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PRE-WEEK POINTERS IN

CIVIL LAW
Dean ED VINCENT S. ALBANO
Proprietor and Bar Review Director

PART II
PERSONS AND FAMILY RELATIONS

Foreign Divorce
Purpose of par. 2, Art. 26, F.C.
Paragraph 2 of Article 26 of the Family Code should be interpreted to include cases involving parties who, at the
time of the celebration of the marriage were Filipino citizens, but later on, one of them becomes naturalized as a foreign
citizen and obtains a divorce decree. The Filipino spouse should likewise be allowed to re-marry as if the other party were
a foreigner at the time of the solemnization of the marriage. To rule otherwise would be to sanction absurdity and
injustice. Where the interpretation of statute according to its exact and literal import would lead to mischievous results or
contravene the clear purpose of the legislature, it should be construed according to its spirit and reason, disregarding as
far as necessary the letter of the law. A statute may therefore be extended to cases not within the literal meaning of its
terms, so long as they come within its spirit or intent.

Marriage mix after its celebration.


Even if the marriage became mixed after its celebration and divorce was obtained later after one of the spouses
embraced American citizenship, the Filipino can remarry. While the law appears to apply only to cases where the parties
must be Filipinos and aliens in order that the Filipino who was divorced was remarry, yet, the Supreme Court said it
applies even if the marriage becomes mixed after its celebration. To rule otherwise would be to sanction the foreigner,
capacitating him on her to remarry. (Republic v. Orbecido III, G.R. No. 154380, October 5, 2005).

No need to declare marriage void after divorce.


If a divorce decree has been obtained, there is no more need to file an action to nullity the marriage. The plaintiff
has no more personality to sue since the marriage bond has already been severed. This is true if the divorce decree is
valid. However if it is void, the plaintiff still has the personality to file an action for declaration of nullity of their marriage
since the marriage bond is still subsisting. (Bayot v. CA, et al., G.R. No. 155635; Bayot v. Bayot, G.R. No. 163979,
November 7, 2008; Catalan v. Court of Appeals).

Proof of foreign judgment; requirement to remarry.


In order that the Filipino may remarry, it is necessary that the naturalization of his wife be proven. Likewise,
before a foreign divorce decree can be recognized by our courts, the party pleading it must prove the divorce as a fact and
demonstrate its conformity to the foreign law allowing it. Such foreign law must also be proved as our courts cannot take
judicial notice of foreign laws. Like any other fact, such laws must be alleged and proved. Furthermore, it must also be
shown that the divroce decree allows his former wife to remarry as specifically required in Article 26. Otherwise, there
would be no evidence sufficient to declare that he is capacitated to enter into another marriage.

There must be a showing that the divorce decree gave the foreigner spouse legal capacity to remarry because in
some jurisdictions, remarriage may be limited or prohibited. An authenticated copy would be enough proof of the
divorce. (Bayot v. Bayot, November 7, 2008; Garcia v. Recio, 366 SCRA 437 (2001)).

Article 34, Family Code – License; Exceptional circumstances.


The marriage is void if it was contracted without a license. Art. 34, F.C. to apply where in lieu of a license an
affidavit of cohabitation would be sufficient, it is required that the man and the woman must have attained the age of
majority, and that being unmarried, they have lived together as husband and wife for at least 5 years. The minimum
requisite of 5 years of cohabitation is an indispensable requisite carved in the language of the law. This material fact
cannot be dispensed with, otherwise the marriage is void. it is not a directory requirement but a mandatory one. In this
case, they lived for less than 6 months. The affidavit was false. the marriage is void. (Republic v. Jose Dayot, March 28,
2008).
LEGAL SEPARATION

Effect of conviction of adultery.


A spouse who was convicted of adultery has a right to a share of the conjugal partnership properties. After
conviction, the aggrieved spouse filed a complaint for declaration of nullity of the marriage but they entered into a
compromise agreement where they divided the properties. This is in effect a voluntary separation of properties during
the marriage under Article 143, F.C. The settlement did not amount to collusion. It had no relation to the question on the
validity of the marriage. (Maquilan v. Maquilan, G.R. No. 155409, June 8, 2007).

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Requisites for declaration of presumptive death.
A well-founded belief that the absentee is already dead is required before an absent spouse may be declared
presumably dead. The requisites are:
1. absent spouse has been missing for 4 years or 2 consecutive years if the disappearance under Art. 391, NCC;
2. present spouse wisher to remarry;
3. present spouse has well-found belief that the absent spouse is dead;
4. present spouse files a summary proceeding for the declaration of presumptive death of the absent spouse.

The well-founded belief must be shown by real honest-to-goodness efforts to locate the absent spouse. The
policy of the doctrine of presumptive death must not be intended to circumvent the law for the spouse’s convenience.
(Rep. v. Nolasco, March 13, 1993).

Meaning of condonation.
In legal separation, condonation means forgiveness, express or implied. Sleeping together after full knowledge of
the offense is condonation. Implied condonation may be evidenced by voluntary intercourse after knowledge of the case.
(Johnston v. Johnston, 116 Va. 778; Keezer, Marriage and Divorce, p 554.; Bugayong v. Ginez, December 28, 1956).

Confession of judgment; effect; exception.


Under the law, no decree of legal separation shall be based upon a stipulation of facts or a confession of
judgment. (Art. 60, F.C.).

However, if there are other evidence aside from stipulation of facts or confession of judgment, still, the court can
grant the petition, because if it were otherwise, it would be very easy to thwart an action for legal separation by the mere
filing of a confession of judgment.

No need of conviction.
A decree of legal separation, on the ground of sexual infidelity, may issue upon proof by preponderance of
evidence in the action for legal separation. No criminal proceedings or conviction is necessary. The case of Francisco v.
Tayao, 50 Phil. 42, is not controlling because it was decided under Article 2710 when absolute divorce was allowed and
had for its grounds the same grounds for legal separation under the NCC, with the requirement, under such former law,
that the guilt of defendant spouse had to be established by final judgment in a criminal action. The requirement has not
been reproduced in the New Civil Code. In fact, such ground can be proven only in a civil case. Criminal action is not
needed. (Ocampo v. Florenciano, L-13553, February 23, 1950).

DONATIONS DURING THE MARRIAGE

Donation during the marriage void; reason.


There may be undue influence that may be exerted by one against the other, to the extent that the heirs or
creditors of the donor may be prejudiced if the spouses are allowed to sell to one another.

The prohibition should likewise apply to persons living together as husband and wife without the benefit of
nuptials. For it is not to be doubted that assent to such irregular connection for thirty (30) years bespeaks greater
influence of one party over the other so that the danger that the law seeks to avoid is correspondingly increase to the
extent that the heirs, or creditors of the donor may be prejudiced.

Prohibition covers common-law relationship; reason.


If the donor and donee are living in a common-law relationship, the donation is void because it was made
between persons guilty of adultery at the time of the donation. Moreover, Article 87 of the Family Code provides that the
prohibition against donations between spouses now applies to donation between persons living together as husband and
wife without a valid marriage (Buenaventura v. Bautista, 50 O.G. 3679; Matabuena v. Cervantes, 38 SCRA 284), for
otherwise, the condition of those who incurred guilt would run out to be better than those in the legal union.
(Buenaventura v. Bautista, 50 O.G. 3679; Matabuena v. Cervantes, 38 SCRA 284; Agapay v. Palang, G.R. No. 116668, July
28, 1997, 85 SCAD 145; Arcaba v. Tabancura Vda. de Batocael, G.R. No. 146683, November 22, 2001; Sps. Cirelos v. Sps.
Hernandez, G.R. No. 146523, June 15, 2006).

Obligations answerable by the CP.


For the conjugal property to be held liable, the obligation contracted by the husband must have redounded to
the benefit of the conjugal partnership. There must be the requisite showing then, of some advantage which clearly
accrued to the welfare of the spouses. Certainly, to make a conjugal partnership respond for a liability that should
appertain to the husband alone is to defeat and frustrate the avowed objective of the ten New Civil Code to show the
utmost concern for the solidarity and well-being of the family as a unit. (Franciso v. Gonzales, September 17, 2008; Ayala
Investment & Dev’t. Corp. v. Court of Appeals, 349 Phil. 942; Luzon Surety Co., Inc. v. De Garcia, 30 SCRA 111).

Nature of property acquired by common-law spouse.


Any property acquired by common-law spouses during their period of cohabitation is presumed to have been
obtained thru their joint efforts and is owned by them in equal shares in the absence of proof to the contrary. Their

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property relationship is governed by the rules co-ownership. And under this regime, they owned their properties in
common “in equal shares.”

Effect if there is legal impediment.


When the common-law spouses with a legal impediment to marry or when they do not live exclusively with each
other (as husband and wife), only the property acquired by both of them through their actual joint contribution of money,
property or industry shall be owned in common and in proportion to their respective contributions. Such contributions
and corresponding shares, however, are prima facie presumed to be equal. The share of any party who is married to
another shall accrue to the absolute community or conjugal partnership, as the case may be, if so existing under a valid
marriage. If the party who has acted in bad faith has not validly married to another, his or her share shall be forfeited in
the manner already heretofore expressed. (Art. 148, F.C.; San Luis v. San Luis, G.R. Nos. 133743; 134029, Feburary 6,
2007; Abing v. Waeyan, G.R. No. 146294, July 31, 2006; Article 147, F.C.).

Effect if a spouse is a surety in an undertaking of another.


If a spouse acts as a surety in an undertaking, the contract does not redound to the benefit of the family, instead,
it would later dissipate the assets of the family. While the obligation was contracted during the marriage, yet the measure
of liability of the community of property is the benefit it would bring to the family. A guaranty agreement is without any
consideration. This is especially so if the spouse has abandoned the family. (BA Finance Corporation v. CA, G.R. No. L-
61464, May 28, 1988).

Effect of registration of properties under the names of spouses.


The fact that the properties were registered in the name of the spouses is no proof that the properties were
acquired during the marriage. Acquisition of title and registration are two different acts. It is well-settled that the
registration does not confer title but merely confirms one already existing. It may be that the properties were acquired by
a spouse when he was still a bachelor, but were registered only after his marriage, which explains why he was described
in the certificates of title as married to the latter. (Jocson v. CA, 204 SCRA 297; Cobb-Perez v. Lantin, 23 SCRA 637;
Maramba v. Lozano, et al., 20 SCRA 474).

When presumption of conjugality applies.


The presumption of conjugality applies only when there is proof that the property was acquired during the
marriage. The mere fact that the title was issued when the spouses were already married is not sufficient proof of
conjugality especially where there was no proof as to when the property was acquired. Acquisition of title and registration
are two different acts. Registration does not confer title but merely confirms one already existing. (Entonina v. CA, et al.,
78 SCAD 321, 266 SCRA 627 (1997); Metrobank, et al. v. Jose Tan, et al., G.R. No. 163712, November 30, 2006).

Obligations not redounding to the benefit of the family.


The conjugal properties cannot be made to answer for obligations of the husband if they did not redound to the
benefit of the family. It said, that this particular codal provision in question rightfully emphasizes responsibility of the
husband as administrator. He is supposed to conserve and, if possible, augment the funds of the conjugal partnership, not
dissipate them. If out of friendship or misplaced generosity on his part the conjugal partnership would be saddled with
financial burden, then the family stands to suffer. No objection need arise if the obligation thus contracted by him could
be shown to be for the benefit of the wife and the progeny if any there by. That is but fair and just. Certainly, however, to
make a conjugal partnership respond for a liability that should appertain to the husband alone is to defeat and frustrate
the avowed objective of the New Civil Code to show the utmost concern for the solidarity and well-being of the family as
a unit. The husband, therefore, is denied the power to assume unnecessary and unwarranted risks to the financial
stability of the conjugal partnership. (Luzon Surety v. De Garcia, 30 SCRA 111; Ting v. Villarin, 174 SCRA 532; Phil. Bank of
Communications v. CA, et al., G.R. No. 106858, September 5, 1997).

Effect if husband is a guarantor of another.


The conjugal partnership cannot possibly be benefited when the husband binds himself, as guarantor, because
this act does not conserve or augment conjugal funds but instead threatens to dissipate them by unnecessary and
unwarranted risks to the partnership’s financial stability. When the husband assumes the obligations of a guarantor, the
presumption that he acts, as administrator, for the benefit of the conjugal partnership, is lost.

In Ayala Investment and Development Corp. v. CA, et al., G.R. No. 118305, February 12, 1998, 91 SCAD 663, it was
ruled that surety obligations cannot be categorized as falling within the context of obligations for the benefit of the
conjugal partnership. It is merely for the benefit of the principal debtor, not for the surety of his family. There is no
presumption if the husband enters into a surety or accommodation agreement that it is for the benefit of the family.
Proof must be presented to establish benefit redounding to the conjugal partnership. (BA Finance Corp. v. CA, G.R. No.
61464, May 28, 1988; Ting v. Villarin, G.R. No. 61754, August 17, 1989; Phil. Bank of Communications v. CA, et al., G.R. No.
106858, September 5, 1997, 86 SCAD 599).

Family home became so by operation of law.


The residential house and lot that was not constituted as a family home whether judicially or extrajudicially
under the Civil Code became a family home by operation of law only under Article 153 of the Family Code. It is deemed

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constituted as a family home upon the effectivity of the Family Code on 3 August 1988, published in the Manila Chronicle
on August 4, 1987 (1988 being a leap year).

Article 162 simply means that all existing family residences at the time of the effectivity of the Family Code are
considered family homes and are prospectively entitled to the benefits accorded to a family home under the Family Code.
Article 162 does not state that the provisions of Chapter 2, Title V have a retroactive effect. (Modequillo v. Breva, G.R.
86355, May 31, 1990).

The law provides that occupancy of the family home, either by the owner or by any of the beneficiaries, must be
equal. Such beneficiaries are the husband and wife, or an unmarried person who is the head of the family, their parents,
ascendants, descendants, brothers and sisters, legitimate or illegitimate, living in the family home. It may also include the
in-laws. But the law definitely excludes maids and overseers. Hence, the occupancy of the family home by an overseer is
insufficient compliance with the law. However, if the in-laws were left therein, the family home can still be exempted
because they are considered as other ascendants who are likewise beneficiaries of the family home. (Manacop v. CA, et
al., G.R. No. 97898, August 11, 1997, 85 SCAD 491).

Filiation and Proof of the Same


The law requires that every reasonable presumption be made in favor of legitimacy. The rationale of this rule
was explained in the recent case of Cabatania v. CA, G.R. No. 124814, Otober 21, 2004, where it was said that the
presumption of legitimacy does not only flow out of a declaration in the statute but based on the broad principles of
natural justice and the supposed virtue of the mother. It is grounded on the policy to protect the innocent offspring from
the odium of illegitimacy. (Gerardo Concepcion v. Court of Appeals, G.R. No. 123450, August 31, 2005).

To rebut the presumption of legitimacy of a child, the separation between the spouses must be such as to make
marital intimacy impossible. This may take place, for instance, when they reside in different countries or provinces and
they were never together during the period of conception. (Estate of Benito Marcelo, 60 Phil. 442 (1934). Or, the husband
was in prison during the period of conception, unless it appears that sexual union takes place through the violation of
prison regulations. (Concepcion v. CA, et al., G.R. No. 123450, August 31, 2005).

While it is true that the father did not sign the birth certificate, the placing of his name therein is incompetent
evidence of paternity, the rule does not apply if the father himself gave all the date regarding the child’s birth and caused
his name to be placed therein as the child’s father. Even if he did not sign the birth certificate, the same is still competent
proof that he is the father because he was the one who supplied the date to the nurse. If he failed to sign the birth
certificate, it was only because he left the hospital quite early (He is bound by the principle of estoppels in pais.) (Ilano v.
CA, G.R. No. 104376, February 23, 1994, 48 SCAD 432).

An illegitimate child is under the parental authority of the mother pursuant to Art. 176, F.C. The recognition by
the father is not a ground for him to have parental authority/custody but he is obliged to support. (David v. CA). Only the
most compelling of reasons like the mother’s unfitness to exercise sole parental deprivation of parental authority and
award custody to someone else.

In Vancil v. Belmes, 358 SCRA 703, the mother is preferred over parental grandmother based in USA.

In Silva v. Court of Appeals, 275 SCRA 604 (1997) the father was granted visitation rights to his illegitimate
children. Visitation right is the right of access to noncustodial parent to his or her child/chidren. There is nothing
conclusive to indicate the constitutional and legal provisions on the natural right and duty of parents are meant solely to
address themselves to legitimate relationships. Art. 150, F.C. expresses family relations to include legitimates and
illegitimates since it says it includes those between parents and children. Art. 209 in relation to Article 220 states that it is
the natural right and duty of parents and those exercising parental authority to, among other things, keep children in their
company and to give than more love and affection, advice and counsel, companionship and understanding. (Briones v.
Miguel, 440 SCRA 455).

ADOPTION

Adoption is a juridical act that creates between two persons certain relations, purely civil, of paternity and
filiation. The adopted becomes a legitimate child of the adopter with reciprocal rights and obligations arising from that
relationship. Consequently, the child has the right to bear the surname of the adopter, receive support and to inherit.
(Art. 189, Family Code).

The relationship established by adoption is limited to the adopting parents and does not extend to their other
relatives, except as expressly provided by law. Thus, the adopted child cannot be considered as a relative of the
ascendants and collaterals of the adopting parents, nor of the legitimate children which they may have after the adoption,
except that the law imposes certain impediments to marriage by reason of adoption. Neither are the children of the
adopted considered descendants of the adopter. (Santos, Jr. v. Republic, 21 SCRA 379). Hence, no relationship is created
between the adopted and the collaterals of the adopting parents. As a consequence, the adopted is an heir of the
adopters, but not of the relatives of the adopter. (Teotico v. Del Val, 13 SCRA 406).

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Section 9 of RA 8552 requires the consent of the biological parents of the adoptee and the children of the
adopter.

The general requirement of consent and notice to the natural parents is intended to protect the natural parent
relationship from unwarranted interference by interlopers, and to insure the opportunity to safeguard the best interests
of the child in the manner of the proposed adoption.

The written consent of the biological parents is indispensable for the validity of a decree of adoption. Indeed, the
natural right of a parent to his child requires that his consent must be obtained before his parental rights and duties may
be terminated and re-established in adoptive parents. In this case, petitioner failed to submit the written consent of the
mother of the minors to the adoption of the latter. (Diwata Ramos Landingin v. Republic, G.R. No. 164948, June 27, 2006).

Middle name of an adopted is surname of biological mother; reasons.


First, it is necessary to preserve and maintain the child’s filiation with her natural mother because under Article
189 of the Family Code, she remains to be an intestate heir of the latter. Thus, to prevent any confusion and needless
hardship in the future, her relationship or proof of that relationship with her natural mother should be maintained.

Second, there is no law expressly prohibiting the adopted to use the surname of her natural mother as her
middle name. What the law does not prohibit, it allows.

Last, it is customary for every Filipino to have a middle name, which is ordinarily the surname of the mother. This
custom has been recognized by the Civil Code and Family Code. In fact, the Family Law Committees agreed that the initial
or surname of the mother should immediately precede the surname of the father so that the second name, if any, will be
before the surname of the mother. (In the Matter of Adoption of Stephanie Nathy Astorga Garcia, Honorato Catindig,
Petitioner, G.R. No. 148311, March 31, 2005, Gutierrez, J).

PARENTAL AUTHORITY

Parental authority and responsibility are inalienable and may not be transferred or renounced except in cases
authorized by law. The right attached to parental authority, being purely personal, the law allows a waiver of parental
authority only in cases of adoption, guardianship and surrender to a children’s home or an orphan institution. (Arts. 222-
224, F.C.; Act No. 3094). When a parent entrusts the custody of a minor to another, such as a friend or godfather, even in
a document, what is given is merely temporary custody and it does not constitute a renunciation of parental authority.
(Celis v. Cafuir, 86 Phil. 555; Santos, Sr. v. CA, et al., G.R. No. 113054, March 16, 1995, 59 SCAD 672).

The right of custody accorded to parents springs from the exercise of parental authority. Parental authority or
patria potestas in Roman Law is the juridical institution whereby parents rightfully assume control and protection of their
unemancipated children to the extent required by the latter’s needs. It is a mass of rights and obligations which the law
grants to parents for the purpose of the children’s physical preservation and development, as well as the cultivation of
their intellect and the education of their heart and senses. As regards parental authority, “there is no power, but a task;
no complex of rights, but a sum of duties; no sovereignty, but a sacred trust for the welfare of the minor.” (Santos, Sr. v.
CA, et al., G.R. No. 113054, March 16, 1995, 59 SCAD 672).

The paramount consideration in matters of custody of a child is the welfare and well-being of the child. (Silva v.
CA, 275 SCRA 609; Cervantes v. Fajardo, 169 SCRA 575). Strong bias is created in favor of the mother. The reason is to
avoid a tragedy where a mother has seen her baby torn away from her. No man can sound the deep sorrow of a mother
who is deprived of her child of tender age. The exception is when there is a compelling reason or reasons like neglect,
abandonment, unemployment and immorality, habitual drunkenness, drug addiction, maltreatment of the child, insanity,
and affliction with a communicable illness. (Perez v. CA, 255 SCRA 661). In this case, the father was given temporary
custody as the mother, a nurse, left for the USA. If the child however is 7 years and above, he can make a choice but not
binding upon the courts. (See Santos v. CA; Tonog v. CA, et al., G.R. No. 122906, February 6, 2002; Agnes Gamboa-Hirsch
v. CA, et al., G.R. No. 174485, July 11, 2007; Malto v. People, G.R. No. 164733, September 27, 2007).

CHANGE OF NAME

Grounds for Change of Name (RA 9048)


The petition for change of first or nickname may be allowed in any of the following cases:
1. The petitioner finds the first name or nickname to be ridiculous, tainted with dishonor or extremely difficult to
write or pronounce;
2. The new first name or nickname has been habitually and continuously used by the petitioner and he has been
publicly known by that first name or nickname in the community; or
3. The change will avoid confusion. (Sec. 4, RA 9048).

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RA 9048 does not sanction a change of first name on the ground of sex reassignment. Rather than avoiding
confusion, changing petitioner’s first name for his declared purpose may only create grave complications in the civil
registry and the public interest.

Before a person can legally change his given name, he must present proper or reasonable cause or any
compelling reason justifying such change. In addition, he must show that he will be prejudiced by the use of his true and
official name. In this case, he failed to show, or even allege, any prejudice that he might suffer as a result of using his true
and official name.

Under RA 9048, a correction in the civil registry involving the change of sex is not a mere clerical or typographical
error. It is a substantial change for which the applicable procedure is Rule 108 of the Rules of Court. Furthermore, there is
no special law in the Philippines governing sex reassignment and its effects. (Rommel Jacinto Dantes Silverio v. Republic,
G.R. No. 174689, October 22, 2007).

Change of name and gender.


Gender classification of a person with intersex when he/she reaches the age of majority depends upon what
he/she thinks of his or her sex.

A change of name is not a matter of right but a judicial discretion. The court’s act of granting petitioner’s change
of named from Jennifer to Jeff implies a change of feminine name to a masculine name.

Considering the consequence that respondent’s change of name merely recognizes his preferred gender, there is
merit to the change of name. Such change will conform with the change of entry in his birth certificate from female to
male. (Republic v. Jennifer Cagandahan, G.R. No. 166676, September 12, 2008).

PROPERTY

Article 45(a), NCC provides that docks and structures which, though floating, are intended by their nature and
object remain at a fixed place on a river, lake or coast, are considered as immovable property. Thus, power barges are
categorized as immovable property by destination, being the nature of machinery and other implements intended by the
owner for an industry or work which may be carried on in a building or on a piece of land and which tend directly to meet
the needs of said industry or work.

(b) The equipment and living quarters of the crew are immovable property under Article 415(3), (the res vinta of
Roman Law), which provides that “everything attached to an immovable in a fixed manner, in such a way that it cannot be
separated therefrom without breaking the material or deterioration of the object. Both the equipment and the living
quarters are permanently attached to the platform which is also an immovable. This is especially so that they are
intended to meet the needs of the business and industry of the corporation. (Fels Energy, Inc. v. Province of Batangas, et
al., February 16, 2007).

(c) The trees, plants and flowers planted in the garden area of the platform are likewise immovable under Article
415(2) which classifies as an immovable “trees, plants and growing fruits, while they are attached to the land or form an
integral part of an immovable. The garden form an integral part of an immovable, the petroleum operation facility. (Fels
Energy, Inc. v. Province of Batangas, et al., 516 SCRA 186, February 16, 2007).

The landowner can choose between appropriating the building by paying the proper indemnity or obliging the
builder to pay the price of the land, unless its value is considerably more than that of the structures, in which case the
builder in good faith shall pay reasonable rent. If the parties cannot come to terms over the conditions of the lease, the
court must fix the terms thereof.

The choice belongs to the owner of the land, a rule that accords with the principle of accession, i.e., that the
accessory follows the principal and not the other way around. Even as the option lies with the landowner, the grant to
him, nevertheless, is preclusive. (PNB v. De Jesus, 411 SCRA 557 (2003). The landowner cannot refuse to exercise either
option and compel instead the owner of the building to remove it from the land. (Rosales, et al. v. Castellfort, et al., G.R.
No. 157044, October 5, 2005 citing Technogas Phils. Mfg. Corp. v. CA, 268 SCRA 5 (1997)).

Reason for the law.


The raison d’etre for the law is that, where the builder, planter or sower has acted in good faith, a conflict of
rights arises between the owners, and it becomes necessary to protect the owner of the improvements without causing
injustice to the owner of the land. In view of the impracticability of creating a state of forced co-ownership, the law has
provided a just solution by giving the owner of the land the option to acquire the improvements after payment of the
proper indemnity, or to oblige the builder or planter to pay for the land and the sower the proper rent. He cannot refuse
to exercise the option, because his right is older, and because of the principle of accession, he is entitled to the ownership
of the accessory thing. (Depra v. Dumlao, 136 SCRA 475 (1985)).

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After the government sold the property of a person due to non-payment of taxes, the buyer moved for the
delivery not only of the lot, but even the improvement. Only the lot was sold. The motion was granted subject to the
condition of reimbursement of the value of the improvement. Reason – he is a builder in good faith. He was still the
owner of the lot when he constructed the improvement. (Nuguid v. Court of Appeals, February 23, 2005).

Article 448 refers to a land whose ownership is claimed by two or more parties, one of whom has built some
works, or sown or planted something. The building, sowing, or planting may have been made in good faith or in bad faith.
The rule on good faith laid down in Article 526 of the Civil Code shall be applied in determining whether a builder, sower,
or planter had acted in good faith.

Article 448 does not apply to a case where the owner of the land is the builder, sower, or planter who then later
loses ownership of the land by sale or donation. (Coleongco v. Regalado and Mortilla, 92 Phil. 387). Where the true owner
himself is the builder of works on his own land, the issue of good faith or bad faith is entirely irrelevant.

The primary intent of Article 448 is to avoid a state of forced co-ownership and that the parties, including the
two courts below, in the main agree that Articles 448 and 546 of the Civil Code are applicable and indemnity for the
improvements may be paid although they differ as to the basis of the indemnity.

The objective of Article 546 of the Civil Code is to administer justice between the parties involved. In this regard,
it has been ruled in Rivera v. Roman Catholic Archbishop of Manila, 40 Phil. 717, that the said provision was formulated in
trying to adjust the rights of the owner and possessor in good faith of a piece of land, to administer complete justice to
both of them in such a way as neither one nor the other may enrich landowner of that which does not belong to him.
Guided by this precept, it is therefore the current market value of the improvements which should be made the basis of
reimbursement. A contrary ruling would unjustly enrich the landowner who would otherwise be allowed to acquire a
highly valued income yielding four-unit apartment building for a measly amount. Consequently, the parties should
therefore be allowed to adduce evidence on the present market value of the apartment building upon which the trial
court should base its finding as to the amount of reimbursement to be paid by the landowner. (Pecson v. CA, et al., G.R.
No. 115814, May 26, 1995).

Lessees are not builders in good faith. They came into possession of the lot by virtue of a contract of lease
executed by petitioner’s mother in their favor. They are then estopped to deny their landlord’s title, or to assert a better
title not only in themselves, but also in some third person while they remain in possession of the leased premises and
until they surrender possession to the landlord. (Munar v. CA, 56 SCAD 787, 230 SCRA 372). This estoppel applies even
though the lessor had no title at the time. The relation of lessor and lessee was created and may be asserted not only by
the original lessor, but also by those who succeed to his title. (49 Am. Jur. 122, 152; Feliciano v. Sps. Zaldivar, G.R. No.
162593, September 26, 2006; Frederico Geminiano, et al. v. CA, et al., G.R. No. 120303, July 24, 1996).

Article 457 of the Civil Code provides: “To the owners of lands adjoining the banks of rivers belong the accretion
which they gradually receive from the effects of the current of the waters.” It was ruled that accretion as a mode of
acquiring property under Art. 457, NCC requires:
1. That the deposit of soil or sediment be gradual and imperceptible;
2. That it be the result of the action of the waters of the river;
3. That the land where accretion takes place is adjacent to the banks of rivers.

These are called the rules on alluvion which if present in a case, give to the owners of lands adjoining the banks
of rivers or streams any accretion gradually received from the effects of the current of waters. (Meneses v. CA, 62 SCRA
660, 246 SCRA 374 (1995)).

In Republic v. CA, 132 SCRA 514, the Court ruled that the requirement that the deposit should be due to the
effect of the current of the river is indispensable. This excludes from Art. 457 of the Civil Code all deposits caused by
human intervention. Putting it differently, alluvion must be the exclusive work of nature. Thus, in Tiongco v. Director of
Lands, et al., 16 C.A. Rep. 211, where the land was not formed solely by the natural effect of the water current of the river
bordering said land but is also the consequence of the direct and deliberate intervention of man, it was deemed a man-
made accretion and, as such, part of the public domain.

“The reason for this rule is because if lands bordering on streams are exposed to floods and other damages due
to the destructive force of the waters, and if by virtue of law they are subject to encumbrances and various kinds of
easement, it is only just that such risks or dangers as may prejudice the owners thereof should in some way be
compensated by the right of accretion.” (Agustin v. IAC, G.R. Nos. 66075-76, July 5, 1990; Vda. de Nazareno, et al. v. CA, et
al., G.R. No. 98405, June 26, 1996).

CO-OWNERSHIP

Well-settled is the rule that when a co-owner sells the whole property as his, the sale will affect only his own
share but not those of the other co-owners who did not consent to the sale.

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The sale or other disposition affects only the seller’s share pro indiviso, and the transferee gets only what
corresponds to his grantor’s share in the partition of the property owned in common. Since a co-owner is entitled to sell
his undivided share, a sale of the entire property by one co-owner without the consent of the other co-owners is not null
and void; only the rights of the co-owners/seller are transferred, thereby making the buyer a co-owner of the property.
(Oesmer v. Paraiso Dev’t. Corp., G.R. No. 157493, February 5, 2007).

The remedy is to ask for partition, not to ask for the nullity of the sale, since the seller transmitted only his
undivided share to the buyer, thus, the buyer and the other owners became co-owners. (Aguirre, et al. v. CA, et al., G.R.
No. 122249, January 29, 2004).

The possession of a co-owner is like that of a trustee and shall not be regarded adverse to the other co-owners
but in fact as beneficial to all of them. Acts which may be considered adverse to strangers may not be considered adverse
insofar as co-owners are concerned. A mere silent possession by a co-owner, his receipt of rents, fruits or profits from the
property, the erection of buildings and fences, and the planting of trees thereon, and the payment of land taxes, cannot
serve as proof of exclusive ownership, if it is not borne out by clear and convincing evidence that he exercised acts of
possession which unequivocably constituted an ouster or deprivation of the rights of the other co-owners. (Aguirre, et al.
v. CA, et al., G.R. No. 122249, January 29, 2004 citing Salvador v. CA, 243 SCRA 239; Carmen Fangonil-Herrera v. Tomas
Fangonil, et al., G.R. No. 169359, August 28, 2007).

Prescription as a rule does not run against co-owners and co-heirs as long as the co-ownership is expressly or
impliedly recognized.

The exception is when there is repudiation, provided that the following requisites are present:
1. He must make known to the others that he is repudiating the co-ownership and claiming complete
ownership of the entire property. (Trinidad v. CA, et al., G.R. No. 118904, April 20, 1998, 93 SCAD 610).
2. Evidence of repudiation and knowledge of others is clear and convincing.
3. There is open, continuous, peaceful, public and adverse possession for a period of time required under the
law.
(Galvez, et al. v. CA, et al., G.R. No. 157954, March 26, 2006).

The term or phrase “unlawfully deprived” extends to all cases where there has been no valid transmission of
ownership, including a depositary or a lessee who has sold the same. (Dizon v. Sunatay, 47 SCRA 160; Ledesma v. CA, et
al., G.R. No. 86051, September 1, 1992; EDCA Publishing and Distributorship Corp. v. Santos, 184 SCRA 614 (1990).

If there was a perfected unconditional contract of sale between the seller and the buyer and the former
voluntarily caused the transfer, title thereto was acquired. The subsequent dishonor of the check merely amounted to a
failure of consideration which does not render the contract of sale void, but merely allows the prejudiced party to sue for
specific performance or rescission of the contract and to prosecute the impostor for estafa under Art. 315, RPC. (Ledesma
v. CA, et al., G.R. No. 86051, September 1, 1992).

Usufruct may be deemed terminated or extinguished by the occurrences of the resolutory conditions provided in
the title creating the usufruct. The deterioration of the relations of the kins to almost irretrievable level is a good reason
for the termination of the usufruct. This is aside from the provisions of Article 603, NCC.

By express provision of law as usufructuary he does not have the right to reimbursement for the improvements
he may have introduced on the property. Under the law the usufructuary may make on the property held in ususfruct
such useful improvements for mere pleasure as he may deem proper, provided he does not alter its form or substance;
but he shall have no right to be indemnified therefore. He may, however, remove such improvements, should it be
possible to do so without damage to the property. (Art. 579, NCC).

The usufructuary may set off the improvements he may have made on the property, against any damage to the
same. (Art. 580, NCC).

If the rule on reimbursement or indemnity were otherwise, then the usufructuary might improve the owner out
of his property. He may, however, remove or destroy the improvements they may have introduced thereon without
damaging the property. (Moralidad v. Sps. Pernes, G.R. No. 152809, August 3, 2006).

EASEMENT

When the easement in this case was established, the parties unequivocally made provision for its observance by
all who, in the future, might succeed them in dominion. So, it is permanent in character, which was annotated on each
and all of the transfer certificates of title.

Even assuming that with the demolition of the house by badong, the necessity for the passageway ceased, still
such fact does not detract from its permanency as a property right which survives the termination of the necessity.

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It is true that the private respondent is the owner of the portion on which the right of way had been established
and that an easement cannot impair ownership, but the petitioner is not claiming the easement or any part of the
property as its own, rather, it is seeking to have the private respondent respect the easement already existing thereon.

The fact that the alley in question as an easement is inseparable from the main land is no argument to defeat the
petitioner’s claim, because as an easment, it operates as a limitation on the title of the owner of the servient estate,
especially his right to use.

The servitude in question is a “personal servitude” which is constituted for the benefit of the general public (Art.
614, NCC), and not a real servitude which is constituted for the benefit of a particular tenement. (Benedicto v. CA, 25
SCRA 145).

If made on one’s own wall and the wall does not extend over the neighbor’s land, it is negative. The reason for
this is that, a dominant estate does an act of ownership and creates an easement. (Cortes v. Yu Tibo, 02 Phil. 24).

If made on one’s own wall which extends over the neighboring land, or if on a party wall, it is positive. (Solid
Manila Corp. v. Bio Hong Trading Co., Inc., G.R. No. 90596, April 8, 1991).

Where there are several tenements surrounding the dominate estate, and the easement may be established on
any of them, the one where the way is shortest and will cause the least damage should be chosen. The conditions of
“least damage” and “shortest distance” are both established in one tenement, which is the petitioner’s property. (Sta.
Maria v. CA, et al., G.R. No. 127549, January 28, 1998, 91 SCAD 65).

There must be proof that the easement must be established at a point least prejudicial to the servient estate. If
the servient estate is only 164 meters, an improvident imposition of the easement on the lot may unjustly deprive the
owner of the optimum use and enjoyment of the property considering that its already small area will be reduced further
by the easement. Worst, it may even render the property useless for the purpose for which it is intended. (Cristobal, et al.
v. CA, et al., G.R. No. 125339, June 22, 1998, 95 SCAD 44).

An easement of right of way is discontinuous in nature since the dominant estate cannot be continually crossing
the servient estate but can do so only at intervals. Hence, it cannot be acquired by prescription. For an easement to be
acquired by prescription, it must be continuous and apparent. (Vda. de Baltazar, et al. v. CA, et al., G.R. No. 106082, June
26, 1995, 62 SCAD 76, citing Ronquillo v. Roco, 103 Phil. 84).

The sale of the dominant estate does not extinguish the easement. Article 631, NCC, provides for the modes of
extinguishment of easements. Under Art. 624, NCC, there must be a statement abolishing or extinguishing it. Hence, the
use of the servient estate is continued by operation of law. (Tanedo v. Hon. Bernad, et al.,G.R. No. 66520, August 30,
1988).

The owners of the dominant estate, may validly claim a compulsory right of way only after they had established
the four requisites under Arts. 649 and 650 of the NCC, to wit:

1. The dominant estate is surrounded by other immovables and is without adequate outlet to a public highway;
2. After payment of proper indemnity;
3. The isolation was not due to the proprietor’s own acts; and
4. The right of way claimed is at a point least prejudicial to the servient estate. (La Vista Assn., Inc. v. CA, et al.,
G.R. No. 95252, September 5, 1997, 86 SCAD 551; Cristobal, et al. v. CA, et al., G.R. No. 125339, June 23,
1998, 95 SCAD 44).

DONATION

The lease contracts entered into by the donee were for the sole purpose of pursuing the objective for which the
donation was intended. The lease contracts were entered into, to protect the area from vandals and the electrification of
the nucleus building of the home for the aged. In fact, such lease was authorized by the donor by express provision in the
deed of donation, albeit the prior written consent therefore of the donor is needed. Hence, considering that the donee’s
acts did not detract from the very purpose for which the donation was made but precisely to achieve such purpose, a lack
of prior written consent of the donor would only constitute casual breach of the deed, which will not warrant the
revocation of the donation. (Republic v. Silim, 356 SCRA 1 (2001).

A deed of exchange over the property donated with another property does not constitute breach of the terms
and conditions of the donation especially so if the purpose of the donation was not defeated. (C-J Yulo & Sons, Inc. v.
Roman Catholic Archbishop of San Pablo, Inc., G.R. No. 133705, March 31, 2005).

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After the donation was made, the donee has been in adverse, continuous, open, public, peaceful and
uninterrupted, and in the concept of an owner. Thus, by virtue of acquisitive prescription, the donee became the owner.
(Bautista, et al. v. Poblete, et al., G.R. No. 141007, September 13, 2005).

The action for revocation of a donation must be filed within four (4) years from the birth of the first child or from
his legitimation, recognition or adoption, or from the judicial declaration of filiation, or from receipt of information
regarding the appearance of the child believed dead. (Art. 763, NCC). The action can be renounced; it is transmissible to
the heirs. (Roman Catholic Archbishop of Manila, et al. v. CA, et al., G.R. No. 77425, and Roman Catholic Archbishop of
Manila, et al. v. CA, et al., G.R. No. 77450, June 30, 1991).

Donation is valid even if the donor has schizophrenia. A person suffering from such sickness is presusmed
capable of attending to his property rights. There is not total loss of control of his mental facilities. Persons suffering from
the disease have gradual onset of symptoms which may become increasingly bizarre as the disease progresses. The
condition improves or worsens in cycles. Sometimes the sufferers appear to be relatively normal. Some may appear
strange because they speak in a monotone, have odd speech habits, appear to have no emotional feelings. Administration
of medicines helps correct the patient. (Catalan v. Basa, July 31, 2007).

NUISANCE

The business of a cold storage or ice plant is a legitimate calling, trade or business, hence, it is not a nuisance per
se. it is legitimate industry, beneficial to the people and conducive to their health and comfort. A nuisance is, according to
Blackstone, anything that worketh hurt, inconvenience or damage. The Supreme Court went further by saying that
nuisance arises from pursuing particular trades or industries in populous neighborhoods; from acts of public indecency;
keeping disorderly houses; houses of ill-fame; and gambling houses. (Salao v. Santos, 7 Phil. 547; Iloilo Ice Cold Storage v.
Iloilo, 24 Phil. 461; AC Enterprises Inc. v. Frabelle Properties Corp., G.R. No. 166744, November 2, 2006).

The principal reason for the doctrine of attractive nuisance is that the condition or appliance in question,
although its danger is apparent to those of age, is so enticing or alluring to children of tender years as to induce them to
approach, get on or use it, and this attractiveness is an implied invitation to such children. (65 C.J.S., p. 458; Hidalgo
Enterprises, Inc. v. Balandan, et al., L-3422, June 13, 1952).

The wordings of the deed of donation executed by the deceased clearly expressed the latter’s desire that the
donation shall take effect only after ten (10) years from her death, there is therefore an express prohibition to alienate
the property within such period.

Furthermore, the deceased continuously possessed the property and never let go of its ownership, enjoyed the
produce, and paid the taxes thereon, until the transfer of the property to the donees, and she did not give the title to the
donees but instead retained the same.

From those facts therefore, it can be inferred that the true intention of the donor is to retain ownership of the
property during her lifetime, and the donees can only enjoy possession after ten (10) years from the death of the same.

It has been held that whether the donation is inter vivos or mortis causa depends on whether the donor intended
to transfer ownership over the properties upon the execution of the deed. (Gestopa v. CA, 342 SCRA 105; Reyes v.
Mosqueda, 187 SCRA 661). It is clear from the donation that the donor intended to part with his ownership while alive.
(Spouses Evelyn and Ernesto Sicad v. CA, et al., G.R. No. 125888, August 13, 1998, 97 SCAD 318).

SUCCESSION

The conflict between the dates appearing on the will does not invalidate the document, “because the law does
not even require that a notarial will be executed and acknowledged on the same occasion.” More important, the will must
be subscribed by the testator, as well as by three or more credible witnesses who must also attest to it in the presence of
the testator and of one another. (Art. 805, NCC). Furthermore, the testator and the witnesses must acknowledge the will
before a notary public. (Art. 806, NCC). In any event the variance in the dates of the will as to its supposed execution and
attestation was satisfactorily and persuasively explained by the notary public and the instrumental witnesses like the fact
that when the testator and the witnesses went to the house of the notary public he was out. (Ortega v. Valmonte, G.R.
No. 157451, December 16, 2005).

The purpose of the law in requiring that the witnesses should sign at the bottom of the attestation clause is to
safeguard against possible interpolation or omission of one or some of its pages and to prevent any increase or decrease
in the pages. The failure to state the number of pages equates with the absence of an averment on the part of the
instrumental witnesses as to how many pages consisted the will, the execution of which they had ostensibly just
witnessed and subscribed to. Following Caneda v. CA, 222 SCRA 781 (1993), there is substantial compliance with this
requirement if the will states elsewhere in it how many pages it is comprised of, as was the situation in Singson and
Taboada. However, in this case, there could have been no substantial compliance with the requirements under Article 805

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since there is no statement in the attestation clause or anywhere in the will itself as to the number of pages which
comprise the will. (Azuela v. CA, et al., G.R. No. 122880, April 12, 2006).

The law (Art. 805) stipulates that the instrumental witnesses sign each page of the will, from the requisite that
the will be attested and subscribed by the instrumental witnesses. The respective intents behind these two classes of
signature are distinct from each other. The signature on the left-hand corner of every page signify, among others, that the
witnesses are aware that the page they are signing forms part of the will. On the other hand, the signatures to the
attestation clause establish that the witnesses are referring to the statements contained in the attestation clause itself.
Indeed, the attestation clause is separate and apart from the disposition of the will. An unsigned attestation clause results
in an unattested will. Even if the instrumental witnesses signed the left-hand margin of the page containing the unsigned
attestation clause, such signatures cannot demonstrate these witnesses’ undertakings in the clause, since the signatures
that do appear on the page were directed towards a wholly different avowal.

It is the attestation clause which contains the utterances reduced into writing of the testamentary witnesses
themselves. It is the witnesses, and not the testator, who are required under Article 805 to state the number of pages
used upon which the will is written; the fact that the testator had signed the will and every page thereof; and that they
witnessed and signed the will and all the pages thereof in the presence of the testator and of one another. The only proof
in the will that the witnesses have stated these elemental facts would be their signatures on the attestation clause.
(Azuela v. CA, et al., supra.).

The phrase “en presencia de nosotros” or “in our presence” coupled with the signatures appearing on the will
itself and after the attestation clause could only mean that: (1) the testator subscribed to and professed before the three
witnesses that the document was his last will, and (2) the testator signed the will in the left margin of each page of the
will in the presence of these three witnesses. (Testate Estate of the Late Alipio Abada v. Alipio Abaja, et al., G.R. No.
147145, January 31, 2005).

The document, although it may initially come across as a mere disinheritance instrument, conforms to the
formalities of a holographic will prescribed by law. It is written, dated and signed by the hand of the testator himself. An
intent to dispose mortis causa (Article 783) can be clearly deduced from the terms of the instrument, and while it does
not make an affirmative disposition of the latter’s property, the disinheritance of the son nonetheless, is an act of
disposition in itself. In other words, the disinheritance results in the disposition of the property of the testator in favor of
those who would succeed in the absence of the eldest son. (Dy Yieng Seangio, et al. v. Hon. Amor Reyes, et al., G.R. No.
140371-72, November 27, 2006).

OBLIGATIONS AND CONTRACTS

If the student is killed inside the campus, the basis of the liability of the school is contract because whenever a
student enrolls at a school, there is a contract entered into between him and the school. In this situation, the student
binds himself to comply with the rules and regulations and to comply with the school policies, especially on academic
requirements. The school in turn assures the student that he will graduate, learn English, Math, etc., and assures that
there will be peace and order in the school campus. (PSBA, et al. v. CA, et al., G.R. No. 84698, February 4, 1992).

Institutions of learning must meet the implicit or “built-in” obligation of providing students with an atmosphere
that promotes or assists in attaining its primary undertaking of imparting knowledge. When an academic institution
accepts a student for enrollment, there is a contract between them. In case of an accident in the campus, like a shooting
incident, there is no liability under Article 2180, NCC. (Saludaga v. FEU, et al., G.R. No. 179337, April 30, 2008).

The breach must be substantial and fundamental, as to defeat the objective of the parties. (Song Fo and Co. v.
Hawaiian Phil. Co., 33 SCRA 1). The breach on the part of Y is only a simple one and should not be made to defeat the
objective of the parties in entering into the contract because the law is not concerned with titles.

Rescission under Article 1191, NCC and Art. 1385, NCC rescission is based on breach. In Article 1385, NCC, it is
based on lesion. It is a principal action under Article 1191, NCC but subsidiary under Article 1385, NCC. (Congregation of
the Religious of the Virgin Mary, et al. v. Orola, et al., G.R. No. 169790, April 30, 2008; Filoil Refinery Corp. v. Mendoza,
June 15, 1987).

Judicial intervention is not necessary for the purpose of obtaining a judicial declaration rescinding a contract
where there is a reserved right to rescind. (Luna v. Abrigo, January 18, 1990). But the extrajudicial rescission is contestable
in court because it is the final award of the court of competent jurisdiction that can conclusively settle whether the
rescission was proper or not. (UP v. De los Angeles, 35 SCRA 102).

When there is a concurrence of several creditors or of several debtors or of several creditors and debtors in one
and the same obligation, it is presumed that the obligation is joint and not solidary. The most fundamental effect of joint
divisible obligations is that each creditor can demand only for the payment of his proportionate share of the credit, while
each debtor can be held liable only for the payment of his proportionate share of the debt. As a corollary to this rule, the
credit or debt shall be presumed, in the absence of any law or stipulation to the contrary, to be divided into as many

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shares as there are creditors and debtors, the credits or debts being considered distinct from one another. It necessarily
follows that a joint creditor cannot act in representation of the others. Neither can a joint debtor be compelled to answer
for the liability of the others. The pertinent rules are provided in Articles 1207 and 1208 of the Civil Code. (Cembrano, et
al. v. City of Butuan, et al., G.R. No. 163605, September 20, 2006).

The well-settled rule is that novation is never presumed. (Martinez v. Cavives, 25 Phil. 581, 586-587 (1913); Tiu
Siuco v. Habana, 45 Phil. 707; 713 (1924); Goni v. CA, 144 SCRA 222, 232 (1986). Novation will not be allowed unless it is
clearly shown by express agreement, or by acts of equal import. Thus, to effect an objective novation, it is imperative that
the new obligation expressly declares that the old obligation is thereby extinguished, or that the new obligation be on
every point incompatible with the new one. (Zapanta v. Rotaeche, 21 Phil. 154). In the same vein, to effect a subjective
novation by a change in the person of the debtor, it is necessary that the old debtor be released expressly from the
obligation, and the third person or new debtor assumes his place in the relation. (Lopez v. CA, 114 SCRA 671; Mercantile
Ins. Co. v. CA, 196 SCRA 197). There is no novation without such release as the third person who has assumed the debtor’s
obligation becomes merely a co-debtor or surety. (Dungo v. Lopena, 116 Phil. 1305; Lopez v. CA, 114 SCRA 671).

The attendant facts herein do not make a case of novation. There is nothing in the records to show the
unequivocal intent of the parties to novate the three loan agreements through the execution of the promissory note. The
provisions of the note yield no indication of the extinguishment of, or an incompatibility with the three loan agreements
secured by the real estate mortgages. (Ajax Marketing and Dev’t. Corp., et al. v. CA, et al., G.R. No. 118585, September 14,
1995, 64 SCAD 311).
TRUST

The action to compel the trustee to convey the property registered in his name for the benefit of the cestui que
trust does not prescribed. If at all, it is only when the trustee repudiates the trust that the period of prescription
commences to run. (Enriquez v. CA, 104 SCRA 656; Heirs of Maria de la Cruz v. CA, 182 SCRA 638). The prescription is 10
years from the repudiation of the trust. it is 10 years because just as a resulting trust is an offspring of the law, so is the
corresponding obligation to convey the property and the title thereto to the true owner. Art. 1144 of the Civil Code
provides that:

“The following actions must be brought within 10 years from the time the right of action accrues: (1)
upon a written contract; (2) upon an obligation created by law; (3) upon a judgment.”

The reckoning point is repudiation of the trust by the trustee because from that moment his possession
becomes adverse which gives rise to a cause of action; but before the period starts to run, it must be shown that: (a) the
trustee has performed unequivocal acts of repudiation amounting to an ouster of the cestui que trust; (b) such positive
acts of repudiation have been made known to the cestui que trust; (c) the evidence thereon is clear and conclusive.
(Caladiao v. Santos Vda. de Blas, 10 SCRA 691 (1964); Diaz v. Gorricho, 103 Phil. 261 (1958); Ramos v. Ramos, 61 SCRA 284
(1974).

An action based on implied or constructive trust prescribes in ten (10) years. This means that a person should
have enforced the trust within ten (10) years from the time of its creation or upon the alleged fraudulent registration of
the property. (Bernardino Ramos v. CA, G.R. No. 111027, February 3, 1999, 103 SCAD 143; Sta. Ana, Jr. v. CA, 88 SCAD 941,
281 SCRA 624). Discovery of the fraud must be deemed to have taken place from the issuance of the certificate of title
“because registration of real property is considered a ‘constructive notice to all persons’ and it shall be counted from the
time of such registering, filing or entering.” (Serna, et al. v. Fontanilla, et al., G.R. No. 124605, June 18, 1999, 107 SCAD
648).

SALES

A contract to sell may not be considered as a Contract of Sale because the first essential element is lacking. In a
contact to sell, the prospective seller explicitly reserves the transfer of title to the prospective buyer, meaning, the
prospective seller does not as yet agree or consent to transfer ownership of the property subject of the contract to sell
until the happening of an event, which for present purposes we shall take as the full payment of the purchase price.
What the seller agrees or obliges himself to do is to fulfill his promise to sell the subject property when the entire
amount of the purchase price is delivered to him. In other words, the full payment of the purchase price partakes of a
suspensive condition, the non-fulfillment of which prevents the obligation to sell from arising and thus, ownership is
retained by the prospective seller without further remedies by the prospective buyer. (Roque v. Lapuz, 96 SCRA 741
(1980).

An option is preparatory contract in which one party grants to another, for a fixed period and at a determined
price, the privilege to buy or sell, or to decide whether or not to enter into a principal contract.

In a right of first refusal, on the other hand, while the object might be made determinate, the exercise of the
right would be dependent not only on the grantor’s eventual intention to enter into a binding juridical relation with
another but also on terms, including the price, that are yet to be firmed up. (Ang Yu Asuncion v. CA, 238 SCRA 602
(1994).

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Applied to the instant case, the provision in the contract is obviously a mere right of first refusal and not an
option contract. Although it has a definite object, i.e., the sale of subject lots, the period within which they will be
offered for sale to petitioners and necessarily, the price for which the subject lots will be sold are not specified. The
phrase “at the prevailing market price at the time of the purchase” connotes that there is no definite period within
which Ayala Corporation is bound to reserve the subject lots for the buyers to exercise their privilege to purchase.
Neither is there a fixed or determinable price at which the subject lots will be offered for sale. The price is considered
certain if it may be determined with reference to another thing certain or if the determination thereof is left to the
judgment of a specified person or persons. (Art. 1469, NCC; Vasquez, et al. v. Ayala Corp., G.R. No. 149734, November
19, 2004 (Tinga, J).

The lessee was granted a right of first refusal. It is not an option clause or an option contract. (Litonjua v. L & R
Corp., 385 Phil. 538 (2000); Carceller v. CA, 362 Phil. 332 (1999); Equatorial Realty Dev’t. Corp. v. Mayfair Theater, Inc.,
332 Phil. 525 (1996).

The stipulation is part and parcel of the entire contract of lease. The consideration for the lease includes the
consideration for the right of first refusal. In Vda. de Quirino v. Palarca, 29 SCRA 1, it was ruled that in reciprocal
contracts, the obligation or promise of each party is the consideration for that of the other. In Sps. Litonjua, et al. v. L & R
Corp., et al., G.R. No. 130722, March 20, 2000, the consideration for the loan includes the consideration for the right of
first refusal.

Rescission is the necessary relief arising out of the violation of the right of first refusal. The reason for the rule is
that, if the grantor violates it, the aggrieved party may have the right to recourse for rescission because there is a breach
of an obligation if the grantor sells it to another.

The reason is that, the status of creditors can be validly accorded the lessees for they have substantial interests
that were prejudiced by the sale of the property to another without recognizing their right of first priority under the
contract of lease. Rescission is a remedy granted by law to the contracting parties and even to third persons, even if this
should be valid, by means of the restoration of things to their condition at the moment of the celebration of the
contract. It is relief allowed for the protection of one of the contracting parties and even third persons from all injury and
damage the contract may cause, or to protect some incompatible and preferential right created by the contract. (Aquino
v. Tanedo, 39 Phil. 517; Guzman, Bocaling and Co. v. Bonnevie, 206 SCRA 668).

Under the law, in a sale on installment of a movable, if the vendor has availed himself of the right to foreclose
the chattel mortgage, he shall have no further action against the purchaser to recover the unpaid balance of the
purchase price. Any agreement to the contrary is void. in other words, in all proceedings for the foreclosure of the
chattel mortgage executed over the chattel which has been sold on installment, the mortgage is limited to the property
included in the mortgage. The scheme adopted by the seller of asking for foreclosure and the payment of the unpaid
balance is a flagrant circumvention of the prohibition of the law. By praying for the foreclosure of the mortgage over the
thing, it renounced whatever claim it may have under the promissory note. (Magna Financial Services Group, Inc. v. Elias
Colorina, G.R. No. 158635, December 9, 2005).

It Is said that the rights of an innocent purchaser for value must be respected and protected nothwithstanding
the fraud employed by the seller in securing his title. (Citing Pino v. CA, 198 SCRA 434, 440; Director of Lands v. Abache, et
al., 73 Phil. 606).

Although, generally, a forged or fraudulent deed is a nullity and conveys no title, however, there are instances
when such a fraudulent document may become the root of a valid title. One such instance is where the certificate of title
was already transferred from the name of the true owner to the forger, and while it remained that way, the land was
subsequently sold to an innocent purchaser. For then, the vendee had the right to rely upon what appeared in the
certificate.” (Spouses Romulo and Sally Eduarte v. CA, et al., G.R. No. 105944, February 9, 1996, 68 SCAD 179).

The essence of a sale with right to repurchase is that title and ownership of the property sold are immediately
vested in the vendee a retro subject to the resolutory condition of repurchase by the vendor a retro within the period
stipulated. Failure to perform said resolutory condition vests upon the vendee by operation of law absolute title or
ownership over the property sold.

Failure of the vendee a retro to consolidate ownership does not impair such title, for the method prescribed
under Article 1607 is merely for the purpose of registration of the consolidated title. Absolute ownership was vested in
the vendee a retro upon failure of the vendor to repurchase. A donor cannot lawfully convey what is not his property.
(Esquejo v. Fortaleza, 13 SCRA 187; Sps. De Guzman v. CA, L-46935, December 21, 1987; Sps. Alexander and Adelaida Cruz
v. Eleuterio Luis, et al., G.R. No. 125233, March 9, 2000).

A co-owner is entitled to a written notice from the selling co-owner in order to remove all uncertainties about the
sale, the terms and conditions, as well as its efficacy and status.

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Private respondents has timely exercised her right of redemption which she did a day after she discovered the sale
from the Office of the City Treasurer. (Verdad v. CA, G.R. No. 109972, April 29, 1996, 70 SCAD 482).

LEASE

In case of sublease, the sublease may be liable to the lessor in the following instances:
1. All acts which refer to the use and preservation of the thing leased in the manner stipulated between the lessor
and the lessee (Art. 1651, NCC);
2. The sublessee is subsidiarily liable to the lessor for any rent due from the lessee. However, the sublessee shall
not be responsible beyond the amount of rent due from him, in accordance with the terms of the sublease, at
the time of the extrajudicial demand by the lessor. (Art. 1652, NCC). Furthermore, there must be a judgment
against the lessee evicting the latter from the premises where he cannot pay the rentals and the sublessee is in
possession. The mere failure of the lessee to pay the rentals does not make the sublessee subsidiarily liable.
(Wheelers Club Int’l., Inc. v. Bonifacio, Jr., June 30, 2005).

A stipulation in a contract of lease that in case of breach the lessor can take over the premises without need of
judicial order is valid. Being the law between the parties, they must be respected. (Viray v. IAC, 198 SCRA 786 (1991);
Consing v. Jamadre, 64 SCRA 1 (1975); SBMA v. Universal International Group of Taiwan, 340 SCRA 359 (2000); Viray v.
IAC, G.R. No. 81015, July 4, 1995; Irao v. By The Bay, Inc., G.R. No. 177120, July 14, 2008).

In a contract of lease where the parties agreed that before the lessee can introduce improvements on the leased
premises, he should first obtain the consent of the lessor, if no prior consent is obtained, the lessee is not entitled to
reimbursement equivalent to 50% of the value of the improvements. Article 678, NCC does not apply. (Florentino v.
Supervalue, Inc., G.R. No. 172384, September 12, 2007).

Although Article 1652 of the Civil Code permits the lessor to proceed against the sublessee for rent due from the
lessee, this is only on a subsidiary liability basis. (Blas v. CA, 180 SCRA 60). There must be a judgment cancelling the
lessee’s principal lease contract or ousting the lessee from the premises before the sublessee becomes subsidiary liable.

The sublessee is not liable to the lessor under Article 1652 upon mere demand by the lessor on the sublessee.
The sublessee is primarily liabile to his sub-lessor and only a court can extinguish or modify this primary liability if the sub-
lessor contests the pre-termination of the principal lease by the lessor. (Tamio v. Ticson, G.R. No. 154895, November 8,
2004; citing Duellome v. Gotico, 7 SCRA 841; Sipin v. CFI of Manila, et al., 74 Phil. 649; Wheelers Club, Int’l. v. Bonifacio).

COMMON CARRIERS/CONTRACTS

The liability of a carrier is contractual and arises upon its breach of the obligation, and there is a breach if it fails
to exercise extraordinary diligence according to all the circumstances of each case. A carrier is obliged to carry its
passengers with utmost diligence of a very cautious person, having due regard for all circumstances surrounding the case.
A carrier is presumed to be at fault or to have acted negligently in case of death of, or injury to, its passengers, it being its
duty to prove that it exercised extraordinary diligence. (Dangwa Trans. Co., Inc. v. CA, et al., G.R. No. 95582, October 7,
1991; Arts. 1733, 1755, NCC).

Well-settled is the rule that common carriers, from the nature of their business and for reasons of public policy,
are bound to observe extraordinary diligence and vigilance with respect to the safety of the goods and the passengers
they transport. (Article 1733, NCC). Thus, common carriers are required to render service with the greatest skill and
foresight and “to use all reasonable means to ascertain the nature and characteristic of the goods tendered for shipment,
and to exercise due care in the handling and storage, including such methods as their nature requires.” The extraordinary
responsibility lasts from the time the goods are unconditionally placed in the possession of and received for
transportation by the carrier until they are delivered, actually or constructively, to the consignee or to the person who has
right to receive them. (Article 1736, NCC0.

This strict requirement is justified by the fact that, without a hand or a voice in the preparation of such contract,
the riding public enters into a contract of transportation with common carriers. Even if it wants to, it cannot submit its
own stipulations for their approval. Hence, it merely adheres to the agreement prepared by them. (Compania Maritima v.
CA, 164 SCRA 685).

Owing to this high degree of diligence required of them, common carriers, as a general rule, are presumed to
have been at fault or negligent if the goods they transported deteriorated or got lost or destroyed. That is, unless they
prove that they exercised extraordinary diligence in transporting the goods. In order to avoid responsibility for any loss or
damages, therefore, they have the burden of proving that they observed such diligence. (Belgian Overseas Chartering and
Shipping N., et al. v. Philippine First Insurance Company, Inc., G.R. No. 143133, June 5, 2002).

While the carrier is not an insurer of the safety of the passengers, it should nevertheless, be held to answer for
the flaws of its equipment if such defects were discoverable. In this connection, the manufacturer of the defective
appliance is considered in law the agent of the carrier, and the good repute of the manufacturer will not relieve the

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carrier from liability. The rationale of the carrier’s liability is the fact that the passenger has no privity with the
manufacturer of the defective equipment, hence, he has no remedy against him, while the carrier has. The defect could
be detected. The periodical, usual inspection of a very cautious person “as far as human care and foresight can provide”
and therefore, the knuckle’s failure cannot be considered a fortuitous event that exempts the carrier from responsibility.
(See also: La Mallorca v. De Jesus, 17 SCRA 23; Necesito v. Paras, 104 Phil. 75).

The common carrier’s duty to observe the requisite diligence in the shipment of goods lasts from the time the
articles are surrendered to or unconditionally placed in the possession of, and received by, the carrier for transportation
until delivered to, or until the lapse of a reasonable time for their acceptance by the person entitled to receive them.
(Articles 1736-1738, Civil Code; Ganzon v. CA, 161 SCRA 646; Kui Bai v. Dollar Steamship Lines, 52 Phil. 863). When the
goods shipped either are lost or arrived in damaged condition, a presumption arises against the carrier of its failure to
observe that diligence, and there need not be an express finding of negligence to hold it liable. (Article 1735, Civil Code;
Philippine National Railways v. CA, 139 SCRA 87; Metro Post Service v. CA, 131 SCRA 365). There are exceptional cases
when such presumption of fault is not observed as enumerated under Article 1734, NCC. (Eastern Shipping Lines, Inc. v.
CA, 234 SCRA 78).

As to an accommodation passenger or invited guest, defendant, as owner and driver of the pick-up, owes to
them merely the duty to exercise reasonable care so that they may be transported safely to their destination. Thus, the
rule is established by the weight of authority that the owner or operator of an automobile owes the duty to an invited
guest to exercise reasonable care in its operation, and not unreasonably to expose him to danger and injury by increasing
the hazards of travel. The rule is that an owner of an automobile owes a guest the duty to exercise ordinary or reasonable
care to avoid injuring him. Since the one riding in an automobile is no less a guest because he asked for the privilege of
doing so, the same obligation of care is imposed upon the driver as in case of one expressly invited to ride. The
extraordinary diligence imposed on common carriers is not required.

In the case at bar, the deceased himself chose the place where he would sit, and he was half-asleep when the
accident took place so that the incident was attributed to his lack of care considering that the pick-up was open and he
was then in a crouching position. On the other hand, there was no showing that the defendant failed to take the
precautions necessary to transport his passenger safely to his place of destination. Defendant, therefore, is not liable for
damages. (Lara v. Valencia, 104 Phil. 65).

The relation of carrier and passenger continues until the passenger had been landed at the port of destination
and has left the vessel-owner’s dock or premises. Once created, the relationship will not ordinarily terminate until the
passenger has, after reaching his destination, safely alighted from the carrier’s conveyance or had a reasonable
opportunity to leave the carrier’s premises. In La Mallorca v. CA, it was held that the relationship exists until the
passenger has had a reasonable time to leave the premises. The reasonableness of time should be made to depend on the
attending circumstances of the case like the kind of carrier, the nature of its business, or the customs of the place. In this
case, the presence of passenger X was still reasonable since his bag was still inside the vessel. (See also: La Mallorca v. CA,
17 SCRA 739; Aboitiz Shipping Co. v. CA, November 6, 1989).

PARTNERSHIP

To regard the petitioners as having formed an unregistered partnership would result in oppressive taxation. Their
original purpose was to divide the lots for residential purposes, but they were compelled to resell because of the high cost
of construction. Article 1769(3) of the NCC provides that: “The sharing of gross returns does not of itself establish a
partnership, whether or not the persons sharing them have a joint or common right or interest in any property from
which the returns are derived.” There must be an unmistakable intention to form a partnership or joint venture. (Obillos
v. CIR, et al., 135 SCRA 436; Pascual v. CIR, 166 SCRA 560).

In Jesus Sy, et al. v. CA, et al., G.R. No. 94285; Sy Yong Hu and Sons, et al. v. CA, et al., G.R. No. 94285, August 31,
1999, 111 SCAD 488, the SC made a distinction between dissolution and winding up of a partnership. The dissolution of a
partnership is the change in the relation of the parties ceasing to be associated in the carrying on, as might be
distinguished from the winding up of its business. Upon its dissolution, the partnership continues and its legal personality
is retained until the complete winding up of its business culminating in its termination.

The dissolution of the partnership does not mean that the juridical entity is immediately terminated and that the
distribution of the assets to its partners should perfunctorily follow. On the contrary, the dissolution simply effected a
change in the relationship among the partners. The partnership, although dissolved, continues to exist until its
termination, at which time the winding up of its affairs should have been completed and the net partnership assets are
partitioned and distributed to the partners. (Ortega v. CA, et al., SCRA 529 citing Arts. 1828-1829, NCC).

A partnership that does not fix its term is a partnership at will. The partnership of Bito, Misa, and Lozada is one
such partnership.

The birth and life of a partnership at will is predicated on the mutual desire and consent of the partners. The
right to choose with whom a person wishes to associate himself is the very foundation and essence of that partnership. Its

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continued existence is, in turn, dependent on the constancy of that mutual resolve, along with each partner’s capability to
give it, and the absence of a cause for dissolution provided by the law itself. Verily, any one of the partners may, at his
sole pleasure, dictate dissolution of the partnership at will. He must, however, act in good faith, not that the attendance
of bad faith can prevent the dissolution of the partnership but that it can result in a liability for damages.

AGENCY

It is a dictum that in order for an agent to be entitled to a commission, he must be the procuring cause of the
sale, which simply means that the measures employed by him and the efforts he exerted must result in a sale. (Damon v.
Antonio Brimo & Co., 42 Phil. 134; Ramos v. CA, 63 SCRA 331). In other words, an agent receives his commission only
upon the successful conclusion of a sale. (Hahn v. CA, G.R. No. 113074, January 22, 1997, 266 SCRA 537). Conversely, it
follows that where his efforts are unsuccessful, or there was no effort on his part, he is not entitled to a commission.

If the contract was negotiated directly by the parties after the agency was revoked due to his refusal to reduce
his commission the agent is not entitled to compensation. Revocation is allowed by law which states that the agency is
revoked if the principal directly manages the business entrusted to the agent, dealing directly with third persons. (Art.
1924, NCC). The agent was not the procuring cause of the contract between the parties, hence, he is not entitled to
commission.

In Prats v. CA, G.R. No. 39822, January 31, 1978, 81 SCRA 360, it has been held that for the purpose of equity, an
agent who is not the efficient procuring cause is nonetheless entitled to his commission, where said agent,
notwithstanding the expiration of his authority, nonetheless, took diligent steps to bring back together the parties, such
that a sale was finalized and consummated between them. In Manotok Brothers v. CA, G.R. No. 94753, April 7, 1993, 271
SCRA 224, where the Deed of Sale was only executed after the agent’s extended authority had expired, the Court,
applying its ruling in Prats, held that the agent is entitled to a commission since he was the efficient procuring cause of the
sale, notwithstanding that the sale took place after his authority had lapsed. The proximate, close and casual connection
between the agent’s efforts and the principal’s sale of his property cannot be ignored. (Sanchez v. Medicard Phils. Inc., et
al., G.R. No. 141525, September 2, 2005).

PACTUM COMMISSORIUM

Under the law, the creditor cannot appropriate the things given by way of pledge or mortgage, or dispose of
them. Any stipulation to the contrary is void. (Art. 2088, NCC; Phil. Phospate Fertilizer Corp. v. Kamalig Resources, Inc.,
G.R. No. 165608, December 13, 2007). This stipulation is contrary to the nature of a true pacto de retro sale since in such
sale, ownership of the property sold is immediately transferred to the vendee a retro upon execution of the sale, subject
only to the repurchase of a vendor a retro within the stipulated period. Undoubtedly, the aforementioned stipulation is a
pactum commissorium because it enables the mortgagee to acquire ownership of the mortgaged properties without need
of any foreclosure proceedings which is a nullity being contrary to the provisions of Article 2088 of the Civil Code.
(Lumayag, et al. v. Heirs of Jacinto Nemeno, et al., G.R. No. 162112, July 3, 2007).

If something more is to be done, like the execution of the deed of assignment, there is no pactum commissorium.
(Uy Tong v. CA, May 21, 1988).

The prohibition against pactum commissorium is intended to protect the debtor, pledgor or mortgagor against
being over-reached by the creditor who holds a piece of property, the value of which is more valuable than the amount of
the debt. Furthermore, when the security of the debt is also money deposited in a bank, the amount of which is less than
the debt, it is not illegal for the creditor to encash the time deposit certificate to pay the debtor’s obligation.

Under Article 2085, it is indispensable, in order that a mortgage may be validly constituted, that the document in
which it appears be recorded in the Registry of Property. If the instrument is not recorded, the mortgage is nevertheless
binding between the parties. (Yau Chu v. CA, September 26, 1989). As a general rule, it should probably be considered as
sound the rule which say that an unrecorded chattel mortgage remains valid between the parties, since the only purpose
of registration is to give constructive notice to third persons. (Filipinas Marble Corp. v. IAC, G.R. No. 68010, Ma7 30, 1986).

MUTUUM/INTEREST RATES

CB Cir. No. 905 effectively removed the ceilings on the interest rates for both secured and unsecured loans.

It does not however grant lenders absolute authority to increase interest rates which would result in the
enslavement of their borrowers and to the hemorrhaging of their assets.

Interest rates which are iniquitous, unconscionable and exorbitant may not be against the law, but is certainly
immoral.

Monthly interest of 5% and penalty of 5% per month are deemed outrageous and inordinate. (See: Imperial v,
Jaucian where the interest rate agreed upon was 192% per annum. It was reduced to 16% per annum because the

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stipulation was unconscionable, etc., hence, void as it was contrary to morals). (Dio v. Japer, et al., July 8, 2005; Chua v.
Timan, et al., G.R. No. 170452, August 13, 2008).

The presence of the escalation clause, without the corresponding de-escalation clause in the event of a reduction
of interest as ordered by law, makes the clause so one-sided as to make it unreasonable. Indeed, because of concern for
the unequal status of borrowers vis-à-vis the banks, it has been ruled in previous cases, starting with Banco Filipino (152
SCRA 346), that any increase in the rate of interest made pursuant to an escalation clause must be the result of an
agreement between the two parties. Increases unilaterally imposed by a bank is in violation of the principle of mutuality
as embodied in Art. 1308 of the Civil Code, which provides that: “The contract must bind both contacting parties; its
validity or compliance cannot be left to the will of one of them.” A contract containing a condition which makes its
fulfillment dependent upon the uncontrolled will of one of the contracting parties is void. Hence, even if the loan
agreement gives the bank the right to increase the interest rate at any time without notice during the term of the loan,
that is null and void for being violative of the principle of mutuality essential in contracts. It would completely take away
from one party (borrower) the right to assent to an important modification in their agreement with the character of
adhesion where the parties do not bargain on equal footing, the weaker party’s (the borrower) participation being
reduced to the alternative “to take it or leave it.” (PNB v. CA, et al., G.R. No. 109563, July 9, 1996, 72 SCAD 39; Equitable
PCI Bank, et al. v. Ng Sheung Ngor, etc., G.R. No. 171545, December 19, 2007).

DEPOSIT

Under the law, the hotelkeeper cannot free himself from responsibility by posting notices to the effect that he is
not liable for the loss of articles brought by the guest. Any stipulation between the hotelkeeper and the guest whereby
the responsibility of the former as set forth in Articles 1998 to 2001 is suppressed or diminished shall be void. (Art. 2003,
NCC).

Article 2003 was incorporated in the New Civil Code as an expression of public policy precisely. The hotel
business like the common carrier’s business is imbued with public interest. Catering to the public, hotelkeepers are bound
to provide not only lodging for hotel guests and security to their persons and belongings. The twin duty constitutes the
essence of the business. The law in turn does not allow such duty to the public to be negated or diluted by any contrary
stipulation in so-called “undertakings” that ordinarily appear in prepared forms imposed by hotelkeepers on guests for
their signature.

The “undertaking” manifestly contravenes, Article 2003 of the New Civil Code for it allows the hotelkeeper to be
released from liability from any loss in the contents and/or of the safety deposit box for any cause whatsoever. Evidently,
the undertaking was intended to bar any claim against the hotelkeeper for any loss of the contents of the safety deposit
box whether or not negligence was incurred by Tropicana or its employees. The New Civil Code is explicit that the
responsibility of the hotelkeeper shall extend to loss of, or injury to, the personal property of the guests even if caused by
servants or employees of the keepers of hotel or inns as well as by strangers, except as it may proceed from any force
majeure. (Art. 2001, NCC). It is the loss through force majeure that may spare the hotelkeeper from liability. In the case at
bar, there is no showing that the act of the thief or robber was done with the use of arms or through an irresistible force
to qualify the same as force majeure. (YHT Realty, et al. v. CA, et al., G.R. No. 126780, February 17, 2005).

GUARANTY AND SURETY

The benefit of excussion may only be invoked after legal remedies against the principal debtor have been
expanded. Thus, it was held that the creditor must first obtain a judgment against the principal debtor before assuming to
run after the alleged guarantor, “for obviously the ‘exhaustion of the principal’s property’ cannot even begin to take place
before judgment has been obtained.” The law imposes conditions precedent for the invocation of the defense. Thus, in
order that the guarantor may make use of the benefit of excussion, he must set it up against the creditor upon the latter’s
demand for payment and point out to the creditor available property of the debtor within the Philippines sufficient to
cover the amount of the debt. (JN Dev’t. Corp. v. Phil. Export & Foreign Guarantee Corp., G.R. No. 151060, August 31,
2005).

A “blanket mortgage clause”, also known as a “dragnet clause” is one which is specifically phrased to subsume all
debts of past or future origins. Mortgages of this character enable the parties to provide continuous dealings, the nature
or extent of which may not be known or anticipated at the time, and they avoid the expense and inconvenience of
executing a new security on each new transaction. A “dragnet clause” operates as a convenience and accommodation to
the borrowers as it makeS available additional funds without their having to execute additional security documents,
thereby saving time, travel, loan closing costs, costs of extra legal services, recording fees, etc. Indeed, it has been settled
in a long line of decisions that mortgages given to secure future advancements are valid and legal contracts (Mojica v. CA,
G.R. No. 94247, September 11, 1991, 201 SCRA 517), and the amounts named as consideration in said contracts 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 gatehered. (China Banking Corp. v. CA, 333 Phil. 158 (1996); Prudential Bank
v. Don A. Alviar, et al., G.R. No. 150197, July 28, 2005; Cuyco v. Cuyco, 487 SCRA 603 (2006); Republic Planters Bank (now
Maybank Phils., Inc.), et al. v. Sarmiento, et al., G.R. No. 170785, October 19, 2007).

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The mortgage with a dragnet clause will not secure a note that expresses that it is secured by another security.
When the mortgagor takes a loan for which another security was given it could not be inferred that such loan was made
in reliance solely on the original security with the dragnet clause but rather on the new security given. It is therefore
improper for the bank to foreclose the mortgaged properties because of non-payment of all the three promissory notes
for there is a need to respect the existence of the other securities given for other loans. (Prudential Bank v. Alviar, et al.,
G.R. No. 150197, July 28, 2005).

QUASI-DELICTS

The doctrine of res ipsa loquitur is a rule of evidence whereby negligence of the alleged wrongdoing may be
inferred from the mere fact that the accident happened, provided that: (1) the occurrence is the kind of thing that does
not ordinarily happen without negligence; (2) the occurrence must have been caused by an agency or instrumentality
within the exclusive control of the defendant; (3) the occurrence was not due to contribution or voluntary action of the
plaintiff (Gifi’s Law Dictionary); it is used to state the fact that the situation itself implies negligence or a duty to
compensate whether negligence is in fact proved or not (Radin’s Law Dictionary); it is a rebuttable presumption that
defendant was negligent, which arises upon proof that the instrumentality causing injury was in defendant’s exclusive
control, and that the accident was one which ordinarily does not happen in the absence of negligence. (Dra. Abdula
Rodriguez, et al. v. CA, et al., G.R. No. 121964, June 17, 1997, 83 SCAD 525; Batinquin v. CA, 71 SCAD 748, 258 SCRA 334;
College Assurance Plan, et al. v. Belfranet Dev. Inc., G.R. No. 155604, November 27, 2007).

The main purpose of vehicle registration is the easy identification of the owner who can be held responsible for
any accident, damage or injury caused by the vehicle. Easy identification prevents inconvenience and prejudice to a third
party injured by one who is unknown or unidentified. To allow a registered owner to escape liability by claiming that the
driver was not authorized by the new (actual) owner results in the public detriment the law seeks to avoid. (Villanueva v.
Domingo, et al., G.R. No. 144274, September 20, 2004; Cadiente v. Macas, G.R. No. 161946, November 14, 2008).

Literally, res ipsa loquitur means “the thing speaks for itself”. It is the rule that the fact of the occurrence of an
injury, taken with the surrounding circumstances, may permit an inference or raise a presumption of negligence, or make
out a plaintiff’s prima facie case, and present a question of fact for defendant to meet with an explanation. (Ramos v. CA,
G.R. No. 124354, December 29, 1999, 321 SCRA 584). Stated differently, where the thing which caused the injury, without
the fault of the injured, is under the exclusive control of the defendant and the injury is such that it should not have
occurred if he, having such control used proper care, it affords reasonable evidence, in the absence of explanation that
the injury arose from the defendant’s want of care, and the burden of proof is shifted to him to establish that he has
observed due care and diligence.

DAMAGES

In order that actual damages may be recovered, the best evidence obtainable by the injured party must be
presented. Actual or compensatory damages cannot be presumed but must be proven with a reasonable degree of
certainty. A court cannot rely on speculation, conjecture, or guesswork. If the proof is unsubstantial and flimsy, no
damages will be awarded.

An award of actual or compensatory damages requires actual proof of pecuniary loss. An exception from the rule
pursuant to Article 2206 of the Civil Code, are “damages for death caused by a crime or quasi-delict” which can be
awarded forthwith to the heirs of the victim by proof alone of such fact of death. no proof of pecuniary loss is likewise
necessary in order that moral, nominal, temperate, liquidated or exemplary damages may be adjudicated (Article 2216,
New Civil Code), and it is quite enough that proof of damage or injury is adduced. Being incapable of exact pecuniary
estimation, the assessment of such damages, except for liquidated damages which the parties themselves fix is left to the
sound discretion of the court. (Jose Ching Sui Yong v. IAC, G.R. No. 64398, November 6, 1990).

As a rule, documentary evidence should be presented to substantiate the claim for damages for the loss of
earning capacity. The only exceptions are: (1) when the deceased is self-employed earning less that minimum wage under
current labor laws; (2) when the deceased is employed as a daily wage worker earning less than the minimum wage under
the current laws. In these two instances, judicial notice may be taken of the fact that in the deceased’s line of work no
documentary evidence is available. Here the lower courts computed the award of compensatory damages for the loss of
earning capacity only on the basis of the testimony of the husband. The award is erroneous because the deceased
earnings do not fall within the exceptions. (See also: People v. Mallari, G.R. No. 145993, June 17, 2003; People v. Craig,
G.R. No. 116224, March 28, 2004; People v. Duetes, et al., G.R. No. 144598, February 6, 2004; Victory Liner, Inc. v.
Gammad, et al., G.R. No. 159636, November 25, 2004).

GOOD LUCK TO ALL BAR CANDIDATES


in the 2013 Bar Examinations
We are praying for your success which is a part of the service of
Albano Bar Review Center.

God Bless You All.


18 | ABRC2013.civillaw.2005-2009/(part2)combi-shortened/EVSA/crys