. The pare nt(s) exercising parental authority are liable for the torts of their children. Despite the lowering of the age of majority from 21 to 18, parents are still lia ble for the torts committed by their children below 21 years of age. Art 236, pa r 3 FC, as amended by RA 6809) Art. 2180, par 2. The father and, in case of his death or incapacity, the mother , are responsible for the damages caused by the minor children who live in their company. Art 58 (PD 603). Torts Parents and guardians are responsible for the d amage caused by the child under their parental authority in accordance with the civil code. Art 221 (FC). Parents and other persons exercising parental authorit y shall be civilly liable for the injuries and damages caused by the acts or omi ssions of their unemancipated children living in their company and under their p arental authority subject to the appropriate defenses provided by law. Art. 101 (RPC). Rules regarding civil liability in certain cases. The exemption from crim inal liability established in subdivisions 1, 2, 3, 5 and 6 of Article 12 and in subdivision 4 of Article 11 of this Code does not include exemption from civil liability, which shall be enforced subject to the following rules: First. In cas es of subdivisions 1, 2, and 3 of Article 12, the civil liability for acts commi tted by an imbecile or insane person, and by a person under nine years of age, o r by one over nine but under fifteen years of age, who has acted without discern ment, shall devolve upon those having such person under their legal authority or control, unless it appears that there was no fault or negligence on their part. Should there be no person having such insane, imbecile or minor under his autho

rity, legal guardianship or control, or if such person be insolvent, said insane , imbecile, or minor shall respond with their own property, excepting property e xempt from execution, in accordance with the civil law. 400 TORTS & DAMAGES Libi vs. IAC (1992): The parents liability under 2180 should be primary and not subsidiary. If it were subsidiary, the parents cannot invoke due diligence as a defense. Such interpretation reconciles 2180 with 2194 which calls for solidary liability of joint tortfeasors.

CIVIL LAW REVIEWER Chapter V. PERSONS LIABLE Guardians Art. 2180, par 3. Guardians are liable for damages caused by the minors or incap acitated persons who are under their authority and live in their company. Art. 2 16. In default of parents or a judicially appointed guardian, the following pers on shall exercise substitute parental authority over the child in the order indi cated: The surviving grandparent, as provided in Art. 214; The oldest brother or sister, over twenty-one years of age, unless unfit or disqualified; and The chi lds actual custodian, over twenty-one years of age, unless unfit or disqualifie d. Whenever the appointment or a judicial guardian over the property of the chil d becomes necessary, the same order of preference shall be observed. Art. 217. I n case of foundlings, abandoned neglected or abused children and other children similarly situated, parental authority shall be entrusted in summary judicial pr oceedings to heads of childrens homes, orphanages and similar institutions duly accredited by the proper government agency. REQUISITES FOR LIABILITY TO ATTACH: Parents - (mnemonic: 21 + Authority & Compan y): 1. The child is below 21 years old 2. The child is under the parental author ity of the parents 3. The child is living in the company of the parents Guardian s - (mnemonic: Authority & Company) 1. The ward if minor is below 21 years old. If incapacitated, the guardian is liable for the acts of the ward regardless of the latters age. 2. The child is under the parental authority of the parents. 3. The tortfeasor is under his authority. 4. The tortfeasor is living in his compan y. Is a minor or insane tortfeasor with NO parent or guardian liable? Yes. He sh all be answerable with his own property in an action against him where a guardia n ad litem shall be appointed. (Art. 2182) 2. Teachers and Heads of Institutions Who are liable Teacher- in- charge (the one designated to exercise supervision o ver students) Head of establishment of arts and trades School (generally not hel d liable) For whose Acts Pupils and students Requisite for Liability to Attach p upils and students remain in teachers custody regardless of the age custody regar dless of the age must be below 18 Apprentices If the tortfeasor is a student of the school (Art 218 FC) If the tor tfeasor is a teacher/ employee of the school, it is liable as employer under 218 0 (5) of CC (St. Francis vs. CA) If the tortfeasor is a stranger, it is liable f or breach of contract. (PSBA vs. CA) 401 TORTS & DAMAGES

Palisoc vs, Brillantes (1971): Custody means the protective and supervisory custod y that the school and its heads and teachers exercise over the pupils and studen ts for as long as they are at attendance in the school and includes recess time. There is nothing in the law that requires that for such liability to attach, th e pupil or student who commits the tortious act must live and board in the schoo l, as erroneously held by the lower court, and in the dicta in Mercado (as well as in Exconde) on which it relied, must now be deemed to have been set aside by this decision Amadora vs. CA (1988): Art . 2180 should apply to ALL schools, academic as well as nonacademic. Where the s chool is academic rather than technical or vocational in nature, responsibility for the tort committed by the student will attach to the teacher in charge of su ch student. In establishments of arts and trades, it is the head thereof, and on

ly he, who shall be held liable as an exception to the general rule.

CIVIL LAW REVIEWER Chapter V. PERSONS LIABLE Teachers in general shall be liable for acts of their students except where the school is technical in nature, in which case it is the head thereof who shall be answerable. Salvosa v. IAC (1988): A student not at attendance in the school cann ot be in recess thereat. A recess, as the concept is embraced in the phrase at attend ance in the school, contemplates a situation of temporary adjournment of school a ctivities where the student still remains within call of his mentor and is not p ermitted to leave the school premises, or the area within which the school activ ity is conducted. Recess by its nature does not include dismissal. Mere fact of being enrolled or being in premises of a school without more does constitute atte nding school or being in protective and supervisory custody of school, as concempla ted by law. the not the the 3 Essential Requisites: 1. That the employee was chosen by the employer, persona lly or through another 2. That the services are to be rendered in accordance wit h orders which the employer has the authority to give at all times 3. That the i llicit act of the employees was on the occasion or by reason of the entrusted to him Presumption of negligence The presentation of proof of the negligence of it s employee gives rise to the presumption that the defendant employer did not exe rcise the diligence of a good father of a family in the selection and supervisio n of its employees Nature of liability of the employer The employer is primarily and solidarily liable for the tortious act of the employee. The employer may re cover from the employee, the amount it will have to pay the offended partys claim . Such recovery, however, is NOT for the entire amount. To allow such would be a s if to say that the employer was not negligent. Necessity of presumption of neg ligence It is difficult for any person injured to prove the employers negligence as they would be proving negative facts. (Here comes in the fabrication of docum ents, etc.) Independent contractor Master not generally liable for the fault or negligence of an independent contractor performing some work for him A contracto r may at the same time be so situated that he would be regarded as an employee f or whose negligence the employer is liable Cuison vs. Norton & Harrison (1930): Basis for civil liability of employers is pater familias The existence of the em ployer-employee relationship must first be established before an employer may be made vicariously liable under Art. 2180, CC. Philtranco vs. CA (1997): The liab ility of the registered owner and driver is solidary, primary and direct. Filame r vs. IAC (1992): Within the scope of their assigned task in Art. 2180 includes an y act done by an employee in furtherance of the Ylarde vs. Aquino (1988): The principal of the school cannot be held liable for the reason that the school he leads is an academic school and not a school of ar ts and trades. (Teachers liability has been asked four times from 19751990, and f our times from 2004- 2007) 3. Owners and Establishments Who are liable Owners and managers of an establish-ment or enterprise Managers of Philippine Rabbit vs. Philam Forwarders (1975): Owners and managers of an establi shment or enterprise does not include a manager of a corporation. (Spanish term di rectores connotes employer. But manager of a corporation is not an employer, merely an employee of the owner.) 4. Employers Art 2180, par 5. Employers shall be liable for the damages caused by their emplo

yees and household helpers acting within the scope of their assigned tasks, even though the former are not engaged in any business or industry. TORTS & DAMAGES For whose acts Their employees Requisites for liability to attach The damage was caused in the service of the b ranches in which the employees are employed -ORThe damage was caused on the occa sion of their functions 402

CIVIL LAW REVIEWER Chapter V. PERSONS LIABLE interests, or for the account of the employer at the time of the infliction of t he injury or damage. De Leon Brokerage v. CA (1962): Employer need not be riding in the vehicle to become liable for a drivers negligence. Article 2184 mandating that the owner is only held solidarily liable if he is riding in the vehicle at the time of the mishap, only applies to those owners of vehicles, who do not co me within the ambit of Article 2180 (as owners of an establishment or enterprise .) b. Art. 2189 provides for state liability for damages caused by defective condit ion of public works. c. Local Government Code provides for the liability of loca l government units for wrongful exercise of its proprietary (as opposed to its g overnmental) functions. The latter is the same as that of a private corporation or individual. (Mendoza vs. De Leon, 1916) The state agencies or subdivisions, i n the pursuance of proprietary functions, are akin to any other private corporat ion. They may be sued for: torts committed by them (Art. 2176) or torts committe d by their employees (art 2180). As long as it is performing proprietary functio ns, it can be held liable for the acts of its employees, both regular and specia l. Quick Glance o As a governmental entity: Liable only for acts of its special agents o As a corporate entity: May be held liable just as any other employer fo r the acts of its employees o Special Agent: One duly empowered by a definite or der or commission to perform some act or one charged with some definite purpose which give rise to the claim; if he is a government employee or official, he mus t be acting under a definite and fixed order or commission, foreign to the exerc ise of the duties of his office 5. State Sec 3, Art XVI, 1987 Constitution. The State may not be sued without its consent . Art 2180, par 6. The State is responsible in like manner when it acts through a special agent; but not when the damage has been caused by the official to whom the task done properly pertains, in which case what is provided in Article 2176 shall be applicable. Merrit vs. Government of the Philippine Islands (1960): A special agent is one w ho receives a definite and fixed order or commission, foreign to the exercise of the duties of his office if he is a special official. This concept does not app ly to any executive agent who is an employee of the active administration and wh o on his own responsibility performs the functions which are inherent in and nat urally pertain to his office. The responsibility of the state is limited to that which it contracts through a special agent, duly empowered by a definite order or commission to perform some act or charged with some definite purpose which gi ves rise to the claim and not where the claim is based on acts or omissions impu table to a public official charged with some administrative or technical office who can be held to the proper responsibility in the manner laid down by the law of civil responsibility. General Rule: The State cannot be sued. Exceptions: a. There is express legislative consent b. The State filed the case Instances where the state gives its consent to be sued: a. Art. 2180 (6) is an example of an ex press legislative consent. Here, the State assumes a limited liability for the a cts of its special agents. 403 TORTS & DAMAGES C. Specific Liability 1. Possessor of Animals Art. 2183 (CC). The possessor of an animal or whoever may make use of the same i s responsible for the damage which it may cause, although it may escape or be lo st. This responsibility shall cease only in case the damage should come from for

ce majeure or from the fault of the person who has suffered damage. Applicability of provision Since the law makes no distinction, this is applicabl e to both wild (in case the wild animal is kept) and domestic animals. It is eno ugh that defendant is the possessor, owner, or user of the animal at the time it caused the damage complained of, to hold him liable therefor.

CIVIL LAW REVIEWER Chapter V. PERSONS LIABLE Basis Negligence is immaterial. It is based on natural equity and on the princip le of social interest that he who possesses animals for his utility, pleasure, o r service, must answer for any damage which such animal may cause. Possible defe nses against this liability: 1. Force Majeure 2. Fault of person suffering damag e 3. Act of third persons 3. DEATH/INJURIES IN THE COURSE OF EMPLOYMENT Art 1711: Owners of enterprises and other employers are obliged to pay compensat ion for the death or injuries ti their laborers, workmen, mechanics or other emp loyees even though the event may be purely accidental or entirely due to a fortu itous cause, if the death or personal injury arose out of and in the course of e mployment. The employer is also liable for compensation if the employee contract s any illness or disease caused by such employment or as a result of the nature of the employment. If the mishap was due to the employees own notorious neglige nce, or voluntary act, or drunkenness, the employer shall not be liable for comp ensation. When the employees lack of due care contributed to his death or injur y, the compensation shall be equitable reduced. Art. 1712: If the death or injur y is due to the negligence of a fellow-worker, the latter and the employer shall be solidarily liable for compensation. If a fellow workers intentional or mali cious act is the only cause of the death or injury, the employer shall not be an swerable, unless it should be shown that the latter did not exercise due diligen ce in the selection or supervision of the plaintiffs fellow worker. Vestil vs. IAC (1989): Possession of the animal, not ownership, is determinative of liability under Art. 2183. The obligation imposed by said article is not bas ed on the negligence or on the presumed lack of vigilance of the possessor or us er of the animal causing damage. It is based on natural equity and on the princi ple of social interest that he who possesses animals for his utility, pleasure, or service, must answer for any damage which such animal may cause. Scope of pro vision Contention that the defendant could not be expected to exercise remote co ntrol of the animal is not acceptable. In fact, Art. 2183 holds the possessor li able even if the animal should escape or be lost and so be removed from his contro l. It is likewise immaterial that the animal was tame and was merely provoked by the victim. The law does not speak only of vicious animals but covers even tame ones as long as they cause injury. Afable vs Singer (1933): The injury must be received while engaged in the furthe rance of the affairs of the employer. 4. PRODUCT LIABILITY Art 2187 (CC). Manufacturers and processors of foodstuffs, drinks, toilet articl es and similar goods shall be liable for death or injuries caused by any noxious or harmful substances used, although no contractual relation exists between the m and the consumers. Consumer Act Provisions Art. 4. n) "Consumer" means a natur al person who is a purchaser, lessee, recipient or prospective purchaser, lessor or recipient of consumer products, services or credit. (as) "Manufacturer" mean s any person who manufactures, assembles or processes consumer products, except that if the goods are manufactured, assembled or processed for another person wh o attaches his own brand name to the consumer products, the latter shall be deem ed the manufacturer. In case of imported products, the manufacturers representa tives or, in his absence, the importer, shall be deemed the manufacturer. Art. 9 7. Liability for the Defective Products. - Any Filipino or foreign manufacturer, producer, and any importer, shall be liable for redress, independently of fault , for damages caused to consumers by defects resulting from design, manufacture, construction, assembly and erection, formulas and handling and making up, prese ntation or packing of their products, as well as for the insufficient or inadequ

ate information on the use and hazards thereof. 404 TORTS & DAMAGES 2. THINGS THROWN FROM A BUILDING OR FALLING Art 2193 (CC). The head of a family that lives in a building or a part thereof, is responsible for damages caused by things thrown or falling from the same. Purpose of the law To relieve the injured party and proving who threw the thing or what caused ue to the fault or negligence of any particular (1941): Lessee is considered as the head of the es in and has control over it. of the difficulty of determining it to fall, or that either was d individual. Dingcong vs. Kanaan family. It is enough that he liv

CIVIL LAW REVIEWER Chapter V. PERSONS LIABLE A product is defective when it does not offer the safety rightfully expected of it, taking relevant circumstances into consideration, including but not limited to: a. presentation of product b. use and hazards reasonably expected of it; c. the time it was put into circulation. A product is not considered defective beca use another better quality product has been placed in the market. The manufactur er, builder, producer or importer shall not be held liable when it evidences: a. that it did not place the product on the market; b. that although it did place the product on the market such product has no defect; c. that the consumer or a third party is solely at fault. Art. 99. Liability for Defective Services. - The service supplier is liable for redress, independently of fault, for damages cau sed to consumers by defects relating to the rendering of the services, as well a s for insufficient or inadequate information on the fruition and hazards thereof . The service is defective when it does not provide the safety the consumer may rightfully expect of it, taking the relevant circumstances into consideration, i ncluding but not limited to: the manner in which it is provided; the result of h azards which may reasonably be expected of it; the time when it was provided. A service is not considered defective because of the use or introduction of new te chniques. The supplier of the services shall not be held liable when it is prove n: that there is no defect in the service rendered; that the consumer or third p arty is solely at fault. Art. 106. Prohibition in Contractual Stipulation. - The stipulation in a contract of a clause preventing, exonerating or reducing the o bligation to indemnify for damages effected, as provided for in this and in the preceding Articles, is hereby prohibited, if there is more than one person respo nsible for the cause of the damage, they shall be jointly liable for the redress established in the pertinent provisions of this Act. However, if the damage is caused by a component or part incorporated in the product or service, its manufa cturer, builder or importer and the person who incorporated the component or par t are jointly liable. Coca-Cola v. CA (1993): While it may be true that the pre-existing contract betw een the parties may, as a general rule, bar the applicability of the law on quas i-delict, the liability may itself be deemed to arise from quasi-delict if the a ct which breaks the contract is also a quasi-delict. 5. INTERFERENCE CONTRACTUAL RELATIONS WITH Art 1314: Any third person who induces another to violate his contract shall be liable for damages to the other contracting party. Gilchrist vs. Cuddy (1915): Everyone has a right to enjoy the fruits of his ente rprise. He has no right to be protected from competition, but he has the right t o be free from malicious and wanton interference. If the injury is a result of c ompetition, it is a case of damnum absque injuria, unless superior right by cont ract is interfered with. So Ping Bun vs. CA (1999): Elements of Interference are : Existence of a valid contract; Knowledge of the third person of the existence of such contract; Interference without legal justification or excuse. Lagon vs. CA (2005): If there in no bad faith, there is no tortious interference; Actual k nowledge of the contract is not required so long as there are facts leading one to investigate. 405 TORTS & DAMAGES 6. LIABILITY OF LOCAL GOVERNMENT UNITS

Art 2189: Provinces, cities and municipalities shall be liable for damages for t he death of, or injuries suffered by, any person by reason of the defective cond ition of roads, streets, bridges, public buildings, and other public works under their control or supervision. Guilatco vs Dagupan: It is not necessary that the defective road belongs to the LGU, only that the LGU exercises control and supervision over it.

CIVIL LAW REVIEWER Chapter V. PERSONS LIABLE QUICK GLANCE Person Strictly Liable Possessor of an animal or whoever makes use of them even if the animal is lost or escaped Owner of Motor Vehicle For What For the damage it may cause Defenses or Exceptions Force majeure Fault of the person who suffer ed damage Solidary liability only if the owner was in the vehicle and if he coul d have prevented it thru due diligence If not in vehicle 2180 Absence on contract ual relation NOT a defense possession or use thereof is indispensable in his occ upation or business Public works must be under their supervisions Motor vehicle mishaps Manufacturers and Processors of foodstuffs, drinks, toilet articles and similar goods (FDTAS) Defendant in possession of dangerous weapons/ substances such as f irearms and poison Provinces, Cities and Municipalities death and injuries caused by any noxious or harmful substances used death or inj ury results from such possession the death or injuries suffered by any person by reason of the defective condition of roads, streets, bridges, public buildings, and other public works total or partial collapse of building or structure if du e to lack of necessary repairs explosion of machinery which has not been taken c ared of with due diligence, and the inflammation of explosive substances which h ave not been kept in a safe and adequate place by excessive smoke, which may be harmful to persons or property by falling of trees situated at or near highways or lanes, if not caused by force majeure by emanations from tubes, canals, sewer s or deposits of infectious matter, constructed without precautions suitable to the place if damage of building or structure is caused by defect in construction which happens within 15 years from construction; action must be brought within 10 years from collapse Proprietor of building/ structure Responsibility for collapse should be due to the lack of necessary repairs 406 TORTS & DAMAGES Engineer, Architect or Contractor Head of the Family that lives in a building or any part thereof Liable for damages caused by things thrown or falling from the same

CIVIL LAW REVIEWER Chapter V. PERSONS LIABLE BAR QUESTION: MOTOR VEHICLE MISHAPS A van owned by Orlando and driven by Diego, while negotiating a downhill slope of a city road, suddenly gained speed, obviou sly beyond the authorized limit in the area, and bumped a car in front of it, ca using severe damage to the car and serious injuries to its passengers. Orlando w as not in the car at the time of the incident. The car owner and the injured pas sengers sued Orlando and Diego for damages cause by Diegos negligence. In their d efense, Diego claims that the downhill slope caused the van to gain speed and th at, as he stepped on the brakes to check the acceleration, the brakes locked, ca using the van to go even faster and eventually to hit the car in front of it. Or lando and Diego contend that the sudden malfunction of the vans brake system is a fortuitous event and that, therefore, they are exempt from any liability. (a) I s this contention tenable? Explain. (b) Explain the concept of vicarious liabili ty in quasi-delicts. (c) Does the presence of the owner inside the vehicle causi ng damage to a third party affect his liability for his drivers negligence? Expla in. Suggested Answer: (a) No. Mechanical defects of a motor vehicle do not const itute fortuitous event, since the presence of such defects would have been readi ly detected by diligence maintenance check. The failure to maintain the vehicle in safe running condition constitutes negligence. (b) The doctrine of vicarious liability is that which renders a person liable for the negligence of others for whose acts or omission the law makes him responsible on the theory that they ar e under his control and supervision. (c) In motor vehicle mishaps, the owner is made solidarily liable with his driver if he (the owner) was in the vehicle and could have, by the use of due diligence, prevented the mishap (Caedo vs. Yu Khe Thai, 26 SCRA 410 [1968]). However, this question has no factual basis in the pr oblem given, in view of the express given fact that Orlando was not in the car at the time of the incident. E. Civil Liability Arising From Crime Art. 2177. Responsibility for fault or negligence under the preceding article is entirely separate and distinct from the civil liability arising from negligence under the Penal Code. But the plaintiff cannot recover damages twice for the sa me act or omission of the defendant. (n) 1. Distinguished from Independent Civil Actions and Liability for QD (Arts. 31-3 4, 2176) Rule 111, Rules of Court Sec. 3. When civil action may proceed independently. In the cases provided in Articles 32, 33, 34 and 2176 of the Civil Code of the Phi lippines, the independent civil action may be brought by the offended party. It shall proceed independently of the criminal action and shall require only a prep onderance of evidence. In no case, however, may the offended party recover damag es twice for the same act or omission charged in the criminal action. Sec. 5. Ju dgment in civil action not a bar. A final judgment rendered in a civil action ab solving the defendant from civil liability is not a bar to a criminal action aga inst the defendant for the same act or omission subject of the civil action. 2. Effect of Acquittal Art. 29. When the accused in a criminal prosecution is acquitted on the ground t hat his guilt has not been proved beyond reasonable doubt, a civil action for da mages for the same act or omission may be instituted. Such action requires only a preponderance of evidence. Upon motion of the defendant, the court may require the plaintiff to file a bond to answer for damages in case the complaint should be found to be malicious. If in a criminal case the judgment of acquittal is ba sed upon reasonable doubt, the court shall so declare. In the absence of any dec laration to that effect, it may be inferred from the text of the decision whethe r or not the acquittal is due to that ground.

407 TORTS & DAMAGES 3. Prejudicial Questions Art. 36. Pre-judicial questions which must be decided before any criminal prosec ution may be instituted or may proceed, shall be governed by rules of court whic h the Supreme Court shall promulgate and which shall not be in conflict with the provisions of this Code. Rule 111, Rules of Court Sec. 6. Suspension by reason of prejudicial question. A petition for suspension of the criminal action based upon the pendency of a prejudicial question in a civil action may be filed in th e office of the prosecutor or the court conducting the preliminary investigation . When the criminal action has been filed D. Joint and Solidary Liability Art. 2194. The responsibility of two or more persons who are liable for quasi-de lict is solidary. (n)

CIVIL LAW REVIEWER in court for trial, the petition to suspend shall be filed in the same criminal action at any time before the prosecution rests. Sec. 7. Elem ents of prejudicial question. The elements of a prejudicial questions are: (a) t he previously instituted civil action involves an issue similar or intimately re lated to the issue raised in the subsequent criminal action, and (b) the resolut ion of such issue determines whether or not the criminal action may proceed. Chapter V. PERSONS LIABLE Zapanta vs. Montesa (1962): A civil case for the annulment of marriage is an exa mple of a prejudicial question for a criminal charge of bigamy. F. Prescription Art. 1146. The following actions must be instituted within four years: (1) Upon an injury to the rights of the plaintiff; (2) Upon a quasi-delict; 408 TORTS & DAMAGES

CIVIL LAW REVIEWER Chapter VI. TORTIOUS INTERFERENCE with CONTRACT Chapter VI. Tortious Interference With Contract Art. 1314. Any third person who induces another to violate his contract shall be liable for damages to the other contracting party. (n) Elements: a) existence of a valid contract b) knowledge of the third person of t he existence of the contract c) interference of the third person WITHOUT legal j ustification or excuse (So Ping Bun vs. CA, 1999) So Ping Bun vs. CA (1999): Bad faith/Malice is required to make the defendant liable for DAMAGES in cases of t ortuous interference. Gilchrist vs. Cuddy (1915): Injunction is the proper remed y to prevent wrongful interference with contracts by strangers, where other lega l remedies are insufficient and the resulting injury is irreparable. Lagon vs. C A (2005): Proper business interest provides a legal justification to negate the presence of the third element. 409 TORTS & DAMAGES

CIVIL LAW REVIEWER Chapter VII. TORTS with INDEPENDENT CIVIL ACTION In any of the cases referred to in this article, whether or not the defendants act or omission constitutes a cri minal offense, the aggrieved party has a right to commence an entirely separate and distinct civil action for damages, and for other relief. Such civil action s hall proceed independently of any criminal prosecution (if the latter be institu ted) and may be proved by a preponderance of evidence. The indemnity shall inclu de moral damages. Exemplary damages may also be adjudicated. The responsibility herein set forth is not demandable from a judge unless his act or omission const itutes a violation of the Penal code or any other penal statute. Chapter VII. Torts with Independent Civil Action A. B. VIOLATION OF CIVIL AND POLITICAL RIGHTS DEFAMATION, FRAUD, PHYSICAL INJURI ES 1. DEFAMATION 2. FRAUD 3. PHYSICAL INJURIES A. Violation of Civil and Political Rights Art 32. Any public officer or employee, or any private individual, who directly or indirectly obstructs, defeats, violates or in any manner impedes or impairs a ny of the following rights and liberties of another person shall be liable to th e latter for damages: 1. Freedom of religion 2. Freedom of speech 3. Freedom to write for the press or to maintain a periodical publication 4. Freedom from arbi trary or illegal detention 5. Freedom of suffrage 6. The right against deprivati on of property without due process of law 7. The right to just compensation when property is taken for public use 8. The right to equal protection of the laws 9 . The right to be secure in ones person, house, papers and effects against unreas onable searches and seizures 10. The liberty of abode and of changing the same 1 1. The right to privacy of communication and correspondence 12. The right to bec ome a member of associations and societies for purposes not contrary to law 13. The right to take part in a peaceable assembly and petition the government for r edress of grievances 14. The right to be free from involuntary servitude in any form 15. The right of the accused against excessive bail 16. The right of the ac cused to be heard by himself and counsel, to be informed of the nature and the c ause of the accusation against him, to have a speedy and public trial, to meet t he witnesses face to face, to have compulsory process to secure the attendance o f witnesses on is behalf; 17. Freedom form being compelled to be a witness again st ones self, or from being forced to confess his guilt, or from being induced by a promise of immunity or reward to make such confession, except when the person confessing becomes a State witness. 18. Freedom from excessive fines, or cruel and unusual punishment, unless the same is imposed or inflicted in accordance wi th a statute which has not been judicially declared unconstitutional; 19. Freedo m of access to the courts Cojuangco vs. CA (1999): The purpose of article 32 is to remind us that basic ri ghts are immutable. Thus, absence of bad faith or malice is not a defense. Vinzo ns- Chato vs. Fortune (2007): A public officer may be sued under Art. 32 even if his acts were not so tainted with malice, as long as there is a violation of a constitutional right. Its precise object is to put an end to official abuse, don e on the plea of good faith. B. Defamation, Fraud, Physical Injuries Art. 33: In case of defamation, fraud, and physical injuries, a civil action for damages, entirely separate and distinct from the criminal action, may be brough t by the injured party. Such civil action shall proceed independently of the cri minal prosecution, and shall require only a preponderance of evidence. 410 TORTS & DAMAGES Marcia vs. CA (1983): Reckless imprudence is not one of the three crimes mention

ed in Art. 33; no independent civil action may be filed because what is punished is reckless imprudence is the negligent or careless act, not the result thereof . (However, in the contrary ruling in People vs. Faller, court discussed reckles s imprudence under art. 33 not as a crime, but as a way of committing it, such t hat it punishes BOTH the act and the resulting damage, wherein an independent ac tion could be allowed.) 1. Defamation Cojuangco vs. CA (1991): Separate civil action may be consolidated with the crim inal action. MVRS vs. Islamic Dawah (2003): Defamation is that which tends to i njure reputation or diminish esteem, respect, good will, or confidence of the pl aintiff, or excite derogatory feelings about him.

CIVIL LAW REVIEWER Chapter VII. TORTS with INDEPENDENT CIVIL ACTION It must be personal. (What is definitive is not the level of hurt, but the effec t of the statement on the reputation or standing of the person.) 2. Fraud Salta vs. De Veyra (1982): Independent civil actions are permitted to be filed s eparately regardless of the result of the criminal action. Samson vs. Daway (200 4): Unfair competition under the Intellectual Property Code and fraud under Art. 33 are independent actions. Art. 33 does not operate as a prejudicial question to justify the suspension of the criminal cases at bar. Neplum vs. Orbeso (2002): Deemed instituted in every criminal prosecution is the civil liability arising from the crime or delict per se (civil liability ex del icto), but not those liabilities from quasi-delicts, contracts or quasi-contract s. Sps. Benito Lo Bun Tiong etc. vs. Vicente Balboa (2008): The criminal action for violation of Batas Pambansa Blg. 22 shall be deemed to include the correspon ding civil action and that no reservation to file such civil action separately s hall be allowed. But a separate proceeding for the recovery of civil liability i n cases of violations of B.P. No. 22 is allowed when the civil case is filed ahe ad of the criminal case. For independent civil actions: Physical injuries unqual ifiedly refer to an independent cause of action, whether caused by a deliberate or negligent act. Jurisprudence is mixed, but Sangco discusses that the reservat ion requirement should only be for civil actions based on crime. What will preve nt double recovery is the election of any of the civil actions, being an implici t waiver of the others. Madeja vs. Caro (1983): Article 33 is ex delicto, but it is an exception to the reservation requirement, as it allows the citizen to enf orce his right to damages independent of the prosecutor. Physical injuries, fraud and defamation are used in their ordinary, generic sense (and not within RPC con text). BAR QUESTION As a result of a collision between a taxicab owned by A and another taxicab owned by B, X, a passenger of the first taxicab, was seriously injured. X later filed a criminal action against both drivers. (a) Is it necessary for X to reserve his right to institute a civil action for damages against both taxic ab owners before he can file a civil action for damages against them? Why? (b) M ay both taxicab owners raise the defense of due diligence in the selection and s upervision of their drivers to be absolved from liability for damages to X? Reas on. Suggested Answer: (a) It depends. If the separate civil action is to recover damages arising from the criminal act, reservation is necessary. If the civil a ction against the taxicab owners is based on culpa contractual or on quasi-delic t, there is no need for reservation. (b) It depends. If the civil action is base d on quasidelict, the taxicab owners may raise the defense 3. Physical Injuries Capuno vs Pepsi (1965): The institution of criminal action cannot have an effect of interrupting the running of the period for the filing of independent civil a ctions. Dulay vs. CA (1995): Homicide is included in Art. 33, where a separate a ction is availing. NOTE: Civil liability arising from crime Art. 2177. Responsibility for fault or negligence is entirely separate and disti nct from the civil liability arising from negligence under the RPC. But double r ecovery is not allowed. 411 TORTS & DAMAGES Art. 100 of the Revised Penal Code provides that every person who is criminally liable for a felony is also civilly liable. This general rule however presuppose s that the felony had resulted in damage or injury to anothers person or property

. To create an obligation or give rise to civil liability, an act or omission, w hether intentional or negligent, must have caused damage or injury to another, o therwise only criminal liability will attach. Though the general rule provides t hat one who is not criminally liable cannot be civilly liable, RPC Arts. 101-103 provide exceptions as they provide for vicarious liability for certain types of offenders and subsidiary liability in case of default of the offender. The civi l liability established by RPC Arts. 100103 include: a. Restitution; b. Reparati on of the damage caused; and c. Indemnification for consequential damages.

CIVIL LAW REVIEWER of diligence of a good father of a family in the selection an d supervision of the driver; if the action against them is based on culpa contra ctual or civil liability arising from a crime, they cannot raise the defense. Al ternative Answer: No such reservation is necessary. Under Section 1 Rule 111 of the 2000 Rules on Criminal Procedure, what is deemed instituted with the criminal action is only the action to recover civil liability arising from the crime or e x delicto. All the other civil actions under Articles 32, 33, 34, 2176 of the Ne w Civil Code are no longer deemed instituted, and may be filed separately and pros ecuted independently even without any reservation in the criminal action (Sectio n 3, Rule 111, 2000 Rules on Criminal Procedure). The failure to make a reservat ion the criminal action is not a waiver of the right to file a separate and inde pendent civil action based on these articles of the New Civil Code (Casupanan vs . Laroya, G.R. No. 145391, August 26, 2002) Chapter VII. TORTS with INDEPENDENT CIVIL ACTION 412 TORTS & DAMAGES

CIVIL LAW REVIEWER Chapter VIII. HUMAN RELATIONS PROVISIONS Chapter VIII. Provisions A. B. Human Relations B. Acts Contra Bonus Mores Art. 21. Any person who willfully causes loss or injury to another in a manner t hat is contrary to morals, good customs or public policy shall compensate the la tter for the damage. ABUSE OF RIGHTS ACTS CONTRA BONUS MORES 1. ELEMENTS 2. EXAMPLES i. BREACH OF PRO MISE TO MARRY, SEDUCTION AND SEXUAL ASSAULT ii. MALICIOUS PROSECUTION iii. PUBLI C HUMILIATION iv. UNJUSTIFIED DISMISSAL OTHER TORTS C. DERELICTION OF DUTY D. UN FAIR COMPETITION E. VIOLATION OF HUMAN DIGNITY Art. 19. Every person must, in th e exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith. 1.Elements Albenson vs. CA ((1993): This provision has broadened the scope of ci vil wrongs; it is more supple and adaptable than tort. Elements: 1. legal action ; 2. contrary to morals, public policy, good customs; 3. intent to injure. 2. Ex amples i. Breach of Promise to Marry, Seduction and Sexual Assault Wassmer vs. V elez (1964): Mere breach of promise to marry is not an actionable wrong. But to formally set a wedding and go through all the above-described preparation and pu blicity, only to walk out of it when the matrimony is about to be solemnized, is quite different. This is palpably and unjustifiably contrary to good customs fo r which defendant must be held answerable in damages in accordance with Article 21. Baksh vs. CA (1993): Where a mans promise to marry is in fact the proximate cause of the acceptance of his love by a woman and his representation to fulfil l that promise thereafter becomes the proximate cause of the giving of herself u nto him in a sexual congress, proof that he had, in reality, no intention of mar rying her and that the promise was only a subtle scheme or deceptive device to e ntice or inveigle her to accept him and to obtain her consent to the sexual act, could justify the award of damages pursuant to Article 21 not because of such p romise to marry but because of the fraud and deceit behind it and the willful in jury to her honor and reputation which followed thereafter. It is essential, how ever, that such injury should have been committed in a manner contrary to morals , good customs or public policy. ii. Malicious Prosecution A. Abuse of Rights Velayo vs. Shell (1959): It may be said that Art 19 only contains a mere declara tion of principles and while such statement may be essentially correct, yet we f ind that such declaration is implemented by Art 21. There is no belief of more b aneful consequences upon the social order than that a person may with impunity c ause damage to his fellowmen so long as he does not break the law though he may be defying the most sacred postulates of morality. Globe vs. CA (1989): A right, though by itself legal because recognized or granted by law as such, may nevert heless become the source of some illegality. When a right is exercised in a mann er which does not conform with the norms enshrined in Article 19 and results in damage to another, a legal wrong is thereby committed for which the wrongdoer mu st be held responsible. Albenson vs. CA (1993): The elements of an abuse of righ t under Article 19 are the following: (1) There is a legal right or duty; (2) Wh ich is exercised in bad faith; (3) For the sole intent of prejudicing or injurin g another. University of the East vs. Jader (2000): Educational institutions are duty-bound

to inform the students of their academic status and not wait for the latter to inquire from the former. The conscious indifference of a person to the rights or welfare of the person/persons who may be affected by his act or omission can su pport a claim for damages. 413 TORTS & DAMAGES

CIVIL LAW REVIEWER Chapter VIII. HUMAN RELATIONS PROVISIONS Que vs. IAC (1989): To constitute malicious prosecution, there must be proof tha t the prosecution was prompted by a sinister design to vex and humiliate a perso n that it was initiated deliberately by the defendant knowing that his charges w ere false and groundless. Concededly, the mere act of submitting a case to the a uthorities for prosecution does not make one liable for malicious prosecution. D rilon vs. CA: Malicious Prosecution defined: An action for damages brought by on e against whom a criminal prosecution, civil suit, or other legal proceeding has been instituted maliciously and without probable cause, after the termination o f such prosecution, suit or other proceeding in favor of the defendant herein. T he gist of the action is the putting of legal process in force, regularly, for t he mere purpose of vexation or injury. Concurring requisites: 1. The fact of the prosecution and the defendant was himself the prosecutor and then action was te rminated with an acquittal; 2. The prosecutor acted without probable cause; 3. T hat the prosecutor was impelled by legal malice, that is by improper or sinister motive. iii. Public Humiliation Grand Union vs. Espino: It is against morals, g ood customs and public policy to humiliate, embarrass and degrade the dignity of a person. Everyone must respect the dignity, personality, privacy and peace of mind of his neighbors and other persons (Article 26, Civil Code). iv. Unjustifie d Dismissal Quisaba vs. Sta. Ines: The complaint in this case is not grounded on his dismissal per se, as in fact he does not ask for reinstatement, but on the manner of his dismissal and the consequent effects of such dismissal. If the dis missal was done anti-socially or oppressively, as the complaint alleges, then th e respondents violated Art. 1701 of the CC and Art 21 of the CC. Other Torts C. Dereliction of Duty Art. 27: Any person suffering material or moral loss because a public servant or employee refuses or neglects, without just cause, to perform his official duty may file an action for damages and other relief against he latter, without preju dice to any disciplinary administrative action that may be taken. Amaro vs. Samanguit: Requisites: (1) Defendant is a public officer charged with a performance of a duty in favor of the plaintiff; (2) He refused or neglected w ithout just cause to perform the duty; (3) Plaintiff sustained material or moral loss as a consequence of such non-performance; (4) The amount of such damages, if material. D. Illegal Acts Art. 20. Every person who, contrary to law, willfully or negligently causes dama ge to another, shall indemnify the latter for the same E. Unfair Competition Art. 28: Unfair competition in agricultural, commercial or industrial enterprise s or in labor through the use of force, intimidation, deceit, machination or any other unjust, oppressive or highhanded method shall give rise to a right of act ion by the person who thereby suffers damage. F. Violation of Human Dignity Art. 26. Every person shall respect the dignity, personality, privacy and peace of mind of his neighbors and other persons. The following and similar acts, thou gh they may not constitute a criminal offense, shall produce a cause of action f or damages, prevention and other relief: 1. Prying into the privacy of anothers residence 2. Meddling with or disturbing the private life or family relations o f another 3. Intriguing to cause another to be alienated from his friends 4. Vex ing or humiliating another on account of his religious beliefs, lowly station in life, place of birth, physical defect, or other personal condition.

414 TORTS & DAMAGES St. Louis Realty Corporation vs. CA (Illustration of a similar act): The acts and omissions of the firm fall under Article 26. Persons who know the residence of D octor Aramil, were confused by the distorted, lingering impression that he was r enting his residence from Arcadio or that Arcadio had leased it from him. Either way, his private life was mistakenly and unnecessarily exposed.

CIVIL LAW REVIEWER Chapter IX. DAMAGES Chapter IX. Damages A. B. DEFINITION AND CONCEPT KINDS OF DAMAGES 1. ACTUAL/COMPENSATORY DAMAGES i. KINDS OF ACTUAL DAMAGES ii. GENERAL PRINCIPLES FOR RECOVERY iii. DAMAGES FOR PER SONAL INJURY & DEATH iv. ATTORNEYS FEES 2. MORAL DAMAGES i. GENERAL PRINCIPLES OF RECOVERY ii. MORAL DAMAGES IN MALICIOUS PROSECUTION iii. MORAL DAMAGES IN RAPE iv. MORAL DAMAGES IN MURDER v. LABOR CASES 3. NOMINAL DAMAGES i. REQUISITES 4. T EMPERATE/MODERATE DAMAGES i. REQUISITES 5. LIQUIDATED DAMAGES 6. EXEMPLARY/CORRE CTIVE DAMAGES i. REQUISITES TO RECOVER EXEMPLARY DAMAGES AND LIQUIDATED DAMAGES AGREED UPON IN ADDITION TO EXEMPLARY ii. GENERAL PRINCIPLES B. Kinds of Damages (1) ACTUAL/COMPENSATORYfor loss actually suffered (2) MORAL- mental anguish, etc . (3) NOMINAL- for rights recognized and violated (4) TEMPERATE/MODERATE- for da mages proved but the amount was not proven (5) LIQUIDATED- stipulated damages in the contract (6) EXEMPLARY/CORRECTIVE- to serve as an example for the common go od 1. Actual or Compensatory When is a person entitled to actual or compensatory damages? (Art. 2199) When there is a pecuniary loss suffered by him; When he ha s alleged and prayed for such relief (Manchester Devt Corp vs. CA); When he has d uly proved it; When provided by law or by stipulation. No proof of pecuniary los s is necessary for: moral, nominal, temperate, liquidated or exemplary damages. The assessment of such damages is discretionary upon the court, except liquidate d ones. (Art. 2216) i. Kinds of Actual Damages A. Definition and Concept People vs. Ballesteros (supra): Damages may be defined as the pecuniary compensa tion, recompense, or satisfaction for an injury sustained, or as otherwise expre ssed, the pecuniary consequences which the law imposes for the breach of some du ty or the violation of some right. Ocena vs. Icamina: The obligation to repair t he damages exists whether done intentionally or negligently and whether or not p unishable by law. Elements for recovery of damages: 1. Right of action 2. For a wrong inflicted by the defendant 3. Damage resulting to the plaintiff 415 TORTS & DAMAGES CC Art. 2200 A. 2205 2206 2209 2208 Damnum emergente- value of the loss suffered B. Lucro cessante- profits which th e obligee failed to obtain A. Loss of earning capacity due to injury (temporary or permanent) B. Damage to Business Standing or Commercial Credit A. Fixed indem nity for death = Php 50,000 (as of 2005) B. Loss of Earning Capacity of the Dece ased Interest Attorneys Fees & Expenses of Litigation ii. General Principles for Recovery (1) The amount of damages must be fair and j ust and commensurate to the loss. - In case of contracts, only those injuries wh ich could have been reasonably foreseen by the parties by the parties at the tim e the contract was entered into are recoverable.

CIVIL LAW REVIEWER Chapter IX. DAMAGES (2) The damages must be proximate and not remote or speculative. (3) The damages must be proven by competent evidence (admissible or probative) - Integrated Pac kaging Corp. vs. CA; Fuentes vs. CA: It is necessary to prove with a reasonable degree of certainty, premised upon competent proof and on the best evidence obta inable by the injured party, the actual amount of loss. (4) Circ. No. 7, Mar. 24 , 1988; Manchester Devt. Corp. vs. CA, 1987: Complaint and prayer must specify am ount of damages and pay filing fees before it may be accepted and admitted for f iling. (5) The requirement of certainty does not prevent the drawing of reasonab le inferences from the fact and circumstance in evidence. (6) Events which occur after the wrong complained of may serve to render the damage sufficiently certa in. Art. 2201 Contracts and quasi contracts (7) The damages must be susceptible of ascertainment in some manner other than b y mere speculation, conjecture or surmise and by reference to some fairly defini te standard, such as market value, established experience or direct inference fr om known circumstances. Talisay-Silay vs. Associacion: Where, however, it is rea sonably certain that injury consisting of failure to realize otherwise reasonabl y expected profits had been incurred, uncertainty as to the precise amount of su ch unrealized profits will not prevent recovery or the award of damages. The ext ent of recovery: Recovery of all proximately traceable to the primary negligence , including subsequent aggravations, the probability of which the law regards as a consequence and natural result likely to flow form the original injury. Howev er, note that if the subsequent aggravations are due to his own negligence then the tortfeasor shall not be liable for such since Art. 2203 imposes a duty on th e injured party to avoid loss or minimize resulting damages. Note: Liability extends to all damages which may be reasonably attributed to the non-performance of the obligation in case of fraud, bad faith, malice or wanton attitude (FBM-WA). Liability extends to those: 1. natural and probable consequences of the breach 2 . those that have been foreseen 3. those that could have been reasonably foresee n Provided: obligor in good faith Liability extends to all damages which are the natural and probable consequence 416 TORTS & DAMAGES Art. 2202 Crimes and quasi-delicts Note: WON damage is foreseen is irrelevant Algarra vs. Sandejas: Actual damages for a negligent act or omission are confine d to those which "were foreseen or might have been foreseen," or those which wer e "the natural and probable consequences" or "the direct and immediate consequen ces" of the act or omission. (Asked eight times from 1990 to 2008) Daywalt vs. R ecoletos et al.: The damages recoverable upon breach of contract are, primarily, the ordinary, natural and in a sense the necessary damage resulting from the br each. Other damages, known as special damages, are recoverable where it appears that the particular conditions which made such damages a probable consequence of the breach were known to the delinquent party at the time the contract was made . What must be proved:

Proof Reasonable certainty only that the fact and cause of injury must be taken out of the area of speculation. Usual burden of proof required in a negligence c ase, prove the substantive right, its breach and the amount of damages flowing f rom the breach. Proximate cause the cause, which, in a natural and continuous se quence, unbroken by any efficient intervening cause, produces the injury, and wi thout which the injury would not have occurred. (without which test of cause in f act) Need not be proved with the same degree of certainty. Fair and reasonable es timate of the amount of damage. Fact of Injury Cause Amount

CIVIL LAW REVIEWER Chapter IX. DAMAGES When pecuniary loss need not be proved 1) Liquidated damages previously agreed u pon 2) If damages other than actual are sought (Art. 2216) 3) Loss is presumed ( ex: loss of a child or spouse) 4) Forfeiture of bonds in favor of the government for the purpose of promoting public interest or policy (ex: bond for temporary stay of alien iii. Damages for Personal Injury & Death (Art. 2206) Recoverable d amages for death caused by a crime or quasi-delict: (a) At least three thousand pesos, even though there may have been mitigating circumstances. - (People vs. R obert Brodett y Pajaro, Jan. 18, 2008: so as of 2008, it is P75,000 (b) Loss of the earning capacity of the deceased, - paid to his heirs - unless the deceased on account of permanent physical disability not caused by the defendant, had no earning capacity at the time of death; (c) Support according to the provisions o f Article 291 - the recipient who is not a testate or intestate heir may demand support from the person causing the death, for a period not exceeding five years (d) Moral damages - demanded by the spouse, legitimate and illegitimate descend ants and ascendants of the deceased Factors: 1. Earning Capacity 2. Obligation t o Support 3. Moral Damages to heirs Compensation should be allowed for loss of e arning capacity resulting from the death of a minor who has not yet commenced em ployment or training for a specific profession if sufficient evidence is present ed to establish the amount thereof. The argument compensation for for allowing l oss of earning capacity of a minor is even stronger if he or she was a student, whether already training for a specific profession or still engaged in general studies. Formula established in decided cases for computing net earning capacity: MMTC v. CA: Ne t earning capacity (X) = life expectancy * [gross annual income reasonable, nece ssary living expenses] Life expectancy = 2/3 (80- age of deceased) iv. Attorneys Fees Attorneys Fees is the exception NOT the general rule. Art. 2208: can be recovered: (1) If there is a stipulation to that effect (2) Wh en exemplary damages are awarded; (3) When the defendants act or omission has c ompelled the plaintiff to litigate with third persons or to incur expenses to pr otect his interest; (4) In criminal cases of malicious prosecution against the p laintiff; (5) In case of a clearly unfounded civil action or proceeding against the plaintiff; (6) Where the defendant acted in gross and evident bad faith in r efusing to satisfy the plaintiffs plainly valid, just and demandable claim; (7) In actions for legal support; (8) In actions for the recovery of wages of house hold helpers, laborers and skilled workers; (9) In actions for indemnity under w orkmens compensation and employers liability laws; (10) In a separate civil ac tion to recover civil liability arising from a crime; (11) When at least double judicial costs are awarded; (12) In any other case where the court deems it just and equitable that attorneys fees and expenses of litigation should be recover ed. In all cases, the attorneys fees and expenses of litigation must be reasona ble. 417 TORTS & DAMAGES Kinds: (1) Retainers agreement between the lawyer and the client (in writing). (2 ) Award as an indemnity to the client. Quirante vs. IAC: BELONGS to the client h ence the litigant is the judgment creditor who may enforce the judgment by execu tion.

CIVIL LAW REVIEWER Chapter IX. DAMAGES INTEREST accrues when: the obligation consists in the payment of a sum of money debtor incurs in delay there being no stipulation to the contrary If there is no stipulated interest the legal interest of 6%. (Art. 2209) from judicial demand even if the obligation is silent upon this point. (Art. 221 2) When is interest not recovered? When claims/ damages are unliquidated EXCEPT when the demand can be established with reasonably certainty. (Art. 2213) Interest due Art. 2210 From Breach of contract Discretion of the court Interest imposed on damages awar ded Interest is awarded as part of damages Art. 2211 Crimes and quasidelicts Discretion of the court

When shall interest? interest earn legal Determination of legal interest: 1. When an obligation, regardless of its source (i.e., law, contracts, quasicontracts, delicts or quasi-delicts) is breached, t he contravenor can be held liable for damages. 2. With regard particularly to an AWARD OF INTEREST in the concept of actual and compensatory damages, the RATE o f interest, as well as the ACCRUAL thereof, is imposed, as follows(Eastern Shipp ing Lines vs. CA, 1994): ACCRUAL to be computed from default, i.e., from JUDICIAL or EXTRAJUDICIAL demand under and subject to the provisions of Article 1169 of the Civil Code. BASE a. When the obligation is breached, and it consists in the PAYMENT OF A SUM OF MONEY, i.e., a loan or forbearance of money, the interest due should be b. F urthermore, the INTEREST DUE shall itself earn c. When an obligation, NOT consti tuting a loan or forbearance of money, is breached, an interest on the AMOUNT OF DAMAGES awarded may be imposed at the discretion of the court. The actual base for the computation of legal interest shall be on the amount finally adjudged. RATE a) That which may have been stipulated in writing. b) In the absence of sti pulation, the rate of interest shall be 12% per annum (legal interest) legal int erest at the rate of 6% per annum. from the time it is JUDICIALLY demanded. If claim or damages are LIQUIDATED, fro m default, i.e., from judicial or extrajudicial demand. (Art. 1169, Civil Code) If UNLIQUIDATED, from the time the demand can be established with reasonable cer

tainty. Hence, the interest shall begin to run only FROM F THE COURT IS MADE (at which time the quantification of o have been reasonably ascertained). from FINALITY UNTIL period being deemed to be an equivalent to a forbearance 418 TORTS & DAMAGES

THE DATE THE JUDGMENT O damages may be deemed t ITS SATISFACTION, this of credit.

d. When the JUDGMENT of the court awarding a sum of money becomes final and exec utory, the rate of legal interest, whether the case falls under a,b, or c, above, shall be 12% per annum

CIVIL LAW REVIEWER Chapter IX. DAMAGES Start of Delay (1) Extrajudicial: demand letter (2) Judicial: Filing of complain t (3) Award When damages mitigated: 1. In quasi-delicts contributory negligence ( Art. 2214) 2. Doctrine of avoidable consequences a) This refers to the duty to m inimize damages once a cause of action has accrued. Standard: good father of a f amily (Art. 2203) 3. In contracts, quasi-contracts and quasidelict (C-BELL): a) plaintiff has contravened the terms of contract b) plaintiff derived some benefi t as result of contract c) in case where exemplary damages are to be awarded, th at the defendant acted upon the advise of counsel d) that the loss would have re sulted in any event e) that since the filing of the action, the defendant has do ne his best to lessen the plaintiffs loss or injury (Art. 2215) 4. In crimes mi tigating circumstances (Art. 2204) (increased, for aggravating) 2. Moral Damages Visayan Sawmill vs. CA: Moral damages are emphatically not intended to enrich a complainant at the expense of the defendant. Its award is aimed at the restorat ion, within the limits of the possible, of the spiritual status quo ante, and it must be proportional to the suffering inflicted. Art. 2217: Awarded when injury consists of: (PBMF-MWSSS) a. Physical suffering b. Besmirched reputation c. Men tal anguish d. Fright e. Moral shock f. Wounded feelings g. Social humiliation h . Serious anxiety i. Similar injury Though incapable of pecuniary computation If such is the proximate result of defendants act or omission. Villanueva vs. Salvador: Requisites for awarding moral damages: (1) there must b e an injury, whether physical, mental or psychological, clearly sustained by the claimant; (2) there must be a culpable act or omission factually established; ( 3) the wrongful act or omission of the defendant must be the proximate cause of the injury sustained by the claimant; and (4) the award of damages is predicated on any of the cases stated in ART. 2219 NCC. i. General Principles of Recovery 1. Moral damages must somehow be proportional to the suffering inflicted. 2. In culpa contractual or breach of contract, moral damages may be recovered when the defendant acted in bad faith or was guilty of gross negligence (amounting to ba d faith) or in wanton disregard of his contractual obligation and, exceptionally , when the act of breach of contract itself is constitutive of tort resulting in physical injuries. 3. By special rule in Article 1764, in relation to Article 2 206, moral damages may also be awarded in case the death of a passenger results from a breach of carriage. 4. In culpa aquiliana, or quasi-delict, (a) when an a ct or omission causes physical injuries, or (b) where the defendant is guilty of intentional tort, moral damages may aptly be recovered. This rule also applies to contracts when breached by tort. 5. In culpa criminal, moral damages could be lawfully due when the accused is found guilty of physical injuries, lascivious acts, adultery or concubinage, illegal or arbitrary detention, illegal arrest, i llegal search, or defamation. 6. Malicious prosecution can also give rise to a c laim for moral damages. The term "analogous cases," referred to in Article 2219, following the ejusdem generis rule, must be held similar to those expressly enu merated by the law. 419 TORTS & DAMAGES

CIVIL LAW REVIEWER Chapter IX. DAMAGES 7. Although the institution of a clearly unfounded civil suit can at times be a legal justification for an award of attorneys fees, such filing, however, has a lmost invariably been held not to be a ground for an award of moral damages. (Ex pertravel& Tours vs. CA, 1 to 7) 8. The burden rests on the person claiming mora l damages to show convincing evidence for good faith is presumed. In a case invo lving simple negligence, moral damages cannot be recovered. (Villanueva vs. Salv ador) 9. Failure to use the precise legal terms or "sacramental phrases" of "men tal anguish, fright, serious anxiety, wounded feelings or moral shock" does not justify the denial of the claim for damages. It is sufficient that these exact t erms have been pleaded in the complaint and evidence has been adduced (Miranda-R ibaya vs. Bautista) 10. Even if the allegations regarding the amount of damages in the complaint are not specifically denied in the answer, such damages are not deemed admitted. Raagas, et al. vs. Traya et al. 11. An appeal in a criminal ca se opens the whole case for review and this includes the review of the penalty, indemnity and damages. Even if the offended party had not appealed from said aw ard, and the only party who sought a review of the decision of said court was th e accused, the court can increase damages awarded. Sumalpong vs. CA Cases where recovery of moral damages are allowed (1) A criminal offense of physical injurie s; (2) Quasi-delicts causing physical injuries; (3) Seduction, abduction, rape, or other lascivious acts; (4) Adultery or concubinage; (5) Illegal or arbitrary detention or arrest; (6) Illegal search; (7) Libel, slander, defamation; (8) Mal icious prosecution; (9) Article 309; (10) Articles 21, 26, 27, 28, 29, 30, 32, 3 4, and 35. (Art. 2219) (11) wilful injury to property (Art. 2220) (12) breach of contract (Art. 2220) (13) death of passenger from breach a breach of carriage (Art. 1764 in relation to Art. 2206 and (Expertravel & Tours vs. CA) Art. 2219. Moral damages may be re covered in the following and analogous cases: (not an exclusive list; 2PI-SALAMI -309-Others) (1) A criminal offense resulting in physical injuries; (2) Quasi-de licts causing physical injuries; (3) Seduction, abduction, rape, or other lasciv ious acts; (4) Adultery or concubinage; (5) Illegal or arbitrary detention or ar rest; (6) Illegal search; (7) Libel, slander or any other form of defamation; (8 ) Malicious prosecution; (9) Acts mentioned in Article 309; (disrespect for the dead) (10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35. Who else can recover moral damages? - Parents of the female seduced, abducted, raped, or abused, referred to in No. 3 - The spouse, descendants, asc endants, and brothers and sisters (SDABS) may bring the action mentioned in No. 9 in the order named. What are the other legal grounds for awarding moral damage s? - Willful injury to property if such damages are justly due. - Breaches of con tract where the defendant acted fraudulently or in bad faith. (Art. 2220) (asked five times from 1990 to 2008) BAR QUESTION Ortillo contracts Fabricato, Inc. to supply and install tile materials in a buil ding he is donating to his province. Ortillo pays 50% of the contract price as p er agreement. It is also agreed that the balance would be payable periodically a fter every 10% performance until completed. After performing about 93% of the co ntract, for which it has been paid an additional 40% as per agreement, Fabricato , Inc. did not complete the project due to its sudden cessation of operations. I nstead, Fabricato, Inc. demands payment of the last 10% of the contract despite its non-completion of the project. Ortillo refuses to pay, invoking the stipulat ion that payment of the last amount of 10% shall be upon completion. Fabricato, Inc. brings suit for the entire 10% plus damages. Ortillo counters with claims f or (a) moral damages for Fabricato, Inc.s unfounded suit which has damaged his re putation as a philanthropist 420 TORTS & DAMAGES

CIVIL LAW REVIEWER and respected businessman in his community, and (b) attorneys fees. (a) Does Ortillo have a legal basis for his claim for moral damages? (b) H ow about his claim for attorneys fees, having hired a lawyer to defend him? Sugge sted Answer: (a) There is no legal basis to Ortillos claim for moral damages. It does not fall under the coverage of Article 2219 of the New Civil Code. (b) Orti llo is entitled to attorneys fees because Fabricatos complaint is a case of malici ous prosecution or a clearly unfounded civil action (Art. 2208 [4] and [11], NCC ). Chapter IX. DAMAGES line with prevailing jurisprudence. In addition, the presence of the qualifying circumstances of minority and relationship entitles the offended party to exempl ary damages in the amount of P25K. People vs. Teodorico Cleopas and Pirame (2000 ): The award of P50,000 from each accused as moral and exemplary damages, howeve r, is unsupported. The widow of the victim did not testify on any mental anguish or emotional distress, which she suffered as a result of her husbands death. A rcona vs. CA: As borne out by human nature and experience, a violent death invar iably and necessarily brings about emotional pain and anguish on the part of the victims family. Such violent death or brutal killing not only steals from the fa mily of the deceased his precious life, deprives them forever of his love, affec tion and support, but often leaves them with the gnawing feeling that an injusti ce has been done to them. For this reason, moral damages must be awarded even in the absence of any allegation and proof of the heirs emotional suffering. v. Lab or Cases Triple Eight Interated Services, Inc. vs. NLRC: Moral damages are recov erable where the dismissal of the employee was attended by bad faith or fraud or constituted an act oppressive to labor, or was done in a manner contrary to mor als, good customs, or public policy. Likewise, exemplary damages may be awarded if the dismissal was effected in a wanton, oppressive or malevolent manner. Fact ors in determining amount: (1) Political, social, financial status, of the perso n offended as well as the business and financial standing of the offender. (2) D egree of anguish (3) Sentimental value where applicable ILLUSTRATIONS: Kierulf e t al. vs. CA : The social and financial standing of a claimant of moral damages may be considered in awarding moral damages only if he or she was subjected to c ontemptuous ii. Moral Damages Prosecution in Malicious Mijares vs. CA: Moral damages cannot be recovered from a person who has filed a complaint against another in good faith, or without malice or bad faith. If dama ge results from the filing of the complaint, it is damnum absque injuria. Castil lo vs. Castillo: The adverse result of an action does not per se make the act wr ongful and subject the actor to the payment of moral damages. The law could not have meant to impose a penalty on the right to litigate; such right is so precio us that moral damages may not be charged on those who may exercise it erroneousl y. iii. Moral Damages in Rape People vs. Calongui: Anent the award of damages, c ivil indemnity ex delicto is mandatory upon finding of the fact of rape while mo ral damages is awarded upon such finding without need of further proof because i t is assumed that a rape victim has actually suffered moral injuries entitling t he victim to such award. If without factual and legal bases, no award of exempla ry damages should be allowed. iv. Moral Damages in Murder People vs. Barcena: TC correctly awarded P75K as civil indemnity which is awarded if the crime is qual ified by circumstances which warrant the imposition of the death penalty. Howeve r, the award of P50K as moral damages must be increased to P75K in 421

TORTS & DAMAGES

CIVIL LAW REVIEWER Chapter IX. DAMAGES conduct despite the offenders knowledge of his or her social and financial stan ding. PNB vs. CA: Petitioner has not presented adequate evidence to show that pr ivate respondent is indeed a big time gambler. Petitioner has besmirched private respondents reputation and has considerably caused him undue humiliation. The records further show that plaintiff is a prominent businessman, licensed and eng aged in the real estate business. He is at the same time a consultant of Dizon-E sguerra Real Estate Company. Defendant treated him as a valued and VIP client. B ecause of the banks refusal to encash the entire one million face amount of his managers checks, he was so embarrassed for he was not able to purchase a house and lot in Baguio City. Lopez, et al. vs. Pan American World Airways: Internati onal carriers like defendant know the prestige of such an office. For the Senate is not only the Upper Chamber of the Philippine Congress, but the nations trea ty-ratifying body. And he was former Vice-President of the Philippines. An award of P100,000,000 is appropriate. Mrs. Maria J. Lopez, as wife of Senator Lopez, shared his prestige and therefore his humiliation. Mr. and Mrs. Alfredo Montelib ano, Jr. were traveling as immediate members of the family of Senator Lopez. As such they likewise shared his prestige and humiliation. Producers Bank vs. CA: I n the case of Leopoldo Araneta v. Bank of America, we held that: "The financial credit of a businessman is a prized and valuable asset, it being a significant p art of the foundation of his business. Any adverse reflection thereon constitute s some financial loss to him. The damage to private respondents reputation and s ocial standing entitles them to moral damages. Strebel vs. Figueras, et al.: As a general rule, the right of recovery for mental suffering resulting from bodily injuries is restricted to the person who has suffered the bodily hurt, and ther e can be no recovery for distress caused by sympathy for anothers suffering, or for fright due to a wrong against a third person. A husband or wife cannot reco ver for mental suffering caused by his sympathy for the others suffering. For C orporations: ABS-CBN vs. CA: The award of moral damages cannot be granted in fav or of a corporation because, being an artificial person and having existence onl y in legal contemplation, it has no feelings, no emotions, no senses, It cannot, therefore, experience physical suffering and mental anguish, which call be exper ienced only by one having a nervous system. The statement in People vs. Manero a nd Mambulao Lumber Co. vs. PNB that a corporation may recover moral damages if i t "has a good reputation that is debased, resulting in social humiliation" is an obiter dictum. NAPOCOR vs. Philipp Brothers: While it is true that besmirched r eputation is included in moral damages, it cannot cause mental anguish to a corp oration, unlike in the case of a natural person, for a corporation has no reputa tion in the sense that an individual has, and besides, it is inherently impossib le for a corporation to suffer mental anguish. BAR QUESTION Rosa was leasing an apartment in the city. Because of the Rent Cont rol Law, her landlord could not increase the rental as much as he wanted to, nor terminate her lease as long as she was paying her rent. In order to force her t o leave the premises, the landlord stopped making repairs on the apartment, and cause the water and electricity services to be disconnected. The difficulty of l iving without electricity and running water resulted in Rosas suffering a nervous breakdown. She sued the landlord for actual and moral damages. Will the action prosper? Explain. Answer: Yes, based on quasi-delict under the human relations p rovisions of the New Civil Code (Articles 19, 20 and 21) because the act committ ed by the lessor is contrary to morals. Moral damages are recoverable under Arti cle 2219 (10) in relation to Article 21. Although the action is based on quasi-d elict and not on contract, actual damages may be recovered if the lessee is able to prove the losses and expenses she suffered. Alternative Answers: (a) Yes, ba sed on breach of contract. The lessor has the obligation to undertake repairs to make the apartment habitable and to maintain the lessee in the peaceful and ade quate enjoyment of the lease for the entire duration of the contract (Article 16

54, NCC). Since there was willful breach of contract by the lessor, the lessee i s entitled to moral damages under Article 2220, NCC. She is also entitled to act ual damages, e.g. loss of income, medical expenses, etc., which she can prove at trial. (b) Yes, based on contract and/or on tort. The lessor willfully breached his obligations under Article 1654, NCC, hence, he is liable for breach of cont ract. For such breach, the lessee may recover moral damages under Art. 2220 of t he NCC, and actual damages that she may have suffered on account thereof. And si nce the conduct of the lessor was contrary to morals, he 422 TORTS & DAMAGES

CIVIL LAW REVIEWER may also be held liable for quasi-delict. The lessee may reco ver moral damages under Article 2219 (10) in relation to Article 21, and all act ual damages which she may have suffered by reason of such conduct under Articles 9, 20 and 21. (c) Yes, the action should prosper for both actual and moral dama ges. In fact, even exemplary damages and attorneys fees can be claimed by Rosa, o n the authority of Magbanua vs. IAC (137 SCRA 328), considering that, as given, the lessors willful and illegal act of disconnecting the water and electric servi ces resulted in Rosas suffering a nervous breakdown. Art. 20 NCC and Art. 21 NCC authorize the award of damages for such willful and illegal conduct. Chapter IX. DAMAGES nominal damages for insensitivity, inadvertence or inattention to their customer s anxiety and need of the hour. 4. Temperate Damages Temperate or moderate dama ges are more than nominal but less than compensatory damages. It may be recovere d when some pecuniary loss has been suffered but its amount can not be provided with certainty. (Art. 2224) Temperate damages must be reasonable under the circu mstances. (Art. 2225) i. Requisites: (1) There is actual damage. (2) The pecunia ry amount of the damage cannot be proved. (3) Amount must be reasonable. In case s where the resulting injury might be continuing and possible future complicatio ns directly arising from the injury, while certain to occur are difficult to pre dict, temperate damages can and should be awarded on top of actual or compensato ry damages; in such cases there is no incompatibility between actual and tempera te damages. Citytrust Bank vs. IAC: Temperate damages are incompatible with nomi nal damages hence, cannot be granted concurrently. Pleno vs. CA: Temperate damag es are included within the context of compensatory damages (RCPI vs. CA). ". . . There are cases where from the nature of the case, definite proof of pecuniary loss cannot be offered, although the court is convinced that there has been such loss. For instance, injury to ones commercial credit or to the goodwill of a b usiness firm is often hard to show certainty in terms of money. (NOTE: In this c ase actual and temperate damages were awarded. It is postulated that the actual damages is for the car while the temperate damages is for the lost actual income not sufficiently proved.) 5. Liquidated Damages Those agreed upon by the partie s to a contract, to be paid in case of breach thereof. (Art. 2226) Grounds for e quitable reduction: - iniquitous or - unconscionable. (Art. 2227) Stipulation is not controlling: 3. Nominal Damages Art. 2221. Nominal damages are adjudicated in order that a right of the plaintif f, which has been violated or invaded by the defendant, may be vindicated or rec ognized, and not for the purpose of indemnifying the plaintiff for any loss suff ered by him. Art. 2222. The court may award nominal damages: in every obligation in Article 1157, or where any property right has been invaded. Art. 2223. Adjud ication of nominal damages precludes: further contest upon the right involved al l accessory questions between the parties or their respective heirs and assigns. General Rule: One does not ask for nominal damages, and it is in lieu of the act ual, moral, temperate, or liquidated damages. Nominal damages are incompatible w ith: actual, temperate and exemplary damages. Armovit vs. CA: Nominal damages ca nnot coexist with actual or compensatory damages. Francisco v. Ferrer: No moral or exemplary damages was awarded. Nevertheless, when confronted with their failu re to deliver on the wedding day the wedding cake ordered and paid for, petition ers gave the lame excuse that delivery was probably delayed because of the traff ic, when in truth, no cake could be delivered because the order slip got lost. F or such prevarication, petitioners must be held liable for TORTS & DAMAGES i. Requisites: (1) A legal right has been violated. (2) There is no loss or dama ge suffered or such cannot be proven or was not proved. (3) The award is to vind

icate the right violated. 423

CIVIL LAW REVIEWER Chapter IX. DAMAGES When the breach of the contract is not the one contemplated by the parties in ag reeing upon the liquidated damages. In this case, the law shall determine the me asure of damages. (Art. 2228) These damages are agreed upon in a contract in cas e of breach thereof. There is no need to prove the amount, only the fact of the breach. The amount can be reduced if: - unconscionable as determined by the cour t - partial or irregular performance. General Rule: The penalty shall substitute the indemnity for damages and the payment of the interests in case or breach. E xceptions (1) When there is a stipulation to the contrary. (2) When the obligor is sued for refusal to pay the agreed penalty. (3) When the obligor is guilty of fraud. 6. Exemplary/Corrective Damages Art. 2229. Nature of exemplary or correc tive damages - Imposed by way of example - or correction for the public good - i n addition to the moral, temperate, liquidated or compensatory damages. Exemplar y damages cannot be recovered as a matter of right; discretion of the court. (Ar t. 2233) i. Requisites to recover exemplary damages and liquidated damages agreed upon in ad dition to exemplary (Art.2234): The plaintiff must show that he is entitled to m oral, temperate or compensatory damages: If arising from When exemplary damages are granted the crime was committed with an aggravating circumstance/s defendant acted with gross negligence defendant ac ted in a wanton, fraudulent, reckless, oppressive, or malevolent manner (WFROMM) Art. 2230 Crimes Art. 2231 Art. 2232 Quasi-delicts Contracts and Quasi- contracts A stipulation whereby exemplary damages are renounced in advance shall be null a nd void. (Art. 2235) ii. General Principles (1) Amount need not be proven. (2) C annot be recovered as a matter or right; may be waived. (3) An employer may be s ubsidiarily liable to pay moral, actual, temperate or liquidated damages arising from an employees criminal offense, but NOT as to exemplary damages because aggr avating circumstances are personal to the accused. PNB vs. CA: However, the awar d of P1,000,000 exemplary damages is also far too excessive and should likewise be reduced to an equitable level. Exemplary damages are imposed not to enrich on e party or impoverish another but to serve as a deterrent against or as a negati ve incentive to curb socially deleterious actions. 424 TORTS & DAMAGES - end of Torts & Damages -

CIVIL LAW REVIEWER TABLE of CONTENTS PRIVATE INTERNATIONAL LAW Table of Contents Chapter I. Introduction.................................427 Chapter II. Jurisdic tion ................................429 I. Bases of Exercise of Judicial Jurisd iction 429 II. Exercise of Jurisdiction .....................429 III. Ways of De aling with Jurisdiction in a Conflicts Problem.................................. .....430 Chapter III. Choice of Law ...........................431 I. Approaches to Choice of Law ...........431 Chapter IV. Characterization .................. .....433 I. Types of Characterization .................433 II. Depecage ........ ..................................433 Chapter V. Renvoi ........................ ................434 I. Definition ...........................................434 II. Ways of Dealing with Renvoi ............434 Chapter VI. Notice and Proof of Foreign Law ................................................................... ....435 I. Proof of Foreign Law.........................435 II. Exceptions to th e Application of Foreign Law 435 Chapter VII. Nationality....................... .........436 I. Determination of Nationality ..............436 II. Procedure for Naturalization .............436 III. Loss of Philippine Citizenship ........... 437 IV. Problems in Applying the Nationality Principle ......................... ............................438 Chapter VIII. Domicile ......................... .........439 I. Domicile ............................................439 II. Com parative Merits and Demerits of Domicile and Nationality ....................... .....440 Chapter IX. Principles on Personal Status and Capacity................. ................................441 I. Definition .............................. .............441 II. Beginning and End of Personality.....441 III. Absence ..... .......................................441 IV. Name............................. ....................442 V. Age of Majority ..................................442 VI. Capacity ............................................442 Chapter X. Family Relations........................443 I. Marriage ............................... .............443 II. Divorce and Separation.....................445 III. Annulme nt and Declaration of Nullity 445 IV. Parental Relations........................ .....446 V. Adoption ............................................446 Chapter XI. Property .................................... 447 I. Controlling LawLex Situs/Le x Rei Sitae 447 II. Exceptions to Lex Situs..................... 447 III. Situs of Certain Properties ................ 447 Chapter XII. Contracts .............. ................... 449 I. Extrinsic Validity of Contracts ........... 449 II. E xtrinsic Validity of Contracts ........... 449 III. Capacity to Enter Into Contr acts....... 449 IV. Choice of Law Issues in Conflicts Contracts Cases .......... .............................. 449 V. Limitation Choice of Law.................. . 450 VI. Applicable Law in the Absence of Effective Choice..................... .................... 450 Chapter XIII. Succession ............................. 451 I. Extrinsic Validity (Arts. 17, 815-817, CC) 451 II. Intrinsic Validity ... .............................. 451 III. Interpretation of Wills ................ ........ 451 IV. Revocation ........................................ 451 V. Prob ate.............................................. 451 VI. Administration of Esta tes .................. 452 VII. Trusts.......................................... .. 452 Chapter XIV. Torts and Crimes ................... 453 I. Torts .......... ........................................ 453 II. Crimes......................... ...................... 454 Chapter XV. Torts and Crimes .................... 455 I. Personal Law of Corporations .......... 455 II. Domicile/Residence of Corpor ations 455 III. Jurisdiction Over Foreign Corporations 455 IV. Right of Foreign Corporations to Bring Suit 456 Chapter XVI. Foreign Judgments ............... 45 7 I. Recognition v. Enforcement.............. 457 II. Bases of Recognition and E nforcement 457 III. Policy of Preclusion Underlying Recognition and Enforcement ................... 457 IV. Requisites for Recognition or Enforcement .......... .................................... 457 V. Procedures for Enforcement ......... .... 457 VI. Effect of Foreign Judgment in the Philippines .....................

............................ 458 426 PRIVATE INTERNATIONAL LAW

CIVIL LAW REVIEWER Chapter I. INTRODUCTION Lyvette San Diego Lead Writer Viktor Fontanilla Writer PRIVATE INTERNATIONAL LAW PRIVATE INTERNATIONAL LAW TEAM Chapter I. Introduction PRIVATE INTERNATIONAL LAW: It is a branch or part of Philippine Law which regula tes the application of foreign law within Philippine jurisdiction in the resolut ion of cases involving foreign elements. It is that part of municipal law which governs cases involving a foreign element. more commonly known in other jurisdic tions as conflict of laws General Nature of Private International Law It is a me thod or technique. It is not a system of substantive rules. It has no material c ontent in terms of rights and duties, and hence it does not provide immediate so lution to the issue at hand. It only points out the legal system which rules are to be applied to a particular dispute. It is a modus vivendi among the private law systems of the world by which they may apply one anothers laws. The principle s of conflict of laws incorporated in municipal laws of many states are based on comity of nations. COMITY: is neither a matter of absolute obligation nor of me re courtesy and good will, it is the recognition which one nation allows within its territory to the legislative, executive, or judicial acts of another nation having due regard both to international duty and convenience, and to the rights of its own citizens or of other persons who are under the protection of its laws (Hilton v. Guyot, 1895) FOREIGN ELEMENT may refer to parties, property, events, or transactions. PRIVATE INTERNATIONAL LAW vs.PUBLIC INTERNATIONAL LAW Basis Parties PRIL PIL Primarily states and international organizations Exceptio n: Human rights cases private transactions between individuals CIVIL LAW Kristine Bongcaron Patricia Tobias Subject Editors ACADEMICS COMMITTEE Kristine Bongcaron Michelle Dy Patrich Leccio Editors-in-Chief PRINTING & DISTRIBUTION Kae Guerrero DESIGN & LAYOUT Pat Hernandez Viktor Fontanilla Rusell Aragones Romualdo Menzon Jr. Rania Joya LECTURES COMMITTEE Michelle Arias Camille Maranan Angela Sandalo Heads Katz Manzano Mary Rose Beley Sam Nuez Krizel Malabanan Arianne Cerezo Marcr ese Banaag Volunteers MOCK BAR COMMITTEE Lilibeth Perez 427 PRIVATE INTERNATIONAL LAW BAR CANDIDATES WELFARE Dahlia Salamat

LOGISTICS Charisse Mendoza SECRETARIAT COMMITTEE Jill Hernandez Head Loraine Mendoza Faye Celso Mary Mendoza Joie Bajo Members Individuals corporations or Transactions state-to-state or government-togovernment matters

CIVIL LAW REVIEWER Sources Custom Treaty general principles of law recognized by civilized nations judicial decisions teachings of the most highly qualified pub licists Chapter I. INTRODUCTION

National conflict rule International conflict rules Remedies resort to forum court or administrative tribunals (as provided by munic ipal laws of the state)

diplomatic protest negotiation, conciliation, arbitration adjudication before in ternational tribunal use of force war

PRIL v. Municipal law: presence of foreign element SOURCES 1. Codes and statutes 2. Treaties and international conventions 3. Treat ises, commentaries, and studies of learned societies 4. Judicial decisions Examp les of Conflict of Law Rules in the Philippines 1. Art. 15 CC: Lex Patriae 2. Ar t. 1251 (par. 3) CC: Lex Domicili 3. Art. 16 CC: Lex Situs/ Lex Rei Sitae 4. Art . 17 (par. 1) CC: Lex Loci Contractus 5. Art. 71 CC: Lex Loci Celebrationis 6. A rt. 26 (par. 1) FC: Lex Loci Celebrationis 7. Art. 1306 CC: Lex Loci Intentionis General Process in the Resolution of Conflict Problem 1. Jurisdiction Where can or should litigation be initiated? 2. Characterization of Cause of Action Which legal category does the case fall into? 3. Choice of law Which law will the cou rt apply? 4. Recognition and enforcement of judgments Where can the resulting ju dgment be enforced? 428 PRIVATE INTERNATIONAL LAW

CIVIL LAW REVIEWER Chapter II. JURISDICTION Chapter II. Jurisdiction I. BASES OF JURISDICTION II. EXERCISE OF JURISDICTION III. WAYS OF DEALING WITH JURISDICTION IN A CONFLICTS PROBLEM b. institution of legal proceedings wherein the courts power over the property is recognized and made effective 2. Basis of jurisdiction: the presence of the pro perty within the territorial jurisdiction of the forum C. Jurisdiction over the SUBJECT MATTER Acquisition 1. competence of the court to hear, try and decide the case is conferred by law 2. necessary that said power be properly invoked by th e filing of petition 3. cannot be conferred by mere consent of parties JURISDICTION 1. Judicial jurisdiction - the power or authority of a court to try a case, rend er judgment and execute it in accordance with law. 2. Legislative jurisdictionthe ability of the state to promulgate laws and enforce them on all persons and property within its territory. I. Bases of Exercise Jurisdiction of Judicial II. Exercise of Jurisdiction TRADITIONAL BASIS: 1. States PHYSICAL POWER over persons and property within its territory 2. This explains the distinctions made between 1 actions in personam a nd actions in rem or 2 quasi in rem , dating back to the case of Pennoyer v. Nef f (1878). In the US: The conceptual basis for the exercise of jurisdiction has s hifted from territorial power to considerations of MINIMUM CONTACTS and FUNDAMEN TAL FAIRNESS. 1. International Shoe Co. v. Washington (1945): Due process only r equires that the defendant who is not present within the territory of the forum have minimum contacts with it such that the maintenance of the suit does not off end traditional notions of fair play and substantial justice. 2. Mullane v. Cent ral Hanover Bank & Trust Co. (1950): The standard for adequate notice is WON it is reasonably certain to inform those affected or, where conditions do not reaso nably permit such notice, WON the form chosen is not substantially less likely t o bring home notice than other of the feasible and customary substitutes. 3. Sha ffer v. Heitner (1977): The minimum contacts and fundamental fairness test shoul d be satisfied regardless of whether the proceedings are in rem, quasi in rem, o r in personam, and the minimum contacts 1 A. Jurisdiction over the PERSON Acquisition 1. Over plaintiff: filing of suit 2. Over defendant: a. entry of appearance, or b. service of legal process/summons I n rem proceeding: service of summons by publication Asiavest Limited v. CA, 1998 : Jurisdiction over the person of the defendant is not a prerequisite to confer jurisdiction on the court provided that the court acquires jurisdiction over the res. Nonetheless summons must be served upon the defendant not for the purpose of vesting the court with jurisdiction but merely for satisfying the due process requirement. In personam proceeding: 1. General Rule: Personal service of summo ns or substituted service, PROVIDED, the defendant is within the territorial jur isdiction of the court 2. Exception: In Gemperle v. Schenker wherein a non-resid ent was served with summons through his wife, who was a resident of the Philippi nes and who was his representative and attorney-in-fact in a prior civil case fi

led by him; moreover, the second case was a mere offshoot of the first case. B. Jurisdiction over the PROPERTY 1. Acquisition a. seizure of property under a pro cess 429 PRIVATE INTERNATIONAL LAW legal Actions in personam are directed against specific persons and seek personal judg ments. 2 Actions in rem or quasi in rem are directed against the thing or proper ty or status of a person and seek judgments with respect thereto as against the whole world and against particular persons, respectively.

CIVIL LAW REVIEWER Chapter II. JURISDICTION must exist among the forum, defendant, and the cause of action. 4. Long-arm stat utes: statutes that allow the forum state to exercise jurisdiction over a non-re sident defendant, provided that the prospective defendant has sufficient minimum contacts with the forum state. III. Ways of Dealing with Jurisdiction in a Conflicts Problem A. Dismiss the Case Grounds 1. For Lack of jurisdiction over the subject matter o r over the parties to the suit 2. On the ground of FORUM NON CONVENIENS Doctrine of Forum Non Conveniens (Asked in 94, 04 BAR EXAMINATIONS) 1. This literally mea ns the forum is inconvenient. 2. This doctrine requires the court to dismiss the c ase on the ground that the controversy may be suitably tried elsewhere. The doct rine of forum non conveniens should NOT be used as a ground for a motion to dism iss because Sec. 1, Rule 16 of the Rules of Court does not include said doctrine as a ground. The propriety of dismissing a case based on the principle of forum non conveniens requires a factual determination; hence it is more properly cons idered as a matter of defense. (Bank of America NT&SA v. CA, 2003) 3. Reasons fo r applying forum non conveniens: a. To prevent abuse of courts processes b. Burde nsome on the court or taxpayers c. Local machinery is inadequate to effectuate a right (no way for the court to secure evidence and attendance of witnesses) d. Avoid global forum shopping B. Assume Jurisdiction 1. Proceed to Characterizatio n (discussed under CHARACTERIZATION) 2. Apply either: Forum Law or Foreign Law ( will be discussed more on the CHOICE OF LAW) When the court assumes jurisdiction , it may apply forum law or foreign law. Forum law should be applied whenever th ere is good reason to do so because forum law is the basic law. Factors which justify the application of forum law 1. A specific law of the foru m decrees that internal law should apply. 2. The proper foreign law was not prop erly pleaded and proved. 3. The case falls under any of the exceptions to the ap plication of foreign law: a. The foreign law is contrary to an IMPORTANT PUBLIC POLICY of the forum b. The foreign law is PROCEDURAL in nature c. The foreign la w is PENAL in nature d. The case involves real or personal PROPERTY SITUATED IN THE FORUM (Lex Situs) e. The issue involved in the enforcement of foreign claim is FISCAL or ADMINISTRATIVE f. The foreign law is contrary to GOOD MORALS (contr a bonus mores) g. The application of foreign law will work UNDENIABLE INJUSTICE to citizens of the forum h. The application of foreign law might endanger the VI TAL INTERESTS of the state 430 PRIVATE INTERNATIONAL LAW

CIVIL LAW REVIEWER Chapter III. CHOICE of LAW Chapter III. Choice of Law I. APPROACHES TO CHOICE OF LAW A. TRADITIONL; APPROACHES B. MODERN APPROACHES (Alabama Great Southern Railroad v. Carroll, 1892) Criticism: Failure to resolve conflicts cases with considerations of policy and fairness as it is too technic al. CHOICE OF LAW The determination by the court of whether to apply forum law or fo reign law The factors that justify exercise of judicial jurisdiction may be the same factors used to determine choice of law. BUT, jurisdiction and choice of la w are two different concepts. A court may exercise jurisdiction but apply foreig n law OR not exercise jurisdiction, although its internal law may be applied as the proper law. 2. Cooks Local Law Theory Treats conflicts cases as a purely domestic case that d oes not involve a foreign element Criticism: narrow-minded by favoring an exagge rated local policy 3. Cavers Principle of Preference Choice of law should be dete rmined by considerations of justice and social expediency and should not be the result of mechanical application of the rule or principle of selection. B. Moder n Approaches: relate to reaching appropriate results in particular cases 1. Plac e of the Most Significant Relationship Factual contacts evaluated depending on t heir relative importance and relevance to the issue at hand Identifies a plurali ty of factors that must be considered in the light of choice of law principles A mong these factors are: needs of the interstate and international system, releva nt policies of the concerned and interested states, justified expectations of th e parties, basic policies underlying a particular field of law, certainty, predi ctability and uniformity of result and ease in the determination of law to be ap plied Criticism: No standard to evaluate significance of each contact In applyin g the grouping of contacts theory, courts, instead of regarding as conclusive th e intention of the parties or the place of the making or performance, lay emphas is rather on the law of the place which has the most significant contacts with t he matter in dispute. (Auten vs. Auten, 1954) 2. Interest Analysis Looks at the policy behind the laws of the involved states and the interest each state has in applying its own law. Factual contacts alone do not determine outcome of the ca se UNLESS they reflect a state policy which would be advanced by the application of the substantive state law. I. Approaches to Choice of Law Ideally, all choice of law theories should advance the notions of JUSTICE and PR EDICTABILITY. A. Traditional Approaches: emphasize simplicity, convenience and u niformity 1. Vested Rights Theory An act done in a foreign jurisdiction gives rise to the existence of a right if the laws of that state provide so. This right vests in t he plaintiff and he carries it with him to be enforced in any forum he chooses t o bring suit The applicable law is the law of the place of occurrence of the LAS T ACT necessary to complete the cause of action. If the place of the last act cr eates no legal right, there is nothing for the forum to recognize and enforce, e ven if its own law creates such a right. Illustration: Carroll is an employee of Alabama Corp. Both EE and ER are residents of Alabama. Carroll was injured in t he course of work in Mississippi due to negligent conduct of co-employees in Ala bama. Mississippi bars recovery. Alabama makes ER liable. Carroll files suit in

Alabama. There can be no recovery in this case. Although it is claimed that the negligent conduct was done in Alabama, the law of Mississippi should be applied which bars recovery since the injury was sustained in that state and such injury created the cause of action. It is the law of the place of the LAST ACT necessa ry to complete the cause of action. 431 PRIVATE INTERNATIONAL LAW

CIVIL LAW REVIEWER Chapter III. CHOICE of LAW

Court determines whether the case involves APPARENT, TRUE or FALSE conflict. a. True Conflict If there is an apparent conflict, the court takes a second look on the policies and interests of each state. If both have real interests in applyi ng their law, then apparent conflict is a true conflict. b. False Conflict If on ly one state has an actual interest in having its law applied and the failure to apply the other state law will not impair its policy Criticisms: a. Conflicts c ases were ordinarily concerned only with private and not governmental interests. b. ii.Not all state legislatures publish reports that explain background and pu rpose of laws, thus courts are left to speculate. Illustration: B and J, NY resi dents, met a car accident in Ontario thru Js fault. B sued J in NY for damages. O ntario bars recovery under a guest statute. NY does not have a similar rule. B s hould be allowed to recover. NY had a greater and more direct interest than Onta rio. NYs policy is to afford compensation to a guest tortfeasor host while Ontari os policy is to prevent fraudulent collusion to the prejudice of Ontario defendan ts and insurance companies. Ontario had no interest in denying a remedy to a NY guest against a NY host. (Babcock vs. Johnson, 1963) 5. Leflars Choice Influencing Considerations (BOPIS) a. Predictability of results ; b. Maintenance of interstate and international order; c. Simplification of the judicial task; d. Application of the better rule of law; e. Advancement of the forums governmental interests

432 PRIVATE INTERNATIONAL LAW 3. Comparative Impairment Court weighs conflicting interests and apply the law o f the state whose interest would be more impaired it its laws were not followed 4. Trautmans Functional Analysis Looks into the general policies of the state bey ond those reflected in its substantive law and to policies and values relating t o effective and harmonious intercourse between states. Looks at the policies and considers their relative weight (policy-weighing) Considers whether the law of a state reflects an emerging or regressing policy

CIVIL LAW REVIEWER Chapter IV. CHARACTERIZATION A law on prescription of actions is sui generis in Conflict o Laws in the sense that it may be viewed either as procedural or subst antive, depending on the characterization given such a law. (Cadalin v. POEA Adm inistrator, 1994) BORROWING STATUTE: (Asked in 94 BAR EXAMINATIONS) Bars the fil ing of a suit in the forum if it is already barred by the statute of limitations in the place where the cause of action arose Characterization of a statute into procedural or substantive becomes irrelevant when country of forum has Borrowin g Statute Many states including the Philippines have passed borrowing statutes t o eliminate forumshopping Section 48 of Code of Civil Procedure: If the laws of t he state or country where the cause of action arose, the action is barred, it is also barred in the Philippine Islands. Chapter IV. Characterization I. II. TYPES OF CHARACTERIZATION DEPECAGE CHARACTERIZATION (Asked in 94) The process by which a court at the beginning of t he choice of law process assigns a disputed question to an area of substantive l aw.

I. Types of Characterization A. Subject-Matter Characterization Classification of a factual situation into a legal category Illustration: Principal authorizes a person to act as his agent i n another country. Agent commits a negligent act. The law that will determine th e principals liability depends on the courts characterization of the case as: a. b. Contractual: Law of the place where the contract of agency was entered int o; or Tortious: Law of the place where tortious conduct or injury occurred II. Depecage Literally means to dissect Different aspects of a case involving a foreign element may be governed by different systems of law. Depecage is the process of cutting up the case issue by issue and applying the pertinent laws to the different asp ects Merits of Depecage: Allows the other relevant interests of the parties to b e addressed; permits the court to arrive at a functionally sound result without rejecting the methodology of the traditional approach. B. Substance-Procedure Dichotomy Classification of a factual situation into eith er procedural or substantive It directs the court to the extent it will apply fo reign law.

Substantive: if it forbids the creation of obligation (e.g., void contracts) Pro cedural: if it forbids the enforcement of the obligation(e.g., unenforce-able co ntracts, Art. 1403 of Civil Code) Procedural: traditionally classified as proced ural because they only bar the legal remedy without impairing the substantive ri ght involved. Substantive: when limitation is directed to a newly created liabil ity so specifically as to warrant saying that it qualified the right. (SPECIFICI TY TEST) Illustration: A man dies intestate domiciled in State A and with movable propert ies in State B. The conflict rules of State A refer to the laws of the domicile to determine how the mans estate should be divided. The intestate law of State B gives the widow a definite share in the estate of the deceased. But the determin

ation of the WON the woman who claims a share in the estate is a wife is referred to family law, not the laws of succession. Application of Depecage in the case: Law governing movable properties and successional rights of spouse: embody subst ance of claim Validity of marriage: affects solution because it answers a prelim inary or incidental question. b. Statutes of Limitations

PRIVATE INTERNATIONAL LAW 1. If issue substantive: court MAY apply foreign law or forum law 2. If issue ocedural: court will apply forum law REASON: It would be too burdensome and nvenient on the part of the forum to apply procedural laws of another country Two issues whose classification (as procedural or substantive) is debatable: Statute of Frauds 433 pr inco 3. a.

CIVIL LAW REVIEWER Chapter V. RENVOI Chapter V. Renvoi (Asked in 97 BAR EXAMINATIONS) I. II. DEFINITION WAYS OF DEALING WITH RENVOI I. Definition A. Definition A procedure whereby a jural matter presented is referred by the co nflict of laws rules of the forum to a foreign state, the conflict of laws rule of which, in turn, refers the matter to the law of the forum or third state. Doe s not apply to a false conflict problem Remission: reference is made back to the law of the forum Transmission: reference to a third state B. Usefulness Used to avoid unjust results C. Criticisms 1. If both courts follow the same theory, th ere would be no end to the case since the courts would be referring it back to e ach other. 2. Courts may be unnecessarily burdened with the task of identifying the choice of law rules of another state. Illustration: STATE A Internal Law Conflict Laws STATE B Internal Law Conflict Laws B. Accept the Renvoi The court may refer not just to another states internal law but to the whole law which includes choice of law rules applicable in multi-stat e cases. Internal Law of the forum court or a third state is applied. Has the sa me effect as applying Single Renvoi Aznar vs. Garcia, (1963): Art. 16 of the Phi lippine Civil Code provides that the national law of the decedent governs the va lidity of his testamentary dispositions. Such national law means the conflict of laws of the California Code, which authorizes the reference or return of the qu estion to the law of the testators domicile. The conflict of laws rule in Califor nia refers back the case, when a decedent is not domiciled in California, to the law of his domicile (the Philippines in CAB). The Philippine court must apply i ts own law as directed in the conflict of laws rule of the state of the decedent . C. Desistance or Mutual Disclaimer The forum court upon reference to another s tates law sees that such law is limited in application to its own national and ha s no provision for application to a non-national. The same result as the accepta nce of renvoi but the process used by the forum court is to desist applying the foreign law. Internal Law of the forum court or a third state is applied. D. For eign Court Theory The forum court would assume the same position the foreign cou rt would take were it litigated in the foreign state. 434 PRIVATE INTERNATIONAL LAW There is Renvoi through Remission. II. Ways of Dealing with Renvoi A. Reject the Renvoi Conflict Rules of the forum court refer the case only to th e INTERNAL LAW of another state. Internal Law of the foreign state is applied by the forum court.

CIVIL LAW REVIEWER Chapter VI. NOTICE and PROOF of FOREIGN LAW Chapter VI. Notice and Proof of Foreign Law I. II. PROOF OF FOREIGN LAW EXCEPTIONS TO THE APPLICATION FOREIGN LAW OF II. Exceptions to the Application of Foreign Law 1. Local law expressly so provides 2. Failure to plead and prove the foreign law or judgment 3. Exceptions to the rule of comity (4P-FAGUV): o The foreign law i s contrary to an IMPORTANT PUBLIC POLICY of the forum o The foreign law is PROCE DURAL in nature o The foreign law is PENAL in nature o The case involves real or personal PROPERTY SITUATED IN THE FORUM (Lex Situs) o The issue involved iin th e enforcement of foreign claim is FISCAL or ADMINISTRATIVE o The foreign law is contrary to GOOD MORALS (contra bonus mores) o The application of foreign law wi ll work UNDENIABLE INJUSTICE to citizens of the forum o The application of forei gn law might endanger the VITAL INTERESTS of the state I. Proof of Foreign Law

General Rule: Foreign law must be pleaded and proved as a fact The party whose c ause of action or defense depended on the foreign law has the burden of proving the foreign law. Exception: Court may take judicial notice of foreign laws which are already within its ACTUAL KNOWLEDGE such as when: they are well and general ly known OR they have been actually ruled upon in other cases before it and none of the parties concerned claim otherwise (PCIB v. Escolin, 1974) Foreign law pr oved by 1. an OFFICIAL PUBLICATION of the law; OR 2. a COPY of the law attested b y the officer having the legal custody of the record, or by his deputy. If such record is not kept in the Philippines, it must be accompanied by a certificate t hat such officer has the custody 3 Alternatives in case of failure to plead and prove foreign law 1. DISMISS the case for failure to establish a cause of action 2. Apply FORUM LAW, conclude that parties acquiesce to its application. 3. PROCE SSUAL PRESUMPTION (Asked in 85, 86, 87, 88,89, 90, 91, 92, 93 and 94) Forum presu the foreign law is the same as the forum law. Factors in deciding whether to app ly domestic law or decide against the party who has the burden of proving the co ntents of foreign law 1. degree of PUBLIC INTEREST involved 2. ACCESSIBILITY of t he foreign law materials to the parties 3. probability that the plaintiff is mer ely FORUM-SHOPPING 4. SIMILARITIES between the forum law and foreign law 435 PRIVATE INTERNATIONAL LAW

CIVIL LAW REVIEWER Chapter VII. NATIONALITY Chapter VII. Nationality I. II. III. IV. DETERMINATION OF NATIONALITY PROCEDURE FOR NATURALIZATION LOSS O F PHILIPPINE CITIZENSHIP PROBLEMS IN APPLYING THE NATIONALITY PRINCIPLE The Constitution enumerates FILIPINO CITIZENS who are

Most civil law countries such as the Philippines follow the NATIONAL LAW THEORY: (Asked in 98, 04, BAR EXAMINATIONS) It is the nationality or citizenship of the individual, which regulates the following: Civil status Capacity Condition Fami ly rights and duties Laws on Succession Capacity to succeed According to the Sup reme Court, it is a conflict of laws theory by virtue of which jurisdiction over the particular subject matter affecting a person is determined by the latters na tionality. (Ellis vs. Republic, 1963) In the Philippines, the nationality princi ple is expressed in Art. 15 of the Civil Code as follows: Sec.1, Art IV. The following are citizens of the Philippines: (1) Those who are citizens of the Philippines at the time of the adoption of this Constitution; (2 ) Those whose fathers or mothers are citizens of the Philippines; (3) Those born before January 17, 1973, of Filipino mothers, who elect Philippine citizenship upon reaching the age of majority; and (4) Those who are naturalized in accordan ce with law.

Article 15, Civil Code. Laws relating to family rights and duties, or to status, condition and capacity of persons are binding upon citizens of the Philippines even though living abroad. 1. Natural-Born Citizens DEFINITION: Those who are citizens of the Philippines w ithout having to perform any act to acquire or perfect citizenship. Two principl es: JUS SOLI looks to the PLACE of BIRTH to determine ones nationality JUS SANGUI NIS - means rule of DESCENT OR BLOOD - Principle followed in the Philippines 2. Citizens by Naturalization NATURALIZATION: confers to an alien a nationality aft er birth by any means provided by law. In the Philippines, this is done by judic ial method under CA No. 73 as amended by RA 530. II. Procedure for Naturalization I. Determination of Nationality [NOTE: N.B. This is a proper subject matter of Political Law but is important to know as background if the Conflicts question asks you to decide the Choice of L aw involving nationality. This was asked in the bar exams as part of PRIL.] Qual ifications for Naturalization 1. Must not be less than 21 years old on the date o f the hearing of the petitions 2. Resided in the Philippines for a continuous pe riod of not less than 10 years EXCEPTION: may be reduced to 5 years in the ff. c ases: a. Honorably held office under the Government or any of its subdivisions b . Established a new industry or introduced a useful invention c. Married to a Fi lipino woman/man

436 PRIVATE INTERNATIONAL LAW Each state has the prerogative and authority to determine by its own municipal l aw who are its nationals or citizens. The Hague Convention on Conflict of Nation al Laws states this principle in the following provisions: 1. Article 1. It is f or each State to determine who are its nationals. This law shall be recognized b y other States insofar as it is consistent with international convention, intern ational customs, and the principles of law generally recognized with regard to n ationality. 2. Article 2. Any question as to whether a person possesses the nati onality of a particular State shall be determined in accordance with the law of that State.

CIVIL LAW REVIEWER Chapter VII. NATIONALITY d. Engaged as a teacher in a public/private school, not exclusive for a particul ar nationality, for 2 years e. Born in the Philippines 3. Of good moral characte r, believes in the Constitution, and conducted himself in a proper and irreproac hable manner during the entire period of his residence 4. Own real estate in the Phils. worth not less than P5,000 or have a lucrative trade, profession or lawf ul occupation 5. Must be able to speak and write English or Spanish and any one of the principal Philippine languages 6. Enrolled his minor children in any of t he public or private schools recognized by the Bureau of Private Schools where P hil. history, government and civics are taught during the entire period of the r esidence required of him, prior to the hearing of his petition Disqualifications for Naturalization 1. Convicted of a crime involving moral turpitude 2. That the applicants state of origin does not grant reciprocal rights to Filipino citizens at the time of the hearing of his application Procedure for Naturalization 1. DE CLARATION OF INTENT 1 year prior to the filing of the petition, unless the appli cant is exempted EXEMPTIONS: a. Persons born in the Philippines and who have rec eived their primary and secondary education in schools recognized by the Governm ent here and are not limited to any race or nationality b. Resided continuously in the Philippines for 30 years or more c. Widow and minor children of an alien who declared his intention to become a citizen and dies before he is actually na turalized 2. PETITION FOR NATURALIZATION 3. PUBLICATION in the Official Gazette or newspaper of general circulation 4. HEARING 5. If the petition is approved, t here will be a REHEARING two years after the promulgation of the judgment awardi ng naturalization 6. Taking of the OATH of ALLEGIANCE III. Loss of Philippine Citizenship A Filipino citizen may lose his citizenship in the following ways: 1. By NATURAL IZATION in foreign countries; 2. By EXPRESS RENUNCIATION of citizenship; 3. By s ubscribing to an OATH of ALLEGIANCE to support the constitution or laws of a for eign country upon reaching 21 years of age or more, subject to certain exception s; 4. By rendering service to, or accepting COMMISSION IN THE ARMED FORCES of a foreign country, subject to certain exceptions; 5. By having been declared by co mpetent authority, a DESERTER of the Phil. armed forces in time of war, unless p ardoned or granted amnesty 6. A WOMAN, who upon her MARRIAGE TO A FOREIGNER, if by virtue of the laws in force in her husbands country, she ACQUIRES HIS NATIONAL ITY; and 7. By CANCELLATION of the certificate of naturalization for the ff. rea sons: i. Certificate was obtained fraudulently or illegally ii. Within 5 years o f issuance of certificate, returns to his native country or foreign country to e stablish a permanent residence therein; - Remaining for more than 1 year in his native country; or - Two years in any foreign country, considered prima facie ev idence of intention of taking up his permanent residence iii. Petition made on a n invalid declaration of intention iv. Minor children failed to graduate from a public or private schools recognized by the Bureau of Private Schools where Phil . history, government and civics are taught, through the fault of their parents v. Naturalized citizens has allowed himself to be used as a dummy NOTE: A judgme nt directing the issuance of certificate of NATURALIZATION IS A MERE GRANT OF PO LITICAL PRIVILEGE, and that neither estoppel nor res judicata may be invoked to bar the State from initiating an action for its cancellation 437 PRIVATE INTERNATIONAL LAW

CIVIL LAW REVIEWER Chapter VII. NATIONALITY IV. Problems in Applying the Nationality Principle 1. Dual or Multiple Citizenship Since each state determines its own nationals, i t is possible that an individual may be CLAIMED AS A NATIONAL OF TWO OR MORE STA TES. In the case of Nottebohm (1955), the ICJ applied the principle of EFFECTIVE NATIONALITY to determine the rights of an individual who may claim multiple nat ionality DEFINITION: a genuine bond of attachment between the individual and the State NOTE: The Philippine Constitution discourages dual or multiple citizenshi p as inimical to the national interest and shall be dealt with by law. 2. Statel essness Two senses: a. DE JURE statelessness: A person has been stripped of his nationality by his former government without having an opportunity to acquire an other b. DE FACTO statelessness: A person possessed of a nationality but whose c ountry does not give him protection outside its own territory (refugees) NOTE: t he 1951 Geneva Convention of the Status of Refugees and the UN Conference on the Elimination or Reduction of Future Statelessness was convened to reduce statele ssness. It provides: Conditions such as marriage, divorce, adoption, naturalizat ion, expatriation, would not cause an individual to lose his nationality upon th e risk of being stateless States cannot deprive their nationals of their identit y as punishment or as instrument of discrimination Jus sanguinis country shall g rant its nationality to a person born within its territory, if he would otherwis e be stateless Jus soli country shall grant its nationality to a person who woul d otherwise be considered stateless when one of his parents is a citizen of the contracting state. NOTE: As long as stateless persons possess all of the qualifi cations, they can be naturalized as Philippine citizens without the requirement of reciprocity. 438 PRIVATE INTERNATIONAL LAW

CIVIL LAW REVIEWER Chapter VIII. DOMICILE Chapter VIII. Domicile I. II. DOMICILE COMPARATIVE MERITS AND DEMERITS OF DOMICILE AND NATIONALITY C. Kinds of Domicile 1. Domicile of Origin A persons DOMICILE AT BIRTH LEGITIMATE CHILD Follow the FATHERs domicile ILLEGITIMATE CHILD Follow the MOTHERs domicile I. Domicile 2. Domicile of Choice i. A persons VOLUNTARY DOMICILE The place freely chosen by a person sui juris (of full age and capacity) ii. To acquire it, there must be a concurrence of: ACTUAL RESIDENCE; and ANIMO MANENDI - intent to make it ones hom e DISTINCTION As to: condition necessary for its abandonment Domicile of Origin St ronger presumption in favor of its continuance NOT lost by mere abandonment and remains until replaced by a domicile of choice Presumed to be revived once the d omicile of choice is given up and before a new one is acquired (reverter or revi val doctrine) Domicile of Choice As compared to domicile of origin, less presump tion in favor of its continuance A. Municipal Law/Philippine Law Definition: PERSON Natural persons DOMICILE Art. 50. For the exercise of civil rights and th e fulfillment of civil obligations, the domicile of natural persons is the PLACE OF THEIR HABITUAL REDENCE. Domicile is determined by the LAW CREATING OR RECOGN IZING IT. In the absence thereof, place where legal representation or place of b usiness is. Juridical persons

CONFLICTS of LAW DEFINITION (Restatement): The place with which a person has a S ETTLED CONNECTION for certain legal purposes, either because: His home is there; or Place is assigned to him by law To acquire a domicile, there must be a concu rrence of TWO ELEMENTS: i. INTENTION to make it ones domicile; and ii. PHYSICAL P RESENCE Residence, on the other hand, simply requires bodily presence of an inha bitant in a given place. As to: capacity for revival

B. General Rules on Domicile 1. No person shall be without domicile A persons domicile of origin prevails unti l he acquires anew domicile 2. A person cannot have two simultaneous domiciles f or a given purpose or a given time under the law of a particular state 3. Domici le establishes a connection between a person and a particular territorial unit 4 . The burden of proving a change of domicile is on the person alleging it 3. Constructive Domicile Domicile assigned by operation of law to persons legall y incapable of choosing their own domicile: Minors Domicile automatically change s when their fathers domicile changes Take the domicile of their mother upon thei r fathers death Mentally disabled If capable of understanding his act and its con sequences, he may be able to acquire a domicile of choice although he may not

PRIVATE INTERNATIONAL LAW Deemed extinguished by removal of intent even prior to the acquisition of a new domicile 439

CIVIL LAW REVIEWER Chapter VIII. DOMICILE be considered competent enough to enter into all aspects of civil life. women b. suitable for countries with a federal system D. Special Problems in Domicile 1. People kept under physical or legal compulsion Military personnel Prisoners ersons with disabilities who are confined in institutions MODERN VIEW: A person under compulsion should not be barred from proving that he intended to establish permanent abode in the same place, even after compulsion has been removed 2. Ma rried women seeking to acquire a separate domicile from her husband Art. 69, Family Code. The husband and wife shall fix the family domicile. In cas e of disagreement, the court shall decide. The court may exempt one spouse from living with the other if the latter should live abroad or there are other valid and compelling reasons for such exemption 2. Demerits a. not ascertainable without first resorting to the courts to establ ish whether or not there is animo manendi b. concept not clear-cut--- differs wi dely with some states distinguishing between residence and domicile or attributi ng different meanings of domicile for different purposes c. if domicile of origi n given much weight, connection attenuated P Married

MODERN VIEW: Dispenses with any presumption that the wifes domicile is the same a s her husbands. II. Comparative Merits and Demerits of Domicile and Nationality A. Nationality 1. Merits a. logical since lawmakers considered the qualities of its citizens in making the laws b. easily verifiable from documents 2. Demerits a. does not provide solution with respect to stateless persons those with multip le nationalities states with diverse legal systems b. persons ties to his nation may be so attenuated if he has lived in another country most of his life B. Domi cile 1. Merits a. genuine linkadequate basis for him to exercise rights therein a nd the state to impose duties on him 440 PRIVATE INTERNATIONAL LAW

CIVIL LAW REVIEWER Chapter IX. PRINCIPLES on PERSONAL STATUS and CAPACITY Chapter IX. Principles Status and Capacity I. II. III. IV. V. VI. on Personal DEFINITION BEGINNING AND END OF PERSONALITY ABSENCE NAME AGE OF MAJORITY CAPACIT Y However, if the fetus had an intrauterine life of less than 7 months, it is not deemed born if it dies within 24 hours after its complete delivery from the mate rnal womb. [Art. 41, FC] 2. End of personality: DEATH a. A declaration of death issued by a competent court is considered valid for all purposes. b. Upon death, some of the decedents rights and obligations are totally extinguished, while oth ers are passed on to his successors I. Definition Includes CONDITION and CAPACITY and more specifically embraces: 1. beginning and end of human personality 2. juridical capacity 3. capacity to act 4. family rel ations 5. succession III. Absence A. Governing Law Determined by the PERSONAL LAW of the individual B. Three Ways o f Dealing with Absence 1. Rebuttable Presumption that a person is dead when he h as been absent for a number of years 2. Judicially Instigated and established wh ich results in legal effect similar to those of death 3. A Judicial Decree shall have to be issued declaring the person dead before legal effects of death take place NOTE: Philippine laws follow the rebuttable presumption.

II. Beginning and End of Personality A. Governing Law The determination of the exact moment personality begins is gove rned by the PERSONAL LAW of the individual. B. Rule under Philippine Law 1. Begin ning of personality: BIRTH a. Birth determines personality; but the conceived ch ild shall be considered born for all purposes that are favorable to it, provided it be born later with the conditions specified by Art. 41, FC. [Art. 40, FC] b. For civil purposes, the fetus is considered born if it is alive at the time it is delivered from the mothers womb. PRIVATE INTERNATIONAL LAW Applicable Law 1. If Filipino: Philippine Law 2. If Alien: Law of nationality or domicile, depending on the law applicable in the aliens country NOTE: 1. Laws re lating to Family rights and duties, Status, Condition or Legal capacity of perso ns are binding on citizens of the Philippines, even though living abroad [Art. 1 5, CC] 2. Status, once established by the personal law of the party, is given un iversal jurisdiction. Hence, aliens can sue and be sued in our courts subject to Philippine procedural law even on matters relating to their status, but the law to be applied is their personal law. C. Rule under Philippine Law 1. Ordinary Absence [Art. 391, CC] a. After the abs

ence of 7 years, it being unknown whether the absentee still lives, s/he shall b e presumed dead for all purposes. b. EXCEPTIONS i. For the purpose of opening hi s succession, the absentee is presumed dead after 10 years. ii. If s/he disappea red after the age of 75 years, 5 years will be sufficient c. Computation of Peri od The computation of the 7 year period begins not from the declaration of absenc e, but from the date on which the last news concerning the absentee is received [Jones v. Hortiguela, 44 Phil 149] 441

CIVIL LAW REVIEWER Chapter IX. PRINCIPLES on PERSONAL STATUS and CAPACITY 2. Extraordinary Absence [Art. 391, CC] The following are presumed dead for ALL p urposes, including the division of estate among the heirs: (VA-A-D) a. A person on board a Vessel during a sea voyage, or an Aeroplane which is missing, who has not been heard of for 4 years since the loss of the vessel or aeroplane; b. A p erson in the Armed forces who has taken part in war, and has been missing for 4 years; c. A person who has been in Danger of death under other circumstances and existence has not been known for 4 years. [Art. 391, CC] 3. Rule for purposes o f remarriage [Art. 41, FC] a. For purposes of remarriage, the spouse present mus t first institute a summary proceeding for the declaration of presumptive death of the absentee spouse, without which the subsequent marriage is void ab initio. b. The periods under Arts. 390 and 391, CC have been reduced to 4 and 2 years. VI. Capacity A. General Rule Determined by PERSONAL LAW; attaches to a person whe rever he is it B. Exceptions 1. Liability on Tortsubject to the law of the place of tort 2. Rest rictions on the contracting capacity of a married womanin some jurisdictions, sub ject to the law governing the personal relations between spouses IV. Name A. Governing Law Determined by PERSONAL LAW B. Rule under Philippine Law 1. No pe rson can change his name or surname without judicial authority [Art. 376, CC] 2. Recognized justifiable causes for change of name: a. when the name is ridiculou s, tainted with dishonour, or is extremely difficult to write or pronounce b. wh en the request for change is a consequence of change of status c. when the chang e is necessary to avoid confusion d. a sincere desire to adopt a Filipino name t o erase signs of a former nationality which unduly hamper social and business li fe. NOTE: RA 9048 (Change of first name and correction of clerical/typographical errors) 442 PRIVATE INTERNATIONAL LAW V. Age of Majority A. Governing LawDetermined by PERSONAL LAW B. Age of Majority under Philippine Law Age of major ity is 18 years old [RA 6809]

CIVIL LAW REVIEWER Chapter X. FAMILY RELATIONS Chapter X. Family Relations I. MARRIAGE II. DIVORCE AND SEPARATION III. ANNULMENT AND DECLARATION NULLITY IV . PARENTAL RELATIONS V. ADOPTION i. OF ii. iii. I. Marriage iv. A. Definition Art. 1, FC. Marriage is a special contract of permanent union between a man and a woman entered into in accordance with law for the establishment of conjugal an d family life. It is the foundation of the family and an inviolable social insti tution whose nature, consequences, and incidents are governed by law and not sub ject to stipulation, except that marriage settlements may fix the property relat ions during the marriage within the limits provided by this Code. v. B. Extrinsic Validity of Marriage 1. Formal Requisites of Marriage under Philippine Law [Art. 3, FC] a. authority of the solemnizing officer b. valid marriage license except in the cases provide d for in Chapter 2 of Title I c. a marriage ceremony which takes place with the appearance of the contracting parties before the solemnizing officer and their p ersonal declaration that they take each other as husband and wife in the presenc e of not less than two witnesses of legal age. 2. Determination of Extrinsic Val idity Art. 26, FC. All marriages solemnized outside the Philippines in accordance with the laws in force in the country where they were solemnized, and valid there as such, shall also be valid in this country. xxx Art. 2, Hague Convention. Formal requirements for marriage are governed by the law of the state of celebration. vi. vii. a. GENERAL RULE LEX LOCI CELEBRATIONIS (law of the place of celebration) [Art. 26 , FC; Art. 2, Hague Convention on Celebration and Recognition of the Validity of Marriages] b. EXCEPTIONS: The following marriages are void even if valid in the country where celebrated [Art. 26, FC]: those contracted by any party below 18 years of age even with the consent of par ents or guardians [Art. 35(1), FC] bigamous or polygamous marriages not falling under Art. 41, FC [Art. 35 (4), FC] those contracted thru mistake of one contrac ting party as to the identity of the other [Art. 35(5), FC] those subsequent mar riage without recording in the civil registry the judgment of annulment or decla ration of nullity, partition and distribution of properties and the delivery of

the childrens presumptive legitimes [Art. 35(6), FC] a marriage contracted by any party who, at the time of the celebration, was psychologically incapacitated to comply with the essential marital obligations of marriage, even if such incapac ity becomes manifest only after solemnization [Art. 36, FC] incestuous marriages [Art. 37, FC] marriages between ascendants and ascendants of any degree, whethe r legitimate or illegitimate; and marriages between brothers and sisters, whethe r of the full or half-blood void marriages for reasons of public policy [Art. 38 , FC] marriages between collateral blood relatives, whether legitimate or illegi timate, up to th the 4 civil degree marriages between step-parents and step-chil dren. marriages between the adopting parent and adopted child marriages between the surviving spouse of the adopting parent and the adopted child marriages betw een the surviving spouse of the adopted child and the adopter marriages between an adopted child and a legitimate child of the adopter marriages between adopted children of the same adopter marriages between parties where one, with the inte ntion to marry the other, killed that other persons spouse, or his or her own s pouse. 443 PRIVATE INTERNATIONAL LAW

CIVIL LAW REVIEWER Chapter X. FAMILY RELATIONS NOTE: These exceptions put into issue the capacity of the parties to enter into the marriage and therefore relate to the substantive requirement for marriage. S ince the personal law of the parties, e.g. the national law of Filipinos, govern s the questions of intrinsic validity of marriages between Filipinos abroad, the above enumerations are exceptions to lex loci celebrationis precisely because t hey are controlled by lex nationalii NOTE: 1. Rule on Proxy Marriages (Asked in 85-89 BAR EXAMINATIONS) a. proxy marri ages, where permitted by the law of the place where the proxy participates in th e marriage ceremony, are entitled to recognition in countries adhering to the le x loci celebrationis rule, at least insofar as formal validity is concerned b. i nternal Philippine law, however, does not sanction proxy marriages. 2. Consular Marriages Marriages between Filipino citizens abroad may be solemnized by a consu l-general, consul or vice consul of the Republic of the Philippines [Art. 10, FC ]. C. Intrinsic Validity of Marriage [refers to capacity of a person to marry] 1. Intrinsic validity is determined by the partie s personal law, which may be their domiciliary or national law. NOTE: a. Laws rel ating to Family rights and duties, Status, Condition or Legal capacity of person s are binding on citizens of the Philippines, even though living abroad [Art. 15 , NCC] b. When either or both of the contracting parties are citizens of a forei gn country, it shall be necessary for them before a marriage license can be obta ined to submit a certificate of legal capacity to contract marriage, issued by t heir respective diplomatic or consular officials [Art. 21, FC] c. Marriages enum erated under Art. 26(2), FC are void even if valid in the country where celebrat ed. 2. Intrinsic requirements of marriage under Philippine Law [Art. 2, FC] a. l egal capacity of the contracting parties who must be male and female; and b. con sent freely given in the presence of the solemnizing officer 3. The Hague Conven tion on Validity of Marriages allows a contracting state to refuse recognition o f the marriage in the ff. 3 Cases [CR-M ]: a. one of the parties did not freely Consent b. spouses were Related, by blood or adoption c. one of the parties did not have the Mental capacity to consent d. one of the spouses was already Marrie d e. one of the parties has not attained the Minimum age, nor acquired the neces sary dispensation D. Effects of Marriage 1. Personal relations between the spouses a. governed by the national law of the parties NOTE: If the spouses have different nationalities, generally the nation al law of the husband may prevail as long as it is not contrary to law, customs and good morals of the forum. b. Under Philippine law, personal relations betwee n the spouses include [Arts. 68, 70-71, FC] i. mutual fidelity ii. respect iii. cohabitation iv. support v. right of the wife to use the husbands family name 2. Property relations a. The Hague Convention declares that the governing law on ma trimonial property is: i. the internal law designated by the spouses before the marriage ii. in the absence thereof, the internal law of the state in which the spouses fix their habitual residence b. Rule under Philippine law [Art. 80, FC] (Asked in 03 BAR EXAMINATIONS) i. In the absence of a contrary stipulation in the marriage settlements, the property relations of the spouses shall be governed b y Philippine laws, regardless of the place of the celebration of the marriage an d their residence. 444 PRIVATE INTERNATIONAL LAW

CIVIL LAW REVIEWER Chapter X. FAMILY RELATIONS ii. Rule is inapplicable: if both spouses are aliens with respect to the extrinsic v alidity of the contracts affecting property not situated in the Philippines and executed in the country where the property is located with respect to the extrin sic validity of contracts entered into in the Philippines but affecting property situated in a foreign country whose laws require different formalities for its extrinsic validity. Where a marriage between a Filipino citizen and a foreigner is validly celebrate d and a divorce is thereafter validly obtained abroad by the alien spouse capaci tating him or her to remarry, the Filipino spouse shall have capacity to remarry under Philippine law NOTE: In the case of Republic v Obrecido, G.R. No. 154380 (2005), the Supreme Court interpreted the exception in Art. 26(2), FC as applyin g to valid marriages between two Filipino citizens, where one party is later nat uralized as a foreign citizen and obtains a valid divorce decree capacitating hi m or her to remarry. c. Doctrine of Immutability of Matrimonial Property RegimeThe change of nationality on the part of the husband or wife does not affect the original property regime EXCEPT when the law of the original nationality itself changes the marital regim e, hence, the property regime has to change accordingly. C. VALIDITY II. Divorce and Separation A. Rule under the Hague Convention (Asked in 94 BAR EXAMINATIONS) The granting of divorce or separation must comply with th e national law of the spouses and lex fori (law of the place were the applicatio n for divorce is made) OF FOREIGN DIVORCE BETWEEN FOREIGNERS (Asked in 75-79, 80-84, 85-89, 95-99,00-04 , 05-08 BAR EXAMINATIONS) 1. A foreign divorce will be recognized in all contract ing states if, at the date of the institution of the proceedings [Hague Conventi on on the Recognition of Divorce and Legal Separation]: a. either spouse had his habitual residence there; b. both spouses were nationals of that state; or c. i f only the petitioner was a national, he should have his habitual residence ther e 2. While there is no provision of law requiring Philippine courts to recognize a foreign divorce decree between non-Filipinos such will ne recognized under th e principle of international comity, provided that it does not violate a strongl y held policy of the Philippines. B. Divorce Decrees Obtained by Filipinos 1. General Rule: Decrees of absolute divorce obtained by Filipinos abroad have n o validity and are not recognized in Philippine Jurisdiction. NOTE: Statutory Ba ses a. Laws relating to Family rights and duties, or to the Status, Condition an d Legal capacity of persons are binding upon citizens of the Philippines, even t hough living abroad [Art. 15, CC] b. Prohibitive laws concerning persons, their acts or property, and those which have for their object public order, public pol icy and good customs, shall not be rendered ineffective by laws or judgments, or by determinations or conventions agreed upon in a foreign country. [Art. 17(3), CC] 2. EXCEPTION: Art. 26(2), FC 445 PRIVATE INTERNATIONAL LAW

III. Annulment and Declaration of Nullity A. Jurisdiction to Annul 1. vested in the court of the domicile of the parties 2 . jurisdiction over the non-resident defendant is not essential B. Governing Law 1. Lex loci celebrationisdetermines the consequences of any defect as to form 2. In general, the same applies with reference to substantive or intrinsic validit y. But with regard to capacity of the parties to marry, national law is determin ative.

CIVIL LAW REVIEWER Chapter X. FAMILY RELATIONS IV. Parental Relations A. Determination of Legitimacy of a Child 1. Legitimacy: personal law of the par ents, which may either be their domicile or nationality 2. In the Philippines a. the legitimacy of the child is governed by the national law of the parents b. i f parents belong to different nationalities, legitimacy of the child is governed by the national law of the father c. personal law of the illegitimate child is the mothers personal law B. Parental Authority Over the Child Personal law of the father controls and rights and duties of parents and child NOTE: Reference to th e personal law of the father may result in joint exercise of parental authority over the property of the child by the father and mother; or, in the case on the illegitimate child, to the mother alone k. his government allows the adoptee to enter his country as his adopted son/daught er 2. The requirement on residence and certificate of qualification may be waived f or the following: a. A former Filipino citizen who seeks to th adopt a relative within the 4 degree of consanguinity or affinity; or b. One who seeks to adopt t he legitimate son/daughter of his/her Filipino spouse; or c. One who is married to a Filipino citizen and seeks to adopt jointly with his/her th spouse a relati ve within 4 degree of consanguinity or affinity of the Filipino spouse 3. The re quirement of 16 years difference between the adopter and the adoptee may be waiv ed if the adopter is: a. The biological parent of the adoptee b. The spouse of t he adoptees parent C. Inter-country Adoption 1. Definition A socio-legal process o f adopting a Filipino child by a foreigner or a Filipino citizen permanently res iding abroad where the petition is filed, the supervised trial custody is undert aken, and the decree of adoption is issued outside the Philippines. 2. This is a n alternative means of childcare if the child cannot be cared for in any suitabl e manner in the Philippines NOTE: Adoption is one of the ways prescribed by law for the acquisition of Filipino citizenship D. Effects of Adoption Two different legal orders: 1. If the adopters personal law appliedsame law governs the effects of the adoption 2. If the personal law of the child determined the creation of the legal relationshipsuch law will cease and yield to the personal law of the ad opting parents V. Adoption (Asked in 75-79, 95-99, 00-04, 05-08 BAR EXAMINATIONS) A. Definition The act by which relations of paternity and filiation are recognized as legally existing be tween persons not so related by nature B. Domestic Adoption Act of 1998 1. An al ien may adopt, provided he is: a. of legal age b. in possession of all civil cap acity and legal rights c. of good moral character d. no conviction of any crime involving moral turpitude e. emotionally and psychologically capable of caring f or children f. at least 16 years older than the adoptee g. in a position to supp ort and care for his children h. his country has diplomatic relations i. residen ce in the Philippines for at least 3 continuous years prior to the filing of the application for adoption and maintains such residence until the adoption decree is entered j. certificate of legal capacity to adopt in his country to be issue d by his diplomatic or consular office; and 446 PRIVATE INTERNATIONAL LAW

CIVIL LAW REVIEWER Chapter XI. PROPERTY Chapter XI. Property I. CONTROLLING LAWLEX SITUS/LEX REI SITAE II. EXCEPTIONS TO LEX SITUS/LEX REI SIT AE A. TRANSACTIONS NOT AFFECTING TRANSFER OF TITLE OR OWNERSHIP OF LAND B. CONTR ACTS WHERE REAL PROPERTY OFFERED AS SECURITY C. INTESTATE AND TESTAMENTARY SUCCE SSION D. POLICY-CENTERED APPROACH III. SITUS OF CERTAIN PROPERTIES A. SITUS OF P ERSONAL PROPERTY FOR TAX PURPOSES B. SITUS OF MONEY C. SITUS OF DEBTS D. SITUS O F CORPORATE SHARES E. PATENTS, TRADEMARKS, TRADE NAME AND COPYRIGHT F. GOODS TRA NSPORTED BY COMMON CARRIERS contract is the loan while the mortgage of the land is only an accessory a. Mort gageLex Situs b. Loan Contractrules on ordinary contracts C. Intestate and Testamentary Succession Intestate and testamentary successions shall be regulated by the national law of the decedent, with respect to the following [Art. 16(2); Art. 1039, NCC] a. Ord er of succession b. Amount of succession rights c. Intrinsic validity of the tes tamentary provisions d. Capacity to succeed D. Under a Policy-centered Approach Forum court is not bound to look to the law of the situs when the situs of the m ovable property is insignificant or accidental Questions relating to the validit y and effect of the transfer of the movable property are governed by the law of the place of principal use Where the issue involves considerations other than th e validity and effect of the transfer itself, governing law is the law of the st ate which has real interest I. Controlling LawLex Situs/Lex Rei Sitae

A. General Rule: Real as well as personal property is subject to the law of the country where it is situated [Art. 15, NCC] B. Application of the Doctrine of Le x Situs/Lex Rei Sitae 1. The capacity to transfer or acquire property is governe d by Lex Situs. NOTE: Transfer of property to a foreigner who subsequently becam e a Filipino citizen shall be recognized [Llantino v Co Liong Chong] [Asked in 0 0-04, BAR EXAMINATIONS] 2. The formalities of a contract to convey property are governed by Lex Situs III. Situs of Certain Properties A. Situs of Personal Property for Tax Purposes The principle of mobilia sequuntur personam cannot be applied to limit the right of the state to tax property with in its jurisdiction. It yields to established facts of legal ownership, actual p resence and control elsewhere, and cannot be applied if it would result in paten t injustice [Wells Fargo Bank and Union Trust Co. v. CIR, 70 Phil 325 (1940)] B. Situs of Money In Leon v. Manufacturers Life Insurance Co., 90 Phil 459 (1951), the Supreme Court held that the funds in question were outside the jurisdiction of Philippine courts, it having been endorsed in an annuity in Canada under a co ntract executed in that country. C. Situs of Debts The debt is located where the debtor is located because it is where he can be sued and the debt collected. 447 PRIVATE INTERNATIONAL LAW II. Exceptions to Lex Situs A. Transactions Not Affecting Transfer of

Title or Ownership of Land Where the transaction does not affect transfer of titl e to or ownership of the land: Lex Intentionis or Lex Voluntatis B. Contracts where Real Property Offered as Security In contracts where real property is offered by way of a security for the performance of an obligation such as loan, the principal

CIVIL LAW REVIEWER Chapter XI. PROPERTY D. Situs of Corporate Shares 1. The situs of shares of stock of a corporation is considered to be at the domicile of the corporation. 2. There is a distinction b etween the situs of shares of stock and the situs of the income derived from the sale or exchange of such. [CIR v Anglo California Bank, G.R. No. L12476(1960)] E. Patents, Trademarks, Trade Name and Copyright 1. Union Convention for the Prot ection of Industrial Property: a trade name shall be protected in all countries of the Union, without the obligation of filing of registration, whether or not i t forms part of the trade name. 2. RA 8923 (Intellectual Property Code): Any for eign corporation which is a national or domiciliary of a country which is a part y to a convention, treaty or agreement relating to intellectual property rights to which the Philippines is also a party or extends reciprocal rights to our nat ionals by law shall be entitled to benefits to the extent necessary to give effe ct to any provision of such convention. F. Liability of the Common Carrier for L oss, Destruction and Deterioration of Goods Transported Law of Destination 1. The law of the country to which the goods are to be transported shall govern the li ability of the common carrier for their loss, destruction or deterioration [Art. 1753, NCC] 2. The law of the country of destination applies even if the goods n ever reach the destination, but does not apply if the goods were never transport ed 3. If the country of destination is the Philippines, it is Philippine interna l law on loss, destruction, or deterioration that must governthe Civil Code princ ipally, and the Code of Commerce and special laws like the Carriage of Goods by Sea Act, suppletorily. 448 PRIVATE INTERNATIONAL LAW

CIVIL LAW REVIEWER Chapter XII. CONTRACTS Chapter XII. Contracts I. II. EXTRINSIC VALIDITY OF CONTRACTS INTRINSIC VALIDITY OF CONTRACTS A. LEX LO CI CONTRACTUS B. LEX LOCI SOLUTIONIS C. LEX LOCI INTENTIONIS III. CAPACITY TO EN TER INTO CONTRACTS IV. CHOICE OF LAW ISSUES A. CHOICE OF FORUM CLAUSE B. CONTRAC TS WITH ARBITRATION CLAUSE C. ADHESION CONTRACTS D. SPECIAL CONTRACTS V. LIMITAT IONS TO CHOICE OF LAW VI. APPLICABLE LAW IN THE ABSENCE OF EFFECTIVE CHOICE B. Lex Loci Solutionis 1. Law of the place of performance governs 2. MeritAlways connected to the contra ct in a significant way 3. DemeritNot helpful when the contract is performed in 2 or more states with conflicting laws C. Lex Loci Intentionis 1. Law intended by the parties 2. Basis The contracting parties may establish suc h stipulations, clauses, terms and conditions as they may deem convenient, provi ded they are not contrary to law, morals, good customs, public order, or public policy [Art. 1306, CC] 3. May be express or implied a. Expresswhen the parties st ipulate that the contract be governed by a specific law, such law will be recogn ized unless there are cogent reasons for not doing so. b. Implied i. Based on th e contemporaneous and subsequent acts of the parties ii. Often upheld with refer ence to the rule of validity of contracts which presumes that the parties contem plate to enter into a valid contract I. Extrinsic Validity of Contracts General Rule: Lex Loci Celebrationis The forms and solemnities of contracts xxx shall be governed by the laws of the country in which they are executed [Art. 17 , CC] NOTE: 1. Contracts Before Diplomatic/ Consular Officials: The solemnities established by Philippine laws shall be observed with respect to contracts execu ted before diplomatic or consular officials of the Republic of the Philippines i n a foreign country [Art. 17(2), FC] 2. Contracts Entered Into by Letter/ Cableg ram, etc.: A contract accepted by letter or cablegram is presumed to have been e ntered into the place where the offer was made. [Art. 1319(2),CC] III. Capacity to Enter Into Contracts Determined by the personal laws of the contracting parties NOTE: Laws relating t o Family rights and duties, Status, Condition or Legal capacity of persons are b inding on citizens of the Philippines, even though living abroad [Art. 15, NCC] 449 PRIVATE INTERNATIONAL LAW II. Extrinsic Validity of Contracts Three possible laws: A. Lex Loci Contractus (Asked in 95, 02 BAR EXAMINATIONS) 1 . Law of the place where the contract is made 2. Merits a. Relative ease in esta blishing b. Certainty and stability 3. DemeritUnjust results when place of making entirely incidental NOTE: To determine where the contract is made, we look to t he place where the last act is done which is necessary to bring the binding agre ement into being so far as the acts of the parties are concerned. IV. Choice of Law Issues in Conflicts Contracts Cases A. Choice of Forum Clause 1. A case arising from a contract will be litigated in the forum chosen by the p arties if the choice of forum clause specifically identifies it as the only venu e 2. When there is no fraud or overreaching, and there is no showing that the ch

oice-of-forum clause would be unreasonable and unjust, the clause must be given effect

CIVIL LAW REVIEWER Chapter XII. CONTRACTS B. Contracts with Arbitration Clause An arbitration clause, stipulating that the arbitral award of an arbitral panel in a foreign country is FINAL and BINDING, is not contrary to public policy. It does not oust our courts of jurisdiction as the international arbitral award, th e award of which is not absolute and without exceptions, is still judicially rev iewable under certain conditions provided for by the INCITRAL Model Law on ICA a s applied and incorporated in RA 9285 (Korea Technologies Co., Ltd. V Lerma, 200 8) V. Limitation Choice of Law (Asked in 90-94 BAR EXAMINATIONS) 1. Cannot be a law which has NO CONNECTION at all with the transaction or the parties 2. LAW AS CHANGED will govern EXCEPT if the change is so revolutionary that it was never contemplated by the parties 3. Choice of law should not be interpreted to OUST THE JURISDICTION which the court has already acquired over the parties and the subject matter. 4. Cannot contrac t away provisions of law especially peremptory provisions heavily impressed with PUBLIC INTEREST 5. COGNOVIT CLAUSE (confession of judgment) valid only if the p arties were of equal bargaining power and the defendant agreed to it voluntarily . C. Adhesion Contracts 1. Adhesion contracts are not entirely prohibited. The one who agrees to the con tract is in reality free to reject it entirely; if he adheres, he gives his cons ent. 2. It is void if there is UNDUE ADVANATGE on the part of the dominant party 3. Any ambiguity is construed strictly against the drafter VI. Applicable Law in the Absence of Effective Choice 1. Law of the place of the MOST SIGNIFICANT RELATIONSHIP with the contract as a whole or with a specific issue arising therefrom 2. Factors to consider a. Place of contracting b. Place of negotiating c. Place of performance d. Situs of the subject matter of the contract e. Parties domicile, residence, nationality, place of incorporation, place of business f. Place under whose local law the contract will be most effective D. Special Contracts 1. Sale or barter of goods: lex situs 2. Simple loan granted by financial instit utions: law of the permanent place of business 3. Loan granted by a private indi vidual or where the subject matter of the loan is personal: law of the place whe re the loan was obtained 4. Pledge, Chattel Mortgage, Antichresis: Lex Situs 5. Carriage of Goods by Sea a. The law of the country to which the goods are to be transported shall govern the liability of the common carrier for their loss, des truction or deterioration [Art. 1753, NCC] b. The law of the country of destinat ion applies even if the goods never reach the destination, but does not apply if the goods were never transported c. If the country of destination is the Philip pines, it is Philippine internal law on loss, destruction, or deterioration that must governthe Civil Code principally, and the Code of Commerce and special laws like the Carriage of Goods by Sea Act, suppletorily. 6. International Air Trans portation: Warsaw Convention 450 PRIVATE INTERNATIONAL LAW

CIVIL LAW REVIEWER Chapter XIII. SUCCESSION Chapter XIII. Succession I. II. III. IV. V. VI. VII. Extrinsic Validity Intrinsic Validity Interpretation of Wills Revocation Probate Administration of Estates Trusts II. Intrinsic Validity Intestate and testamentary successions shall be regulated by the national law of the decedent, with respect to the following [Art. 16(2); Art. 1039, NCC] 1. Ord er of succession 2. Amount of successional rights 3. Intrinsic validity of the t estamentary provisions 4. Capacity to succeed I. Extrinsic Validity (Arts. 17, 815-817, CC) (Asked in 75-79, EXAMINATIONS) PLACE OF EXECUTION Philippines 90-94, 95-99 BAR III. Interpretation of Wills Governed by the National Law of the decedent APPLICABLE LAW Philippine Law 1. law of the place where he may be (lex loci cele brationis) [Art 815, CC] 2. Philippine law [see III Tolentino 117] 1. Philippine Law [Art. 17, CC] 2. law of the country in which he is a citizen or subject [le x nationali] (Art. 817, NCC) IV. Revocation TESTATOR Will is revoked in the Philippines Filipino Testator Foreign Country APPLICABLE LAW Philippine Domiciliary Philippine Law Non-domiciliary [Art. 829, CC] 1. Philippi ne Law 2. Law of the place of revocation (lex loci actus) 1. law of the place wh ere the will was made 2. law of the place in which the testator had his domicile at the time of the revocation Philippines Will is revoked in a Foreign Country Philippine Domiciliary Alien Testator V. Probate A. Controlling Law The probate of a will being essentially procedural in characte r, the law of the forum (lex fori) governs. B. Wills Proved and Allowed in a For eign Country 1. A will proved and allowed in a foreign country in accordance wit h the laws of that country may be allowed, filed, and recorded in the proper Reg ional Trial Court in the Philippines [RULES OF COURT, Rule 77, Sec.1] NOTE: Rule re: Joint Wills 1. Joint wills prohibited under Art. 818, CC executed by Filipinos in a foreign country shall not be valid in the Philippines even th ough authorized by the laws of the country where they were executed. [Art. 819,

CC] (Asked in 00-04 BAR EXAMINATIONS) 2. Civil Code is silent as to the validity of a joint will executed by an alien in the Philippines. It is suggested that t hat it should not be probated if it would affect the heirs in the Philippines. PRIVATE INTERNATIONAL LAW Foreign 1. law of the place in which he resides [lex Country [Arts. domicilii] 8 16, 17, NCC] 2. law of his country (lex nationali) 3. Philippine law 4. law of t he place where they were executed (lex loci celebrationis) 451 Non-domiciliary [Art. 829, CC]

CIVIL LAW REVIEWER Chapter XIII. SUCCESSION 2. Requisites for Reprobate (Vda de Perez v Tolete, 232 SCRA 722) The following must be proved by competent evidence: a. due execution of the will in accordance with the foreign laws b. the testator had his domicile in the foreign country a nd not in the Philippines c. the will has been admitted to probate in such count ry d. the laws of the foreign country on procedure and allowance of wills VI. Administration of Estates Territorial: governed by the law of the place where the administration takes pla ce, and that is the law of the country from which the administrator derives his authority. VII. Trusts Extrinsic Validity: rules governing wills apply Intrinsic Validity: lex situs si nce a trust involves property 452 PRIVATE INTERNATIONAL LAW

CIVIL LAW REVIEWER Chapter XIV. TORTS and CRIMES Chapter XIV. Torts and Crimes I. Torts A. Traditional Approach 1. Controlling Law a. Matters Concerning Conduc t and Safety: Lex Loci Delicti Commissi b. Matters Concerning Loss and Safety: L ex Domicilii 2. Characterization of Locus Delicti a. Common Law Rule b. Civil La w Rule B. Modern Approaches 1. Most Significant Relationship 2. Interest Analysi s 3. Cavers Principle of Preference C. Foreign Torts Claims 1. Transitory Nature of Torts Claims 2. Conditions for Enforcement 3. Alien Torts Claims Acts (ATCA) 4. Rule under Philippine Law Crimes A. General Rule: Lex Loci Delicti Commissi/L ocus Regit Actum B. Exceptions 1. Crimes Committed by Diplomatic Officials; Doct rine of State Immunity 2. Crimes Committed in Foreign Vessels 3. Art. 2, Revised Penal Code b. In the case of Saudi Arabian Airlines v CA, 297 SCRA 469, the Supreme Court h ad the occasion to apply the most significant relationship rule. In the said case the court laid down the following factors which are to be taken into account:: i . place where the injury occurred ii. place where the conduct causing the injury occurred iii. the domicile, residence, nationality, place of incorporation and place of business of the parties iv. place where the relationship, if any, betwe en the parties is centered 2. Interest Analysis This approach considers the relev ant concerns the state may have in the case and its interest in having its law a pplied on that issue 3. Cavers Principle of Preference a. Where the State of Injur y provides for higher standard of conduct or financial protection against injury than the State where the tortious act was done, the law of the former shall gov ern b. Where the State of injury and conduct provides for lower standard of cond uct and financial protection than the home State of the person suffering the inj ury, the law of the State of conduct and injury shall govern c. Where the State in which the defendant was engaged, the special controls and benefits must be ap plied although the State has no relationship to the defendant d. Where the law i n which the relationship has its seat imposed higher standards of conduct or fin ancial protection than the law of the State of the injury, the former law shall govern. C. Foreign Torts Claims 1. Tort liability is transitory. Hence, an actio n for tort may be brought wherever the tortfeasor is subject to suit. 2. Conditi ons for enforcement of foreign tort claims: a. The foreign tort is based on civi l action and not on a crime b. The enforcement of the tort would not infringe th e public policy of the forum c. The judicial machinery of the forum is adequate for its proper enforcement 3. Alien Tort Claims Act(ATCA) (Asked in 0004 BAR EXA MINATIONS) II. I. Torts A. Traditional Approach 1. Controlling Law a. Lex Loci Delicti Commissi (law of the place where the alleged tort was committed) applies in matters concerning co nduct and safety b. Lex Domicilii of the parties applies in matters concerning l oss distribution or financial protection 2. Characterization of the place of wro ng (Locus Delicti) a. Common Law: place where the last event necessary to make a n actor liable for an alleged tort occurs (place of injury) b. Civil Law: place where the tortious conduct was committed (place of conduct) B. Modern Approaches 1. Most Significant Relationship a. The most significant relationship approach considers the states contacts with the occurrence and the parties 453 PRIVATE INTERNATIONAL LAW

CIVIL LAW REVIEWER Chapter XIV. TORTS and CRIMES grants US District Courts original jurisdiction over any civil action by an alie n for a tort omitted in violation of the law of nations or a treaty of the US. 4 . In the Philippines, no specific statutory law governs the enforcement of claim s arising from foreign tort. II. Crimes A. General Rule Lex Loci Delicti Commissi/ Locus Regit Actum (law of the place wh ere the act was committed) NOTE: Penal laws xxx shall be obligatory upon all tho se who live and sojourn in Philippine territory, subject to the principles of pu blic international law and to treaty stipulations [Art. 14, CC] B. Exceptions 1. Crimes committed by state officials, diplomatic representatives and officials o f recognized international organizations (based on the doctrine of state immunit y from suit. 2. Crimes committed on board a foreign vessel even if it is within the territorial waters of the coastal state, as long as the effect of such crime does not affect the peace and order of the coastal state. 3. Crimes which, alth ough committed by Philippine nationals abroad are punishable under Philippine la w as provided in Art. 2, Revised Penal Code: b. offenses committed in a Philippi ne vessel or airship c. forging or counterfeiting any coin or currency note of t he Philippines, or any obligation issued by the government d. introduction into the country of the obligations and securities mentioned in the preceding number e. those committed by public officers or employees in the exercise of their func tions 4. Crimes against national security and the law of nations. 454 PRIVATE INTERNATIONAL LAW

CIVIL LAW REVIEWER Chapter XV. CORPORATIONS Chapter XV. Torts and Crimes I. Personal Law of Corporations A. General Law: Law of Incorporation B. Exceptio ns 1. Constitutional and Statutory Restrictions 2. Control Test During War II. D omicile/Residence of Corporations A. General Rule B. Exceptions III. Jurisdictio n Over Foreign Corporations A. Consent Doctrine B. Foreign Corporations Doing Bu siness Bound by Philippine Law 1. Art. 129, Corporation Code 2. Service Upon For eign Corporations Doing Business in the Philippines IV. Right of Foreign Corpora tions to Bring Suit A. General Rule B. Exceptions 1. Isolated Transactions 2. Ac tion to Protect Trademark, Trade Name, Goodwill, Patent or for Unfair Competitio n 3. Agreements Fully Transacted Outside the Philippines 4. Petitions Filed Mere ly as Corollary Defense in a Suit Against It B. Rule if the Same Not Fixed by Law If the law does not fix the same, the domicile of juridical persons shall be und erstood to be [Art. 51, CC]: 1. place where their legal representation is establ ished; or 2. place where they exercise their principal functions NOTE: A foreign corporation granted license to operate in the Philippines acquires domicile her e. III. Jurisdiction Corporations Over Foreign I. Personal Law of Corporations A. General Rule Law of the State where it is incorporated [Art. 2, Corporation Co de] NOTE: Hence, if the law creating the corporation does not give it authority to enter into certain contracts, such contracts made by it in another state shal l be void despite the express permission given by the laws of that other state. B. Exceptions 1. Constitutional and Statutory Restrictions (e.g. Art. XII, Sec. 2, 1987 Constitution) 2. Control Test During War In wartime, the courts may pierc e the veil of corporate identity and look into the nationality of the controllin g stockholders to determine the citizenship of the corporation. II. Domicile/Residence of Corporations A. General Rule [Art. 51, CC] that fixed by the law creating them, recognizing them or any other provision of law 2. Service upon foreign corporations doing business in the Philippines may be ma de on [Rule 14, Sec. 14, RULES OF COURT]: c. its resident agent a. in the absenc e thereof, process will be served on the government official designated by law o r any of its officers or agent within the Philippines b. on any officer or agent of said corporation in the Philippines c. thru diplomatic channels (Far East In ternational v. Nankai Kogyo, 6 SCRA 725 (1962)) PRIVATE INTERNATIONAL LAW A. Consent Doctrine A foreign corporation shall be recognized and will be allowed to transact business in any state which gives it consent. The consent doctrine is established in Sections 125, 126, 127 and 128 of the Corporation Code. . B. F oreign Corporations Doing Business in Philippines Bound by Philippine Law 1. Und er Art. 129 of the Corporation Code, all foreign corporations lawfully doing bus

iness in the Philippines shall be bound by all laws, rules, and regulations appl icable to domestic corporations; EXCEPT: a. provisions for the creation, formati on, organization or dissolution of corporations b. those which fix the relations , liabilities, responsibilities, or duties of stockholders, members, or officers of corporations to each other or to the corporation 455

CIVIL LAW REVIEWER Chapter XV. CORPORATIONS IV. Right of Foreign Corporations to Bring Suit A. General Rule License to transact business in the Philippines is an essential p rerequisite for filing a suit before Philippine courts [Art. 133, Corporation Co de] B. Exceptions 1. isolated transactions 2. action to protect trademark, trade name, goodwill, patent or for unfair competition 3. agreements fully transacted outside the Philippines 4. when the petition filed is merely a corollary defense in a suit against the corporation EFFECT OF FAILURE TO SECURE A LICENSE TO TRAN SACT BUSINESS 1. the foreign corporation has no right to sue in the Philippines but it can still be sued 2. although the contracts entered into may be valid as between the parties, it may not be enforced in Philippine courts 456 PRIVATE INTERNATIONAL LAW

CIVIL LAW REVIEWER Chapter XVI. FOREIGN JUDGMENTS Chapter XVI. Foreign Judgments III. Policy of Preclusion Underlying Recognition and Enforcement AND I. II. RECOGNITION v. ENFORCEMENT BASES OF RECOGNITION ENFORCEMENT III. POLICIES UNDERL YING IV. REQUISITES V. PROCEDURE FOR ENFORCEMENT VI. EFFECTS OF FOREIGN JUDGMENT S FOREIGN JUDGMENT: a decision rendered outside the forum and encompasses judgment s, decrees and order of courts of foreign countries. The policy of preclusion seeks to protect party expectation resulting from previ ous litigation, to safeguard against the harassment of defendants, to insure tha t the task of the courts not be increased by neverending litigation of the same disputes, and in a larger senseto promote what Lord Coke in the Ferrers Case of 159 9 stated to be the goal of all law: rest and quietness. (Mijares v Ranada, 2005) I. Recognition v. Enforcement A. Recognition of Foreign Judgment 1. Passive act of giving the same effect that it has in the State where it was rendered with respect to the parties, the subj ect matter of the action and the issues involved without the necessity of filing an action in the forum giving effect to the judgment 2. Examples of foreign jud gments which can only be recognized: declaratory judgments, judgments which give no affirmative relief, judgments which determine the parties interests in a thin g or status. B. Enforcement of Foreign Judgment 1. A judgment is enforced when, in addition to being recognized, a party is given affirmative relief to which th e judgment entitles him; it necessarily requires the filing of an action. 2. Thi s necessary implies recognition. RELATED CONCEPTS 1. Res Judicata: once there is a final judgment, resolution on the issues litigated is binding on the parties and their privies. 2. Merger: pla intiffs cause of action is merged in the judgment so that he may not relitigate t hat exact claim. 3. Bar: successful defendant can interpose as defense the judgm ent in his favor to avert a nd 2 action by the plaintiff on the same claim. 4. D irect estoppel: relitigation of all matters decided are precluded 5. Indirect es toppel: all essential issues of fact actually litigated cannot be relitigated. IV. Requisites for Enforcement Recognition or II. Bases of Enforcement Recognition and

A. Comity In order to obtain reciprocal treatment from the courts of other countr ies, we are compelled to take foreign judgments as they stand and to give them f ull faith and credit. B. Doctrine of Obligation 1. Considers a judgment of a fore ign court of competent jurisdiction as imposing a duty or obligation on the losi ng litigant. 2. This is based on the vested rights theory. V. Procedures for Enforcement Three modes of enforcement: A. Petition 1. Followed in most common law countries and in the Philippines PRIVATE INTERNATIONAL LAW 1. Foreign court had JURISDICTION over the parties and the case 2. Judgment VALI D under the laws of the country that rendered it. 3. Judgment FINAL and EXECUTOR Y to constitute res judicata in another action 4. RECIPROCITY: state where forei gn judgment was obtained allows recognition and enforcement of Philippine judgme nts. 5. Judgment is for a FIXED SUM of money 6. Foreign judgment not contrary to PUBLIC POLICY OR GOOD MORALS of country where it is sought to be enforced 7. Ju dgment not obtained by EXTRINSIC FRAUD, COLLUSION, MISTAKE of fact or law. 457

CIVIL LAW REVIEWER Chapter XVI. FOREIGN JUDGMENTS 2. The rules are silent as to what initiatory procedure must be undertaken in or der to enforce a foreign judgment in the Philippines. But there is no question t hat the filing of a B. Summary Proceeding 1. Followed in most civil law countrie s 2. A summary proceeding for enforcement is provided by statute. C. Judgment Re gistration An authenticated copy of the foreign judgment is filed in the registr ars office together with other proofs required by domestic laws and the foreign j udgment is converted into a local one that is immediately executory. VI. Effect of Foreign Judgment in the Philippines The effect of a judgment or final order of a tribunal of foreign country, having jurisdiction to render such is as follows [Sec. 48, Rule 39, RULES OF COURT]: 1 . In a judgment or final order upon a specific thing, the judgment or final orde r is conclusive upon the title to the thing; and 2. In a judgment or final order against a person, the judgment or final order is presumptive evidence of a righ t as between the parties and their successors-in-interest by a subsequent title. 3. In either case, the judgment or final order may be repelled by evidence of a . want of jurisdiction b. want of notice to the party c. collusion d. fraud e. c lear mistake of law or fact NOTE: It has been recognized that public policy as a d efense to the recognition of judgment serves as an umbrella for a variety of con cerns in international practice which may lead to a denial of recognition [Mijar es v Ranada, 2005] 458 PRIVATE INTERNATIONAL LAW - end of Private International Law - end of Civil Law -